SCHEDULE 14A INFORMATION
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:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
CALIFORNIA INVESTMENT TRUST
CALIFORNIA INVESTMENT TRUST II
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box:
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
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):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] 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:
2) Form, Schedule or Registration Statement No.: Schedule 14A
3) Filing Party: Registrant
4) Date Filed: December 22, 1999
<PAGE>
CALIFORNIA INVESTMENT TRUST FUND GROUP
44 MONTGOMERY STREET, SUITE 2100
SAN FRANCISCO, CA 94104
January 3, 2000
Dear Shareholder:
Enclosed are proxy materials related your shares in a fund of the
California Investment Trust Fund Group (the "Group"). Please take a few minutes
to read the proxy statement and cast your vote. Your vote must be received by no
later than January 27, 2000, in order to be cast at the Special Shareholders
Meeting on January 28, 2000. The meeting will begin at 10:00 a.m., local time,
at the Group's offices at 44 Montgomery Street, Suite 2100 San Francisco, CA
94104.
The proxy statement attached requests your vote to elect five trustees for
the Group to serve for an indefinite term. Three of the Group's current trustees
were previously elected by the shareholders and you would be re-electing them.
Two current Trustees were appointed during the last year and a half to fill
vacancies and you would be electing those Trustees for the first time.
You are also being asked to approve new investment management agreements
between the Group and CCM Partners, the Group's investment adviser. The recent
death of Richard F. Shelton, the retired Chief Executive Officer of CCM
Partners, resulted in a change of control of CCM Partners. The laws regulating
investment companies require mutual fund shareholders to approve new investment
management agreements with the adviser whenever there is a change in control.
These new agreements, however, are substantially the same as those currently in
effect. The change of control in CCM Partners has not resulted in any change in
the team directly responsible for managing the Group's portfolio investments.
PLEASE REVIEW THE ENCLOSED MATERIAL AND COMPLETE, SIGN, DATE AND RETURN THE
ENCLOSED PROXY CARD(S). IT IS IMPORTANT THAT YOU SUBMIT YOUR VOTE TO ENSURE THAT
YOUR SHARES ARE REPRESENTED AT THE SPECIAL MEETING. IF YOU HAVE ANY QUESTIONS
ABOUT THE PROXY, PLEASE CALL US AT (800) 225-8778.
The Trustees have carefully reviewed the proposals and unanimously
recommend that you approve them. Your vote is important for the proper
administration of the Group. Thank you for your participation and prompt
response in this matter.
Sincerely,
Stephen C. Rogers
Chairman and President
Enclosures
<PAGE>
CALIFORNIA INVESTMENT TRUST FUND GROUP
<TABLE>
<CAPTION>
<S> <C> <C>
California Tax-Free Income Fund S&P 500 Index Fund U.S. Government Securities Fund
California Insured Intermediate Fund S&P 500 MidCap Index Fund The United States Treasury Trust
California Tax-Free Money Market Fund S&P 500 SmallCap Index Fund
Equity Income Fund
</TABLE>
-----------------------------
44 Montgomery Street, Suite 2100
San Francisco, CA 94104
(800) 225-8778
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To be held January 28, 2000
- --------------------------------------------------------------------------------
To the Shareholders:
A Special Meeting of Shareholders of each Fund listed above will be held on
January 28, 2000 at 10:00 a.m., local time, at 44 Montgomery Street, Suite 2100,
San Francisco, California 94104 for the following purposes:
1. To elect five trustees to serve until their successors are elected and
qualified;
2. To approve new Investment Management Agreements between the Funds and
CCM Partners ("CCM") as a result of the change of control of CCM, with no change
in the advisory fee payable to CCM;
3. To transact such other business as may properly come before the Meeting
of Shareholders or any adjournments thereof.
Shareholders of record at the close of business on December 22, 1999 are
entitled to notice of, and to vote at, the Meeting. Your attention is called to
the accompanying Proxy Statement. Regardless of whether you plan to attend the
Meeting, please complete, sign and promptly return the enclosed proxy card so
that a quorum will be present and a maximum number of shares may be voted. If
you are present at the Meeting, you may change your vote, if desired, at that
time.
By Order of the Board of Trustees
/s/ Stephen C. Rogers
---------------------------------
Stephen C. Rogers, Secretary
<PAGE>
CALIFORNIA INVESTMENT TRUST FUND GROUP
<TABLE>
<CAPTION>
<S> <C> <C>
California Tax-Free Income Fund S&P 500 Index Fund U.S. Government Securities Fund
California Insured Intermediate Fund S&P 500 MidCap Index Fund The United States Treasury Trust
California Tax-Free Money Market Fund S&P 500 SmallCap Index Fund
Equity Income Fund
</TABLE>
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD JANUARY 28, 2000
- --------------------------------------------------------------------------------
A Special Meeting (the "Meeting") of Shareholders of each Fund listed above
will be held on January 28, 2000 at 10:00 a.m., local time, at 44 Montgomery
Street, Suite 2100, San Francisco, California 94104 for the following purposes:
1. To elect five trustees to serve until their successors are elected and
qualified;
2. To approve new Investment Management Agreements between the Funds and
CCM Partners ("CCM") as a result of the change of control of CCM, with no change
in the advisory fee payable to CCM;
3. To transact such other business as may properly come before the Meeting
or any adjournments thereof.
This is a combined proxy statement for all of the Funds. Each Fund is a
series of California Investment Trust or of California Investment Trust II, each
of which is a registered investment company (each investment company is referred
to in this proxy as a "Trust" and, collectively, as the "Trusts"). The following
table identifies the Trusts to which this proxy relates and the Funds that are
series thereof:
California Investment Trust California Investment Trust II
California Tax-Free Income Fund S&P 500 Index Fund
California Insured Intermediate Fund S&P 500 MidCap Index Fund
California Tax-Free Money Market Fund S&P 500 SmallCap Index Fund
U.S. Government Securities Fund Equity Income Fund
The United States Treasury Trust
The Board of Trustees is soliciting votes from shareholders of a Fund only
with respect to the particular Proposals that affect that Fund. The following
table identifies the Funds entitled to vote on each Proposal:
-1-
<PAGE>
Fund Proposal 1 Proposal 2
- ---- ---------- ----------
California Tax-Free Income Fund ("Income Fund") |X| |X|
California Insured Intermediate Fund ("Insured Fund") |X| |X|
California Tax-Free Money Market Fund ("Money Fund") |X| |X|
U.S. Government Securities Fund ("Government Fund") |X| |X|
The United States Treasury Trust ("Treasury Trust") |X| |X|
S&P 500 Index Fund ("500 Fund") |X| |X|
S&P 500 MidCap Index Fund ("MidCap Fund") |X| |X|
S&P 500 SmallCap Index Fund ("SmallCap Fund") |X| |X|
Equity Income Fund ("Equity Income Fund") |X| |X|
PROPOSAL NO. 1
ELECTION OF TRUSTEES
BACKGROUND
The Board of Trustees of each Trust is currently comprised of five
individuals, three of whom were elected by the shareholders and two appointed by
each Board to fill interim vacancies. A majority of the individuals serving on
each Board of Trustees are required by the Investment Company Act of 1940 (the
"1940 Act") to have been elected by Shareholders. That is currently the case
with the Board of Trustees of each Trust. In the event of a future vacancy on
the Board of Trustees, however, or a determination by the Board to expand its
size to include a larger percentage of independent Trustees (i.e., Trustees who
are not affiliated with CCM), the Board would not be able to fill that vacancy
or add another independent Trustee by appointment. Its authority to do so under
the Declaration of Trust and Bylaws of each Trust would be limited by the 1940
Act which permits such an appointment, with certain exceptions, only when, after
giving effect to the appointment, two thirds of the Trustees would have been
elected by the shareholders.
Consequently, one purpose of the Meeting is to elect or re-elect, as the
case may be, all five Trustees of each Trust's Board of Trustees, each to serve
on the respective Board for an indefinite term, so that any future additions
that need to be made to the Board can be handled by the Trustees by appointment.
-2-
<PAGE>
INFORMATION REGARDING NOMINEES
In evaluating the Nominees, each Board of Trustees took into account their
background and experience, including their familiarity with the issues relating
to these types of Funds and investments as well as their careers in business,
finance, marketing and other areas. Below are the names, ages, business
experience during the past five years and other directorships of the Nominees
(as furnished to the Trusts). An asterisk (*) has been placed next to the name
of each Nominee who would constitute an "interested person," as defined in the
Investment Company Act of 1940 by virtue of that person's affiliation with any
of the Funds (other than as a Trustee) or CCM.
<TABLE>
<CAPTION>
Principal Occupation Shares Owned Beneficially
Name, Position and Age within the Past 5 Years and Percentage of Series
- ---------------------- ----------------------- ------------------------
<S> <C> <C>
*Stephen C. Rogers Chief Executive Officer, CCM Partners, * *
Chairman, President Secretary 1999 to present; Chief Operating Officer,
and Trustee (32) CCM Partners 1997 to 1999, Administrative
Officer, CCM Partners 1993-1997; Marketing
Representative, CCM Partners, 1992 to 1993.
*Phillip W. McClanahan Director of Investments, CCM Partners, * *
Vice President, Treasurer 1985-present; Vice President and
and Trustee (63) Portfolio Manager, Transamerica
Investment Services, 1984-1985; Vice
President and Portfolio Manager,
Fireman's Fund Insurance Company and
Amfire, Inc., 1966-1984.
Harry Holmes Trustee (73) Principal, Harry Holmes & Associates * *
(consulting), 1982-1984; President and
Chief Executive Officer, Aspen Skiing
Company, 1973-1984; President and Chief
Executive Officer, Pebble Beach Company
(property management).
John B. Sias Trustee (70) President and CEO, Chronicle * *
Publishing Company, 1993 to
Present; formerly, Director and
Executive Vice President, Capital
Cities/ABC Inc. and President, ABC
Network T.V. Group.
Guy Rounsaville, Jr. Partner, Allen, Matkins, Leck, Gamble * *
Trustee (53) & Mallory LLP; General Counsel, Wells
Fargo Bank, 1977-1999; Corporate Secretary,
Wells Fargo & Company, 1978-1999.
</TABLE>
- -------------------
** As of December 20, 1999, Trustees and Officers as a group owned less than
1% of the outstanding shares of the Money Fund, the Treasury Trust, the
Insured Fund, the Government Fund, and the 500 Fund. As of December 20,
1999, the Trustees and Officers of the Trust as a group owned approximately
1.1% of the Income Fund, 2.0% of the MidCap Fund, 2.7% of the SmallCap Fund
and 1.3% of the Equity Income Fund.
-3-
<PAGE>
REMUNERATION OF TRUSTEES AND OFFICERS
As shown on the following table the Funds pay the fees of the Trustees who
are not affiliated with CCM Partners, which are currently $2,500 per quarter and
$500 for each meeting attended. There is no separate compensation for committee
service. The table provides information regarding all series of the Trusts for
the fiscal year ended August 31, 1999.
<TABLE>
<CAPTION>
Pension or Estimated Total Compensaton
retirement benefits Annual respecting Registrant
Aggregate accrued as Benefits upon and Fund complex
Name/Position compensation Fund Expenses Retirement paid to Trustees
- ------------- ------------ ------------- ---------- ----------------
<S> <C> <C> <C> <C>
Stephen C. Rogers None None None None
CEO, Trustee
Phillip W. McClanahan None None None None
Treasurer, Trustee
Harry Holmes $12,000 None None $12,000
Trustee
John B. Sias $12,000 None None $12,000
Trustee
Guy Rousaville, Jr. $12,000 None None $12,000
Trustee
</TABLE>
VOTE REQUIRED
Shareholders of each Trust must separately approve the election of Nominees
for that Trust. When a quorum is present, the affirmative vote of a plurality of
the shares of each Trust voted at the meeting is required to approve the
election of each Nominee for that Trust.
The Board of Trustees of each Trust, including the independent Trustees,
recommends that shareholders vote "For" each of the Nominees under Proposal No.
1.
-4-
<PAGE>
PROPOSAL NO. 2
APPROVAL OF INVESTMENT ADVISORY AGREEMENTS
BACKGROUND
Shareholders of the Funds are being asked to approve new Investment
Management Agreements (the "New Agreements") between the Funds and CCM. The form
of the New Agreements is attached as Appendix B. CCM has been the investment
adviser for the Funds under Investment Management Agreements dated December 27,
1985, October 15, 1992, December 31, 1985 and April 13, 1992 (the "Current
Agreements"). OTHER THAN CERTAIN CONFORMING CHANGES DESCRIBED BELOW, THERE IS NO
PROPOSED CHANGE IN ANY OF THE SUBSTANTIVE TERMS OF THE NEW AGREEMENTS. Approval
of the New Agreements by the Funds' shareholders is required by the 1940 Act
only as a result of a recent change of control of CCM, the Funds' investment
adviser, as described below.
Richard F. Shelton, the Founder of the California Investment Trust Group,
died unexpectedly in October, 1999. Mr. Shelton was the effective control person
of CCM through a series of partnership, corporate and trust entities, as
follows. Mr. Shelton was the sole trustee of the Richard F. Shelton Trust (the
"RFS Trust"), which owned 100% of the voting shares of Richard F. Shelton, Inc.
("RFS, Inc."). RFS, Inc. is the general partner and control person of RFS
Partners, a California limited partnership ("RFS Partners"), which is the
general partner of CCM. RFS Partners, a broker-dealer, also serves as the Funds'
underwriter.
Upon Mr. Shelton's death, the assets of the RFS Trust were placed in an
administrative trust under the supervision Mr. Shelton's executors. When the
administration of Mr. Shelton's estate is complete, control of RFS, Inc. will be
shared equally by Mr. Stephen C. Rogers, Mrs. Celia S. Rogers, who is Mr.
Rogers' wife and the daughter of Mr. Shelton, and Brooks Cutter, Mr. Shelton's
stepson. Shortly before Mr. Shelton's death, Mr. Rogers became Chief Executive
Officer of CCM, where he had been serving for several years as Chief Operating
Officer and as Administrative Officer. Neither Mrs. Rogers nor Mr. Cutter are
active in CCM's investment management business.
At the December 7, 1999 meeting of the Board of Trustees of each Trust,
each New Agreement was approved unanimously by the respective Board of Trustees,
including all of the Trustees who are not parties to the New Agreements or
interested persons of such parties (other than as Trustees of the Trust). Each
New Agreement as approved by the Board of Trustees is submitted for approval by
the shareholders of the Fund to which the New Agreement applies. Each New
Agreement must be voted upon separately by each Fund to which it pertains.
If the New Agreements are approved by shareholders, they will go into
effect on February 5, 2000. The New Agreements will remain in effect for up to
two years from the date they take effect, and, unless earlier terminated, will
continue for maximum terms of one year thereafter, provided that each such
continuance is approved annually with respect to each Fund (i) by the applicable
Trust's Board of Trustees or by a vote of a majority of the outstanding voting
securities of the particular Fund, and, in either case, (ii) by a majority of
the Trust's Trustees who are not parties to the New Agreement or interested
persons of any such party (other than as a Trustee of the Trust).
-5-
<PAGE>
If the shareholders of any Fund should fail to approve the New Agreement
pertaining to that Fund, the Trustees will promptly seek to enter into a new
investment advisory agreement for the Fund, subject to approval by the Fund's
shareholders.
No change has occurred in the management of CCM as a result of the change
in control described above. Mr. Shelton was not active in the portfolio
management of the Funds. CCM has advised the Funds that no change is expected in
the investment management and other personnel of CCM as a result of the change
in control and it is currently anticipated the same persons responsible for
management of the Funds under the Current Agreements will continue to be
responsible under the New Agreements. CCM does not anticipate that the change in
control will cause any reduction in the quality of services now provided to the
Funds or have any effect on CCM's ability to fulfill its obligations to the
Funds.
THE TERMS OF THE NEW AGREEMENTS
The terms of the New Agreements are the same in all material respects as
the terms of the Current Agreements, which were last approved by each Trust's
Board of Trustees, including a majority of the Trustees who were not parties to
such Agreements or interested persons of such parties, at a meeting held on
February 16, 1999. The initial shareholder of each Fund approved the Current
Agreement for each Fund at the time each Fund was launched.
We are taking this opportunity, however, to conform agreements for all
Funds in both Trusts and to remove inconsistent language. Currently, there are
inconsistencies in the extent of the indemnification afforded by the Funds to
CCM and there are inconsistencies in specifying which entity (the Fund or CCM)
is responsible for bearing costs of routine SEC examinations. The New Agreements
will clarify that CCM is responsible for bearing the costs associated with
routine SEC examinations and that there is no indemnification of CCM for actions
(or for failures to act) in contravention of any provisions of the New
Agreements, a Fund's investment restrictions or any provisions of applicable
law.
Pursuant to the New Agreements, CCM will continue to provide investment
research and portfolio management, including the selection of securities for the
Funds to purchase, hold, or sell and the selection of brokers or dealers through
whom the portfolio transactions of each fund are executed. CCM's activities are
subject to review and supervision by the Trustees to whom CCM renders periodic
reports of the Funds' investment activities. CCM, at its own expense, also will
furnish the Trusts with executive and administrative personnel, office space and
facilities, and pays certain additional administrative expenses incurred in
connection with the operation of each Fund.
Each Fund will to continue to pay for its own operating expenses and for
its share of its respective Trust's expenses not assumed by CCM, including, but
not limited to, costs of custodian services, brokerage fees, taxes, interest,
costs of reports and notices to shareholders, costs of dividend disbursing and
shareholder record-keeping services (including telephone costs), auditing and
legal fees, the fees of the independent Trustees and the salaries of any
officers or employees who are not affiliated with CCM, and its pro-rata portion
of premiums on the fidelity bond covering the Funds.
-6-
<PAGE>
There will be no increase in advisory fees for any of the Funds. The annual
advisory fees under the New Agreements for each Fund are:
Fund Name Advisory Fees
- --------- -------------
California Tax-Free Income Fund A monthly fee computed at the annual
California Insured Intermediate Fund rate of 0.50% of average daily net
California Tax-Free Money Market Fund assets up to and including $100 million;
U.S. Government Securities Fund plus 0.45% of average daily net assets
The United States Treasury Trust over $100 million up to and including
$500 million; plus 0.40% of average
daily net assets above $500 million.
S&P 500 MidCap Index Fund A monthly fee computed at the annual
rate of 0.40% of average daily net
assets.
S&P 500 Index Fund A monthly fee computed at the annual
rate of 0.25% of average daily net
assets.
S&P 500 SmallCap Index Fund A monthly fee computed at the annual
Equity Income Fund rate of 0.50% of average daily net
assets up to and including $500 million;
plus 0.45% of average daily net assets
up to and including $1 billion; plus
0.40% of average daily net assets above
$1 billion.
The New Agreements provide that CCM is obligated to reimburse each of the
Funds which are series of California Investment Trust monthly (through a
reduction of its management fees and otherwise) for all expenses (except for
extraordinary expenses such as litigation) in excess of 1.00% of each Fund's
average daily net assets. The Manager has also agreed to further limit the
expenses of each Fund, other than the Income Fund, through December 31, 2000, to
the following annual percentage of daily net assets: Insured Fund, 0.55%; Money
Fund, 0.40%; 500 Fund, 0.20%; MidCap Fund, 0.40%; SmallCap Fund, 0.65%; Equity
Income Fund, 0.80%; Government Fund, 0.65%; and Treasury Trust, 0.40%.
The New Agreements may be terminated without penalty at any time by the
applicable Trust with respect to one or more of the Funds to which the relevant
Agreement applies (either by the applicable Board of Trustees or by a majority
vote of the terminating Fund's outstanding shares); or by the Manager on
60-days' written notice, and will automatically terminate in the event of its
assignment as defined in the 1940 Act.
INFORMATION ABOUT CCM PARTNERS.
CCM Partners, a California limited partnership, is the investment adviser
for the Funds under the Current Agreements. CCM is registered as an investment
advisor with the Securities and Exchange Commission. As of _____________, 1999
CCM managed over $__________ in assets. Other than the Trusts, CCM does not act
as investment adviser to any other registered investment companies.
-7-
<PAGE>
Phillip W. McClanahan is the portfolio Manager for the California Tax-Free
Income Fund, the California Insured Intermediate Fund, the U.S. Government
Securities Fund and The United States Treasury Trust. He joined the firm in 1985
and has over 35 years of investment experience. Mr. McClanahan graduated from
the University of Kansas in 1958 and earned his MBA from the University of
Pennsylvania, Wharton School in 1966.
Roderick G. Baldwin is the portfolio manager for the S&P 500 Index Fund,
S&P MidCap Index Fund, S&P SmallCap Index Fund and the Equity Income Fund. He
joined CCM in 1999. Prior to his employment with CCM, he was Vice President of
Index Investing at Bank of America Capital Management. Mr. Baldwin graduated
from Hamilton College in 1968 and earned his MBA from the University of
Pennsylvania, Wharton School in 1970. He has approximately 30 years of
experience with equity fund management.
Michael J. Conn is the portfolio manager for the California Tax-Free Money
Market Fund. Mr. Conn joined CCM in 1996 and prior to his joining the firm,
spent several years working for Gruntal & Co. specializing in trading and
institutional sales of various fixed income securities. Mr. Conn graduated from
the Leavy School of Business at Santa Clara University.
CCM Partners' officers are shown below:
Principal Occupation
Name and Address Within the Past 5 years
- --------------------------------------------------------------------------------
Stephen C. Rogers Chief Executive Officer, CCM Partners 1999 to
44 Montgomery Street present; Chief Operating Officer, CCM Partners
Suite 2100 1997 to 1999; Administrative Officer, CCM
San Francisco, CA 94104 Partners 1993-1997; Marketing Representative,
CCM Partners, 1992 to 1993.
Phillip W. McClanahan Director of Investments, CCM Partners,
44 Montgomery Street 1985-present; Vice President and Portfolio
Suite 2100 Manager, Transamerica Investment Services, 1984
San Francisco, CA 94104 to 1985; Vice President and Portfolio Manager,
Fireman's Fund Insurance Company and Amfire,
Inc., 1966 to 1984.
For the fiscal year ended August 31, 1999, CCM received a management fee of
$558,691 from the Money Fund and reimbursed that Fund $233,014, which resulted
in a net management fee of $325,677; a management fee of $1,043,156 from the
Income Fund, and did not make any reimbursements; a fee of $174,183 from the
Government Fund and reimbursed that Fund $3,320 which resulted in a net
management fee of $170,863; a fee of $253,658 from the Treasury Trust and
reimbursed that Fund $109,740, which resulted in a net management fee of
$143,918; and a fee of $123,678 from the Insured Fund and reimbursed that Fund
$27,698 which resulted in a net management fee of $95,982.
For the fiscal year ended August 31, 1999, CCM received a management fee of
$212,287 from the MidCap Fund and reimbursed that Fund $89,438, which resulted
in a net management fee of $122,849; a fee of $313,194 from the 500 Fund and
reimbursed that Fund $218,960, which resulted in a net management fee of
$94,234; a fee of $47,058 from the
-8-
<PAGE>
SmallCap Fund and reimbursed that Fund $38,043, which resulted in a net
management fee of $9,015; and a fee of $67,107 from the Equity Income Fund and
reimbursed that Fund $8,051, which resulted in a net management fee of $59,056.
EVALUATION BY THE BOARD OF TRUSTEES
In determining whether or not it was appropriate to approve the New
Agreements and to recommend their approval to the shareholders, each Board of
Trustees, including the Trustees who are not interested persons of CCM,
considered various materials and representations provided by CCM and was advised
by independent legal counsel with respect to these matters.
Information considered by the Trustees included, among other things, the
following: (1) representation that the same persons responsible for management
of the Funds under the Current Agreements are currently expected to continue to
manage the Funds under the New Agreements; (2) that the compensation to be
received by CCM under the New Agreements is the same as the compensation paid
under the Current Agreements; (3) CCM's representation that it will not seek to
increase the rate of advisory fees paid by the Funds for a period of at least
two years and that it will keep any existing expense limitation agreement in
effect for a period of at least two years; (4) that the senior management
personnel responsible for the management of CCM are expected to continue to be
responsible for the management of CCM; and (5) the commonality of the terms and
provisions of the New Agreements and Current Agreements.
Further, the Board of Trustees reviewed its determinations reached at the
meetings of the Board of Trustees of California Investment Trust Funds Group
held on February 16, 1999, and December 7, 1999, respecting the Current
Agreements and, with respect to the Current Agreements, (1) the nature and
quality of the services rendered by CCM under the Current Agreements; (2) the
fairness of the compensation payable to CCM under the Current Agreements; (3)
the results achieved by CCM for the Funds; and (4) the personnel, operations and
financial condition, and investment management capabilities, methodologies, and
performance of CCM.
Based upon its review, each Board of Trustees determined that, by approving
the New Agreements, the Funds can best be assured that services from CCM will be
provided without interruption. Each Board of Trustees also determined that the
New Agreements are in the best interests of each Fund and its shareholders.
Accordingly, after consideration of the above factors, and such other factors
and information it considered relevant, each Board of Trustees unanimously
approved the New Agreements and voted to recommend its approval by each Fund's
shareholders.
VOTE REQUIRED
Shareholders of each Fund must separately approve the applicable New
Agreement with respect to that Fund. Approval of this Proposal No. 2 by a Fund
requires an affirmative vote of the lesser of (i) 67% or more of the shares of
the Fund present at the Meeting if more than 50% of the outstanding shares of
the Fund are present or represented by proxy, or (ii) more than 50% of the
outstanding shares of the Fund.
-9-
<PAGE>
The Board of Trustees of the Funds, including a majority of the independent
Trustees, recommends that you vote "FOR" this Proposal No. 2.
GENERAL INFORMATION
THE LEGAL FRAMEWORK
Pursuant to Section 15 of the 1940 Act, each investment advisory agreement
between a Fund and an adviser terminates automatically upon its assignment,
which is deemed to include any change of control of the investment adviser.
Section 15(a) of the 1940 Act prohibits any person from serving as an investment
adviser to a registered investment company except pursuant to a written contract
that has been approved by the shareholders. Therefore, in order for CCM to
continue to provide investment advisory services to the Funds after the change
of control described above, the shareholders of each Fund must approve the New
Agreement between each Fund and CCM.
GENERAL
The Funds' Distributor is RFS Partners, 44 Montgomery Street, Suite 2100,
San Francisco, California, 94104. The Funds' Custodian Bank, Shareholder
Servicing and Transfer Agent is Firstar Trust Company, 615 East Michigan Street,
Milwaukee, Wisconsin 53202. During the year ended August 31, 1999, the Funds
paid no commissions to the affiliated broker-dealer RFS Partners.
VOTING RIGHTS AND PROCEDURES AND SHAREHOLDER MEETING COSTS
Each share of each Fund is entitled to one vote. Shareholders of each Fund
at the close of business on December 22, 1999 (the "Record Date") will be
entitled to be present and give voting instructions for the Funds at the Meeting
with respect to their shares owned as of the Record Date. For each Fund, as of
December 22, 1999, the total number of shares outstanding and entitled to vote
and the total net assets represented by those shares was:
Total Number Total Net
Fund of Shares Assets
---- --------- ------
California Tax Free Income Fund
California Insured Intermediate Fund
California Tax-Free Money Market Fund
U.S. Government Securities Fund
The United States Treasury Trust
S&P 500 Index Fund
S&P 500 MidCap Index Fund
S&P 500 SmallCap Index Fund
Equity Income Fund
Except as indicated under "Information Regarding Nominees" above, as of
November 30, 1999, to the knowledge of the Trusts' management, the officers and
Trustees of the Trusts owned, collectively, less than 1% of the shares of each
Fund. To the knowledge of the Trusts' management, at the close of business
November 30, 1999, the only persons owning
-10-
<PAGE>
beneficially more than five percent of the outstanding shares of each Fund were
those listed in Appendix A.
The Declaration of Trust of each Trust provides that the presence at a
shareholder meeting in person or by proxy of 40 percent of the shares of each
Trust entitled to vote at the Meeting constitutes a quorum. Thus, the Meeting
will take place on its scheduled date if 40 percent or more of the shares of the
series of each Trust entitled to vote are represented. If a quorum is not
present or if a quorum is present but sufficient votes in favor of any of the
Proposals are not received, the meeting may be held for the purposes of voting
on those proposals for which sufficient votes have been received and the persons
named as proxies may propose one or more adjournments of the meeting to permit
further solicitation of proxies with respect to any proposal for a Fund for
which sufficient votes have not been received. Any such adjournment will require
the affirmative vote of a majority of the votes cast on the question of
adjournment in person or by proxy. The persons named as proxies will vote in
favor of any such adjournment.
In tallying shareholder votes, abstentions (i.e., shares for which a proxy
is presented, but which abstains from voting on one or more matters) and
"nominee non-votes" (i.e., shares held by nominees for which proxies are
presented but as to which (i) instructions have not been received from the
beneficial owners or persons entitled to vote and (ii) the nominee does not have
discretionary voting power on a particular matter) will be counted for purposes
of determining whether a quorum, or majority of voting shares, is present for
the conduct of business at the Meeting and will be voted in favor of any
adjournment proposed. However, nominee non-votes will not constitute votes for
or against any proposal, will not constitute an abstention, and will be
disregarded in determining votes cast for purposes of determining whether a
proposal has received a majority of the outstanding voting shares.
The cost of preparing, printing and mailing the enclosed proxy,
accompanying notice and proxy statement and all other costs in connection with
solicitation of proxies related to the required approvals will be paid by CCM,
including any additional solicitation made by letter, telephone or telegraph. In
addition to solicitation by mail, certain officers and representatives of the
Trusts, officers and employees of CCM and certain financial services firms and
their representatives, who will receive no extra compensation for their
services, may solicit proxies by telephone, telegram or personally. In addition,
CCM may retain a firm to solicit proxies on behalf of the Board, the fee for
which will be borne by CCM.
ANNUAL REPORTS
A COPY OF EACH FUND'S ANNUAL REPORT FOR THE FISCAL YEAR ENDED AUGUST 31,
1999, IS AVAILABLE WITHOUT CHARGE UPON REQUEST BY WRITING TO CALIFORNIA
INVESTMENT TRUST GROUP, 44 MONTGOMERY STREET, SUITE 2100, SAN FRANCISCO, CA
94104 OR BY CALLING 1-800-225-8778.
OTHER MATTERS TO COME BEFORE THE MEETING
Neither Board of Trustees is aware of any matters that will be presented
for action at the Meeting other than the matters set forth herein. Should any
other matters requiring a vote of shareholders arise, the proxy in the
accompanying form will confer upon the person or persons
-11-
<PAGE>
entitled to vote the shares represented by such proxy the discretionary
authority to vote matters in accordance with their best judgment.
PLEASE COMPLETE, SIGN AND RETURN THE ENCLOSED PROXY PROMPTLY. NO POSTAGE IS
REQUIRED IF MAILED IN THE UNITED STATES.
By order of the Board of Trustees,
/s/ Stephen C. Rogers
Stephen C. Rogers
Chairman and President
<PAGE>
APPENDIX A
5% SHAREHOLDERS
As of November 30, 1999, the following shareholders, to the Trusts'
knowledge, owned beneficially more than 5% of a Fund's outstanding shares, as
noted:
<TABLE>
<CAPTION>
<S> <C>
MONEY FUND:
Donald Fisher & Doris Fisher (9.27%)
One Maritime Plaza #1400
San Francisco, CA 94111-3503
Robert J. Fisher (5.17%)
One Maritime Plaza #1400
San Francisco, CA 94111-3503
John J. Fisher (5.15%)
One Maritime Plaza #1400
San Francisco, CA 94111-3503
INSURED FUND:
Northern Trust Co. (10.20%) Deborah Murray (7.07%)
P.O. Box 92956 27 Makin Grade
Chicago, IL 60675 Ross, CA 94957
John Larson (7.47%) The Harold Messmer Family Trust (5.48%)
1 Market Plaza 2884 Sand Hill Rd., Suite 200
San Francisco, CA 94105 Menlo Park, CA 94025
GOVERNMENT FUND:
Blush & Co. (8.50%) Firstar Trust Company CUST (6.68%)
P.O. Box 976 David Vernon Thomas IRA
New York, NY 10268 1393 Oak Avenue
Los Altos Hills, CA 94024-5768
TREASURY TRUST:
William Edwards (23.35%) Edwin Callan (6.92%)
3000 Sand Hill Rd. 71 Stevenson Street, #1300
Menlo Park, CA 94025 San Francisco, CA 94105
D & DF Foundation (5.00%)
1 Maritime Plaza, Suite 1300
San Francisco, CA 94111-3503
S&P 500 FUND: Charles Schwab & Co. (7.13%)
State Street CA Inc., Custodian (14.52%) 101 Montgomery Street
FBO Cal/STRS San Francisco, CA 94104
1001 Marina Village PKWY FL 3
Alameda, CA 94501
MIDCAP FUND:
Donald Fisher & Doris Fisher, Trustees (12.22%) Charles Schwab & Co. (11.53%)
Donald G. Fisher 1991 101 Montgomery Street
Charitable Remainder Trust 1 San Francisco, CA 94104
A-1
<PAGE>
EQUITY INCOME FUND:
Timothy Abel (12.01%) Susan Ballinger (10.05%)
1331 B St., #B 50 Makin Grade
Hayward, CA 94541 Kentfield, CA 94904
Richard F. Shelton Trust (6.25%)
1 Market
San Francisco, CA 94105
SMALLCAP FUND:
Alexander D. Calhoun & (6.60%) FBO Spieker 1991 Trust (5.26%)
Charles S. Lafollette Trust Michael McAuliffe Trust
Thomas B. Calhoun 1992 Trust 1 Market Plaza, Suite 2100
1 Maritime Plaza, Suite 300 San Francisco, CA 94105
San Francisco, CA 94111
Richard F. Shelton Trust Charles Schwab & Co. Inc. (9.94%)
Richard F. Shelton Trustee (6.12%) Reinvest Account
1 Market 101 Montgomery Street
San Francisco, CA 94105 San Francisco, CA 94104
</TABLE>
A-2
<PAGE>
APPENDIX B
FORM OF NEW INVESTMENT MANAGEMENT AGREEMENT
<PAGE>
MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT made as of __________________, by and between
[Name of Trust]___________________________, a Massachusetts business trust (the
"Trust"), on behalf the series of the Trust identified in the Appendix attached
hereto (the "Fund"), and CCM PARTNERS, a limited partnership organized and
existing under the laws of the State of California (the "Manager"),
WHEREAS, the Trust is an open-end management investment company, registered
as such under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, the Manager is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended, and is engaged in the business of
supplying investment advice, investment management and administrative services,
as an independent contractor; and
WHEREAS, the Trust desires to retain the Manager to render advice and
services to the Fund pursuant to the terms and provisions of this Agreement, and
the Manager is interested in furnishing said advice and services;
NOW THEREFORE, the Trust and the Manager mutually agree as follows:
1. APPOINTMENT OF MANAGER. The Trust hereby employs the Manager and the
Manager hereby accepts such employment, to render investment advice and
management services with respect to the assets of the Fund for the period
and on the terms set forth in this Agreement, subject to the supervision
and direction of the Trust's Board of Trustees.
2. DUTIES OF MANAGER.
(a) General Duties. The Manager shall act as investment manager to the
Fund and shall supervise investments of the Fund on behalf of the Fund in
accordance with the investment objectives, programs and restrictions of the
Fund as provided in the Trust's governing documents, including, without
limitation, the Trust's Agreement and Declaration of Trust and By-Laws, and
such other limitations as the Trustees may impose from time to time in
writing to the Manager. The Manager shall, except as otherwise provided for
herein, render or make available all services needed for the management,
administration and operation of the Fund. Without limiting the generality
of the foregoing, the Manager shall: (i) furnish the Fund with advice and
recommendations with respect to the investment of the Fund's assets and the
purchase and sale of portfolio securities for the Fund, including the
taking of such other steps as may be necessary to implement such advice and
recommendations; (ii) furnish the Fund with reports, statements and other
data on securities, economic conditions and other pertinent subjects which
the Trust's Board of Trustees may reasonably request; (iii) manage the
investments of the Fund, subject to the ultimate supervision and direction
of the Trust's Board of Trustees; (iv) provide persons satisfactory to the
Trust's Board of Trustees to act as officers and employees of the Trust and
the Fund (such officers and employees, as well as certain Trustees, may be
trustees, directors, officers, partners, or employees of the Manager or its
affiliates); and (v) render to the Trust's Board of Trustees such periodic
and special reports with respect to the Fund's investment activities as the
Board may reasonably request.
B-1
<PAGE>
(b) Brokerage. The Manager shall place orders for the purchase and
sale of securities either directly with the issuer or with a broker or
dealer selected by the Manager. In placing the Fund's securities trades, it
is recognized that the Manager will give primary consideration to securing
the most favorable price and efficient execution, so that the Fund's total
cost or proceeds in each transaction will be the most favorable under all
the circumstances. Within the framework of this policy, the Manager may
consider the financial responsibility, research and investment information,
and other services provided by brokers or dealers who may effect or be a
party to any such transaction or other transactions to which other clients
of the Manager may be a party. It is understood that an affiliate of the
Manager may act as one of the Fund's brokers in the purchase and sale of
portfolio securities for the Fund, consistent with the requirements of the
1940 Act.
It is also understood that it may be desirable for the Fund that the
Manager have access to investment and market research and securities and
economic analyses provided by brokers and others. It is also understood
that brokers providing such services may execute brokerage transactions at
a higher cost to the Fund than might result from the allocation of
brokerage to other brokers on the basis or seeking the most favorable price
and efficient execution. Therefore, the purchase and sale of securities for
the Fund may be made with brokers who provide such research and analysis,
subject to review by the Trust's Board of Trustees from time to time with
respect to the extent and continuation of this practice to determine
whether the Fund benefits, directly or indirectly, from such practice. It
is understood by both parties that the Manager may select broker-dealers
for the execution of the Fund's portfolio transactions who provide research
and analysis as the Manager may lawfully and appropriately use in its
investment management and advisory capacities, whether or not such research
and analysis may also be useful to the Manager in connection with its
services to other clients.
On occasions when the Manager deems the purchase or sale of a security
to be in the best interest of the Fund as well as of other clients, the
Manager, to the extent permitted by applicable laws and regulations, may
aggregate the securities to be so purchased or sold in order to obtain the
most favorable price or lower brokerage commissions and the most efficient
execution. In such event, allocation of the securities so purchased or
sold, as well as the expenses incurred in the transaction, will be made by
the Manager in the manner it considers to be the most equitable and
consistent with its fiduciary obligations to the Fund and to such other
clients.
3. BEST EFFORTS AND JUDGMENT. The Manager shall use its best judgment and
efforts in rendering the advice and, services to the Fund as contemplated
by this Agreement.
4. INDEPENDENT CONTRACTOR. The Manager shall, for all purposes herein, be
deemed to be an independent contractor, and shall, unless otherwise
expressly provided and authorized to do so, have no authority to act for or
represent the Trust or the Fund in any way, or in any way be deemed an
agent for the Trust or for the Fund. It is expressly understood and agreed
that the services to be rendered by the Manager to the Fund under the
provisions of this Agreement are not to be deemed exclusive, and the
Manager shall
B-2
<PAGE>
be free to render similar or different services to others so long as its
ability to render the services provided for in this Agreement shall not be
impaired thereby.
5. MANAGER'S PERSONNEL. The Manager shall, at its own expense, maintain
such staff and employ or retain such personnel and consult with such other
persons as it shall from time to time determine to be necessary to the
performance of its obligations under this Agreement. Without limiting the
generality of the foregoing, the staff and personnel of the Manager shall
be deemed to include persons employed or retained by the Manager to furnish
statistical information, research, and other factual information, advice
regarding economic factors and trends, information with respect to
technical and scientific developments, and such other information, advice
and assistance as the Manager or the Trust's Board of Trustees may desire
and reasonably request.
6. REPORTS BY FUND TO MANAGER. Each Fund from time to time will furnish to
the Manager detailed statements of its investments and assets, and
information as to its investment objective and needs, and will make
available to the Manager such financial reports, proxy statements, legal
and other information relating to the Fund's investments as may be in its
possession or available to it, together with such other information as the
Manager may reasonably request.
7. EXPENSES.
(a) The Manager shall bear and pay the costs of rendering the services
to be performed by it under this Agreement. In addition, with respect to
the operation of the Fund, the Manager is responsible for (i) the
compensation of any of the Trust's trustees, officers, and employees who
are affiliates of the Manager, (ii) the expenses of printing and
distributing the Fund's prospectuses, statements of additional information,
and sales and advertising materials (but not the legal, auditing or
accounting fees attendant thereto) to prospective investors (but not to
existing shareholders), and (iii) providing office space and equipment
reasonably necessary for the operation of the Fund.
(b) The Fund is responsible for and has assumed the obligation for
payment of all of its expenses, other than as stated in Subparagraph 7(a)
above, including but not limited to: fees and expenses incurred in
connection with the issuance, registration and transfer of its shares;
brokerage and commission expenses; all expenses of transfer, receipt,
safekeeping, servicing and accounting for the cash, securities and other
property of the Trust for the benefit of the Fund including all fees and
expenses of its custodian, shareholder services agent and accounting
services agent; interest charges on any borrowings; costs and expenses of
pricing and calculating its daily net asset value and of maintaining its
books of account required under the 1940 Act; taxes, if any; expenditures
in connection with meetings of the Fund's Shareholders and Board of
Trustees that are properly payable by the Fund; salaries and expenses of
officers and fees and expenses of members of the Trust's Board of Trustees
or members of any advisory board or committee who are not members of,
affiliated with or interested persons of the Manager; insurance premiums on
property or personnel of the Fund which inure to its benefit, including
liability and fidelity bond insurance; the cost of preparing and printing
reports, proxy statements, prospectuses and statements of additional
information of the Fund or other communications for distribution to
existing shareholders; legal, auditing and accounting fees; trade
association dues; fees and expenses (including legal fees) of
B-3
<PAGE>
registering and maintaining registration of its shares for sale under
federal and applicable state and foreign securities laws; all expenses of
maintaining and servicing shareholder accounts, including all charges for
transfer, shareholder recordkeeping, dividend disbursing, redemption, and
other agents for the benefit of the Fund, if any; and all other charges and
costs of its operation plus any extraordinary and non-recurring expenses,
except as herein otherwise prescribed.
(c) To the extent the Manager incurs any costs by assuming expenses
which are an obligation of the Fund as set forth herein, the Fund shall
promptly reimburse the Manager for such costs and expenses, except to the
extent the Manager has otherwise agreed to bear such expenses. To the
extent the services for which the Fund is obligated to pay are performed by
the Manager, the Manager shall be entitled to recover from the Fund to the
extent of the Manager's actual costs for providing such services.
8. INVESTMENT ADVISORY AND MANAGEMENT FEE
(a) The Fund shall pay to the Manager, and the Manager agrees to
accept, as full compensation for all administrative and investment
management and advisory services furnished or provided to the Fund pursuant
to this Agreement, a management fee as set forth in the Fee Schedule
attached hereto as the Appendix, as may be amended in writing from time to
time by the Trust and the Manager.
(b) The management fee shall be accrued daily by the Fund and paid to
the Manager on the first business day of the succeeding month.
(c) The initial fee under this Agreement shall be payable on the first
business day of the first month following the effective date of this
Agreement and shall be prorated as set forth below. If this Agreement is
terminated prior to the end of any month, the fee to the Manager shall be
prorated for the portion of any month in which this Agreement is in effect
which is not a complete month according to the proportion which the number
of calendar days in the month during which the Agreement is in effect bears
to the number of calendar days in the month, and shall be payable within
ten (10) days after the date of termination.
(d) The fees payable to the Manager under this Agreement will be
reduced to the extent required under the most stringent expense limitation
applicable to the Fund imposed by any state in which shares of the Fund are
qualified for sale. The Manager may reduce any portion of the compensation
or reimbursement of expenses due to it pursuant to this Agreement and may
agree to make payments to limit the expenses that are the responsibility of
a Fund under this Agreement. Except as the Manager may otherwise agree with
respect to the Fund, any such reduction or payment shall be applicable only
to such specific reduction or payment and shall not constitute an agreement
to reduce any future compensation or reimbursement due to the Manager
hereunder or to continue future payments. Any such reduction will be agreed
to prior to accrual of the related expense or fee and will be estimated
daily and reconciled and paid on a monthly basis. Any fee withheld pursuant
to this paragraph 8(d) from the Manager shall be reimbursed by the Fund to
the Manager in the first fiscal year or the second fiscal year next
succeeding the fiscal year of the withholding to the extent permitted by
B-4
<PAGE>
the applicable state law if the aggregate expenses for the next succeeding
fiscal year or second succeeding fiscal year do not exceed the applicable
state limitation or any more restrictive limitation to which the Manager
has agreed.
(e) The Manager may agree not to require payment of any portion of the
compensation or reimbursement of expenses otherwise due to it pursuant to
this Agreement prior to the time such compensation or reimbursement has
accrued as a liability of the Fund. Any such agreement shall be applicable
only with respect to the specific items covered thereby and shall not
constitute an agreement not to require payment of any future compensation
or reimbursement due to the Manager hereunder.
9. TRADING IN FUND SHARES. The Manager agrees that neither it nor any of
its partners, officers or employees shall take any short position in the
shares of the Fund. This prohibition shall not prevent the purchase of such
shares by any of the officers and partners or bona fide employees of the
Manager or any trust, pension, profit-sharing or other benefit plan for
such persons or affiliates thereof, at a price not less than the net asset
value thereof at the time of purchase, as allowed pursuant to rules
promulgated under the 1940 Act.
10. CONFLICTS WITH TRUST'S GOVERNING DOCUMENTS AND APPLICABLE LAWS. Nothing
herein contained shall be deemed to require the Trust or the Fund to take
any action contrary to the Trust's Agreement and Declaration of Trust,
By-Laws, or any applicable statute or regulation, or to relieve or deprive
the Board of Trustees of the Trust of its responsibility for and control of
the conduct of the affairs of the Trust and the Fund.
11. MANAGER'S LIABILITIES AND INDEMNIFICATION.
(a) The Manager shall have responsibility for the accuracy and
completeness (and liability for the lack thereof) of the statements in the
Fund's offering materials (including the prospectus, the statement of
additional information, advertising and sales materials), except for
information supplied by the Trust or another third party for inclusion
therein.
(b) The Manager shall be liable to the Fund for any loss (including
brokerage charges) incurred by the Fund as a result of any improper
investment made by the Manager.
(c) In the absence of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the obligations or duties hereunder on
the part of the Manager, the Manager shall not be subject to liability to
the Trust or the Fund or to any shareholder of the Fund for any act or
omission in the course of, or connected with, rendering services hereunder
or for any losses that may be sustained in the purchase, holding or sale of
any security by the Fund.
(d) Notwithstanding the foregoing, the Manager agrees to reimburse the
Trust for any and all costs, expenses, and counsel and trustees' fees
reasonably incurred by the Trust in the preparation, printing and
distribution of proxy statements, amendments to its Registration Statement,
holdings of meetings of its shareholders or trustees, the conduct of
factual investigations, any legal or administrative proceedings (including
any applications for exemptions or determinations by the Securities and
Exchange Commission) which the
B-5
<PAGE>
Trust incurs as the result of action or inaction of the Manager or any of
its partners where the action or inaction necessitating such expenditures
(i) is directly or indirectly related to any transactions or proposed
transaction in the interests or control of the Manager or its affiliates
(or litigation related to any pending or proposed future transaction in
such interests or control) which shall have been undertaken without the
prior, express approval of the Trust's Board of Trustees; or (ii) is within
the sole control of the Manager or any of its affiliates or any of their
officers, partners, employees, or agents. So long as this Agreement is in
effect, the Manager shall pay to the Trust the amount due for expenses
subject to this Subparagraph 10(b) within thirty (30) days after a bill or
statement has been received from the Trust therefor. This provision shall
not be deemed to be a waiver of any claim which the Trust may have or may
assert against the Manager or others for costs, expenses, or damages
heretofore incurred by the Trust or for costs, expenses" or damages the
Trust may hereafter incur which are not reimbursable to it hereunder.
(e) No provision of this Agreement shall be construed to protect any
Trustee or officer of the Trust, or partner or officer of the Manager, from
liability in violation of Sections 17(h) and (i) of the 1940 Act.
12. NON-EXCLUSIVITY. The Trust's employment of the Manager is not an
exclusive arrangement, and the Trust may from time to time employ other
individuals or entities to furnish it with the services provided for
herein.
13. TERM. This Agreement shall become effective as of the date of execution
and shall remain in effect for a period of two (2) years, unless sooner
terminated as hereinafter provided. This Agreement shall continue in effect
thereafter for additional periods not exceeding one (1) year so long as
such continuation is approved for each Fund at least annually by (i) the
Board of Trustees of the Trust or by the vote of a majority of the
outstanding voting securities of each Fund and (ii) the vote of a majority
of the Trustees of the Trust who are not parties to this Agreement nor
interested persons thereof, cast in person at a meeting called for the
purpose of voting on such approval.
14. TERMINATION. This Agreement may be terminated by the Trust on behalf of
the Fund at any time without payment of any penalty, by the Board of
Trustees of the Trust or by vote of a majority of the outstanding voting
securities of the Fund, upon sixty (60) days' written notice to the
Manager, and by the Manager upon sixty (60) days' written notice to the
Fund.
15. TERMINATION BY ASSIGNMENT. This Agreement shall terminate automatically
in the event of any transfer or assignment thereof, as defined in the 1940
Act.
16. TRANSFER, ASSIGNMENT. This Agreement may not be transferred, assigned,
sold or in any manner hypothecated or pledged without the affirmative vote
or written consent of the holders of a majority of the outstanding voting
securities of each Fund.
17. SEVERABILITY. If any provision of this Agreement shall be held or made
invalid by a court decision, statute or rule, or shall be otherwise
rendered invalid, the remainder of this Agreement shall not be affected
thereby.
B-6
<PAGE>
18. DEFINITIONS. The terms "majority of the outstanding voting securities"
and "interested persons" shall have the meanings as set forth in the 1940
Act.
19. NOTICE OF LIMITATION AN LIABILITY. The Manager acknowledges that it has
received notice of and accepts the limitations of the Trust's liability set
forth in Article III, Section 6(b) of its Agreement and Declaration of
Trust. The Manager agrees that the Trust's obligations under this Agreement
with respect to the Fund shall be limited to the Fund and to its assets,
and that the Manager shall not seek satisfaction of any such obligation
from the shareholders of the Fund nor from any trustee, officer, employee
or agent of the Trust or the Fund, nor from the assets of shareholders of
any other series of the Trust.
20. CAPTIONS. The captions in this Agreement are included for convenience
of reference only and in no way define or limit any of the provisions
hereof or otherwise affect their construction or effect.
21. GOVERNING LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of California without giving effect
to the conflict of laws principles thereof; provided that nothing herein
shall be construed to preempt, or to be inconsistent with, any federal law,
regulation or rule, including the 1940 Act and the Investment Advisers Act
of 1940 and any rules and regulations promulgated thereunder.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first written above.
[NAME OF TRUST]
By: _________________
Name:
Title
CCM PARTNERS,
a California Limited Partnership
By: _________________
RFS Partners,
its General Partner
By: _________________
Richard F. Shelton, Inc.,
its General Partner
By: _________________
Name:
Its:
B-7
<PAGE>
APPENDIX TO MANAGEMENT AGREEMENT
Dated ___________________________ (the "Management Agreement")
The provisions of the Management Agreement between the Trust and the Manager
apply to the following series of the Trust:__________________________________
FEE SCHEDULE
------------
The Fund shall pay to the Manager, as full compensation for all investment
management, advisory and administrative services furnished or provided to the
Fund, pursuant to the Management Agreement, a management fee based upon the
Fund's average daily net assets at the following per annum rates:
-------------------------------------------------
FEE LIMITATIONS
---------------
[California Investment Trust Funds: To the extent that the gross operating costs
and expenses of the Fund (excluding any extraordinary expenses, such as
litigation) exceed 1.00% of the Fund's average daily net asset value for any one
fiscal year, the Manager shall reimburse the Fund for the amount of such excess
expenses.]
B-8
<PAGE>
APPENDIX C
FORM OF PROXY
<PAGE>
PROXY
[Shareholder Name]
[Title (if applicable)]
[Address]
[Fund Name]
[Shares Held]
CALIFORNIA INVESTMENT TRUST
CALIFORNIA INVESTMENT TRUST II
SPECIAL MEETING OF SHAREHOLDERS
January 28, 2000
SOLICITED ON BEHALF OF
THE BOARD OF TRUSTEES OF
CALIFORNIA INVESTMENT TRUST AND
CALIFORNIA INVESTMENT TRUST II
The undersigned hereby appoints Stephen C. Rogers and Phillip W.
McClanahan, and each of them, as proxies of the undersigned, each with the power
to appoint his substitute, for the Special Meeting of Shareholders of each
series of California Investment Trust and California Investment Trust II (each,
a "Trust") to be held on January 28, 2000, at the offices of California
Investment Trust Group, 44 Montgomery Street, Suite 2100, San Francisco,
California, and at any and all adjournments thereof (the "Meeting"), to vote, as
designated below, all shares of the series (the "Fund") of the respective Trust,
as indicated above, held by the undersigned at the close of business on December
22, 1999.
A SIGNED PROXY WILL BE VOTED IN FAVOR OF THE PROPOSALS LISTED BELOW UNLESS
YOU HAVE SPECIFIED OTHERWISE. Please sign, date and return this proxy promptly.
Your signature authorizes the proxies to vote in their discretion on such other
business as may properly come before the Meeting including, without limitation,
all matters incident to the conduct of the Meeting.
Please indicate your vote by an "x" in the appropriate box below.
1. To elect Trustees of the Trust. The nominees are: Stephen C. Rogers,
Phillip W. McClanahan, Harry Holmes, John B. Sias and Guy Rounsaville, Jr.
To withhold authority to vote for an individual nominee, mark the "For All
Except" box and strike a line through the nominee's name in the list above.
For |_| Withhold |_| For All Except |_|
2. Approval of a new investment advisory agreement between the Fund and CCM
Partners, the investment adviser to the Fund.
For |_| Withhold |_| Abstain |_|
Appendix C-1
<PAGE>
Dated: __________________, 2000
[Shareholder Name]
Dated: __________________, 2000
[Signature(s) (if held jointly)]
Please sign exactly as name or names appear on your shareholder account
statement. When signing as attorney, trustee, executor, administrator,
custodian, guardian or corporate officer, please give full title. If shares are
held jointly, each shareholder should sign.
C-2
