<PAGE> 1
SCHEDULE 14A
(Rule 14a)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
PACIFIC INNOVATIONS TRUST
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(Name of Registrant as Specified In Its Charter)
PACIFIC INNOVATIONS TRUST
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
PACIFIC LIFE INSURANCE COMPANY
May 18, 1998
Dear Variable Contract Owner:
We are pleased to enclose a Notice and Proxy Statement for the Special Meeting
of the shareholders (the "Meeting") of the Money Market Fund, Managed Bond Fund,
Capital Income Fund, Blue Chip Fund, Mid-Cap Equity Fund, Aggressive Growth Fund
and International Fund (each a "Fund" and collectively the "Funds") of the
Pacific Innovations Trust, a Delaware Business Trust (the "Trust"), along with
your voting instruction(s)/proxy card(s).
The Meeting is scheduled to be held at 9:00 a.m. Eastern Standard Time, on
Monday, June 26, 1998 at the offices of the Funds, 400 Bellevue Parkway,
Wilmington, Delaware. Please take the time to read the Proxy Statement and cast
your vote, since it covers matters that are important to each Fund and to you as
owner of a Pacific Innovations variable contract ("Contract") having an interest
in one or more of the Funds. As all or part of your Contract value was allocated
to one or more of the Fund Subaccounts on the record date, May 6, 1998, you are
entitled to receive information and provide voting instructions to Pacific Life
Insurance Company ("Pacific Life") on issues placed before the shareholders of
each Fund. You can give voting instructions to Pacific Life based on the number
of shares in the Funds in which you had an interest on the record date which are
shares shown on the enclosed voting instruction(s)/proxy card(s).
The purpose of the Meeting is: (1) to elect seven (7) Trustees to the Board of
Trustees; (2) to approve a new management agreement between the Trust and Bank
of America National Trust and Savings Association ("Bank of America"); (3) to
approve a new sub-advisory agreement between Bank of America and Scudder Kemper
Investments, Inc. (Managed Bond Fund only); (4) to approve a new sub-advisory
agreement between Bank of America and Wellington Management Company, LLP
(International Fund only); and (5) to approve the selection of Price Waterhouse
LLP as the Trust's independent auditors for the current fiscal year. The
election of Trustees to the Board of the Trust is being sought in connection
with a proposed restructuring of the boards of all the funds managed by Bank of
America. The approval of the management agreement and sub-advisory agreements
are being sought in connection with the planned merger of BankAmerica
Corporation, Bank of America's parent, and NationsBank Corp. as described in the
attached proxy statement, which may result in their assignment under the
Investment Company Act of 1940 and their termination. The Board of Trustees has
voted to approve proposals 2 through 5 and to recommend that shareholders elect
each nominee for Trustee and that shareholders approve proposals 2 through 5 as
described in the attached Proxy Statement.
Pacific Life will vote shares of the Funds held by each separate Subaccount
according to instructions received from Contract owners having an interest in
the Funds. If you do not give voting instructions to Pacific Life, the shares in
which you have an interest will be voted in proportion to the responses received
from other Contract owners having an interest in the Funds. As provided in the
proxy statement, the Funds' shares attributed to investment by Pacific Life's
subsidiary will also be voted in proportion to the vote by Contract owners.
Please complete and return the voting instruction(s)/proxy card(s) in the
enclosed postage-paid envelope if you want to exercise your voting rights. You
may also give voting instructions in person at the Special Meeting of
Shareholders. We appreciate your participation and prompt response in this
matter and thank you for your continued support.
Sincerely,
Thomas C. Sutton
Chairman of the Board and Chief Executive Officer
<PAGE> 3
PACIFIC INNOVATIONS TRUST
400 BELLEVUE PARKWAY
WILMINGTON, DELAWARE 19809
MONEY MARKET FUND MID-CAP EQUITY FUND
MANAGED BOND FUND AGGRESSIVE GROWTH FUND
CAPITAL INCOME FUND INTERNATIONAL FUND
BLUE CHIP FUND
NOTICE OF SPECIAL MEETING
OF SHAREHOLDERS
JUNE 26, 1998
May 18, 1998
To the Shareholders:
You are invited to attend a Special Meeting (the "Meeting") of the shareholders
of the Money Market Fund, Managed Bond Fund, Capital Income Fund, Blue Chip
Fund, Mid-Cap Equity Fund, Aggressive Growth Fund, and International Fund (each
a "Fund" and collectively the "Funds") of the Pacific Innovations Trust, a
Delaware Business Trust (the "Trust"). The Meeting will be held at the offices
of the Trust, 400 Bellevue Parkway, Wilmington, Delaware, on Monday, June 26,
1998, at 9:00 a.m., Eastern Standard Time, for the following purposes and to
transact such other business, if any, as may properly come before the Meeting:
1. To elect seven (7) Trustees to the Board of Trustees;
2. To approve a new Management Agreement between the Trust and
Bank of America National Trust and Savings Association in
connection with the merger of Bank America Corporation and
NationsBank Corporation;
3. To approve a new Sub-Advisory Agreement between Bank of
America National Trust and Savings Association and Scudder
Kemper Investments, Inc. (Managed Bond Fund only) in
connection with the merger of BankAmerica Corporation and
NationsBank Corporation;
4. To approve a new Sub-Advisory Agreement between Bank of
America National Trust and Savings Association and Wellington
Management Company, LLP (International Fund only) in
connection with the merger of BankAmerica Corporation and
NationsBank Corporation;
5. To approve the selection of Price Waterhouse LLP as
independent auditors for the current fiscal year.
The Board of Trustees of the Trust has fixed the close of business on May 6,
1998 as the record date for determining the shareholders of the Funds entitled
to notice of and to vote at the Meeting. Shareholders are entitled to one vote
for each share of each Fund held.
PLEASE INDICATE YOUR VOTING INSTRUCTIONS ON THE ENCLOSED VOTING
INSTRUCTION(S)/PROXY CARD(S). SIGN, DATE AND RETURN IT IN THE ENVELOPE PROVIDED.
PLEASE MAIL YOUR VOTING INSTRUCTION(S)/PROXY CARD(S) PROMPTLY.
Cathy G. O'Kelly
Secretary
<PAGE> 4
PACIFIC INNOVATIONS TRUST
400 BELLEVUE PARKWAY
WILMINGTON, DELAWARE 19809
MONEY MARKET FUND MID-CAP EQUITY FUND
MANAGED BOND FUND AGGRESSIVE GROWTH FUND
CAPITAL INCOME FUND INTERNATIONAL FUND
BLUE CHIP FUND
PROXY STATEMENT
GENERAL
This Proxy Statement is furnished in connection with the solicitation by the
Board of Trustees (the "Board") of the Money Market Fund, Managed Bond Fund,
Capital Income Fund, Blue Chip Fund, Mid-Cap Equity Fund, Aggressive Growth
Fund, and International Fund (each a "Fund" and collectively the "Funds") of the
Pacific Innovations Trust, a Delaware Business Trust (the "Trust"), of proxies
to be voted at the Special Meeting of Shareholders of the Trust to be held on
Monday, June 26, 1998, and any and all adjournments thereof (the "Meeting"). The
date of the first mailing of the Notice, Proxy Statement and the accompanying
voting instruction(s)/proxy card(s) will be on or about May 18, 1998.
INTRODUCTION
On April 13, 1998, BankAmerica Corporation ("BankAmerica") and NationsBank
Corporation ("NationsBank") announced a definitive agreement to merge and form a
new holding company to be named BankAmerica Corporation (the "Merger"). The
Merger is anticipated to close by the end of 1998, however, it is subject to a
number of approvals including shareholder and regulatory approvals.
Bank of America National Trust and Savings Association ("Bank of America"), a
subsidiary of BankAmerica and the investment adviser to the Funds, will continue
to serve as investment adviser to the Funds after the Merger. The Merger,
however, represents a change in ownership of the parent corporation of Bank of
America and, as such, may have the effect under the Investment Company Act of
1940 (the "1940 Act") of terminating the Management Agreement between the Trust
and Bank of America (the "Current Management Agreement") and the Sub-Advisory
Agreement between Bank of America and Scudder Kemper Investments, Inc. ("Scudder
Kemper") on behalf of the Managed Bond Fund, and the Sub-Advisory Agreement
between Bank of America and Wellington Management Company LLP ("Wellington
Management") on behalf of the International Fund (collectively, the "Current
Sub-Advisory Agreements") at the date of the consummation of the Merger.
As a consequence of the Merger and in order to facilitate the investment
management of the Funds, the Board of Directors (the "Board") has proposed for
your approval a new management agreement with Bank of America and new
sub-advisory agreements with Scudder Kemper and Wellington Management (each a
"Sub-Advisor"). Except as further discussed below, the terms of the new
management agreement and sub-advisory agreements are substantially the same as
the current agreements. In addition, the advisory fees provided for in the
current agreements will remain the same and not change in the new management and
sub-advisory agreements. The election of trustees and approval of the selection
of accountants are also on the agenda for the Meeting.
<PAGE> 5
PROPOSAL 1: ELECTION OF TRUSTEES
INTRODUCTION. At the Meeting, shareholders of each Fund will be asked to
consider the election of seven (7) Trustees, who will constitute the entire
Board of the Trust. The election of the seven (7) Trustees is part of a
restructuring of the boards of the registered investment companies advised by
Bank of America (the "Bank of America Complex") into essentially the same board
for each investment company in the Bank of America Complex. The Board concluded
that the election of common board members to all funds in the Bank of America
Complex will result in a number of benefits including the following: (1) the new
Board would be better positioned to provide effective oversight in that its
members would have detailed information about all of the funds in the Bank of
America Complex; (2) by bringing together members of the boards of Bank of
America sponsored funds, the new Board would have a more complete historical
background of the Bank of America Complex; (3) the Funds would benefit from
reduced expenses resulting from the elimination of multiple Board meetings and
the spreading of meeting costs among all funds in the Bank of America Complex;
and (4) communications between the new Board and management should be more
effective given the reduction in the time and effort required by management to
keep multiple boards informed and to be responsive to multiple boards' needs.
The Board, at a meeting on April 29, 1998, unanimously approved the proposed
restructuring of the Board. Therefore, the Board is proposing that, at the
Meeting shareholders elect the seven (7) Trustees listed below to serve as
Trustees of the Trust. Also at a meeting on April 2, 1998, the Board unanimously
approved amendments to the Declaration of Trust which changed the provisions
regarding the term of office for a Trustee such that a Trustee's term would not
automatically end on the attainment of age 72 and that a Trustee's term would
end upon the election of his or her successor at a shareholders meeting called
for the purpose of electing Trustees. All of the nominees are proposed to serve
on each of the Bank of America Complex fund boards with the exception of Mr.
Joanning, who currently serves and is proposed to continue serving only on the
Board of the Trust. Messrs. Edward S. Bottum, William P. Carmichael, Robert E.
Greeley, and Harold T. Joanning were elected to the Board of the Trust by the
initial shareholder of the Trust on February 27, 1997. Messrs. Collins, Fletcher
and Pings are recommended for election by shareholders for the first time. The
Board and management wish to express their great appreciation to Mr. Privat, a
current Board member who will not continue on the Board, for his contributions
to the Trust.
TRUSTEES. It is intended that the voting instructions/proxies will be voted for
the election of the nominees for election as Trustee described in the table
below. All of the nominees have consented to serve as Trustees of the Trust, if
elected. In case any nominee shall be unable or shall fail to act as a Trustee
by virtue of an unexpected occurrence, the voting instructions/proxies may be
voted for such other person(s) as shall be determined by the persons acting
under the voting instructions/proxies in their discretion.
<TABLE>
<CAPTION>
NAME, AGE, PRINCIPAL YEAR FIRST BECAME
OCCUPATION AND AFFILIATIONS A TRUSTEE
--------------------------- ---------
<S> <C>
Edward S. Bottum (64) 1996
Managing Director, Chase Franklin Corporation (venture capital firm) (since 1990);
Director, Kellwood Corporation (woman's apparel manufacturer); Trustee, Time Horizon
Funds (since 1995); formerly Vice Chairman of Continental Bank N.A. (retired 1990);
formerly Trustee, 231 Funds (registered investment company) (1993 to 1995).
William P. Carmichael (54) 1996
Formerly Senior Vice President, Sara Lee Corporation (1991 to 1993); formerly Treasurer,
Senior Vice President and Chief Financial Officer, Beatrice Company (1987 to 1990),
Trustee, Time Horizon Funds (since 1995); formerly Trustee, 231 Funds (1993 to 1995)
(registered investment company); Director, Cobra Electronics Corporation; Director,
The Hain Food Group, Inc.
</TABLE>
2
<PAGE> 6
<TABLE>
<CAPTION>
NAME, AGE, PRINCIPAL YEAR FIRST BECAME
OCCUPATION AND AFFILIATIONS A TRUSTEE
--------------------------- ---------
<S> <C>
Thomas M. Collins (64) Nominee
Of counsel, law firm of McDermott & Trayner; Partner of the law firm
of Musick, Peeler & Garrett (until 1993); Chairman of the Board and Trustee,
Master Investment Trust, Series I (registered investment company) (since
1993); Director and former President and Chairman of the Board of Pacific
Horizon Funds, Inc. (1982 to 1995); former Chairman and Trustee, Master
Investment Trust, Series II (registered investment company) (1993 to 1997);
former Director, Bunker Hill Income Securities, Inc. (registered investment
company) (through 1991).
Douglas B. Fletcher (73) Nominee
Chairman of the Board and Chief Executive Officer, Fletcher Capital Advisor,
Incorporated (registered investment advisor) (since 1991); Director, Pacific Horizon
Funds, Inc. (since 1985); Partner, Newport Partners (private venture capital firm) (since
1981); Director, FCA Securities Inc. (registered broker/dealer) (since 1993); formerly
Chairman of the Board and Chief Executive Officer, First Pacific Advisors, Inc.
(registered investment adviser) and seven investment companies under its management
(prior to 1983); former Allied Member, New York Stock Exchange; Chairman of the
Board of FPA Paramount Fund, Inc. (through 1984); Chairman, TIS Mortgage Investment
Company (real estate investment trust) (since 1988); Trustee and former Vice Chairman
of the Board, Claremont McKenna College; Chartered Financial Analyst.
*Robert E. Greeley (66) 1996
Chairman, Page Mill Asset Management (a private investment company) (since 1987);
Director, The Pacific Horizon Funds, Inc. (since 1993), Morgan Grenfell Small Cap Fund
(since 1986); Trustee, Master Investment Trust Series I (registered investment company)
(since 1993), Master Investment Trust, Series II (registered investment company) (from
1993 to 1997), Time Horizon Funds (registered investment companies) (since 1995);
formerly Director, Bunker Hill Income Securities, Inc. (from 1989 to 1994); Trustee,
SunAmerica Fund Group (previously Equitec Siebel Fund Group) (registered investment
company) (from 1984 to 1992); formerly Director, Manager, Corporate Investments,
Hewlett Packard Company (from 1979 to 1991).
Harold T. Joanning (69) 1996
Retired. Formerly Executive Vice President, Finance and Administration, Pacific Mutual
Life Insurance Company (from 1980 to 1991).
Cornelius J. Pings (69) Nominee
President, Association of American Universities (since 1993); Provost (from 1982 to
1993) and Senior Vice President for Academic Affairs (from 1981 to 1993), University
of Southern California; Director (since 1984) and President and Chairman of the Board
(since 1995), The Pacific Horizon Funds, Inc. (since 1982); Trustee, Master Investment
Trust, Series I (since 1995); former Trustee, Master Investment Trust, Series II (from
1995 to 1997); Director, Farmers Group, Inc. (insurance company) (since 1991).
</TABLE>
- ---------------
* "Interested Person" as defined in the Investment Company Act of 1940. Mr.
Greeley is an "interested" person solely by reason of his position as
President of the Trust.
3
<PAGE> 7
The term of office of each person elected as a Trustee will be until the next
meeting of shareholders called for the purpose of electing trustees or until he
or she dies, resigns, is declared incompetent by a court of appropriate
jurisdiction, or is removed.
Mr. Bottum is a director of Chase Franklin Corporation and Mr. Fletcher is a
director of FCA Securities, Inc. Chase Franklin and FCA Securities are
registered broker dealers with the Securities and Exchange Commission. Chase
Franklin and FCA Securities do not execute portfolio transactions for any of the
Funds nor do they engage in principal transactions with or act as distributor
for any of the Funds. Mr. Bottum and Mr. Fletcher have advised the Trust that
Chase Franklin and FCA Securities will not execute portfolio transactions for,
engage in principal transactions with, or act as distributor for, any of the
Funds during any period when he is a Trustee of the Trust. The Board of Trustees
has determined that none of the Funds nor their shareholders will be adversely
affected as a result of Chase Franklin and FCA Securities not executing such
transactions for the Funds or engaging in such principal transactions with or
acting as distributor for the Funds. Accordingly, Mr. Bottum and Mr. Fletcher
will not be considered interested persons of the Trust due to their respective
relationships with Chase Franklin and FCA Securities.
In the fiscal year of the Trust ended December 31, 1997, the Trustees met five
times. Each of the current trustees attended 75% or more of the meetings of the
Board. The Board currently has no committees.
For his or her services as Trustee of all of the Funds of the Trust, each
Trustee currently receives an annual retainer of $6,000 with a fee of $1,000 for
each day of board meetings attended in person plus $500 for each telephone board
meeting attended. Edward S. Bottum receives an additional $2,000 per annum as
Chairman of the Board. Each Trustee also is reimbursed for out-of-pocket
expenses incurred as a Trustee. It is anticipated that upon the restructuring of
the Board, the Trustees may change the structure for trustee compensation. The
following table sets forth the aggregate compensation paid by the Trust for the
fiscal year ended December 31, 1997, to the Trustees who are not affiliated with
Bank of America, Scudder Kemper or Wellington Management and the aggregate
compensation paid to such Trustees for services on the Trust's Board and that of
all other funds in the "Trust Complex" (as defined in Schedule 14A under the
Securities Exchange Act of 1934):
<TABLE>
<CAPTION>
PENSION OR
RETIREMENT ESTIMATED TOTAL
AGGREGATE BENEFITS ACCRUED ANNUAL COMPENSATION
COMPENSATION AS PART OF FUND BENEFITS UPON FROM THE TRUST
NAME FROM THE TRUST* EXPENSES RETIREMENT AND TRUST COMPLEX (1)
---- --------------- -------- ---------- ---------------------
<S> <C> <C> <C> <C>
Edward S. Bottum (2) $15,000 $0 $0 $ 29,125
William P. Carmichael (2) $13,500 $0 $0 $ 27,625
Thomas M. Collins (3) $ 0 ** ** $ 53,500
Douglas B. Fletcher (3) $ 0 ** ** $ 36,750
Robert E. Greeley (4) $13,500 ** ** $ 72,750
Harold T. Joanning $13,500 $0 $0 $ 13,500
Cornelius J. Pings (3) $ 0 ** ** $ 81,892
</TABLE>
- ---------------
(1) The "Trust Complex" currently consists of the Trust,
Master Investment Trust, Series I, Time Horizon Funds, World Horizon
Funds, the Pacific Horizon Funds, Inc., the Seafirst Retirement Funds,
which were merged into the Pacific Horizon Funds, Inc. on June 23, 1997,
and the Robertson Stephens Investment Trust. The total compensation for
the Trust Complex is for the one-year period ended December 31, 1997.
4
<PAGE> 8
(2) Messrs. Bottum and Carmichael currently also serve as Trustees for the Time
Horizon Funds.
(3) Nominee. Messrs. Collins and Pings currently serve as Trustees for the
Master Investment Trust, Series I and Directors for the Pacific Horizon
Funds, Inc. Mr. Fletcher currently serves as Director for the Pacific
Horizon Funds, Inc.
(4) Mr. Greeley currently also serves as Trustee for the Time Horizon Funds and
the Master Investment Trust, Series I and Director for the Pacific Horizon
Funds, Inc.
* Mr. Privat received $13,500 in compensation from the Trust for the fiscal
year ended December 31, 1997. The total compensation for the Trust Complex
is for the one year period ended December 31, 1997.
** As of the fiscal year ended February 28, 1998, the Pacific Horizon Funds,
Inc. had accrued on the part of all of its Directors an aggregate of
$284,393.27 in retirement benefits.
TRUST OFFICERS. The table below describes the officers of the Trust and their
principal occupations during the past five years:
<TABLE>
<CAPTION>
NAME AND AGE POSITION WITH TRUST PRINCIPAL OCCUPATIONS
- ------------ ------------------- ---------------------
<S> <C> <C>
Robert E. Greeley (66) President (see nominee table above)
Stephen M. Wynne (41) Vice President Executive Vice President
and Chief Accounting Officer (since
1993) and Senior Vice President
and Chief Accounting Officer (from
1991 to 1993) PFPC, Inc.; Executive Vice
President, PFPC International (since 1995);
Vice President and Chief Accounting
Officer, PNC Institutional Management Corp.
(since 1987).
Cathy G. O'Kelly (44) Secretary Partner in the Law Firm of Vedder, Price, Kaufman
& Kammholz.
Jay F. Nusblatt (36) Treasurer Vice President and Director of Fund Accounting and
Administration, PFPC Inc. (since 1993); formerly
Assistant Vice President, Fund/Plan Services, Inc.
(from 1989 to 1993).
Gary M. Gardner (46) Assistant Secretary Chief Counsel-- Mutual Funds, PNC Bank (since
1994); Associate General Counsel, The Boston
Company, Inc. (from 1992 to 1994); General
Counsel, SunAmerica Asset Management Inc. (from
1986 to 1992).
J. Robert Dugan (32) Assistant Secretary Counsel-- Mutual Funds, PNC Bank (since 1993);
Associate, Drinker Biddle and Reath (from 1990 to
1993).
</TABLE>
The officers of the Trust are elected by the Board of the Trust on an annual
basis to serve until their successors are elected and qualified.
Shareholders vote. On May 6, 1998 none of the Trustees and nominees owned
beneficially any shares of any Fund.
The candidates receiving the affirmative vote of a plurality of the votes
cast at the Meeting, if a quorum is present, shall be elected. Shares of all
of the Funds shall vote together as a single class for the Trustees.
5
<PAGE> 9
THE BOARD OF TRUSTEES RECOMMENDS ELECTION OF EACH NOMINEE FOR TRUSTEE LISTED
ABOVE.
PROPOSALS 2, 3 AND 4: APPROVAL OF THE NEW MANAGEMENT AGREEMENT (ALL FUNDS)
AND NEW SUB-ADVISORY AGREEMENTS (MANAGED BOND FUND AND INTERNATIONAL FUND
ONLY)
Introduction. At the Meeting, shareholders of each Fund will be asked to vote on
the approval of a Management Agreement between Bank of America and the Trust
(the "New Management Agreement"), which is summarized below. A copy of the form
of the New Management Agreement is attached to this Proxy Statement as Exhibit
A, and the description of the New Management Agreement which follows is
qualified in its entirety by reference to Exhibit A.
In addition, at the Meeting the shareholders of the Managed Bond Fund and
International Fund will be asked to vote separately on a Sub-Advisory Agreement
dated [April 29, 1998] between Bank of America and Scudder Kemper (Managed Bond
Fund) and Wellington Management (International Fund), respectively (each a "New
Sub-Advisory Agreement", collectively the "New Sub-Advisory Agreements"). A copy
of the form of the Sub-Advisory Agreements are attached as Exhibit B and C,
respectively, and the description of the New Sub-Advisory Agreements which
follows are qualified in their entirety by reference to Exhibits B and C.
On June 8, 1997, BankAmerica, the parent of Bank of America, entered into an
Agreement and Plan of Merger with Robertson, Stephens & Company Group, L.L.C.
and Robertson Stephens & Company, Inc., pursuant to which each of those entities
were merged into a wholly-owned subsidiary of BankAmerica. Upon consummation of
those mergers on October 1, 1997, BankAmerica became the owner of the entire
beneficial interest in Robertson, Stephens & Company Investment Management,
L.P., a California limited partnership ("RSIM").
As of March 1, 1998, BankAmerica consolidated Bank of America's investment
advisory division with RSIM. Bank of America informed the Trust that virtually
all of the investment advisory, administrative, support and supervisory
personnel at Bank of America who are responsible for providing services to the
Trust became authorized to act on behalf of RSIM. No change in the investment
advisory personnel or the research and support personnel servicing the Trust
was intended as a direct result of the consolidation. As a part of the
consolidation, on February 3, 1998, the Board of Trustees approved the
assumption by RSIM of the Current Management Agreement.
As mentioned above, on April 13, 1998, BankAmerica and NationsBank Corp.
announced a definitive agreement to merge and form a new holding company to be
named BankAmerica Corporation. The Merger is anticipated to close by the end of
1998, however, it is subject to a number of contingencies, including shareholder
and regulatory approvals. Following the announcement of the Merger, BankAmerica
determined to restructure its investment advisory business. On April 29, 1998,
the Board approved the reassumption by Bank of America of the management
agreement with respect to each Fund of the Trust. RSIM and Bank of America
informed the Trust that no change in the investment advisory personnel or the
research and support personnel servicing the Trust would occur as a result of
this restructuring.
The Merger would represent a change in ownership of the parent corporation of
the Fund's investment adviser, Bank of America and, as such, may have the effect
under the 1940 Act of terminating the Current Management Agreement and the
Current Sub-Advisory Agreements on the date of the consummation of the Merger.
NationsBank is a North Carolina-based, bank holding company subject to the Bank
Holding Company Act of 1956, as amended, and the rules and regulations
promulgated thereunder (the "BHCA"). Through its full-service banking
subsidiaries, NationsBank provides a wide range of commercial and retail banking
services and trust services in Maryland, Virginia, North Carolina, South
Carolina, Georgia, Florida, Kentucky, Tennessee, Illinois, Missouri, Kansas,
Oklahoma, Texas and New Mexico. The principal executive offices of NationsBank
are located at One NationsBank Plaza, Charlotte, North Carolina 28255.
6
<PAGE> 10
The Merger will create a company with approximately $570 billion in assets.
$45 billion in shareholders' equity and a market capitalization of
approximately $133 billion which operates in 22 states and 38 other countries.
As required by the 1940 Act, the Current Management Agreement and Current
Sub-Advisory Agreements provide for their automatic termination upon
"assignment." In addition, the Sub-Advisory Agreements provide for their
termination upon the termination of the Management Agreement. Consummation of
the Merger may be deemed to be an assignment (as defined in the 1940 Act) of the
Current Management Agreement and Current Sub-Advisory Agreements resulting in
the termination of those agreements in accordance with their terms. In
anticipation of the consummation of the Merger, and to provide continuity in
investment advisory services, the Board, including a majority of the trustees
who are not "interested persons" (as defined in the 1940 Act) at a meeting held
on April 29, 1998, approved and directed that there be submitted to shareholders
for approval the New Management Agreement and the New Sub-Advisory Agreements.
Section 15(f) of the 1940 Act provides that when a change in the control of an
investment adviser occurs, the investment adviser or any of its affiliated
persons may receive any amount or benefit in connection therewith as long as two
conditions are satisfied. Bank of America has assured the Board that both
conditions of Section 15(f) will be satisfied. First, no "unfair burden" may be
imposed on the investment company as a result of the transaction relating to the
change of control, or any express or implied terms, conditions or understandings
applicable thereto. The term "unfair burden," as defined in the 1940 Act,
includes any arrangement during the two-year period after the change in control
whereby the investment adviser (or predecessor or successor adviser), or any
interested person of any such adviser, receives or is entitled to receive any
compensation, directly or indirectly, from the investment company or its
security holders (other than fees for bona fide investment advisory or other
services) or from any person in connection with the purchase or sale of
securities or other property to, from, or on behalf of the investment company
(other than fees for bona fide principal underwriting services). The Trust is
not aware of any such compensation arrangements insofar as the Fund is
concerned. Bank of America represented to the Board that it was not aware of
any express or implied term, condition, arrangement or understanding that would
impose an "unfair burden" as a result of the Merger.
The second condition is that, during the three-year period immediately following
consummation of the transaction, at least 75% of the investment company's board
of trustees must not be "interested persons" of the investment adviser within
the meaning of the 1940 Act. None of the Trust's trustees, nor the nominees
for trustee, are interested persons of the Bank of America as constituted
before or after the Merger. The Trust expects to comply with Section 15(f).
In considering whether to approve, and recommend that shareholders approve, the
approval of the New Management Agreement and New Sub-Advisory Agreements in the
event of the consummation of the Merger, the Board considered that the New
Management Agreement and New Subadvisory Agreements will be continued on the
terms and conditions identical to those in effect immediately prior to the
consummation of the Merger. In addition, the Board obtained assurances from
BankAmerica that it is firmly committed to Bank of America and its asset
management line of business and to maintaining its relationship with
shareholders of the Funds. The Board also considered a number of other factors
including the experience and financial resources of the combined entity after
the consummation of the Merger and that the relationships with Scudder Kemper
and Wellington Management would be unchanged.
If the Merger is not completed but the New Management Agreement (or New
Sub-Advisory Agreements with respect to the Managed Bond Fund and International
Fund) is approved by shareholders, Bank of America will still operate under the
New Management Agreement and Scudder Kemper and Wellington Management will
operate under the New Sub-Advisory Agreements. In the event the New Management
Agreement (or New Sub-Advisory Agreements with respect to the Managed Bond Fund
and International Fund) is not approved by shareholders, the Board will in the
event of the consummation of the Merger, take such action as it deems is in the
best interests of shareholders.
7
<PAGE> 11
Proposal 2 requires the affirmative vote of a "majority of the outstanding
voting securities" of each Fund. Proposals 3 and 4 require the affirmative vote
of a majority of the outstanding voting securities of the Managed Bond Fund and
International Fund, respectively. The term "majority of the outstanding voting
securities," as defined in the 1940 Act, and as used in this proxy statement,
means: the lesser of (1) 67% of the voting securities of each Fund present at
the Meeting if more than 50% of the outstanding shares of such Fund are present
in person or by proxy, or (2) more than 50% of the outstanding shares of such
Fund. If the shareholders of any Fund were not to approve any of the new
advisory agreements, then the Trustees would take such further action with
respect to that Fund as they may deem to be in the best interest of the Fund.
DESCRIPTION OF THE CURRENT MANAGEMENT AGREEMENT (ALL FUNDS). Bank of America
currently acts as manager for the Funds under the Current Management Agreement.
Pursuant to the Current Management Agreement, Bank of America provides a
continuous investment program for the Funds, including research and management
of the Funds' investments and is responsible for, places orders for, and makes
decisions with respect to, all purchases and sales of the Funds' securities.
With respect to the Managed Bond Fund and the International Fund, Bank of
America oversees the performance of those Fund's sub-advisers, Scudder Kemper
and Wellington Management, respectively. In providing management services to the
Trust, Bank of America may, pursuant to the Current Management Agreement, use
officers, and utilize the facilities, of wholly owned subsidiaries and other
affiliates of Bank of America or its parent corporation in providing management
services to the Trust.
In addition, under the Current Management Agreement, Bank of America provides
facilities, equipment, statistical and research data, clerical, accounting and
bookkeeping services, internal auditing and legal services, and provides all
management services required for the operation of the business and affairs of
the Fund or oversees the performance of various entities that Bank of America
has contracted to perform such services pursuant to the Current Management
Agreement. Specifically, the Manager of the Funds, pursuant to the authority
granted in the Current Management Agreement entered into a Sub-Administration
and Accounting Services Agreement dated February 27, 1997 (the
"Sub-Administration and Accounting Services Agreement") between the Trust, Bank
of America and PFPC, Inc. pursuant to which PFPC, Inc. currently provides
certain administrative and accounting services to the Funds.
In return for the services provided by Bank of America under the Current
Management Agreement, Bank of America is entitled to receive fees from the Funds
equal to the following percentages of the average net assets of each Fund on an
annual basis: Money Market Fund, 0.22%; Managed Bond Fund, 0.37%; Capital Income
Fund, 0.48%; Blue Chip Fund, 0.53%; Mid-Cap Equity Fund, 0.53%; Aggressive
Growth Fund, 0.61%; and International Fund, 0.66%. The monthly fees charged by
PFPC, Inc. under the Sub-Administration and Accounting Services Agreement are
paid by Bank of America.
The Current Management Agreement provides that, if in any fiscal year the
aggregate operating expenses of any Fund (other than interest, taxes, brokerage
commissions and extraordinary expenses) exceed the following expense
limitations, each Fund may deduct from the fees to be paid pursuant to the
Current Management Agreement, or the Manager shall bear such excess, to the
extent of its management fees with respect to such Fund for such year less 0.02%
of the average net assets of the Fund for such year: Money Market Fund, 0.60%;
Managed Bond Fund, 0.75%; Capital Income Fund, 0.89%; Blue Chip Fund, 0.94%;
Mid-Cap Equity Fund, 0.94%; Aggressive Growth Fund, 1.03%; and International
Fund, 1.24%. Such deduction or payment, if any, will be estimated and accrued
daily and paid on a monthly basis.
8
<PAGE> 12
For the fiscal period from March 1, 1997 (commencement of operations) through
December 31, 1997, the Trust paid Bank of America and Bank of America waived the
following amounts:
<TABLE>
<CAPTION>
TOTAL MANAGEMENT TOTAL MANAGEMENT
FUND FEES FEES WAIVED*
- ---- ---------------- ----------------
<S> <C> <C>
Money Market Fund $9,717.82 $9,717.82
Managed Bond Fund $9,212.45 $8,714.33
Capital Income Fund $38,337.46 $31,764.82
Blue Chip Fund $45,677.52 $35,308.77
Mid-Cap Equity Fund $31,979.32 $26,619.23
Aggressive Growth Fund $34,343.06 $27,459.42
International Fund $36,581.58 $35,706.09
</TABLE>
- ---------------------------
*Bank of America has undertaken not to seek a change in the terms of the
reimbursement provisions of the Management Agreement through April 2, 1999.
The Current Management Agreement may be terminated at any time without cause
upon 60 days' written notice, without penalty, by a majority vote of the Board
or by a vote of a majority of the outstanding voting securities of a Fund, by
Bank of America, and automatically terminates in the event of its assignment as
defined in the Investment Company Act of 1940.
The Current Management Agreement provides that Bank of America will not be
liable for any error of judgment or mistake of law or for any loss suffered in
connection with the performance of the services provided pursuant to the
investment advisory agreements, except a loss resulting from a breach of
fiduciary duty with respect to the receipt of compensation for services or a
loss resulting from willful misfeasance, bad faith or negligence in the
performance of its duties or from reckless disregard by it of its duties and
obligations thereunder.
Bank of America has acted as the manager for the Funds since their inception.
RSIM acted as the manager for the Funds from March 1, 1998 to April 29, 1998, at
which time the management function was reassumed by Bank of America. The Current
Management Agreement was last approved by the Board on October 28, 1997 and by
the initial shareholder of each of the Funds on February 27, 1997.
THE NEW MANAGEMENT AGREEMENT. The New Management Agreement will be dated as of
the date of the consummation of the Merger, which is expected by the end of
1998. The New Management Agreement will be in effect until February 27, 1999,
and may continue thereafter for year to year only if specifically approved at
least annually by the vote of a "majority of the outstanding voting members" of
the Funds or by the Board and, in either event, the vote of a majority of the
non-interested Trustees, cast in person at a meeting called for such purpose.
THE DIFFERENCES BETWEEN THE CURRENT AND NEW MANAGEMENT AGREEMENTS. The New
Management Agreement is the same as the Current Management Agreement in all
material respects. The only change that has been made is to modify the effective
date.
9
<PAGE> 13
DESCRIPTION OF THE CURRENT SUB-ADVISORY AGREEMENTS (MANAGED BOND FUND AND
INTERNATIONAL FUND ONLY). The Current Sub-Advisory Agreements between the Trust
and Scudder Kemper and Wellington Management are substantially the same except
for the effective date. What follows is a general description of the Current
Sub-Advisory Agreements.
Under the Current Sub-Advisory Agreements, the Sub-Adviser provides the Fund
with a continuous investment program. The Current Sub-Advisory Agreements
provide that the Sub-Adviser, subject to the control of the Manager and the
Board, provides research and management with respect to all securities,
investments, cash and cash equivalents in the portfolio of the Fund. The
Sub-Adviser also determines, from time to time, what securities and other
investments will be purchased, retained or sold by the Fund in accordance with
the investment criteria and policies of the Fund.
In return for the services provided by the Sub-Adviser under each respective
Current Sub-Advisory Agreement, the Current Sub-Advisory Agreements
specifically provide that the Sub-Adviser's fees and the Sub-Adviser's sole
recourse for payment of such fees shall be to the Manager. For their services,
the Sub-Advisers are entitled to receive fees from Bank of America equal to the
following annual percentages of the Funds' average daily net assets: Managed
Bond Fund -- Scudder Kemper will receive .20% of the first $25 million, .15% of
the next $25 million, and .10% of average daily net assets in excess of $50
million; and International Fund -- Wellington Management will receive .40% of
the first $50 million, .30% of the next $100 million, .25% of the next $350
million, and .20% of the average daily net assets in excess of $500 million.
The Current Sub-Advisory Agreements provide that the Sub-Adviser agrees to waive
or reduce any sub-advisory fees in the event that the Manager reduces or waives
all or a part of the management fee to the Manager under the Current Management
Agreement as described above under the "Description of the Current Management
Agreement."
The Current Sub-Advisory Agreements may be terminated on 60 days' written
notice, without penalty, by a majority vote of the Board, by the Manager or by
the Sub-Adviser, and automatically terminates in the event of its assignment or
in the event that the Current Management Agreement is terminated.
The Current Sub-Advisory Agreements provide that the Sub-Adviser shall not be
liable for any error of judgment or mistake of law or for any loss suffered by
the Fund in connection with the performance of the Sub-Advisory Agreement,
except that the Sub-Adviser is liable to the Fund for any loss resulting from a
breach of fiduciary duty by the Sub-Adviser with respect to the receipt of
compensation for services or any loss resulting from willful misfeasance, bad
faith or negligence on the part of the Sub-Adviser in the performance of its
duties or from reckless disregard by it of its obligations and duties under the
Current Sub-Advisory Agreements.
Scudder Kemper and Wellington Management have acted as the Sub-Adviser for the
Managed Bond Fund and International Fund since their inception. The Current
Sub-Advisory Agreement for the International Fund is dated February 27, 1997,
and was last approved by the Board on December 12, 1996 and by the initial
shareholder of the Fund on February 27, 1997 and continues until February 27,
1999. The Current Sub-Advisory Agreement with Scudder Kemper for the Managed
Bond Fund is dated December 31, 1997 and was last approved by the Board on July
21, 1997 and by shareholders on November 24, 1997 and continues until February
27, 1999.
THE NEW SUB-ADVISORY AGREEMENTS. The New Sub-Advisory Agreements will be dated
as of the date of the consummation of the Merger, which is expected at the end
of 1998. The New Sub-Advisory Agreement will be in effect until February 27,
1999, and may continue thereafter from year to year only if specifically
approved at least annually by the vote of a "majority of the outstanding voting
securities" of the Fund, or by the Board and, in either event, the vote of a
majority of the Non-interested Trustees, cast in person at a meeting called for
such purpose.
DIFFERENCES BETWEEN THE CURRENT AND NEW SUB-ADVISORY AGREEMENTS. The New
Sub-Advisory Agreements are the same as the Current Sub-Advisory Agreements in
all material respects. The only changes that have been made are to modify the
effective dates.
10
<PAGE> 14
MANAGER. BANK OF AMERICA. Bank of America, which has principal offices located
at 555 California Street, San Francisco, California 94104, serves as investment
adviser to the Funds pursuant to the Existing Agreement. Bank of America is a
wholly-owned subsidiary of BankAmerica, a registered bank holding company.
Formed in 1904, Bank of America is a national banking association that provides
commercial banking and trust business through an extensive system of branches
across the western United States. Bank of America's principal banking affiliates
operate branches in ten U.S. states as well as corporate banking, business
credit and thrift offices in major U.S. cities. In addition, it has branches,
corporate offices and representative offices in 37 foreign countries.
The name and principal occupation of the principal executive officer and each
director of Bank of America as of April 28, 1998 were as follows: David A.
Coulter (Chief Executive Officer and President of Bank of America and
BankAmerica Corporation); Joseph F. Alibrandi (Chairman of the Board of
Whittaker Corporation); Peter Bedford (Chairman and Chief Executive Officer of
Bedford Property Investors, Inc.); Richard A. Clarke (Retired Chairman of the
Board of Pacific Electric Gas Company); Timm F. Crull (Retired Chairman of the
Board of Nestle USA, Inc.); Kathleen Feldstein (President of Economics Studies,
Inc.); Donald E. Guinn (Chairman Emeritus of Pacific Telesis Group); Frank L.
Hope, Jr. (Consulting Architect); Walter E. Massey, Ph.D. (President of
Morehouse College); John M. Richman (Of Counsel Wachtell, Lipton, Rosen & Katz);
Richard M. Rosenberg (Director and Retired Chairman of the Board of Bank of
America and BankAmerica Corporation); A. Michael Spence (Dean of the Graduate
School of Business of Stanford University) and Solomon D. Trujillo (President
and CEO of U.S. West Communications Group). It is possible that the persons
listed above may change as a result of the Merger.
Exhibit E sets forth the fees and other information relating to other investment
companies with investment objectives similar to those of the Funds and advised
by Bank of America.
No officer or Trustee of the Trust is an officer, employee, or general partner
of Bank of America.
AUTHORITY TO ACT AS INVESTMENT ADVISER. Banking laws and regulations currently
prohibit a bank holding company registered under the Federal Bank Holding
Company Act of 1956 or any affiliate thereof from sponsoring, organizing or
controlling a registered open-end investment company continuously engaged in the
issuance of its shares, and prohibit banks generally from underwriting, selling
or distributing securities, but in general do not prohibit such a holding
company or affiliate banks generally from acting as investment adviser, transfer
agent or custodian to such an investment company or from purchasing shares of
such a company as agent for and upon the order of customers. Bank of America is
subject to such laws and regulations, but believes that it may perform the
services contemplated by the New Management Agreement without violating the
Glass-Steagall Act or other applicable banking laws or regulations. Future
changes in legal requirements relating to the permissible activities of banks
and their affiliates, as well as future interpretations of current requirements,
could prevent Bank of America from continuing to perform such services for the
Fund. If it was prohibited from acting as investment adviser to the Fund, it is
expected that the Board would recommend that shareholders approve a new
investment advisory agreement with another qualified firm.
SUB-ADVISERS. SCUDDER KEMPER. Scudder Kemper is one of the most experienced
investment counsel firms in the United States. It was established in 1919 as a
partnership and was restructured as a Delaware corporation in 1985. The
principal source of Scudder Kemper's income is professional fees received from
providing continuing investment advice. Scudder Kemper provides investment
counsel for other investment companies as well as for many individuals and
institutions, including insurance companies, endowments, industrial corporations
and financial and banking organizations.
Scudder Kemper is a Delaware corporation. Rolf Hueppi* is the Chairman
of the Board and Director, Edmond D. Villani# is the President, Chief Executive
Officer and Director, Stephen R. Beckwith# is the Treasurer and Chief
Financial Officer, Kathryn L. Quirk# is the General Counsel, Chief Compliance
Officer and Secretary, Lynn S. Birdsong# is a Corporate Vice President and
Director, Cornelia M. Small# is a Corporate Vice President and Director,
Laurence Cheng* is a Director, Steven Gluckstern* is a Director and Marcus
Rohrbasser* is a Director of Scudder Kemper. The principal occupation
of each of Edmond D. Villani, Stephen R. Beckwith, Kathryn L. Quirk, and
Cornelia M. Small is serving as a Managing Director of Scudder Kemper;
the principal occupation of Rolf Hueppi, Laurence Cheng, Steven Gluckstern and
Marcus Rohrbasser is serving as an officer of Zurich Insurance Company
("Zurich").
The outstanding voting securities of Scudder Kemper are held of record
36.63% by Zurich Holding Company of America ("ZHCA"), a subsidiary of Zurich;
32.85% by ZKI Holding Corp. ("ZKIH") a subsidiary of Zurich; 20.86% by Stephen
R. Beckwith, Lynn S. Birdsong, Kathryn L. Quirk, Cornelia M. Small and Edmond
D. Villani in their capacity as representatives (the "Management
Representatives") of Scudder Kemper's management holders and retiree holders
pursuant to a Second Amended and Restated Security Holders Agreement among
Scudder Kemper, Zurich, ZHCA, ZKIH, the Management Representatives, the
management holders, the retiree holders and Edmond D. Villani, as trustee of
Scudder Kemper Investments, Inc. Executive Defined Contribution Plan Trust
(the "Trust"); and 9.66% by the Trust. There are no outstanding non-voting
securities of Scudder Kemper.
- -----------------------
* Mythenquai 2, Zurich, Switzerland
- -------------------------------------
# 345 Park Avenue, New York, New York
- ---------------------------------------
11
<PAGE> 15
Directors, officers and employees of Scudder Kemper from time to time may enter
into transactions with various banks, including the Fund's custodian bank. It is
Scudder Kemper's opinion that the terms and conditions of those transactions
will not be influenced by existing or potential custodial or other Fund
relationships.
For the fiscal period from March 1, 1997 (commencement of operations) through
December 31, 1997, Bank of America paid Scudder Kemper $ in sub-advisory fees
and Scudder Kemper waived $_________in sub-advisory fees.
- ---------------
Exhibit F sets forth the fees and other information relating to other investment
companies with investment objectives similar to those of the Fund and advised by
Scudder Kemper.
WELLINGTON MANAGEMENT. Wellington Management is a Massachusetts limited
liability partnership, with headquarters at 75 State Street, Boston,
Massachusetts 02109. Wellington Management is a professional investment
counseling firm which provides investment services to investment companies,
employee benefit plans, endowments, foundations and other institutions and
individuals. Wellington Management's predecessor organizations have provided
investment advisory services for over 60 years.
Wellington Management is managed by its active partners. The managing partners
of Wellington Management as of , 1998 were Robert W. Doran, Duncan
M. McFarland and John R. Ryan. The following individuals were general partners
and Senior Vice Presidents of Wellington Management as of , 1998,
and may be reached at the principal offices of the firm: Keneth L. Abrams,
Nicholas C. Adams, Rand L. Alexander, Deborah L. Allison, Nancy T. August, Hames
H. Averill, Marie-Claude Bernal, William N. Booth, Paul Braverman, William D.
Dilanni, Pamela Dippel, Robert W. Doran, Charles T. Freeman, Laurie A. Gabriel,
Frank J. Gilday, John H. Gooch, Nicholas P. Greville, William C.S. Hicks, Paul
D. Kaplan, John C. Keogh, Christine S. Manfredi, Patrick J. McCloskey, Earl E.
McEvoy, Dunan M. McFarland, Paul M. Mecray, III, Matthew E. Megargel, James N.
Mordy, Diane C. Nordin, Edward P. Owens, Saul J. Pannell, Thomas L. Pappas,
David M. Parker, Jonathan M. Payson, Stephen M. Pazuk, Robert D. Rands, Eugene
E. Record, Jr., John R. Ryan, Joseph H. Schwartz, David W. Scudder, Binkley C.
Shorts, Trond Skramstad, Catherine A. Smith, Stephen A. Soderberg, Ralph E.
Stuart, Jr., Perry M. Traquina, Gene R. Tremblay, Mary Ann Tynan, Ernst H. von
Metzsch, James L. Walters, Kim Williams and Frank V. Wisneski. The above persons
may be reached c/o Wellington Management, 75 State Street,
Boston, Massachusetts 02109.
For the fiscal period from March 1, 1997 (commencement of operations) through
December 31, 1997, Bank of America paid Wellington Management $ in sub-advisory
fees and Wellington Management waived $_________ in sub-advisory fees.
- ---------------
12
<PAGE> 16
Exhibit E sets forth the fees and other information relating to other
investment companies with investment objectives similar to those of the Funds
and advised by Wellington Management.
No officer or Trustee of the Trust is an officer, employee, or general
partner of Wellington Management.
THE BOARD OF THE TRUST RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE APPROVAL OF
THE NEW MANAGEMENT AGREEMENT AND NEW SUB-ADVISORY AGREEMENTS.
PROPOSAL 5: APPROVAL OF INDEPENDENT AUDITORS
A majority of the members of the Board who are not "interested" persons of
the Trust has recommended for approval the selection of Price Waterhouse LLP,
independent auditors, to audit the books and records of the Funds for the
current fiscal year. In connection with the consolidation of the boards for
the Bank of America Complex, the Board has determined that it would be in the
Funds' best interests to have the same independent auditors as the other
funds in the Bank of America Complex. Price Waterhouse LLP currently serves
as independent auditors for The Pacific Horizon Funds, Inc., the Master
Investment Trust, Series I, and the World Horizon Funds. The Time Horizon
Funds' shareholders are also being asked to approve the selection of Price
Waterhouse as independent auditors. The selection of Price Waterhouse LLP as
independent auditors of the Trust is being submitted to the shareholders for
approval. The Board has been pleased with the services of the Funds' current
independent auditors, KPMG Peat Marwick, LLP, but believes that the use of a
single accounting firm for the entire Bank of America Complex would benefit
the Funds by providing economies of scale as well as allowing the Board to
exercise better oversight of the Funds. Accordingly, the current independent
auditors have tendered their resignation effective upon the vote of
shareholders approving Price Waterhouse LLP as auditors. The current
independent auditor's report on the Trust's financial statements (1) did not
contain an adverse opinion or a disclaimer of opinion and (2) was not
qualified or modified as to uncertainty, audit scope, or accounting
principles. In addition, there have been no disagreements with the current
independent auditors on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure, which
disagreements, if not resolved to the satisfaction of the current independent
auditors, would have caused it to make reference to the subject matter of the
disagreements in connection with its report. A representative of Price
Waterhouse LLP is expected to be present at the Meeting and will be available
to respond to any appropriate questions raised at the Meeting and may make a
statement.
THE BOARD OF THE TRUST RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE APPROVAL OF
THE SELECTION OF PRICE WATERHOUSE LLP AS INDEPENDENT AUDITORS.
GENERAL
The cost of preparing, printing and mailing the enclosed voting
instructions/proxies, accompanying notice and proxy statement and all other
costs associated with the solicitation of voting instructions/proxies
including any additional solicitation made by letter, telephone or telegraph,
will be allocated between the Trust and Bank of America, with Bank of America
paying that portion of the costs attributable to the consideration of the new
investment advisory agreements resulting from the Merger. In addition to
solicitation by mail, certain officers and representatives of the Trust,
officers, employees or agents of Bank of America and Pacific Life and certain
financial service firms and their representatives who will receive no extra
compensation for their services may solicit and obtain voting instructions by
proxies by telephone, telegraph, facsimile, Internet or personally.
Should contract owners require additional information regarding the voting
instruction(s)/proxy(s) or replacement voting instruction(s)/proxy card(s),
they may contact Pacific Life toll-free at 1-800-772-5558. Any voting
instruction/proxy given by a contract owner is revocable as described below.
THE FUNDS PROVIDE PERIODIC REPORTS TO ALL OF ITS SHAREHOLDERS WHICH HIGHLIGHT
RELEVANT INFORMATION INCLUDING INVESTMENT RESULTS. YOU MAY RECEIVE AN
ADDITIONAL COPY OF THE MOST RECENT ANNUAL AND SEMI-ANNUAL REPORT
13
<PAGE> 17
FOR EACH FUND WITHOUT CHARGE BY CALLING 1-800-722-5558 OR BY WRITING PACIFIC
INNOVATIONS TRUST, C/O PACIFIC LIFE, P.O. BOX 7187, PASADENA, CALIFORNIA
91109-7187.
VOTING INFORMATION
Voting instructions/proxies are being solicited by the Board for use at the
Meeting. The shares of the Funds are offered as an investment medium for
variable annuity contracts offered by Pacific Life. For contract owners having
account values invested in one or more of the Funds, Pacific Life is the owner
of the shares, but is soliciting voting instructions from contract owners as to
how such shares should be voted. All properly executed voting
instructions/proxies received in time for the Meeting will be voted by Pacific
Life as specified in the voting instructions/proxies or, if no specification is
made, in favor of the election of nominees for Trustees referred to in the proxy
statement, in favor of approval of the New Management Agreement and the New
Sub-Advisory Agreements and for the approval of Price Waterhouse, LLP as
independent auditors for the current fiscal year. Consistent with
interpretations of voting requirements by the staff of the Securities and
Exchange Commission, Pacific Life will vote shares held by its general account,
the separate account and any of its subsidiaries on the proposals to be
considered at the Meeting in proportion to the timely voting instructions it
receives from contract owners. Voting instructions/proxies may be revoked at any
time by (a) submitting a subsequently dated voting instruction/proxy or by (b)
revoking in person at the time of the Meeting. Only a shareholder may execute or
revoke a proxy. Therefore, a contract owner who has given voting instructions
may revoke them only through Pacific Life.
The presence at the Meeting, in person or by proxy, of the holders of one-third
of the shares entitled to be cast shall be necessary and sufficient to
constitute a quorum for the transaction of business. In the event that the
necessary quorum to transact business or the vote required to approve or reject
the proposal is not obtained at the Meeting, the persons named as proxies may
propose one or more adjournments of the Meeting in accordance with applicable
law, to permit further solicitation of proxies. Any such adjournment will
require the affirmative vote of a majority of the Funds' shares present in
person or by proxy at the Meeting. The persons named as proxies will vote in
favor of such adjournment if they determine that such adjournment and additional
solicitation are reasonable and in the interest of the Funds' shareholders.
The Board of the Trust has fixed the close of business on May 6, 1998 as the
record date for determination of shareholders entitled to notice of and to vote
at the Meeting. As of May 6, 1998, the issued and outstanding shares of each
Fund were as follows: Money Market Fund -- __________; Managed Bond Fund --
__________; Capital Income Fund -- __________; Blue Chip Fund -- __________;
Mid-Cap Equity Fund -- __________; Aggressive Growth Fund -- __________; and
International Fund -- __________.
No contract owner is entitled to give voting instructions with respect to 5% or
more of the outstanding shares of each Fund. The following table sets forth the
holding of the shares of the Fund as of May 6, 1998, of each person known to own
5 percent or more of each Fund's outstanding voting securities:
<TABLE>
<CAPTION>
SHARES % OF SHARES
FUND NAME OWNED OUTSTANDING
---- ---- ----- -----------
<S> <C> <C> <C>
Money Market Fund Pacific Asset Management LLC ("PAM")
(a subsidiary of Pacific Life)
Pacific Life
Managed Bond Fund PAM
Pacific Life
</TABLE>
14
<PAGE> 18
<TABLE>
<CAPTION>
SHARES % OF SHARES
FUND NAME OWNED OUTSTANDING
---- ---- ----- -----------
<S> <C> <C> <C>
Capital Income Fund PAM
Pacific Life
Blue Chip Fund PAM
Pacific Life
Mid-Cap Equity Fund PAM
Pacific Life
Aggressive Growth Fund PAM
Pacific Life
International Fund PAM
Pacific Life
</TABLE>
Pacific Life is located at 700 Newport Center Drive, Newport Beach, California
92660. Bank of America, the Fund's adviser, is located at 555 California Street,
San Francisco, California 94104. Scudder Kemper, the Managed Bond Fund's
sub-adviser, is located at 345 Park Avenue, New York, New York 10154. Wellington
Management, the International Fund's sub-adviser, is located at 75 State Street,
Boston, Massachusetts 02109. The Fund's distributor, Provident Distributors,
Inc., is located at Four Falls Corporate Center, 6th Floor, West Conshohocken,
Pennsylvania 19428. The Fund's sub-administrator, PFPC, Inc. is located at 400
Bellevue Parkway, Wilmington, Delaware 19809.
PROPOSALS OF SHAREHOLDERS
As a Delaware business trust, the Trust is not required to hold annual
shareholder meetings, but will hold special meetings as required or deemed
desirable. Since the Trust does not hold regular meetings of shareholders, the
anticipated date of the next special shareholders meeting cannot be provided.
Any shareholder proposal that may properly be included in the proxy solicitation
for a special shareholder meeting must be received by the Trust no later than
four months prior to the date when the proxy statements are mailed to
shareholders.
OTHER MATTERS TO COME BEFORE THE MEETING
The Board is not aware of any matters that will be presented for action at the
Meeting other than the matters set forth herein. Should any other matters
requiring a vote of shareholders arise, the voting instruction/proxy in the
accompanying form will confer upon the person or persons entitled to vote the
shares represented by such proxy the discretionary authority to vote the shares
as to any such other matters in accordance with their best judgment of the best
interests of shareholders.
PLEASE COMPLETE, SIGN AND RETURN THE ENCLOSED VOTING INSTRUCTIONS/PROXY CARDS
PROMPTLY. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
By order of the Board of Trustees,
Cathy G. O'Kelly
Secretary
15
<PAGE> 19
EXHIBIT A
FORM OF
NEW MANAGEMENT AGREEMENT
This Management Agreement is made as of _____________, 1998 between
PACIFIC INNOVATIONS TRUST, a Delaware Business Trust (herein called the
"Company"), and Bank of America National Trust Savings Association, (herein
called the "Manager").
WHEREAS, the Company is registered as an open-end management investment
company under the Investment Company Act of 1940 (the "1940 Act"); and
WHEREAS, the Company wishes to retain the Manager under this Agreement
to render investment advisory and management services to the portfolios of the
Company known as the Money Market Fund, Managed Bond Fund, Capital Income Fund,
Blue Chip Fund, Mid-Cap Equity Fund, Aggressive Growth Fund, International Fund
and Global Value Fund (the "Initial Funds", together with any other Company
portfolios which may be established later and served by the Manager hereunder,
being herein referred to collectively as the "Funds" and individually as a
"Fund"); and
WHEREAS, pursuant to a Distribution Agreement dated September 15, 1997
(the "Distribution Agreement") between the Company and Provident Distributors,
Inc. (the "Distributor"), the Company has retained the Distributor to provide
for the sale and distribution of shares of beneficial interest of each Fund
(herein collectively called "Shares"); and
WHEREAS, the Company desires to retain the Manager to provide all
investment management and administrative services for the Funds required by
applicable law, and the Manager is willing to render such services and is
registered under the Investment Advisers Act of 1940;
NOW, THEREFORE, in consideration of the premises and mutual covenants
set forth herein, the parties hereto agree as follows:
1. Appointment of Manager.
(A) The Company hereby appoints the Manager as manager of each
Fund on the terms and for the period set forth in this Agreement and the Manager
hereby accepts such appointment and agrees to perform the services and duties
set forth herein on the terms herein provided. The Manager may, in its
discretion, provide such services through its own employees or the employees of
one or more affiliated companies that are qualified to provide such services to
the Company under applicable law and are under the common control of BankAmerica
Corporation, provided (i) that all persons, when providing services hereunder,
are functioning as part of an organized group of persons, (ii) that such
organized group of persons is managed at all times by authorized officers of the
Manager, and (iii) the Manager remains obligated under Section 7 of this
Agreement.
(B) In the event that the Company establishes one or more
portfolios other than the Initial Funds with respect to which it desires to
retain the Manager to render investment advisory and management services
hereunder, it shall notify the Manager in writing. If the Manager is willing to
render such services, it shall notify the Company in writing whereupon such
portfolio or portfolios shall become a Fund or Funds hereunder.
2. Administrative Services and Duties. Subject to the supervision and
control of the Company's Board of Trustees, the Manager shall provide to the
Company facilities, equipment, statistical and research data, clerical,
accounting and bookkeeping services, internal auditing and legal services, and
personnel to carry out all
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management services required for operation of the business and affairs of the
Funds other than those services to be performed by any sub-adviser appointed by
the Board of Trustees (each a "Sub-adviser" and collectively the
"Sub-advisers"), those services to be provided by the Distributor pursuant to
the Distribution Agreement, those services to be performed by PNC Bank, N.A.
(the "Custodian"), pursuant to the Company's Custody Agreement those services to
be performed by PFPC Inc. ("PFPC") pursuant to the Company's Sub-Administration
and Accounting Services Agreement, those services to be performed by Pacific
Life Insurance Company ("Pacific Life") pursuant to the Company's Support
Services Agreement, those services to be provided by Pacific Life pursuant to
the Company's Transfer Agency Agreement, and those services normally performed
by the Company's counsel and auditors.
(A) The Manager's oversight responsibilities shall include:
(1) Overseeing the performance of each Sub-adviser
under its Sub-Advisory Agreement with respect to the Funds;
(2) Overseeing the performance of the Custodian under
the Custody Agreement with respect to the Funds;
(3) Overseeing the performance of PFPC under
Sub-Administration and Accounting Services Agreement with respect to
the Funds; and
(4) Overseeing the performance of Pacific Life
pursuant to the Support Services Agreement and Transfer Agency
Agreement with respect to the Funds.
(B) The Manager's other responsibilities shall include without
limitation the following services:
(1) Providing a facility to receive purchase and
redemption orders for Shares via toll-free telephone lines;
(2) Making available information concerning each Fund
to its shareholders; distributing written communications to each Fund's
shareholders such as periodic listings of each Fund's securities,
annual and semi-annual reports, and prospectuses and supplements
thereto; and handling shareholder problems and calls relating to
administrative matters; and
(3) Providing and supervising the services of
employees whose principal responsibility and function shall be to
preserve and strengthen each Fund's relationships with its
shareholders.
(C) The Manager shall assure that persons are available to
transmit redemption requests for Shares to the Company's transfer agent as
promptly as practicable.
(D) The Manager shall assure that persons are available to
transmit orders accepted for the purchase of Shares to the transfer agent of the
Company as promptly as practicable.
(E) The Manager shall participate in the periodic updating of
the Funds' prospectuses and statements of additional information and shall
accumulate information for and, subject to approval by the Company's Treasurer
and legal counsel, coordinate the preparation, filing, printing and
dissemination of reports to the Funds' shareholders and the Securities and
Exchange Commission (the "Commission"), including but not limited to annual
reports and semi-annual reports on Form N-SAR, notices pursuant to Rule 24f-2
and proxy materials pertaining to the Funds, and any supplements to any of the
foregoing.
(F) The Manager shall calculate dividends and capital gain
distributions to be paid by each Fund in conformity with subchapter M and
Section 817(h) of the Internal Revenue Code of 1986, as amended.
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(G) The Manager shall pay all costs and expenses of
maintaining the offices of the Company, wherever located, and shall arrange for
payment by the Company of all expenses payable by the Company.
(H) The Manager, after consultation with legal counsel for the
Company, shall determine the jurisdictions in which the Shares shall be
registered or qualified for sale, if any, and, in connection therewith, shall be
responsible for the maintenance of the registration or qualification of the
Shares for sale under the securities laws of any such state. Payment of any
Share registration fees and any fees for qualifying or continuing the
qualification of the Company shall be made by the Company.
(I) The Manager shall maintain such other books and records
with respect to the Funds as may be required by law or may be required for the
proper operation of the business and affairs of the Funds, other than those
required to be maintained under any Sub-Advisory Agreements to which the Company
is a party, the Custodian Agreement, the Sub-Administration and Accounting
Services Agreement, the Support Services Agreement and the Transfer Agency
Agreement, and by the Manager under Section 3 of this Agreement. Without
limiting the foregoing, the Manager shall be responsible for the proper
maintenance of the records to be maintained by the Company, throughout the term
of this Agreement.
(J) The Manager shall prepare the Funds' federal, state and
local income tax returns.
(K) The Manager shall prepare and, subject to approval of the
Company's Treasurer, disseminate to the Company's trustees each Fund's quarterly
financial statements and schedules of investments, and shall prepare such other
reports relating to the business and affairs of the Funds (not otherwise
appropriately prepared by the Company's counsel, auditors or other Company
service providers) as the officers and trustees of the Company may from time to
time reasonably request in connection with performance of their duties.
(L) The Manager shall assist the Custodian, Transfer Agent,
counsel and auditors as required to carry out the business and operations of the
Funds.
3. Investment Services and Duties. Subject to the supervision of the
Company's Board of Trustees, the Manager shall provide a continuous investment
program for the Funds, including investment research and management with respect
to all securities and investments and cash equivalents in the Funds. The Manager
shall determine from time to time what securities and other investments will be
purchased, retained or sold by the Company with respect to each Fund. The
Manager shall provide the services under this Section 3 in accordance with the
Funds' investment objectives, policies and restrictions as stated in the Funds'
then current registration statement and resolutions of the Company's Board of
Trustees and all applicable state and federal law or rules.
(A) The Manager shall use the same skill and care in providing
services under this Section 3 as it uses in providing services to fiduciary
accounts for which it has investment responsibilities.
(B) The Manager shall place all orders for the purchase and
sale of portfolio securities for the account of the each Fund with brokers or
dealers selected by the Manager. In executing portfolio transactions and
selecting brokers or dealers, the Manager will use its best efforts to seek on
behalf of each Fund the best overall terms available. In assessing the best
overall terms available for any transaction the Manager shall consider all
factors it deems relevant, including the breadth of the market in the security,
the price of the security, the financial condition and execution capability of
the broker or dealer, and the reasonableness of the commission, if any, both for
the specific transaction and on a continuing basis. In evaluating the best
overall terms available, and in selecting the broker or dealer to execute a
particular transaction, the Manager may also consider the brokerage and research
services (as those terms are defined in Section 28(e) of the Securities Exchange
Act of 1934) provided to the Fund and/or other accounts over which the Manager
or any affiliate of the Manager exercise investment discretion. The Manager is
authorized, subject to the prior approval of the Company's Board of Trustees, to
pay to a broker or dealer who provides such brokerage and research services a
commission for executing a portfolio transaction for any Fund
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which is in excess of the amount of commission another broker or dealer would
have charged for effecting that transaction if, but only if, the Manager
determines in good faith that such commission was reasonable in relation to the
value of the brokerage and research services provided by such broker or dealer,
viewed in terms of that particular transaction or in terms of the overall
responsibilities of the Manager to that Fund and to the Company. In no instance
may portfolio securities be purchased from or sold to the Manager, any
sub-adviser, or an affiliated person of any of them acting as principal or as
broker, except as permitted by law. In executing portfolio transactions for the
Funds the Manager may, to the extent permitted by applicable laws and
regulations, but shall not be obligated to, aggregate the securities to be sold
or purchased with those of other investment portfolios and its other clients
where such aggregation is not inconsistent with the policies set forth in the
Company's registration statement. In such event, the Manager shall allocate the
securities so purchased or sold, and the expenses incurred in the transaction,
in the manner it considers to be the most equitable and consistent with its
fiduciary obligations to the Funds and such other clients.
(C) In performing the investment advisory services hereunder,
the Manager is authorized to purchase, sell or otherwise deal with securities or
other instruments for which (i) the Manager or any Sub-adviser, (ii) any
affiliate of the Manager or any Sub-adviser, (iii) an entity in which the
Manager or any Sub-adviser has a direct or indirect interest, and (iv) another
member of a syndicate or other intermediary (where an entity referred to in (i),
(ii) or (iii) above was a member of the syndicate), has acted, now acts or in
the future will act as an underwriter, syndicate member, market-maker, dealer,
broker or in any other similar capacity, whether the purchase, sale or other
dealing occurs during the life of the syndicate or after the close of the
syndicate, provided such purchase, sale or dealing is permitted under the 1940
Act and the rules thereunder. Insofar as permitted by law, any rules of or under
applicable law prohibiting or restricting in any way an agent or fiduciary from
dealing with itself or from dealing with respect to any matter in which it may
or does have a personal interest shall not apply to the Manager, to the extent
its actions are authorized under this paragraph.
(D) The Manager shall maintain books and records with respect
to the securities transactions of the Company, and furnish the Company's Board
of Trustees such periodic and special reports as the Board may request.
(E) The Manager shall maintain a policy and practice of
conducting its investment advisory operations independently of its commercial
banking operations. When the Manager makes investment recommendations for a
Fund, its investment advisory personnel shall not inquire or take into
consideration whether the issuer of securities proposed for purchase or sale for
the Fund's account are customers of its commercial department. In dealing with
commercial customers, such commercial department shall not inquire or take into
consideration whether securities of those customers are held by the Funds except
as required by law.
(F) The Manager shall review, monitor and report to the Board
of Trustees regarding the performance and investment practices, strategies, and
procedures of the Manager and any Sub-adviser appointed by the Board of
Trustees, and shall assist and consult with any Sub-adviser in connection with
the Fund's continuous investment program.
4. Compliance with Governing Instruments and Laws. In performing its
duties as Manager for the Funds, the Manager shall act in conformity with the
Company's Declaration of Trust, Bylaws, prospectuses and statements of
additional information, and the instructions and directions of the Board of
Trustees of the Company. In addition, the Manager shall conform to and comply
with the requirements of the 1940 Act, the Rules and Regulations of the
Commission, and all other applicable federal or state laws and regulations,
including, but not limited to, Subchapter M of the Internal Revenue Code of
1986, as amended (the "Code") and Section 817(h) of Subchapter L of the Code.
5. Services Not Exclusive. The Manager shall for all purposes herein be
deemed to be an independent contractor and shall, unless otherwise expressly
provided herein or authorized by the Board of Trustees from time to time, have
no authority to act for or represent the Company in any way or otherwise be
deemed its agent. The
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services furnished by the Manager hereunder are not deemed exclusive, and the
Manager shall be free to furnish similar services to others so long as its
services under this Agreement are not impaired thereby.
6. Books and Records. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Manager hereby agrees that all records which it
maintains for the Company are the property of the Company and further agrees to
surrender promptly to the Company any such records upon the Company's request.
The Manager agrees to obtain all Company records held by any subcontractor upon
the termination of such subcontractor. The Manager further agrees to preserve
for the periods prescribed by Rule 31a-2 under the 1940 Act the records required
to be maintained by Rule 3la-1 under the 1940 Act. The Company shall have the
right to inspect, audit or request copies of any and all records pertaining to
this Agreement.
7. Subcontractors. It is understood that the Manager may from time to
time employ or associate with itself such person or persons as the Manager may
believe to be particularly fitted to assist in the performance of this
Agreement; provided, however, that the compensation of such person or persons
shall be paid by the Manager. Without limiting the generality of the foregoing,
it is understood that the Manager and the Company intend to enter into an
agreement with PFPC under which PFPC will provide certain administration
services to the Company ("subadministration services"), and that the Manager
shall pay PFPC for the provision of such subadministration services. It is
understood that the Manager shall be as fully responsible to the Company for the
acts and omissions of any subcontractor as it is for its own acts and omissions.
It is also understood that the Manager and the Company intend to enter into an
agreement with PFPC under which PFPC will provide certain accounting,
bookkeeping, pricing and dividend distribution calculation services ("accounting
services") with respect to the Funds, and that the Funds shall pay PFPC for the
provision of such accounting services.
8. Expenses Assumed as Manager. Except as otherwise stated in this
Agreement, the Manager shall pay all expenses incurred by it in performing its
services and duties hereunder as Manager including the fees of any sub-adviser
and the cost of any independent pricing service used in connection with the
Funds (other than the cost of securities purchased for the Company). The Company
shall bear other expenses incurred in the operation of the Funds, including
without limitation taxes, interest, brokerage fees and commissions, if any, fees
of trustees who are not officers, directors, partners, employees or holders of 5
percent or more of the outstanding voting securities of the Manager or any of
its affiliates, Commission fees, charges of custodians, transfer and dividend
disbursing agents' fees, certain insurance premiums, outside auditing and legal
expenses, costs of maintaining trust existence, costs of preparing and printing
prospectuses or any supplements or amendments thereto necessary for the
continued effective registration of the Shares under federal or state securities
laws, costs of printing and distributing any prospectus, supplement or amendment
thereto for existing shareholders of the Funds described therein, costs of
shareholders' reports and meetings, and any extraordinary expenses.
9. Compensation. For the services provided and the expenses assumed
pursuant to this Agreement, the Company shall pay the Manager a fee, computed
daily and payable monthly, at the following annual rates of the average net
assets of each Fund: Money Market Fund - .22%; Managed Bond Fund - .37%; Capital
Income Fund - .48%; Mid-Cap Equity Fund - .53%; Blue Chip Fund - .53%;
Aggressive Growth Fund - .61%; and International Fund - .66%. Such fee as is
attributable to each Fund shall be a separate (and not joint or joint and
several) obligation of each such Fund. Notwithstanding anything to the contrary
herein, if in any fiscal year the aggregate operating expenses of any Fund,
other than interest, taxes, brokerage commissions and extraordinary expenses,
exceed the following expense limitations, the Company may deduct from the fees
to be paid pursuant to this Agreement, or the Manager shall bear such excess, to
the extent of its management fees with respect to such Fund for such year less
0.02% of the average net assets of the Fund for such year: Money Market Fund -
.60%; Managed Bond Fund - .75%; Capital Income Fund - .87%; Blue Chip Fund -
.94%; Mid-Cap Equity Fund - .94%; Aggressive Growth Fund - 1.03%; and
International Fund - 1.24%. Such deduction or payment, if any, will be estimated
and accrued daily and paid on a monthly basis.
10. Confidentiality. The Manager shall treat confidentially and as
proprietary information of the Company all records and other information
relative to the Company and prior or present shareholders or those
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persons or entities who respond to the Distributor's inquiries concerning
investment in the Company, and shall not use such records and information for
any purpose other than performance of its responsibilities and duties hereunder
or under any other agreement with the Company except after prior notification to
and approval in writing by the Company, which approval shall not be unreasonably
withheld and may not be withheld where the Manager may be exposed to civil or
criminal contempt proceedings for failure to comply, when requested to divulge
such information by duly constituted authorities, or when so requested by the
Company. Nothing contained herein, however, shall prohibit the Manager from
advertising to or soliciting the public generally with respect to other products
or services, including, but not limited to, any advertising or marketing via
radio, television, newspapers, magazines or direct mail solicitation, regardless
of whether such advertisement or solicitation may coincidentally include prior
or present Company shareholders or those persons or entities who have responded
to inquiries with respect to the Funds.
11. Limitations of Liability. Subject to the provisions of this
Agreement concerning the Manager's responsibilities for the acts and omissions
of persons employed or associated with the Manager, the Manager shall not be
liable for any error of judgment or mistake of law or for any loss suffered by
the Company or by any Fund in connection with the matters to which this
Agreement relates, except a loss resulting from a breach of fiduciary duty with
respect to the receipt of compensation for services or a loss resulting from
willful misfeasance, bad faith or negligence on its part in the performance of
its duties or from reckless disregard by it of its obligations and duties under
this Agreement. Any person, even though also an officer, director, employee or
agent of the Manager, who may be or become an officer, director, employee or
agent of the Company, shall be deemed, when rendering services to the Company or
to any Fund, or acting on any business of the Company or of any Fund (other than
services or business in connection with the Manager's duties as Manager
hereunder or under any other agreement with the Company) to be rendering such
services to or acting solely for the Company or Fund and not as an officer,
director, employee or agent or one under the control or direction of the Manager
even though paid by the Manager.
The Manager acknowledges and agrees that the Declaration of Trust of
the Company provides that the Trustees of the Company and the officers of the
Company executing this Agreement on behalf of the Company shall not be
personally bound hereby or liable hereunder, nor shall resort be had to their
private property or the private property of the shareholders of the Company for
the satisfaction of any claim or obligation under this Agreement.
12. Duration or Termination. This Agreement shall become effective as
of the date first written above and, unless sooner terminated as provided
herein, shall continue until February 27, 1999. Thereafter, this Agreement will
be extended with respect to a particular Fund for successive one-year periods
ending on October 31st of each year, provided each such extension is
specifically approved at least annually (a) by vote of a majority of those
members of the Company's Board of Trustees who are not interested persons of any
party to this Agreement, cast in person at a meeting called for the purpose of
voting on such approval, and (b) by the Company's Board of Trustees or by vote
of a majority of the outstanding voting securities of such Fund. This Agreement
may be terminated by the Company at any time with respect to any Fund, without
the payment of any penalty, by vote of a majority of the entire Board of
Trustees of the Company or by a vote of a majority of the outstanding voting
securities of such Fund on 60 days' written notice to the Manager, or by the
Manager at any time, without the payment of penalty, on 60 days' written notice
to the Company. This Agreement will immediately terminate in the event of its
assignment. As used in this Agreement, the terms "majority of the outstanding
voting securities," "interested persons" and "assignment" shall have the same
meanings as such terms have in the 1940 Act.
13. Names. The name "Pacific Innovations Trust, a Delaware Business
Trust" refers to the trust created and the trustees, as trustees but not
individually or personally, acting from time to time under a Declaration of
Trust dated September 25, 1996, as amended, which is hereby referred to and a
copy of which is on file at the principal office of the Company. The trustees,
officers, employees and agents of the Company shall not personally be bound by
or liable under any written obligation, contract, instrument, certificate or
other interest or undertaking of the Company made by the trustees or by an
officer, employee or agent of the Company, in his or her capacity as such, nor
shall resort be had to their private property for the satisfaction of any
obligation or claim thereunder. All persons dealing with any series or class of
shares of the Company may enforce claims against the Company only against the
assets belonging to such series or class.
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14. Notices. Notices of any kind to be given to the Company hereunder
by the Manager shall be in writing and shall be duly given if mailed or
delivered to the Company at the following:
Pacific Innovations Trust, a
Delaware Business Trust
c/o PFPC Inc.
103 Bellevue Parkway
Wilmington, Delaware 19809
With a copy to:
Cathy O'Kelly, Esq.
Vedder, Price, Kaufman & Kammholz
222 N. LaSalle, 26th Floor
Chicago, Illinois 60601
or at such other address or to such individual as shall be so specified by the
Company to the Manager. Notices of any kind to be given to the Manager hereunder
by the Company shall be in writing and shall be duly given if mailed or
delivered to the Manager at:
Bank of America
555 California St., 8th Floor
San Francisco, CA 94104
Attn: Jay Gould, Esq.
or at such other address or to such individual as shall be so specified by the
Manager to the Company.
15. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. Subject to the provisions of Section 12 hereof, this Agreement
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective successors and shall be governed by Delaware law (without
regard to principles of conflicts of law); provided, however, that nothing
herein shall be construed in a manner inconsistent with the 1940 Act or any rule
or regulation of the Commission thereunder.
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first
above written.
PACIFIC INNOVATIONS TRUST, A
DELAWARE BUSINESS TRUST
By:
---------------------------
President
Attest:
------------------------------
Secretary
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By:
----------------------------
President
Attest:
------------------------------
General Counsel
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EXHIBIT B
FORM OF SUB-ADVISORY AGREEMENT
Managed Bond Fund
AGREEMENT, made as of __________, 1998 between Bank of America
National Trust and Savings Association, a national banking association
(hereinafter called the "Manager"), and Scudder Kemper Investments, Inc., a New
York Corporation (hereinafter called the "Sub-Adviser").
WHEREAS, the Pacific Innovations Managed Bond Fund
(hereinafter called the "Fund"), is a series of Pacific Innovations Trust, a
Delaware business trust (the "Trust"), in an open-end, management investment
company organized as a business trust under the laws of the State of Delaware;
and
WHEREAS, pursuant to Management Agreement dated ____________
___, 1998 (hereinafter called the "Management Agreement") by and between the
Trust and the Manager, the Manager has agreed to furnish investment management
services to the Fund; and
WHEREAS, the Management Agreement specifically authorizes the
Manager and sub-contract investment advisory services on behalf of the Fund to
the Sub-Adviser pursuant to a sub-advisory agreement agreeable to the Trust and
approved in accordance with the provisions of the Declaration of Trust and
Bylaws of the Trust; and
WHEREAS, the Board of Trustees of the Trust has approved this
Agreement, and the Sub-Adviser is willing to furnish such services upon the
terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, it is agreed between the parties hereto as follows:
1. APPOINTMENT.
The Manager hereby appoints the Sub-Adviser to act as sub-investment
adviser with respect to the investment portfolio of the Fund for the period and
on the terms set forth in this Agreement and the Sub-Adviser accepts such
appointment and agrees to furnish the services herein set forth for the
compensation herein provided.
2. SERVICES OF SUB-ADVISER.
Subject to the oversight and supervision of the Manager and the Trust's
Board of Trustees, the Sub-Adviser will provide a continuous investment program
for the Fund, including investment research and management with respect to all
securities, investments, cash and cash equivalents in the portfolio of the Fund.
The Sub-Adviser will determine from time to time what securities and other
investments will be purchased, retained or sold by the Fund. The Sub-Adviser
will provide the services rendered by it under this Agreement in accordance with
the investment criteria and policies established form time to time for the Fund
by the Manager, the investment objective, policies and restrictions as stated in
the Fund's current Prospectus with respect to the Fund, and resolutions of the
Trust's Board of Trustees. Without limiting the generality of the foregoing, the
Sub-Adviser further agrees that it will maintain all books and records regarding
the securities transactions with respect to the Fund, keep books of account with
respect to the Fund and supply the Trust and its Board of Trustees with reports,
statistical data and economic information as reasonably requested.
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3. OTHER COVENANTS.
The Sub-Adviser agrees that it:
(a) will conform with all applicable rules and regulations of
the U.S. Securities and Exchange Commission and will, in addition,
conduct its activities under this Agreement in accordance with other
applicable law;
(b) will use the same skill and care in providing services
under this Agreement as it uses in providing services to other
investment funds for which it has investment responsibilities;
(c) will place orders pursuant to its investment
determinations with respect to the Fund with brokers or dealers
reasonably acceptable to the Manager including its broker-dealer
affiliate Scudder Investor Services, Inc. or any successor to it. In
executing portfolio transactions and selecting brokers or dealers, the
Sub-Adviser will use its best efforts to seek on behalf of the Fund the
best overall terms available. In assessing the best overall terms
available to any transaction, the Sub-Adviser shall consider all
factors that it deems relevant, including the breadth of the market in
the security, the price of the security, the financial condition and
execution capability of the broker or dealer, and the reasonableness of
any commission or spread, if any, both the for the specific transaction
and on a continuing basis. In evaluating the best overall terms
available, and in selecting the broker-dealer to execute a particular
transaction, the Sub-Adviser may also consider the brokerage and
research services (as those terms are defined in Section 28(e) of the
U.S. Securities Exchange Act of 1934 (as amended), provided with
respect to the Fund or other accounts over which the Sub-Adviser or an
affiliate of the Sub-Adviser exercises investment discretion. The
Sub-Adviser is authorized, subject to the prior approval of the Manager
and the Fund's Board of Trustees, to pay a broker or dealer who
provides such brokerage and research services a commission or spread
for executing a portfolio transaction with respect to the Fund that is
in excess of the amount of commission or spread another broker or
dealer would have charged for effecting that transaction if, but only
if, the Sub-Adviser determines in good faith that such commission or
spread was reasonable in relation to the value of the brokerage and
research services provided by such broker or dealer -- viewed in terms
of that particular transaction or in terms of the overall
responsibilities of the Sub-Adviser to the Fund. In no instance will
portfolio securities be purchased from or sold to the Manager, the
Sub-Adviser, or Provident Distributors, Inc. (or any of its affiliates)
acting as principal or broker, except to the extent permitted by law.
In executing portfolio transactions with respect to the Fund, the
Sub-Adviser may, but is not obligated to the extent permitted by
applicable laws and regulations, aggregate the securities to be sold or
purchased with those of its other clients where such aggregation is not
inconsistent with the policies set forth in the Fund's currently
effective Prospectus. In such event the Sub-Adviser will allocate the
securities so purchased or sold, and the expenses incurred in the
transaction, in the manner it considers to be the most equitable and
consistent with its fiduciary obligations to the Fund and such other
clients.
(d) When the Sub-Adviser makes investment recommendations with
respect to the Fund, its investment advisory personnel will not inquire
or take into consideration whether the issuers of securities proposed
for purchase or sale for the account of the Fund are customers of its,
or any of its affiliates' other departments.
(e) Will treat confidentially and as proprietary information
of the Fund all records and other information relative to the Fund and
prior or present Fund interest holders ("Investors") or those persons
or entities who respond to inquiries concerning investment in the Fund
and will not use such records and information for any purpose other
than performance of its responsibilities and duties hereunder or under
any other agreement with the Trust except after prior notification to
an approval in writing by the Trust, which approval shall not be
unreasonably withheld and may not be withheld where the Sub-Adviser may
be exposed to civil or criminal contempt proceedings for failure to
comply, when requested to divulge such information by duly constituted
authorities, or when so requested by the Trust. Nothing contained
herein,
B-2
<PAGE> 29
however, shall prohibit the Sub-Adviser from advertising to or
soliciting the public generally with respect to other products or
services, including, but not limited to, any advertising or
marketing via radio, television, newspapers, magazines or direct
mail solicitation, regardless of whether such advertisement or
solicitation may coincidentally include prior or present Investors
or those persons or entities who have responded to inquiries
regarding the Fund, to the extent permitted by applicable law.
(f) Will not purchase any securities from or sell any
securities to or engage in any financial transactions with the
Manager or any of its affiliates on behalf of the Fund. Nothing in
this subsection shall in any way prohibit the Sub-Adviser or any of
its affiliates from purchasing securities from, selling securities
to or engaging in any other financial transactions with the Manager
or any of its affiliates on behalf of any other accounts managed by
the Sub-Adviser or for the Sub-Adviser's own account.
(g) Will provide the information set forth on Appendix A
attached hereto.
4. SERVICES NOT EXCLUSIVE.
The services furnished by the Sub-Adviser hereunder are deemed not
to be exclusive, and the Sub-Adviser shall be free to furnish similar
services to others so long as its services under this Agreement are not
impaired thereby. The Sub-Adviser will for all purposes herein be deemed to
be an independent contractor and will, unless otherwise expressly authorized,
have no authority to act for or represent the Fund or the Manager in any way
or otherwise be deemed their agent.
5. BOOKS AND RECORDS.
The Sub-Adviser hereby agrees that all records that it maintains
with respect to the Fund are the property of the Trust and further agrees to
surrender promptly to the Trust any of such records upon the Trust's request,
copies of which may be retained by the Sub-Adviser. The Sub-Adviser further
agrees to maintain and to preserve the information required pursuant to and
for the periods prescribed by Rule 31a-1 and Rule 31a-2, respectively under
the U.S. Investment Company Act of 1940 (the "1940 Act").
6. EXPENSES.
During the term of this Agreement, the Sub-Adviser will pay all
expenses incurred by it in connection with its activities under this
Agreement other than the cost of securities (including brokerage commissions
or spreads and other transaction costs, if any) purchased or sold with
respect to the Fund.
7. COMPENSATION.
For the services provided and the expenses assumed pursuant to this
Agreement, the Manager will pay the Sub-Adviser, and the Sub-Adviser will
accept as full compensation therefor, a fee, computed daily and payable
monthly (in arrears), at the following annual rates based upon the total net
assets of the Fund as follows:
<TABLE>
<CAPTION>
FUND ASSETS RATE OF SUB-ADVISORY FEE
----------- ------------------------
<S> <C>
0 -- $25 million 0.20%
in excess of $25 million up to and including $50 million 0.15%
in excess of $50 million 0.10%
</TABLE>
B-3
<PAGE> 30
The Sub-Adviser acknowledges that it shall not be entitled to any
further compensation from the Manager in respect of the services provided and
expenses assumed by it under this Agreement. The Sub-Adviser's fees hereunder,
and the Sub-Adviser's sold recourse for payment of such fees shall be to the
Manager.
8. REDUCTION OF FEES.
The Manager and Sub-Adviser hereby agree that the fees of the
Sub-Adviser pursuant to this Agreement shall be subject to reduction or waiver
in the event that the Manager reduces or waives all or a portion of the
Management fee otherwise due to the Manager pursuant to the Management Agreement
in order to permit the Fund to meet its initial target expense ratio of 0.75 of
1%. To the extent Fund meets its initial target expense ratio including partial
or full Management fees, the Sub-Adviser shall not be required to waive fees in
order for the Fund to maintain expenses below the target expense ratio. Such
reduction or waiver shall be effective with respect to the Sub-Advisory fee due
hereunder upon thirty (30) days' written notice (or facsimile) by the Manager to
the Sub- Adviser. All such reductions of the Management fee pursuant to notice
as provided herein shall be shared by and assessed against the Manager and the
Sub-Adviser equally rather than pro rata. Nothing in this section 8 shall be
interpreted to limit the ability of the Manager and the Sub-Adviser to
voluntarily and immediately waive or reduce any portion of their respective fees
nor shall any such voluntary and immediate fee reduction or waiver be construed
as a waiver by the Sub-Adviser of the notice provision in any further fee
reductions or waivers as provided for herein.
9. LIMITATION OF LIABILITY.
The Sub-Adviser shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Fund in connection with the
performance of this Agreement, except that the Sub-Adviser shall be liable shall
be liable to the Fund for any loss resulting from a breach of fiduciary duty by
the Sub-Adviser with respect to the receipt of compensation for services or any
loss resulting from willful misfeasance, bad faith or negligence on the part of
the Sub-Adviser in the performance of its duties or from reckless disregard by
it of its obligations and duties under this Agreement. The Sub-Adviser
acknowledges and agrees that the performance of this Agreement is for the
benefit of the Fund, that the Sub-Adviser is therefore directly liable and
responsible to the Fund for the performance of its obligations hereunder, and
that the Fund may enforce in its own name and for itself such liability and
responsibility.
10. DURATION AND TERMINATION.
This Agreement will become effective as of the date hereof and, unless
sooner terminated as provided herein, shall continue in effect until February
27, 1999. Thereafter, if not terminated, this Agreement shall automatically
continue in effect for successive annual periods ending on February 27, provided
such continuance is specifically approved at least annually by the vote of a
majority of the Trust's Board of Trustees at a meeting called for the purpose of
voting on such approval. Notwithstanding the foregoing, this Agreement may be
terminated at any time, without the payment of any penalty, by the Manager or by
the Trust (by vote of the Trust's Board of Trustees) on sixty days' written
notice to the Sub-Adviser, or by the Sub-Adviser, on sixty days' written notice
to the Trust, provided that in each such case, notice shall be given
simultaneously to the Manager. In addition, notwithstanding anything herein to
the contrary, in the event of the termination of the Management Agreement for
any reason (whether by the Trust, by the Manager or by operation of law) this
Agreement shall terminate upon the effective date of such termination of the
Management Agreement. This Agreement will immediately terminate in the event of
its assignment. (As used in this Agreement, the term "assignment" shall have the
same meaning as such term has in the 1940 Act.)
11. AMENDMENT TO THIS AGREEMENT.
No provision of this Agreement may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by the party
against which enforcement of the change, waiver, discharge or termination
B-4
<PAGE> 31
is sought. No amendment of this Agreement shall be effective until approved by
vote of a majority of the Trust's Trustees.
12. MISCELLANEOUS.
The captions of this Agreement are included for convenience of
reference only and in no may define or delimit any of the provisions hereof or
otherwise affect their construction or effect. If any provision of this
Agreement shall be held or made invalid by a court decision, statute, rule or
otherwise, the remainder of this Agreement shall not be affected thereby. This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and shall be governed by the internal laws, and
not the law of conflicts, of the State of California, provided that nothing
herein will be construed in a manner inconsistent with the 1940 Act, the
Investment Manager's Act of 1940, as amended, any rule or regulation of the U.S.
Securities and Exchange Commission thereunder.
13. NAMES.
The names "Fund," "Trust" and the "Board of Trustees," refer
respectively to the Trust created and the Trustees, as trustees but not
individually or personally, acting from time to time under the Declaration of
Trust, dated September 25, 1996, which is hereby referred to and a copy of which
is on file at the principal office of the Trust. The Trustees, officers,
employees and agents of the Trust shall not personally be bound by or liable
under any written obligation, contract, instrument, certificate or other
instrument or undertaking of the Trust made by the Trustees or by an officer,
employee or agent of the Trust, in his or her capacity as such, nor shall resort
be had to their private property for the satisfaction of any obligation or claim
thereunder.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first
above written.
BANK OF AMERICA NATIONAL TRUST AND SAVINGS SCUDDER KEMPER INVESTMENTS, INC.
ASSOCIATION
By: _______________________________ By: _________________________
Title: _______________________________ Title: _________________________
B-5
<PAGE> 32
EXHIBIT C
FORM OF
SUB-ADVISORY AGREEMENT
International Fund
AGREEMENT, made as of __________ __, 1998, between Bank of America
National Trust and Savings Association, a national banking association
(hereinafter called the "Manager"), and Wellington Management Company, LLP (the
"Sub-Adviser").
WHEREAS, the Pacific Innovations International Fund (the "Fund") is a
series of Pacific Innovations Trust, a Delaware business trust (the "Trust"), an
open-end, management investment company organized as a business trust under the
laws of the state of Delaware; and
WHEREAS, pursuant to a Management Agreement dated _________ __, 1998
(the "Management Agreement") by and between the Trust and the Manager, the
Manager has agreed to furnish investment management services to the Fund; and
WHEREAS, the Management Agreement specifically authorizes the Manager
to sub-contract investment advisory services on behalf of the Fund to the
Sub-Adviser pursuant to a sub-advisory agreement agreeable to the Trust and
approved in accordance with the provisions of the Declaration of Trust and
Bylaws of the Trust; and
WHEREAS, the Board of Trustees of the Trust has approved this
Agreement, and the Sub-Adviser is willing to furnish such services upon the
terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. APPOINTMENT.
The Manager hereby appoints the Sub-Adviser to act as sub-investment
adviser with respect to the investment portfolio of the Fund for the period and
on the terms set forth in this Agreement and the Sub-Adviser accepts such
appointment and agrees to furnish the services herein set forth for the
compensation herein provided.
2. SERVICES OF SUB-ADVISER.
Subject to the oversight and supervision of the Manager and the Trust's
Board of Trustees, the Sub-Adviser will provide a continuous investment program
for the Fund, including investment research and management with respect to all
securities, investments, cash and cash equivalents in the portfolio of the Fund.
The Sub-Adviser will determine from time to time what securities and other
investments will be purchased, retained or sold by the Fund. The Sub-Adviser
will provide the services rendered by it under this Agreement in accordance with
the investment criteria and policies established from time to time for the Fund
by the Manager, the investment objective, policies and restrictions as stated in
the Fund's current Prospectus with respect to the Fund, and resolutions of the
Trust's Board of Trustees. Without limiting the generality of the foregoing, the
Sub-Adviser further agrees that it will maintain all books and records regarding
the securities transactions with respect to the Fund, keep books of account with
respect to the Fund and supply the Trust and its Board of Trustees with reports,
statistical data and economic information as reasonably requested.
C-1
<PAGE> 33
3. OTHER COVENANTS.
The Sub-Adviser agrees that it:
(A) will conform with all applicable rules and regulations of
the U.S. Securities and Exchange Commission and will, in addition, conduct its
activities under this Agreement in accordance with other applicable law;
(B) will use the same skill and care in providing services
under this Agreement as it uses in providing services to other investment funds
for which it has investment responsibilities;
(C) will place orders pursuant to its investment
determinations with respect to the Fund with brokers or dealers reasonably
acceptable to the Manager [including its broker-dealer affiliate
___________________ or any successor to it.] In executing portfolio transactions
and selecting brokers or dealers, the Sub-Adviser will use its best efforts to
seek on behalf of the Fund the best overall terms available. In assessing the
best overall terms available for any transaction, the Sub-Adviser shall consider
all factors that it deems relevant, including the breadth of the market in the
security, the price of the security, the financial condition and execution
capability of the broker or dealer, and the reasonableness of any commission or
spread, if any, both for the specific transaction and on a continuing basis. In
evaluating the best overall terms available, and in selecting the broker-dealer
to execute a particular transaction, the Sub-Adviser may also consider the
brokerage and research services as those terms are defined in Section 28(e) of
the U.S. Securities Exchange Act of 1934, (as amended) provided with respect to
the Fund or other accounts over which the Sub-Adviser or an affiliate of the
Sub-Adviser exercises investment discretion. The Sub-Adviser is authorized,
subject to the prior approval of the Manager and the Fund's Board of Trustees to
pay to a broker or dealer who provides such brokerage and research services a
commission or spread for executing a portfolio transaction with respect to the
Fund that is in excess of the amount of commission or spread another broker or
dealer would have charged for effecting that transaction if, but only if, the
Sub-Adviser determines in good faith that such commission or spread was
reasonable in relation to the value of the brokerage and research services
provided by such broker or dealer -- viewed in terms of that particular
transaction or in terms of the overall responsibilities of the Sub-Adviser to
the Fund. In no instance will portfolio securities be purchased from or sold to
the Manager, the Sub-Adviser, or Concord Holding Corporation (or any of its
affiliates) acting as principal or broker, except to the extent permitted by
law. In executing portfolio transactions with respect to the Fund, the
Sub-Adviser may, but is not obligated to the extent permitted by applicable laws
and regulations, aggregate the securities to be sold or purchased with those of
its other clients where such aggregation is not inconsistent with the policies
set forth in the Fund's currently effective Prospectus. In such event the
Sub-Adviser will allocate the securities so purchased or sold, and the expenses
incurred in the transaction, in the manner it considers to be most equitable and
consistent with its fiduciary obligations to the Fund and such other clients;
(D) when the Sub-Adviser makes investment recommendations with
respect to the Fund, its investment advisory personnel will not inquire or take
into consideration whether the issuers of securities proposed for purchase or
sale for the account of the Fund are customers of its, or any of its affiliates'
other departments;
(E) will treat confidentially and as proprietary information
of the Fund all records and other information relative to the Fund and prior or
present Fund interest holders ("Investors") or those persons or entities who
respond to inquiries concerning investment in the Fund and will not use such
records and information for any purpose other than performance of its
responsibilities and duties hereunder or under any other agreement with the
Trust except after prior notification to an approval in writing by the Trust,
which approval shall not be unreasonably withheld and may not be withheld where
the Sub-Adviser may be exposed to civil or criminal contempt proceedings for
failure to comply, when requested to divulge such information by duly
constituted authorities, or when so requested by the Trust. Nothing contained
herein, however, shall prohibit the Sub-Adviser from advertising to or
soliciting the public generally with respect to other products or services,
including, but not limited to, any advertising or marketing via radio,
television, newspapers, magazines or direct mail solicitation, regardless of
whether such advertisement or solicitation may coincidentally include prior or
present Investors or those persons or entities who have responded to inquiries
regarding the Fund, to the extent permitted by applicable law;
C-2
<PAGE> 34
(F) will not purchase any securities from or sell any
securities to or engage in any financial transactions with the Manager or any of
its affiliates on behalf of the Fund. Nothing in this subsection shall in any
way prohibit the Sub-Adviser or any of its affiliates from purchasing securities
from, selling securities to or engaging in any other financial transactions with
the Manager or any of its affiliates on behalf of any other accounts managed by
the Sub-Adviser or for the Sub-Adviser's own account; and
(G) will provide the information set forth on Appendix A
attached hereto.
4. SERVICES NOT EXCLUSIVE.
The services furnished by the Sub-Adviser hereunder are deemed not to
be exclusive, and the Sub-Adviser shall be free to furnish similar services to
others so long as its services under this Agreement are not impaired thereby.
The Sub-Adviser will for all purposes herein be deemed to be an independent
contractor and will, unless otherwise expressly authorized, have no authority to
act for or represent the Fund or the Manager in any way or otherwise be deemed
their agent.
5. BOOKS AND RECORDS.
The Sub-Adviser hereby agrees that all records that it maintains with
respect to the Fund are the property of the Trust and further agrees to
surrender promptly to the Trust any of such records upon the Trust's request,
copies of which may be retained by the Sub-Adviser. The Sub-Adviser further
agrees to maintain and to preserve the information required pursuant to and for
the periods prescribed by Rule 31a-1 and Rule 31a-2, respectively under the U.S.
Investment Company Act of 1940 (the "1940 Act").
6. EXPENSES.
During the term of this Agreement, the Sub-Adviser will pay all
expenses incurred by it in connection with its activities under this Agreement
other than the cost of securities (including brokerage commissions or spreads
and other transaction costs, if any) purchased or sold with respect to the Fund.
7. COMPENSATION.
For the services provided and the expenses assumed pursuant to this
Agreement, the Manager will pay the Sub-Adviser, and the Sub-Adviser will accept
as full compensation therefor, a fee, computed daily and payable monthly (in
arrears), at the following annual rates based on the total net assets of the
Fund as follows:
<TABLE>
<CAPTION>
FUND ASSETS RATE OF SUB-ADVISORY FEE
----------- ------------------------
<S> <C>
First--U.S. $50 million 0.40%
next U.S. $100 million 0.30%
next U.S. $350 million 0.25%
over U.S. $500 million 0.20%
</TABLE>
The Sub-Adviser acknowledges that it shall not be entitled to any
further compensation from the Manager in respect of the services provided and
expenses assumed by it under this Agreement. The Sub-Adviser's fees hereunder,
and the Sub-Adviser's sole recourse for payment of such fees shall be to the
Manager.
8. REDUCTION OF FEES.
C-3
<PAGE> 35
The Manager and the Sub-Adviser hereby agree that the fees of the
Sub-Adviser pursuant to this Agreement shall be subject to reduction or waiver
in the event that the Manager reduces or waives all or a portion of the
Management fee otherwise due to the Manager pursuant to the Management Agreement
in order to permit the Fund to meet its initial target expense ratio of _____ of
1%. To the extent the Fund meets its initial target expense ratio including
partial or full Management fees, the Sub-Adviser shall not be required to waive
fees in order for the Fund to maintain expenses below the target expense ratio.
Such reduction or waiver shall be effective with respect to the Sub-Advisory fee
due hereunder upon thirty (30) days written notice (or facsimile) by the Manager
to the Sub-Adviser. All such reductions of the Management fee pursuant to notice
as provided herein shall be shared by and assessed against the Manager and the
Sub-Adviser equally rather than pro rata. Nothing in this section 8 shall be
interpreted to limit the ability of the Manager and the Sub-Adviser to
voluntarily and immediately waive or reduce any portion of their respective fees
nor shall any such voluntary and immediate fee reduction or waiver be construed
as a waiver by the Sub-Adviser of the notice provision in any future fee
reductions or waivers as provided for herein.
9. LIMITATION OF LIABILITY.
The Sub-Adviser shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Fund in connection with the
performance of this Agreement, except that the Sub-Adviser shall be liable to
the Fund for any loss resulting from a breach of fiduciary duty by the
Sub-Adviser with respect to the receipt of compensation for services or any loss
resulting from willful misfeasance, bad faith or negligence on the part of the
Sub-Adviser in the performance of its duties or from reckless disregard by it of
its obligations and duties under this Agreement. The Sub-Adviser acknowledges
and agrees that the performance of this Agreement is for the benefit of the
Fund, that the Sub-Adviser is therefore directly liable and responsible to the
Fund for the performance of its obligations hereunder, and that the Fund may
enforce in its own name and for itself such liability and responsibility.
10. DURATION AND TERMINATION.
This Agreement will become effective as of the date hereof and, unless
sooner terminated as provided herein, shall continue in effect until February
27, 1999. Thereafter, if not terminated, this Agreement shall automatically
continue in effect for successive annual periods ending on February 27, provided
such continuance is specifically approved at least annually by the vote of a
majority of the Trust's Board of Trustees at a meeting called for the purpose of
voting on such approval. Notwithstanding the foregoing, this Agreement may be
terminated at any time, without the payment of any penalty, by the Manager or by
the Trust (by vote of the Trust's Board of Trustees) on sixty days' written
notice to the Sub-Adviser, or by the Sub-Adviser, on sixty days' written notice
to the Trust, provided that in each such case, notice shall be given
simultaneously to the Manager. In addition, notwithstanding anything herein to
the contrary, in the event of the termination of the Management Agreement for
any reason (whether by the Trust, by the Manager or by operation of law) this
Agreement shall terminate upon the effective date of such termination of the
Management Agreement. This Agreement will immediately terminate in the event of
its assignment. (As used in this Agreement, the term "assignment" shall have the
same meaning as such term has in the 1940 Act.)
11. AMENDMENT OF THIS AGREEMENT.
No provision of this Agreement may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by the other
party against which enforcement of the change, waiver, discharge or termination
is sought. No amendment of this Agreement shall be effective until approved by
vote of a majority of the Trust's Trustees.
12. MISCELLANEOUS.
The captions in the Agreement are included for convenience of reference
only and in no way define or delimit any of the provisions hereof or otherwise
affect their construction or effect. If any provision of this Agreement shall be
held or made invalid by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby. This Agreement shall
be binding upon and shall inure to the benefit of the parties hereto and their
respective successors and shall be governed by the internal laws, and not the
law of conflicts, of the State of California, provided
C-4
<PAGE> 36
that nothing herein will be construed in a manner inconsistent with the 1940
Act, the Investment Manager's Act of 1940, as amended, or any rule or regulation
of the U.S. Securities and Exchange Commission thereunder.
13. NAMES.
The names "Fund," "Trust" and the "Board of Trustees" refer
respectively to the Trust created and the Trustees, as trustees but not
individually or personally, acting from time to time under the Declaration of
Trust, dated September 25, 1996, which is hereby referred to and a copy of which
is on file at the principal office of the Trust. The Trustees, officers,
employees and agents of the Trust shall not personally be bound by or liable
under any written obligation, contract, instrument, certificate or other
interest or undertaking of the Trust made by the Trustees or by an officer,
employee or agent of the Trust, in his or her capacity as such, nor shall resort
be had to their private property for the satisfaction of any obligation or claim
thereunder.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first
above written.
BANK OF AMERICA NATIONAL TRUST AND WELLINGTON MANAGEMENT COMPANY, LLP
SAVINGS ASSOCIATION
By: __________________________________ By: __________________________________
Title: Title:
C-5
<PAGE> 37
EXHIBIT D
COMPARABLE INVESTMENT COMPANIES
ADVISED BY BANK OF AMERICA
As of May 6, 1998 Bank of America provided advisory services to the
following open- and closed-end funds with investment objectives similar to the
Funds:
<TABLE>
<CAPTION>
NET ASSETS AS OF ADVISORY COMPENSATION
MAY 6, 1998 ON AN ANNUAL BASIS BASED ON THE
NAME (000 OMITTED) VALUE OF AVERAGE DAILY NET ASSETS
---- ------------- ---------------------------------
<S> <C>
Pacific Horizon Aggressive Growth Fund 0.60%
Pacific Horizon Government Fund 0.10% of first $3 billion
0.09% of next $2 billion
0.08% over $5 billion
Pacific Horizon Intermediate Bond Fund 0.30%
Pacific Horizon Capital Income Fund 0.45%
Pacific Horizon Blue Chip Fund 0.50%
Pacific Horizon International Equity Fund 0.75%
</TABLE>
<PAGE> 38
EXHIBIT E
COMPARABLE INVESTMENT COMPANIES
ADVISED BY SCUDDER KEMPER
As of May 6, 1998, Scudder Kemper provided advisory services to the
following open- and closed-end funds with investment objectives similar to the
Managed Bond Fund.
<TABLE>
<CAPTION>
NET ASSETS AS OF ADVISORY COMPENSATION
MAY 6, 1998 ON AN ANNUAL BASIS BASED ON THE
NAME (000 OMITTED) VALUE OF AVERAGE DAILY NET ASSETS
---- ------------- ---------------------------------
<S> <C> <C>
</TABLE>
<PAGE> 39
EXHIBIT F
COMPARABLE INVESTMENT COMPANIES
ADVISED BY WELLINGTON MANAGEMENT
As of May 6, 1998 Wellington Management provided advisory services to
the following open- and closed-end funds with investment objectives similar to
the International Fund:
<TABLE>
<CAPTION>
NET ASSETS AS OF ADVISORY COMPENSATION
MAY 6, 1998 ON AN ANNUAL BASIS BASED ON THE
NAME (000 OMITTED) VALUE OF AVERAGE DAILY NET ASSETS
---- ------------- ---------------------------------
<S> <C> <C>
</TABLE>
<PAGE> 40
VOTING INSTRUCTION / PROXY
Pacific Innovations Trust
Money Market Fund (the "Fund")
The undersigned owner of a variable annuity contract ("Variable Contract")
issued by Pacific Life Insurance Company ("Pacific Life") and funded by a
separate account of Pacific Life, hereby instructs Pacific Life or its
designated attorneys and proxies, on behalf of the separate account to vote the
shares of the Fund attributable to his or her Variable Contract at the special
meeting of shareholders of Pacific Innovations Trust (the "Trust"), to be held
at 9:00 a.m. Eastern Time, on June 26, 1998, at the offices of the Fund, 400
Bellevue Parkway, Wilmington, Delaware, and at any adjournment thereof, in the
manner directed below, with respect to the matters referred to in the proxy
statement for the meeting, receipt of which is hereby acknowledged, and in the
discretion of Pacific Life or its designated attorneys and proxies upon such
matters as may properly come before the meeting and at any adjournment thereof.
THIS VOTING INSTRUCTION/PROXY IS BEING SOLICITED BY THE BOARD OF TRUSTEES OF
THE TRUST. THE BOARD OF TRUSTEES OF THE TRUST RECOMMENDS A VOTE FOR THE
PROPOSALS AND THE ELECTION OF THE NOMINEES AS TRUSTEES. PLEASE VOTE BY
CHECKING YOUR RESPONSE.
1. Election of Trustees: Edward S. Bottum, William P. Carmichael, Thomas
M. Collins, Douglas B. Fletcher, Jr., Robert E. Greeley, Harold T.
Joanning, Cornelius J. Pings
_______FOR __________ WITHHOLD ALL
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL STRIKE
LINE THROUGH THE NOMINEE'S NAME IN THE LIST ABOVE.)
2. To approve a new Management Agreement between the Trust and Bank of
America National Trust and Savings Association in connection with the
merger of BankAmerica Corporation and NationsBank Corporation.
_______FOR __________ AGAINST __________ ABSTAIN
3. To approve the selection of Price Waterhouse LLP as independent auditors
for the current fiscal year.
_______FOR __________ AGAINST __________ ABSTAIN
This voting instruction will be voted as specified. IF NO SPECIFICATION IS
MADE, THIS VOTING INSTRUCTION WILL BE VOTED FOR THE PROPOSALS AND FOR THE
ELECTION OF ALL OF THE NOMINEES FOR TRUSTEES. If this voting instruction is not
returned or is not returned properly executed, such votes will be cast by
Pacific Life on behalf of the pertinent separate account in the same proportion
as it votes shares held by that separate account for which it has received
instructions from Variable Contract owners.
Contract(s): Receipt of the Notice of Meeting and
Proxy Statement is hereby acknowledged:
Dated: ____________________, 1998
Shares: XXXXXXXXX.XXXX
---------------------------------------
---------------------------------------
All designated owners of the Variable Contract(s) shown on this voting
instruction must sign hereon. If as an attorney, executor, trustee, guardian or
in some representative capacity or as an officer or a corporation or
partnership, please add title as such.
PLEASE VOTE, SIGN AND DATE THIS VOTING INSTRUCTION AND RETURN IT IN THE ENCLOSED
ENVELOPE PROMPTLY.
First Name Middle Initial Last Name (Owner)
First Name, Middle Initial Last Name (Joint Owner)
Address
Address
City, State Zip
<PAGE> 41
VOTING INSTRUCTION / PROXY
Pacific Innovations Trust
Managed Bond Fund (the "Fund")
The undersigned owner of a variable annuity contract ("Variable Contract")
issued by Pacific Life Insurance Company ("Pacific Life") and funded by a
separate account of Pacific Life, hereby instructs Pacific Life or its
designated attorneys and proxies, on behalf of the separate account to vote the
shares of the Fund attributable to his or her Variable Contract at the special
meeting of shareholders of Pacific Innovations Trust (the "Trust"), to be held
at 9:00 a.m. Eastern Time, on June 26, 1998, at the offices of the Fund, 400
Bellevue Parkway, Wilmington, Delaware, and at any adjournment thereof, in the
manner directed below, with respect to the matters referred to in the proxy
statement for the meeting, receipt of which is hereby acknowledged, and in the
discretion of Pacific Life or its designated attorneys and proxies upon such
matters as may properly come before the meeting and at any adjournment thereof.
THIS VOTING INSTRUCTION/PROXY IS BEING SOLICITED BY THE BOARD OF TRUSTEES OF
THE TRUST. THE BOARD OF TRUSTEES OF THE TRUST RECOMMENDS A VOTE FOR THE
PROPOSALS AND THE ELECTION OF THE NOMINEES AS TRUSTEES. PLEASE VOTE BY
CHECKING YOUR RESPONSE.
1. Election of Trustees: Edward S. Bottum, William P. Carmichael, Thomas
M. Collins, Douglas B. Fletcher, Jr., Robert E. Greeley, Harold T.
Joanning, Cornelius J. Pings
_______ FOR __________ WITHHOLD ALL
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL STRIKE
LINE THROUGH THE NOMINEE'S NAME IN THE LIST ABOVE.)
2. To approve a new Management Agreement between the Trust and Bank of
America National Trust and Savings Association in connection with the
merger of BankAmerica Corporation and NationsBank Corporation.
_______ FOR __________ AGAINST __________ ABSTAIN
3. To approve a new Sub-Advisory Agreement between Bank of America
National Trust and Savings Association and Scudder Kemper Investments,
Inc. in connection with the merger of BankAmerica Corporation and
NationsBank Corporation.
_______ FOR __________ AGAINST __________ ABSTAIN
4. To approve the selection of Price Waterhouse LLP as independent auditors
for the current fiscal year.
_______ FOR __________ AGAINST __________ ABSTAIN
This voting instruction will be voted as specified. IF NO SPECIFICATION IS MADE,
THIS VOTING INSTRUCTION WILL BE VOTED FOR THE PROPOSALS AND FOR THE ELECTION OF
ALL OF THE NOMINEES FOR TRUSTEES. If this voting instruction is not returned
or is not returned properly executed, such votes will be cast by Pacific Life
on behalf of the pertinent separate account in the same proportion as it votes
shares held by that separate account for which it has received instructions
from Variable Contract owners.
Contract(s): Receipt of the Notice of Meeting and
Proxy Statement is hereby acknowledged:
Dated: ____________________, 1998
Shares: XXXXXXXXX.XXXX
---------------------------------------
---------------------------------------
All designated owners of the Variable Contract(s) shown on this voting
instruction must sign hereon. If as an attorney, executor, trustee, guardian or
in some representative capacity or as an officer or a corporation or
partnership, please add title as such.
PLEASE VOTE, SIGN AND DATE THIS VOTING INSTRUCTION AND RETURN IT IN THE ENCLOSED
ENVELOPE PROMPTLY.
First Name Middle Initial Last Name (Owner)
First Name, Middle Initial Last Name (Joint Owner)
Address
Address
City, State Zip
<PAGE> 42
VOTING INSTRUCTION / PROXY
Pacific Innovations Trust
Capital Income Fund (the "Fund")
The undersigned owner of a variable annuity contract ("Variable Contract")
issued by Pacific Life Insurance Company ("Pacific Life") and funded by a
separate account of Pacific Life, hereby instructs Pacific Life or its
designated attorneys and proxies, on behalf of the separate account to vote the
shares of the Fund attributable to his or her Variable Contract at the special
meeting of shareholders of Pacific Innovations Trust (the "Trust"), to be held
at 9:00 a.m. Eastern Time, on June 26, 1998, at the offices of the Fund, 400
Bellevue Parkway, Wilmington, Delaware, and at any adjournment thereof, in the
manner directed below, with respect to the matters referred to in the proxy
statement for the meeting, receipt of which is hereby acknowledged, and in the
discretion of Pacific Life or its designated attorneys and proxies upon such
matters as may properly come before the meeting and at any adjournment thereof.
THIS VOTING INSTRUCTION/PROXY IS BEING SOLICITED BY THE BOARD OF TRUSTEES OF THE
TRUST. THE BOARD OF TRUSTEES OF THE TRUST RECOMMENDS A VOTE FOR THE PROPOSALS
AND THE ELECTION OF THE NOMINEES AS TRUSTEES. PLEASE VOTE BY CHECKING YOUR
RESPONSE.
1. Election of Trustees: Edward S. Bottum, William P. Carmichael, Thomas
M. Collins, Douglas B. Fletcher, Jr., Robert E. Greeley, Harold T.
Joanning, Cornelius J. Pings
_______ FOR __________ WITHHOLD ALL
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL STRIKE
LINE THROUGH THE NOMINEE'S NAME IN THE LIST ABOVE.)
2. To approve a new Management Agreement between the Trust and Bank of
America National Trust and Savings Association in connection with the
merger of BankAmerica Corporation and NationsBank Corporation.
_______ FOR __________ AGAINST __________ ABSTAIN
3. To approve the selection of Price Waterhouse LLP as independent auditors
for the current fiscal year.
_______ FOR __________ AGAINST __________ ABSTAIN
This voting instruction will be voted as specified. IF NO SPECIFICATION IS MADE,
THIS VOTING INSTRUCTION WILL BE VOTED FOR THE PROPOSALS AND FOR THE ELECTION OF
ALL OF THE NOMINEES FOR TRUSTEES. If this voting instruction is not
returned or is not returned properly executed, such votes will be cast by
Pacific Life on behalf of the pertinent separate account in the same proportion
as it votes shares held by that separate account for which it has received
instructions from Variable Contract owners.
Contract(s): Receipt of the Notice of Meeting and
Proxy Statement is hereby acknowledged:
Dated: ____________________, 1998
Shares: XXXXXXXXX.XXXX
---------------------------------------
---------------------------------------
All designated owners of the Variable Contract(s) shown on this voting
instruction must sign hereon. If as an attorney, executor, trustee, guardian or
in some representative capacity or as an officer or a corporation or
partnership, please add title as such.
PLEASE VOTE, SIGN AND DATE THIS VOTING INSTRUCTION AND RETURN IT IN THE ENCLOSED
ENVELOPE PROMPTLY.
First Name Middle Initial Last Name (Owner)
First Name, Middle Initial Last Name (Joint Owner)
Address
Address
City, State Zip
<PAGE> 43
VOTING INSTRUCTION / PROXY
Pacific Innovations Trust
International Fund (the "Fund")
The undersigned owner of a variable annuity contract ("Variable Contract")
issued by Pacific Life Insurance Company ("Pacific Life") and funded by a
separate account of Pacific Life, hereby instructs Pacific Life or its
designated attorneys and proxies, on behalf of the separate account to vote the
shares of the Fund attributable to his or her Variable Contract at the special
meeting of shareholders of Pacific Innovations Trust (the "Trust"), to be held
at 9:00 a.m. Eastern Time, on June 26, 1998, at the offices of the Fund, 400
Bellevue Parkway, Wilmington, Delaware, and at any adjournment thereof, in the
manner directed below, with respect to the matters referred to in the proxy
statement for the meeting, receipt of which is hereby acknowledged, and in the
discretion of Pacific Life or its designated attorneys and proxies upon such
matters as may properly come before the meeting and at any adjournment thereof.
THIS VOTING INSTRUCTION/PROXY IS BEING SOLICITED BY THE BOARD OF TRUSTEES OF
THE TRUST. THE BOARD OF TRUSTEES OF THE TRUST RECOMMENDS A VOTE FOR THE
PROPOSALS AND THE ELECTION OF THE NOMINEES AS TRUSTEES. PLEASE VOTE BY
CHECKING YOUR RESPONSE.
1. Election of Trustees: Edward S. Bottum, William P. Carmichael, Thomas
M. Collins, Douglas B. Fletcher, Jr., Robert E. Greeley, Harold T.
Joanning, Cornelius J. Pings
_______FOR __________ WITHHOLD ALL
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL STRIKE
LINE THROUGH THE NOMINEE'S NAME IN THE LIST ABOVE.)
2. To approve a new Management Agreement between the Trust and Bank of
America National Trust and Savings Association in connection with the
merger of BankAmerica Corporation and NationsBank Corporation.
_______FOR __________ AGAINST __________ ABSTAIN
3. To approve a new Sub-advisory Agreement between Bank of America
National Trust and Savings Association and Wellington Management
Company, LLP in connection with the merger of BankAmerica Corporation
and NationsBank Corporation.
_______FOR __________ AGAINST __________ ABSTAIN
4. To approve the selection of Price Waterhouse LLP as independent auditors
for the current fiscal year.
_______FOR __________ AGAINST __________ ABSTAIN
This voting instruction will be voted as specified. IF NO SPECIFICATION IS MADE,
THIS VOTING INSTRUCTION WILL BE VOTED FOR THE PROPOSALS AND FOR THE ELECTION OF
ALL OF THE NOMINEES FOR TRUSTEES. If this voting instruction is not returned
or is not returned properly executed, such votes will be cast by Pacific Life
on behalf of the pertinent separate account in the same proportion as it votes
shares held by that separate account for which it has received instructions
from Variable Contract owners.
Contract(s): Receipt of the Notice of Meeting and
Proxy Statement is hereby acknowledged:
Dated: ____________________, 1998
Shares: XXXXXXXXX.XXXX
----------------------------------------
----------------------------------------
All designated owners of the Variable Contract(s) shown on this voting
instruction must sign hereon. If as an attorney, executor, trustee, guardian or
in some representative capacity or as an officer or a corporation or
partnership, please add title as such.
PLEASE VOTE, SIGN AND DATE THIS VOTING INSTRUCTION AND RETURN IT IN THE ENCLOSED
ENVELOPE PROMPTLY.
First Name Middle Initial Last Name (Owner)
First Name, Middle Initial Last Name (Joint Owner)
Address
Address
City, State Zip
<PAGE> 44
VOTING INSTRUCTION / PROXY
Pacific Innovations Trust
Aggressive Growth Fund (the "Fund")
The undersigned owner of a variable annuity contract ("Variable Contract")
issued by Pacific Life Insurance Company ("Pacific Life") and funded by a
separate account of Pacific Life, hereby instructs Pacific Life or its
designated attorneys and proxies, on behalf of the separate account to vote the
shares of the Fund attributable to his or her Variable Contract at the special
meeting of shareholders of Pacific Innovations Trust (the "Trust"), to be held
at 9:00 a.m. Eastern Time, on June 26, 1998, at the offices of the Fund, 400
Bellevue Parkway, Wilmington, Delaware, and at any adjournment thereof, in the
manner directed below, with respect to the matters referred to in the proxy
statement for the meeting, receipt of which is hereby acknowledged, and in the
discretion of Pacific Life or its designated attorneys and proxies upon such
matters as may properly come before the meeting and at any adjournment thereof.
THIS VOTING INSTRUCTION/PROXY IS BEING SOLICITED BY THE BOARD OF TRUSTEES OF
THE TRUST. THE BOARD OF TRUSTEES OF THE TRUST RECOMMENDS A VOTE FOR THE
PROPOSALS AND THE ELECTION OF THE NOMINEES AS TRUSTEES. PLEASE VOTE BY
CHECKING YOUR RESPONSE.
1. Election of Trustees: Edward S. Bottum, William P. Carmichael, Thomas
M. Collins, Douglas B. Fletcher, Jr., Robert E. Greeley, Harold T.
Joanning, Cornelius J. Pings
_______ FOR ________ WITHHOLD ALL
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL STRIKE
LINE THROUGH THE NOMINEE'S NAME IN THE LIST ABOVE.)
2. To approve a new Management Agreement between the Trust and Bank of
America National Trust and Savings Association in connection with the
merger of BankAmerica Corporation and NationsBank Corporation.
_______ FOR ________ AGAINST _________ ABSTAIN
3. To approve the selection of Price Waterhouse LLP as independent auditors
for the current fiscal year.
_______ FOR ________ AGAINST __________ ABSTAIN
This voting instruction will be voted as specified. IF NO SPECIFICATION IS MADE,
THIS VOTING INSTRUCTION WILL BE VOTED FOR THE PROPOSALS AND FOR THE ELECTION OF
ALL OF THE NOMINEES FOR TRUSTEES. If this voting instruction is not
returned or is not returned properly executed, such votes will be cast by
Pacific Life on behalf of the pertinent separate account in the same proportion
as it votes shares held by that separate account for which it has received
instructions from Variable Contract owners.
Contract(s): Receipt of the Notice of Meeting and
Proxy Statement is hereby acknowledged:
Dated: ____________________, 1998
Shares: XXXXXXXXX.XXXX
----------------------------------------
----------------------------------------
All designated owners of the Variable Contract(s) shown on this voting
instruction must sign hereon. If as an attorney, executor, trustee, guardian or
in some representative capacity or as an officer or a corporation or
partnership, please add title as such.
PLEASE VOTE, SIGN AND DATE THIS VOTING INSTRUCTION AND RETURN IT IN THE ENCLOSED
ENVELOPE PROMPTLY.
First Name Middle Initial Last Name (Owner)
First Name, Middle Initial Last Name (Joint Owner)
Address
Address
City, State Zip
<PAGE> 45
VOTING INSTRUCTION / PROXY
Pacific Innovations Trust
Blue Chip Fund (the "Fund")
The undersigned owner of a variable annuity contract ("Variable Contract")
issued by Pacific Life Insurance Company ("Pacific Life") and funded by a
separate account of Pacific Life, hereby instructs Pacific Life or its
designated attorneys and proxies, on behalf of the separate account to vote the
shares of the Fund attributable to his or her Variable Contract at the special
meeting of shareholders of Pacific Innovations Trust (the "Trust"), to be held
at 9:00 a.m. Eastern Time, on June 26, 1998, at the offices of the Fund, 400
Bellevue Parkway, Wilmington, Delaware, and at any adjournment thereof, in the
manner directed below, with respect to the matters referred to in the proxy
statement for the meeting, receipt of which is hereby acknowledged, and in the
discretion of Pacific Life or its designated attorneys and proxies upon such
matters as may properly come before the meeting and at any adjournment thereof.
THIS VOTING INSTRUCTION/PROXY IS BEING SOLICITED BY THE BOARD OF TRUSTEES OF
THE TRUST. THE BOARD OF TRUSTEES OF THE TRUST RECOMMENDS A VOTE FOR THE
PROPOSALS AND THE ELECTION OF THE NOMINEES AS TRUSTEES. PLEASE VOTE BY
CHECKING YOUR RESPONSE.
1. Election of Trustees: Edward S. Bottum, William P. Carmichael,
Thomas M. Collins, Douglas B. Fletcher, Jr., Robert E. Greeley,
Harold T. Joanning, Cornelius J. Pings
_______FOR __________ WITHHOLD ALL
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL STRIKE
LINE THROUGH THE NOMINEE'S NAME IN THE LIST ABOVE.)
2. To approve a new Management Agreement between the Trust and Bank of
America National Trust and Savings Association in connection with
the merger of BankAmerica Corporation and NationsBank Corporation.
_______FOR __________ AGAINST __________ ABSTAIN
3. To approve the selection of Price Waterhouse LLP as independent auditors
for the current fiscal year.
_______FOR __________ AGAINST __________ ABSTAIN
This voting instruction will be voted as specified. IF NO SPECIFICATION IS MADE,
THIS VOTING INSTRUCTION WILL BE VOTED FOR THE PROPOSALS AND FOR THE ELECTION OF
ALL OF THE NOMINEES FOR TRUSTEES. If this voting instruction is not
returned or is not returned properly executed, such votes will be cast by
Pacific Life on behalf of the pertinent separate account in the same proportion
as it votes shares held by that separate account for which it has received
instructions from Variable Contract owners.
Contract(s): Receipt of the Notice of Meeting and
Proxy Statement is hereby acknowledged:
Dated: ____________________, 1998
Shares: XXXXXXXXX.XXXX
----------------------------------------
----------------------------------------
All designated owners of the Variable Contract(s) shown on this voting
instruction must sign hereon. If as an attorney, executor, trustee, guardian or
in some representative capacity or as an officer or a corporation or
partnership, please add title as such.
PLEASE VOTE, SIGN AND DATE THIS VOTING INSTRUCTION AND RETURN IT IN THE ENCLOSED
ENVELOPE PROMPTLY.
First Name Middle Initial Last Name (Owner)
First Name, Middle Initial Last Name (Joint Owner)
Address
Address
City, State Zip
<PAGE> 46
VOTING INSTRUCTION / PROXY
Pacific Innovations Trust
Mid-Cap Equity Fund (the "Fund")
The undersigned owner of a variable annuity contract ("Variable Contract")
issued by Pacific Life Insurance Company ("Pacific Life") and funded by a
separate account of Pacific Life, hereby instructs Pacific Life or its
designated attorneys and proxies, on behalf of the separate account to vote the
shares of the Fund attributable to his or her Variable Contract at the special
meeting of shareholders of Pacific Innovations Trust (the "Trust"), to be held
at 9:00 a.m. Eastern Time, on June 26, 1998, at the offices of the Fund, 400
Bellevue Parkway, Wilmington, Delaware, and at any adjournment thereof, in the
manner directed below, with respect to the matters referred to in the proxy
statement for the meeting, receipt of which is hereby acknowledged, and in the
discretion of Pacific Life or its designated attorneys and proxies upon such
matters as may properly come before the meeting and at any adjournment thereof.
THIS VOTING INSTRUCTION/PROXY IS BEING SOLICITED BY THE BOARD OF TRUSTEES OF THE
TRUST. THE BOARD OF TRUSTEES OF THE TRUST RECOMMENDS A VOTE FOR THE PROPOSALS
AND THE ELECTION OF THE NOMINEES AS TRUSTEES. PLEASE VOTE BY CHECKING YOUR
RESPONSE.
1. Election of Trustees: Edward S. Bottum, William P. Carmichael,
Thomas M. Collins, Douglas B. Fletcher, Jr., Robert E. Greeley,
Harold T. Joanning, Cornelius J. Pings
_______FOR __________ WITHHOLD ALL
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL STRIKE
LINE THROUGH THE NOMINEE'S NAME IN THE LIST ABOVE.)
2. To approve a new Management Agreement between the Trust and Bank of
America National Trust and Savings Association in connection with
the merger of BankAmerica Corporation and NationsBank Corporation.
_______FOR __________ AGAINST __________ ABSTAIN
3. To approve the selection of Price Waterhouse LLP as independent auditors
for the current fiscal year.
_______FOR __________ AGAINST __________ ABSTAIN
This voting instruction will be voted as specified. IF NO SPECIFICATION IS MADE,
THIS VOTING INSTRUCTION WILL BE VOTED FOR THE PROPOSALS AND FOR THE ELECTION OF
ALL OF THE NOMINEES FOR TRUSTEES. If this voting instruction is not
returned or is not returned properly executed, such votes will be cast by
Pacific Life on behalf of the pertinent separate account in the same proportion
as it votes shares held by that separate account for which it has received
instructions from Variable Contract owners.
Contract(s): Receipt of the Notice of Meeting and
Proxy Statement is hereby acknowledged:
Dated: ____________________, 1998
Shares: XXXXXXXXX.XXXX
----------------------------------------
----------------------------------------
All designated owners of the Variable Contract(s) shown on this voting
instruction must sign hereon. If as an attorney, executor, trustee, guardian or
in some representative capacity or as an officer or a corporation or
partnership, please add title as such.
PLEASE VOTE, SIGN AND DATE THIS VOTING INSTRUCTION AND RETURN IT IN THE ENCLOSED
ENVELOPE PROMPTLY.
First Name Middle Initial Last Name (Owner)
First Name, Middle Initial Last Name (Joint Owner)
Address
Address
City, State Zip
