SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO._____)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Pacific Capital Funds
(Name of Registrant as Specified In Its Charter)
----------------------------------------------------------------------
(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)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
PACIFIC CAPITAL FUNDS
NEW ASIA GROWTH FUND
3435 STELZER ROAD
COLUMBUS, OHIO 43219
1-800-258-9232
February 9, 2006
Dear Shareholder:
The Board of Trustees has called a special meeting of the shareholders of the
New Asia Growth Fund (the "Fund"), a series of Pacific Capital Funds (the
"Trust"), to take place on March 13, 2006 at the offices of the Trust's
administrator, BISYS Fund Services Ohio, Inc., 100 Summer Street, Suite 1500,
Boston, Massachusetts 02110 at 10:00 a.m. Eastern Time, or as adjourned from
time to time.
The sole purpose of this meeting is to seek shareholder approval of a
Sub-Advisory Agreement for the Fund with a new sub-advisor, First State
Investments International Limited ("FSI"). FSI is an affiliate of the Fund's
current sub-advisor, First State (Hong Kong) LLC. The terms of the Fund's
proposed new Sub-Advisory Agreement will be substantially similar to those of
the Fund's current sub-advisory agreement and will not result in any change in
fees or management of the Fund. Although the Fund has not experienced
significant problems in the past in complying with applicable U.S. securities
laws and regulations, the Board of Trustees believes that FSI has a stronger
capability than the current sub-adviser for ensuring that the Fund will continue
to comply with applicable laws and regulations.
THE TRUSTEES HAVE UNANIMOUSLY APPROVED THE PROPOSAL
AND RECOMMEND THAT YOU VOTE "FOR" THE PROPOSAL.
If you have any additional questions, please do not hesitate to contact us by
calling 1-800-258-9232. Please note that you cannot cast your vote by calling
this number. To cast your vote, please sign and mail the enclosed ballot in the
envelope provided.
Respectfully,
- -------------------------------------
William Henry
President
Pacific Capital Funds
WE URGE YOU TO VOTE BY COMPLETING AND RETURNING THE ENCLOSED PROXY CARD OR
BY ATTENDING THE MEETING.
YOUR VOTE IS IMPORTANT REGARDLESS OF THE SIZE OF YOUR HOLDINGS - WE ASK THAT YOU
VOTE PROMPTLY IN ORDER TO AVOID THE EXPENSE OF ADDITIONAL SOLICITATION.
Q. WHO CAN VOTE?
A. Any person owning shares of any of the Funds on January 27, 2006.
Q. WHO VOTES ON WHICH PROPOSALS?
The table below summarizes each proposal to be presented at the special meeting
and shows which shareholders may vote for each proposal.
PROPOSAL WHICH SHAREHOLDERS MAY VOTE
-------- ---------------------------
To approve a new Sub-Advisory Agreement Shareholders of the New Asia Growth
for the New Asia Growth Fund with First Fund only
State Investments International Limited.
Q. WHY SHOULD I BOTHER TO VOTE?
A. Your vote is important. If the Trust 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.
- In person at the meeting.
Q. HOW DO THE BOARD MEMBERS OF THE TRUST RECOMMEND THAT I VOTE?
A. After careful consideration, the Board of Trustees unanimously recommends
that you vote "FOR" each applicable proposal on the enclosed proxy card.
Q. WHAT IF I HAVE ADDITIONAL QUESTIONS?
A. Contact us, by calling 1-800-258-9232. Please note that you cannot cast
your vote by calling this number. To cast your vote, please sign and mail
the enclosed ballot in the envelope provided.
PACIFIC CAPITAL FUNDS
NEW ASIA GROWTH FUND
3435 STELZER ROAD
COLUMBUS, OHIO 43219
1-800-258-9232
NOTICE
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON MARCH 13, 2006
To the shareholders of Pacific Capital Funds:
Notice is hereby given that the Board of Trustees has called a special meeting
of the shareholders of the New Asia Growth Fund (the "Fund"), a series of
Pacific Capital Funds (the "Trust"), to take place on March 13, 2006, at the
offices of the Trust's administrator, BISYS Fund Services Ohio, Inc., 100 Summer
Street, Suite 1500, Boston, Massachusetts 02110 at 10:00 a.m., Eastern Time, or
as adjourned from time to time (the "Meeting"), for the sole purpose of
approving a new Sub-Advisory Agreement for the New Asia Growth Fund with First
State Investments International Limited.
AFTER CAREFUL CONSIDERATION, THE BOARD OF TRUSTEES UNANIMOUSLY APPROVED THE
PROPOSAL AND UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS OF THE FUND VOTE "FOR" THE
PROPOSAL.
The matter referred to above is discussed in detail in the proxy statement
attached to this notice. The Board of Trustees has fixed the close of business
on January 27, 2006 as the record date for determining shareholders entitled to
notice of, and to vote at, the Meeting.
Regardless of whether you plan to attend the Meeting, PLEASE COMPLETE, SIGN,
DATE AND RETURN PROMPTLY THE ENCLOSED PROXY CARD IN THE ENVELOPE PROVIDED, SO
THAT YOU WILL BE REPRESENTED AT THE MEETING. If you have returned a proxy card
and are present at the Meeting, you may change the vote specified in the proxy
at that time. However, attendance in person at the Meeting, by itself, will not
revoke a previously tendered proxy.
By order of the Board of Trustees,
- -------------------------------------
Patrick Keniston
Secretary
February 9, 2006
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND SIGN
THE ENCLOSED PROXY CARD AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE IN ORDER
TO ASSURE REPRESENTATION OF YOUR SHARES. NO POSTAGE IS NECESSARY IF THE PROXY
CARD IS MAILED IN THE UNITED STATES.
PACIFIC CAPITAL FUNDS
NEW ASIA GROWTH FUND
3435 STELZER ROAD
COLUMBUS, OHIO 43219
1-800-258-9232
----------
PROXY STATEMENT
----------
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD MARCH 13, 2006
This proxy statement and the enclosed form of proxy are being furnished in
connection with the solicitation of proxies by the Board of Trustees (the
"Board") of Pacific Capital Funds (the "Trust") for use at a special meeting of
shareholders of the New Asia Growth Fund (the "Fund"), a series of the Trust, to
be held at 10:00 a.m., Eastern Time, on March 13, 2006, at the offices of BISYS
Fund Services Ohio, Inc., 100 Summer Street, Suite 1500, Boston, Massachusetts
02110, or as adjourned from time to time (the "Meeting"). The Board is
soliciting proxies from shareholders with respect to the proposals set forth in
the accompanying notice.
The Trust anticipates that the mailing of proxies and proxy statements to
shareholders will begin on or about February 9, 2006.
Shareholders can find important information about the Fund in the Trust's annual
report dated as of July 31, 2005, which previously has been furnished to
shareholders. Shareholders may request another copy of the annual report and the
semi-annual report for the period ended January 31, 2005 by writing to the Trust
at the above address or by calling the telephone number above. The Trust will
provide copies of the report[s] free of charge.
INTRODUCTION
The Board proposes that the services of First State (Hong Kong) LLC ("FSHK" or
"the Current-Sub-Adviser") as sub-adviser to the Fund be terminated effective as
of March 31, 2006, and that the Trust enter into a new sub-advisory agreement on
behalf of the Fund (the "New Sub-Advisory Agreement") with the Asset Management
Group of Bank of Hawaii, as Adviser to the Fund ("AMG" or "the Adviser"), and
First State Investments International Limited ("FSI") as the new Sub-Adviser.
WHY IS THIS CHANGE BEING RECOMMENDED?
FSI and the Current Sub-Adviser are indirect, wholly-owned subsidiaries of
Commonwealth Bank of Australia. Both companies are operated as components of
First State International, the international funds management division of
Commonwealth Bank of Australia (the division also has component operations in
Singapore and Indonesia). Although portions of their management infrastructures
are intertwined, each of the Current Sub-Adviser and FSI maintains its own
compliance functions.
The Fund has not experienced significant problems in the past in complying with
applicable U.S. federal securities laws and regulations. However, as a result of
its compliance reviews, including onsite visits, AMG has concluded that FSI has
more experience and a stronger capability than the Current Sub-Adviser for
ensuring that the Fund will continue to comply with applicable U.S. federal
securities laws and regulations. The Investment Company Act of 1940, as amended
(the "Investment Company Act"), requires the shareholders of the Fund to approve
the proposed New Sub-Advisory Agreement with FSI.
1
HOW WILL THE NEW ARRANGEMENT AFFECT THE MANAGEMENT OF THE FUND?
The proposed change will not affect the persons providing portfolio management
services to the Fund. In addition, the terms of the New Sub-Advisory Agreement
are substantially similar to the terms of the current sub-advisory agreement
between FSHK and AMG (the "Current Sub-Advisory Agreement"). For its services,
FSI will receive the same fee that the Current Sub-Advisor receives, 0.50% of
the average daily value of the net assets of the Fund.
The terms of the Current Sub-Advisory Agreement and the New Sub-Advisory
Agreement are described in greater detail below.
THE CURRENT SUB-ADVISORY AGREEMENT
FSHK serves as sub-adviser to the Fund pursuant to the Current Sub-Advisory
Agreement, which was entered into on July 19, 1999. The Current Sub-Advisory
Agreement was last submitted to a shareholder vote at a special meeting of Fund
shareholders held in August 1999. The Current Sub-Advisory Agreement was last
approved by the Board of Trustees of the Trust at its September 20, 2005 regular
meeting, at which the Board of approved continuation of the Agreement for an
additional year subject to termination upon shareholder approval of the New
Sub-Advisory Agreement.
Under the Current Sub-Advisory Agreement, FSHK effects portfolio transactions
for the Fund, using its own discretion and without prior consultation with AMG,
and reports periodically to AMG and to the Board of Trustees. As consideration
for its services, FSHK receives an annual fee at the rate of 0.50% of the Fund's
average net assets, computed daily and payable quarterly. The aggregate fees
paid to FSHK for the Fund's last three fiscal years ended July 31 were as
follows: 2005 -- $193,284; 2004 -- $153,279; and 2003 -- $90,161.
The Current Sub-Advisory Agreement provides that FSHK will not be liable for any
mistake in judgment or in any other event, except for losses resulting from its
willful misfeasance, bad faith or gross negligence in the performance of its
duties or its reckless disregard of such duties. The Current Sub-Advisory
Agreement continues automatically for successive one-year periods, provided such
continuance is approved at least annually by the Board of Trustees or vote of a
majority of the Fund's shareholders (as defined in the Investment Company Act),
in either event so long as its continuance is also approved by a majority of the
Trust's Trustees who are not "interested persons" (as defined in the Investment
Company Act) of any party to the Agreement (the "Independent Trustees"). The
Current Sub-Advisory Agreement may not be amended unless approved by vote of a
majority of the Fund's shareholders (as defined in the Investment Company Act)
and a majority of the Independent Trustees. It is terminable any time without
penalty, on 60 days' notice, by AMG, FSHK, the Board of Trustees or vote of a
majority of the Fund's shareholders.
THE NEW SUB-ADVISORY AGREEMENT
A copy of the New Sub-Advisory Agreement, as further described below, is set
forth as Appendix A to this Proxy Statement. The following description of the
New Sub-Advisory Agreement is qualified in its entirety by reference to the full
text of the Agreement as set forth in Appendix A.
The terms and conditions of the New Sub-Advisory Agreement, which the Trust
anticipates will take effect on March 31, 2006 following shareholder approval,
are substantially the same as those of the Current Sub-Advisory Agreement. Under
the New Sub-Advisory Agreement, FSI would among other things: (i) provide a
continuous investment program for the Fund's assets; (ii) select brokers and
dealers through which securities transactions are to be executed; and (iii)
maintain certain records required under relevant provisions of the Investment
Company Act. As consideration for its services, FSI receives the same annual fee
as the Current Sub-Advisor -- at the rate of 0.50% of the Fund's average net
assets, computed daily and payable quarterly.
Like the Current Sub-Advisory Agreement, the New Sub-Advisory Agreement provides
that FSI will not be liable for any mistake in judgment or in any other event,
except for losses resulting from its willful misfeasance, bad faith or gross
negligence in the performance of its duties or its reckless disregard of such
duties. The New Sub-Advisory Agreement has an initial term of two years, and
thereafter continues automatically for successive one-year periods provided such
continuance is approved at least annually by the Board of Trustees or vote of a
majority of the Fund's
2
shareholders (as defined in the Investment Company Act), in either event so long
as its continuance is also approved by a majority of the Independent Trustees.
Like the Current Sub-Advisory Agreement, the New Sub-Advisory Agreement may not
be amended unless approved by vote of a majority of the Fund's shareholders (as
defined in the Investment Company Act) and a majority of the Independent
Trustees. It is terminable any time without penalty, on 60 days' notice, by AMG,
FSI, the Board of Trustees or vote of a majority of the Fund's shareholders.
INFORMATION ABOUT FSI
Like the Current Sub-Advisor, FSI is an indirect, wholly-owned subsidiary of
Commonwealth Bank of Australia ("Commonwealth Bank"). The Current Sub-Advisor
and FSI are operated as components of First State International, the
international funds management division of Commonwealth Bank, which had
L10.2 billion (British) in assets under management as of December 31,
2005. First State International has 161 employees, including 52 investment
professionals, with offices in London, Edinburgh, Hong Kong, Singapore and
Indonesia and clients in Europe, the US and Asia.
FSI is a Scottish company whose registered office is at 23 St. Andrew Square,
Edinburgh, Scotland. It is engaged in the management of investment portfolios,
principally for clients resident outside the UK, and is registered as an
investment adviser with both the US Securities and Exchange Commission and the
UK Financial Services Authority. FSI is a member of the UK division of first
State International. As of December 31, 2005, FSI had 154 employees, including
30 investment professionals, and assets under management of $14.4 billion. Six
members of First State International's Asia Pacific ex-Japan Investment Team are
based in Scotland, along with professionals in First State International's other
offices, as described below.
FSI does not currently serve as adviser or sub-adviser to any funds having
similar investment objectives as the Fund:
PORTFOLIO MANAGEMENT TEAM
Angus Tulloch and Stuart Paul, Joint Managing Partners of FSI, have ultimate
responsibility for the First State International's Asia Pacific ex-Japan
investment product. The Asia Pacific ex-Japan Investment Team consists of 14
members based in Edinburgh, Singapore and Hong Kong, and is responsible for over
50% of First State International's total assets under management Alistair
Thompson, supported by Talib Dohadwala, is responsible for day-to-day management
of the New Asia Growth Fund's portfolio. They are assisted by the rest of the
Asia Pacific Team, most of whom specialize in specific geographical areas.
DIRECTORS AND OFFICERS OF FSI
The table below identifies the principal executive officer and the directors of
FSI and their principal occupations:
Name Title
- ---- -----
Thomas Tremayne Waring Chief Executive Officer and Director
Stuart Watson Paul Director
Gregory Robert Cooper Chief Financial Officer and Director
The table below identifies the "control persons" of FSI, as that term is defined
in the Investment Company Act.
CONTROL PERSONS OF FSI
Name Address Basis of Control
- ---- ------- ----------------
First State Investment Management 23 St. Andrew Square Beneficial Owner
(UK) Limited Edinburgh, UK EH2 1BB
SI Holdings Limited 23 St. Andrew Square Indirect Beneficial Owner
Edinburgh, UK EH2 1BB
First State Investments (UK 23 St. Andrew Square Indirect Beneficial Owner
Holdings) Limited Edinburgh, UK EH2 1BB
Colonial First State Group Limited 48 Martin Place Indirect Beneficial Owner
Sydney, Australia
Colonial Mutual Life Assurance Society 48 Martin Place Indirect Beneficial Owner
3
Limited Sydney, Australia
Colonial Holding Co.(NO2) PTY 48 Martin Place Indirect Beneficial Owner
Limited Sydney, Australia
Colonial Holding Company PTY Limited 48 Martin Place Indirect Beneficial Owner
Sydney, Australia
Colonial Limited 48 Martin Place Indirect Beneficial Owner
Sydney, Australia
Commonwealth Bank of Australia 48 Martin Place Indirect Beneficial Owner
Sydney, Australia
Stuart Watson Paul 23 Saint Andrew Square Director
Edinburgh, UK EH2 1BB
Gillian Victoria Davies and Adrian 23 Saint Andrew Square Company Secretary
Charles Newlands Smith Edinburgh, UK EH2 1BB
Michael Graeme Tulloch 23 Saint Andrew Square Head of Finance
Edinburgh, UK EH2 1BB
Gregory Robert Cooper 23 Saint Andrew Square Chief Operating Officer and Director
Edinburgh, UK EH2 1BB
Thomas Douglas Tremayne Waring 30 Cannon St Chief Executive
London, UK EC4M 6YQ
Rajeev Gupta 30 Cannon St Chief Compliance Officer
London, UK EC4M 6YQ
Commonwealth Insurance Holdings 48 Martin Place Indirect Beneficial Owner
Limited Sydney, Australia
CONSIDERATION OF THE NEW SUB-ADVISORY AGREEMENT BY THE BOARD
On September 20, 2005, the Board of Trustees met in person at a meeting called
for the purpose of considering, among other things, the New Sub-Advisory
Agreement. At the meeting, the Board approved the New Sub-Advisory Agreement
subject to shareholder approval. The Board's approval followed the
recommendation of the Independent Trustees, who met in person on September 19,
2005 to consider the matter among other things.
During the course of previous years, the Trustees received a wide variety of
material relating to the services provided by the Current Sub-Advisor, including
its portfolio management services. In determining whether to approve the New
Sub-Advisory Agreement, the Trustees also evaluated information provided by AMG
and FSI in accordance with section 15(c) of the Investment Company Act. In that
connection the Trustees considered a variety of factors as described below. The
Independent Trustees received assistance and advice regarding legal and industry
standards from their independent counsel. They discussed the renewals with
management representatives and in a private session with independent legal
counsel at which no representatives of management were present. In deciding to
recommend approval of the New Sub-Advisory Agreement, the Trustees did not
identify any single or particular information that, in isolation, was the
controlling factor. The following summary describes the most important, but not
all, of the factors considered by the Board.
NATURE, EXTENT AND QUALITY OF SERVICES PROVIDED BY FSI
As part of their review, the Board examined the ability of FSI to provide high
quality investment management services to the Fund. The Board considered the
quality and depth of FSI's organization in general and of the investment
professionals currently providing services on behalf of FSHK to the Fund (who
would continue to provide such services on behalf of FSI); the investment
philosophy and decision-making processes of those professionals; the capability
and integrity of FSI's senior management and staff; the quality of FSI's
services with respect to regulatory compliance and compliance with the
investment policies of the Fund (which the Board believes will be more robust
than those available from FSHK); and the business reputation, financial
condition and operational stability of FSI and its parent company Commonwealth
Bank of Australia.
In reviewing the quality of the services to be provided to the Fund by FSI's
investment professionals who would continue to manage the Fund's portfolio, the
Board also reviewed a comparison of the past performance of the Fund to a peer
group of comparable funds. The Board noted among other things that the Fund had
performed at approximately the average of its peer group during the one- and
five-year periods ended July 31, 2005 and at approximately the top quarter of
its peer group for the ten-year period ended on that date and since its
inception. The Board concluded that the performance record of the investment
professionals who would manage the Fund on behalf of FSI indicated that their
continued management would benefit the Fund and its shareholders.
4
SUB-ADVISORY FEES AND TOTAL EXPENSES
In reviewing the fees and expenses borne by the Fund, the Board noted among
other things that there would be no change in the Fund's sub-advisory fee as a
result of the change in sub-advisors. They noted that the Fund's total advisory
and sub-advisory fees were above the median for comparable funds during the
twelve months ended July 31, 2005; that the total fees and expenses for Class Y
shares of the Fund (which comprise the bulk of the Fund's assets) were slightly
above the median for comparable institutional funds; and that the total fees and
expenses for Class A shares of the Fund were at the median for comparable retail
funds. The Board also received information regarding the advisory fees paid by
other institutional clients of FSI and FSHK and noted that the Fund was
receiving a very favorable rate compared with those other clients. The Board
ultimately concluded that in the context of the Fund's overall performance and
the other factors considered by the Board the level of total fees, sub-advisory
fees and total expenses of the Fund were reasonable.
SUB-ADVISOR COSTS, LEVEL OF PROFITS AND ECONOMIES OF SCALE
The Board also evaluated the projected benefits of the Fund's sub-advisory
relationship to FSI, including the projected profitability of its relationship
with the Fund. The Board noted that although FSI's sub-advisory fee did not have
break points and thus would not reflect economies of scale, if any, the fee was
below its lowest breakpoint for other institutional clients and thus reflected
the economies of scale of its overall investment management business. The Board
also noted that FSI would receive certain ancillary benefits as a result of its
relationship to the Fund, including the benefit of research provided by
broker-dealers executing portfolio transactions on behalf of the Fund, but that
FSI does not obtain third-party research or other services in return for
allocating brokerage to such broker-dealers. The Independent Trustees concluded
that the Fund's cost structure was reasonable and FSI's projected profit margin
with respect to its relationship with the Fund was within the range of
acceptable industry standards.
CONCLUSIONS
Based on their review, including their consideration of each of the factors
referred to above, the Board (including all of the Independent Trustees)
determined, in the exercise of their business judgment, that FSI's proposed
sub-advisory fee was fair, and that approval of the New Sub-Advisory Agreement
with FSI was in the best interest of the Fund and its shareholders.
THE BOARD OF TRUSTEES, INCLUDING THE INDEPENDENT TRUSTEES, UNANIMOUSLY
RECOMMENDS THAT THE SHAREHOLDERS APPROVE THE NEW SUB-ADVISORY AGREEMENT.
OTHER INFORMATION
PROXY SOLICITATION
The costs of the Meeting, estimated to be approximately $5,000, will be paid by
the Fund,. The principal solicitation will be by mail, but proxies also may be
solicited by telephone, facsimile or personal interview by officers or agents of
the Trust. In addition, the Fund may retain a proxy solicitation firm to assist
in the solicitation of proxies. The Fund will request broker-dealer firms,
custodians, nominees and fiduciaries to forward proxy materials to the
beneficial owners of the Fund shares held of record by such persons.
SHAREHOLDER VOTING
Holders of the Fund's Class A, Class B, Class C, and Class Y shares of
beneficial interest (collectively, the "Shares") of record as of the close of
business on January 27, 2006 (the "Record Date") are entitled to vote on all of
the business at the Meeting and any adjournments thereof. Each Share is entitled
to one vote, and fractional Shares are entitled to fractional votes, without
regard to Class. As of the Record Date, the outstanding Shares of the Fund were
as follows:
5
OUTSTANDING OUTSTANDING OUTSTANDING OUTSTANDING TOTAL OUTSTANDING
CLASS A SHARES CLASS B SHARES CLASS C SHARES CLASS Y SHARES SHARES
- -------------- -------------- -------------- -------------- -----------------
The presence in person or by proxy of more than 50% of the outstanding Shares of
the Fund (without regard to Class) entitled to vote at the Meeting will
constitute a quorum for the Meeting. If a quorum is not present, sufficient
votes are not received by the date of the Meeting, or the holders of Shares
present in person or by proxy determine to adjourn the Meeting for any other
reason, a person named as proxy may propose one or more adjournments of the
Meeting from time to time to permit further solicitation of proxies. Abstentions
and broker non-votes will be counted as Shares present but not voting.
Accordingly, abstentions and broker non-votes effectively will be a vote against
adjournment and the proposal. Broker non-votes are Shares held in street name
for which the broker indicates that instructions have not been received from the
beneficial owners or other persons entitled to vote and for which the broker
does not have discretionary voting authority. The persons named as proxies will
vote in favor of adjournment those Shares which they represent if adjournment is
necessary to obtain a quorum or to obtain a favorable vote on the proposal.
In addition to voting in person at the Meeting, shareholders also may sign and
mail the proxy card received with this proxy statement. Timely, properly
executed proxies will be voted as instructed by shareholders. If no instructions
are given on the proxy with respect to a proposal but the proxy is properly
executed, it will be voted FOR the proposal. A shareholder may revoke his or her
proxy at any time prior to its exercise by written notice addressed to the
Secretary of the Trust at the address set forth on the cover of this proxy
statement or by voting in person at the Meeting. However, attendance in person
at the Meeting, by itself, will not revoke a previously tendered proxy.
REQUIRED VOTE
Approval of the New Sub-Advisory Agreement will require the affirmative vote of
a "majority of the outstanding voting securities of the Fund" as defined in the
1940 Act. This means the lesser of (1) 67% or more of the Shares of the Fund
present at the Meeting if the owners of more than 50% of the Shares of the Fund
then outstanding are present in person or by proxy, or (2) more than 50% of the
outstanding Shares of the Fund entitled to vote at the Meeting. If shareholders
fail to approve the New Sub-Advisory Agreement, FSHK will continue to serve as
the sub-advisor to the Fund, and the Board will consider what alternatives may
be most appropriate for future management of the Fund.
INTERESTED PARTIES
As of the Record Date, Trustees and officers of the Trust as a group
beneficially owned less than 1% of the outstanding Shares of the Fund. The
following table sets forth, as of the Record Date, the name, address, number and
percentage of Shares of persons that owned beneficially or of record 5% or more
of the outstanding Shares of the Fund.
NAME AND ADDRESS OF
HOLDER (1) NUMBER OF SHARES PERCENTAGE OF FUND
- ------------------- ---------------- ------------------
6
SHAREHOLDER PROPOSALS
Neither the Trust nor the Fund holds regular shareholders' meetings.
Shareholders wishing to submit a proposal for inclusion in a proxy statement for
a subsequent shareholders' meeting should send their written proposal to the
Secretary of the Trust at the address set forth on the cover of this proxy
statement.
A proposal must be received within a reasonable time prior to the date of a
meeting of shareholders to be considered for inclusion in the proxy materials
for a meeting. Timely submission of a proposal, however, does not necessarily
mean that the proposal will be included. Persons named as proxies for any
subsequent shareholders' meeting will vote in their discretion with respect to a
proposal submitted on a timely basis.
OTHER SERVICE PROVIDERS
BISYS Fund Services Ohio, Inc. serves as administrator to the Funds pursuant to
an Administration Agreement and BISYS Fund Services LP serves as the distributor
of shares of the Funds pursuant to a Distribution Agreement. The address of each
is 3435 Stelzer Road, Columbus, Ohio 43219.
THE TRUST REQUESTS YOUR EXECUTION AND RETURN OF THE ENCLOSED PROXY. A
SELF-ADDRESSED, POSTAGE-PAID ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE.
By order of the Board of Trustees,
- -------------------------------------
Patrick Keniston
Secretary
7
APPENDIX A
FORM OF SUB-ADVISORY AGREEMENT
FORM OF SUB-ADVISORY AGREEMENT
PACIFIC CAPITAL NEW ASIA GROWTH FUND
THIS AGREEMENT is made as of _________, 2006 among Pacific Capital Funds of 3435
Stelzer Road, Columbus, Ohio, 43219 USA (the "Trust"), The Asset Management
Group of Bank of Hawaii of 111 S. King Street, Honolulu, Hawaii 96813 (the
"Adviser"), and First State Investments International Limited, whose registered
office is at 23 St Andrew Square, Edinburgh EH2 1BB (the "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 New
Asia Growth Fund (the "Fund");
WHEREAS, the Adviser desires to retain the Sub-Adviser to assist it in the
provision of a continuous investment program for the Fund and the Sub-Adviser is
willing to do so; and
WHEREAS, the Sub-Adviser, which is registered in the United States as an
investment advisor under the 1940 Investment Act and is authorized and regulated
in the United Kingdom by the Financial Services Authority, 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 the Sub-Adviser with effect
from the date of this Agreement to act as the 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, the Sub-Adviser accepts such appointment
and agrees to render the services herein set forth for the compensation herein
provided. The initial composition and value of the Fund will be as agreed
between the Trust and the Sub-Adviser. For the purposes of the rules of the
Financial Services Authority ("FSA"), the Trust is classified by the Sub-Adviser
as an intermediate customer.
The Trust and the Adviser represent and warrant to the Sub-Advisor
that each of them has full capacity and authority to appoint the Sub-Advisor on
the terms of this Agreement; that the Fund is free from all liens, charges and
encumbrances; and that all transactions entered into within the scope of this
Agreement will be binding on the Trust in accordance with its or their
respective terms and that neither the entry into this Agreement nor into any
such transaction will breach any law, rule or regulation applicable to the
Trust.
2. Sub-Advisory Services. Subject to the supervision of the Trust's Board
of Trustees and the Adviser, the Sub-Adviser will assist the Adviser in
providing a continuous investment program with respect to the Fund's portfolio,
including investment research and management with respect to all securities and
investments and cash equivalents in the Fund. The Sub-Adviser will provide
services under this Agreement in accordance with the Fund's investment
objectives, policies and restrictions as stated in the Fund's prospectus and
such resolutions of the Trust's Board of Trustees applicable to the Fund all as
are notified to the Sub-Adviser from time to time.
Without limiting the generality of the foregoing, the Sub-Adviser further agrees
that it will, with respect to the Fund and all in accordance with the investment
objectives and restrictions applicable to the Fund as are notified to the
Sub-Adviser from time to time:
(a) determine from time to time what securities and other investments will be
purchased, retained or sold for the Fund;
(b) place orders pursuant to its investment determinations for the Fund either
directly with the issuer or with any broker or dealer;
(c) 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;
(d) manage the Fund's overall cash position;
(e) attend business and 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 in such locations and at such times as are agreed between the
parties;
(f) ensure all Fund security valuations are reasonable for purposes of
determining whether such securities should be purchased, owned or sold by
the Fund;
(g) ensure that, if required, securities are identified for proper segregation
and collateralization;
(h) vote proxies on behalf of the Fund and on request provide proxy voting
information to the Fund and its agents in relation to the Fund's annual
filing on Form N-PX and as otherwise reasonably requested by officers of
the Fund; and
(i) 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 such of the
Trust's Board meetings as are notified to the Sub-Adviser in sufficient
time for it to be able to provide such reports.
3. Covenants by the Sub-Adviser. The Sub-Adviser agrees with respect to the
services provided to the Fund that it will:
(a) conform with all Rules and Regulations of the Securities and Exchange
Commission;
(b) telecopy or provide by electronic means trade information to the Adviser on
the first business day following the day of the trade
(c) treat confidentially and as proprietary information of the Trust all
records and other information relative to the Trust and prior, present or
potential shareholders of the Trust, and 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 the 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);
(d) notify the Adviser and the Trust immediately upon detection of (i) any
material failure to manage the Fund in accordance with its investment
objectives and policies or any applicable law; or (ii) any material breach
of any of the Fund's or the Sub-Adviser's policies, guidelines or
procedures. The Sub-Adviser agrees to correct any such failure promptly and
to take any action that the Board may reasonably request in connection with
any such breach;
(e) upon request, provide the Adviser and/or the officers of the Trust with
supporting certifications which pertain to services being provided by the
Sub-Adviser hereunder, in connection with any filings and certifications
made pursuant to the Sarbanes-Oxley Act of 2002; and
(f) promptly notify the Adviser and the Trust in the event (i) the Sub-Adviser
is served or otherwise receives notice of any action, suit, proceeding,
inquiry or investigation, at law or in equity, before or by any court,
public board, or body, involving the affairs of the Trust (excluding class
action suits in which the Fund is a member of the plaintiff class by reason
of the Fund's ownership of shares in the defendant) or the compliance by
the Sub-Adviser with the federal or state securities laws or (ii) an actual
change in control of the Sub-Adviser resulting in an "assignment" (as
defined in the 1940 Act) has occurred or is otherwise proposed to occur.
4. Services Not Exclusive. Except as provided herein, the services
furnished by the Sub-Adviser hereunder are deemed not to be exclusive, and
nothing in this Agreement shall (i) prevent the Sub-Adviser from acting as
investment adviser or manager for any other person or persons, including other
management investment companies, or (ii) limit or restrict the Sub-Adviser from
buying, selling or trading any securities or other investments (including any
securities or other investments which the Funds are eligible to buy) for its or
their own accounts or for the accounts of others for whom it or they may be
acting.
5. Portfolio Transactions. Investment decisions for the Fund shall be made
by the Sub-Adviser independently from those for any other investment companies
and accounts advised or managed by the 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 the Sub-Adviser believes to be equitable to the Fund and such
other investment company or account. The Fund acknowledges that 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, the 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. The Fund and
Adviser understand that the Sub-Adviser may give advice and take action with
respect to any of its other clients or for its own account which may differ from
the timing or nature of action taken by the Sub-Adviser, with respect to the
Fund.
The 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. The 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 the Sub-Adviser. In executing portfolio transactions and
selecting brokers or dealers, the Sub-Adviser shall use its reasonable best
efforts to seek the most favorable execution of orders, after taking into
account all factors the 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, the 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 the Sub-Adviser or any of its affiliates exercises
investment discretion. The 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 the 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 the Sub-Adviser's overall responsibilities to the Fund. In no
instance will portfolio securities be purchased from or sold to the Sub-Adviser,
or the Fund's principal underwriter, or any affiliated person thereof except as
permitted by the 1940 Act or the rules of the Securities and Exchange Commission
thereunder.
6. Books and Records. In compliance with the requirements of Rule 3la-3
under the 1940 Act, the 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.
The 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, the Sub-Adviser shall 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 directly from the Fund,
calculated at the annual rate of 0.5 per cent of the Fund's daily net assets.
9. Standard of Care; Limitation of Liability. The 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 and accounts, but shall not be liable for any action taken or omitted
by it in the performance of services rendered hereunder in the absence of its
bad faith, willful misconduct, gross negligence or reckless disregard of its
duties. No warranty or representation of any kind is given by the Sub-Adviser as
to the performance or profitability of the Fund's portfolio or any part of it.
Neither the Sub-Adviser, nor any of its directors, officers, agents or employees
shall be liable or responsible to the Trust, its shareholders or the Adviser for
any error of judgment, or any loss arising out of any investment, or for any
other act or omission in the performance by the Sub-Adviser of its duties under
this Agreement, except for liability resulting from bad faith, willful
misconduct, gross negligence or reckless disregard of its duties under this
Agreement.
10. Reference to the Sub-Adviser. Neither the Adviser nor any of its
affiliates or agents shall make reference to or use the name of the Sub-Adviser
or any of its affiliates, or any of their clients, except references concerning
the identity of and services provided by the 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 the
Sub-Adviser, which approval shall not be unreasonably withheld or delayed.
11. Duration and Termination. Unless sooner terminated, this Agreement
shall continue for a period of two years from the date first set forth above,
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 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, 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. This Agreement is terminable at any time
without penalty, with respect to the Fund, on 60 days' notice, by the Adviser,
the Sub-Adviser or the Trust's Board of Trustees or by vote of 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 will
terminate automatically in the event of its assignment (as defined in the 1940
Act). In relation to all communications of any nature by the Trust to the
Sub-Adviser, the Sub-Adviser shall be entitled to assume, in the absence of
explicit instructions to the contrary, that any decisions communicated to it as
being by the Trust's Board of Trustees are by such members of that board as are
Disinterested Trustees.
Termination will be without prejudice to the completion of transactions
already initiated which will be completed expeditiously by the Sub-Adviser.
Termination of this Agreement shall not prejudice or affect the rights and
liabilities of the Parties which have accrued prior to the date of termination.
Upon termination the Trust shall pay to the Sub-Adviser its accrued amount of
fees and charges pro rata to the date of termination; pay to the Sub-Adviser any
additional expenses necessarily incurred in terminating this Agreement; and bear
any losses necessarily realised in settling or concluding outstanding
obligations.
12. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought. No amendment of this Agreement shall be
effective until approved by the vote of (i) a majority of the outstanding voting
securities of the Fund, if required by the 1940 Act or
the rules of the Securities and Exchange Commission thereunder, 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, advice or report to be given pursuant to this
Agreement shall be delivered or mailed by registered post:
To The Sub-Adviser at:
First State Investments International Limited
23 St Andrew Square
Edinburgh
EH2 1BB
Scotland
Attention: company secretarial department
With a copy to:
Ruta Noreika
First State Investments International Limited
23 St Andrew Square
Edinburgh
EH2 1BB
Scotland
To the Adviser at:
The Asset Management Group of
Bank of Hawaii
111 South King Street
Honolulu, Hawaii 96813
To the Trust at:
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. 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 (without regard to conflict of law principles). 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. In the event of any conflict between the law governing this
contract and the rules of the FSA, the law governing this contract shall
prevail.
Any complaint relating to the Sub-Adviser should, in the first
instance, be made in writing to the Head of Institutional Business of the
Sub-Adviser (with a copy to the Company Secretary of the Sub-Adviser) at the
address notified by the Sub-Adviser to the Fund pursuant to Clause 14. Where
required by FSA Rules, a copy of the Sub-Adviser's complaints handling procedure
will be available on request.
A statement is available from the Sub-Adviser describing the Fund's rights to
compensation (if any) in the event that the Sub-Adviser is unable to meet its
liabilities.
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, as amended, 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 "Pacific Capital Funds" 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 the Trust.
[Signature Page Follows]
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.
THE ASSET MANAGEMENT GROUP OF BANK OF
HAWAII
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
FIRST STATE INVESTMENTS INTERNATIONAL
LIMITED
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
PACIFIC CAPITAL FUNDS
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES
PACIFIC CAPITAL NEW ASIA GROWTH FUND
SPECIAL MEETING OF SHAREHOLERS - MARCH 13, 2006
The undersigned hereby appoints Patrick Keniston and Heather Slavkin, or
either of them (with full power to act in the absence of the other, each with
full power of substitution), his/her attorney and proxy to vote and act with
respect to all shares of each of the funds listed above (each, a "Fund" and
collectively, the "Funds"), each a series of Pacific Capital Funds (the "Trust")
held by the undersigned at the Special Meeting of Shareholders of the Funds to
be held at 10:00 a.m., Eastern Time, on March 13, 2006, at the offices of the
Trust's administrator, BISYS Fund Services Ohio, Inc., 100 Summer Street, Suite
1500, Boston, Massachusetts 02110, and at any adjournment thereof (the
"Meeting"), and instructs them to vote as indicated on the matters 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.
THE BOARD OF TRUSTEES RECOMMENDS THAT YOU VOTE FOR THE FOLLOWING PROPOSALS:
1. APPROVAL OF A NEW SUB-ADVISORY AGREEMENT FOR THE NEW ASIA GROWTH FUND
WITH FIRST STATE INVESTMENTS INTERNATIONAL LIMITED
[ ] 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 ______________, 2006
----------------------------------------------
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.