UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material under ss. 240.14a-12
HILLVIEW INVESTMENT TRUST II
(Name of Registrant as Specified In Its Charter)
N/A
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
N/A
(2) Aggregate number of securities to which transaction applies:
N/A
(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):
N/A
(4) Proposed maximum aggregate value of transaction:
N/A
(5) Total fee paid:
N/A
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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4) Date Filed:
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Hillview Investment Trust II
1055 Washington Boulevard
Stamford, CT 06901
Hillview Alpha Fund
Hillview International Alpha Fund
Notice of Special Meeting of Shareholders
December 19, 2000
A Special Meeting of the shareholders of the Hillview Alpha Fund and
the Hillview International Alpha Fund (each, a "Fund" and together, the "Funds")
of Hillview Investment Trust II (the "Trust") will be held on Tuesday, December
19, 2000 at 10:00 a.m. at the offices of PFPC Inc., 400 Bellevue Parkway,
Wilmington, Delaware for the following purposes:
1. (a) To approve or disapprove a new Sub-Advisory Agreement for the
Hillview Alpha Fund among the Trust, Hillview Capital Advisors, LLC
and Harris Associates, L.P. ("Harris") that arises out of Harris'
change in control and that reflects a slightly higher fee schedule.
(b) To approve or disapprove a new Sub-Advisory Agreement for the
Hillview International Alpha Fund among the Trust, Hillview Capital
Advisors, LLC and Harris that arises out of Harris' change in
control.
2. To consider and act upon any other matters that properly come
before the meeting and any adjourned session of the meeting.
Shareholders of record at the close of business on October 25, 2000 are
entitled to notice of and to vote at the meeting and any adjourned session.
By order of the Board of Trustees,
Joseph A. Bracken
Secretary
December 5, 2000
Please respond. Your vote is important. Please complete, sign, date and
return the enclosed proxy card, whether or not you plan to attend the
meeting.
<PAGE>
PROXY STATEMENT
Hillview Investment Trust II
1055 Washington Blvd.
Stamford, CT 06901
Hillview Alpha Fund
Hillview International Alpha Fund
The Trustees of Hillview Investment Trust II (the "Trustees") are
soliciting proxies from the shareholders of each of the Funds in connection with
a Special Meeting of Shareholders of each Fund (the "Meeting") to be held on
Tuesday, December 19, 2000 at 10:00 a.m. at the offices of PFPC Inc., 400
Bellevue Parkway, Wilmington, DE. The meeting notice, this Proxy Statement and
proxy cards are being sent to shareholders beginning on or about December 5,
2000.
The only item of business that the Trustees expect will come before the
Meeting is approval of a new Sub-Advisory Agreement for each Fund (each Fund's
"New Sub-Advisory Agreement") among Hillview Investment Trust II (the "Trust"),
Hillview Capital Advisors, LLC (the "Adviser") and Harris Associates, L.P. (the
"Sub-Adviser"). The proposed New Sub-Advisory Agreement for the Hillview
International Alpha Fund is identical (except for its date) to the Sub-Advisory
Agreement currently in effect for that Fund (for each Fund, "Current
Sub-Advisory Agreement"). The proposed New Sub-Advisory Agreement for the
Hillview Alpha Fund ("Alpha Fund") increases the fees payable to the
Sub-Adviser. Other than the proposed fee increase, and the date of the contract,
the Alpha Fund's proposed New Sub-Advisory contract is identical to its Current
Sub-Advisory Agreement.
The reason the Trustees are proposing the New Sub-Advisory Agreement
for each Fund is that the Current Sub-Advisory Agreements terminated when the
Sub-Adviser's parent company, Nvest Companies, L.P. ("Nvest"), was acquired by a
new parent company, CDC Asset Management ("CDC AM"), which is an indirect
subsidiary of Caisse des depots et Consignations. A federal law, the Investment
Company Act of 1940 (the "Investment Company Act"), provides generally that the
advisory agreements of mutual funds, including sub-advisory agreements such as
the Current Sub-Advisory Agreements, automatically terminate when the investment
adviser (including sub-advisers such as the Sub-Adviser) or its parent company
undergo a significant change of ownership. The Trustees have carefully
considered the matter, and have concluded that it is appropriate to enter into
the New Sub-Advisory Agreement for each Fund, so that the Sub-Adviser can
continue to manage each Fund. The International Alpha Fund will be managed on
the same terms now in effect, and the Alpha Fund will be managed on the same
terms except for the change in the fee payable to the Sub-Adviser. As described
more fully below, the change in the fee is not a result of the Acquisition of
Nvest by CDC AM.
Under the Investment Company Act, a Sub-Adviser cannot enter into a New
Sub-Advisory Agreement with respect to a Fund unless the shareholders of that
Fund vote to approve the New Sub-Advisory Agreement. The Meeting is being held
to seek shareholder approval of the New Sub-Advisory Agreements. In the
meantime, Interim Sub-Advisory Agreements have
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been put in place for a period up to the time of shareholder approval of the New
Sub-Advisory Agreements or 150 days after the change of control, whichever
occurs first.
Shareholders of each Fund will vote only with regard to the New
Sub-Advisory Agreement for their own Fund. Each share is entitled to cast one
vote, and fractional shares are entitled to a proportionate fractional vote.
Approval must be by a majority of the outstanding shares of each Fund, which is
the lesser of (1) 67% of the shares of that Fund that are present as the
Meeting, if the holders of more than 50% of the shares of the Fund outstanding
as of the record date are present or represented by proxy at the Meeting, or (2)
more than 50% of the shares of the Fund outstanding on the record date.
The Trustees recommend that the shareholders of each Fund vote to
approve the New Sub-Advisory Agreement for their Fund.
Description of the New Sub-Advisory Agreements
The New Sub-Advisory Agreement for each Fund is identical to the
Current Sub-Advisory Agreement for that Fund, except that the date of each New
Sub-Advisory Agreement will be the date that the shareholders approve the New
Sub-Advisory Agreement and, as discussed below, the New Sub-Advisory Agreement
for the Alpha Fund has a new fee schedule. Appendix A to this Proxy Statement
sets forth information about the Current Sub-Advisory Agreements, including the
dates of the Current Sub-Advisory Agreements and the advisory fee rates under
both the New Sub-Advisory Agreements and the Current Sub-Advisory Agreements.
Appendix B to this Proxy Statement contains the form of the Sub-Advisory
Agreements. Each Current Sub-Advisory Agreement and each New Sub-Advisory
Agreement matches the form in Appendix B, except for the names of the Funds, the
dates of the Agreements and, in the New Sub-Advisory Agreement for the Alpha
Fund, the fee rates. The following chart and the next several paragraphs briefly
summarize some important provisions of the New Sub-Advisory Agreements, but for
a complete understanding of the Agreements you should read Appendix A.
<TABLE>
<CAPTION>
----------------- ------------------------------- --------------------- --------------------- ----------------------
Description of Date of Last
Trustee Action Submission of
Regarding Current Current Sub-Advisory
Sub-Advisory Agreement for
Date of Current Agreement Since Shareholder Approval
Sub-Advisory Fee Sub-Advisory Beginning of Fund's and Reason for
Name of Fund Rate Schedule Agreement Last Fiscal Year Submission
----------------- ------------------------------- --------------------- --------------------- ----------------------
<S> <C> <C> <C> <C>
Hillview Alpha Current: July 31, 2000 N/A June 12, 2000
--------
Fund 0.75% of average daily assets
on the first $20 million;
0.50% of the average daily
assets of the rest of the
portion of fund assets
managed.
Proposed:
---------
0.75% of average daily assets
on the first $20 million;
0.60% of average daily assets
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on the next $55 million;
0.55% of average daily assets
over $75 million.
----------------- ------------------------------- --------------------- --------------------- ----------------------
Hillview Current: July 31, 2000 N/A June 12, 2000
--------
International 0.75% of average daily assets
Alpha Fund on first $25 million;
0.70% of average daily assets
on next $25 million;
0.60% of average daily assets
on next $50 million;
0.50% of average daily assets
on the rest of the portion of
fund assets managed.
Proposed:
---------
No change is being proposed
----------------- ------------------------------- --------------------- --------------------- ----------------------
</TABLE>
Each New Sub-Advisory Agreement essentially provides that the
Sub-Adviser, under the supervision of the Trustees and Hillview Capital
Advisors, LLC, will (1) decide what securities to buy and sell for the Fund's
portfolio, (2) select brokers and dealers to carry out portfolio transactions
for the Fund and (3) provide officers, office space and certain administrative
services to the Fund.
Each New Sub-Advisory Agreement provides that it will continue in
effect for an initial period of two years (beginning on the date that
shareholders of the Fund approve the contract). After that, it will continue in
effect from year to year as long as the continuation is approved at least
annually (i) by the Trustees or by vote of a majority of the outstanding voting
securities of the relevant Fund, and (ii) by vote of a majority of the Trustees
who are not "interested persons," as that term is defined in the Investment
Company Act, of the Trust, the Adviser or the Sub-Adviser (these Trustees who
are not "interested persons" are referred to below as the "Independent
Trustees").
Each New Sub-Advisory Agreement may be terminated by any party at any
time without the payment of penalty immediately (i) by vote of the Trustees or
by vote of a majority of the outstanding voting securities of the relevant Fund,
on thirty days' written notice by any party, and each terminates automatically
in the event of its "assignment" as defined in the Investment Company Act. The
Investment Company Act defines "assignment" to include, in general,
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transactions in which a significant change in the ownership of an investment
adviser, including a sub-adviser such as the Sub-Adviser, or its parent company
occur (such as the acquisition of Nvest by CDC AM).
Each New Sub-Advisory Agreement provides that the Sub-Adviser will not
be liable to the relevant Fund or its shareholders, except for liability arising
from the Sub-Adviser's willful misfeasance, bad faith, negligence or reckless
disregard of duty. In addition, each New Sub-Advisory Agreement provides that
each of the Adviser, the Sub-Adviser and the Trust shall indemnify the other
party and its affiliates and controlling persons for liability incurred by such
persons arising out of the indemnifying party's responsibilities to the Fund
based on the willful misfeasance, bad faith, negligence or reckless disregard of
duty of the indemnifying party or its employees, affiliates or persons acting on
its behalf.
Proposed Change for the Alpha Fund's Sub-Advisory Fees
------------------------------------------------------
The Sub-Adviser is one of five sub-advisers that each manages a portion
of the Alpha Fund's portfolio. Under the Current Sub-Advisory Agreement, the
Alpha Fund pays the Sub-Adviser 0.75% of the average daily assets on the first
$20 million the Sub-Adviser manages, and 0.50% of the average daily assets of
the rest of the portion of the Alpha Fund it manages. Under the proposed New
Sub-Advisory Agreement for the Alpha Fund, the Alpha Fund would still pay 0.75%
of the average daily assets on the first $20 million the Sub-Adviser manages,
but it would pay 0.60% of the average daily assets on the next $55 million the
Sub-Adviser manages and 0.55% of the average Alpha Fund assets over $75 million
that the Sub-Adviser manages. Thus, once the portion of the Alpha Fund that the
Sub-Adviser manages reaches $20 million, the Alpha Fund would pay the
Sub-Adviser slightly higher advisory fees under the proposed New Sub-Advisory
Agreement than it would pay under the Current Sub-Advisory Agreement. As of
November 9, 2000 the Sub-Adviser managed $21,896,593.65 of the Alpha Fund's
assets; therefore, the proposed fee schedule would impact the Alpha Fund's
sub-advisory fee immediately, unless the assets managed decreased to less than
$20 million prior to the effective date of the new sub-advisory agreement.
The Alpha Fund follows the same investment objectives and policies as
an unregistered investment company ("Predecessor Fund") advised by the Advisor
that operated from September 4, 1997 until August 31, 2000. The Sub-Adviser
served as a sub-adviser to the Predecessor Fund at the same advisory fee rate as
the rate under the Current Sub-Advisory Agreement. The Sub-Adviser agreed to
manage the Alpha Fund's assets under the Current Sub-Advisory Agreement
believing that the fee would be comparable to the advisory fee it charges
unaffiliated registered investment companies that it advises. In fact, the fee
is lower than the Sub-Adviser's current customary rate for unaffiliated
registered investment companies of a similar size. The current advisory fee rate
does not reflect the additional cost to the Sub-Adviser of serving in that
capacity for a registered investment company. The proposed increase in the fee
schedule is intended to account for the increased administrative and compliance
costs to the Sub-Adviser that arise out of the Alpha Fund being a registered
investment company. Even under the fee schedule in the New Sub-Advisory
Agreement, The Sub-Adviser's advisory fee would be the lowest of the Alpha
Fund's five sub-
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advisers, and it is well within the range of fees the Sub-Adviser charges for
comparable products. Appendix C shows the fee rates the Sub-Adviser charges
other comparable funds that it manages.
Basis for the Trustees' Recommendation
--------------------------------------
The Trustees determined at a meeting held on October 24, 2000 to
recommend that each Fund's shareholders vote to approve the New Sub-Advisory
Agreement for the respective Fund.
In coming to this recommendation, the Trustees considered a wide range
of information of the type they regularly consider when determining whether to
continue a Fund's sub-advisory agreement as in effect from year to year. The
Trustees considered information about, among other things:
o the increased administrative burden imposed on the Sub-Adviser in
managing the Alpha Fund as a registered investment company;
o the Sub-Adviser and its personnel (including particularly those
personnel with responsibilities for providing services to the Funds),
resources and investment process;
o the terms of the relevant advisory agreements (in this case, the New
Sub-Advisory Agreements);
o the scope and quality of the services that the Sub-Adviser has been
providing to the Funds;
o the advisory fee rates payable to the Sub-Adviser by the Adviser and
by other funds and client accounts managed or sub-advised by the
Sub-Adviser, and payable by similar funds managed by other advisers
(Appendix C to this Proxy Statement contains information comparing
each Fund's Sub-Advisory fee schedule to the fee schedule for other
funds managed or sub-advised by the Sub-Adviser that have investment
objectives similar to the Funds');
In addition to reviewing these kinds of information, which the Trustees
regularly consider on an annual or more frequent basis, the Trustees gave
particular consideration to matters relating to the possible effects on the
Sub-Adviser and the Funds of the acquisition of Nvest by CDC AM. Among other
things, the Trustees considered:
o the stated intention of Nvest and CDC AM that the Sub-Adviser will
continue to have a high degree of managerial autonomy from its parent
organizations and from other subsidiaries of Nvest;
o the stated intention of Nvest, CDC AM and the Sub-Adviser that the
acquisition not change the investment approach or process used by the
Sub-Adviser in managing the Funds;
o representations of senior executives of the Sub-Adviser and the
portfolio managers of the Funds that they have no intention of
terminating their employment with the Sub-Adviser as a result of CDC
AM's acquisition of Nvest, and representations of the Sub-Adviser,
Nvest and CDC AM that they have no intention of terminating the
employment of these executives or portfolio managers as a result of
the acquisition;
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<PAGE>
o certain actions taken by CDC AM, Nvest and the Sub-Adviser to help
retain and give incentive to key personnel of Nvest and the
Sub-Adviser;
o the general reputation and the financial resources of CDC AM and its
parent organizations.
In addition, the Trustees considered that the agreement relating to the
acquisition of Nvest by CDC AM provides that CDC AM and its immediate parent
company will (subject to certain qualifications) use their reasonable best
efforts to assure compliance with Section 15(f) of the Investment Company Act.
Section 15(f) provides that a mutual fund investment adviser (including a
sub-adviser such as the Sub-Adviser) or its affiliates can receive benefit or
compensation in connection with a change of control of the investment adviser
(such as CDC AM's acquisition of the Sub-Adviser's parent, Nvest) if two
conditions are satisfied. First, for three years after the change of control, at
least 75% of the members of the board of any registered investment company
advised by the adviser must consist of persons who are not "interested persons,"
as defined in the Investment Company Act, of the adviser. (No changes in the
current composition of the Trustees are required to satisfy this condition.)
Second, no "unfair burden" may be imposed on any such registered investment
company as a result of the change of control transaction or any express or
implied terms, conditions or understandings applicable to the transaction.
"Unfair burden" means any arrangement, during the two years after the
transaction, by which the investment adviser or any "interested person" of the
adviser receives or is entitled to receive any compensation, directly or
indirectly, from such investment company or its security holders (other than
fees for bona fide investment advisory or other services) or from any other
person in connection with the purchase or sale of securities or other property
to, from or on behalf of such investment company.
After carefully considering the information summarized above, the
Trustees, including the Independent Trustees, unanimously voted to (i) approve
the proposed new fee schedule for the Sub-Adviser for the Alpha Fund; (ii)
approve the New Sub-Advisory Agreement for each Fund; and (iii) recommend that
each Fund's shareholders vote to approve the New Sub-Advisory Agreement for
their Fund.
Information about the Ownership of the Sub-Adviser and the CDC AM/Nvest
-----------------------------------------------------------------------
Transaction
------------
The Sub-Adviser is a limited partnership that has one general partner,
Harris Associates, Inc. (the "Sub-Adviser General Partner"). Robert M. Levy is
the principal executive officer of the Sub-Adviser. The address of the
Sub-Adviser, the Sub-Adviser General Partner and Robert M. Levy is 2 North
LaSalle Street, Suite 500, Chicago, IL 60602-3790. The Sub-Adviser General
Partner is a direct wholly owned subsidiary of Nvest Holdings, Inc. ("Nvest
Holdings"), which in turn is a direct wholly owned subsidiary of Nvest. Nvest's
managing general partner, Nvest Corporation, is a direct wholly-owned subsidiary
of MetLife New England Holdings, Inc. MetLife New England Holdings, Inc. is a
direct wholly-owned subsidiary of Metropolitan Life Insurance Company
("MetLife"). Nvest Corporation is also the sole general partner of Nvest, L.P.
Nvest, L.P., Nvest's advising general partner, is a publicly traded company
listed on the New York Stock Exchange. In addition to owning Nvest Corporation,
MetLife owns, directly or indirectly, approximately a 48% limited partnership
interest in Nvest. Nvest, L.P. owns
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approximately 14% of Nvest. (These percentages do not reflect the vesting and
exercise, described below, of various options held by personnel of Nvest and of
its affiliates, including the Sub-Adviser, to acquire limited partnership units
of Nvest, L.P.) If the proposed acquisition is completed, Nvest Corporation will
cease to be the managing general partner of Nvest and the general partner of
Nvest, L.P., and MetLife will cease to own any partnership interest in Nvest.
MetLife is a wholly-owned subsidiary of MetLife, Inc., a publicly traded company
listed on the New York Stock Exchange. The address of Nvest, Nvest Corporation,
Nvest Holdings and Nvest, L.P. is 399 Boylston Street, Boston, Massachusetts
02116. The address of MetLife New England Holdings, Inc., MetLife and MetLife,
Inc. is One Madison Avenue, New York, New York 10010.
On June 16, 2000, Nvest and CDC AM announced that they and certain of
their respective affiliated companies had entered into an Agreement and Plan of
Merger (the "Merger Agreement"). Under the Merger Agreement, CDC AM would
acquire all of the outstanding units of partnership interest in both Nvest and
Nvest, L.P., at a price of $40 per unit. This price was subject to reduction
(but not below $34 per unit) based in part on a formula that took into account
the investment advisory fees payable to the Sub-Adviser and other Nvest
affiliates by their mutual fund and other investment advisory clients that have
consented to the transaction. Under this formula, the price per unit that CDC AM
paid to acquire Nvest could have been reduced if a Fund's shareholders do not
approve the New Sub-Advisory Agreement for their Fund. The aggregate price
payable by CDC AM to acquire all of the units of Nvest was $1,500,000,000, and
the aggregate price paid by CDC AM to acquire all of the units of Nvest, L.P.
(including payments with respect to units subject to options) was
$375,000,000,000.
As a result of the acquisition, Nvest and Nvest, L.P. became indirect
wholly-owned subsidiaries of CDC AM, which in turn is 60% owned by CDC Finance,
a wholly-owned subsidiary of Caisse des depots et Consignations ("CDC"). Founded
in 1816, CDC is a major diversified financial institution with a strong global
presence in the banking, insurance, investment banking, asset management and
global custody industries. In addition to its 60% ownership of CDC AM through
CDC Finance, CDC owns 40% of CNP Assurances, the leading French insurance
company, which itself owns 20% of CDC AM. CDC also owns 35% of Caisse National
des Caisses d'Epargne, which also owns 20% of CDC AM. CDC is 100% owned by the
French state. The main place of business of CDC AM is 7, place des Cinq Martyrs
du Lycee Buffon, 75015 Paris, France. The registered address of CDC Finance is
56, rue de Lille, 75007 Paris, France. The registered address of CDC is 56, rue
de Lille, 75007 Paris, France. The registered address of CNP Assurances is 4,
place Raoul Dautry, 75015 Paris, France. The registered address of Caisse
National des Caisses d'Epargne is 5, rue Masseran, 75007 Paris, France.
Following the acquisition, Nvest was renamed CDC Asset Management-North America.
Various personnel of Nvest and of its affiliates, including the
Sub-Adviser, had previously been granted options to purchase limited partnership
units of Nvest, L.P. ("Nvest L.P. Units"). The Merger Agreement provided that
these options vested and became fully exercisable immediately before CDC AM's
acquisition of Nvest and Nvest, L.P., even though some of these options would
not otherwise have vested or been exercisable at that time. Each option was
converted into the right to receive cash from Nvest in an amount equal to the
difference between the option's exercise price and the actual transaction price
of $40 per unit.
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Certain Brokerage Matters
-------------------------
In their consideration of the New Sub-Advisory Agreements, the Trustees
took account of the Sub-Adviser's practices regarding the selection and
compensation of brokers and dealers that execute portfolio transactions for the
Funds, and the brokers' and dealers' provision of brokerage and research
services to the Sub-Adviser. The Sub-Adviser has informed the Trustees that it
does not expect to change these practices as a result of CDC AM's acquisition of
Nvest. The following is a summary of these practices:
In selecting brokers, the sub-advisers will consider the full range and
quality of a broker's services. Consistent with the interests of the funds and
subject to the review of the board, the sub-advisers may cause a fund to
purchase and sell portfolio securities through brokers who provide the
sub-advisers with brokerage or research services. A fund may pay those brokers a
higher commission than may be charged by other brokers, provided that the
sub-advisers determine in good faith that the commission is reasonable in terms
either of that particular transaction or of the overall responsibility of the
sub-advisers to the fund and their other clients.
Research services obtained from brokers may include written reports,
pricing and appraisal services, analysis of issues raised in proxy statements,
educational seminars, subscriptions, portfolio attribution and monitoring
services, and computer hardware, software and access charges which are directly
related to investment research. Research services may be received in the form of
written reports, online services, telephone contacts and personal meetings with
security analysts, economists, corporate and industry spokespersons, and
government representatives.
For purchases or sales with broker-dealer firms that act as principal,
the sub-advisers seeks best execution. Although the sub-advisers may receive
certain research or execution services in connection with these transactions,
the sub-advisers will not purchase securities at a higher price or sell
securities at a lower price than would otherwise be paid if no weight was
attributed to the services provided by the executing dealer. The sub-advisers
may engage in agency transactions in over-the-counter securities in return for
research and execution services. These transactions are entered into only
pursuant to procedures that are designed to ensure that the transaction
(including commissions) is at least as favorable as it would have been if
effected directly with a market-maker that did not provide research or execution
services.
Research services and information received from brokers or dealers are
supplemental to the sub-advisers' own research efforts and, when utilized, are
subject to internal analysis before being incorporated into its investment
processes. Information and research services furnished by brokers or dealers
through which or with which a fund effects securities transactions may be used
by the sub-advisers in advising other funds or accounts and, conversely,
research services furnished to the sub-advisers by brokers or dealers in
connection with other funds or accounts that it advises may be used in advising
the funds.
Investment decisions for the funds and for other investment accounts
managed by the sub-advisers are made independently of each other in light of
differing considerations for the various accounts. However, the same investment
decision may occasionally be made for a fund
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and one or more accounts. In those cases, simultaneous transactions are
inevitable. Purchases or sales are then averaged as to price and allocated
between that fund and the other account(s) as to amount according to a formula
deemed equitable to the fund and the other account(s). While in some cases this
practice could have a detrimental effect upon the price or value of the security
as far as the funds are concerned, or upon their ability to complete their
entire order, in other cases it is believed that coordination and the ability to
participate in volume transactions will be beneficial to the funds.
The Sub-Adviser may cause portfolio transactions for the Funds to be
executed by Harris Associates Securities LP; AEW Securities L.P.; Fulcrum
Financial Advisors; Loomis Sayles Distributors L.P.; MetLife Securities, Inc.;
Metric Capital Corporation; Metropolitan Life Insurance Company; Nathan & Lewis
Securities, Inc.; New England Funds, L.P.; New England Securities Corporation;
Reich & Tang Distributors, Inc.; Security First Financial, Inc.; State Street
Research Investment Services, Inc.; and 1717 Capital Management Co., brokerage
firms that are affiliated with the Sub-Adviser because they are owned by the
Sub-Adviser's parent company, Nvest. The Funds may pay brokerage commissions to
these brokerage firms for executing these portfolio transactions. Appendix D
contains information about these commission payments.
Other Information
-----------------
Principal Underwriter's and Administrator's Address. The address of the
Funds' principal underwriter, PFPC Distributors, Inc., and administrator, PFPC
Inc. is 400 Bellevue Parkway, Wilmington, DE 19809.
Outstanding Shares and Significant Shareholders. Appendix E to this Proxy
Statement lists for each Fund the total number of shares outstanding as of
October 25, 2000 for each class of the Fund's shares entitled to vote at the
Meeting. It also identifies holders of more than 5% of any class of shares of
each Fund, and contains information about the shareholdings in the Funds of the
Trustees and the executive officers of the Funds.
Information About Proxies and the Conduct of the Meeting
--------------------------------------------------------
Solicitation of Proxies. Proxies will be solicited primarily by mailing
this Proxy Statement and its enclosures, but proxies may also be solicited
through further mailings or telephone calls by officers of the Funds or by
employees or agents of the Adviser.
Costs of Solicitation. All of the costs of the Meeting, including the costs
of soliciting proxies, will be paid by the Sub-Adviser, Nvest or CDC AM. None of
these costs will be borne by the Funds.
Voting and Tabulation of Proxies. Shares represented by duly executed
proxies will be voted as instructed on the proxy. If no instructions are given,
the proxy will be voted in favor of the relevant New Sub-Advisory Agreement(s).
You can revoke your proxy by sending a signed, written letter of revocation to
the Secretary of the Funds, by properly executing and submitting a later-dated
proxy or by attending the Meeting and voting in person.
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One third of the shares of any Fund outstanding on the record date, present
in person or represented by proxy, constitutes a quorum for the transaction of
business by the shareholders of that Fund at the Meeting. In determining whether
a quorum is present, shares represented by proxies that reflect abstentions, and
"broker non-votes," will be counted as shares that are present and entitled to
vote. Since these shares will be counted as present, but not as voting in favor
of any proposal, these shares will have the same effect as if they cast votes
against the proposal. "Broker non-votes" are shares held by brokers or nominees
as to which (i) the broker or nominee does not have discretionary voting power
or (ii) the broker or nominee has not received instructions from the beneficial
owner or other person who is entitled to instruct how the shares will be voted.
Required Vote. For each Fund, the vote required to approve the New
Sub-Advisory Agreement is the lesser of (1) 67% of the shares of that Fund that
are present at the Meeting, if the holders of more than 50% of the shares of the
Fund outstanding as of the record date are present or represented by proxy at
the Meeting, or (2) more than 50% of the shares of the Fund outstanding on the
record date. If the required vote is not obtained for any Fund, the Trustees
will consider what other actions to take in the best interests of the Funds.
Adjournments; Other Business. If any Fund has not received enough votes by
the time of the Meeting to approve that Fund's New Sub-Advisory Agreement, the
persons named as proxies may propose that the Meeting be adjourned one or more
times as to that Fund to permit further solicitation of proxies. Any adjournment
requires the affirmative vote of more than 50% of the total number of shares of
that Fund that are present in person or by proxy when the adjournment is being
voted on. The persons named as proxies will vote in favor of any such
adjournment all proxies that they are entitled to vote in favor of the relevant
Fund's New Sub-Advisory Agreement. They will vote against any such adjournment
any proxy that directs them to vote against the New Sub-Advisory Agreement. They
will not vote any proxy that directs them to abstain from voting on the New
Sub-Advisory Agreement.
The Meeting has been called to transact any business that properly comes
before it. The only business that management of the Funds intends to present or
knows that others will present is the approval of the New Sub-Advisory
Agreements. If any other matters properly come before the Meeting, and on all
matters incidental to the conduct of the Meeting, the persons named as proxies
intend to vote the proxies in accordance with their judgment, unless the
Secretary of the Funds has previously received written contrary instructions
from the shareholder entitled to vote the shares.
Shareholder Proposals at Future Meetings. The Trust does not hold annual or
other regular meetings of shareholders. Shareholder proposals to be presented at
any future meeting of shareholders of the Funds must be received by the Funds in
writing a reasonable amount of time before the Trust solicits proxies for that
meeting, in order to be considered for inclusion in the proxy materials for that
meeting.
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Appendix A
Form of Investment Sub-Advisory Agreements
SUB-ADVISORY AGREEMENT
THIS SUB-ADVISORY AGREEMENT is made as of the ____ day of ___________,
2000 ("Contract"), among Hillview Investment Trust II, a Delaware business trust
("Trust"), Hillview Capital Advisors, LLC ("Adviser"), a limited liability
company organized under the laws of the State of Delaware and Harris Associates,
L.P. a partnership organized under the laws of the State of Illinois
("Sub-Adviser").
WHEREAS, the Adviser has entered into an Investment Advisory and
Administration Agreement dated June 12, 2000 ("Management Agreement") with the
Trust, an open-end management investment company registered under the Investment
Company Act of 1940, as amended ("1940 Act"); and
WHEREAS, the Hillview Alpha Fund ("Fund") is a series of the Trust; and
WHEREAS, under the Management Agreement, the Adviser has agreed to
provide certain investment advisory and administrative services to the Fund; and
WHEREAS, the Adviser is authorized under the Management Agreement to
delegate its investment advisory responsibilities to one or more persons or
companies; and
WHEREAS, the Sub-Adviser is willing to furnish such services to the
Adviser and the Fund;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, Trust, Adviser and the Sub-Adviser agree as follows:
1. Appointment. The Trust hereby appoints and employs the Sub-Adviser
as a discretionary portfolio manager, on the terms and conditions set forth
herein, of those assets of the Fund which the Adviser determines to assign to
the Sub-Adviser (those assets being referred to as the "Fund Account"). The
Adviser may, from time to time, make additions to and withdrawals, including
cash and cash equivalents, from the Fund Account.
2. Acceptance of Appointment. The Sub-Adviser accepts that appointment
and agrees to render the services herein set forth, for the compensation herein
provided.
3. Duties as Sub-Adviser.
(a) Subject to the supervision and direction of the Trust's Board of
Trustees ("Board") and of the Adviser, and all written guidelines adopted by the
Trust or the Adviser that are provided to the Sub-Adviser, the Sub-Adviser will
provide a continuous investment program with respect to the Fund Account,
including investment research and management for all securities and investments
and cash equivalents in the Fund Account. The Sub-Adviser will determine from
time to time what investments in the Fund Account will be purchased, retained or
sold by the Fund. The Sub-Adviser will be responsible for placing purchase and
sell orders for investments and for other related transactions with respect to
the Fund Account. The Sub-Adviser will provide services under this Contract in
accordance with the Fund's investment objective, policies and restrictions and
the description of its investment strategy and style, all as stated in the
Trust's registration statement under the 1940 Act, and any amendments or
supplements thereto ("Registration Statement") of which the Sub-Adviser has
notice.
(b) The Sub-Adviser agrees that, in placing orders with brokers, it
will seek to obtain the best net result in terms of price and execution;
provided that, on behalf of the Fund, the Sub-Adviser may, in its
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discretion, use brokers (including brokers that may be affiliates of the
Sub-Adviser to the extent permitted by Section 3(c) hereof) who provide the
Sub-Adviser with research, analysis, advice and similar services to execute
portfolio transactions, and the Sub-Adviser may pay to those brokers in return
for brokerage and research services a higher commission than may be charged by
other brokers, subject to the Sub-Adviser's determining in good faith that such
commission is reasonable in terms either of the particular transaction or of the
overall responsibility of the Sub-Adviser to the Fund and its other clients and
that the total commissions paid by the Fund will be reasonable in relation to
the benefits to the Fund over the long term. In no instance will portfolio
securities be purchased from or sold to the Sub-Adviser, or any affiliated
person thereof, except in accordance with the federal securities laws and the
rules and regulations thereunder. Whenever the Sub-Adviser simultaneously places
orders to purchase or sell the same security on behalf of the Fund and one or
more other accounts advised by the Sub-Adviser, the orders will be allocated as
to price and amount among all such accounts in a manner believed to be equitable
over time to each account. The Adviser recognizes that in some cases this
procedure may adversely affect the results obtained for the Fund.
(c) The Sub-Adviser will not execute without the prior written approval
of the Adviser any portfolio transactions for the Fund Account with a broker
which is (i) an affiliated person of the Trust, including the Adviser or any
Sub-Adviser for any Fund of the Trust; (ii) a principal underwriter of the
Fund's shares; or (iii) an affiliated person of such an affiliated person or
principal underwriter. The Adviser agrees that it will provide the Sub-Adviser
with a list of such brokers and dealers and will, from time to time, update such
list as necessary.
(d) The Sub-Adviser will maintain all books and records required to be
maintained pursuant to the 1940 Act and the rules and regulations promulgated
thereunder with respect to actions by the Sub-Adviser on behalf of the Fund, and
will furnish the Board and the Adviser with such periodic and special reports as
the Board or the Adviser reasonably may request. In compliance with the
requirements of Rule 31a-3 under the 1940 Act, the Sub-Adviser hereby agrees
that all records that it maintains for the Fund are the property of the Trust,
agrees to preserve for the periods prescribed by Rule 31a-2 under the 1940 Act
any records that it maintains for the Trust and that are required to be
maintained by Rule 31a-1 under the 1940 Act, and further agrees to surrender
promptly to the Trust a complete set of any records that it maintains for the
Fund upon request by the Trust.
(e) All transactions will be consummated by payment to or delivery by
the custodian designated by the Trust (the "Custodian"), or such depositories or
agents as may be designated by the Custodian in writing, of all cash and/or
securities due to or from the Fund Account, and the Sub-Adviser shall not have
possession or custody thereof. The Sub-Adviser shall advise the Custodian and
confirm in writing to the Trust and to the Adviser or any other designated agent
of the Fund all investment orders for the Fund Account placed by it with brokers
and dealers at the time and in the manner set forth in Rule 31a-1 under the 1940
Act. For purposes of the foregoing sentence, communication to the Custodian via
DTC is acceptable. The Trust shall issue to the Custodian such instructions as
may be appropriate in connection with the settlement of any transaction
initiated by the Sub-Adviser. The Trust shall be responsible for all custodial
arrangements and the payment of all custodial charges and fees, and, upon giving
proper instructions to the Custodian, the Sub-Adviser shall have no
responsibility or liability with respect to custodial arrangements or the acts,
omissions or other conduct of the Custodian, except that it shall be the
responsibility of the Sub-Adviser to communicate it to the Adviser if the
Custodian fails to confirm in writing proper execution of the instructions.
(f) At such times as shall be reasonably requested by the Board or the
Adviser, the Sub-Adviser will provide the Board and the Adviser with economic
and investment analyses and reports as well as quarterly reports setting forth
the performance of the Fund Account and make available to the Board and Adviser
any economic, statistical and investment services that the Sub-Adviser normally
makes available to its institutional or other customers.
(g) In accordance with procedures adopted by the Board, as amended from
time to time, the Sub-Adviser is responsible for assisting in the fair valuation
of all portfolio securities and will use its reasonable efforts to arrange for
the provision of valuation information or a price(s) from a party(ies)
independent of the
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Sub-Adviser for each portfolio security for which the custodian does not obtain
prices in the ordinary course of business from an automated pricing service.
4. Further Duties. In all matters relating to the performance of this
Contract, the Sub-Adviser will act in conformity with the Trust's Declaration of
Trust, By-Laws and Registration Statement of which it has received notice and
with the written instructions and written directions of the Board and the
Adviser; and will comply with the requirements of the 1940 Act and the
Investment Advisers Act of 1940, as amended ("Advisers Act") and the rules under
each, and all other federal and state laws and regulations applicable to the
Trust and the Fund. The Adviser agrees to provide to the Sub-Adviser copies of
the Trust's Declaration of Trust, By-Laws, Registration Statement, written
instructions and directions of the Board and the Adviser, and any amendments or
supplements to any of these materials as soon as practicable after such
materials become available.
5. Proxies. The Sub-Adviser will vote all proxies solicited by or with
respect to issuers of securities in which assets of the Fund Account may be
invested from time to time. At the request of the Sub-Adviser, the Adviser shall
provide the Sub-Adviser with its or the Trust's recommendations as to the voting
of such proxies. The Adviser shall instruct the Custodian to forward or cause to
be forwarded to the Sub-Adviser all relevant proxy solicitation materials.
6. Expenses. During the term of this Contract, the Sub-Adviser will
bear all expenses incurred by it in connection with its services under this
Contract other than the cost of securities (including brokerage commissions,
transactional fees and taxes, if any) purchased for the Fund. The Fund shall be
responsible for its expenses.
7. Compensation. The compensation of the Sub-Adviser for its services
under this Contract shall be calculated and paid by the Trust in accordance with
the attached Schedule A.
8. 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, the
Trust, its shareholders or by the Adviser in connection with the matters to
which this Contract relates, except a loss resulting from willful misfeasance,
bad faith or gross negligence on its part in the performance of its duties or
from reckless disregard by it of its obligations and duties under this Contract.
Nothing in this paragraph shall be deemed a limitation or waiver of any
obligation or duty that may not by law be limited or waived.
9. Indemnification.
(a) The Adviser and the Trust shall indemnify the Sub-Adviser or any of
its directors, officers, employees or affiliates for all losses, damages,
liabilities, costs and expenses (including legal) ("Losses") as they are
incurred by the Sub-Adviser by reason of or arising out of any act or omission
by the Adviser or Trust under this Agreement, or any breach of warranty,
representation or agreement hereunder, except to the extent that such Losses
arise as a result of the negligence of the Sub-Adviser or the Sub-Adviser's
breach of fiduciary duty to the Adviser or the Trust.
(b) The Sub-Adviser shall indemnify the Adviser or any of its
directors, officers, employees or affiliates for all losses, damages,
liabilities, costs and expenses (including legal) ("Losses") as they are
incurred by the Adviser by reason of or arising out of any act or omission by
the Sub-Adviser under this Agreement, or any breach of warranty, representation
or agreement hereunder, except to the extent that such Losses arise as a result
of the negligence of the Adviser or the Adviser's breach of fiduciary duty to
the Sub-Adviser.
(c) The Sub-Adviser shall indemnify the Trust or any of its directors,
officers, employees or affiliates for all losses, damages, liabilities, costs
and expenses (including legal) ("Losses") as they are incurred by the Trust by
reason of or arising out of any act or omission by the Sub-Adviser under this
Agreement, or any breach of warranty, representation or agreement hereunder,
except to the extent that such Losses arise as a result of the negligence of the
Trust or the Trust's breach of fiduciary duty to the Sub-Adviser.
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10. Representations, Warranties and Agreements of the Trust. The Trust
represents, warrants and agrees that:
(a) Each of the Adviser and the Sub-Adviser has been duly appointed by
the Board of Trustees of the Trust to provide investment services to the Fund
Account as contemplated hereby.
(b) The Trust will deliver to the Sub-Adviser a true and complete copy
of the Fund's Registration Statement as effective from time to time and such
other documents or instruments governing the investment of the Fund Account and
such other information as is necessary for the Sub-Adviser to carry out its
obligations under this Contract.
(c) The Trust is currently in compliance and shall at all times
continue to comply with the requirements imposed upon the Trust by applicable
law and regulations.
11. Representations of Adviser. The Adviser represents, warrants and
agrees that:
(a) The Adviser has been duly authorized by the Board of Trustees of
the Trust to delegate to the Sub-Adviser the provision of investment services to
the Fund Account as contemplated hereby.
(b) The Adviser is currently in compliance and shall at all times
continue to comply with the requirements imposed upon the Adviser by applicable
law and regulations.
12. Representations of Sub-Adviser. The Sub-Adviser represents,
warrants and agrees as follows:
(a) The Sub-Adviser (i) is registered as an investment adviser under
the Advisers Act and will continue to be so registered for so long as this
Contract remains in effect; (ii) is not prohibited by the 1940 Act, the Advisers
Act or other law, regulation or order from performing the services contemplated
by this Contract; (iii) has met and will seek to continue to meet for so long as
this Contract remains in effect, any other applicable federal or state
requirements, or the applicable requirements of any regulatory or industry
self-regulatory agency necessary to be met in order to perform the services
contemplated by this Contract; (iv) has the authority to enter into and perform
the services contemplated by this Contract; and (v) will promptly notify Adviser
of the occurrence of any event that would disqualify the Sub-Adviser from
serving as an investment adviser of an investment company pursuant to Section
9(a) of the 1940 Act or otherwise. The Sub-Adviser will also immediately notify
the Fund and the Adviser if it is served or otherwise receives notice of any
action, suit, proceeding, inquiry or investigation, at law or in equity, before
or by any court, public board or body, involving the affairs of the Fund.
(b) The Sub-Adviser has adopted a written code of ethics complying with
the requirements of Rule 17j-1 under the 1940 Act and will provide the Adviser
and the Board with a copy of such code of ethics, together with evidence of its
adoption. Within forty-five days of the end of the last calendar quarter of each
year that this Contract is in effect, the president, Chief Operating Officer or
a vice-president of the Sub-Adviser shall certify to the Adviser that the
Sub-Adviser has complied with the requirements of Rule 17j-1 during the previous
year and that there has been no violation of the Sub-Adviser's code of ethics
or, if such a violation has occurred, that appropriate action was taken in
response to such violation. Upon the written request of the Adviser, the
Sub-Adviser shall permit the Adviser, its employees or its agents to examine the
reports required to be made to the Sub-Adviser by Rule 17j-1(c)(1) and all other
records relevant to the Sub-Adviser's code of ethics.
(c) The Sub-Adviser has provided the Trust and the Adviser with a copy
of its Form ADV, which as of the date of this Agreement is its Form ADV as most
recently filed with the Securities and Exchange Commission ("SEC") and promptly
will furnish a copy of all amendments to the Trust and the Adviser at least
annually. Such amendments shall reflect all changes in the Sub-Adviser's
organizational structure, professional staff or other significant developments
affecting the Sub-Adviser, as required by the Investment Advisers Act of 1940.
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(d) The Sub-Adviser will notify the Trust and the Adviser of any change
of control of the Sub-Adviser, including any change of its general partners,
controlling persons or 25% shareholders, as applicable, and any changes in the
key personnel who are either the portfolio manager(s) of the Fund Account or
senior management of the Sub-Adviser, in each case prior to, or promptly after,
such change. The Sub-Adviser agrees to bear all reasonable expenses of the Fund,
if any, arising out of such change in control.
(e) The Sub-Adviser agrees to maintain an appropriate level of errors
and omissions or professional liability insurance coverage.
(f) The Sub-Adviser agrees that neither it, nor any of its affiliates,
will in any way refer directly or indirectly to its relationship with the Trust,
the Fund, the Adviser or any of their respective affiliates in offering,
marketing or other promotional materials without the express written consent of
the Adviser. However, the Sub-Adviser may use the performance of the Fund
Account in its composite performance.
13. Services Not Exclusive. The services furnished by the Sub-Adviser
hereunder are not to be deemed to be exclusive, and the Sub-Adviser shall be
free to furnish similar services to others, except as prohibited by applicable
law or agreed upon in writing among the Sub-Adviser, the Fund and the Adviser.
14. Confidentiality. Subject to the duty of the Sub-Adviser and the
Adviser to comply with applicable law, including any demand of any regulatory or
taxing authority having jurisdiction, the parties hereto shall treat as
confidential all material non public information pertaining to the Fund Account
and the actions of the Sub-Adviser, the Adviser and the Fund in respect thereof.
Unless such use is required by law, the Adviser and the Trust may not use
Sub-Adviser's name, investment performance information, other descriptive
biographical information about the Sub-Adviser or its personnel, or other
pertinent information regarding the Sub-Adviser in offering documents for the
Fund, and in marketing or advertising materials relating to the Fund, the Trust
or the Adviser, without consent of the Sub-Adviser, which will not be
unreasonably withheld.
15. Duration and Termination.
(a) This Contract shall become effective upon the date first above
written, provided that this Contract shall not take effect unless it has first
been approved: (i) by a vote of a majority of those trustees of the Trust who
are not parties to this Contract or interested persons of any such party, cast
in person at a meeting called for the purpose of voting on such approval, and
(ii) by vote of a majority of the Fund's outstanding securities. Adviser shall
provide Sub-Adviser with verification that such approvals have occurred.
(b) Unless sooner terminated as provided herein, this Contract shall
continue in effect for two years from its effective date. Thereafter, if not
terminated, this Contract shall continue automatically for successive periods of
twelve months each, provided that such continuance is specifically approved at
least annually: (i) by a vote of a majority of those trustees of the Trust who
are not parties to this Contract or interested persons of any such party, cast
in person at a meeting called for the purpose of voting on such approval, and
(ii) by the Board or by vote of a majority of the outstanding voting securities
of the Fund. Adviser shall provide Sub-Adviser with verification that such
approvals have occurred.
(c) Notwithstanding the foregoing, this Contract may be terminated by
any party hereto at any time, without the payment of any penalty, immediately
upon written notice to the other parties hereto in the event of material breach
of any provision thereof by the party so notified if such breach shall not have
been cured within a 20-day period after notice of such breach; or otherwise, by
any party upon thirty (30) days written notice to the other parties hereto. The
Agreement may also be terminated immediately if, in the reasonable judgment of
the Trust or the Adviser, the Sub-Adviser becomes unable to discharge its duties
and obligations under this Contract, including circumstances such as financial
insolvency of the Sub-Adviser or other circumstances that could adversely affect
the Fund. This Contract will terminate automatically in the event of its
assignment or upon termination of the Advisory Contract as it relates to the
Fund.
16. Amendment of this Contract. No provision of this Contract may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against whom
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enforcement of the change, waiver, discharge or termination is sought. No
amendment of this Contract shall be effective until approved (i) by a vote of a
majority of those trustees of the Trust who are not parties to this Contract or
interested persons of any such party, and (ii) by a vote of a majority of the
Fund's outstanding voting securities (unless the Trust receives an SEC order or
no-action letter permitting it to modify the Contract without such vote or a
regulation exists under the 1940 Act that permits such action without such
vote).
17. Trust and Shareholder Liability. The Adviser and Sub-Adviser are
hereby expressly put on notice of the limitation of shareholder liability as set
forth in the Declaration of Trust of the Trust and agree that obligations
assumed by the Trust pursuant to this Agreement shall be limited in all cases to
the Trust and its assets, and if the liability relates to one or more series,
the obligations hereunder shall be limited to the respective assets of the Fund.
The Adviser and Sub-Adviser further agree that they shall not seek satisfaction
of any such obligation from the shareholders or any individual shareholder of
the Fund, nor from the Trustees or any individual Trustee of the Trust.
18. Governing Law. This Contract shall be construed in accordance with
the 1940 Act and the laws of the State of Delaware, without giving effect to the
conflicts of laws principles thereof. To the extent that the applicable laws of
the State of Delaware conflict with the applicable provisions of the 1940 Act,
the latter shall control.
19. Miscellaneous. The captions in this Contract 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 Contract shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Contract shall not be affected
thereby. This Contract shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors. As used in this Contract,
the terms "majority of the outstanding voting securities," "affiliated person,"
"interested person," "assignment," "broker," "investment adviser," "net assets,"
"sale," "sell" and "security" shall have the same meaning as such terms have in
the 1940 Act, subject to such exemption as may be granted by the SEC by any
rule, regulation or order. Where the effect of a requirement of the federal
securities laws reflected in any provision of this Contract is made less
restrictive by a rule, regulation or order of the SEC, whether of special or
general application, such provision shall be deemed to incorporate the effect of
such rule, regulation or order. This Contract and the Schedule(s) attached
hereto embody the entire agreement and understanding among the parties. This
Contract may be signed in counterpart.
20. Notices. Any notice herein required is to be in writing and is
deemed to have been given to the Sub-Adviser or Adviser upon receipt of the same
at their respective addresses set forth below. All written notices required or
permitted to be given under this Contract will be delivered by personal service,
by postage mail - return receipt requested or by facsimile machine or a similar
means of same day delivery which provides evidence of receipt (with a confirming
copy by mail as set forth herein). All notices provided to the Fund will be sent
to the attention of Joseph A. Bracken, Secretary. All notices provided to
Adviser will be sent to the attention of Joseph A. Bracken, ________________.
All notices provided to the Sub-Adviser will be sent to the attention of Anita
Nagler, with a copy to Margaret K. McLaughlin.
[rest of page left intentionally blank]
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their duly authorized signatories as of the date and year first
above written.
HILLVIEW INVESTMENT TRUST II
on behalf of
HILLVIEW ALPHA FUND
1055 Washington Boulevard, Third Floor
Stamford, Connecticut 06901
Attest:
By:_____________________ By:______________________
Name: Name:
Title: Title:
HILLVIEW CAPITAL ADVISORS, LLC
1055 Washington Boulevard, Third Floor
Stamford, Connecticut 06901
Attest:
By:_____________________ By:______________________
Name: Name:
Title: Title:
HARRIS ASSOCIATES, L.P.
Two North LaSalle Street, Suite 500
Chicago, Illinois 60602
Attest:
By:_______________________ By:_____________________________
Name: Name:
Title: Title:
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EXHIBIT A
SUB-ADVISORY FEES
This Exhibit A contains the sub-advisory fee information required by
Section 7 of the Sub-Advisory Agreement among Hillview Investment Trust II
("Trust"), Hillview Capital Advisers, LLC ("Adviser") and Harris Associates,
L.P. ("Sub-Adviser") relating to the Alpha Fund series ("Fund") of the Trust.
Fee Schedule. Fees payable to the Sub-Adviser pursuant to this Contract
shall be payable within ten days after receipt by the Trust of the Sub-Adviser's
bill after the end of each calendar quarter for services rendered during the
prior quarter (or billing period, if less than a calendar quarter). The fees are
calculated as of the close of trading on the last business day of the calendar
quarter by applying the applicable fee rate to the average daily assets of the
Fund allocated to the Sub-Adviser for that period. For purposes of calculating
the fee, the value of the Fund's assets shall be determined in the same manner
as that which the Fund uses to determine the net asset value of its shares. The
applicable annualized fee rate shall be 0.75% on the first $20 million of the
Fund's assets allocated to the Sub-Adviser, and 0.60% on the next $55 million of
the Fund's assets allocated to the Sub-Adviser, and 0.55% on all of the Fund's
assets allocated to the Sub-Adviser in excess of $75 million.
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SUB-ADVISORY AGREEMENT
THIS SUB-ADVISORY AGREEMENT is made as of the ____ day of ___________,
2000 ("Contract"), among Hillview Investment Trust II, a Delaware business trust
("Trust"), Hillview Capital Advisors, LLC ("Adviser"), a limited liability
company organized under the laws of the State of Delaware and Harris Associates,
L.P. a partnership organized under the laws of the State of Illinois
("Sub-Adviser").
WHEREAS, the Adviser has entered into an Investment Advisory and
Administration Agreement dated June 12, 2000 ("Management Agreement") with the
Trust, an open-end management investment company registered under the Investment
Company Act of 1940, as amended ("1940 Act"); and
WHEREAS, the Hillview International Alpha Fund ("Fund") is a series of
the Trust; and
WHEREAS, under the Management Agreement, the Adviser has agreed to
provide certain investment advisory and administrative services to the Fund; and
WHEREAS, the Adviser is authorized under the Management Agreement to
delegate its investment advisory responsibilities to one or more persons or
companies; and
WHEREAS, the Sub-Adviser is willing to furnish such services to the
Adviser and the Fund;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, Trust, Adviser and the Sub-Adviser agree as follows:
1. Appointment. The Trust hereby appoints and employs the Sub-Adviser
as a discretionary portfolio manager, on the terms and conditions set forth
herein, of those assets of the Fund which the Adviser determines to assign to
the Sub-Adviser (those assets being referred to as the "Fund Account"). The
Adviser may, from time to time, make additions to and withdrawals, including
cash and cash equivalents, from the Fund Account.
2. Acceptance of Appointment. The Sub-Adviser accepts that appointment
and agrees to render the services herein set forth, for the compensation herein
provided.
3. Duties as Sub-Adviser.
(a) Subject to the supervision and direction of the Trust's Board of
Trustees ("Board") and of the Adviser, and all written guidelines adopted by the
Trust or the Adviser that are provided to the Sub-Adviser, the Sub-Adviser will
provide a continuous investment program with respect to the Fund Account,
including investment research and management for all securities and investments
and cash equivalents in the Fund Account. The Sub-Adviser will determine from
time to time what investments in the Fund Account will be purchased, retained or
sold by the Fund. The Sub-Adviser will be responsible for placing purchase and
sell orders for investments and for other related transactions with respect to
the Fund Account. The Sub-Adviser will provide services under this Contract in
accordance with the Fund's investment objective, policies and restrictions and
the description of its investment strategy and style, all as stated in the
Trust's registration statement under the 1940 Act, and any amendments or
supplements thereto ("Registration Statement") of which the Sub-Adviser has
notice.
(b) The Sub-Adviser agrees that, in placing orders with brokers, it
will seek to obtain the best net result in terms of price and execution;
provided that, on behalf of the Fund, the Sub-Adviser may, in its discretion,
use brokers (including brokers that may be affiliates of the Sub-Adviser to the
extent permitted by Section 3(c) hereof) who provide the Sub-Adviser with
research, analysis, advice and similar services to execute portfolio
transactions, and the Sub-Adviser may pay to those brokers in return for
brokerage and research services a higher commission than may be charged by other
brokers, subject to the Sub-Adviser's
A-9
<PAGE>
determining in good faith that such commission is reasonable in terms either of
the particular transaction or of the overall responsibility of the Sub-Adviser
to the Fund and its other clients and that the total commissions paid by the
Fund will be reasonable in relation to the benefits to the Fund over the long
term. In no instance will portfolio securities be purchased from or sold to the
Sub-Adviser, or any affiliated person thereof, except in accordance with the
federal securities laws and the rules and regulations thereunder. Whenever the
Sub-Adviser simultaneously places orders to purchase or sell the same security
on behalf of the Fund and one or more other accounts advised by the Sub-Adviser,
the orders will be allocated as to price and amount among all such accounts in a
manner believed to be equitable over time to each account. The Adviser
recognizes that in some cases this procedure may adversely affect the results
obtained for the Fund.
(c) The Sub-Adviser will not execute without the prior written approval
of the Adviser any portfolio transactions for the Fund Account with a broker
which is (i) an affiliated person of the Trust, including the Adviser or any
Sub-Adviser for any Fund of the Trust; (ii) a principal underwriter of the
Fund's shares; or (iii) an affiliated person of such an affiliated person or
principal underwriter. The Adviser agrees that it will provide the Sub-Adviser
with a list of such brokers and dealers and will, from time to time, update such
list as necessary.
(d) The Sub-Adviser will maintain all books and records required to be
maintained pursuant to the 1940 Act and the rules and regulations promulgated
thereunder with respect to actions by the Sub-Adviser on behalf of the Fund, and
will furnish the Board and the Adviser with such periodic and special reports as
the Board or the Adviser reasonably may request. In compliance with the
requirements of Rule 31a-3 under the 1940 Act, the Sub-Adviser hereby agrees
that all records that it maintains for the Fund are the property of the Trust,
agrees to preserve for the periods prescribed by Rule 31a-2 under the 1940 Act
any records that it maintains for the Trust and that are required to be
maintained by Rule 31a-1 under the 1940 Act, and further agrees to surrender
promptly to the Trust a complete set of any records that it maintains for the
Fund upon request by the Trust.
(e) All transactions will be consummated by payment to or delivery by
the custodian designated by the Trust (the "Custodian"), or such depositories or
agents as may be designated by the Custodian in writing, of all cash and/or
securities due to or from the Fund Account, and the Sub-Adviser shall not have
possession or custody thereof. The Sub-Adviser shall advise the Custodian and
confirm in writing to the Trust and to the Adviser or any other designated agent
of the Fund all investment orders for the Fund Account placed by it with brokers
and dealers at the time and in the manner set forth in Rule 31a-1 under the 1940
Act. For purposes of the foregoing sentence, communication to the Custodian via
DTC is acceptable. The Trust shall issue to the Custodian such instructions as
may be appropriate in connection with the settlement of any transaction
initiated by the Sub-Adviser. The Trust shall be responsible for all custodial
arrangements and the payment of all custodial charges and fees, and, upon giving
proper instructions to the Custodian, the Sub-Adviser shall have no
responsibility or liability with respect to custodial arrangements or the acts,
omissions or other conduct of the Custodian, except that it shall be the
responsibility of the Sub-Adviser to communicate it to the Adviser if the
Custodian fails to confirm in writing proper execution of the instructions.
(f) At such times as shall be reasonably requested by the Board or the
Adviser, the Sub-Adviser will provide the Board and the Adviser with economic
and investment analyses and reports as well as quarterly reports setting forth
the performance of the Fund Account and make available to the Board and Adviser
any economic, statistical and investment services that the Sub-Adviser normally
makes available to its institutional or other customers.
(g) In accordance with procedures adopted by the Board, as amended from
time to time, the Sub-Adviser is responsible for assisting in the fair valuation
of all portfolio securities and will use its reasonable efforts to arrange for
the provision of valuation information or a price(s) from a party(ies)
independent of the Sub-Adviser for each portfolio security for which the
custodian does not obtain prices in the ordinary course of business from an
automated pricing service.
4. Further Duties. In all matters relating to the performance of this
Contract, the Sub-Adviser will act in conformity with the Trust's Declaration of
Trust, By-Laws and Registration Statement of which it
A-10
<PAGE>
has received notice and with the written instructions and written directions of
the Board and the Adviser; and will comply with the requirements of the 1940 Act
and the Investment Advisers Act of 1940, as amended ("Advisers Act") and the
rules under each, and all other federal and state laws and regulations
applicable to the Trust and the Fund. The Adviser agrees to provide to the
Sub-Adviser copies of the Trust's Declaration of Trust, By-Laws, Registration
Statement, written instructions and directions of the Board and the Adviser, and
any amendments or supplements to any of these materials as soon as practicable
after such materials become available.
5. Proxies. The Sub-Adviser will vote all proxies solicited by or with
respect to issuers of securities in which assets of the Fund Account may be
invested from time to time. At the request of the Sub-Adviser, the Adviser shall
provide the Sub-Adviser with its or the Trust's recommendations as to the voting
of such proxies. The Adviser shall instruct the Custodian to forward or cause to
be forwarded to the Sub-Adviser all relevant proxy solicitation materials.
6. Expenses. During the term of this Contract, the Sub-Adviser will
bear all expenses incurred by it in connection with its services under this
Contract other than the cost of securities (including brokerage commissions,
transactional fees and taxes, if any) purchased for the Fund. The Fund shall be
responsible for its expenses.
7. Compensation. The compensation of the Sub-Adviser for its services
under this Contract shall be calculated and paid by the Trust in accordance with
the attached Schedule A.
8. 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, the
Trust, its shareholders or by the Adviser in connection with the matters to
which this Contract relates, except a loss resulting from willful misfeasance,
bad faith or gross negligence on its part in the performance of its duties or
from reckless disregard by it of its obligations and duties under this Contract.
Nothing in this paragraph shall be deemed a limitation or waiver of any
obligation or duty that may not by law be limited or waived.
9. Indemnification.
(a) The Adviser and the Trust shall indemnify the Sub-Adviser or any of
its directors, officers, employees or affiliates for all losses, damages,
liabilities, costs and expenses (including legal) ("Losses") as they are
incurred by the Sub-Adviser by reason of or arising out of any act or omission
by the Adviser or Trust under this Agreement, or any breach of warranty,
representation or agreement hereunder, except to the extent that such Losses
arise as a result of the negligence of the Sub-Adviser or the Sub-Adviser's
breach of fiduciary duty to the Adviser or the Trust.
(b) The Sub-Adviser shall indemnify the Adviser or any of its
directors, officers, employees or affiliates for all losses, damages,
liabilities, costs and expenses (including legal) ("Losses") as they are
incurred by the Adviser by reason of or arising out of any act or omission by
the Sub-Adviser under this Agreement, or any breach of warranty, representation
or agreement hereunder, except to the extent that such Losses arise as a result
of the negligence of the Adviser or the Adviser's breach of fiduciary duty to
the Sub-Adviser.
(c) The Sub-Adviser shall indemnify the Trust or any of its directors,
officers, employees or affiliates for all losses, damages, liabilities, costs
and expenses (including legal) ("Losses") as they are incurred by the Trust by
reason of or arising out of any act or omission by the Sub-Adviser under this
Agreement, or any breach of warranty, representation or agreement hereunder,
except to the extent that such Losses arise as a result of the negligence of the
Trust or the Trust's breach of fiduciary duty to the Sub-Adviser.
10. Representations, Warranties and Agreements of the Trust. The Trust
represents, warrants and agrees that:
(a) Each of the Adviser and the Sub-Adviser has been duly appointed by
the Board of Trustees of the Trust to provide investment services to the Fund
Account as contemplated hereby.
A-11
<PAGE>
(b) The Trust will deliver to the Sub-Adviser a true and complete copy
of the Fund's Registration Statement as effective from time to time and such
other documents or instruments governing the investment of the Fund Account and
such other information as is necessary for the Sub-Adviser to carry out its
obligations under this Contract.
(c) The Trust is currently in compliance and shall at all times
continue to comply with the requirements imposed upon the Trust by applicable
law and regulations.
11. Representations of Adviser. The Adviser represents, warrants and
agrees that:
(a) The Adviser has been duly authorized by the Board of Trustees of
the Trust to delegate to the Sub-Adviser the provision of investment services to
the Fund Account as contemplated hereby.
(b) The Adviser is currently in compliance and shall at all times
continue to comply with the requirements imposed upon the Adviser by applicable
law and regulations.
12. Representations of Sub-Adviser. The Sub-Adviser represents,
warrants and agrees as follows:
(a) The Sub-Adviser (i) is registered as an investment adviser under
the Advisers Act and will continue to be so registered for so long as this
Contract remains in effect; (ii) is not prohibited by the 1940 Act, the Advisers
Act or other law, regulation or order from performing the services contemplated
by this Contract; (iii) has met and will seek to continue to meet for so long as
this Contract remains in effect, any other applicable federal or state
requirements, or the applicable requirements of any regulatory or industry
self-regulatory agency necessary to be met in order to perform the services
contemplated by this Contract; (iv) has the authority to enter into and perform
the services contemplated by this Contract; and (v) will promptly notify Adviser
of the occurrence of any event that would disqualify the Sub-Adviser from
serving as an investment adviser of an investment company pursuant to Section
9(a) of the 1940 Act or otherwise. The Sub-Adviser will also immediately notify
the Fund and the Adviser if it is served or otherwise receives notice of any
action, suit, proceeding, inquiry or investigation, at law or in equity, before
or by any court, public board or body, involving the affairs of the Fund.
(b) The Sub-Adviser has adopted a written code of ethics complying with
the requirements of Rule 17j-1 under the 1940 Act and will provide the Adviser
and the Board with a copy of such code of ethics, together with evidence of its
adoption. Within forty-five days of the end of the last calendar quarter of each
year that this Contract is in effect, the president, Chief Operating Officer or
a vice-president of the Sub-Adviser shall certify to the Adviser that the
Sub-Adviser has complied with the requirements of Rule 17j-1 during the previous
year and that there has been no violation of the Sub-Adviser's code of ethics
or, if such a violation has occurred, that appropriate action was taken in
response to such violation. Upon the written request of the Adviser, the
Sub-Adviser shall permit the Adviser, its employees or its agents to examine the
reports required to be made to the Sub-Adviser by Rule 17j-1(c)(1) and all other
records relevant to the Sub-Adviser's code of ethics.
(c) The Sub-Adviser has provided the Trust and the Adviser with a copy
of its Form ADV, which as of the date of this Agreement is its Form ADV as most
recently filed with the Securities and Exchange Commission ("SEC") and promptly
will furnish a copy of all amendments to the Trust and the Adviser at least
annually. Such amendments shall reflect all changes in the Sub-Adviser's
organizational structure, professional staff or other significant developments
affecting the Sub-Adviser, as required by the Investment Advisers Act of 1940.
(d) The Sub-Adviser will notify the Trust and the Adviser of any change
of control of the Sub-Adviser, including any change of its general partners,
controlling persons or 25% shareholders, as applicable, and any changes in the
key personnel who are either the portfolio manager(s) of the Fund Account or
senior management of the Sub-Adviser, in each case prior to, or promptly after,
such change. The Sub-Adviser agrees to bear all reasonable expenses of the Fund,
if any, arising out of such change in control.
A-12
<PAGE>
(e) The Sub-Adviser agrees to maintain an appropriate level of errors
and omissions or professional liability insurance coverage.
(f) The Sub-Adviser agrees that neither it, nor any of its affiliates,
will in any way refer directly or indirectly to its relationship with the Trust,
the Fund, the Adviser or any of their respective affiliates in offering,
marketing or other promotional materials without the express written consent of
the Adviser. However, the Sub-Adviser may use the performance of the Fund
Account in its composite performance.
13. Services Not Exclusive. The services furnished by the Sub-Adviser
hereunder are not to be deemed to be exclusive, and the Sub-Adviser shall be
free to furnish similar services to others, except as prohibited by applicable
law or agreed upon in writing among the Sub-Adviser, the Fund and the Adviser.
14. Confidentiality. Subject to the duty of the Sub-Adviser and the
Adviser to comply with applicable law, including any demand of any regulatory or
taxing authority having jurisdiction, the parties hereto shall treat as
confidential all material non public information pertaining to the Fund Account
and the actions of the Sub-Adviser, the Adviser and the Fund in respect thereof.
Unless such use is required by law, the Adviser and the Trust may not use
Sub-Adviser's name, investment performance information, other descriptive
biographical information about the Sub-Adviser or its personnel, or other
pertinent information regarding the Sub-Adviser in offering documents for the
Fund, and in marketing or advertising materials relating to the Fund, the Trust
or the Adviser, without consent of the Sub-Adviser, which will not be
unreasonably withheld.
15. Duration and Termination.
(a) This Contract shall become effective upon the date first above
written, provided that this Contract shall not take effect unless it has first
been approved: (i) by a vote of a majority of those trustees of the Trust who
are not parties to this Contract or interested persons of any such party, cast
in person at a meeting called for the purpose of voting on such approval, and
(ii) by vote of a majority of the Fund's outstanding securities. Adviser shall
provide Sub-Adviser with verification that such approvals have occurred.
(b) Unless sooner terminated as provided herein, this Contract shall
continue in effect for two years from its effective date. Thereafter, if not
terminated, this Contract shall continue automatically for successive periods of
twelve months each, provided that such continuance is specifically approved at
least annually: (i) by a vote of a majority of those trustees of the Trust who
are not parties to this Contract or interested persons of any such party, cast
in person at a meeting called for the purpose of voting on such approval, and
(ii) by the Board or by vote of a majority of the outstanding voting securities
of the Fund. Adviser shall provide Sub-Adviser with verification that such
approvals have occurred.
(c) Notwithstanding the foregoing, this Contract may be terminated by
any party hereto at any time, without the payment of any penalty, immediately
upon written notice to the other parties hereto in the event of material breach
of any provision thereof by the party so notified if such breach shall not have
been cured within a 20-day period after notice of such breach; or otherwise, by
any party upon thirty (30) days written notice to the other parties hereto. The
Agreement may also be terminated immediately if, in the reasonable judgment of
the Trust or the Adviser, the Sub-Adviser becomes unable to discharge its duties
and obligations under this Contract, including circumstances such as financial
insolvency of the Sub-Adviser or other circumstances that could adversely affect
the Fund. This Contract will terminate automatically in the event of its
assignment or upon termination of the Advisory Contract as it relates to the
Fund.
16. Amendment of this Contract. No provision of this Contract may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against whom enforcement of the change, waiver,
discharge or termination is sought. No amendment of this Contract shall be
effective until approved (i) by a vote of a majority of those trustees of the
Trust who are not parties to this Contract or interested persons of any such
party, and (ii) by a vote of a majority of the Fund's outstanding voting
securities (unless the Trust receives an SEC order or no-action letter
permitting it to modify the Contract without such vote or a regulation exists
under the 1940 Act that permits such action without such vote).
A-13
<PAGE>
17. Trust and Shareholder Liability. The Adviser and Sub-Adviser are
hereby expressly put on notice of the limitation of shareholder liability as set
forth in the Declaration of Trust of the Trust and agree that obligations
assumed by the Trust pursuant to this Agreement shall be limited in all cases to
the Trust and its assets, and if the liability relates to one or more series,
the obligations hereunder shall be limited to the respective assets of the Fund.
The Adviser and Sub-Adviser further agree that they shall not seek satisfaction
of any such obligation from the shareholders or any individual shareholder of
the Fund, nor from the Trustees or any individual Trustee of the Trust.
18. Governing Law. This Contract shall be construed in accordance with
the 1940 Act and the laws of the State of Delaware, without giving effect to the
conflicts of laws principles thereof. To the extent that the applicable laws of
the State of Delaware conflict with the applicable provisions of the 1940 Act,
the latter shall control.
19. Miscellaneous. The captions in this Contract 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 Contract shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Contract shall not be affected
thereby. This Contract shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors. As used in this Contract,
the terms "majority of the outstanding voting securities," "affiliated person,"
"interested person," "assignment," "broker," "investment adviser," "net assets,"
"sale," "sell" and "security" shall have the same meaning as such terms have in
the 1940 Act, subject to such exemption as may be granted by the SEC by any
rule, regulation or order. Where the effect of a requirement of the federal
securities laws reflected in any provision of this Contract is made less
restrictive by a rule, regulation or order of the SEC, whether of special or
general application, such provision shall be deemed to incorporate the effect of
such rule, regulation or order. This Contract and the Schedule(s) attached
hereto embody the entire agreement and understanding among the parties. This
Contract may be signed in counterpart.
20. Notices. Any notice herein required is to be in writing and is
deemed to have been given to the Sub-Adviser or Adviser upon receipt of the same
at their respective addresses set forth below. All written notices required or
permitted to be given under this Contract will be delivered by personal service,
by postage mail - return receipt requested or by facsimile machine or a similar
means of same day delivery which provides evidence of receipt (with a confirming
copy by mail as set forth herein). All notices provided to the Fund will be sent
to the attention of Joseph A. Bracken, Secretary. All notices provided to
Adviser will be sent to the attention of Joseph A. Bracken, _________________.
All notices provided to the Sub-Adviser will be sent to the attention of Anita
Nagler, with a copy to Margaret K. McLaughlin.
[rest of page left intentionally blank]
A-14
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their duly authorized signatories as of the date and year first
above written.
HILLVIEW INVESTMENT TRUST II
on behalf of
HILLVIEW INTERNATIONAL ALPHA FUND
1055 Washington Boulevard, Third Floor
Stamford, Connecticut 06901
Attest:
By:_____________________ By:______________________
Name: Name:
Title: Title:
HILLVIEW CAPITAL ADVISORS, LLC
1055 Washington Boulevard, Third Floor
Stamford, Connecticut 06901
Attest:
By:_____________________ By:______________________
Name: Name:
Title: Title:
HARRIS ASSOCIATES, L.P.
Two North LaSalle Street, Suite 500
Chicago, Illinois 60602
Attest:
By:_______________________ By:_____________________________
Name: Name:
Title: Title:
A-15
<PAGE>
EXHIBIT A
SUB-ADVISORY FEES
This Exhibit A contains the sub-advisory fee information required by
Section 7 of the Sub-Advisory Agreement among Hillview Investment Trust II
("Trust"), Hillview Capital Advisers, LLC ("Adviser") and Harris Associates,
L.P. ("Sub-Adviser") relating to the International Alpha Fund series ("Fund") of
the Trust.
Fee Schedule. Fees payable to the Sub-Adviser pursuant to this Contract
shall be payable within ten days after receipt by the Trust of the Sub-Adviser's
bill after the end of each calendar quarter for services rendered during the
prior quarter (or billing period, if less than a calendar quarter). The fees are
calculated as of the close of trading on the last business day of the calendar
quarter by applying the applicable fee rate to the average daily assets of the
Fund allocated to the Sub-Adviser for that period. For purposes of calculating
the fee, the value of the Fund's assets shall be determined in the same manner
as that which the Fund uses to determine the net asset value of its shares. The
applicable annualized fee rate shall be 0.75% on the first $25 million of the
Fund's assets allocated to the Sub-Adviser, and 0.70% on the next $25 million of
the Fund's assets allocated to the Sub-Adviser, and 0.60% on the next $50
million of the Fund's assets allocated to the Sub-Adviser, and 0.50% on the
remaining assets of the Fund allocated to the Sub Adviser.
A-16
<PAGE>
Appendix B
Certain Other Mutual Funds Advised by the Sub-Adviser
The Sub-Adviser acts as investment adviser or sub-adviser to the
following other mutual funds that have investment objectives similar to the
Funds', for compensation at the annual percentage rates of the corresponding
average net asset levels of those funds set forth below.
<TABLE>
<CAPTION>
Hillview Alpha Fund
Hillview International Alpha Fund
Harris Portfolio
Fund Name Net Assets 9-30-2000 Fee Rate Relationship
<S> <C> <C> <C>
1. Oakmark Fund $2,038,728,806.52 1.00% up to $2.5 billion Adviser*
.95% on next $1.25 billion
.90% on next $1.25 billion
.85% over $5 billion
.80% over $10 billion
2. Oakmark Select $1,778,736,473.84 1.00% up to $1 billion Adviser*
.95% on next $500 million
.90% on next $500 million
.85% on next $500 million
.80% over $2.5 billion
.75% over $5 billion
3. Harris Oakmark Mid Cap $119,956,686.25 .45% up to $100 million Sub-Adviser
.40% on next $400 million
.35% over $500 million
4. Mass Mutual Focused $53,129,065.25 .50% up to $100 million Sub-Adviser
Value .45% up to $400 million
.40% over $500 million
5. Masters Select Value $10,720,539.32 .65% up to $50 million Sub-Adviser
.60% on next $50 million
.55% over $100 million
6. LPT Fund $6,743,258.00 .75% up to $25 million Sub-Adviser
.60% on next $75 million
.50% over $100 million
7. Nvest Star Advisers $222,445,400.81 .65% up to $50 million Sub-Adviser
.60% on next $50 million
.55% over $100 million
B-1
<PAGE>
Fund Name Net Assets 9-30-2000 Fee Rate Relationship
8. Nvest Star Worldwide $52,927,078.30 .65% up to $50 million Sub-Adviser
Domestic .60% on next $50 million
.55% over $100 million
9. Nvest Star Value $50,405,323.27 .50% up to $100 million Sub-Adviser
.45% over $50 million
10. Oakmark International $782,513,965.71 1.00% up to $2.5 billion Adviser*
.95% on next $2.5 billion
.90% over $5 billion
11. Master's Select $59,333,655.80 .65% Sub-Adviser
International
12. Nvest Star Worldwide $62,734,550.09 .65% up to $50 million Sub-Adviser
International .60% on next $50 million
.55% over $100 million
</TABLE>
B-2
----------------------
* The Sub-Adviser notes that as a fund's Adviser its contractual duties are
broader that the provision of investment advice and extend to the overall
management of the fund.
<PAGE>
<TABLE>
<CAPTION>
Appendix C
-------------- -------------- -------------- --------------- ----------------- ----------------- ----------------- -----------------
Brokerage Percentage of
Transfer Agency Distribution and Commissions on Fund's Total
and Shareholder Fees for Legal Shareholder Fund's Portfolio Brokerage
Administrative Servicing Fees and Accounting Servicing (12b-1 Transactions Paid Commissions Paid
Advisory Fee Fees Paid to Paid to Services Paid Fees Paid to to Sub-Advisers' to Sub-Advisers'
Paid to Sub-Advisers' Sub-Advisers' to Sub-Advisers' Sub-Advisers' Brokerage Brokerage
Name of Fund Sub-Adviser Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates
-------------- -------------- -------------- --------------- ----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Hillview
Alpha Fund 161,401.94 18,192.57 4,921.78 16,078.41 3,883.80 0 0
-------------- -------------- -------------- --------------- ----------------- ----------------- ----------------- -----------------
Hillview 21,429.03 3,045.40 4,256.32 9,981.36 636.86 0 0
International
Fund
-------------- -------------- -------------- --------------- ----------------- ----------------- ----------------- -----------------
</TABLE>
C-1
<PAGE>
<TABLE>
<CAPTION>
Appendix D
SHARES OUTSTANDING AND ENTITLED TO VOTE
For each class of the Fund's shares entitled to vote at the Meeting, the number
of shares outstanding as of October 25, 2000 was as follows:
------------------------------------------------------- -----------------------------------------------------
Number of Shares Outstanding and
Name of Fund Entitled to Vote Per Class
------------------------------------------------------- -----------------------------------------------------
<S> <C>
Hillview Alpha Fund 8,638,276.392
Hillview International Fund 1,692,265.436
OWNERSHIP OF SHARES
As of October 25, 2000, the Trust believes that the Trustees and officers of the
Trust, as a group, owned less than one percent of each class of shares of the
Fund and of the Trust as a whole. As of October 25, 2000, the following persons
owned of record or beneficially 5% more of the noted class of shares of the
noted Fund:
----------------------------------------- ------------------------------- -----------------------------------
Percentage of Outstanding
Fund and Class Shares Beneficially Owned Shares of Class Owned
----------------------------------------- ------------------------------- -----------------------------------
Hillview Alpha Fund
Batrus & Co. 6,628,391.959 76.7%
c/o Bankers Trust Co.
P.O. Box 9005 Church Street Station
New York, NY 10008
Guadi & Co. 540,682.419 6.3%
c/o Bankers Trust Co.
P.O. Box 9005 Church Street Station
New York, NY 10008
Hillview International Alpha Fund
Batrus & Co. 830,971.783 49.1%
c/o Bankers Trust Co.
P.O. Box 9005 Church Street Station
New York, NY 10008
Field Nominees Limited 89,605.735 5.3%
Attn: Marguerite Lovell
a/c 1343900
Bank of NT Butterfield & Son Ltd.
65 Front Street
Hamilton Bermuda
Firstoak & Co. 137,659.971 8.1%
Attn: Anita Lantz
P.O. Box 557
Oakland, MD 21550
D-1
<PAGE>
First Union National Bank Trust 151,930.333 9.0%
Mutual Funds NC 1151
1525 WWT Harris Blvd.
Charlotte, NC 28288-1150
Independent Trust Co. 150,671.685 8.9%
P.O. Box 682188
Franklin, TN 37068-2188
Saxon & Co. 323,093.596 19.1%
FBO a/c 20101021040914
cusip 432787109
P.O. Box 7780-1888
Philadelphia, PA 19182
----------------------------
* Entity owned 25% or more of the outstanding shares of beneficial interest of
the Fund, and therefore may be presumed to "control" the Fund, as that term is
defined in the 1940 Act.
** Shares are believed to be held only as nominee.
</TABLE>
<PAGE>
BY SIGNING AND DATING THE BACK OF THIS BALLOT, YOU AUTHORIZE THE PROXIES TO VOTE
EACH PROPOSAL AS MARKED. IF NOT MARKED, THE PROXIES WILL VOTE "FOR" EACH
PROPOSAL, AND AS THEY SEE FIT ON ANY OTHER MATTER AS MAY PROPERLY COME BEFORE
THE MEETING. IF YOU DO NOT INTEND TO PERSONALLY ATTEND THE MEETING, PLEASE
COMPLETE AND MAIL THIS BALLOT AT ONCE IN THE ENCLOSED ENVELOPE.
HILLVIEW INVESTMENT TRUST II
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS OF
HILLVIEW ALPHA FUND
December 19, 2000
The undersigned hereby constitutes and appoints Joseph A. Bracken and
J. Kenneth Hawley, Jr. or any one of them true and lawful attorneys, with power
of substitution, as proxies to appear and vote all of the shares of beneficial
interest standing in the name of the undersigned on the record date at the
special meeting of shareholders of Hillview Alpha Fund and Hillview
International Alpha Fund to be held at the offices of PFPC Inc., 400 Bellevue
Parkway, Wilmington, Delaware 19809 at 10:00 a.m. local time, or at any
postponement or adjournment thereof; and the undersigned hereby instructs said
proxies to vote as indicated on this proxy ballot.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS SPECIFIED IN THE
FOLLOWING ITEMS. IF NO CHOICE IS SPECIFIED, THEY WILL BE VOTED TO APPROVE EACH
PROPOSAL. PLEASE REFER TO THE PROXY STATEMENT DISCUSSION OF THESE MATTERS. THIS
PROXY IS SOLICITED ON BEHALF OF THE FUND'S BOARD OF TRUSTEES.
1. To approve or disapprove a new Sub-Advisory Agreement for the Hillview
Alpha Fund among the Trust, Hillview Capital Advisors, LLC and Harris
Associates, L.P. ("Harris") that arises out of Harris' change in control
and that reflects a slightly higher fee schedule.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
2. To transact such other business as may properly come before the Meeting.
------------------- --------------------------- -------
SIGNATURE SIGNATURE (JOINT OWNER) DATE
PLEASE DATE AND SIGN NAME OR NAMES TO AUTHORIZE THE VOTING OF YOUR SHARES AS
INDICATED ABOVE. WHERE SHARES ARE REGISTERED WITH JOINT OWNERS, ALL JOINT OWNERS
SHOULD SIGN. PERSONS SIGNING AS AN EXECUTOR, TRUSTEE, ADMINISTRATOR, OR OTHER
REPRESENTATIVE SHOULD GIVE FULL TITLE AS SUCH.
<PAGE>
BY SIGNING AND DATING THE BACK OF THIS BALLOT, YOU AUTHORIZE THE PROXIES TO VOTE
EACH PROPOSAL AS MARKED. IF NOT MARKED, THE PROXIES WILL VOTE "FOR" EACH
PROPOSAL, AND AS THEY SEE FIT ON ANY OTHER MATTER AS MAY PROPERLY COME BEFORE
THE MEETING. IF YOU DO NOT INTEND TO PERSONALLY ATTEND THE MEETING, PLEASE
COMPLETE AND MAIL THIS BALLOT AT ONCE IN THE ENCLOSED ENVELOPE.
HILLVIEW INVESTMENT TRUST II
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS OF
HILLVIEW INTERNATIONAL ALPHA FUND
December 19, 2000
The undersigned hereby constitutes and appoints Joseph A. Bracken and
J. Kenneth Hawley, Jr. or any one of them true and lawful attorneys, with power
of substitution, as proxies to appear and vote all of the shares of beneficial
interest standing in the name of the undersigned on the record date at the
special meeting of shareholders of Hillview Alpha Fund and Hillview
International Alpha Fund to be held at the offices of PFPC Inc., 400 Bellevue
Parkway, Wilmington, Delaware 19809 at 10:00 a.m. local time, or at any
postponement or adjournment thereof; and the undersigned hereby instructs said
proxies to vote as indicated on this proxy ballot.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS SPECIFIED IN THE
FOLLOWING ITEMS. IF NO CHOICE IS SPECIFIED, THEY WILL BE VOTED TO APPROVE EACH
PROPOSAL. PLEASE REFER TO THE PROXY STATEMENT DISCUSSION OF THESE MATTERS. THIS
PROXY IS SOLICITED ON BEHALF OF THE FUND'S BOARD OF TRUSTEES.
1. To approve or disapprove a new Sub-Advisory Agreement for the Hillview
International Alpha Fund among the Trust, Hillview Capital Advisors, LLC
and Harris that arises out of Harris' change in control.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
2. To transact such other business as may properly come before the Meeting.
------------------- --------------------------- -------
SIGNATURE SIGNATURE (JOINT OWNER) DATE
PLEASE DATE AND SIGN NAME OR NAMES TO AUTHORIZE THE VOTING OF YOUR SHARES AS
INDICATED ABOVE. WHERE SHARES ARE REGISTERED WITH JOINT OWNERS, ALL JOINT OWNERS
SHOULD SIGN. PERSONS SIGNING AS AN EXECUTOR, TRUSTEE, ADMINISTRATOR, OR OTHER
REPRESENTATIVE SHOULD GIVE FULL TITLE AS SUCH.
