<PAGE> 1
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:
[ ] Preliminary Proxy Statement
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
PACIFIC CAPITAL FUNDS
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously, with preliminary materials
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
PACIFIC CAPITAL
NEW ASIA GROWTH FUND
3435 STELZER ROAD
COLUMBUS, OHIO 43219-3035
July 22, 1999
Dear Shareholder:
As you may know, the subsidiary of Nicholas-Applegate Capital Management
that previously managed the Pacific Capital New Asia Growth Fund has been sold
to an affiliate of Colonial Ltd., a publicly held Australian company, and the
company is now named CMG First State (Hong Kong) LLC. After careful
consideration, we have retained CMG as the new investment sub-adviser to the
Fund, subject to shareholder approval. In determining whether to approve this
decision, please note that:
- The key employees who managed the Fund while working for
Nicholas-Applegate will continue to manage the Fund while working for
CMG.
- The number of shares you own, the advisory fees the Fund pays, and the
investment objectives of the Fund will not change.
- You will continue to receive the high quality investment management and
shareholder services that you have come to expect since the Fund began
operations.
We recommend that you read the enclosed materials carefully and then vote
"FOR" the proposal.
Your vote is important. Please take a moment now to sign and return your
proxy card in the enclosed postage paid return envelope. Thank you for your
cooperation and continued support.
Sincerely,
WALTER J. LASKEY
Trustee and Chairperson
on behalf of the Board of Trustees of
Pacific Capital Funds
Q&A on reverse side
<PAGE> 3
Q. WHAT IS HAPPENING?
A. The subsidiary of Nicholas-Applegate Capital Management that used to manage
the New Asia Growth Fund has been sold, and is now named CMG First State
(Hong Kong) LLC. We want CMG to continue to manage the Fund.
Q. WHY AM I BEING ASKED TO VOTE ON THIS PROPOSAL?
A. The Investment Company Act of 1940 requires a shareholder vote to approve
any new investment sub-advisory agreements, such as the agreement the Fund
recently entered into with CMG.
Q. HOW WILL THIS AFFECT ME AS A FUND SHAREHOLDER?
A. The persons responsible for managing the Fund's assets now work for CMG
instead of Nicholas-Applegate. The Board expects no material changes in the
portfolio management of the Fund.
Q. WILL THE INVESTMENT ADVISORY FEES CHANGE?
A. No, the fees for investment management charged to the Fund as a result of
the new sub-advisory agreement will stay the same.
Q. HOW DO THE BOARD MEMBERS OF MY FUND RECOMMEND THAT I VOTE?
A. After careful consideration, the Board of Trustees unanimously recommends
that you vote "FOR" the proposal on the enclosed proxy card.
Q. WHAT IF I HAVE QUESTIONS?
A. Contact us, by calling 1-800-258-9232.
<PAGE> 4
PACIFIC CAPITAL
NEW ASIA GROWTH FUND
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON AUGUST 23, 1999
AT 3:00 P.M.
A Special Meeting of Shareholders of the PACIFIC CAPITAL NEW ASIA GROWTH
FUND will be held at 3435 Stelzer Road, Columbus, Ohio 43219 on August 23, 1999
at 3:00 p.m. local time. At the Meeting, we will ask the shareholders to vote
on:
1. A new investment sub-advisory agreement between Pacific Capital Funds,
Pacific Century Trust (as investment adviser of the Fund), and CMG First
State (Hong Kong) LLC (as investment sub-adviser of the Fund); and
2. Any other matters that properly come before the Meeting.
We have unanimously approved this proposal and recommend you vote "FOR" it.
Please read the enclosed proxy statement for a full discussion of the proposal.
By order of the Board of Trustees
GREGORY T. MADDOX, Secretary
PACIFIC CAPITAL FUNDS
Columbus, Ohio
July 22, 1999
Q. WHO CAN VOTE?
A. Any person owning shares on June 18, 1999.
Q. WHY SHOULD I BOTHER TO VOTE?
A. Your vote is important. If the Fund does not receive enough votes, it will
have to spend money to mail proxies again or solicit voters by telephone
so that this meeting can take place.
Q. HOW CAN I VOTE?
A. By mail -- Vote, sign and mail the enclosed ballot in the envelope
provided.
By internet -- www.proxyvote.com
By phone -- Call 1-800-690-6903.
In person at the meeting.
Q. DO YOU HAVE QUESTIONS?
A. Call us at 1-800-258-9232.
<PAGE> 5
PACIFIC CAPITAL FUNDS
NEW ASIA GROWTH FUND
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON AUGUST 23, 1999
INTRODUCTION
The Board of Trustees of Pacific Capital Funds (referred to in this Proxy
Statement as the "Company") solicits your Proxy in connection with a Special
Meeting of Shareholders (referred to in this Proxy Statement as the "Meeting")
of the Company's New Asia Growth Fund (referred to in this Proxy Statement as
the "Fund"). The Meeting will be held at 3435 Stelzer Road, Columbus, Ohio 43219
on August 23, 1999 at 3:00 p.m. local time. The enclosed Proxy and this Proxy
Statement are first being sent to the Fund's shareholders on or about July 26,
1999.
PROPOSED APPROVAL OF A NEW SUB-ADVISORY AGREEMENT
From August 1, 1997 until July 18, 1999, Nicholas-Applegate Capital
Management and its subsidiary Nicholas-Applegate Capital Management (Hong Kong)
LLC (referred to in this Proxy Statement collectively as "Nicholas-Applegate")
provided investment management services to the Fund under a sub-advisory
agreement with the Company and Pacific Century Trust, the Fund's investment
adviser (referred to in this Proxy Statement as "Pacific Century"). On May 1,
1999, all employees of Nicholas-Applegate (including Timothy L. Greaton, Robert
Brewis, David Wong, and Tommy Wong, who had provided these investment management
services to the Fund on a day to day basis), became employees of CMG First State
(Hong Kong) LLC (referred to in this Proxy Statement as "CMG"). On July 18,
1999, the Company terminated the sub-advisory agreement with Nicholas-Applegate
and Pacific Century and entered into a New Sub-Advisory Agreement with CMG and
Pacific Century to provide these investment management services. We did this so
that the former employees of Nicholas-Applegate could continue to provide these
services to the Fund. Pursuant to Rule 15a-4 under the Investment Company Act of
1940, we need shareholder approval of the New Sub-Advisory Agreement by November
15, 1999 to allow CMG to continue to provide these investment management
services to the Fund.
The prior sub-advisory agreement among the Company, Pacific Century and
Nicholas-Applegate, dated August 1, 1997 was last approved by shareholders of
the Fund on May 19, 1997. The purpose of that shareholder vote was to approve
the sub-advisory agreement between Nicholas-Applegate and Pacific Century upon
the acquisition of Credit Lyonnais International Asset Management (HK) Ltd. by
Nicholas-Applegate. Under this prior agreement, Pacific Century paid
Nicholas-Applegate a fee, computed daily and payable quarterly, equal on an
annual basis, to 0.50% of the New Asia Growth Fund's average daily net assets.
For the fiscal year ended July 31, 1998 Pacific Century paid Nicholas-Applegate
$91,615 for services provided to the New Asia Growth Fund.
After careful consideration, the Board of Trustees unanimously recommends
that the shareholders vote "FOR" the New Sub-Advisory Agreement.
<PAGE> 6
INFORMATION ABOUT CMG
CMG is a Hong Kong corporation which is an affiliate of Colonial Ltd., a
publicly-held Australian company. Its address is 3 Exchange Square, Room 604-6,
8 Connaught Place Central, Hong Kong. CMG is registered as an investment adviser
in the United States, and its staff of 52 persons currently manages approximate
$750 million of assets investing in the Asia-Pacific region on behalf of
institutional and individual investors.
Thomas D. T. Waring is the chief executive officer of CMG; his address is
the same as CMG's. Colonial Ltd., 330 Collins Street, Melbourne 3000, Australia,
is engaged in insurance, banking, investment management and other financial
service businesses, principally in Australia, Hong Kong and other Asian
countries. CMG is a part of its Colonial First State Investments group of
companies, an international funds management group which currently manages
approximately $27 billion of assets through a staff of 88 portfolio managers and
analysts worldwide.
Colonial Ltd. controls CMG through the following organization structure:
The Managing Member of CMG is CMG First State Investments (Bermuda) Ltd.
("Colonial Bermuda"), Clarendon House, 2 Church Street, Hamilton HM11, Bermuda.
The holding company of Colonial Bermuda is CMG First State Investment Managers
(Asia) Ltd. ("Colonial Asia"), Level 9, 330 Collins Street, Melbourne Victoria
3000, Australia. Colonial Asia is a wholly-owned subsidiary of Colonial First
State Investment Group Ltd. ("Colonial Investment Group"), Level 12, 330 Collins
Street, Melbourne Victoria 3000, Australia. Colonial Investment Group is a
wholly-owned subsidiary of Colonial Holding Company (No. 2) Pty Ltd. ("Colonial
Holding 2"), Level 9, 330 Collins Street, Melbourne, Victoria 3000, Australia.
Colonial Holding 2 is a wholly-owned subsidiary of Colonial Holding Company Pty
Ltd. ("Colonial Holding"), Level 9, 330 Collins Street, Melbourne, Victoria
3000, Australia. Colonial Holding is a wholly-owned subsidiary of Colonial Ltd.
CMG does not currently act as an investment adviser or sub-adviser to any
other U.S. investment companies.
DESCRIPTION OF THE NEW SUB-ADVISORY AGREEMENT
The New Sub-Advisory Agreement among the Company, Pacific Century and CMG
dated July 19, 1999 is the same in all material respects as the Company's
previous sub-advisory agreement for the Fund, other than the date and the
identity of the sub-adviser.
Under the New Sub-Advisory Agreement, CMG manages the investments of the
Fund and provides such investment research, advice and supervision, in keeping
with the Fund's investment objectives and policies, as may be necessary for the
operations of the Fund. Pacific Century pays CMG a fee for its services of .50%
of the Fund's average daily net asset value.
Under the New Sub-Advisory Agreement, CMG bears all the expenses of its
employees and all overhead incurred in connection with its duties. The Fund
reimburses CMG for any expenses related to securities, commodities and other
investments of the Fund (including brokerage commissions and transaction
charges).
Unless CMG is guilty of bad faith, willful misconduct, gross negligence or
reckless disregard of its obligations under the New Sub-Advisory Agreement, CMG
is not liable to the Fund or any of the Fund's shareholders for any act or
omission in managing the Fund's investments or for any loss sustained by the
Fund or the Fund's shareholders.
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<PAGE> 7
The New Sub-Advisory Agreement will terminate automatically if it is not
approved by the shareholders of the Fund by November 15, 1999. If approved, the
New Sub-Advisory Agreement will continue for an initial term of two years, and
from year-to-year thereafter so long as the continuation is approved annually by
the Board of Trustees (including a majority of the Trustees who are not
"interested persons" of a party to the New Sub-Advisory Agreement (as defined in
the Investment Company Act) or by the vote of the Fund's shareholders. However,
the Company can terminate the New Sub-Advisory Agreement at any time, without
paying any penalty, upon the vote of a majority of the Board of Trustees or a
majority of the outstanding shares of the Fund, on 30 days' written notice. CMG
can terminate the New Sub-Advisory Agreement on the same notice.
WHY WE HIRED CMG
On May 1, 1999, the employees of Nicholas-Applegate who had provided
investment management services to the Fund since the Fund began operations
became part of CMG following Nicholas-Applegate's sale of its Asian business to
an affiliate of Colonial Ltd. Management of the Company interviewed
representatives of both Nicholas-Applegate and CMG to determine whether to
change sub-advisers, and decided it was in the best interests of the Fund to
leave the Fund with the key employees who have been managing the Fund since its
inception. On June 17, 1999, the independent trustees of the Board met and
discussed management's recommendation, interviewed representatives of CMG,
reviewed various written materials presented to them by CMG, and discussed the
proposed New Sub-Advisory Agreement. At the meeting, CMG represented that:
1. It expected no changes in the portfolio management of the Fund;
2. The key employees of Nicholas-Applegate who became employees of CMG will
continue to manage the Fund, and the resources available to these
employees in performing their duties for the Fund will not be
diminished; and
3. The Fund's expenses under the New Sub-Advisory Agreement will be no
greater than under the previous sub-advisory agreement.
The Board also considered the capabilities of CMG to provide service to the
Fund, and that the New Sub-Advisory Agreement, including the fees paid to CMG,
is the same in all material respects as the current sub-advisory agreement.
The Board of Trustees was advised by its own counsel and considered all
information that it determined was relevant to its deliberations. Based on these
considerations, the Board concluded that the New Sub-Advisory Agreement is in
the best interests of the Fund and its shareholders. The Board unanimously
approved the New Sub-Advisory Agreement and recommends its approval to the
Fund's shareholders.
PROXY VOTING AND MEETING PROCEDURES
WHO CAN VOTE
Anyone who is shown on the records of the Fund as holding shares as of the
close of business (Eastern Standard Time) on June 18, 1999 is entitled to vote
at the Meeting. On that date, the Fund had 1,723,204.876 outstanding shares.
3
<PAGE> 8
HOW TO VOTE
You can vote by mail, phone, internet or in person at the Meeting.
1. To vote by mail, sign and send us the enclosed Proxy voting card in the
envelope provided.
2. To vote by internet, go to the Website www.proxyvote.com.
3. To vote by phone, call our proxy tabulator, Automatic Data Processing,
at 1-800-690-6903. They have procedures designed to confirm your
identity and voting instructions.
Even if you plan to attend the Meeting and vote in person, please return
the enclosed Proxy card. This will help us ensure that an adequate number of
shares are present at the Meeting.
If you give specific voting instructions on your Proxy, the persons named
in the Proxy will vote as you have directed. Otherwise, the persons named in the
Proxy will vote at their discretion (they intend to vote in favor of the
proposal). If you return a Proxy, you can revoke it by notifying the Secretary
of the Fund in writing, by returning a Proxy with a later date, or by voting in
person at the Meeting.
QUORUM REQUIREMENTS
In order for the Meeting to go forward, a quorum of shareholders must be
present. This means that a majority of the Fund's shares must be represented at
the Meeting -- either in person or by proxy. All returned proxies count toward a
quorum, regardless of how they are voted. "Broker non-votes" will also be
treated as shares which are present but have not been voted. (Broker non-votes
are shares held by a broker for the owner, which the owner has not voted on a
proposal and the broker does not have the authority to vote on the proposal.)
Broker non-votes and abstentions will have the same effect as a "NO" vote for
purposes of determining whether the proposal has been approved.
If sufficient votes in favor of the proposal are not received by the date
of the Meeting, the persons named in the Proxy may propose and vote for one or
more adjournments of the Meeting to permit further solicitations of proxies. Any
such adjournment will require approval by the holders of a majority of the
shares who are present in person or by proxy.
WHAT VOTE IS REQUIRED?
Approval of a majority of the shares of the Fund, as defined by the
Investment Company Act, is needed to continue the New Sub-Advisory Agreement.
This consists of the lesser of:
1. Two-thirds of the shares present at the Meeting, if holders of more than
one-half of the outstanding shares are present in person or by proxy; or
2. More than one-half of the outstanding shares.
WHAT IS THE PROPOSAL IS NOT APPROVED?
If the shareholders do not approve the New Sub-Advisory Agreement, the
Board will decide whether to re-propose approval to the shareholders, to retain
a new sub-adviser (subject to shareholder approval), or to take some other
action.
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<PAGE> 9
PROXY SOLICITATION METHODS AND COSTS
Proxies will be solicited by mail, but trustees and officers of the Fund
and employees of Pacific Century or BISYS Fund Services, the Company's
administrator, may also solicit proxies by personal meetings, telephone and
facsimile. Banks, brokerage houses and other custodians, nominees and
fiduciaries may forward soliciting material to beneficial owners of shares
entitled to vote at the Meeting. The Fund will pay or reimburse all solicitation
costs.
PRINCIPAL SHAREHOLDERS
As of June 18, 1999, the following shareholders were known by the Company
to own of record 5% or more of the outstanding shares of the Fund:
<TABLE>
<CAPTION>
NAME AND ADDRESS SHARES/CLASS % OWNERSHIP
- ---------------- ---------------------- -----------
<S> <C> <C>
REINCO approximately 263,880/ 17%
Pacific Century Trust Institutional Class
PO Box 3170
Honolulu, HI 96802
STROBRO approximately 616,770/ 41%
Pacific Century Trust Institutional Class
PO Box 3170
Honolulu, HI 96802
HAWCO approximately 238,240/ 16%
Pacific Century Trust Institutional Class
PO Box 3170
Honolulu, HI 96802
Vanguard Fiduciary Trust Company approximately 227,140/ 15%
400 Vanguard Group Stck Fnd Acct STP A14 Institutional Class
Malvern, PA 19355
Vanguard Fiduciary Trust Company approximately 136,130/ 9%
400 Vanguard Group Stck Fnd Acct STP A14 Institutional Class
Malvern, PA 19355
Merrill Lynch Pierce Fenner & Smith approximately 24,850/ 11%
4800 Deer Lake Dr East 3(rd) Fl Class A
Jacksonville, FL 32246
BHC Securities Inc approximately 177,900/ 82%
2005 Market St Suite 1200 Class A
Philadelphia, PA 19103
Merrill Lynch Pierce Fenner & Smith approximately 2,730/ 11%
Mutual Fund Operations Class B
4800 Deer Lake Dr East 3(rd) Fl
Jacksonville, FL 32246
BHC Securities Inc approximately 10,510/ 43%
FAO 80239106 Class B
2005 Market St Suite 1200
Philadelphia, PA 19103
</TABLE>
5
<PAGE> 10
As of June 18, 1999, the trustees and officers of the Fund as a group
beneficially owned less than 1% of the outstanding shares of the Fund. However
Mr. Laskey, as Executive Vice President of Bank of Hawaii, may be deemed the
beneficial owner of any shares held by Pacific Century Trust which it may vote.
REPORTS TO SHAREHOLDERS AND FINANCIAL STATEMENTS
The Company will furnish you, without charge, a copy of the most recent
Annual Report to shareholders of the Fund. You can obtain copies of this report
by contacting the Company in writing at the address on the cover of this Proxy
Statement, or by calling 1-800-258-9232.
MISCELLANEOUS
NAMES AND ADDRESSES
The Fund's investment adviser is Pacific Century Trust. Its address is 111
S. King Street, Honolulu, Hawaii 96813. The Fund's principal underwriter is
BISYS Fund Services. The Fund's administrator is BISYS Fund Services Ohio, Inc.
Their address is 3435 Stelzer Road, Columbus, Ohio 43219.
DEADLINE FOR SUBMITTING SHAREHOLDER PROPOSALS
The Company does not intend to hold annual meetings of shareholders of the
Fund. The Company will call meetings of shareholders of the Fund as may be
required under the Investment Company Act (such as to approve a new investment
advisory agreement for the Fund) or as the Board of Trustees may determine in
its discretion.
If a shareholder wishes to present a proposal to be included in the proxy
statement for the next meeting of shareholders of the Fund or the Company, the
Secretary of the Company must receive the proposal at the Company's principal
office a reasonable time before the meeting is to be held. Any such proposal
must satisfy all applicable federal and state requirements.
OTHER MATTERS
Management knows of no other business to be presented at the Meeting, but
if other matters properly do come before the Meeting the persons named in the
Proxy will vote on them in accordance with their best judgment.
Very truly yours,
WALTER J. LASKEY
Trustee and Chairperson
on behalf of the Board of Trustees of
Pacific Capital Funds
July 22, 1999
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<PAGE> 11
SUB-ADVISORY AGREEMENT
PACIFIC CAPITAL NEW ASIA GROWTH FUND
AGREEMENT is made as of July 19, 1999 among Pacific Capital Funds (the
"Trust"), Pacific Century Trust (the "Adviser"), and CMG First State (Hong Kong)
LLC ("Sub-Adviser").
WHEREAS, the "Trust" is registered as an open-end diversified management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act");
WHEREAS, the Adviser has been appointed investment adviser to the Trust's
Pacific Capital New Asia Growth Fund, (the "Fund"); and
WHEREAS, the Adviser desires to retain Sub-Adviser to assist in the
provision of a continuous investment program for the Fund and Sub-Adviser is
willing to do so;
WHEREAS, the Board of Trustees of the Trust has approved this Agreement,
and Sub-Adviser is willing to furnish such services upon the terms and
conditions herein set forth;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Appointment. The Adviser hereby appoints Sub-Adviser to act as
sub-adviser to the Fund as permitted by the Adviser's Advisory Agreement with
the Trust pertaining to the Fund. Intending to be legally bound, Sub-Adviser
accepts such appointment and agrees to render the services herein set forth for
the compensation herein provided.
2. Sub-Advisory Services. Subject to the supervision of the Trust's Board
of Trustees, Sub-Adviser will assist the Adviser in providing a continuous
investment program with respect to the foreign component of the Fund's
portfolio, including investment research and management with respect to all
foreign securities and investments and cash equivalents in the Fund. Sub-Adviser
will provide services under this Agreement in accordance with the Fund's
investment objective, policies and restrictions as stated in the Funds'
prospectus and resolutions of the Trust's Board of Trustees applicable to the
Fund.
Without limiting the generality of the foregoing, Sub-Adviser further
agrees that it:
(a) will prepare, subject to the Adviser's approval, lists of foreign
countries for investment by the Fund and determine from time to time what
securities and other investments will be purchased, retained or sold for
the Fund, including, with the assistance of the Adviser, the Fund's
investments in futures and forward currency contracts;
(b) will manage in consultation with the Adviser the Fund's temporary
investments in securities;
(c) will place orders pursuant to its investment determinations for
the Fund either directly with the issuer or with any broker or dealer;
(d) will not purchase shares of the Fund for itself or for accounts
with respect to which it exercises sole investment discretion in connection
with such transactions except as permitted by the Trust's Board of Trustees
or by federal, state and local law;
(e) will manage the Fund's overall cash position, and determine from
time to time what portion of the Funds' assets will be held in different
currencies;
<PAGE> 12
(f) will provide the Adviser with foreign broker research, a quarterly
review of international economic and investment developments and occasional
"Spot Lights" on international investment issues;
(g) will attend regular business investment-related meetings with the
Trust's Board of Trustees and the Adviser if requested to do so by the
Trust and/or the Adviser;
(h) will evaluate the systemic risks of holding the Fund's assets in
various countries, including without limitation their financial
infrastructures, prevailing custody and settlement practices, risks of
nationalization and other governmental actions, regulation of banking and
securities industries, currency controls and restrictions, market
conditions which may affect the orderly execution of securities
transactions or affect the value of such transactions, and the use of
depositories required by law or regulation or prevailing market practices;
and
(i) will maintain books and records with respect to the securities
transactions for the Fund, furnish to the Adviser and the Trust's Board of
Trustees such periodic and special reports as they may request with respect
to the Fund, and provide in advance to the Adviser all reports to the Board
of Trustees for examination and review within a reasonable time prior to
the Trust's Board meetings.
3. Covenants by Sub-Adviser. Sub-Adviser agrees with respect to the
services provided to the Fund
that it:
(a) will conform with all Rules and Regulations of the Securities and
Exchange Commission;
(b) will telecopy trade information to the Adviser on the first
business day following the day of the trade and cause broker confirmations
to be sent directly to the Adviser; and
(c) will treat confidentially and as proprietary information of the
Trust all records and other information relative to the Trust and prior,
present or potential shareholders, 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 and will be deemed granted where Sub-Adviser may be
exposed to civil or criminal contempt proceedings for failure to comply,
when requested to divulge such information by duly constituted authorities,
or when so requested by the Trust).
4. Services Not Exclusive. Except as provided herein, the services
furnished by Sub-Adviser hereunder are deemed not to be exclusive, and nothing
in this Agreement shall (i) prevent Sub-Adviser from acting as investment
adviser or manager for any other person or persons, including other investment
companies, except that Sub-Adviser shall not provide primary advisory or
sub-advisory services of any nature to any registered investment company (a)
that has an investment objective or style substantially similar to that of the
Pacific Capital New Asia Growth Fund ("an Asia Fund") and (b) that offers its
shares (or any class thereof) in Hawaii, California, Guam or Arizona.
Notwithstanding the prohibited services described in the immediately preceding
sentence, in the event that Sub-Adviser wishes to advise or sub-advise another
Asia Fund, it shall notify the Adviser and the Trust of such desire and,
following such notification, the Adviser, Sub-Adviser and the Trust shall
negotiate in good faith (for at least 30 days prior to any notice of termination
submitted arising from a disagreement on this prohibition), a modification to
this prohibition that will allow Sub-Adviser to provide services to another Asia
Fund, such that the economic and other interests of the Adviser, Sub-Adviser and
the Trust are adequately addressed or (ii) limit or restrict Sub-Adviser from
buying, selling or trading any securities or other investments (including any
securities or other investments which the Fund is eligible to buy) for its or
their own accounts or for the accounts of others for whom it or they may be
acting; provided,
2
<PAGE> 13
however, that Sub-Adviser agrees that it will not undertake any activities which
will adversely affect the performance of its obligations to the Fund under this
Agreement.
5. Portfolio Transactions. Investment decisions for the Fund shall be made
by Sub-Adviser independently from those for any other investment companies and
accounts advised or managed by Sub-Adviser. The Fund and such investment
companies and accounts may, however, invest in the same securities. When a
purchase or sale of the same security is made at substantially the same time on
behalf of the Fund and/or another investment company or account, the transaction
will be averaged as to price, and available investments allocated as to amount,
in a manner which Sub-Adviser believes to be equitable to the Fund and such
other investment company or account. In some instances, this investment
procedure may adversely affect the price paid or received by the Fund or the
size of the position obtained or sold by the Fund. To the extent permitted by
law, Sub-Adviser may aggregate the securities to be sold or purchased for the
Fund with those to be sold or purchased for other investment companies or
accounts in order to obtain best execution.
Sub-Adviser shall place orders for the purchase and sale of portfolio
securities and shall solicit broker-dealers to execute transactions in
accordance with the Fund's policies and restrictions regarding brokerage
allocations. Sub-Adviser shall place orders pursuant to its investment
determination for the Fund either directly with the issuer or with any broker or
dealer selected by Sub-Adviser. In executing portfolio transactions and
selecting brokers or dealers, Sub-Adviser shall use its reasonable best efforts
to seek the most favorable execution of orders, after taking into account all
factors Sub-Adviser 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. Consistent
with this obligation, Sub-Adviser may, to the extent permitted by law, purchase
and sell portfolio securities to and from brokers and dealers who provide
brokerage and research services (within the meaning of Section 28(e) of the
Securities Exchange Act of 1934) to or for the benefit of the Fund and/or other
accounts over which Sub-Adviser or any of its affiliates exercises investment
discretion. Sub-Adviser is authorized to pay to a broker or dealer who provides
such brokerage and research services a commission for executing a portfolio
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
Sub-Adviser 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 either that particular transaction or
Sub-Adviser's overall responsibilities to the Fund and to the Trust. In no
instance will portfolio securities be purchased from or sold to Sub-Adviser, or
the Fund's principal underwriter, or any affiliated person thereof except as
permitted by the rules of the Securities and Exchange Commission.
6. Books and Records. In compliance with the requirements of Rule 31a-3
under the 1940 Act, Sub-Adviser 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.
Sub-Adviser further agrees to preserve for the periods prescribed by Rule 31a-2
under the 1940 Act the records required to be maintained by Rule 31a-1 under the
1940 Act.
7. Expenses. During the term of this Agreement, Sub-Adviser will pay all
expenses incurred by it in connection with its activities under this Agreement
other than the cost of securities, commodities and other investments (including
brokerage commissions and other transaction charges, if any) purchased for the
Fund.
8. Compensation. For the services provided and the expenses assumed with
respect to the Fund pursuant to this Agreement, the Sub-Adviser shall be
entitled to a fee, computed daily and payable quarterly, from Adviser,
calculated at the annual rate of 0.50% of the Fund's average daily net assets.
3
<PAGE> 14
9. Standard of Care; Limitation of Liability. Sub-Adviser shall exercise
due care and diligence and use the same skill and care in providing its services
hereunder as it uses in providing services to other investment companies, but
shall not be liable for any action taken or omitted by Sub-Adviser in
performance of services rendered hereunder in the absence of bad faith, willful
misconduct, gross negligence or reckless disregard of its duties.
10. Reference to Sub-Adviser. Neither the Adviser nor any affiliate or
agent of the Adviser shall make reference to or use the name of Sub-Adviser or
any of its affiliates, or any of their clients, except references concerning the
identity of and services provided by Sub-Adviser to the Fund, which references
shall not differ in substance from those included in the current registration
statement pertaining to the Fund, this Agreement and the Advisory Agreement
between the Adviser and the Trust with respect to the Fund, in any advertising
or promotional materials without the prior approval of Sub-Adviser, which
approval shall not be unreasonably withheld or delayed. The Adviser hereby
agrees to make all reasonable efforts to cause the Fund and any affiliate
thereof to satisfy the foregoing obligation.
11. Duration and Termination. This Agreement shall terminate on November
15, 1999 unless it has been approved by a majority of the Fund's shareholders.
If so approved, then unless sooner terminated, this Agreement shall continue
until the second anniversary hereof and thereafter shall continue automatically
for successive annual periods, provided such continuance is specifically
approved at least annually by the Trust's Board of Trustees or vote of a
majority of the Fund's shareholders, provided that in either event its
continuance also is approved by a majority of the Trust's Trustees who are not
"interested persons" (as defined in the 1940 Act) of any party to this Agreement
(the "Disinterested Trustees"), by vote cast in person at a meeting called for
the purpose of voting on such approval. As used herein, a "majority" of the
Fund's shareholders means the lesser of (a) 67% of the shares of the Fund
represented at a meeting if holders of more than 50% of the outstanding shares
of the Fund are present in person or by proxy or (b) more than 50% of the
outstanding shares of the Fund. This Agreement is terminable at any time without
penalty, on 60 days' notice, by Adviser, by Sub-Adviser, by the Trust's Board of
Trustees, or by vote of a majority of the Fund's shareholders. This Agreement
shall terminate automatically in the event of its assignment (as defined in the
1940 Act).
12. Amendment of This Agreement. No provision of 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. No amendment of this Agreement shall be effective with
respect to the Fund until approved by the vote of (i) a majority of the
outstanding voting securities of the Fund and (ii) a majority of the
Disinterested Trustees cast in person at a meeting called for the purpose of
voting on such approval.
13. Notice. Any notice, advise or report to be given pursuant to this
Agreement shall be delivered or mailed:
To Sub-Adviser at:
CMG First State (Hong Kong) LLC
3 Exchange Square, Room 604-6
8 Connaught Place Central
Hong Kong
4
<PAGE> 15
To the Adviser at:
Pacific Century Trust
111 S. King Street
Honolulu, Hawaii 96813
To the Trust at:
Pacific Capital Funds
c/o BISYS Fund Services
3435 Stelzer Road
Columbus, Ohio 43219-3035
14. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby.
This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and shall be governed by the laws
of the Commonwealth of Massachusetts applicable to contracts made and to be
performed therein.
15. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
16. Personal Liability. The names "Pacific Capital Funds" and "Trustees"
refer respectively to the Trust created and to the Trustees, as trustees but not
individually or personally, acting from time to time under an Agreement and
Declaration of Trust dated as of October 30, 1992 to which reference is hereby
made and a 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 the
Trust entered into in the name or on behalf hereof by any of the Trustees,
representatives or agents are made not individually, but 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 all persons dealing
with any series of shares of the Trust must look solely to the assets of the
Trust belonging to such series for the enforcement of any claims against such
series.
5
<PAGE> 16
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first
above-written.
<TABLE>
<S> <C>
PACIFIC CENTURY TRUST
By:
--------------------------------------------
Name:
------------------------------------------
Title:
-----------------------------------------
CMG FIRST STATE (HONG KONG) LLC
By:
--------------------------------------------
Name:
------------------------------------------
Title:
-----------------------------------------
PACIFIC CAPITAL FUNDS
By:
--------------------------------------------
Name:
------------------------------------------
Title:
-----------------------------------------
</TABLE>
6
<PAGE> 17
PROXY
PACIFIC CAPITAL NEW ASIA GROWTH FUND
SPECIAL MEETING OF SHAREHOLDERS
AUGUST 23, 1999
The undersigned hereby appoints Alaina V. Metz and Martin R. Dean his/her
attorney and proxy with full power of substitution to vote and act with respect
to all shares of the Pacific Capital New Asia Growth Fund (the "Fund") held by
the undersigned at the Special Meeting of Shareholders of the Fund to be held
at 3:00 p.m., Eastern Time, on August 23, 1999, at the offices of BISYS Fund
Services, 3435 Stelzer Road, Columbus, Ohio 43219 and at any adjournment
thereof (the "Meeting"), and instructs them to vote as indicated on the matter
referred to in the Proxy Statement for the Meeting, receipt of which is hereby
acknowledged, with discretionary power to vote upon such other business as may
properly come before the Meeting.
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES OF THE FUND. THE BOARD OF
TRUSTEES RECOMMENDS THAT YOU VOTE FOR THE FOLLOWING PROPOSAL:
Approval of a new investment sub-advisory agreement between Pacific Capital
Funds, Pacific Century Trust (as investment adviser of the Fund), and CMG First
State (Hong Kong) LLC (as investment sub-adviser of the Fund).
/ / FOR / / AGAINST / / ABSTAIN
THIS PROXY WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE, THIS
PROXY WILL BE VOTED FOR THE PROPOSAL.
Receipt of the Notice of Special Meeting and Proxy Statement is hereby
acknowledged.
Dated ______________, 1999
______________________________________________
Name of Shareholder(s) -- Please print or type
______________________________________________
Signature(s) of Shareholder(s)
______________________________________________
Signature(s) of Shareholder(s)
This proxy must be signed by the beneficial owner of Fund shares. If signing as
attorney, executor, guardian or in some representative capacity or as an
officer of a corporation, please add title as such.
PLEASE VOTE, SIGN AND DATE THIS PROXY AND RETURN IT IN THE
ENCLOSED POSTAGE-PAID ENVELOPE.
