<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /x/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/x/ Preliminary Proxy Statement
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
STEPSTONE FUNDS
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(Name of Registrant as Specified In Its Charter)
same
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(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/x/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2), or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
N/A
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2) Aggregate number of securities to which transaction applies:
N/A
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11
N/A
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4) Proposed maximum aggregate value of transaction:
N/A
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/ / 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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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE> 2
BALANCED FUND
BLUE CHIP GROWTH FUND
CALIFORNIA TAX-FREE BOND FUND
CALIFORNIA TAX-FREE MONEY MARKET FUND
CONVERTIBLE SECURITIES FUND
EMERGING GROWTH FUND
GOVERNMENT SECURITIES FUND
GROWTH EQUITY FUND
INTERMEDIATE-TERM BOND FUND
INTERNATIONAL EQUITY FUND
LIMITED MATURITY GOVERNMENT FUND
MONEY MARKET FUND
TREASURY MONEY MARKET FUND
VALUE MOMENTUM FUND
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IMPORTANT SHAREHOLDER INFORMATION
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THE DOCUMENT YOU HOLD IN YOUR HANDS CONTAINS YOUR PROXY STATEMENT AND PROXY
CARD. A PROXY CARD IS, IN ESSENCE, A BALLOT. WHEN YOU VOTE YOUR PROXY CARD,
IT TELLS US HOW TO VOTE ON YOUR BEHALF ON IMPORTANT ISSUES RELATING TO YOUR
FUND. EACH PROXY CARD MAY BE COMPLETED BY CHECKING A SINGLE BOX AND VOTING FOR
OR AGAINST ALL OF THE PROPOSALS RELATING TO YOUR FUND, OR YOU MAY VOTE ON EACH
PROPOSAL SEPARATELY. IF YOU SIMPLY SIGN THE PROXY CARD WITHOUT SPECIFYING A
VOTE, YOUR SHARES WILL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE
BOARD OF TRUSTEES. YOU WILL RECEIVE ONE PROXY CARD FOR EACH FUND IN WHICH YOU
OWN SHARES.
WE URGE YOU TO SPEND A FEW MINUTES WITH THE PROXY STATEMENT, FILL OUT YOUR
PROXY CARD, AND RETURN IT TO US. VOTING YOUR PROXY, AND DOING SO PROMPTLY,
ENSURES THAT YOUR FUND WILL NOT NEED TO CONDUCT ADDITIONAL MAILINGS. WHEN
SHAREHOLDERS DO NOT RETURN THEIR PROXIES IN SUFFICIENT NUMBERS, WE HAVE TO MAKE
FOLLOW-UP SOLICITATIONS, WHICH MAY COST YOUR FUND MONEY.
PLEASE TAKE A FEW MOMENTS TO EXERCISE YOUR RIGHT TO VOTE. THANK YOU.
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STEPSTONE FUNDS
<PAGE> 3
STEPSTONE FUNDS
January 1996
Dear Stepstone Funds Shareholder:
I am writing to let you know that a special meeting of the Stepstone Funds
shareholders will be held on March 7, 1996 to vote on several important
proposals that affect The Stepstone Funds(R). As a shareholder, you have the
opportunity to voice your opinion on these matters. This package contains
information about the proposals and the materials to use to vote by mail.
Please take a few minutes to read the enclosed materials and cast your vote on
the proxy ballot(s) enclosed. It is extremely important to vote promptly.
Your vote is important no matter how many shares you own. If we do not receive
enough votes, we must resolicit shareholders at an additional cost. We
encourage you to support the Trustees recommendations.
The Union Bank has announced effective April 1, 1996 that The Bank of
California, N.A., BanCal Tri-State Corporation and Union Bank will combine. As
a result of the combination, Union Bank will be renamed Union Bank of
California, N.A. In addition, on the same date, The Bank of Tokyo Ltd., Union
Bank's corporate parent, is merging with Mitsubishi Bank Limited. Since Union
Capital Advisors, a division of Union Bank, serves as the investment adviser to
the Stepstone Funds, the combination of the banks requires approval of a new
investment advisory agreement between the Stepstone Funds and the Union Bank of
California. Similarly, the combination of the Bank of Tokyo and Mitsubishi
Bank requires that Shareholders of certain The Stepstone Funds approve new
sub-advisory agreements with BOT Asset Management (U.K.) Limited and Bank of
Tokyo Trust Company, each of which are affiliates of the Bank of Tokyo. The
terms of the new agreements will be substantially the same as the present
investment advisory agreement with Union Bank and sub-advisory agreements with
Bank of Tokyo Trust Company and BOT Asset Management (U.K.) Limited. This
special meeting of shareholders is being called to obtain your approval of
these new investment advisory and sub-advisory agreements in order to avoid any
interruption in the investment advisory services provided to the Stepstone
Funds.
<PAGE> 4
IMPORTANT FACTORS REGARDING THE NEW INVESTMENT ADVISORY AND SUB-ADVISORY
AGREEMENTS INCLUDE:
- - The Stepstone Funds' Board of Trustees has unanimously approved the new
advisory and sub-advisory agreements;
- - There will be no change in the Stepstone Funds' investment objectives or
investment policies or in the responsibilities of the investment adviser and
sub-advisers;
- - There will be no change in the fees payable to the adviser or sub-advisers as
a result of the approval of the new investment advisory and sub-advisory
agreements;
- - No significant changes in the personnel of the investment adviser or
sub-advisers who manage the funds are currently planned.
THE FOLLOWING IS A BRIEF SUMMARY OF THE PROPOSALS THAT ARE INCLUDED IN THIS
PROXY:
PROPOSAL 1: AGREEMENT WITH THE INVESTMENT ADVISER
1. To approve the Selection of Union Bank of California ("UBOC") as
investment adviser to each Fund, and to approve a new investment advisory
agreement between the Stepstone Funds and UBOC.
PROPOSALS 2 AND 3: AGREEMENTS WITH THE SUB-ADVISERS
2. To approve the selection of The Bank of Tokyo Trust Company ("BOTT") or
its successor as the sub-adviser to the Blue Chip Growth, Emerging
Growth, Government Securities and Convertible Securities Funds, and to
approve a new sub-advisory agreement between BOTT (or its successor) and
UBOC relating to the Funds.
3. To approve the selection of BOT Asset Management (U.K.), Limited ("BTAM")
or its successor as the sub-adviser to the International Equity Fund, and
to approve the sub-advisory agreement between BTAM (or its successor) and
UBOC relating to the Fund.
Your vote is important to us. Please mark, sign and date the enclosed proxy
card and return it as soon as possible. For your convenience, we have enclosed
a self-addressed stamped envelope. Please call 1-800-___-____ if you have any
questions about the proposals. Thank you for taking the time to consider these
important proposals and for your investment in the Stepstone Funds.
Sincerely,
---------------
[Title]
<PAGE> 5
PRELIMINARY COPY
STEPSTONE FUNDS
2 OLIVER STREET
BOSTON, MA 02109
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
MARCH 7, 1996
To the Shareholders of Stepstone Funds:
Notice is hereby given that a special meeting of shareholders (the
"Meeting") of the Balanced, Blue Chip Growth, California Tax-Free Bond,
California Tax-Free Money Market, Convertible Securities, Emerging Growth,
Government Securities, Growth Equity, Intermediate-Term Bond, International
Equity, Limited Maturity Government, Money Market Fund, Treasury Money Market
and Value Momentum Funds (each a "Fund" and, together, the "Funds") of
Stepstone Funds (the "Trust"), will be held at the offices of SEI Financial
Management Corporation, 680 East Swedesford Road, Wayne, Pennsylvania
19087-1658, on Thursday, March 7, 1996, at 10:00 a.m., Eastern time.
At the Meeting, Shareholders of the Trust will be asked to consider and act
upon proposed advisory and sub-advisory agreements with the successor entities
to the Trust's current adviser and sub-advisers, and on other matters detailed
below (the "Proposals"). The enclosed proxy card permits Shareholders of each
Fund to vote either for or against all Proposals that apply to the Fund by
checking a single box, or to vote on each applicable Proposal separately. The
specifics of these Proposals, which are more fully described in the attached
Proxy Statement, are as follows:
1. To approve the selection of Union Bank of California, N.A. ("UBOC")
as investment adviser to each Fund, and to approve a new investment
advisory agreement between the Trust, on behalf of each Fund, and
UBOC.
2. To approve the selection of The Bank of Tokyo Trust Company ("BOTT")
or its successor as the sub-adviser to the Blue Chip Growth, Emerging
Growth, Government Securities and Convertible Securities Funds, and
to approve a new sub-advisory agreement between BOTT (or its
successor) and UBOC relating to these Funds.
3. To approve the selection of BOT Asset Management (U.K.), Limited
("BTAM") or its successor as the sub-advisor to the International
Equity Fund, and to approve the a sub-advisory agreement between BTAM
(or its successor) and UBOC relating to the Fund.
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The proxies are authorized to vote on such other business as may properly
come before the Meeting in accordance with their own discretion.
BY ORDER OF THE BOARD OF TRUSTEES
RICHARD W. GRANT, SECRETARY
All Shareholders are cordially invited to attend the Meeting. However, if
you are unable to attend the Meeting, you are requested to mark, sign and date
the enclosed Proxy Card(s) and return them promptly in the enclosed,
postage-paid envelope so that the Meeting may be held and the maximum number of
shares may be voted.
Shareholders of record at the close of business on January 16, 1996, are
entitled to notice of and to vote at the Meeting or any adjournment thereof.
February 1, 1996
PROMPT EXECUTION AND RETURN OF THE ENCLOSED PROXY CARD
IS REQUESTED. A SELF-ADDRESSED, POSTAGE-PAID
ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE.
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<PAGE> 7
PRELIMINARY COPY
STEPSTONE FUNDS
2 OLIVER STREET
BOSTON, MA 02109
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
MARCH 7, 1996
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Trustees of Stepstone Funds (the "Trust") on behalf of
the Balanced, Blue Chip Growth, California Tax-Free Bond, California Tax-Free
Money Market, Convertible Securities, Emerging Growth, Government Securities,
Growth Equity, Intermediate-Term Bond, International Equity, Limited Maturity
Government, Money Market Fund, Treasury Money Market and Value Momentum Funds
(each a "Fund," and, together, the "Funds") for use at the Special Meeting of
Shareholders to be held at the offices of SEI Financial Management Corporation,
680 East Swedesford Road, Wayne, Pennsylvania 19087-1658, on Thursday, March 7,
1996, at 10:00 a.m. Eastern time, and at any adjourned session thereof (such
meeting and any adjournments thereof are hereinafter referred to as the
"Meeting"). Shareholders of the Funds of record at the close of business on
January 16, 1996 ("Shareholders"), are entitled to vote at the Meeting. The
table below sets forth the approximate number of units of beneficial interest
("shares") issued and outstanding for each Fund:
Shares Outstanding
Fund As of , 1996
- ---- -------------------------
Balanced
Blue Chip Growth
California Tax-Free Bond
California Tax-Free Money Market
Convertible Securities
Emerging Growth
Government Securities
Growth Equity
Intermediate-Term Bond
International Equity
Limited Maturity Government
Money Market
Treasury Money Market
Value Momentum
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<PAGE> 8
Each share is entitled to one vote and each fractional share is
entitled to a proportionate fractional vote on each matter as to which such
shares are to be voted at the Meeting. Shareholders of each class of each Fund
will vote together on each Proposal relating to their Fund.
In addition to the solicitation of proxies by mail, Trustees and
officers of the Trust and officers and employees of SEI Financial Management
Corporation, 680 East Swedesford Road, Wayne, Pennsylvania 19087-1658, the
Administrator for the Trust (the "Administrator"), may solicit proxies in
person or by telephone. Persons holding shares as nominees will, upon request,
be reimbursed for their reasonable expenses incurred in sending soliciting
materials to their principals. The cost of solicitation will be borne by
Union Bank. The proxy and this Proxy Statement are being mailed to
Shareholders on or about February 1, 1996.
Shares represented by duly executed proxies will be voted in
accordance with the instructions given. Proxies may be revoked at any time
before they are exercised by a written revocation received by the President of
the Trust at 680 East Swedesford Road, Wayne, Pennsylvania 19087-1658, by
properly executing a later-dated proxy, or by attending the Meeting and voting
in person.
INTRODUCTION
The Trust is organized as a Massachusetts business trust and is not
required to hold annual meetings of Shareholders. The Meeting is being called
in order to permit the Shareholders of the Trust to vote on the approval of new
investment advisory and sub-advisory agreements with the successor entities to
the Trust's current adviser and sub-advisers. These new agreements are
required by law to replace those that will terminate upon the mergers of both
the parent company of the Trust's current adviser and sub-advisers and of the
Trust's adviser (the "Mergers").
This Proxy Statement solicits votes on proposals affecting more than
one Fund as set forth below. Shareholders may vote only on those proposals
affecting the Fund(s) of which they are Shareholders. The table below sets
forth the specifics of each Proposal, and indicates the Fund(s) affected by
each:
Proposal Fund
- -------- ----
1. To approve the selection of All Funds
Union Bank of California, N.A.
("UBOC") as investment adviser
to each Fund, and to approve
the new investment advisory
agreement between
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<PAGE> 9
the Trust, on behalf of each
Fund, and UBOC.
2. To approve the selection of Blue Chip Growth Fund
The Bank of Tokyo Trust Company Emerging Growth Fund
("BOTT") or its successor as Government Securities Fund
the sub-adviser to the Blue Convertible Securities Fund
Chip Growth, Emerging Growth,
Government Securities and
Convertible Securities Funds,
and to approve a new
sub-advisory agreement between
BOTT (or its successor) and
UBOC relating to the Funds.
3. To approve the selection of International Equity Fund
BOT Asset Management (U.K.),
Limited ("BTAM") or its
successor as the sub-advisor to
the International Equity Fund,
and to approve a new
sub-advisory agreement between
BTAM (or its successor) and
UBOC relating to the Fund.
Here are some factors you should consider in determining whether to approve the
new advisory and sub-advisory agreements:
- - The Stepstone Funds' Board of Trustees has unanimously approved the
new advisory and sub-advisory agreements;
- - There will be no change in the Stepstone Funds' investment objectives
or investment policies or in the responsibilities of the investment
adviser and sub-advisers;
- - There will be no change in the fees payable to the adviser or
sub-advisers as a result of the approval of the new investment
advisory and sub-advisory agreements;
- - No significant changes in the personnel of the investment adviser or
sub-advisers who manage the funds are currently planned.
THE PROPOSED TRANSACTION
The Trust's current investment adviser is Union Bank ("Union"), an
indirect, majority-owned subsidiary of The Bank of Tokyo, Ltd. (the "Bank of
Tokyo"). The Bank of Tokyo directly or indirectly owns 72% of the outstanding
shares of Union, and directly or indirectly owns all of the outstanding shares
of (i) The Bank of Tokyo Trust Company ("BOTT"), the current sub-adviser to the
Trust's Blue Chip Growth, Emerging Growth, Government Securities and
Convertible Securities Funds, and (ii) BOT Asset Management
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<PAGE> 10
(U.K.) Limited ("BTAM"), the current sub-adviser to the Trust's International
Equity Fund.
The Bank of Tokyo and The Mitsubishi Bank, Limited ("Mitsubishi")
have announced their intention to merge. The terms of the proposed transaction
provide that (i) Mitsubishi and the Bank of Tokyo will engage in a merger
transaction in which Mitsubishi will be the surviving entity and will change
its name to The Bank of Tokyo-Mitsubishi, Ltd. ("BOT-Mitsubishi"), and (ii) as
soon as practicable thereafter, the California bank subsidiaries of the Bank of
Tokyo and Mitsubishi, Union and the Bank of California (the "Bank of
California"), respectively, will combine to become Union Bank of California,
N.A.
The combination of the California banking subsidiaries of the Bank of
Tokyo and Mitsubishi will be accomplished pursuant to an Agreement and Plan of
Reorganization (the "Reorganization Agreement") among Union, the Bank of
California and Tri-State, a related Plan of Merger (the "Merger Agreement"),
and a Purchase and Assumption Agreement (the Purchase Agreement") between Union
and the Bank of California, each dated as of September 27, 1995, pursuant to
which Union will transfer substantially all of its banking business and other
assets to the Bank of California in exchange for the Bank of California's
assumption of substantially all of the liabilities of Union and the issuance by
the Bank of California to Union of 26,117,714 shares of common stock, $15.00
par value. In a practical sense, the transactions under the Reorganization
Agreement, the Merger Agreement and the Purchase Agreement will be effected as
a single, integrated transaction. The consummation of the Mergers is currently
expected to occur on or about April 1, 1996 (the "Closing Date").
Following the transactions described above, the combined bank will be
renamed Union Bank of California, N.A., referred to herein as UBOC. UBOC will
succeed by operation of law to all rights, obligations, properties, assets,
investments, deposits, demands, and agreements covered by the Purchase
Agreement, and to all properties, assets, investments, agreements, rights, and
obligations of Union under all fiduciary or representative capacities (e.g.,
trusts and executorships). After this transfer to UBOC of substantially all
its banking business, Union will voluntarily relinquish its California banking
license and its federal deposit insurance and will be strictly a bank holding
company for UBOC and its non-bank subsidiaries and will be renamed Union BanCal
Corporation ("UBCC"). As a result of the Mergers, Union will become part of
UBOC.
Immediately following the combination of the California subsidiaries,
UBCC will own approximately 94% of the outstanding shares of Common Stock of
UBOC. BOT-Mitsubishi will own approximately 81% of the issued and outstanding
UBCC Common Stock. In addition to its indirect ownership of UBOC through its
ownership of 81% of UBCC Common Stock, BOT-Mitsubishi will also own directly
approximately 6% of the common stock of UBOC. As a consequence, both UBCC and
BOT-Mitsubishi will be deemed to control UBOC for purposes of the Investment
Company Act of 1940, as amended (the "1940 Act").
One or more of the foregoing transactions will constitute an
"assignment" of the existing investment advisory agreements between the Trust
and Union and the sub-advisory
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<PAGE> 11
agreements between Union and BOTT and BTAM under the 1940 Act. Under the 1940
Act, an "assignment" will result in the automatic termination of the Trust's
investment advisory (the "Existing Advisory Agreement") and sub-advisory
agreements (each an "Existing Sub-Advisory Agreement" and, together, the
"Existing Sub-Advisory Agreements"), effective at the time of the
transaction(s). Accordingly, Shareholders of each Fund of the Trust are being
asked to approve a new investment advisory agreement (the "New Advisory
Agreement") and new sub-advisory agreements (each a "New Sub-Advisory
Agreement" and, together, the "New Sub-Advisory Agreements") to take effect at
the time of the Mergers and avoid any interruption in the provision of advisory
services to the Funds. The New Advisory Agreement and New Sub-Advisory
Agreements will be dated the later of (i) the date of approval of the New
Advisory Agreement and New Sub-Advisory Agreements by Shareholders of the Funds
or (ii) the date of the consummation of the Mergers.
The Proposals set forth in this Proxy Statement relate to the New
Advisory Agreement and the New Sub-Advisory Agreements. THE TERMS OF THE NEW
ADVISORY AGREEMENT AND NEW SUB-ADVISORY AGREEMENTS ARE IDENTICAL TO THOSE OF
THE EXISTING ADVISORY AGREEMENT AND EXISTING SUB-ADVISORY AGREEMENTS WITH
RESPECT TO DUTIES, FEES AND THE STANDARD OF CARE.
TRUSTEES' CONSIDERATIONS REGARDING THE PROPOSED TRANSACTION AND THE NEW
AGREEMENTS
Consummation of the Mergers is subject to the satisfaction of certain
conditions, including the receipt of all necessary regulatory approvals.
Approval of the Merger by the Shareholders of Union and the Bank of California
is being solicited. Shareholders of the Trust are not being asked to vote on
the Mergers. The Merger Agreements may be terminated and the Mergers abandoned
at any time prior to the Closing Date by the mutual consent of the parties or
upon the occurrence of other events specified in the Merger Agreements.
Completion of the Mergers will occur as soon as practicable after satisfaction
(or waiver) of the applicable conditions, which the parties anticipate will
occur by April 1, 1996.
If the conditions are not met and the Mergers are not completed, the
Existing Advisory Agreement and Existing Sub-Advisory Agreements will remain in
effect. If the New Advisory Agreement and New Sub-Advisory Agreements are
approved by Shareholders and the Mergers are thereafter consummated, the New
Advisory Agreement and New Sub-Advisory Agreements will be executed and become
effective on the Closing Date. In the event the Mergers are not consummated,
the Existing Advisory Agreement and each Existing Sub-Advisory Agreement will
continue in accordance with its terms. In the event the Mergers are
consummated and the New Advisory Agreement and New Sub-Advisory Agreements are
not approved, the Board of Trustees will consider what further actions should
be taken.
The Mergers will result in a change of control of Union for purposes
of the 1940 Act, and Union will receive a "benefit" from the Mergers since it
will receive shares of Bank of California stock (which will become UBOC stock
after the Mergers) in the transaction.
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<PAGE> 12
Section 15(f) of the 1940 Act provides that when a change in the control of an
investment adviser occurs, the investment adviser or any of its affiliated
persons may receive any amount or benefit in connection therewith as long as
two conditions are satisfied. First, no "unfair burden" may be imposed on the
investment company as a result of the transaction relating to the change of
control, or any express or implied terms, conditions or understandings
applicable thereto. The term "unfair burden," as defined in the 1940 Act,
includes any arrangement during the two-year period after the change in control
whereby the investment adviser (or predecessor or successor adviser), or any
interested person of any such adviser, receives or is entitled to receive any
compensation, directly or indirectly, from the investment company or its
security holders (other than fees for bona fide investment advisory or other
services) or from any person in connection with the purchase or sale of
securities or other property to, from, or on behalf of the investment company
(other than fees for bona fide principal underwriting services). No such
compensation arrangements are contemplated in connection with the Mergers. The
second condition is that, during the three-year period immediately following
consummation of the transaction, at least 75% of the investment company's board
of directors must not be "interested persons" of UBOC or Union within the
meaning of the 1940 Act.
The majority of the members of the Board of Trustees of the Trust is
not and will not be comprised of interested persons of Union or UBOC.
Additionally, the Board of Trustees of the Funds has received assurance from
Union that no "unfair burden" will be imposed on the Funds as a result of the
Mergers. After careful review and consideration, the Trust's Board of Trustees
has concluded that the Mergers will provide significant value to the Trust's
Shareholders and will enable them to participate in the expanded opportunities
for growth that the Mergers will make possible.
The Trustees of the Trust, including the Trustees who are
non-interested persons (i.e., those Trustees who are not parties to the New
Advisory Agreement or the New Sub-Advisory Agreements, or interested persons of
such parties), as defined in the 1940 Act, reviewed and unanimously approved
the New Advisory Agreement and New Sub-Advisory Agreements, subject to
Shareholder approval, in person at a meeting held on November 9, 1995, and have
directed that they be submitted to the Shareholders of the Funds for their
approval. The Board of Trustees believes that the terms of the New Advisory
Agreement and New Sub-Advisory Agreements are fair to, and in the best interest
of, the Trust, the Funds, and the Shareholders. The Board of Trustees,
including all of the non-interested Trustees, recommends approval by
Shareholders of the New Advisory Agreement between UBOC and the Trust, and the
New Sub-Advisory Agreements between UBOC and BOTT and BTAM (or their respective
successors).
In making this recommendation, the Trustees carefully evaluated the
experience of Union's, BOTT's and BTAM's key personnel, the quality of services
UBOC, BOTT and BTAM (or their respective successors) are expected to provide to
the Funds, and a number of related factors, including: (1) the fee and expense
ratios of comparable mutual funds; (2) the performance of the Funds since
commencement of operations; (3) the nature and quality of the services expected
to be rendered to the Funds by UBOC, BOTT and BTAM (or their
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<PAGE> 13
respective successors); (4) the distinct investment objectives and policies of
the Funds; (5) the compensation payable to UBOC by the Funds under the New
Advisory Agreement and payable by UBOC to BOTT and BTAM (or their respective
successors) under the New Sub-Advisory Agreements; (6) the terms of the
Existing Advisory Agreement and the Existing Sub-Advisory Agreements; (7) the
history, reputation, qualification and background of Union, BOTT and BTAM, as
well as the qualifications of their personnel and their respective financial
conditions; (8) the commitment of the parties to the Merger Agreement to pay or
reimburse the Trust for the expenses of the Trust incurred in connection with
the proposed transaction; (9) the benefits expected to be realized as a result
of the combination of Union and the Bank of California; and (10) other factors
deemed relevant.
In connection with their recommendation to Shareholders to vote for
the Agreements, the Trustees were advised by Union that while it is unable to
predict whether changes ultimately will be recommended which would materially
impact the Trust's operations or when such changes, if recommended, would be
proposed, no significant changes in the persons currently responsible for
providing investment advice to the Trust currently are planned to be made by
UBOC following consummation of the Mergers. It is expected that, following the
Mergers, there will be no dilution in the scope and quality of advisory and
sub-advisory services provided to the Funds, many of the same persons who are
presently responsible for the Funds' investment policies will continue to
direct the Funds' investment policies at UBOC, BOTT and BTAM (or their
respective successors) and there will be no disruption of advisory services
provided to the Funds. Union also advised the Trustees that it intends to
examine all mutual fund activities of UBOC subsequent to consummation of the
Mergers, and that management of the Trust would be informed of any conclusions
or recommendations for action involving the Trust. Nevertheless, the Trustees,
including all members of the Board of Trustees who are not interested persons
of the Trust, Union, or UBOC have concluded that UBOC will be fully capable of
performing the services contemplated by the New Advisory Agreement and New
Sub-Advisory Agreements, and have recommended that the New Advisory Agreement
and New Sub-Advisory Agreements be approved by the Shareholders of the Funds.
PROPOSAL I.
APPROVAL OF A NEW ADVISORY AGREEMENT FOR THE FUNDS
The Board of Trustees is recommending that Shareholders of the Funds
approve the selection of UBOC to serve as investment adviser to the Funds after
the Mergers, and approve the New Advisory Agreement between the Trust, on
behalf of the Funds, and UBOC. Other than the change in the identity of the
adviser from Union to UBOC and the effective and termination dates, there are
no material differences between the Existing and New Advisory Agreements. The
Trustees believe that approval of the New Advisory Agreement will provide the
Funds with continuity of investment management services, and is in the best
interest of Shareholders.
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<PAGE> 14
DESCRIPTION OF THE EXISTING ADVISORY AGREEMENT AND THE NEW ADVISORY AGREEMENT
Union currently serves as the Trust's investment adviser pursuant to
the Existing Advisory Agreement. The Existing Advisory Agreement is dated
January 30, 1991, and was approved by the sole initial Shareholder of the
Balanced, California Tax-Free Money Market, Growth Equity, Intermediate-Term,
Money Market, Treasury Money Market and Value Momentum Funds on January 30,
1991, of the Limited Maturity Fund on May 6, 1993, of the California Tax-Free
Bond Fund on October 14, 1993, of the Blue Chip Growth, Convertible Securities,
Emerging Growth and Government Securities Funds on January 31, 1994, and of the
International Equity Fund on January 31, 1995. As required by the 1940 Act,
such Shareholder approval was obtained prior to the commencement of operations
of each Fund. The form of the New Advisory Agreement is attached to this Proxy
Statement as Exhibit A, and the description of the New Advisory Agreement set
forth in this Proxy Statement is qualified in its entirety by reference to
Exhibit A.
Under the Existing Advisory Agreement, Union makes investment
decisions for the assets of the Funds and continuously reviews, supervises and
administers each Fund's investment program. Union discharges its
responsibilities subject to the supervision of, and policies established by,
the Trustees of the Trust. UBOC's responsibilities under the New Advisory
Agreement are identical.
The Existing Advisory Agreement provides that, if, for any fiscal
year, the ratio of expenses of any Fund (including amounts payable to Union but
excluding interest, taxes, brokerage, litigation, and other extraordinary
expenses) exceeds limitations established by the State of California, Union
will bear the amount of such excess. Union will not be required to bear
expenses of the Trust to an extent which would result in a Fund's inability to
qualify as a regulated investment company under provisions of the Internal
Revenue Code of 1986, as amended. UBOC will bear any such amounts under the
New Advisory Agreement.
The continuance of the Existing Advisory Agreement must be
specifically approved at least annually (i) by the vote of a majority of the
Trustees who are not parties to the Agreement or "interested persons" of any
party thereto, cast in person at a meeting called for the purpose of voting on
such approval, and (ii) by the vote of the Trustees or a majority of
outstanding shares of the Funds, as defined in the 1940 Act. The Existing
Advisory Agreement terminates automatically in the event of its assignment, and
is terminable at any time without penalty by the Trustees of the Trust or, with
respect to the Funds by a majority of the outstanding shares of the Funds, on
not less than 30 days' nor more than 60 days' written notice to Union, or by
Union on 90 days' written notice to the Trust. The approval and termination
provisions of the New Advisory Agreement are identical.
The Existing Advisory Agreement provides that Union shall not be
protected against any liability to the Trust or its shareholders by reason of
willful misfeasance, bad faith or gross negligence on its part in the
performance of its duties or from reckless disregard of its obligations or
duties thereunder. UBOC will be subject to the same standard of care under the
New Advisory Agreement.
-8-
<PAGE> 15
Under the Existing Advisory Agreement, Union is entitled to a fee
which is calculated daily and paid monthly at an annual rate of .80% of the
daily average net assets of the Emerging Growth Fund, .60% of the daily average
net assets of each of the Value Momentum, Growth Equity, Blue Chip Growth,
Convertible Securities and Balanced Funds, .50% of the average daily net assets
of the Intermediate-Bond, California Tax-Free Bond and Government Securities
Funds, .30% of the average daily net assets of each of the Money Market,
Treasury Money Market, California Money Market Tax-Free, and Limited Maturity
Government Funds, and .95% of the average daily net assets of the International
Equity Fund. Union may, from time to time, waive all or a portion of its fee
in order to limit the operating expenses of a Fund. Any such waiver is
voluntary and may be terminated at any time in Union's sole discretion. These
fees are identical in amount to the fees to which each of the Funds will be
contractually subject under the New Advisory Agreement.
For the Trust's fiscal year ended January 31, 1995, the following
advisory fees were paid to (or waived by) Union:
<TABLE>
<CAPTION>
==============================================================================
ADVISORY FEES PAID ADVISORY FEES WAIVED
----------------------------------------------
FUND 1995 1995
==============================================================================
<S> <C> <C>
Balanced $1,015,559 $ 0
- ------------------------------------------------------------------------------
Blue Chip Growth $ 183,178 $ 0
- ------------------------------------------------------------------------------
California Tax-Free Bond $ 60,306 $ 48,888
- ------------------------------------------------------------------------------
California Tax-Free Money Market $ 99,901 $ 264,000
- ------------------------------------------------------------------------------
Convertible Securities $ 44,430 $ 0
- ------------------------------------------------------------------------------
Emerging Growth $ 130,134 $ 0
- ------------------------------------------------------------------------------
Government Securities $ 145,821 $ 0
- ------------------------------------------------------------------------------
Growth Equity $ 835,080 $ 0
- ------------------------------------------------------------------------------
Intermediate-Term Bond $ 617,704 $ 0
- ------------------------------------------------------------------------------
International Equity * *
- ------------------------------------------------------------------------------
Limited Maturity Government $ 111,587 $ 0
- ------------------------------------------------------------------------------
Money Market $1,820,479 $ 0
- ------------------------------------------------------------------------------
Treasury Money Market $ 461,318 $ 129,255
- ------------------------------------------------------------------------------
Value Momentum $ 923,288 $ 0
==============================================================================
</TABLE>
* Fund had not commenced operations as of January 31, 1995.
INFORMATION REGARDING UNION AND ITS AFFILIATES
-9-
<PAGE> 16
The Bank of Tokyo is one of Japan's premier international financial
institutions. Founded in 1946 as successor to the Yokohama Specie Bank, which
was established in 1880, the Bank of Tokyo has been the most prominent force in
Japan's foreign exchange market. In addition to foreign exchange, the Bank of
Tokyo offers an array of services to its internationally-oriented clients in
such fields as corporate finance, global service banking, investment advisory
services and project finance. These services are carried out through a network
of approximately 400 international offices, subsidiaries, sub-branches and
associated institutions. The Bank of Tokyo has Y26.78 trillion in assets.
Union is a California banking corporation formed in 1952. Union is
the fourth largest commercial bank in California, with $19 billion in assets at
September 30, 1995, and the thirtieth largest commercial bank nationally, based
on deposits at such date. The Bank of Tokyo owned approximately 71.54 percent
of the issued and outstanding Union Common Stock at September 30, 1995.
Union has offices throughout California, primarily centered in the
San Diego, Los Angeles, Orange County and San Francisco metropolitan areas. It
also has licensed loan production offices for either commercial, consumer or
residential loans in five California cities and Dallas, Texas. It has overseas
banking offices located in Guam, Saipan and Grand Cayman, a representative
office in Tokyo and international banking facilities in San Francisco and Los
Angeles.
Union provides a wide range of financial services to California
consumers, small businesses, middle market companies and major corporations,
and has a strong position in providing financial services for growing Pacific
Rim companies in California through its affiliation with the Bank of Tokyo's
Pacific Rim network. Union maintains relationships with a significant number of
the Japanese-owned businesses in California, and assists U.S. companies in
establishing businesses in Japan and other Pacific Rim countries.
Union serves consumers, smaller businesses, and government and
nonprofit institutions through its 209 offices in California. It has seven
commercial banking offices in the state through which extensive services are
provided to California's corporate middle market, such as lines of credit,
accounts receivable and inventory financing, foreign trade financing and an
array of cash-management services. Union lends statewide to the California
real estate market primarily through the three geographic regions of its real
estate industries area. Union also provides specialized lending services to
corporate customers, a variety of banking services in the institutional and
deposit markets, and asset management services for individuals and businesses.
Union has twelve subsidiaries that provide services to Union and it customers.
[UNION'S PRINCIPAL EXECUTIVE OFFICES ARE LOCATED AT 350 CALIFORNIA STREET, SAN
FRANCISCO, CALIFORNIA 94104.]
As of __________________, 1995, Union managed $___ billion in
individual portfolios and collective funds. Union's clients range from pension
funds, national labor union plans and foundations to personal investments and
trust portfolios.
-10-
<PAGE> 17
Union currently serves as investment adviser to the following
investment company with investment objectives similar to those of the Funds.
The approximate net assets of such investment company and the fee payable by it
are set forth below:
<TABLE>
<CAPTION>
NET ASSETS FEE
FUND (AS OF 12/31/95) PAYABLE
---- ---------------- -------
<S> <C> <C>
Current Income Shares, Inc. $50,120,223 .50%
</TABLE>
Listed below are the names and principal occupations of the directors and
the principal executive officer of Union. The principal business address of
each of these directors and the principal executive officer, as it relates to
his or her duties at Union, is 350 California Street, San Francisco, California
94104.
<TABLE>
<CAPTION>
NAME TITLE PRINCIPAL OCCUPATION
---- ----- --------------------
<S> <C> <C>
Tamotsu Yamaguchi Chairman Chairman of the Board, Union
Alexander D. Calhoun Director Of Counsel, Graham & James
Richard D. Farman Director Director, President & CEO, Pacific Enterprises
Herman E. Gallegos Director Independent Management Consultant
Jack L. Hancock Director Former Executive Vice President, Pacific Bell
Richard C. Hartnack Director Vice Chairman of the Board, Union
Hon. Harry W. Low Director Judicial Arbitration and Mediation Services, Inc.
Dr. Mary S. Metz Director Dean, University Extension, University of California-Berkeley
Takahiro Moriguchi Director Vice Chairman of the Board & CFO, Union
Shin Nakahara Director Resident Managing Director for the Americas, Bank of Tokyo
Sidney R. Petersen Director Former Chairman & CEO, Getty Oil Company
Yuji Taniguchi Director Executive Vice President, Union
Robert M. Walker Director Vice Chairman of the Board, Union
Dr. Blenda J. Wilson Director President, California State University-Northridge
Kanetaka Yoshida Director President and CEO, Union
Kenji Yoshizawa Director Deputy President, Bank of Tokyo
</TABLE>
Union Bank of California, which will serve as investment adviser to the
Funds once the Mergers have occurred, will be created by the combination of
Union and the Bank of California. Under the New Advisory Agreement, the
day-to-day management of the Funds will be provided by personnel from the
Funds' existing adviser, Union Capital Advisers, Union's asset management
division. The newly-created UBOC will also advise mutual funds currently
advised by MERUS Capital Management, the asset management division of the Bank
of California. UBOC will be headquartered at 350 California Street, San
Francisco, California 94104.
-11-
<PAGE> 18
Listed below are the names and principal occupations of each of the
persons expected to be named as directors and the anticipated principal
executive officer of UBOC. The principal business address of each of these
directors and the principal executive officer, as it relates to his or her
duties at UBOC, will be 350 California Street, San Francisco, California 94104.
<TABLE>
<CAPTION>
NAME TITLE PRINCIPAL OCCUPATION
- ---- ----- --------------------
<S> <C> <C>
Alexander D. Calhoun Director, A director of Of Counsel, Graham &
Union since 1968. James, Attorneys at
Law, since 1992. General
Partner, 3638 Washington
Associates.
Richard D. Farman Director, A director of President, Chief operat-
Union since 1988. ing Officer and Director
of Pacific Enterprises
since 1993. Former
Chief Executive Officer
Southern California Gas
Company, a subsidiary of
Pacific Enterprises.
Stanley F. Farrar Director, A director of Partner, Sullivan &
the Bank of California. Cromwell since 1984.
since 1984.
Herman E. Gallegos Director, A director of Independent management
Union since 1988. consultant since 1982.
Former U.S. Public
Delegate to the 49th
United Nations General
Assembly, Chairman of
the Board, Gallegos
Institutional Investors
Corporation (retired).
Director of Pacific
Telesis Group and
Pacific Bell.
Jack L. Hancock Director. A director of Executive Vice President
Union since 1994 of Pacific Bell
(retired). Director of
Whittaker Corporation.
</TABLE>
-12-
<PAGE> 19
<TABLE>
<S> <C> <C>
Richard C. Hartnack Vice Chairman of the Board Former Executive Vice
of UBOC. Vice Chairman of President of The First
the Union Board since 1991. National Bank of
Chicago.
Roy A. Henderson Vice Chairman of the Board Chairman of LoPresti
of UBOC. A director of Flight Concepts. Former
the Bank of California President and Chief
since 1993. Operating Officer of
Puget Sound Bank.
Harry W. Low Director. A director of Mediator/Arbitrator
Union since 1993. Judicial Arbitration &
Mediation Services, Inc.
since 1992. Presiding
Justice, State of
California Court of
Appeals, 1st District
(retired).
Mary S. Metz Director. A director of Dean of University
Union since 1988. Extension, University
of California, Berkeley
since 1991. President
Emerita of Mills
College. Director of
Pacific Telesis Group,
Pacific Gas & Electric
Co. and Longs Drug
Stores.
Raymond E. Miles Director. A director of Professor, Haas School
the Bank of California of Business, University
since 1987. of California, Berkeley
since 1963.
J. Fernando Niebla Director. A director of Chairman and Chief
the Bank of California Executive Officer of
since 1994. Infotec Development,
Inc. since 1979.
Hiroo Nozawa Deputy Chairman of the Deputy Chairman of the
Board and Chief Operating Board and Chief operat-
Officer Of UBOC. Chairman, ing Officer of UBOC.
President and Chief Chairman, President and
</TABLE>
-13-
<PAGE> 20
<TABLE>
<S> <C> <C>
Executive Officer of the Chief Executive Officer
Bank of California since of the Bank of
1994. A director of MBL California since 1994.
since 1992 and of the Bank A director of MBL since
of California since 1994. 1992 and of the Bank of
Former Senior Officer of California sine 1994.
Mitsubishi. Former Senior Officer
of Mitsubishi.
Sidney R. Peterson Director. A director of Consultant and private
Union since 1988. investor since 1984.
Chairman and Chief
Executive Officer of
Getty Oil Company
(retired). Director
of Avery Dennison
Corporation, NICOR,
Inc., Global Natural
Resources, Inc. and
Group Technologies
Corporation.
Carl W. Robertson Director. A director of the Managing Director of
Bank of California since Warland Investments
1975. Company since 1985.
Charles R. Scott Director. A director of the Chairman and Chief
Bank of California since Executive Officer of
1990. Leadership Centers USA
since 1995. Former
President and Chief
Executive Officer of
The Actava Group and
Intermark Inc. Vice
Chairman and Director
of Pier I Imports, Inc.
Paul W. Steere Director. A director of the Member, Bogle & Gates,
Bank of California since P.L.L.C. since 1966.
1981. Director of Accordia
Northwest, Inc., a
subsidiary of Accordia,
Inc.
Henry T. Swigert Director. A director of the Chairman of ESCO
</TABLE>
-14-
<PAGE> 21
<TABLE>
<S> <C> <C>
Bank of California since Corporation since 1979.
1989.
Robert M. Walker Vice Chairman and Director Former Vice Chairman of
of UBOC. Vice Chairman of the Board and Chief
the Union Board since 1992. Credit Officer of Valley
National Bank of
Arizona.
Blenda J. Wilson Director. A director of President of California
Union since 1993. State University, North-
ridge since 1992. Former
Chancellor of the Uni-
versity of Michigan -
Dearborn.
Kanetaka Yoshida President and Chief President and Chief
Executive Officer and Executive Officer and
Director of UBOC. President Director of UBOC.
and Chief Executive Officer President and Chief
of Union since 1993. A Executive Officer of
director of both Union and Union since 1993. A
the Bank of Tokyo since director of both Union
1990. Former Vice Chairman and the Bank of Tokyo
of the Union Board and since 1990. Former
Chief Financial Officer Vice Chairman of the
of Union. Former Senior Union Board and Chief
Officer of the Bank of Financial Officer of
Tokyo. Union. Former Senior
Officer of the Bank of
Tokyo.
</TABLE>
THE TRUSTEES, INCLUDING ALL OF THE INDEPENDENT TRUSTEES, RECOMMEND THAT
SHAREHOLDERS OF THE FUNDS VOTE "FOR" THE NEW ADVISORY AGREEMENT.
PROPOSAL II.
APPROVAL OF THE SELECTION OF THE BANK OF TOKYO TRUST COMPANY OR ITS SUCCESSOR
AS THE SUB-ADVISER TO THE BLUE CHIP GROWTH FUND, EMERGING GROWTH FUND,
GOVERNMENT SECURITIES FUND AND CONVERTIBLE SECURITIES FUND, AND OF A NEW
SUB-ADVISORY AGREEMENT FOR THOSE FUNDS
-15-
<PAGE> 22
The Board of Trustees is recommending that Shareholders of the Blue Chip
Growth, Emerging Growth, Government Securities and Convertible Securities Funds
approve the selection of BOTT (or its successor) as sub-adviser to the Funds
after the Mergers, and approve the New Sub-Advisory Agreement between UBOC and
BOTT (or its successor) relating to the Funds. Other than the change in
adviser from Union Capital to Union and the effective and termination dates,
there are no material differences between the Existing and New Sub-Advisory
Agreements. The Trustees believe that approval of the New Sub-Advisory
Agreement with BOTT (or its successor) will provide the Funds with continuity
of investment management services, and is in the best interest of Shareholders.
DESCRIPTION OF THE EXISTING SUB-ADVISORY AGREEMENT BETWEEN UNION AND BOTT AND
THE NEW SUB-ADVISORY AGREEMENT BETWEEN UBOC AND BOTT (OR ITS SUCCESSOR)
BOTT currently serves as the sub-adviser to each of the Blue Chip Growth,
Emerging Growth, Government Securities and Convertible Securities Funds
pursuant to the Existing Sub-Advisory Agreement between Union and BOTT dated
February 1, 1994. Under the Existing Sub-Advisory Agreement, BOTT makes the
day-to-day investment decisions for the assets of the Funds, subject to the
supervision of, and policies established by, Union and the Trustees of the
Trust. The Existing Sub-Advisory Agreement was approved by the sole initial
Shareholder of the Blue Chip Growth, Convertible Securities, Emerging Growth
and Government Securities Funds on ________________. As required by the 1940
Act, such Shareholder approval was obtained prior to the commencement of
operations of each Fund. The form of the New Sub-Advisory Agreement between
UBOC and BOTT (or its successor) is attached to this Proxy Statement as Exhibit
B, and the description of the New Sub-Advisory Agreement set forth in this
Proxy Statement is qualified in its entirety by reference to Exhibit B.
Under the Existing Sub-Advisory Agreement with BOTT, BOTT shall not be
liable for any error of judgment or for any loss suffered by the Funds or any
adviser in connection with the performance of its obligations under the
Agreement, except a loss resulting from a breach of fiduciary duty with respect
to compensation, or for a loss resulting from BOTT's wilful misfeasance, bad
faith or gross negligence in the performance of its duties, or from reckless
disregard of its obligations and duties under the Agreement. BOTT (or its
successor) will be subject to the same standard of care under the New
Sub-Advisory Agreement.
The continuance of the Existing Sub-Advisory Agreement, after the first
year, must be specifically approved at least annually (i) by the vote of a
majority of the Trustees who are not parties to the Agreement or "interested
persons" of any party thereto, cast in person at a meeting called for the
purpose of voting on such approval, and (ii) by the vote of the Trustees or a
majority of outstanding shares of the Funds, as defined in the 1940 Act. The
Existing Sub-Advisory Agreement will terminate automatically in the event of
its assignment, and is terminable at any time without penalty by the Funds on
60 days' written notice, or by BOTT or Union on 60 days' written notice to the
Trust. The New Sub-Advisory
-16-
<PAGE> 23
Agreement's approval and termination provisions are identical to the those of
the Existing Sub-Advisory Agreement.
BOTT is entitled to a fee, which is calculated daily and paid monthly out
of Union's fee at an annual rate of .30% of the average daily net assets of the
Blue Chip Growth Fund, .50% of the average daily net assets of the Emerging
Growth Fund, .20% of the average daily net assets of the Government Securities
Fund, and .30% of the average daily net assets of the Convertible Securities
Fund. BOTT (or its successor) will receive the same fees under the New
Sub-Advisory Agreement.
For the Trust's fiscal year ended January 31, 1995, BOTT received the
following fees from Union:
<TABLE>
<CAPTION>
====================================================================
FUND SUB-ADVISORY FEES PAID
- --------------------------------------------------------------------
<S> <C>
Emerging Growth $81,334
- --------------------------------------------------------------------
Blue Chip Growth $91,589
- --------------------------------------------------------------------
Convertible Securities $22,216
- --------------------------------------------------------------------
Government Securities $58,328
====================================================================
</TABLE>
INFORMATION CONCERNING BOTT
BOTT, 100 Broadway, New York, New York 10005, is a wholly-owned subsidiary
of the Bank of Tokyo. The Bank of Tokyo was established in 1946, and BOTT was
established as a New York state-chartered bank in 1955. BOTT has provided
trust services since 1955 and asset management services since 1965.
BOTT manages bank common funds, employee benefit funds and personal trust
accounts in money market, equity and fixed income portfolios. As of
________________, 1995, BOTT managed $____ billion in individual portfolios and
collective funds.
Listed below are the names and principal occupations of each director and
the principal executive officer of BOTT. The principal business address of
each director and the principal executive officer, as it relates to his or her
duties at BOTT, is 100 Broadway, New York, New York 10005.
<TABLE>
<CAPTION>
NAME TITLE PRINCIPAL OCCUPATION
---- ----- --------------------
<S> <C> <C>
Shin Nakahara Chairman Chief Executive Officer & President, BOTT
Michael Bradfield, Esq. Director Partner, Jones Day, Reavis & Pogue
Gerald L. Curtis Director Professor, Columbia University
Evan F. Greenberg Director President and CEO, American International
Underwriters, Senior Vice President,
American International Group, Inc.
</TABLE>
-17-
<PAGE> 24
<TABLE>
<S> <C> <C>
James L. Hindenach Director Former Senior Assistant Treasurer, General
Electric Corp.
Eugene F. McCulloch Director President and CEO, BOT Financial Corporation
Akira Okuhata Director Executive Vice President, BOTT
Donald B. Riefler Director Consultant to J.P. Morgan & Co., Incorporated
Isaac Shapiro, Esq. Director Partner, Skadden, Arps, Slate, Meagher & Flom
</TABLE>
THE TRUSTEES, INCLUDING ALL OF THE INDEPENDENT TRUSTEES, RECOMMEND THAT
SHAREHOLDERS OF THE BLUE CHIP GROWTH, EMERGING GROWTH, GOVERNMENT SECURITIES
AND CONVERTIBLE SECURITIES FUNDS VOTE "FOR" THE NEW SUB-ADVISORY AGREEMENT
BETWEEN UBOC AND BOTT (OR ITS SUCCESSOR).
PROPOSAL III.
APPROVAL OF THE SELECTION OF BTAM OR ITS SUCCESSOR AS THE SUB-ADVISER TO THE
INTERNATIONAL EQUITY FUND
The Board of Trustees is recommending that Shareholders of the
International Equity Fund approve the selection of BTAM (or its successor) to
serve as sub-adviser to the Fund after the Mergers, and approve the New
Sub-Advisory Agreement between the UBOC and BTAM (or its successor), on behalf
of the Fund. Other than the change in adviser from Union to UBOC, the
effective and termination dates, and the fact that under the New Sub-Advisory
Agreement UBOC may direct all or a portion of the assets of the Fund to BTAM
(or its successor), there are no material differences between the Existing and
New Sub-Advisory Agreements. The Trustees believe that approval of the New
Sub-Advisory Agreement with BTAM will provide the Fund with continuity of
investment management services, and is in the best interest of Shareholders.
DESCRIPTION OF THE EXISTING SUB-ADVISORY AGREEMENT BETWEEN UNION AND BTAM AND
THE NEW SUB-ADVISORY AGREEMENT BETWEEN UBOC AND BTAM (OR ITS SUCCESSOR)
BTAM currently serves as the International Equity Fund's sub-adviser
pursuant to the Existing Sub-Advisory Agreement between Union and BTAM dated
November 15, 1994. Under the Existing Sub-Advisory Agreement, BTAM makes the
day-to-day investment decisions for the assets of the Fund, subject to the
supervision of, and policies established by, Union and the Trustees of the
Trust. The Existing Sub-Advisory Agreement was approved by the sole initial
Shareholder of the Fund on January 31, 1995. As required by the 1940 Act, such
Shareholder approval was obtained prior to the commencement of operations of
each Fund. The form of the New Sub-Advisory Agreement between Union and BTAM
(or its successor) is attached to this Proxy Statement as Exhibit C, and the
description of the New Sub-Advisory Agreement set forth in this Proxy Statement
is qualified in its entirety by reference to Exhibit C.
-18-
<PAGE> 25
Under the Existing Sub-Advisory Agreement with BTAM, BTAM shall not be
liable for any error of judgment or for any loss suffered by the Funds or any
adviser in connection with the performance of its obligations under the
Agreement, except a loss resulting from a breach of fiduciary duty with respect
to compensation, or for a loss resulting from BTAM's wilful misfeasance, bad
faith or gross negligence in the performance of its duties, or from reckless
disregard of its obligations and duties under the Agreement. BTAM (or its
successor) will be subject to the same standard of care under the New
Sub-Advisory Agreement.
The continuance of the Existing Sub-Advisory Agreement, after the first
two years, must be specifically approved at least annually (i) by the vote of a
majority of the Trustees who are not parties to the Agreement or "interested
persons" of any party thereto, cast in person at a meeting called for the
purpose of voting on such approval, and (ii) by the vote of the Trustees or a
majority of outstanding shares of the Funds, as defined in the 1940 Act. The
Existing Sub-Advisory Agreement will terminate automatically in the event of
its assignment, and is terminable at any time without penalty by the Funds on
60 days' written notice, or by BTAM or Union on 60 days' written notice to the
Trust. The approval and termination provisions of the New Sub-Advisory
Agreement and the Existing Sub-Advisory Agreement are identical.
Under the Existing Sub-Advisory Agreement, BTAM is entitled to a fee,
which is calculated daily and paid monthly out of the Union's fee, at an annual
rate of .30% of the average daily net assets of the International Equity Fund.
The fees payable to BTAM (or its successor) under the New Sub-Advisory
Agreement are the same as those payable under the Existing Sub-Advisory
Agreement. The International Equity Fund had not commenced operations as of
January 31, 1995.
INFORMATION CONCERNING BTAM
BTAM, 12-15 Finsbury Circus, London EC2M 7BT, England, is a subsidiary of
Bank of Tokyo and a registered investment adviser. Established in 1984, BTAM
provides active global investment services for segregated funds and specialist
fund management. As of _________________, 1995, BTAM managed assets of $____
billion in individual portfolios and collective funds.
Listed below are the names and principal occupations of each director and
the principal executive officer of BTAM. The principal business address of
each director and the principal executive officer, as it relates to his or her
duties at BTAM, is 12-15 Finsbury Circus, London EC2M 7BT, England.
<TABLE>
<CAPTION>
NAME TITLE PRINCIPAL OCCUPATION
---- ----- --------------------
<S> <C>
Tetsuo Shimura Director and Chairman
Tadashi Kurachi Director
Tadashi Yanagisawa Managing Director and
</TABLE>
-19-
<PAGE> 26
<TABLE>
<S> <C>
Chief Executive Officer
Takashi Uno Director
Fumio Hashimoto Director
James Wignall Secretary and Senior
Executive Officer
</TABLE>
THE TRUSTEES, INCLUDING ALL OF THE INDEPENDENT TRUSTEES, RECOMMEND THAT
SHAREHOLDERS OF THE INTERNATIONAL EQUITY FUND VOTE "FOR" THE NEW SUB-ADVISORY
AGREEMENT BETWEEN UBOC AND BTAM.
GENERAL INFORMATION ABOUT THE TRUST AND OTHER MATTERS
Distribution. SEI Financial Services Company ("SFS"), a wholly-owned
subsidiary of SEI Corporation, 680 East Swedesford Road, Wayne, Pennsylvania
19087-1658 ("SEI"), acts as the Distributor of the Trust's shares pursuant to a
Distribution Agreement dated January 30, 1991, between the Trust and SFS.
Alfred P. West, Jr. serves as Chairman of the Board and Chief Executive Officer
of SFS and SEI, and Henry H. Greer serves as Director, President and Chief
Operating Officer of SFS and SEI.
Portfolio Transactions. For the Trust's fiscal year ended January 31, 1995,
the Funds paid the following amounts in brokerage commissions to affiliates of
the Funds.
<TABLE>
<CAPTION>
================================================================================================
Total Brokerage Amount Paid To % Paid to
Fund Commissions Affiliated Brokers Affiliated Brokers
================================================================================================
<S> <C> <C> <C>
Balanced
- ------------------------------------------------------------------------------------------------
Blue Chip Growth
- ------------------------------------------------------------------------------------------------
California Tax-Free Bond
- ------------------------------------------------------------------------------------------------
California Tax-Free
Money Market
- ------------------------------------------------------------------------------------------------
Convertible Securities
- ------------------------------------------------------------------------------------------------
Emerging Growth
- ------------------------------------------------------------------------------------------------
Government Securities
- ------------------------------------------------------------------------------------------------
Growth Equity
- ------------------------------------------------------------------------------------------------
Intermediate-Term
Bond
- ------------------------------------------------------------------------------------------------
International Equity * * *
- ------------------------------------------------------------------------------------------------
</TABLE>
-20-
<PAGE> 27
<TABLE>
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Limited Maturity
Government
- ------------------------------------------------------------------------------------------------
Money Market
- ------------------------------------------------------------------------------------------------
Treasury Money
Market
- ------------------------------------------------------------------------------------------------
Value Momentum
================================================================================================
</TABLE>
* Fund had not commenced operations as of January 31, 1995.
5% Shareholders. As of January 16, 1996, the following persons were the only
persons who were, to the knowledge of the Trust, beneficial owners of 5% or
more of shares of the Funds:
NAME AND ADDRESS PERCENTAGE OF
FUND OF BENEFICIAL OWNER NUMBER OF SHARES FUND'S SHARES
---- ------------------- ---------------- -------------
The Trust's Trustees and officers beneficially own less than 1% of the shares
of the Trust.
Adjournment. In the event that sufficient votes in favor of a Proposal set
forth in the Notice of the Special Meeting are not received by the time
scheduled for the meeting, the persons named as proxies may propose one or more
adjournments of the meeting for a period or periods of not more than 60 days in
the aggregate to permit further solicitation of proxies with respect to any of
such Proposal. Any such adjournment will require the affirmative vote of a
majority of the votes cast on the question in person or by proxy at the session
of the meeting to be adjourned. The persons named as proxies will vote in favor
of such adjournment those proxies which they are entitled to vote in favor of
such Proposals. They will vote against any such adjournment those proxies
required to be voted against any such Proposals. The costs of any such
additional solicitation and of any adjourned session will be borne by the
Trust.
Required Vote. Approval of each Proposal with respect to a Fund requires the
affirmative vote of a majority of the outstanding shares of a Fund. As defined
in the 1940 Act, "majority of the outstanding shares" means the vote of (i) 67%
or more of a Fund's outstanding shares present at a meeting, if the holders of
more than 50% of the outstanding shares of a Fund are present or represented by
proxy, or (ii) more than 50% of a Fund's outstanding shares, whichever is less.
-21-
<PAGE> 28
Abstentions and "broker non-votes" will not be counted for or against any
Proposal to which it relates, but will be counted for purposes of determining
whether a quorum is present. Abstentions will be counted as votes present for
purposes of determining a "majority of the outstanding voting securities"
present at the Meeting, and will therefore have the effect of counting against
the Proposal to which it relates.
Shareholder Proposals. The Trust does not hold annual Shareholder Meetings.
Shareholders wishing to submit proposals for inclusion in a proxy statement for
a subsequent meeting should send their written proposals to the Secretary of
the Trust c/o SEI Corporation, Legal Department, 680 East Swedesford Road,
Wayne, Pennsylvania 19087-1658.
Reports to Shareholders. The Trust will furnish, without charge, a copy of
the most recent Annual Report to Shareholders of the Trust and the most recent
Semi-Annual Report succeeding such Annual Report, if any, on request. Requests
should be directed to the Trust at 680 East Swedesford Road, Wayne,
Pennsylvania 19087-1658, or by calling 1-800-738-2922.
Other Matters. The Trustees know of no other business to be brought before
the meeting. However, if any other matters properly come before the meeting, it
is their intention that proxies which do not contain specific restrictions to
the contrary will be voted on such matters in accordance with the judgment of
the persons named in the enclosed form of proxy.
--------------------------
SHAREHOLDERS ARE URGED TO COMPLETE, SIGN AND DATE THE ENCLOSED PROXY CARD
AND RETURN IT PROMPTLY.
-22-
<PAGE> 29
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this 30th day of , 199 , by and between
Stepstone Funds, a Massachusetts business trust (the "Trust"), and Union Bank
of California, N.A.(the "Adviser").
WHEREAS, the Trust is an open-end, diversified management investment
company registered under the Investment Company Act of 1940, as amended,
consisting of several series of shares, each having its own investment
policies; and
WHEREAS, the Trust has retained SEI Financial Management Corporation (the
"Administrator") to provide administration of the Trust's operations, subject
to the control of the Board of Trustees;
WHEREAS, the Trust desires to retain the Adviser to render investment
management services with respect to its Treasury Money Market, Money Market,
California Tax Free Money Market, Intermediate Term Bond, Value Momentum,
Growth Equity, and Balanced Portfolios and such other portfolios as the Trust
and the Adviser may agree upon (the "Portfolios"), and the Adviser is willing
to render such services:
NOW, THEREFORE, in consideration of mutual covenants herein contained, the
parties hereto agree as follows:
1. DUTIES OF ADVISER. The Trust employs the Adviser to manage the
investment and reinvestment of the assets, and to continuously review,
supervise, and administer the investment program of the Portfolios, to
determine in its discretion the securities to be purchased or sold, to
provide the Administrator and the Trust with records concerning the
Adviser's activities which the Trust is required to maintain, and to
render regular reports to the Administrator and to the Trust's
Officers and Trustees concerning the Adviser's discharge of the
foregoing responsibilities.
The Adviser shall discharge the foregoing responsibilities subject to
the control of the Board of Trustees of the Trust and in compliance
with such policies as the Trustees may from time to time establish,
and in compliance with the objectives, policies, and limitations for
each such Portfolio set forth in the Trust's prospectus and statement
of additional information as amended from time to time, and applicable
laws and regulations.
The Adviser accepts such employment and agrees, at its own expense, to
render the services and to provide the office space, furnishings and
equipment and the personnel required by it to perform the services on
the terms and for the compensation provided herein.
A-1
<PAGE> 30
2. PORTFOLIO TRANSACTIONS. The Adviser is authorized to select the
brokers or dealers that will execute the purchases and sales of
portfolio securities for the Portfolios and is directed to use its
best efforts to obtain the best net results as described in the
Trust's prospectus and statement of additional information from time
to time. The Adviser will promptly communicate to the Administrator
and to the officers and the Trustees of the Trust such information
relating to portfolio transactions as they may reasonably request.
It is understood that the Adviser will not be deemed to have acted
unlawfully, or to have breached a fiduciary duty to the Trust or be in
breach of any obligation owing to the Trust under this Agreement, or
otherwise, solely by reason of its having directed a securities
transaction on behalf of the Trust to a broker-dealer in compliance
with the provisions of Section 28(e) of the Securities Exchange Act of
1934.
3. COMPENSATION OF THE ADVISER. For the services to be rendered by the
Adviser as provided in Sections 1 and 2 of this Agreement, the Trust
shall pay to the Adviser compensation at the rate specified in the
Schedule(s) which are attached hereto and made a part of this
Agreement. Such compensation shall be paid to the Adviser at the end
of each month, and calculated by applying a daily rate, based on the
annual percentage rates as specified in the attached Schedule(s), to
the assets. The fee shall be based on the average daily net assets
for the month involved (less any assets of such Portfolios held in
non-interest bearing special deposits with a Federal Reserve Bank).
All rights of compensation under this Agreement for services performed
as of the termination date shall survive the termination of this
Agreement.
4. OTHER EXPENSES. The Adviser shall pay all expenses of preparing
(including typesetting), printing and mailing reports, prospectuses,
statements of additional information, and sales literature to
prospective clients to the extent these expenses are not borne by the
Trust under a distribution plan adopted pursuant to Rule 12b-1.
5. EXCESS EXPENSES. If the expenses for any Portfolio for any fiscal
year (including fees and other amounts payable to the Adviser, but
excluding interest, taxes, brokerage costs, litigation, and other
extraordinary costs) as calculated every business day would exceed the
expense limitations imposed on investment companies by any applicable
statute or regulatory authority of any jurisdiction in which Shares
are qualified for offer and sale, the Adviser shall bear such excess
cost.
However, the Adviser will not bear expenses of the Trust or any
Portfolio which would result in the Trust's inability to qualify as a
regulated investment company under provisions of the Internal Revenue
Code. Payment of expenses by the Adviser pursuant to this Section 5
shall be settled on a monthly basis (subject to fiscal year end
reconciliation) by a reduction in the fee payable to the Adviser for
such month pursuant to
A-2
<PAGE> 31
Section 3 and, if such reduction shall be insufficient to offset such
expenses, by reimbursing the Trust.
6. REPORTS. The Trust and the Adviser agree to furnish to each other, if
applicable, current prospectuses, proxy statements, reports to
shareholders, certified copies of their financial statements, and such
other information with regard to their affairs as each may reasonably
request.
7. STATUS OF ADVISER. The services of the Adviser to the Trust are not
to be deemed exclusive, and the Adviser shall be free to render
similar services to others so long as its services to the Trust are
not impaired thereby. The Adviser shall be deemed to be an
independent contractor and shall, unless otherwise expressly provided
or authorized, have no authority to act for or represent the Trust in
any way or otherwise be deemed an agent of the Trust.
8. CERTAIN RECORDS. Any records required to be maintained and preserved
pursuant to the provisions of Rule 31a-1 and Rule 31a-2 promulgated
under the Investment Company Act of 1940 which are prepared or
maintained by the Adviser on behalf of the Trust are the property of
the Trust and will be surrendered promptly to the Trust on request.
9. LIMITATION OF LIABILITY OF ADVISER. The duties of the Adviser shall
be confined to those expressly set forth herein, and no implied duties
are assumed by or may be asserted against the Adviser hereunder. The
Adviser shall not be liable for any error of judgment or mistake of
law or for any loss arising out of any investment or for any act or
omission in carrying out its duties hereunder, except a loss resulting
from willful misfeasance, bad faith or gross negligence in the
performance of its duties, or by reason of reckless disregard of its
obligations and duties hereunder, except as may otherwise be provided
under provisions of applicable state law which cannot be waived or
modified hereby. (As used in this Paragraph 9, the term "Adviser"
shall include directors, officers, employees and other corporate
agents of the Adviser as well as that corporation itself).
The Trust shall be entitled to participate at its own expense in the
defense or, if it so elects, to assume the defense of any suit brought
to enforce any claims subject to this indemnity provision. If the
Trust elects to assume the defense of any such claim, the defense
shall be conducted by counsel chosen by the Trust and satisfactory to
the indemnified defendants in the suit whose approval shall not be
unreasonably withheld. In the event that the Trust elects to assume
the defense of any suit and retain counsel, the indemnified defendants
shall bear the fees and expenses of any additional counsel retained by
them. If the Trust does not elect to assume the defense of a suit, it
will reimburse the indemnified defendants for the reasonable fees and
expenses of any counsel retained by the indemnified defendants.
So long as the Adviser acts in good faith and with due diligence and
without gross negligence, the Trust assumes full responsibility and
shall indemnify the Adviser and hold it
A-3
<PAGE> 32
harmless from and against any and all actions, demands, suits and
claims (including claimed breaches of fiduciary duty), whether
groundless or otherwise, and from and against any and all losses,
damages, costs, charges, reasonable counsel fees and disbursements,
payments, expenses and liabilities (including reasonable investigation
expenses) arising directly or indirectly out of said advisory services
to the Trust. The indemnity and defense provisions set forth herein
shall indefinitely survive the termination of this Agreement.
The rights herein shall include the right to reasonable advances of
defense expenses in the event of any pending or threatened litigation
with respect to which indemnification hereunder may ultimately be
merited. In order that the indemnification provision contained herein
shall apply, however, it is understood that if in any case the Trust
may be asked to indemnify or hold the Adviser harmless, the Trust
shall be fully and promptly advised of all pertinent facts concerning
the situation in question, and it is further understood that the
Adviser will use all reasonable care to identify and notify the Trust
promptly concerning any situation which presents or appears likely to
present the probability of such a claim for indemnification against
the Trust, but failure to do so in good faith shall not effect the
rights hereunder.
The Adviser may apply to the Trust at any time for instructions and
may consult counsel for the Trust or its own counsel and with
accountants and other experts with respect to any matter arising in
connection with the Adviser's duties, and the Adviser shall not be
liable or accountable for any action taken or omitted by it in good
faith in accordance with such instruction or with the opinion of such
counsel, accountants or other experts.
Also, the Adviser shall be protected in acting upon any document which
it reasonably believes to be genuine and to have been signed or
presented by the proper person or persons. Nor shall the Adviser be
held to have notice of any change of authority of any officers,
employee, or agent of the Trust until receipt of written notice
thereof from the Trust.
10. PERMISSIBLE INTERESTS. Trustees, agents, and shareholders of the
Trust are or may be interested in the Adviser (or any successor
thereof) as directors, partners, officers, or shareholders, or
otherwise; directors, partners, officers, agents, and shareholders of
the Adviser are or may be interested in the Trust as Trustees,
shareholders or otherwise; and the Adviser (or any successor) is or
may be interested in the Trust as a shareholder or otherwise. In
addition, brokerage transactions for the Trust may be effected through
affiliates of the Adviser if approved by the Board of Trustees,
subject to the rules and regulations of the Securities and Exchange
Commission.
11. DURATION AND TERMINATION. This Agreement, unless sooner terminated as
provided herein, shall remain in effect until [two years from date of
execution], and thereafter, for periods of one year so long as such
continuance thereafter is specifically
A-4
<PAGE> 33
approved at least annually (a) by the vote of a majority of those
Trustees of the Trust who are not parties to this Agreement or
interested persons of any such party, cast in person at a meeting
called for the purpose of voting on such approval, and (b) by the
Trustees of the Trust or by vote of a majority of the outstanding
voting securities of each Portfolio; provided, however, that if the
shareholders of any Portfolio fail to approve the Agreement as
provided herein, the Adviser may continue to serve hereunder in the
manner and to the extent permitted by the Investment Company Act of
1940 and rules and regulations thereunder. The foregoing requirement
that continuance of this Agreement be "specifically approved at least
annually" shall be construed in a manner consistent with the
Investment Company Act of 1940 and the rules and regulations
thereunder.
This Agreement may be terminated as to any Portfolio at any time,
without the payment of any penalty by vote of a majority of the
Trustees of the Trust or by vote of a majority of the outstanding
voting securities of the Portfolio on not less than 30 days nor more
than 60 days written notice to the Adviser, or by the Adviser at any
time without the payment of any penalty, on 90 days written notice to
the Trust. This Agreement will automatically and immediately
terminate in the event of its assignment. Any notice under this
Agreement shall be given in writing, addressed and delivered, or
mailed postpaid, to the other party at any office of such party. As
used in this Section 11, the terms "assignment", "interested persons",
and a "vote of a majority of the outstanding voting securities" shall
have the respective meanings set forth in the Investment Company Act
of 1940 and the rules and regulations thereunder; subject to such
exemptions as may be granted by the Securities and Exchange Commission
under said Act.
12. NOTICE. Any notice required or permitted to be given by either party
to the other shall be deemed sufficient if sent by registered or
certified mail, postage prepaid, addressed by the party giving notice
to the other party at the last address furnished by the other party
to the party giving notice: if to the Trust, at 680 East Swedesford
Road, Wayne, PA and if to the Adviser at 445 South Figueroa Street,
Los Angeles, CA.
13. SEVERABILITY. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby.
A copy of the Declaration of Trust of the Trust is on file with the Secretary
of The Commonwealth of Massachusetts, and notice is hereby given that this
instrument is executed on behalf of the Trustees of the Trust as Trustees, and
are not binding upon any of the Trustees, officers, or shareholders of the
Trust individually but binding only upon the assets and property of the Trust.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
executed as of the day and year first written above.
A-5
<PAGE> 34
Union Bank of California, N.A.
By:
---------------------------
Attest:
-----------------------
Stepstone Funds
By:
---------------------------
Attest:
-----------------------
A-6
<PAGE> 35
SCHEDULE A
TO THE
INVESTMENT ADVISORY AGREEMENT
BETWEEN
STEPSTONE FUNDS
AND
UNION BANK OF CALIFORNIA, N.A.
Pursuant to Article 3, the Trust shall pay the Adviser compensation at an
annual rate as follows:
<TABLE>
<CAPTION>
Portfolio Fee (in basis points)
--------- ---------------------
<S> <C>
Money Market 30
Treasury Money Market 30
California Tax Free
Money Market 30
Intermediate Term
Bond 50
Value Momentum 60
Growth Equity 60
Balanced 60
California Tax Free
Bond Fund 50
Limited Maturity Government 30
Government Securities 50
Convertible Securities 60
Blue Chip Growth 60
Emerging Growth 80
International Equity 95
</TABLE>
A-7
<PAGE> 36
INVESTMENT SUBADVISORY AGREEMENT
AGREEMENT executed as of , 1996 by and between UNION BANK of
CALIFORNIA, N.A. (the "Advisor"), and THE BANK OF TOKYO TRUST COMPANY, or it
successor, (the "SubAdvisor"), a subsidiary of The Bank of Tokyo, Ltd., a New
York state chartered bank.
WHEREAS, Advisor is the investment manager for the Stepstone Funds (the
"Trust"), an open-end management investment company registered under the
Investment Company Act of 1940, as amended ("1940 Act"); and
WHEREAS, Advisor desires to retain SubAdvisor as its agent to furnish
investment advisory services for certain of the Trust's diversified investment
portfolios which are listed on Schedule A attached hereto and made a part
hereof (the "Funds").
NOW, THEREFORE, in consideration of the mutual covenants herein contained, the
parties hereto agree as follows:
1. Appointment. Advisor hereby appoints SubAdvisor to provide certain
sub-investment advisory services to the Funds for the period and on the terms
set forth in this Agreement. SubAdvisor accepts such appointment and agrees to
furnish the services herein set forth for the compensation herein provided.
2. Delivery of Documents. Advisor has furnished or will furnish SubAdvisor
with copies properly certified or authenticated of each of the following:
(a) the Trust's Agreement and Declaration of Trust, as filed with the
Secretary of State of the Commonwealth of Massachusetts on October 16,
1990, and all amendments thereto or restatements thereof (such
Declaration, as presently in effect and as it shall from time to time be
amended or restated, is herein called the "Declaration of Trust");
(b) the Trust's By-Laws and amendments thereto;
(c) resolutions of the Trust's Board of Trustees authorizing the
appointment of SubAdvisor and approving this Agreement;
B-1
<PAGE> 37
(d) the Trust's Notification of Registration of Form N-8A under the
Investment Company Act of 1940 (the "1940 Act") as filed with the
Securities and Exchange Commission (the "SEC") on October 16, 1990 and
all amendments thereto;
(e) the Trust's Registration Statement on Form N-1A under the Securities
Act of 1933, as amended ("1933 Act") (File No. 33-37687) and under the
1940 Act as filed with the SEC and all amendments thereto insofar as such
Registration Statement and such amendments relate to the Funds;
(f) the Trust's most recent prospectuses and Statement of Additional
Information for the Funds (such prospectuses and Statement of Additional
Information, as presently in effect, and all amendments and supplements
thereto are herein collectively called the "Prospectus"); and
(g) such other materials and documents as SubAdvisor shall reasonably
request.
Advisor will furnish SubAdvisor from time to time with copies of all amendments
of or supplements to the foregoing.
3. Management. Subject always to the supervision of the Trust's Board of
Trustees and Advisor, SubAdvisor will furnish an investment program in respect
of, and make investment decisions for, all assets of the Funds and place all
orders for the purchase and sale of securities, all on behalf of the Funds. In
the performance of its duties, SubAdvisor will satisfy its fiduciary duties to
the Funds (as set forth in Section 8 below), and will monitor the Funds
investments, and will comply with the provisions of the Trust's Declaration of
Trust and By-Laws, as amended from time to time, and the stated investment
objectives, policies and restrictions of the Funds. SubAdvisor and Advisor
will each make its officers and employees available to the other from time to
time at reasonable times to review investment policies of the Funds and to
consult with each other regarding the investment affairs of the Funds.
SubAdvisor shall also make itself reasonably available to the Board of Trustees
at such times as the Board of Trustees shall request.
SubAdvisor represents and warrants that it is in compliance with all applicable
Rules and Regulations of the SEC pertaining to its investment advisory
activities and agrees that it:
B-2
<PAGE> 38
(a) will use the same skill and care in providing such services as it
uses in providing services to fiduciary accounts for which it has
investment responsibilities;
(b) will conform with all applicable Rules and Regulations of the SEC
pertaining to its investment advisory activities;
(c) will place orders pursuant to its investment determinations for the
Funds either directly with the issuer or with any broker or dealer. In
providing the Funds with investment supervision, the SubAdvisor will give
primary consideration to securing the most favorable price and efficient
execution. Within the framework of this policy, the SubAdvisor 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 the
SubAdvisor's other clients may be a party. It is understood that it is
desirable for the Funds that the SubAdvisor have access to supplemental
investment and market research and security and economic analysis
provided by brokers who may execute brokerage transactions at a higher
cost to the Funds than may result when allocating brokerage to other
brokers on the basis of seeking the most favorable price and efficient
execution. Therefore, the SubAdvisor is authorized to place orders for
the purchase and sale of securities for the Funds with such brokers,
subject to such guidelines as shall be established by the Advisor and
reviewed by the Trust's Board of Trustees from time to time with respect
to the extent and continuation of this practice. It is understood that
the services provided by such brokers may be useful to the SubAdvisor in
connection with the SubAdvisor's services to other clients.
On occasions when the SubAdvisor deems the purchase or sale of a security to be
in the best interest of the Funds as well as other clients of the SubAdvisor,
the SubAdvisor, to the extent permitted by applicable laws and regulations,
may, but shall be under no obligation to, aggregate the securities to be so
purchased or sold in order to obtain the most favorable price or lower
brokerage commissions and 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 SubAdvisor in the manner it considers to be
the most equitable and consistent with its fiduciary obligations to the Funds
and to such other clients. In no instance will portfolio securities be
purchased from or sold to Advisor, SubAdvisor, SEI Financial Services Company
or any affiliated person of either the Trust, Advisor, SEI Financial services
Company or SubAdvisor that Advisor has identified to the SubAdvisor in writing,
except as may be permitted under the 1940 Act;
B-3
<PAGE> 39
(d) will report regularly to Advisor and will make appropriate
persons available for the purpose of reviewing at reasonable times with
representatives of Advisor and the Board of Trustees the management of the
Funds, including, without limitation, review of the general investment strategy
of the Funds, the performance of the Funds in relation to standard industry
indices and general conditions affecting the marketplace and will provide
various other reports from time to time as reasonably requested by Advisor;
(e) will maintain books and records with respect to the Trust's
securities transactions required by subparagraphs (b)(5), (6), (7), (9), (10)
and (11) and paragraph (f) of Rule 31a-1 under the 1940 Act and will furnish
Advisor and the Trust's Board of Trustees such periodic and special reports as
the Board of Trustees may request;
(f) will act upon instructions form Advisor not inconsistent with the
fiduciary duties hereunder; and
(g) will treat confidentially and as proprietary information of the
Trust all such records and other information relative to the Trust maintained
by the SubAdvisor, and will not use such records and information for any
purpose other than performance of its responsibilities and duties hereunder,
except after prior notification to and approval in writing by the Trust, which
approval shall not be unreasonably withheld and may not be withheld where
SubAdvisor may be exposed to civil or criminal contempt proceedings for failure
to comply, when requested to divulge such information by duly constituted
authorities, or when so requested by the Trust.
SubAdvisor shall have the right to execute and deliver, or cause its nominee to
execute and deliver, all proxies and notices of meetings and other notices
affecting or relating to the securities of the Funds.
4. Books and Records. In compliance with the requirements of Rule 31a-3
under the 1940 Act, SubAdvisor hereby agrees that all records which it
maintains for the Trust are the property of the Trust and further agrees to
surrender promptly to the Trust any of such records upon the Trust's request.
SubAdvisor further agrees to preserve for the periods prescribed by Rule 31a-2
under the 1940 Act the records required to be maintained by subparagraphs
(b)(5), (6), (7), (9), (10) and (11) and paragraph (f) of Rule 31a-1 under the
1940 Act. SubAdvisor may delegate its responsibilities under this Section to
affiliates that perform custody and/or fund accounting services for the Funds,
which delegation shall not, however, relieve the SubAdvisor of its
responsibilities under this paragraph 4.
B-4
<PAGE> 40
5. Expenses. During the terms of this Agreement, SubAdvisor will pay all
expenses incurred by it in connection with its activities under this Agreement
other than the cost of securities (including brokerage commissions, if any)
purchased for the Trust.
6. Compensation. For the services provided and the expenses assumed
pursuant to this Agreement, Advisor will pay the SubAdvisor, and the SubAdvisor
agrees to accept as full compensation therefor, a sub-advisory fee, accrued
daily and payable monthly, in accordance with Schedule B hereto. From time to
time, SubAdvisor may agree to waive or reduce some or all of the compensation
to which it is entitled under this Agreement.
7. Services to Others. Advisor understands, and has advised the Trust's
Board of Trustees, that SubAdvisor now acts, and may in the future act, as an
investment adviser to fiduciary and other managed accounts, and as investment
advisor, sub-investment adviser, and/or administrator to other investment
companies. Advisor has no objection to SubAdvisor's acts in such capacities,
as long as such services do not impair the services rendered to Advisor or the
Trust. Advisor recognizes, and has advised the Trust's Board of Trustees, that
in some cases this procedure may adversely affect the size of the position that
the Funds may obtain in a particular security. In addition, Advisor
understands, and has advised the Trust's Board of Trustees, that the persons
employed by SubAdvisor to assist in SubAdvisor's duties under this Agreement
will not devote their full time to such service and nothing contained in this
Agreement will be deemed to limit or restrict the right of SubAdvisor or any of
its affiliates to engage in and devote time and attention to other businesses
or to render services of whatever kind or nature.
8. Limitation of Liability. The SubAdvisor shall not be liable for any
error or judgment or for any loss suffered by the Funds or Advisor in
connection with performance of its obligations under this Agreement, except a
loss resulting from a breach of fiduciary duty with respect to the receipt of
compensation for services (in which case any award of damages shall be limited
to the period and the amount set forth in Section 36(b)(3) of the 1940 Act), or
a loss resulting from willful misfeasance, bad faith or gross negligence on the
SubAdvisor's part in the performance of its duties or from reckless disregard
of its obligations and duties under this Agreement, except as may otherwise be
provided under provisions or applicable state law which cannot be waived or
modified hereby.
9. Indemnification. Advisor and SubAdvisor each agree to indemnify the
other against any claim against, loss or liability to such other party
(including reasonable attorneys' fees) arising out of any action on the part of
the indemnifying party which constitutes willful misfeasance, bad faith or
gross negligence.
B-5
<PAGE> 41
10. Duration and Termination. This Agreement will become effective as of the
date hereof, provided that it has been approved by vote of a majority of the
outstanding voting securities of the Funds in accordance with the requirements
under the 1940 Act, and, unless sooner terminated as provided herein, will
continue in effect for one year.
Thereafter, if not terminated, this Agreement will continue in effect for the
Funds for successive periods of 12 months, each ending on the day preceding the
anniversary of the Agreement's effective date of each year, provided that such
continuation is specifically approved at least annually (a) by the vote of a
majority of those members of the Trust's Board of Trustees who are not
interested persons of the Trust, SubAdvisor, or Advisor, cast in person at a
meeting called for the purpose of voting on such approval, and (b) by the vote
of a majority of the Trust's Board of Trustees or by the vote of majority of
all votes attributable to the outstanding Shares of the Funds. Notwithstanding
the foregoing, this Agreement may be terminated as to the Funds at any time,
without the payment of any penalty, on sixty (60) day's written notice by
Advisor or by SubAdvisor. This Agreement will immediately terminate in the
event of its assignment. (As used in this Agreement, the terms "majority of the
outstanding voting securities", "interested persons" and "assignment" have the
same meaning of such terms in the 1940 Act.)
11. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought.
12. SubAdvisor Information. During the terms of this Agreement, Advisor
agrees to furnish the SubAdvisor at SubAdvisor's principal office all
prospectuses, proxy statements, reports to stockholders, sales literature or
other materials prepared for distribution to stockholders of the Funds, the
Trust or the public that refer to the SubAdvisor or its clients in any way
prior to use thereof and not to use material if the SubAdvisor reasonably
objects in writing within five business days (or such other period as may be
mutually agreed) after receipt thereof. The SubAdvisor's right to object to
such materials is limited to the portions of such materials that expressly
relate to the SubAdvisor, its services and its clients. The Advisor agrees to
use its reasonable best efforts to ensure that materials prepared by its
employees or agents or its affiliates that refer to the SubAdvisor or its
clients in any way are consistent with those materials previously approved by
the SubAdvisor as referenced in the first sentence of this paragraph. Sales
literature may be furnished to the SubAdvisor by first-class or overnight mail,
facsimile transmission equipment or hand delivery.
B-6
<PAGE> 42
13. Severability. Should any part of this Agreement be held invalid by a
court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors.
14. Notices. Any notice, advice or report to be given pursuant to this
Agreement shall be delivered or mailed:
To Advisor at:
Union Bank of California, N.A.
530 "B" Street
San Diego, CA 92101
Attention: Clark Gates, Senior Vice President
To the SubAdvisor at:
The Bank of Tokyo Trust Company
100 Broadway
New York, NY 10005
Attention: Harold C. Elliot, CIO
To the Trust or the Funds at:
Stepstone Funds
680 East Swedesford Road
Wayne, Pennsylvania 19087
Attention: Legal Department
15. Change of Law. Where the effect of a requirement of the 1940 Act
reflected in any provision of this Agreement is altered by a rule, regulation
or order of the
B-7
<PAGE> 43
Commission, whether of special or general application, such provision shall be
deemed to incorporate the effect of such rule, regulation or order.
16. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement is held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement will not be
affected thereby. This Agreement will be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and will be
governed by the laws of the Commonwealth of Massachusetts.
The name "Stepstone Funds" and "Trustees of the Stepstone Funds" refer
respectively to the Trust created by, and the Trustees, as trustees but not
individually or personally, acting from time to time under, the Declaration of
the Trust, to which reference is hereby made and copy of which is on file at
the office of the Secretary of State of the Commonwealth of Massachusetts and
elsewhere as required by law, and to any and all amendments thereto so filed or
hereafter filed. The obligations of "Stepstone Funds" entered in the name or
on behalf thereof by any of the Trustees, representatives or agents are made
not individually but only in such capacities and are not binding upon any of
the Trustees, Shareholders or representatives of the Trust personally, but bind
only the assets of the Trust, and persons dealing with the Funds must look
solely to the assets of the Trust belonging to such Funds for the enforcement
of any claims against the Trust.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officer designated below as of the day and year first above
written.
UNION BANK OF CALIFORNIA, N.A.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
B-8
<PAGE> 44
THE BANK OF TOKYO TRUST COMPANY
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
B-9
<PAGE> 45
SCHEDULE A
STEPSTONE FUNDS
Blue Chip Growth Fund
Convertible Securities Fund
Emerging Growth Fund
Government Securities Fund
B-10
<PAGE> 46
SCHEDULE B
SUB ADVISOR COMPENSATION
1. Government Securities Fund
Advisory Fee: 50 b.p.
Subadvisory Fee: 20 b.p.
2. Convertible Securities Fund
Advisory Fee: 60 b.p.
Subadvisory Fee: 30 b.p.
3. Blue Chip Growth Fund
Advisory Fee: 60 b.p.
Subadvisory Fee: 30 b.p.
4. Emerging Growth Fund
Advisory Fee: 80 b.p.
Subadvisory Fee: 50 b.p.
B-11
<PAGE> 47
INVESTMENT SUBADVISORY AGREEMENT
AGREEMENT executed as of , 1996 by and between UNION BANK OF
CALIFORNIA, N.A. (the "Advisor"), and BOT ASSET MANAGEMENT (UK), LIMITED, or
its successor (the "SubAdvisor"), an affiliate of The Bank of Tokyo, Ltd.,
("BTAM").
WHEREAS, Advisor is the investment manager for the Stepstone Funds (the
"Trust"), an open-end management investment company registered under the
Investment Company Act of 1940, as amended ("1940 Act"); and
WHEREAS, Advisor desires to retain SubAdvisor as its agent to furnish
investment advisory services for the Trust's International Equity investment
portfolio (the "Fund").
NOW, THEREFORE, in consideration of the mutual covenants herein contained, the
parties hereto agree as follows:
1. Appointment. Advisor hereby appoints SubAdvisor to provide certain
sub-investment advisory services to the Fund for the period and on the terms
set forth in this Agreement. SubAdvisor accepts such appointment and agrees to
furnish the services herein set forth for the compensation herein provided.
2. Delivery of Documents. Advisor has furnished or will furnish SubAdvisor
with copies properly certified or authenticated of each of the following:
(a) the Trust's Agreement and Declaration of Trust, as filed with the
Secretary of State of the Commonwealth of Massachusetts on October 16,
1990, and all amendments thereto or restatements thereof (such
Declaration, as presently in effect and as it shall from time to time be
amended or restated, is herein called the "Declaration of Trust");
(b) the Trust's By-Laws and amendments thereto;
(c) resolutions of the Trust's Board of Trustees authorizing the
appointment of SubAdvisor and approving this Agreement;
C-1
<PAGE> 48
(d) the Trust's Notification of Registration of Form N-8A under the
Investment Company Act of 1940 (the "1940 Act") as filed with the
Securities and Exchange Commission (the "SEC") on October 16, 1990 and
all amendments thereto;
(e) the Trust's Registration Statement on Form N-1A under the
Securities Act of 1933, as amended ("1933 Act") (File No. 33-37687) and
under the 1940 Act as filed with the SEC and all amendments thereto
insofar as such Registration Statement and such amendments relate to the
Funds;
(f) the Trust's most recent prospectuses and Statement of Additional
Information for the Funds (such prospectuses and Statement of Additional
Information, as presently in effect, and all amendments and supplements
thereto are herein collectively called the "Prospectus"); and
(g) such other materials and documents as SubAdvisor shall reasonably
request.
Advisor will furnish SubAdvisor from time to time with copies of all amendments
of or supplements to the foregoing.
3. Management. Subject always to the supervision of the Trust's Board of
Trustees and Advisor, SubAdvisor will furnish an investment program in respect
of, and make investment decisions for the assets of the Fund entrusted to it
hereunder and place all orders for the purchase and sale of securities, all on
behalf of the Fund. In the performance of its duties, SubAdvisor will satisfy
its fiduciary duties to the Fund (as set forth in Section 8 below), and will
monitor the Fund investments, and will comply with the provisions of the
Trust's Declaration of Trust and By-Laws, as amended from time to time, and the
stated investment objectives, policies and restrictions of the Fund.
SubAdvisor and Advisor will each make its officers and employees available to
the other from time to time at reasonable times to review investment policies
of the Fund and to consult with each other regarding the investment affairs of
the Fund. SubAdvisor shall also make itself reasonably available to the Board
of Trustees at such times as the Board of Trustees shall request.
SubAdvisor represents and warrants that it is in compliance with all applicable
Rules and Regulations of the SEC pertaining to its investment advisory
activities and agrees that it:
C-2
<PAGE> 49
(a) will use the same skill and care in providing such services as it
uses in providing services to fiduciary accounts for which it has
investment responsibilities;
(b) will maintain registration with the SEC as an investment adviser
under the Investment Advisers Act of 1940 and will conform with all
applicable Rules and Regulations of the SEC pertaining to its investment
advisory activities;
(c) will place orders pursuant to its investment determinations for the
Fund either directly with the issuer or with any broker or dealer. In
providing the Funds with investment supervision, the SubAdvisor will
give primary consideration to securing the most favorable price and
efficient execution. Within the framework of this policy, the
SubAdvisor 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 the SubAdvisor's other clients may be a party. it
is understood that it is desirable for the Fund that the SubAdvisor have
access to supplemental investment and market research and security and
economic analysis provided by brokers who may execute brokerage
transactions at a higher cost to the Fund than may result when
allocating brokerage to other brokers on the basis of seeking the most
favorable price and efficient execution. Therefore, the SubAdvisor is
authorized to place orders for the purchase and sale of securities for
the Fund with such brokers, subject to such guidelines as shall be
established by the Advisor and reviewed by the Trust's Board of Trustees
from time to time with respect to the extent and continuation of this
practice. It is understood that the services provided by such brokers
may be useful to the SubAdvisor in connection with the SubAdvisor's
services to other clients.
On occasions when the SubAdvisor deems the purchase or sale of a
security to be in the best interest of the Fund as well as other clients
of the SubAdvisor, the SubAdvisor, to the extent permitted by applicable
laws and regulations, may, but shall be under no obligation to,
aggregate the securities to be so purchased or sold in order to obtain
the most favorable price or lower brokerage commissions and 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 SubAdvisor in the manner it considers to be the most equitable
and consistent with its fiduciary obligations to the Fund and to such
other clients. In no instance will portfolio securities be purchased
from
C-3
<PAGE> 50
or sold to Advisor, SubAdvisor, SEI Financial Services Company or any
affiliated person of either the Trust, Advisor, SEI Financial Services
Company or SubAdvisor that Advisor has identified to the SubAdvisor in
writing, except as may be permitted under the 1940 Act;
(d) will report regularly to Advisor and will make appropriate persons
available for the purpose of reviewing at reasonable times with
representatives of Advisor and the Board of Trustees the management of
the Fund, including, without limitation, review of the general
investment strategy of the Fund, the performance of the Fund in relation
to standard industry indices and general conditions affecting the
marketplace and will provide various other reports from time to time as
reasonably requested by Advisor;
(e) will maintain books and records with respect to the Trust's
securities transactions required by subparagraphs (b)(5), (6), (7), (9),
(10) and (11) and paragraph (f) of Rule 31a-1 under the 1940 Act and
will furnish Advisor and the Trust's Board of Trustees such periodic and
special reports as the Board of Trustees may request;
(f) will act upon instructions form Advisor not inconsistent with the
fiduciary duties hereunder; and
(g) will treat confidentially and as proprietary information of the
Trust all such records and other information relative to the Trust
maintained by the SubAdvisor, and will not use such records and
information for any purpose other than performance of its
responsibilities and duties hereunder, except after prior notification
to and approval in writing by the Trust, which approval shall not be
unreasonably withheld and may not be withheld where SubAdvisor may be
exposed to civil or criminal contempt proceedings for failure to comply,
when requested to divulge such information by duly constituted
authorities, or when so requested by the Trust.
SubAdvisor shall have the right to execute and deliver, or cause its nominee to
execute and deliver, all proxies and notices of meetings and other notices
affecting or relating to the securities of the Fund.
4. Books and Records. In compliance with the requirements of Rule
31a-3 under the 1940 Act, SubAdvisor hereby agrees that all records which it
maintains for the Trust are the property of the Trust and further agrees to
surrender promptly to the Trust
C-4
<PAGE> 51
any of such records upon the Trust's request. SubAdvisor further agrees to
preserve for the periods prescribed by Rule 31a-2 under the 1940 Act the
records required to be maintained by subparagraphs (b)(5), (6), (7), (9), (10)
and (11) and paragraph (f) of Rule 31a-1 under the 1940 Act. SubAdvisor may
delegate its responsibilities under this Section to affiliates that perform
custody and/or fund accounting services for the Fund, which delegation shall
not, however, relieve the SubAdvisor of its responsibilities under this
paragraph 4.
5. Expenses. During the terms of this Agreement, SubAdvisor will pay all
expenses incurred by it in connection with its activities under this Agreement
other than the cost of securities (including brokerage commissions, if any)
purchased for the Trust.
6. Compensation. For the services provided and the expenses assumed
pursuant to this Agreement, Advisor will pay the SubAdvisor, and the SubAdvisor
agrees to accept as full compensation therefor, a sub-advisory fee, accrued
daily and payable monthly, in accordance with Schedule A hereto. The fee will
be calculated based on the average monthly market value of the assets under the
Sub-Advisor's management and will be paid to the Sub-Advisor monthly. From
time to time, SubAdvisor may agree to waive or reduce some or all of the
compensation to which it is entitled under this Agreement.
7. Services to Others. Advisor understands, and has advised the Trust's
Board of Trustees, that SubAdvisor now acts, and may in the future act, as an
investment adviser to fiduciary and other managed accounts, and as investment
advisor, sub-investment adviser, and/or administrator to other investment
companies. Advisor has no objection to SubAdvisor's acts in such capacities,
as long as such services do not impair the services rendered to Advisor or the
Trust. Advisor recognizes, and has advised the Trust's Board of Trustees, that
in some cases this procedure may adversely affect the size of the position that
the Fund may obtain in a particular security. In addition, Advisor
understands, and has advised the Trust's Board of Trustees, that the persons
employed by SubAdvisor to assist in SubAdvisor's duties under this Agreement
will not devote their full time to such service and nothing contained in this
Agreement will be deemed to limit or restrict the right of SubAdvisor or any of
its affiliates to engage in and devote time and attention to other businesses
or to render services of whatever kind or nature.
8. Limitation of Liability. The SubAdvisor shall not be liable for any
error or judgment or for any loss suffered by the Fund or Advisor in connection
with performance of its obligations under this Agreement, except a loss
resulting from a breach of fiduciary duty with respect to the receipt of
compensation for services (in which case any award of damages shall be limited
to the period and the amount set forth in Section 36(b) (3) of
C-5
<PAGE> 52
the 1940 Act), or a loss resulting from willful misfeasance, bad faith or gross
negligence on the SubAdvisor's part in the performance of its duties or from
reckless disregard of its obligations and duties under this Agreement, except
as may otherwise be provided under provisions or applicable state law which
cannot be waived or modified hereby.
9. Indemnification. Advisor and SubAdvisor each agree to indemnify the
other against any claim against, loss or liability to such other party
(including reasonable attorneys' fees) arising out of any action on the part of
the indemnifying party which constitutes willful misfeasance, bad faith or
gross negligence.
10. Duration of Termination. This Agreement will become effective as of the
date hereof, provided that it has been approved by vote of a majority of the
outstanding voting securities of the Fund in accordance with the requirements
under the 1940 Act, and, unless sooner terminated as provided herein, will
continue in effect for one year.
Thereafter, if not terminated, this Agreement will continue in effect for the
Funds for successive periods of 12 months, each ending on the day preceding the
anniversary of the Agreement's effective date of each year, provided that such
continuation is specifically approved at least annually (a) by the vote of a
majority of those members of the Trust's Board of Trustees who are not
interested persons of the Trust, SubAdvisor, or Advisor, cast in person at a
meeting called for the purpose of voting on such approval, and (b) by the vote
of a majority of the Trust's Board of Trustees or by the vote of majority of
all votes attributable to the outstanding Shares of the Fund. Notwithstanding
the foregoing, this Agreement may be terminated as to the Funds at any time,
without the payment of any penalty, on sixty (60) day's written notice by
Advisor or by SubAdvisor. This Agreement will immediately terminate in the
event of its assignment. (As used in this Agreement, the terms "majority of the
outstanding voting securities", "interested persons" and "assignment" have the
same meaning of such terms in the 1940 Act.)
11. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought.
12. SubAdvisor Information. During the terms of this Agreement, Advisor
agrees to furnish the SubAdvisor at SubAdvisor's principal office all
prospectuses, proxy statements, reports to stockholders, sales literature or
other materials prepared for
C-6
<PAGE> 53
distribution to stockholders of the Fund, the Trust or the public that refer to
the SubAdvisor or its clients in any way prior to use thereof and not to use
material if the SubAdvisor reasonably objects in writing within five business
days (or such other period as may be mutually agreed) after receipt thereof.
The SubAdvisor's right to object to such materials is limited to the portions
of such materials that expressly relate to the SubAdvisor, its services and its
clients. The Advisor agrees to use its reasonable best efforts to ensure that
materials prepared by its employees or agents or its affiliates that refer to
the SubAdvisor or its clients in any way are consistent with those materials
previously approved by the SubAdvisor as referenced in the first sentence of
this paragraph. Sales literature may be furnished to the SubAdvisor by
first-class or overnight mail, facsimile transmission equipment or hand
delivery.
13. Severability. Should any part of this Agreement be held invalid by a
court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors.
14. Notices. Any notice, advice or report to be given pursuant to this
Agreement shall be delivered or mailed:
To Advisor at:
Union Bank of California, N.A.
530 "B" Street
San Diego, CA 92101
Attention: Clark Gates, Senior Vice President
To the SubAdvisor at:
BOT Asset Management (UK), Ltd.
12-15 Finsbury Circus
London, EC2M 7BT
England
Attention: James Wignall, Company Secretary
C-7
<PAGE> 54
To the Trust or the Fund at:
Stepstone Funds
680 East Swedesford Road
Wayne, Pennsylvania 19087
Attention: Legal Department
15. Change of Law. Where the effect of a requirement of the 1940 Act
reflected in any provision of this Agreement is altered by a rule, regulation
or order of the Commission, whether of special or general application, such
provision shall be deemed to incorporate the effect of such rule, regulation or
order.
16. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. if any
provision of this Agreement is held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement will not be
affected thereby. This Agreement will be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and will be
governed by the laws of the Commonwealth of Massachusetts.
The name "Stepstone Funds" and "Trustees of the Stepstone Funds" refer
respectively to the Trust created by, and the Trustees, as trustees but not
individually or personally, acting from time to time under, the Declaration of
the Trust, to which reference is hereby made and copy of which is on file at
the office of the Secretary of State of the Commonwealth of Massachusetts and
elsewhere as required by law, and to any and all amendments thereto so filed or
hereafter filed. The obligations of "Stepstone Funds" entered in the name or
on behalf thereof by any of the Trustees, representatives or agents are made
not individually but only in such capacities and are not binding upon any of
the Trustees, Shareholders or representatives of the Trust personally, but bind
only the assets of the Trust, and persons dealing with the Funds must look
solely to the assets of the Trust belonging to such Funds for the enforcement
of any claims against the Trust.
C-8
<PAGE> 55
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officer designated below as of the day and year first above
written.
UNION BANK OF CALIFORNIA, N.A.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
BOT ASSET MANAGEMENT (UK), LIMITED
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
C-9
<PAGE> 56
SCHEDULE A
STEPSTONE INTERNATIONAL EQUITY FUND
Advisory Fee: 95 b.p. (will waive 20 b.p.)
Subadvisory Fee: 30 b.p.
C-10
<PAGE> 57
SCHEDULE B
SUBADVISOR PERFORMANCE STANDARDS
1. Outperform the Morgan Stanley Capital International (MSCI) European
Index.
C-11
<PAGE> 58
STEPSTONE FUNDS
BALANCED FUND
SPECIAL MEETING OF SHAREHOLDERS
PROXY SOLICITED BY THE BOARD OF TRUSTEES FOR
THE SPECIAL MEETING OF SHAREHOLDERS, MARCH 7, 1996
The undersigned, revoking previous proxies with respect to the Shares (defined
below), hereby appoints David G. Lee and Kevin P. Robins as proxies and each of
them, each with full power of substitution, to vote at the Special Meeting of
Shareholders of the Balanced Fund (the "Fund") of Stepstone Funds (the "Trust")
to be held in the offices of SEI Financial Management Corporation, 680 East
Swedesford Road, Wayne, Pennsylvania 19087-1658, on Thursday, March 7, 1996, at
10:00 a.m., Eastern time, and any adjournments or postponements thereof (the
"Meeting"), all shares of beneficial interest of said Fund that the undersigned
would be entitled to vote if personally present at the Meeting ("Shares") on
the proposal set forth below and, in accordance with their own discretion, any
other matters properly brought before the Meeting.
THE BOARD OF TRUSTEES OF THE TRUST RECOMMENDS A VOTE "FOR" THE PROPOSAL TO:
Approve the selection of Union Bank of California, N.A. ("UBOC") as
investment adviser to the Fund, and to approve the new investment advisory
agreement between the Trust, on behalf of the Fund, and UBOC.
For Against Abstain
---- ---- ----
THIS PROXY WILL, WHEN PROPERLY EXECUTED, BE VOTED AS DIRECTED HEREIN BY THE
SIGNING SHAREHOLDER. IF NO CONTRARY DIRECTION IS GIVEN WHEN THE DULY EXECUTED
PROXY IS RETURNED, THIS PROXY WILL BE VOTED FOR THE FOREGOING PROPOSAL AND WILL
BE VOTED IN THE APPOINTED PROXIES' DISCRETION UPON SUCH OTHER BUSINESS AS MAY
PROPERLY COME BEFORE THE MEETING.
<PAGE> 59
The undersigned acknowledges receipt with this proxy of a copy of the Notice of
Special Meeting and the Proxy Statement of the Board of Trustees. Your
signature(s) on this proxy should be exactly as your name(s) appear on this
Proxy. If the shares are held jointly, each holder should sign this Proxy.
Attorneys-in-fact, executors, administrators, trustees or guardians should
indicate the full title and capacity in which they are signing.
Dated: , 1996 --------------------------------
----------------- Signature of Shareholder
--------------------------------
Signature (Joint owners)
PLEASE DATE, SIGN AND RETURN PROMPTLY USING THE ENCLOSED ENVELOPE WHETHER OR
NOT YOU EXPECT TO ATTEND THE MEETING; YOU MAY, NEVERTHELESS, VOTE IN PERSON IF
YOU DO SO ATTEND.
2
<PAGE> 60
STEPSTONE FUNDS
CALIFORNIA TAX-FREE BOND FUND
SPECIAL MEETING OF SHAREHOLDERS
PROXY SOLICITED BY THE BOARD OF TRUSTEES FOR
THE SPECIAL MEETING OF SHAREHOLDERS, MARCH 7, 1996
The undersigned, revoking previous proxies with respect to the Shares (defined
below), hereby appoints David G. Lee and Kevin P. Robins as proxies and each of
them, each with full power of substitution, to vote at the Special Meeting of
Shareholders of the California Tax-Free Bond Fund (the "Fund") of Stepstone
Funds (the "Trust") to be held in the offices of SEI Financial Management
Corporation, 680 East Swedesford Road, Wayne, Pennsylvania 19087-1658, on
Thursday, March 7, 1996, at 10:00 a.m., Eastern time, and any adjournments or
postponements thereof (the "Meeting"), all shares of beneficial interest of
said Fund that the undersigned would be entitled to vote if personally present
at the Meeting ("Shares") on the proposal set forth below and, in accordance
with their own discretion, any other matters properly brought before the
Meeting.
THE BOARD OF TRUSTEES OF THE TRUST RECOMMENDS A VOTE "FOR" THE PROPOSAL TO:
Approve the selection of Union Bank of California, N.A. ("UBOC") as
investment adviser to the Fund, and to approve the new investment advisory
agreement between the Trust, on behalf of the Fund, and UBOC.
For Against Abstain
---- ---- ----
THIS PROXY WILL, WHEN PROPERLY EXECUTED, BE VOTED AS DIRECTED HEREIN BY THE
SIGNING SHAREHOLDER. IF NO CONTRARY DIRECTION IS GIVEN WHEN THE DULY EXECUTED
PROXY IS RETURNED, THIS PROXY WILL BE VOTED FOR THE FOREGOING PROPOSAL AND WILL
BE VOTED IN THE APPOINTED PROXIES' DISCRETION UPON SUCH OTHER BUSINESS AS MAY
PROPERLY COME BEFORE THE MEETING.
3
<PAGE> 61
The undersigned acknowledges receipt with this proxy of a copy of the Notice of
Special Meeting and the Proxy Statement of the Board of Trustees. Your
signature(s) on this proxy should be exactly as your name(s) appear on this
Proxy. If the shares are held jointly, each holder should sign this Proxy.
Attorneys-in-fact, executors, administrators, trustees or guardians should
indicate the full title and capacity in which they are signing.
Dated: , 1996 --------------------------------
---------------- Signature of Shareholder
--------------------------------
Signature (Joint owners)
PLEASE DATE, SIGN AND RETURN PROMPTLY USING THE ENCLOSED ENVELOPE WHETHER OR
NOT YOU EXPECT TO ATTEND THE MEETING; YOU MAY, NEVERTHELESS, VOTE IN PERSON IF
YOU DO SO ATTEND.
4
<PAGE> 62
STEPSTONE FUNDS
CALIFORNIA TAX-FREE MONEY MARKET FUND
SPECIAL MEETING OF SHAREHOLDERS
PROXY SOLICITED BY THE BOARD OF TRUSTEES FOR
THE SPECIAL MEETING OF SHAREHOLDERS, MARCH 7, 1996
The undersigned, revoking previous proxies with respect to the Shares (defined
below), hereby appoints David G. Lee and Kevin P. Robins as proxies and each of
them, each with full power of substitution, to vote at the Special Meeting of
Shareholders of the California Tax-Free Money Market Fund (the "Fund") of
Stepstone Funds (the "Trust") to be held in the offices of SEI Financial
Management Corporation, 680 East Swedesford Road, Wayne, Pennsylvania
19087-1658, on Thursday, March 7, 1996, at 10:00 a.m., Eastern time, and any
adjournments or postponements thereof (the "Meeting"), all shares of beneficial
interest of said Fund that the undersigned would be entitled to vote if
personally present at the Meeting ("Shares") on the proposal set forth below
and, in accordance with their own discretion, any other matters properly
brought before the Meeting.
THE BOARD OF TRUSTEES OF THE TRUST RECOMMENDS A VOTE "FOR" THE PROPOSAL TO:
Approve the selection of Union Bank of California, N.A. ("UBOC") as
investment adviser to the Fund, and to approve the new investment advisory
agreement between the Trust, on behalf of the Fund, and UBOC.
For Against Abstain
---- ---- ----
THIS PROXY WILL, WHEN PROPERLY EXECUTED, BE VOTED AS DIRECTED HEREIN BY THE
SIGNING SHAREHOLDER. IF NO CONTRARY DIRECTION IS GIVEN WHEN THE DULY EXECUTED
PROXY IS RETURNED, THIS PROXY WILL BE VOTED FOR THE FOREGOING PROPOSAL AND WILL
BE VOTED IN THE APPOINTED PROXIES' DISCRETION UPON SUCH OTHER BUSINESS AS MAY
PROPERLY COME BEFORE THE MEETING.
5
<PAGE> 63
The undersigned acknowledges receipt with this proxy of a copy of the Notice of
Special Meeting and the Proxy Statement of the Board of Trustees. Your
signature(s) on this proxy should be exactly as your name(s) appear on this
Proxy. If the shares are held jointly, each holder should sign this Proxy.
Attorneys-in-fact, executors, administrators, trustees or guardians should
indicate the full title and capacity in which they are signing.
Dated: , 1996
----------------- --------------------------------
Signature of Shareholder
--------------------------------
Signature (Joint owners)
PLEASE DATE, SIGN AND RETURN PROMPTLY USING THE ENCLOSED ENVELOPE WHETHER OR
NOT YOU EXPECT TO ATTEND THE MEETING; YOU MAY, NEVERTHELESS, VOTE IN PERSON IF
YOU DO SO ATTEND.
6
<PAGE> 64
STEPSTONE FUNDS
GROWTH EQUITY FUND
SPECIAL MEETING OF SHAREHOLDERS
PROXY SOLICITED BY THE BOARD OF TRUSTEES FOR
THE SPECIAL MEETING OF SHAREHOLDERS, MARCH 7, 1996
The undersigned, revoking previous proxies with respect to the Shares (defined
below), hereby appoints David G. Lee and Kevin P. Robins as proxies and each of
them, each with full power of substitution, to vote at the Special Meeting of
Shareholders of the Growth Equity Fund (the "Fund") of Stepstone Funds (the
"Trust") to be held in the offices of SEI Financial Management Corporation, 680
East Swedesford Road, Wayne, Pennsylvania 19087-1658, on Thursday, March 7,
1996, at 10:00 a.m., Eastern time, and any adjournments or postponements
thereof (the "Meeting"), all shares of beneficial interest of said Fund that
the undersigned would be entitled to vote if personally present at the Meeting
("Shares") on the proposal set forth below and, in accordance with their own
discretion, any other matters properly brought before the Meeting.
THE BOARD OF TRUSTEES OF THE TRUST RECOMMENDS A VOTE "FOR" THE PROPOSAL TO:
Approve the selection of Union Bank of California, N.A. ("UBOC") as
investment adviser to the Fund, and to approve the new investment advisory
agreement between the Trust, on behalf of the Fund, and UBOC.
For Against Abstain
---- ---- ----
THIS PROXY WILL, WHEN PROPERLY EXECUTED, BE VOTED AS DIRECTED HEREIN BY THE
SIGNING SHAREHOLDER. IF NO CONTRARY DIRECTION IS GIVEN WHEN THE DULY EXECUTED
PROXY IS RETURNED, THIS PROXY WILL BE VOTED FOR THE FOREGOING PROPOSAL AND WILL
BE VOTED IN THE APPOINTED PROXIES' DISCRETION UPON SUCH OTHER BUSINESS AS MAY
PROPERLY COME BEFORE THE MEETING.
7
<PAGE> 65
The undersigned acknowledges receipt with this proxy of a copy of the Notice of
Special Meeting and the Proxy Statement of the Board of Trustees. Your
signature(s) on this proxy should be exactly as your name(s) appear on this
Proxy. If the shares are held jointly, each holder should sign this Proxy.
Attorneys-in-fact, executors, administrators, trustees or guardians should
indicate the full title and capacity in which they are signing.
Dated: , 1996
----------------- --------------------------------
Signature of Shareholder
--------------------------------
Signature (Joint owners)
PLEASE DATE, SIGN AND RETURN PROMPTLY USING THE ENCLOSED ENVELOPE WHETHER OR
NOT YOU EXPECT TO ATTEND THE MEETING; YOU MAY, NEVERTHELESS, VOTE IN PERSON IF
YOU DO SO ATTEND.
8
<PAGE> 66
STEPSTONE FUNDS
INTERMEDIATE-TERM BOND FUND
SPECIAL MEETING OF SHAREHOLDERS
PROXY SOLICITED BY THE BOARD OF TRUSTEES FOR
THE SPECIAL MEETING OF SHAREHOLDERS, MARCH 7, 1996
The undersigned, revoking previous proxies with respect to the Shares (defined
below), hereby appoints David G. Lee and Kevin P. Robins as proxies and each of
them, each with full power of substitution, to vote at the Special Meeting of
Shareholders of the Intermediate-Term Bond Fund (the "Fund") of Stepstone Funds
(the "Trust") to be held in the offices of SEI Financial Management
Corporation, 680 East Swedesford Road, Wayne, Pennsylvania 19087-1658, on
Thursday, March 7, 1996, at 10:00 a.m., Eastern time, and any adjournments or
postponements thereof (the "Meeting"), all shares of beneficial interest of
said Fund that the undersigned would be entitled to vote if personally present
at the Meeting ("Shares") on the proposal set forth below and, in accordance
with their own discretion, any other matters properly brought before the
Meeting.
THE BOARD OF TRUSTEES OF THE TRUST RECOMMENDS A VOTE "FOR" THE PROPOSAL TO:
Approve the selection of Union Bank of California, N.A. ("UBOC") as
investment adviser to the Fund, and to approve the new investment advisory
agreement between the Trust, on behalf of the Fund, and UBOC.
For Against Abstain
---- ---- ----
THIS PROXY WILL, WHEN PROPERLY EXECUTED, BE VOTED AS DIRECTED HEREIN BY THE
SIGNING SHAREHOLDER. IF NO CONTRARY DIRECTION IS GIVEN WHEN THE DULY EXECUTED
PROXY IS RETURNED, THIS PROXY WILL BE VOTED FOR THE FOREGOING PROPOSAL AND WILL
BE VOTED IN THE APPOINTED PROXIES' DISCRETION UPON SUCH OTHER BUSINESS AS MAY
PROPERLY COME BEFORE THE MEETING.
9
<PAGE> 67
The undersigned acknowledges receipt with this proxy of a copy of the Notice of
Special Meeting and the Proxy Statement of the Board of Trustees. Your
signature(s) on this proxy should be exactly as your name(s) appear on this
Proxy. If the shares are held jointly, each holder should sign this Proxy.
Attorneys-in-fact, executors, administrators, trustees or guardians should
indicate the full title and capacity in which they are signing.
Dated: , 1996
----------------- --------------------------------
Signature of Shareholder
--------------------------------
Signature (Joint owners)
PLEASE DATE, SIGN AND RETURN PROMPTLY USING THE ENCLOSED ENVELOPE WHETHER OR
NOT YOU EXPECT TO ATTEND THE MEETING; YOU MAY, NEVERTHELESS, VOTE IN PERSON IF
YOU DO SO ATTEND.
10
<PAGE> 68
STEPSTONE FUNDS
LIMITED MATURITY GOVERNMENT FUND
SPECIAL MEETING OF SHAREHOLDERS
PROXY SOLICITED BY THE BOARD OF TRUSTEES FOR
THE SPECIAL MEETING OF SHAREHOLDERS, MARCH 7, 1996
The undersigned, revoking previous proxies with respect to the Shares (defined
below), hereby appoints David G. Lee and Kevin P. Robins as proxies and each of
them, each with full power of substitution, to vote at the Special Meeting of
Shareholders of the Limited Maturity Government Fund (the "Fund") of Stepstone
Funds (the "Trust") to be held in the offices of SEI Financial Management
Corporation, 680 East Swedesford Road, Wayne, Pennsylvania 19087-1658, on
Thursday, March 7, 1996, at 10:00 a.m., Eastern time, and any adjournments or
postponements thereof (the "Meeting"), all shares of beneficial interest of
said Fund that the undersigned would be entitled to vote if personally present
at the Meeting ("Shares") on the proposal set forth below and, in accordance
with their own discretion, any other matters properly brought before the
Meeting.
THE BOARD OF TRUSTEES OF THE TRUST RECOMMENDS A VOTE "FOR" THE PROPOSAL TO:
Approve the selection of Union Bank of California, N.A. ("UBOC") as
investment adviser to the Fund, and to approve the new investment advisory
agreement between the Trust, on behalf of the Fund, and UBOC.
For Against Abstain
---- ---- ----
THIS PROXY WILL, WHEN PROPERLY EXECUTED, BE VOTED AS DIRECTED HEREIN BY THE
SIGNING SHAREHOLDER. IF NO CONTRARY DIRECTION IS GIVEN WHEN THE DULY EXECUTED
PROXY IS RETURNED, THIS PROXY WILL BE VOTED FOR THE FOREGOING PROPOSAL AND WILL
BE VOTED IN THE APPOINTED PROXIES' DISCRETION UPON SUCH OTHER BUSINESS AS MAY
PROPERLY COME BEFORE THE MEETING.
11
<PAGE> 69
The undersigned acknowledges receipt with this proxy of a copy of the Notice of
Special Meeting and the Proxy Statement of the Board of Trustees. Your
signature(s) on this proxy should be exactly as your name(s) appear on this
Proxy. If the shares are held jointly, each holder should sign this Proxy.
Attorneys-in-fact, executors, administrators, trustees or guardians should
indicate the full title and capacity in which they are signing.
Dated: , 1996
----------------- --------------------------------
Signature of Shareholder
--------------------------------
Signature (Joint owners)
PLEASE DATE, SIGN AND RETURN PROMPTLY USING THE ENCLOSED ENVELOPE WHETHER OR
NOT YOU EXPECT TO ATTEND THE MEETING; YOU MAY, NEVERTHELESS, VOTE IN PERSON IF
YOU DO SO ATTEND.
12
<PAGE> 70
STEPSTONE FUNDS
MONEY MARKET FUND
SPECIAL MEETING OF SHAREHOLDERS
PROXY SOLICITED BY THE BOARD OF TRUSTEES FOR
THE SPECIAL MEETING OF SHAREHOLDERS, MARCH 7, 1996
The undersigned, revoking previous proxies with respect to the Shares (defined
below), hereby appoints David G. Lee and Kevin P. Robins as proxies and each of
them, each with full power of substitution, to vote at the Special Meeting of
Shareholders of the Money Market Fund (the "Fund") of Stepstone Funds (the
"Trust") to be held in the offices of SEI Financial Management Corporation, 680
East Swedesford Road, Wayne, Pennsylvania 19087-1658, on Thursday, March 7,
1996, at 10:00 a.m., Eastern time, and any adjournments or postponements
thereof (the "Meeting"), all shares of beneficial interest of said Fund that
the undersigned would be entitled to vote if personally present at the Meeting
("Shares") on the proposal set forth below and, in accordance with their own
discretion, any other matters properly brought before the Meeting.
THE BOARD OF TRUSTEES OF THE TRUST RECOMMENDS A VOTE "FOR" THE PROPOSAL TO:
Approve the selection of Union Bank of California, N.A. ("UBOC") as
investment adviser to the Fund, and to approve the new investment advisory
agreement between the Trust, on behalf of the Fund, and UBOC.
For Against Abstain
---- ---- ----
THIS PROXY WILL, WHEN PROPERLY EXECUTED, BE VOTED AS DIRECTED HEREIN BY THE
SIGNING SHAREHOLDER. IF NO CONTRARY DIRECTION IS GIVEN WHEN THE DULY EXECUTED
PROXY IS RETURNED, THIS PROXY WILL BE VOTED FOR THE FOREGOING PROPOSAL AND WILL
BE VOTED IN THE APPOINTED PROXIES' DISCRETION UPON SUCH OTHER BUSINESS AS MAY
PROPERLY COME BEFORE THE MEETING.
13
<PAGE> 71
The undersigned acknowledges receipt with this proxy of a copy of the Notice of
Special Meeting and the Proxy Statement of the Board of Trustees. Your
signature(s) on this proxy should be exactly as your name(s) appear on this
Proxy. If the shares are held jointly, each holder should sign this Proxy.
Attorneys-in-fact, executors, administrators, trustees or guardians should
indicate the full title and capacity in which they are signing.
Dated: , 1996
----------------- --------------------------------
Signature of Shareholder
--------------------------------
Signature (Joint owners)
PLEASE DATE, SIGN AND RETURN PROMPTLY USING THE ENCLOSED ENVELOPE WHETHER OR
NOT YOU EXPECT TO ATTEND THE MEETING; YOU MAY, NEVERTHELESS, VOTE IN PERSON IF
YOU DO SO ATTEND.
14
<PAGE> 72
STEPSTONE FUNDS
TREASURY MONEY MARKET FUND
SPECIAL MEETING OF SHAREHOLDERS
PROXY SOLICITED BY THE BOARD OF TRUSTEES FOR
THE SPECIAL MEETING OF SHAREHOLDERS, MARCH 7, 1996
The undersigned, revoking previous proxies with respect to the Shares (defined
below), hereby appoints David G. Lee and Kevin P. Robins as proxies and each of
them, each with full power of substitution, to vote at the Special Meeting of
Shareholders of the Treasury Money Market Fund (the "Fund") of Stepstone Funds
(the "Trust") to be held in the offices of SEI Financial Management
Corporation, 680 East Swedesford Road, Wayne, Pennsylvania 19087-1658, on
Thursday, March 7, 1996, at 10:00 a.m., Eastern time, and any adjournments or
postponements thereof (the "Meeting"), all shares of beneficial interest of
said Fund that the undersigned would be entitled to vote if personally present
at the Meeting ("Shares") on the proposal set forth below and, in accordance
with their own discretion, any other matters properly brought before the
Meeting.
THE BOARD OF TRUSTEES OF THE TRUST RECOMMENDS A VOTE "FOR" THE PROPOSAL TO:
Approve the selection of Union Bank of California, N.A. ("UBOC") as
investment adviser to the Fund, and to approve the new investment advisory
agreement between the Trust, on behalf of the Fund, and UBOC.
For Against Abstain
---- ---- ----
THIS PROXY WILL, WHEN PROPERLY EXECUTED, BE VOTED AS DIRECTED HEREIN BY THE
SIGNING SHAREHOLDER. IF NO CONTRARY DIRECTION IS GIVEN WHEN THE DULY EXECUTED
PROXY IS RETURNED, THIS PROXY WILL BE VOTED FOR THE FOREGOING PROPOSAL AND WILL
BE VOTED IN THE APPOINTED PROXIES' DISCRETION UPON SUCH OTHER BUSINESS AS MAY
PROPERLY COME BEFORE THE MEETING.
15
<PAGE> 73
The undersigned acknowledges receipt with this proxy of a copy of the Notice of
Special Meeting and the Proxy Statement of the Board of Trustees. Your
signature(s) on this proxy should be exactly as your name(s) appear on this
Proxy. If the shares are held jointly, each holder should sign this Proxy.
Attorneys-in-fact, executors, administrators, trustees or guardians should
indicate the full title and capacity in which they are signing.
Dated: , 1996
----------------- --------------------------------
Signature of Shareholder
--------------------------------
Signature (Joint owners)
PLEASE DATE, SIGN AND RETURN PROMPTLY USING THE ENCLOSED ENVELOPE WHETHER OR
NOT YOU EXPECT TO ATTEND THE MEETING; YOU MAY, NEVERTHELESS, VOTE IN PERSON IF
YOU DO SO ATTEND.
16
<PAGE> 74
STEPSTONE FUNDS
VALUE MOMENTUM FUND
SPECIAL MEETING OF SHAREHOLDERS
PROXY SOLICITED BY THE BOARD OF TRUSTEES FOR
THE SPECIAL MEETING OF SHAREHOLDERS, MARCH 7, 1996
The undersigned, revoking previous proxies with respect to the Shares (defined
below), hereby appoints David G. Lee and Kevin P. Robins as proxies and each of
them, each with full power of substitution, to vote at the Special Meeting of
Shareholders of the Value Momentum Fund (the "Fund") of Stepstone Funds (the
"Trust") to be held in the offices of SEI Financial Management Corporation, 680
East Swedesford Road, Wayne, Pennsylvania 19087-1658, on Thursday, March 7,
1996, at 10:00 a.m., Eastern time, and any adjournments or postponements
thereof (the "Meeting"), all shares of beneficial interest of said Fund that
the undersigned would be entitled to vote if personally present at the Meeting
("Shares") on the proposal set forth below and, in accordance with their own
discretion, any other matters properly brought before the Meeting.
THE BOARD OF TRUSTEES OF THE TRUST RECOMMENDS A VOTE "FOR" THE PROPOSAL TO:
Approve the selection of Union Bank of California, N.A. ("UBOC") as
investment adviser to the Fund, and to approve the new investment advisory
agreement between the Trust, on behalf of the Fund, and UBOC.
For Against Abstain
---- ---- ----
THIS PROXY WILL, WHEN PROPERLY EXECUTED, BE VOTED AS DIRECTED HEREIN BY THE
SIGNING SHAREHOLDER. IF NO CONTRARY DIRECTION IS GIVEN WHEN THE DULY EXECUTED
PROXY IS RETURNED, THIS PROXY WILL BE VOTED FOR THE FOREGOING PROPOSAL AND WILL
BE VOTED IN THE APPOINTED PROXIES' DISCRETION UPON SUCH OTHER BUSINESS AS MAY
PROPERLY COME BEFORE THE MEETING.
17
<PAGE> 75
The undersigned acknowledges receipt with this proxy of a copy of the Notice of
Special Meeting and the Proxy Statement of the Board of Trustees. Your
signature(s) on this proxy should be exactly as your name(s) appear on this
Proxy. If the shares are held jointly, each holder should sign this Proxy.
Attorneys-in-fact, executors, administrators, trustees or guardians should
indicate the full title and capacity in which they are signing.
Dated: , 1996
----------------- --------------------------------
Signature of Shareholder
--------------------------------
Signature (Joint owners)
PLEASE DATE, SIGN AND RETURN PROMPTLY USING THE ENCLOSED ENVELOPE WHETHER OR
NOT YOU EXPECT TO ATTEND THE MEETING; YOU MAY, NEVERTHELESS, VOTE IN PERSON IF
YOU DO SO ATTEND.
18
<PAGE> 76
STEPSTONE FUNDS
INTERNATIONAL EQUITY FUND
SPECIAL MEETING OF SHAREHOLDERS
PROXY SOLICITED BY THE BOARD OF TRUSTEES FOR
THE SPECIAL MEETING OF SHAREHOLDERS, MARCH 7, 1996
The undersigned, revoking previous proxies with respect to the Shares (defined
below), hereby appoints David G. Lee and Kevin P. Robins as proxies and each of
them, each with full power of substitution, to vote at the Special Meeting of
Shareholders of the International Equity Fund (the "Fund") of Stepstone Funds
(the "Trust") to be held in the offices of SEI Financial Management
Corporation, 680 East Swedesford Road, Wayne, Pennsylvania 19087-1658, on
Thursday, March 7, 1996, at 10:00 a.m., Eastern time, and any adjournments or
postponements thereof (the "Meeting"), all shares of beneficial interest of
said Fund that the undersigned would be entitled to vote if personally present
at the Meeting ("Shares") on the proposals set forth below and, in accordance
with their own discretion, any other matters properly brought before the
Meeting.
THE BOARD OF TRUSTEES OF THE TRUST RECOMMENDS A VOTE "FOR" THE PROPOSALS TO:
I. Approve the selection of Union Bank of California, N.A. ("UBOC") as
investment adviser to the Fund, and to approve the new investment advisory
agreement between the Trust, on behalf of the Fund, and UBOC.
For Against Abstain
---- ---- ----
II. To Approve the selection of BOT Asset Management (U.K.), Limited ("BTAM")
or its successor as the sub-adviser to a portion of the assets of the
Fund, and to approve the new sub-advisory agreement between BTAM or its
successor and UBOC, on behalf of the Fund.
For Against Abstain
---- ---- ----
THIS PROXY WILL, WHEN PROPERLY EXECUTED, BE VOTED AS DIRECTED HEREIN BY THE
SIGNING SHAREHOLDER. IF NO CONTRARY DIRECTION IS GIVEN WHEN THE DULY EXECUTED
PROXY IS RETURNED, THIS PROXY WILL BE VOTED FOR THE FOREGOING PROPOSALS AND
WILL BE VOTED IN THE APPOINTED PROXIES' DISCRETION UPON SUCH OTHER BUSINESS AS
MAY PROPERLY COME BEFORE THE MEETING.
19
<PAGE> 77
The undersigned acknowledges receipt with this proxy of a copy of the Notice of
Special Meeting and the Proxy Statement of the Board of Trustees. Your
signature(s) on this proxy should be exactly as your name(s) appear on this
Proxy. If the shares are held jointly, each holder should sign this Proxy.
Attorneys-in-fact, executors, administrators, trustees or guardians should
indicate the full title and capacity in which they are signing.
Dated: , 1996
----------------- --------------------------------
Signature of Shareholder
--------------------------------
Signature (Joint owners)
PLEASE DATE, SIGN AND RETURN PROMPTLY USING THE ENCLOSED ENVELOPE WHETHER OR
NOT YOU EXPECT TO ATTEND THE MEETING; YOU MAY, NEVERTHELESS, VOTE IN PERSON IF
YOU DO SO ATTEND.
20
<PAGE> 78
STEPSTONE FUNDS
BLUE CHIP GROWTH FUND
SPECIAL MEETING OF SHAREHOLDERS
PROXY SOLICITED BY THE BOARD OF TRUSTEES FOR
THE SPECIAL MEETING OF SHAREHOLDERS, MARCH 7, 1996
The undersigned, revoking previous proxies with respect to the Shares (defined
below), hereby appoints David G. Lee and Kevin P. Robins as proxies and each of
them, each with full power of substitution, to vote at the Special Meeting of
Shareholders of the Blue Chip Growth Fund (the "Fund") of Stepstone Funds (the
"Trust") to be held in the offices of SEI Financial Management Corporation, 680
East Swedesford Road, Wayne, Pennsylvania 19087-1658, on Thursday, March 7,
1996, at 10:00 a.m., Eastern time, and any adjournments or postponements
thereof (the "Meeting"), all shares of beneficial interest of said Fund that
the undersigned would be entitled to vote if personally present at the Meeting
("Shares") on the proposals set forth below and, in accordance with their own
discretion, any other matters properly brought before the Meeting.
THE BOARD OF TRUSTEES OF THE TRUST RECOMMENDS A VOTE "FOR" THE PROPOSALS TO:
I. Approve the selection of Union Bank of California, N.A. ("UBOC") as
investment adviser to the Fund, and to approve the new investment advisory
agreement between the Trust, on behalf of the Fund, and UBOC.
For Against Abstain
---- ---- ----
II. To Approve the selection of The Bank of Tokyo Trust Company ("BOTT") or
its successor as the sub-adviser to the Fund, and to approve the new
sub-advisory agreement between BOTT or its successor and UBOC, on behalf
of the Fund.
For Against Abstain
---- ---- ----
THIS PROXY WILL, WHEN PROPERLY EXECUTED, BE VOTED AS DIRECTED HEREIN BY THE
SIGNING SHAREHOLDER. IF NO CONTRARY DIRECTION IS GIVEN WHEN THE DULY EXECUTED
PROXY IS RETURNED, THIS PROXY WILL BE VOTED FOR THE FOREGOING PROPOSALS AND
WILL BE VOTED IN THE APPOINTED PROXIES' DISCRETION UPON SUCH OTHER BUSINESS AS
MAY PROPERLY COME BEFORE THE MEETING.
21
<PAGE> 79
The undersigned acknowledges receipt with this proxy of a copy of the Notice of
Special Meeting and the Proxy Statement of the Board of Trustees. Your
signature(s) on this proxy should be exactly as your name(s) appear on this
Proxy. If the shares are held jointly, each holder should sign this Proxy.
Attorneys-in-fact, executors, administrators, trustees or guardians should
indicate the full title and capacity in which they are signing.
Dated: , 1996
----------------- --------------------------------
Signature of Shareholder
--------------------------------
Signature (Joint owners)
PLEASE DATE, SIGN AND RETURN PROMPTLY USING THE ENCLOSED ENVELOPE WHETHER OR
NOT YOU EXPECT TO ATTEND THE MEETING; YOU MAY, NEVERTHELESS, VOTE IN PERSON IF
YOU DO SO ATTEND.
22
<PAGE> 80
STEPSTONE FUNDS
EMERGING GROWTH FUND
SPECIAL MEETING OF SHAREHOLDERS
PROXY SOLICITED BY THE BOARD OF TRUSTEES FOR
THE SPECIAL MEETING OF SHAREHOLDERS, MARCH 7, 1996
The undersigned, revoking previous proxies with respect to the Shares (defined
below), hereby appoints David G. Lee and Kevin P. Robins as proxies and each of
them, each with full power of substitution, to vote at the Special Meeting of
Shareholders of the Emerging Growth Fund (the "Fund") of Stepstone Funds (the
"Trust") to be held in the offices of SEI Financial Management Corporation, 680
East Swedesford Road, Wayne, Pennsylvania 19087-1658, on Thursday, March 7,
1996, at 10:00 a.m., Eastern time, and any adjournments or postponements
thereof (the "Meeting"), all shares of beneficial interest of said Fund that
the undersigned would be entitled to vote if personally present at the Meeting
("Shares") on the proposals set forth below and, in accordance with their own
discretion, any other matters properly brought before the Meeting.
THE BOARD OF TRUSTEES OF THE TRUST RECOMMENDS A VOTE "FOR" THE PROPOSALS TO:
I. Approve the selection of Union Bank of California, N.A. ("UBOC") as
investment adviser to the Fund, and to approve the new investment advisory
agreement between the Trust, on behalf of the Fund, and UBOC.
For Against Abstain
---- ---- ----
II. To Approve the selection of The Bank of Tokyo Trust Company ("BOTT") or
its successor as the sub-adviser to the Fund, and to approve the new
sub-advisory agreement between BOTT or its successor and UBOC, on behalf
of the Fund.
For Against Abstain
---- ---- ----
THIS PROXY WILL, WHEN PROPERLY EXECUTED, BE VOTED AS DIRECTED HEREIN BY THE
SIGNING SHAREHOLDER. IF NO CONTRARY DIRECTION IS GIVEN WHEN THE DULY EXECUTED
PROXY IS RETURNED, THIS PROXY WILL BE VOTED FOR THE FOREGOING PROPOSALS AND
WILL BE VOTED IN THE APPOINTED PROXIES' DISCRETION UPON SUCH OTHER BUSINESS AS
MAY PROPERLY COME BEFORE THE MEETING.
23
<PAGE> 81
The undersigned acknowledges receipt with this proxy of a copy of the Notice of
Special Meeting and the Proxy Statement of the Board of Trustees. Your
signature(s) on this proxy should be exactly as your name(s) appear on this
Proxy. If the shares are held jointly, each holder should sign this Proxy.
Attorneys-in-fact, executors, administrators, trustees or guardians should
indicate the full title and capacity in which they are signing.
Dated: , 1996
----------------- --------------------------------
Signature of Shareholder
--------------------------------
Signature (Joint owners)
PLEASE DATE, SIGN AND RETURN PROMPTLY USING THE ENCLOSED ENVELOPE WHETHER OR
NOT YOU EXPECT TO ATTEND THE MEETING; YOU MAY, NEVERTHELESS, VOTE IN PERSON IF
YOU DO SO ATTEND.
24
<PAGE> 82
STEPSTONE FUNDS
GOVERNMENT SECURITIES FUND
SPECIAL MEETING OF SHAREHOLDERS
PROXY SOLICITED BY THE BOARD OF TRUSTEES FOR
THE SPECIAL MEETING OF SHAREHOLDERS, MARCH 7, 1996
The undersigned, revoking previous proxies with respect to the Shares (defined
below), hereby appoints David G. Lee and Kevin P. Robins as proxies and each of
them, each with full power of substitution, to vote at the Special Meeting of
Shareholders of the Government Securities Fund (the "Fund") of Stepstone Funds
(the "Trust") to be held in the offices of SEI Financial Management
Corporation, 680 East Swedesford Road, Wayne, Pennsylvania 19087-1658, on
Thursday, March 7, 1996, at 10:00 a.m., Eastern time, and any adjournments or
postponements thereof (the "Meeting"), all shares of beneficial interest of
said Fund that the undersigned would be entitled to vote if personally present
at the Meeting ("Shares") on the proposals set forth below and, in accordance
with their own discretion, any other matters properly brought before the
Meeting.
THE BOARD OF TRUSTEES OF THE TRUST RECOMMENDS A VOTE "FOR" THE PROPOSALS TO:
I. Approve the selection of Union Bank of California, N.A. ("UBOC") as
investment adviser to the Fund, and to approve the new investment advisory
agreement between the Trust, on behalf of the Fund, and UBOC.
For Against Abstain
---- ---- ----
II. To Approve the selection of The Bank of Tokyo Trust Company ("BOTT") or
its successor as the sub-adviser to the Fund, and to approve the new
sub-advisory agreement between BOTT or its successor and UBOC, on behalf
of the Fund.
For Against Abstain
---- ---- ----
THIS PROXY WILL, WHEN PROPERLY EXECUTED, BE VOTED AS DIRECTED HEREIN BY THE
SIGNING SHAREHOLDER. IF NO CONTRARY DIRECTION IS GIVEN WHEN THE DULY EXECUTED
PROXY IS RETURNED, THIS PROXY WILL BE VOTED FOR THE FOREGOING PROPOSALS AND
WILL BE VOTED IN THE APPOINTED PROXIES' DISCRETION UPON SUCH OTHER BUSINESS AS
MAY PROPERLY COME BEFORE THE MEETING.
25
<PAGE> 83
The undersigned acknowledges receipt with this proxy of a copy of the Notice of
Special Meeting and the Proxy Statement of the Board of Trustees. Your
signature(s) on this proxy should be exactly as your name(s) appear on this
Proxy. If the shares are held jointly, each holder should sign this Proxy.
Attorneys-in-fact, executors, administrators, trustees or guardians should
indicate the full title and capacity in which they are signing.
Dated: , 1996
----------------- --------------------------------
Signature of Shareholder
--------------------------------
Signature (Joint owners)
PLEASE DATE, SIGN AND RETURN PROMPTLY USING THE ENCLOSED ENVELOPE WHETHER OR
NOT YOU EXPECT TO ATTEND THE MEETING; YOU MAY, NEVERTHELESS, VOTE IN PERSON IF
YOU DO SO ATTEND.
26
<PAGE> 84
STEPSTONE FUNDS
CONVERTIBLE SECURITIES FUND
SPECIAL MEETING OF SHAREHOLDERS
PROXY SOLICITED BY THE BOARD OF TRUSTEES FOR
THE SPECIAL MEETING OF SHAREHOLDERS, MARCH 7, 1996
The undersigned, revoking previous proxies with respect to the Shares (defined
below), hereby appoints David G. Lee and Kevin P. Robins as proxies and each of
them, each with full power of substitution, to vote at the Special Meeting of
Shareholders of the Convertible Securities Fund (the "Fund") of Stepstone Funds
(the "Trust") to be held in the offices of SEI Financial Management
Corporation, 680 East Swedesford Road, Wayne, Pennsylvania 19087-1658, on
Thursday, March 7, 1996, at 10:00 a.m., Eastern time, and any adjournments or
postponements thereof (the "Meeting"), all shares of beneficial interest of
said Fund that the undersigned would be entitled to vote if personally present
at the Meeting ("Shares") on the proposals set forth below and, in accordance
with their own discretion, any other matters properly brought before the
Meeting.
THE BOARD OF TRUSTEES OF THE TRUST RECOMMENDS A VOTE "FOR" THE PROPOSALS TO:
I. Approve the selection of Union Bank of California, N.A. ("UBOC") as
investment adviser to the Fund, and to approve the new investment advisory
agreement between the Trust, on behalf of the Fund, and UBOC.
For Against Abstain
---- ---- ----
II. To Approve the selection of The Bank of Tokyo Trust Company ("BOTT") or
its successor as the sub-adviser to the Fund, and to approve the new
sub-advisory agreement between BOTT or its successor and UBOC, on behalf
of the Fund.
For Against Abstain
---- ---- ----
THIS PROXY WILL, WHEN PROPERLY EXECUTED, BE VOTED AS DIRECTED HEREIN BY THE
SIGNING SHAREHOLDER. IF NO CONTRARY DIRECTION IS GIVEN WHEN THE DULY EXECUTED
PROXY IS RETURNED, THIS PROXY WILL BE VOTED FOR THE FOREGOING PROPOSALS AND
WILL BE VOTED IN THE APPOINTED PROXIES' DISCRETION UPON SUCH OTHER BUSINESS AS
MAY PROPERLY COME BEFORE THE MEETING.
27
<PAGE> 85
The undersigned acknowledges receipt with this proxy of a copy of the Notice of
Special Meeting and the Proxy Statement of the Board of Trustees. Your
signature(s) on this proxy should be exactly as your name(s) appear on this
Proxy. If the shares are held jointly, each holder should sign this Proxy.
Attorneys-in-fact, executors, administrators, trustees or guardians should
indicate the full title and capacity in which they are signing.
Dated: , 1996
----------------- --------------------------------
Signature of Shareholder
--------------------------------
Signature (Joint owners)
PLEASE DATE, SIGN AND RETURN PROMPTLY USING THE ENCLOSED ENVELOPE WHETHER OR
NOT YOU EXPECT TO ATTEND THE MEETING; YOU MAY, NEVERTHELESS, VOTE IN PERSON IF
YOU DO SO ATTEND.
28
