SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[x] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2)
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
The Pillar Funds
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(Name of Registrant as Specified in its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: *
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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* Set forth the amount on which the filing fee is calculated and state how it
was determined.
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid: ____________________________________
2) Form, Schedule or Registration Statement No.: ______________
3) Filing Party: ______________________________________________
4) Date Filed: ________________________________________________
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INTERNATIONAL GROWTH 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.
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.
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.
Please take a few moments to exercise your right to vote. Thank you.
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THE PILLAR FUNDS
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THE PILLAR FUNDS
INTERNATIONAL GROWTH FUND
Dear Shareholder,
A Shareholder Meeting (the "Meeting") of the International Growth Fund (the
"Fund") of The Pillar Funds (the "Trust") has been scheduled for [day], [date],
1998. If you were a shareholder of record as of the close of business on
_______________, 1998, you are entitled to vote at the Meeting or any
adjournment of the Meeting.
This Meeting is being called to request that Shareholders of the Fund approve
(i) a new investment sub-advisor and related investment sub-advisory agreement,
(ii) the restatement of the Fund's investment objective, (iii) the revision of a
fundamental investment limitation regarding the Fund's ability to acquire the
voting securities of a single issuer; and (iv) the reclassification of two
fundamental investment limitations as non-fundamental.
While you are, of course, welcome to join us at the Meeting, most shareholders
cast their votes by filling out and signing the enclosed proxy card. Whether or
not you plan to attend the meeting, we need your vote. Please mark, sign, and
date the enclosed proxy card and return it promptly in the enclosed,
postage-paid envelope so that the maximum number of shares may be voted.
The attached proxy statement is designed to give you information relating to the
proposals on which you will be asked to vote. We encourage you to support the
Trustees' recommendations. The proposals described in the proxy statement relate
to the following matters:
1. A proposal to approve the selection of Vontobel USA Inc.
("Vontobel") as investment sub-advisor to the Fund and to approve
an investment sub-advisory agreement between Summit Bank, the
investment advisor to the Fund, and Vontobel.
2. A proposal to restate the Fund's investment objective from
"long-term capital growth" to "capital appreciation."
3. A proposal to revise a fundamental limitation of the Fund to
increase, from 5% to 10%, the Fund's ability to acquire the voting
securities of any one issuer and to apply the 10% limit on the
ownership of voting securities of an issuer to 75% of the total
assets of the Fund, rather than 100% of its total assets.
4. A proposal to reclassify as "non-fundamental" a fundamental
limitation of the Fund regarding investing in companies for the
purpose of exercising control.
5. A proposal to reclassify as "non-fundamental" a fundamental
limitation of the Fund that restricts the Fund's ability to
purchase securities of issuers whose
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securities are owned by the officers, trustees, partners and
directors of the Trust or any investment advisor of the Trust.
6. To transact such other business as may properly come before the
Meeting or any adjournments thereof.
Please note that Proposal 2 is contingent on the approval of Proposal 1. That
is, Proposal 2 will only become effective if shareholders approve both Proposal
1 and Proposal 2.
Your vote is important to us. Please do not hesitate to call 1-800-________ if
you have any questions about the proposals under consideration. Thank you for
taking the time to consider these important proposals and for your investment in
The Pillar Funds.
Sincerely,
[name]
President and Chief Executive Officer
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The Pillar Funds
2 Oliver Street
Boston, MA 02109
Notice of Special Meeting of Shareholders
__________ ____, 1998
Notice is hereby given that a Special Meeting of Shareholders of the
International Growth Fund (the "Fund") of The Pillar Funds (the "Trust"), will
be held at the offices of SEI Investments Company ("SEI Investments"), One
Freedom Valley Drive, Oaks, Pennsylvania 19456, on [day], [date], 1998, at [3:30
p.m.]
At the Meeting, Shareholders of the Fund will be asked to approve (i) a
new investment sub-advisor and related investment sub-advisory agreement; (ii) a
restatement of the Fund's investment objective to seek capital appreciation;
(iii) a revision of a fundamental investment limitation that would increase the
Fund's ability to acquire the voting securities of any one issuer; and (iv) a
reclassification of two fundamental investment limitations as non-fundamental.
The specifics of these proposals, which are more fully described in the attached
Proxy Statement, are as follows:
1. To consider and vote upon a proposal to approve Vontobel USA
Inc. as investment sub-advisor to the Fund, and to approve an
investment sub-advisory agreement between Summit Bank, the
investment advisor to the Fund, and Vontobel.
2. To consider and vote upon a proposal to restate the Fund's
investment objective from "long-term capital growth" to
"capital appreciation."
3. To consider and vote upon a proposal to revise a fundamental
limitation of the Fund to increase, from 5% to 10%, the Fund's
ability to acquire the voting securities of any one issuer and
to apply the 10% limit on ownership of voting securities of an
issuer to 75% of the total assets of the Fund, rather than
100% of its total assets.
4. To consider and vote upon a proposal to reclassify as
"non-fundamental" a fundamental limitation of the Fund
regarding investing in companies for the purpose of exercising
control.
5. To consider and vote upon a proposal to reclassify as
"non-fundamental" a fundamental limitation of the Fund that
restricts the Fund's ability to purchase securities of issuers
whose securities are owned by the officers, trustees, partners
and directors of the Trust or any investment advisor of the
Trust.
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In accordance with their own discretion, the proxies are authorized to
vote on such other business as may properly come before the Meeting.
By Order Of The Board Of Trustees
/s/ Richard W. Grant
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Richard W. Grant, Secretary
All Shareholders are cordially invited to attend the Meeting. However,
if you are unable to be present at the Meeting, you are requested to mark, sign,
and date the enclosed Proxy and return it 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 ______, 1998, are
entitled to notice of and to vote at the Meeting, or any adjournment thereof.
_____________________, 1998
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PRELIMINARY COPY
The Pillar Funds
2 Oliver Street
Boston, MA 02109
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PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Trustees of The Pillar Funds (the "Trust") for use at
the Special Meeting of Shareholders to be held on [day], [date], 1998, at [3:30
p.m.], at the offices of SEI Investments Corporation ("SEI Investments"), One
Freedom Valley Drive, Oaks, Pennsylvania 19456, and at any adjourned session
thereof (such meeting and any adjournment thereof are hereinafter referred to as
the "Meeting"). Shareholders of the International Growth Fund (the "Fund") of
record at the close of business on ___________, 1998 ("Shareholders"), are
entitled to vote at the Meeting. As of ______________, 1998, the Fund had
approximately ___________ units of beneficial interest ("shares") issued and
outstanding. 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 the Fund
will vote together on the proposals.
In addition to the solicitation of proxies by mail, Trustees and
officers of the Trust and officers and employees of Summit Bank (the "Advisor"),
SEI Fund Resources and Boston Financial Data Services, the investment advisor,
administrator, and shareholder servicing agent, respectively, for the Trust, and
third parties hired for such purpose, 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 general cost of solicitation will be borne by the [Advisor.] The
proxy card and this Proxy Statement are being mailed to Shareholders on or about
____________, 1998.
Shares represented by duly executed proxy cards 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 One Freedom Valley Drive, Oaks, Pennsylvania 19456, by properly
executing a later-dated proxy card, or by attending the Meeting and voting in
person.
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INTRODUCTION
The Trust is organized as a Massachusetts business trust and is not
required to hold annual meetings of shareholders, but special meetings may be
called for purposes such as electing or removing trustees, changing fundamental
investment policies or approving an investment advisory or investment
sub-advisory agreement. The primary purpose of the Meeting is to permit the
Trust's shareholders to take action on the following proposals (each a
"Proposal" and, collectively, the "Proposals"):
Proposal 1: To consider and vote upon a proposal to approve
the selection of Vontobel USA Inc. ("Vontobel") as
investment sub-advisor to the Fund, and to approve an
investment sub-advisory agreement between the Advisor
and Vontobel.
Proposal 2: To consider and vote upon a proposal to restate the
Fund's investment objective from "long-term capital
growth" to "capital appreciation."
Proposal 3: To consider and vote upon a proposal to revise a
fundamental limitation of the Fund to increase, from
5% to 10%, the Fund's ability to acquire the voting
securities of any one issuer and to apply the 10%
limit on ownership of voting securities of an issuer
to 75% of the total assets of the Fund, rather than
100% of its total assets.
Proposal 4: To consider and vote upon a proposal to reclassify
as "non-fundamental" a fundamental limitation of the
Fund regarding investing in companies for the purpose
of exercising control.
Proposal 5: To consider and vote upon a proposal to reclassify
as "non-fundamental" a fundamental limitation of the
Fund that restricts the Fund's ability to purchase
securities of issuers whose securities are owned by
the officers, trustees, partners and directors of the
Trust or any investment advisor of the Trust.
The Meeting is being called to consider the Proposals in connection
with the proposed termination of the investment sub-advisory agreement by and
among the Trust, Summit Bank (the "Advisor") and Wellington Management Company,
L.L.C. ("WMC"). In addition to Proposal 1, the Trustees have sought Shareholder
approval to restate the Fund's investment objective to reflect more accurately
than does the current objective the method by and goals toward which Vontobel
will manage the Fund's assets. Further, should the Shareholders approve Proposal
1 the Trustees will change the name of the Fund to the "International Equity
Fund," again to more accurately reflect the way Vontobel will manage the Fund's
assets. Proposal 2 is contingent on the approval of Proposal 1. That is,
Proposal 2 will only be effective if shareholders approve both Proposal 1 and
Proposal 2.
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Shareholder approval is also being sought with respect to three of the
Fund's fundamental limitations. The revision to the first limitation would
increase the Fund's ability to acquire the voting securities of any one issuer.
The Fund's increased flexibility would remain consistent with the Investment
Company of 1940 Act's definition of a "diversified" investment company. The
Trustees have proposed that the other two fundamental limitations be
reclassified as non-fundamental. Each was originally characterized as
fundamental to satisfy requirements that certain state securities agencies
previously promulgated but that no longer apply. A "fundamental" limitation may
not be changed without the consent of the holders of a majority of the Fund's
outstanding shares, whereas a "non-fundamental" limitation may be changed by the
Trustees.
The Trust will furnish, without charge, a copy of its most recent
Annual Report (and the succeeding Semi-Annual Report) to Shareholders of the
Trust on request. Requests should be directed to the Trust at [address] or by
calling (800) [number].
With respect to each Proposal, a "vote of majority of the outstanding
voting securities" of the Fund is required, which is defined under the
Investment Company Act of 1940 (the "1940 Act") as the lesser of (i) 67% or more
of the voting securities of the Fund entitled to vote thereon present in person
or by proxy at the Meeting, if the holders of more than 50% of the outstanding
voting securities of the Fund entitled to vote thereon are present in person or
represented by proxy, or (ii) more than 50% of the outstanding voting securities
of the Fund entitled to vote thereon. Additionally, Proposal 2 is contingent on
the approval of Proposal 1.
The Board recommends that you cast your vote:
o FOR approval of the New Sub-Advisory Agreement with Vontobel;
o FOR approval of the Restatement of the Fund's Investment Objective;
o FOR approval of the Revision of the Fundamental Limitation Regarding
the Acquisition of Voting Securities of a Single Issuer;
o FOR approval of the Reclassification as "Non-Fundamental" of the
Fund's Fundamental Limitation Regarding Investing in Companies to
Exercise Control; and
o FOR approval of the Reclassification as "Non-Fundamental" of the
Fund's Fundamental Limitation Regarding Permissible Fund Investments
of certain Trust and Advisory Personnel.
All properly executed proxy cards received prior to the Meeting will be
voted at the Meeting in accordance with the instructions marked thereon.
Properly executed proxy cards received prior to the Meeting on which no vote is
indicated will be voted "FOR" the Proposals. Votes that are withheld and proxy
cards signed and returned by brokers without voting on a proposal ("broker
non-votes") will not be counted for or against the proposal, but will be counted
as votes present for purposes of determining whether a quorum is present. With
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respect to each Proposal, abstentions and broker non-votes 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 they relate. A majority of the
outstanding Shares entitled to vote must be present in person or by proxy to
have a quorum to conduct business at the Meeting.
Shareholders who execute proxy cards may revoke them at any time before
they are voted by filing with the Trust a written notice of revocation, by
delivering a duly executed proxy card bearing a later date or by attending the
Meeting and voting in person.
PROPOSAL 1 APPROVAL OF THE SELECTION OF VONTOBEL USA INC. AS INVESTMENT SUB-
ADVISOR TO THE TRUST'S INTERNATIONAL GROWTH FUND AND APPROVAL OF AN
INVESTMENT SUB-ADVISORY AGREEMENT BETWEEN SUMMIT BANK AND
VONTOBEL USA INC.
The Board of Trustees is recommending that Shareholders of the Fund
approve the selection of Vontobel as the investment sub-advisor to the Fund, and
to approve the form of investment sub-advisory agreement (the "Vontobel
Sub-Advisory Agreement") between the Advisor and Vontobel, a copy of which is
attached as Exhibit A to this Proxy Statement. The description of the
Sub-Advisory Agreement set forth in this Proxy Statement is qualified in its
entirety by reference to Exhibit A.
BACKGROUND. Summit Bank Investment Management Division, a division of
Summit Bank, serves as the investment advisor to the Trust. Summit Bank provides
investment advice to the Trust and, in conjunction with the Trustees of the
Trust, is responsible for oversight of any sub-advisors to the Trust. WMC,
located at 75 State Street, Boston, Massachusetts 02109, has acted as investment
sub-advisor to the Fund from its inception. At a meeting held on March __, 1998,
the Board of Trustees of the Trust voted to replace WMC as the investment
sub-advisor to the Fund. In addition, the Board of Trustees, subject to the
approval of the Shareholders of the Fund, approved the appointment of Vontobel
as the investment sub-advisor to the Fund, and approved the form of the Vontobel
Sub-Advisory Agreement.
The Board of Trustees of the Trust has determined that it is in the
best interest of the Trust to retain Vontobel as investment sub-advisor to the
Fund. Therefore, the Board of Trustees is recommending that the Shareholders
approve the Vontobel Sub-Advisory Agreement. On March __, 1998, the Trustees and
the Trustees who are not "interested persons" (the "Independent Trustees"), as
such term1/ is defined in the 1940 Act, by unanimous votes approved the Vontobel
Sub-Advisory Agreement. In accordance with the 1940 Act, this matter is being
submitted to the Shareholders for their approval. Approval by Shareholders
requires the affirmative vote of a majority of the outstanding shares of the
Fund as described above.
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1/ The term "Independent Trustees" as used herein means Trustees who are
not "interested persons" of the Trust within the meaning of the 1940
Act and who have no direct or indirect interest in the operation of any
of the advisory agreements or sub-advisory agreements of any Fund or
any agreements relating thereto.
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COMPARISON OF THE FUND'S CURRENT POLICIES AND PROPOSED POLICIES. If the
Shareholders approve Vontobel as the Fund's sub-advisor, the Trustees will
revise the Fund's investment policies to reflect Vontobel's investment
philosophy. The following table highlights the differences between the Fund's
current investment policies and the proposed investment policies.
<TABLE>
<CAPTION>
Current Policies Proposed Policies
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<S> <C> <C>
Diversification The Fund is non-diversified and may, therefore, The Fund would become a broadly
concentrate its portfolio investments in a relatively diversified portfolio.
small number of issuers.
Country The Fund invests in securities of issuers in at least The Fund, under normal circumstances,
Allocation three countries other than the United States. The Fund would invest primarily in equity
may also invest up to 25% of its assets in securities securities of issuers located in
of issuers from countries that are considered to be European and Pacific Basin countries.
"lesser-developed countries" by the international The Fund would diversify investments
financial community. among countries and would normally
invest in issuers that have business
activities in at least three different
countries. The Fund would invest most
of its assets in the equity securities
of issuers located in countries which
are generally considered to have
developed markets, although investments
could also be made in equities issued
by companies in "developing countries"
or "emerging markets."
Equity The Fund normally invests at least 65% of its total The Fund would invest, under normal
Securities assets in the following equity securities of non-U.S. conditions, substantially all of its assets
issuers: common stocks, warrants to purchase in equity securities of non-U.S. issuers.
common stocks, debt securities and preferred stocks
convertible into common stocks and depositary
receipts (collectively, "equity securities").
Debt The Fund may invest up to 35% of its assets in The Fund would invest in foreign debt
Securities foreign government debt securities and securities securities primarily for temporary defensive
issued by supranational agencies. purposes.
Investment The Fund may invest up to 10% of its assets in The Fund would be able to invest in the
Company closed-end investment companies that invest in the shares of open-end and closed-end investment
Shares securities of issuers in a single country or region. companies that acquire equity securities of
foreign issuers in which the Fund may
invest.
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Derivatives The Fund may engage in currency transactions for The Fund would be able to invest in forward contracts to
hedging purposes. Currency transactions include purchase or sell foreign currencies, purchase and write
forward currency contracts, exchange-listed and covered call options on foreign currencies and enter into
OTC currency futures contracts and options on foreign currency futures contracts. The Fund would use
futures contracts, exchange-listed and OTC options these derivative transactions for: hedging securities
on currencies, and currency swaps. The Fund may market or currency exchange rate fluctuations; as a
employ certain hedging, income enhancement and temporary substitute for purchasing or selling particular
risk management techniques, including the purchase securities; or as a means to efficiently changing country
and sale of exchange-listed and OTC options, and/or currency allocation. The Fund could also use
futures and options on futures involving equity and derivative transactions to enhance potential gains,
debt securities, aggregates of equity and debt although no more than 5% of the Fund's assets would be
securities, and other financial indices. The Fund committed to futures and options on futures entered into
may write options and invest in futures only on a for non-hedging purposes.
covered basis.
Temporary The Fund may invest in short-term U.S. Government The Fund would be able to invest up to 100% of its assets
Defensive obligations, obligations issued or guaranteed by the in U.S. Government securities, bonds, certificates of
Positions agencies and instrumentalities of the U.S. deposits and repurchase agreements. In addition, the
Government and securities of foreign governments; Fund could hold cash or debt obligations denominated in
custodial receipts evidencing separately traded U.S. dollars or foreign currencies.
interest and principal components of securities
issued by the U.S. Treasury; short-term corporate
securities in the highest rating category by an
NRSRO or determined by the Advisor or WMC to
be comparable quality at the time of purchase; short-
term bank obligations or U.S. or foreign commercial
banks with assets of at least $1 billion as of the end
of their most recent fiscal year; Eurocurrency
instruments and securities; and repurchase
agreements involving such securities.
</TABLE>
TRUSTEES' CONSIDERATIONS. The Trustees of the Trust, including all of
the Independent Trustees, approved the selection of Vontobel as investment
adviser to the Fund and the general form of the Vontobel Sub-Advisory Agreement
with respect to the Fund at a Special Board meeting held on March __, 1998. The
Trustees received written and oral information from both the Advisor and
Vontobel at the March __ meeting as well as at the Trust's February 19, 1998
regular quarterly Board meeting. The Advisor recommended the selection of
Vontobel and reviewed the considerations and the search process that had led to
the recommendation. The Trustees also met with representatives of Vontobel and
considered information about key personnel, investment philosophy and process
and performance track record, among other factors. In recommending that the
Shareholders approve the Investment Sub-Advisory Agreement, the Trustees
carefully evaluated the investing experience of Vontobel's key personnel and the
quality of services that Vontobel can be expected to provide to the Fund,
including, but not limited to, (1) the fee and expense ratios of comparable
mutual funds; (2) the fact that the compensation payable to Vontobel by the Fund
under the proposed Vontobel Sub-Advisory Agreement will be at the same rate as
the compensation payable to the existing sub-advisor; (3) the performance of the
Fund since commencement of operations; (4) Vontobel's performance record; (5)
the current and proposed investment objective and policies of the Fund; (6) the
nature and quality of the services expected to be rendered to the Fund by
Vontobel; (7) the history, reputation, qualification and background of
Vontobel's personnel and its financial condition; and (8) other factors deemed
relevant. The Trustees also considered the impact of
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Vontobel's investment philosophy on the Fund and, in particular, the commission
charges the Fund would incur (approximately $75,000) to reconstitute its
investment portfolio to coincide with Vontobel's investment philosophy. The
Trustees also reviewed the fees to be paid to Vontobel in comparison to those
being charged in the relevant segment of the mutual fund business, including any
benefits received by Vontobel or its affiliates in connection with soft dollars
payments.
INFORMATION ABOUT THE ADVISOR. The Advisor's principal business address
is 210 Main Street, Hackensack, New Jersey 07601. Under an investment advisory
agreement between the Trust and the Advisor (the "Advisory Agreement") dated
April 28, 1996, the Advisor is responsible for the investment decisions of the
Fund, subject to the supervision and direction of the Board of Trustees. The
Adviser has delegated these responsibilities, subject to its supervision to a
sub-advisor. In this instance, the Advisor recommends the selection of Vontobel
as the new investment sub-advisor to the International Growth Fund and
recommends that the Shareholders vote to approve the Vontobel Sub-Advisory
Agreement.
Neither the Advisory Agreement nor the fees to which the Advisor is
entitled under the Advisory Agreement will change as a consequence of the
Vontobel Sub-Advisory Agreement. Pursuant to the Advisory Agreement, the Advisor
pays any sub-advisor fees out of its advisory fees. For the services provided
and expenses assumed pursuant to the Advisory Agreement, the Advisor is entitled
to receive a monthly fee at the annual rate of 1.00% of the Fund's average daily
net assets. The Advisor retains only the net amount of the foregoing investment
management fees that remains after its advisory fee waivers and after the
Advisor pays the Fund's investment sub-advisor the investment management fees to
which the sub-advisor is entitled as described on the following pages. During
the fiscal year ended December 31, 1997, $129,000 in advisory fees was paid by
the Fund to Summit Bank, of which $_______ was paid by Summit Bank to WMC.
Additional information about the Advisor is set forth under "General Information
About the Trust and Other Matters -- The Advisor."
REASON FOR TERMINATION OF THE WMC AGREEMENT. The Trust, the Advisor and
WMC are parties to the current investment sub-advisory agreement (the "WMC
Agreement"), which is dated April 28, 1996. The Board of Trustees last approved
the WMC Agreement on an interim basis at the Board Meeting held February 19,
1998, and it was last approved by consent of the sole shareholder of the Fund on
[date] for the purpose of approving WMC as the Fund's investment sub-advisor. At
the special meeting held March , 1998, the Board of Trustees voted to replace
WMC as the investment sub-advisor to the Fund, subject to Shareholder approval.
The Board of Trustees is recommending replacing WMC with Vontobel because the
Board believes that Vontobel's investment process and style are more suitable
for the Fund's Shareholders.
After consideration of possible alternative investment sub-advisors,
the Board of Trustees selected Vontobel in light of the experience and
qualifications of its personnel, the depth of its other resources, its
investment philosophy and process and its consistently strong investment
performance. In particular, the Board gave significant weight to Vontobel's
performance history and its practice of investing in a broadly diversified
selection of foreign equity securities. See "Description of Vontobel" below for
more information.
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COMPARISON OF THE VONTOBEL SUB-ADVISORY AGREEMENT AND THE WMC
AGREEMENT. A copy of the form of the Vontobel Sub-Advisory Agreement is attached
as Exhibit A to this Proxy Statement. The following discussion of the Vontobel
Sub-Advisory Agreement is qualified in its entirety by reference to Exhibit A.
The Vontobel Sub-Advisory Agreement differs from the WMC Agreement (the
"Agreements") in a number of respects, including the number of parties to the
agreement, the terminology used to describe the sub-advisor's duties to execute
transactions, and the termination provisions. The WMC Agreement is a "tri-party"
agreement by and among the Trust, the Advisor and WMC. In contrast, the two
parties to the Vontobel sub-advisory agreement would be the Advisor and
Vontobel. Although the Fund would not be a party to the Vontobel Sub-Advisory
Agreement, the Agreement provides the Fund with certain powers as required by
the 1940 Act. The Vontobel Sub-Advisory Agreement specifically provides that the
agreement will continue only if approved by the Trustees and that the Fund may
terminate the agreement at any time and without penalty by the vote of the
Trustees or by vote of a majority of the outstanding voting securities of the
Fund.
The terminology of the Agreements also differs slightly with respect to
a sub-advisor's duties to execute transactions. In particular, the Vontobel
Sub-Advisory Agreement directs the sub-advisor, when executing transactions and
selecting brokers or dealers, to use its best efforts to seek on behalf of the
Fund the "best overall terms available." In contrast, the WMC Agreement directs
the sub-advisor to "secure the most favorable price and efficient execution."
Although the two phrases express the idea that the sub-advisor should make the
selection that it determines is most beneficial to the Fund, the Vontobel
Sub-Advisory Agreement permits the sub-advisor to take into account various
factors, such as the price, commission, if any, size of the transactions and
difficulty of execution, the firm's general execution and operational facilities
and the firm's risk in positioning the securities involved.
The termination provisions also differ between the Agreements. The WMC
Agreement provides that each party to the Agreement can terminate it at any time
upon 60 days' notice to the other parties. In contrast, under the Vontobel
Sub-Advisory Agreement, the Fund may terminate the agreement at any time and
without penalty by the vote of the Trustees or by vote of a majority of the
outstanding voting securities of the Fund. Additionally, the Advisor may
terminate the agreement upon not more than 60 days' nor less than 30 days'
written notice to Vontobel and Vontobel may terminate the agreement upon not
less than 90 days' written notice to the Advisor. The termination provisions of
the Vontobel Sub-Advisory Agreement are discussed more fully below.
DUTIES UNDER THE VONTOBEL SUB-ADVISORY AGREEMENT. Under the Vontobel
Sub-Advisory Agreement, Vontobel will, subject to the supervision and direction
of the Board of Trustees and the Advisor, make investment decisions, place
purchase and sell orders and provide record-keeping services and statistical
information to the Fund. In connection therewith, Vontobel will, among other
things, supervise the Fund's investments and conduct a continual program of
investment, evaluation and, if appropriate, sale and reinvestment of the Fund's
assets. The Vontobel Sub-Advisory Agreement provides that Vontobel shall not be
protected against any liability to the Fund by reason of willful misfeasance,
bad faith or gross negligence on its part in
<PAGE>
the performance of its duties or from reckless disregard by the sub-advisor of
its obligations or duties thereunder.
DURATION AND TERMINATION. Unless earlier terminated, the Vontobel
Sub-Advisory Agreement would continue in effect until the second anniversary of
its effective date, and thereafter, for periods of one year for so long as such
continuance is specifically approved at least annually (i) by vote of the Board
of Trustees or by vote of a majority of the outstanding voting securities of the
Fund, and (ii) by vote of a majority of the Independent Trustees of the Trust,
cast in person at a meeting called for the purpose of voting on such approval.
The Vontobel Sub-Advisory Agreement is terminable at any time without penalty by
(i) the Fund by a vote of a majority of the Trustees of the Trust or by the vote
of a majority of the outstanding voting securities of the Fund; (ii) the Advisor
upon not more than 60 days' nor less than 30 days' written notice to Vontobel;
and (iii) by Vontobel upon not less than 90 days' written notice to the Advisor.
The Vontobel Sub-Advisory Agreement will automatically and immediately terminate
in the event of its assignment as defined in the 1940 Act or in the event of a
termination of the Advisor's agreement with the Trust.
In the event the Shareholders do not approve the adoption of the
Vontobel Sub-Advisory Agreement, the Board of Trustees will promptly consider
what further action to take, which may include hiring a different investment
sub-advisor for the Fund or retaining WMC as the Fund's investment sub-advisor
in the manner and to the extent permitted by the 1940 Act and the rules and the
exemptions adopted by the Securities and Exchange Commission (the "Commission")
thereunder.
COMPENSATION. Under the proposed Vontobel Sub-Advisory Agreement, the
Advisor will pay Vontobel a fee, which is calculated daily and paid monthly,
based on the annual percentage rate of .60% of the average daily net assets of
the Fund up to and including $50 million; .45% of the average daily net assets
of the Fund in excess of $50 million up to and including $150 million; and .30%
of the average daily net assets of the Fund in excess of $150 million. This fee
structure is the same as that under the WMC Sub-Advisory Agreement.
DESCRIPTION OF VONTOBEL. Vontobel is a wholly owned subsidiary of
Vontobel Holding Ltd., and an affiliate of Bank J. Vontobel & Co., Ltd., one of
the largest private banks and brokerage firms in Switzerland. Its principal
place of business is located at 450 Park Avenue, New York, New York 10022. As of
December 31, 1997, Vontobel managed assets of over $1.9 billion, a substantial
part of which was invested outside of the United States. The Vontobel group of
companies has investments in excess of $30 billion under management.
If Proposal 1 is approved, Mr. Fabrizio Pierallini, who is a Vice
President of Vontobel, will become the portfolio manager for the Fund. Mr.
Pierallini has been a portfolio manager with Vontobel since 1994. He is
currently in charge of portfolio management and research for Vontobel's
international and emerging market equity portfolios. From 1991 to 1994, Mr.
Pierallini was an Associate-Director/Portfolio Manager with Swiss Bank
Corporation in New York where he was responsible for, among other things,
international asset allocation. If Proposal 1 is approved, Mr. Rajiv Jain, who
is currently a Vice President of Vontobel, will become an associate portfolio
manager of the Fund. He joined Vontobel in
<PAGE>
1994 and serves as an associate portfolio manager for an international equity
fund and an emerging markets fund. From 1993 to 1994, Mr. Jain worked as an
analyst with Swiss Bank Corporation.
Listed below are the names, addresses, and principal occupations of the
directors and the principal executive officer of Vontobel. The principal
business address of each director and the principal executive officer, as it
relates to their duties at Vontobel is 450 Park Avenue, New York, New York
10022.
<TABLE>
<CAPTION>
Name Principal Occupation
<S> <C>
Dr. Wolfhard Graetz Chairman, Vontobel USA Inc.; Chief Executive Officer, Vontobel Asset
Management Ltd.; Chairman, Tardy, de Watteville; Chairman, Vontobel
Fund Management.
Dr. Hans-Dieter Vontobel Deputy Chairman, Vontobel USA Inc., Chairman, Vontobel Holding
Ltd., Chairman, Vontobel Asset Management Ltd.
Heinrich Schlegel Director, President, and Chief Executive Officer, Vontobel USA Inc.,
Director, Vontobel Funds, Inc.
</TABLE>
Vontobel currently provides investment services to the following
investment companies having an investment objective similar to the Fund's
investment objective. Vontobel provided these services pursuant to the fee
arrangements described below as of December 31, 1997. Vontobel was waiving, as
of the date of this Proxy Statement, some or all of the fees payable by certain
of the portfolios listed below. These waivers are not reflected in the table.
<TABLE>
<CAPTION>
Amount of Assets Under Rate of Compensation (as a percentage of
Name of Investment Company Management average daily net assets.
<S> <C> <C>
Penn Series Funds, Inc.'s $ 0.75%
International Equity Fund
Vontobel International Equity Fund $160,937,272 1.00% on first $100 million; 0.75% on
assets over $100 million
</TABLE>
THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS VOTE FOR PROPOSAL 1.
--------------------
PROPOSAL 2 APPROVAL OF RESTATEMENT OF THE INTERNATIONAL GROWTH FUND'S
INVESTMENT OBJECTIVE FROM "LONG-TERM CAPITAL GROWTH" TO "CAPITAL
APPRECIATION."
The Trustees of the Trust have determined that it would be in the best
interest of the Fund and its Shareholders to restate the Fund's investment
objective. The investment objective of the Fund is currently stated as follows,
the Fund seeks "long-term capital growth." It is proposed
<PAGE>
that the investment objective of the Fund be changed to read as follows, the
Fund seeks "capital appreciation."
The proposed change in the stated investment objective of the Fund is
intended to accurately reflect the manner in which Vontobel would manage the
Fund. Vontobel intends to use a "top-down" country allocation approach that
would be combined with a "bottom-up" stock selection process. Vontobel would
seek to identify countries where economic and political factors are likely to
provide above average returns, and companies in such countries that are best
positioned in their respective industries and are attractively valued. While the
two stated investment objectives correlate closely, the proposed change would
avoid potential confusion as to whether the Fund would seek to achieve its
objective by investing primarily in "growth" companies.
Required Vote
The change in investment objective of the Fund requires the affirmative
vote of a majority of the outstanding shares of the Fund. If this proposal is
approved by the Shareholders at the Meeting, the Fund's prospectus and statement
of additional information will be amended or supplemented in due course in order
to reflect the change in the investment objective. If the proposal is not
approved, the investment objective as currently stated will remain in effect.
Proposal 2 is contingent on shareholder approval of Proposal 1. That is,
Proposal 2 will only become effective in Shareholders approve both Proposal 1
and Proposal 2. If Proposal 2 fails to become effective, the Portfolio's
investment objective will remain unchanged.
THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS VOTE FOR PROPOSAL 2.
--------------------
PROPOSALS 3, 4 AND 5
Proposals 3 through 5 relate to changes to the fundamental investment
policies of the Fund. The Board of Trustees of the Trust recommends the
modification or elimination of some of the Fund's fundamental policies to
reflect, in the case of two of the limitations, changes in the law and other
regulatory developments and to provide the Fund with flexibility to adapt to
developments in the securities markets. The changes to the Fund's fundamental
policies will become effective immediately upon Shareholder approval. If a
Proposal is not approved by a vote of Shareholders of the Fund, the current
policy as applied to the Fund will remain unchanged.
--------------------
PROPOSAL 3: APPROVAL OF REVISION OF A FUNDAMENTAL LIMITATION
OF THE FUND TO INCREASE, FROM 5% TO 10%, THE FUND'S
ABILITY TO ACQUIRE THE VOTING SECURITIES OF ANY ONE
ISSUER AND TO APPLY THE 10% LIMIT ON OWNERSHIP OF
VOTING SECURITIES OF AN ISSUER TO 75% OF THE TOTAL
ASSETS OF THE FUND, RATHER THAN 100% OF ITS TOTAL
ASSETS.
<PAGE>
The Trustees of the Trust have determined that it would be in the best
interest of the Fund and its Shareholders to revise the Fund's fundamental
limitation which prohibits the Fund from acquiring more than 5% of the
outstanding voting securities of any one issuer. The proposed limitation would
replace the 5% limit that applies to 100% of the Fund's assets with a 10% limit,
which would apply to 75% of the Fund's assets. The revised policy will also
clarify that the securities issued or guaranteed by the U.S. Government, its
agencies or instrumentalities are not subject to the limitation. The Fund's
current investment policy states:
The Fund may not acquire more than 5% of the voting securities of any
one issuer.
Subject to Shareholder approval, the Trust intends to replace the
Fund's current fundamental policy with the following:
The Fund may not, with respect to 75% of the Fund's assets, acquire
more than 10% of any class of the outstanding voting securities of any
one issuer (other than obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities).
As revised, this policy will conform to the diversification
requirements of the 1940 Act. If Proposal 3 is approved, the Fund would be
required to invest 75% of its total assets so that the Fund owned no more than
10% of the voting securities of any one issuer. The current limitation applies
to all of the Fund's assets, but under the amended limitation would apply only
to 75% of the Fund's assets. As to the remaining 25% of total assets, there
would be no direct limitation on the amount of voting securities of a single
issuer that the Fund could hold. Having increased flexibility to acquire larger
positions in the securities of individual issuers may provide opportunities to
enhance the Fund's performance. At the same time, investing a larger percentage
of a the Fund's assets in a single issuer's securities increases the Fund's
exposure to risks associated with that issuer's financial condition and business
operations, including market risk and the risk of bankruptcy or default.
Adoption of Proposal 3 is not expected to affect, in the foreseeable future, the
way in which the Fund is managed, the investment performance of the Fund, or the
instruments in which it invests.
If Proposal 3 is approved, the new fundamental limitation may not be
changed without a vote of Shareholders of the Fund.
THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS VOTE FOR PROPOSAL 3.
--------------------
PROPOSAL 4 APPROVAL OF RECLASSIFICATION AS "NON-FUNDAMENTAL" OF A
FUNDAMENTAL LIMITATION OF THE FUND REGARDING THE INVESTING IN
COMPANIES FOR THE PURPOSE OF EXERCISING CONTROL.
The Trustees of the Trust have determined that it would be in the best
interest of the Fund and its Shareholders to reclassify as non-fundamental the
Fund's policy that states that the Fund may not invest in companies for the
purpose of exercising control. The policy was originally characterized as
fundamental to satisfy certain state law requirements that were recently
<PAGE>
superseded by federal law. Adoption of the proposed policy is not expected to
affect, in the foreseeable future, the manner in which the Fund is managed, the
investment performance of the Fund, or the instruments in which it invests.
However, a "fundamental" limitation may not be changed without the consent of
the holders of a majority of the Fund's outstanding shares, whereas a
"non-fundamental" limitation may be changed by the Trustees.
Accordingly, the Trust proposes to change the policy from a fundamental
policy to a non-fundamental policy to give the Board of Trustees the flexibility
to change the policy in the future as it deems appropriate in the interest of
investors in the Fund.
THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS VOTE FOR PROPOSAL 4.
--------------------
PROPOSAL 5 APPROVAL OF RECLASSIFICATION AS "NON-FUNDAMENTAL" OF A
FUNDAMENTAL LIMITATION OF THE INTERNATIONAL GROWTH FUND THAT
RESTRICTS THE FUND'S ABILITY TO PURCHASE SECURITIES OF ISSUERS WHOSE
SECURITIES ARE OWNED BY THE OFFICERS, TRUSTEES, PARTNERS AND
DIRECTORS OF THE TRUST OR ANY INVESTMENT ADVISOR OF THE TRUST.
The Trustees of the Trust have determined that it would be in the best
interest of the Fund and its Shareholders to reclassify as non-fundamental the
Fund's policy that states that the Fund may not purchase or retain securities of
an issuer if, to the knowledge of the Trust, an officer, trustee, partner or
director of the Trust or any investment advisor of the Trust owns beneficially
more than 1/2 of 1% of the shares or securities of such issuer and all such
officers, trustees, partners and directors owning more than 1/2 of 1% of such
shares or securities together own more than 5% of such shares or securities. The
policy was originally characterized as fundamental to satisfy certain state law
requirements that were recently superseded by federal law. Adoption of the
proposed policy is not expected to affect, in the foreseeable future, the manner
in which the Fund is managed, the investment performance of the Fund, or the
instruments in which it invests. However, a "fundamental" limitation may not be
changed without the consent of the holders of a majority of the Fund's
outstanding shares, whereas a "non-fundamental" limitation may be changed by the
Trustees.
Accordingly, the Trust proposes to change the policy from a fundamental
policy to a non-fundamental policy to give the Board of Trustees the flexibility
to change the policy in the future as it deems appropriate in the interest of
investors in the Fund.
THE TRUSTEES RECOMMEND THAT THE SHAREHOLDER VOTE FOR PROPOSAL 5.
--------------------
GENERAL INFORMATION ABOUT THE TRUST AND OTHER MATTERS
TRUSTEES AND OFFICERS OF THE TRUST.
<PAGE>
The Trust's Trustees and officers beneficially own less than 1% of the
shares of the Trust. The following Trustees owned shares of the Fund as of
[date]:
<TABLE>
<CAPTION>
Name Number of Shares Nature of Beneficial Ownership
<S> <C> <C>
</TABLE>
THE ADVISOR. Summit Bank Investment Management Division, a division of
Summit Bank (the "Advisor"), serves as the investment advisor to the Trust.
Summit Bank was chartered in 1899 and has been exercising trust powers and
managing money since 1916. The Investment Management Division began as a
separate operating division of the Bank in 1973. The Bank's investment
professionals have, on average, over 20 years of experience in investment
management. As of December 31, 1997, total assets under management were
approximately $___ billion.
Summit Bank is a wholly-owned subsidiary of Summit Bancorp., an
interstate bank holding company with almost $30 billion in assets and over 420
banking offices, predominantly in New Jersey and eastern Pennsylvania, as of
December 31, 1997. Additional information about the Advisor is set forth under
"Proposal 1 -- Information About the Advisor."
DISTRIBUTION. SEI Investments Distribution Co. (the "Distributor"), a
wholly-owned subsidiary of SEI Investments, Oaks, Pennsylvania 19456, acts as
the distributor of the Trust's shares pursuant to a distribution agreement dated
February 28, 1992, as amended May 25, 1993, between the Trust and the
Distributor.
PORTFOLIO TRANSACTIONS. During the Trust's fiscal year ended December
31, 1997, the Fund paid the following amounts in brokerage commissions to
affiliates.
<TABLE>
<CAPTION>
Total Brokerage Amounts Paid to Affiliated Percent Paid to Affiliated
Commissions Brokers Brokers
<S> <C> <C>
</TABLE>
5% SHAREHOLDERS. As of _____________________, 1998, the following
persons were the only persons who were, to the knowledge of the Trust,
beneficial owners of 5% or more of the shares of the Fund.
<TABLE>
<CAPTION>
Name and Address of
Beneficial Owner Number of Shares Percentage of Fund's shares
<S> <C> <C>
</TABLE>
ADJOURNMENT. In the event that sufficient votes in favor of a
Proposal(s) 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
<PAGE>
the Proposal(s). 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 with which they are entitled to vote in favor
of the Proposal(s). They will vote against any such adjournment those proxies
required to be voted against the Proposal(s). The costs of any such additional
solicitation and of any adjourned session will be borne by the Trust.
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 Investments Company, Legal Department, Oaks,
Pennsylvania 19456.
OTHER MATTERS. The Trustees know of no other business to be brought
before the Meeting. However, if any other matters promptly come before the
Meeting, it is their intention that proxies which do not contain specific
resolutions 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.
<PAGE>
EXHIBIT A
FORM OF
INVESTMENT SUB-ADVISORY AGREEMENT
AGREEMENT made this ____ day of _________, 1998, between Summit Bank
Investment Management Division, a division of Summit Bank (the "Advisor") and
Vontobel USA Inc. (the "Sub-Advisor").
WHEREAS, The Pillar Funds, a Massachusetts business trust (the
"Trust"), is registered as an open-end management investment company under the
Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Advisor has entered into an Investment Advisory Agreement
dated April 28, 1995 (the "Advisory Agreement") with the Trust, pursuant to
which the Advisor will act as investment advisor to the investment portfolio
identified on Schedule A hereto (the "Fund"), which is a series of the Trust;
and
WHEREAS, the Advisor, with the approval of the Trust, desires to retain
the Sub-Advisor to provide investment advisory services to the Advisor in
connection with the management of the Fund, and the Sub-Advisor is willing to
render such investment advisory services.
NOW, THEREFORE, the parties hereto agree as follows:
1. DUTIES OF THE SUB-ADVISOR. Subject to supervision by the Advisor and
the Trust's Board of Trustees, the Sub-Advisor shall manage all of the
securities and other assets of the Fund entrusted to it hereunder (the
"Assets"), including the purchase, retention and disposition of the
Assets, in accordance with the Fund's investment objective, policies
and restrictions as stated in the Fund's prospectus and statement of
additional information, as currently in effect and as amended or
supplemented from time to time (referred to collectively as the
"Prospectus"), and subject to the following:
(a) The Sub-Advisor shall, in consultation with and subject to the
direction of the Advisor, determine from time to time what Assets will
be purchased, retained or sold by the Fund, and what portion of the
Assets will be invested or held uninvested in cash.
(b) In the performance of its duties and obligations under this
Agreement, the Sub-Advisor shall act in conformity with the Trust's
Declaration of Trust (as defined herein) and the Prospectus and with
the instructions and directions of the Advisor and of the Board of
Trustees of the Trust and will conform to and comply with the
requirements of the 1940 Act, the Internal Revenue Code of 1986, and
all other applicable federal and state laws and regulations, as each is
amended from time to time.
(c) The Sub-Advisor shall determine the Assets to be purchased or sold
by the Fund as provided in subparagraph (a) and will place orders with
or through such persons, brokers or dealers to carry out the policy
with respect to brokerage set forth in the Fund's Registration
A-1
<PAGE>
Statement (as defined herein) and Prospectus or as the Board of
Trustees or the Advisor may direct from time to time, in conformity
with federal securities laws. In executing Fund transactions and
selecting brokers or dealers, the Sub-Advisor will use its best efforts
to seek on behalf of the Fund the best overall terms available. In
assessing the best overall terms available for any transaction, the
Sub-Advisor shall consider all factors that it deems relevant,
including the breadth of the market in the security, the price of the
security, the financial condition and execution capability of the
broker or dealer, and the reasonableness of the commission, if any,
both for the specific transaction and on a continuing basis. In
evaluating the best overall terms available, and in selecting the
broker-dealer to execute a particular transaction, the Sub-Advisor may
also consider the brokerage and research services provided (as those
terms are defined in Section 28(e) of the Securities Exchange Act of
1934). Consistent with any guidelines established by the Board of
Trustees of the Trust, the Sub-Advisor is authorized to pay to a broker
or dealer who provides such brokerage and research services a
commission for executing a Fund transaction for the Fund which is in
excess of the amount of commission another broker or dealer would have
charged for effecting that transaction if, but only if, the Sub-Advisor
determines in good faith that such commission was reasonable in
relation to the value of the brokerage and research services provided
by such broker or dealer -- viewed in terms of that particular
transaction or terms of the overall responsibilities of the Sub-Advisor
to the Fund. In addition, the Sub-Advisor is authorized to allocate
purchase and sale orders for securities to brokers or dealers
(including brokers and dealers that are affiliated with the Advisor,
Sub-Advisor or the Trust's principal underwriter) to take into account
the sale of shares of the Trust if the Sub-Advisor believes that the
quality of the transaction and the commission are comparable to what
they would be with other qualified firms. In no instance, however, will
the Fund's Assets be purchased from or sold to the Advisor,
Sub-Advisor, the Trust's principal underwriter, or any affiliated
person of either the Trust, Advisor, the Sub-Advisor or the principal
underwriter, acting as principal in the transaction, except to the
extent permitted by the Securities and Exchange Commission ("SEC") and
the 1940 Act.
(d) The Sub-Advisor shall maintain all books and records with respect
to transactions involving the Assets required by subparagraphs (b)(5),
(6), (7), (9), (10) and (11) and paragraph (f) of Rule 31a-1 under the
1940 Act. The Sub-Advisor shall provide to the Advisor or the Board of
Trustees such periodic and special reports, balance sheets or financial
information, and such other information with regard to its affairs as
the Advisor or Board of Trustees may reasonably request.
The Sub-Advisor shall keep the books and records relating to the Assets
required to be maintained by the Sub-Advisor under this Agreement and
shall timely furnish to the Advisor all information relating to the
Sub-Advisor's services under this Agreement needed by the Advisor to
keep the other books and records of the Fund required by Rule 31a-1
under the 1940 Act. The Sub-Advisor shall also furnish to the Advisor
any other information relating to the Assets that is required to be
filed by the Advisor or the Trust with the SEC or sent to shareholders
under the 1940 Act (including the rules adopted thereunder) or any
exemptive or other relief that the Advisor or the Trust obtains from
the SEC. The Sub-Advisor agrees that all records that it maintains on
behalf of the Fund are property of the Fund and the Sub-Advisor will
surrender promptly to the Fund any of such records upon the Fund's
request;
A-2
<PAGE>
provided, however, that the Sub-Advisor may retain a copy of such
records. In addition, for the duration of this Agreement, the
Sub-Advisor shall preserve for the periods prescribed by Rule 31a-2
under the 1940 Act any such records as are required to be maintained by
it pursuant to this Agreement, and shall transfer said records to any
successor sub-advisor upon the termination of this Agreement (or, if
there is no successor sub-advisor, to the Advisor).
(e) The Sub-Advisor shall report regularly to the Advisor and will make
appropriate persons available for the purpose of reviewing at
reasonable times with representatives of the Advisor and the Board of
Trustees of the Trust 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,
interest rate considerations and general conditions affecting the
marketplace and will provide various other reports from time to time as
reasonably requested by the Advisor;
(f) The Sub-Advisor shall treat confidentially and as proprietary
information of the Trust all such records and other information
relative to the Trust maintained by the Sub-Advisor, 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 the
Sub-Advisor may be exposed to civil or criminal contempt proceeding for
failure to comply, when requested to divulge such information by duly
constituted authorities, or when so requested by the Trust.
(g) The Sub-Advisor shall provide the Fund's custodian on each business
day with information relating to all transactions concerning the Fund's
Assets and shall provide the Advisor with such information upon request
of the Advisor.
(h) The investment management services provided by the Sub-Advisor
under this Agreement are not to be deemed exclusive and the Sub-Advisor
shall be free to render similar services to others, as long as such
services do not impair the services rendered to the Advisor or the
Trust.
(i) The Sub-Advisor shall promptly notify the Advisor of any financial
condition that is likely to impair the Sub-Advisor's ability to fulfill
its commitment under this Agreement.
(j) The Sub-Advisor shall review all proxy solicitation materials and
be responsible for voting and handling all proxies in relation to the
securities held in the Fund. The Advisor shall instruct the custodian
and other parties providing services to the Fund to promptly forward
misdirected proxies to the Sub-Advisor.
Services to be furnished by the Sub-Advisor under this Agreement may be
furnished through the medium of any of the Sub-Advisor's directors,
officers or employees.
A-3
<PAGE>
For all purposes of this Agreement, the Sub-Advisor shall be deemed to
be an independent contractor, and shall have no authority to act as an
agent for the Advisor or Trust in any manner or in any respect.
2. DUTIES OF THE ADVISOR. The Advisor shall continue to have
responsibility for all services to be provided to the Fund pursuant to
the Advisory Agreement and shall oversee and review the Sub-Advisor's
performance of its duties under this Agreement; provided, however, that
in connection with its management of the Assets, nothing herein shall
be construed to relieve the Sub-Advisor of responsibility for
compliance with the Trust's Declaration of Trust (as defined herein),
the Prospectus, the instructions and directions of the Board of
Trustees of the Trust, the requirements of the 1940 Act, the Internal
Revenue Code of 1986, and all other applicable federal and state laws
and regulations, as each is amended from time to time.
3. DELIVERY OF DOCUMENTS. The Advisor has furnished the Sub-Advisor with
copies properly certified or authenticated of each of the following
documents:
(a) The Trust's Agreement and Declaration of Trust, as filed with
the Secretary of State of the Commonwealth of Massachusetts
(such Agreement and Declaration of Trust, as in effect on the
date of this Agreement and as amended from time to time,
herein called the "Declaration of Trust");
(b) By-Laws of the Trust (such By-Laws, as in effect on the date
of this Agreement and as amended from time to time, are herein
called the "By-Laws");
(c) Prospectus(es) of the Fund.
4. COMPENSATION TO THE SUB-ADVISOR. For the services to be provided and
the expense assumed by the Sub-Advisor pursuant to this Agreement, the
Advisor will pay the Sub- Advisor, and the Sub-Advisor agrees to accept
as full compensation therefor, a sub-advisory fee at the rate specified
in the Schedule(s) which is attached hereto and made part of this
Agreement. The fee will be calculated based on the average daily net
assets of the Fund and will be paid to the Sub-Advisor monthly. Except
as may otherwise be prohibited by law or regulation (including any then
current SEC staff interpretation), the Sub-Advisor may, in its
discretion and from time to time, waive a portion of its fee.
5. LIABILITY. The Sub-Advisor shall not be liable for any error of
judgment or for any loss suffered by the Fund or the Advisor in
connection with the 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 Sub-Advisor'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 of applicable state law which cannot be
waived or modified hereby.
A-4
<PAGE>
6. DURATION AND TERMINATION. This Agreement shall become effective upon
its approval by the Trust's Board of Trustees and by the vote of a
majority of the outstanding voting securities of the Fund. This
Agreement shall continue in effect for a period of more than two years
from the date hereof only so long as continuance is specifically
approved at least annually in conformance with the 1940 Act; provided,
however, that this Agreement may be terminated with respect to the Fund
(a) by the Fund at any time, without the payment of any penalty, by the
vote of a majority of Trustees of the Trust or by the vote of a
majority of the outstanding voting securities of the Fund, (b) by the
Advisor at any time, without the payment of any penalty, on not more
than 60 days' nor less than 30 days' written notice to the Sub-Advisor,
or (c) by the Sub-Advisor at any time, without the payment of any
penalty, on 90 days' written notice to the Advisor. This Agreement
shall terminate automatically and immediately in the event of its
assignment, or in the event of a termination of the Advisor's agreement
with the Trust. As used in this Section 6, the terms "assignment" and
"vote of a majority of the outstanding voting securities" shall have
the respective meanings set forth in the 1940 Act and the rules and
regulations thereunder, subject to such exceptions as may be granted by
the SEC under the 1940 Act.
7. GOVERNING LAW. This Agreement shall be governed by the internal laws of
the Commonwealth of Massachusetts, without regard to conflict of law
principles; provided, however, that nothing herein shall be construed
as being inconsistent with the 1940 Act.
8. 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.
9. AMENDMENT. The terms or provisions of this Agreement may be amended,
modified or waived in writing if such amendment, modification or waiver
is signed by both parties hereto; provided that an amendment,
modification or waiver shall not become effective until approved by
vote of a majority of the (a) Trust's Trustees, including by a majority
of the Independent Trustees, and (b) Fund's outstanding voting
securities if shareholder approval is required by the 1940 Act and/or
the rules and regulations thereunder.
10. NOTICE. Any notice, advice or report to be given pursuant to this
Agreement shall be deemed sufficient if delivered or mailed by
registered, certified or overnight mail, postage prepaid addressed by
the party giving notice to the other party at the last address
furnished by the other party:
To the Advisor at: Summit Bank
Attn: Pillar Funds' Product Manager
210 Main Street
Hackensack, NJ 07601
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To the Sub-Advisor at: Vontobel USA Inc.
Attn:
450 Park Avenue
New York, NY 10022
11. ENTIRE AGREEMENT. This Agreement embodies the entire agreement and
understanding between the parties hereto, and supersedes all prior
agreements and understandings relating to this Agreement's subject
matter. This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, but such counterparts
shall, together, constitute only one instrument.
A copy of the Declaration of Trust is on file with the Secretary of
State of the Commonwealth of Massachusetts, and notice is hereby given that the
obligations of this instrument are not binding upon any of the Trustees,
officers or shareholders of the Fund or the Trust.
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
SEC, whether of special or general application, such provision shall be deemed
to incorporate the effect of such rule, regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the day and year first written
above.
Summit Bank Investment Management Vontobel USA Inc.
Division
By: By:
----------------------------- -------------------------------
Name: Name:
----------------------------- -------------------------------
Title: Title:
----------------------------- -------------------------------
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<PAGE>
THE PILLAR FUNDS
International Growth Fund
Special Meeting of Shareholders
PROXY SOLICITED BY THE BOARD OF TRUSTEES FOR
THE SPECIAL MEETING OF SHAREHOLDERS, [date], 1998
The undersigned, revoking previous proxies with respect to the Shares (defined
below), hereby appoints Kathryn Stanton, Joseph M. O'Donnell and Michael
Bellopede as proxies and each of them, each with full power of substitution, to
vote at the Special Meeting of Shareholders of the International Growth Fund
(the "Fund") of The Pillar Funds (the "Trust") to be held in the offices of SEI
Investments Company, One Freedom Valley Drive, Oaks, Pennsylvania 19456, on
[day], [date], 1998, at [time], and any adjournments or postponements thereof
(the "Meeting") all shares of beneficial interest of said Trust 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:
PROPOSAL 1: Approve the selection of Vontobel as
investment sub-advisor to the Fund, and
approve an investment sub-advisory agreement
between the Advisor and Vontobel.
____For ____Against____Abstain
PROPOSAL 2: Restate the Fund's investment objective from "long-term
capital growth" to "capital appreciation."
____For ____Against____Abstain
PROPOSAL 3: Revise a fundamental limitation of the
Fund to increase from 5% to 10%, the Fund's
ability to acquire the voting securities of
any one issuer and to apply the 10% limit on
the ownership of voting securities of an
issuer to 75% of the total assets of the
Fund, rather than 100% of its total assets.
____For ____Against____Abstain
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PROPOSAL 4: Reclassify as "non-fundamental" a
fundamental limitation of the Fund regarding
investing in companies for the purpose of
exercising control.
____For ____Against____Abstain
PROPOSAL 5: Reclassify as "non-fundamental" a
fundamental limitation of the Fund that
restricts the Fund's ability to purchase
securities of issuers whose securities are
owned by the officers, trustees, partners
and directors of the Trust or any investment
advisor of the Trust.
____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.
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: , 1998 ________________________________
Signature of Shareholder
________________________________
Signature (Joint owners)
PLEASE DATE, SIGN AND RETURN PROMPTLY USING THE ENCLOSED, POSTAGE-PAID ENVELOPE
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING; YOU MAY, NEVERTHELESS, VOTE IN
PERSON IF YOU DO ATTEND.
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