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SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN A PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box:
o Preliminary Proxy Statement
o Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
þ Definitive Proxy Statement
o Definitive Additional Materials
o Soliciting Material Under Rule 14a-12
BISHOP STREET FUNDS
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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No fee required. |
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
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Title of each class of securities to which transaction applies: |
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Aggregate number of securities to which transaction applies: |
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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): |
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Proposed maximum aggregate value of transaction: |
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Total fee paid: |
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Fee paid previously with preliminary materials. |
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Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date
of its filing. |
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Amount Previously Paid: |
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Form, Schedule or Registration Statement No.: |
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Date Filed: |
BISHOP STREET LARGE CAP CORE EQUITY FUND
a series of
BISHOP STREET FUNDS
999 Bishop Street, 28th Floor
Honolulu, Hawaii 96813
Dear Shareholder:
I am writing to inform you of an upcoming special meeting of shareholders of Bishop Street Funds
Large Cap Core Equity Fund (the Fund) to be held on January 15, 2010 (the Meeting). If you are
a shareholder of record of the Fund as of the close of business on December 11, 2009, you are
entitled to vote at the Meeting, and any adjournment of the Meeting. Enclosed for your reference
and use are a notice, proxy statement (the Proxy Statement), and proxy card for the Meeting.
At the Meeting, you will be asked to approve the following matters:
PROPOSAL 1: |
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Approval of a new investment
sub-advisory agreement for the Fund
between Bishop Street Capital
Management (BSCM or the
Adviser) and Columbia Management
Advisors, LLC (CMA). |
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PROPOSAL 2: |
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Approval of a new investment goal for
the Fund, which in the future would be
changeable by the Board of Trustees of
Bishop Street Funds (the Trust)
without shareholder approval. |
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PROPOSAL 3: |
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Approval of an interim sub-advisory
agreement among the Trust, on behalf of
the Fund, the Adviser and Lotsoff
Capital Management (Lotsoff). |
The purpose of this proxy statement is to obtain your approval on the matters identified in each
proposal in order to effect certain changes to the Fund. At the November 11-12, 2009 meeting of
the Board of Trustees (the Board), BSCM, the Funds investment adviser, recommended the
replacement of the Funds current sub-adviser, Lotsoff, with CMA because it believes that such a
change would be in the best interests of the Fund and its shareholders. In connection with the
proposal to hire CMA as the Funds new sub-adviser, BSCM also recommended approval of changes to
the Funds name, investment goal and investment strategy. The Board unanimously approved these
proposals and is now seeking your approval of a new sub-advisory agreement with CMA, as required by
the Investment Company Act of 1940 (the 1940 Act). The proposed sub-advisory agreement with CMA
and the current agreement with Lotsoff are substantially similar, except for the compensation to be
paid to CMA. Under the proposed new sub-advisory agreement, CMA would be entitled to a greater fee
than Lotsoff under its contract. However, because BSCM is responsible for paying sub-advisory
fees, the proposed sub-advisory fees will not result in increased advisory fees paid by the Fund.
Changes to the Funds investment goal presently must be approved by shareholders. The Board is
also seeking your approval of a new investment goal for the Fund, which in the future may be
changed by the Board without shareholder approval. Consequently, the Fund would not bear the
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cost of soliciting shareholder approval of any subsequent changes to the Funds investment goal and
would allow the Board to change the Funds goal in response to market conditions and other
circumstances in a timely manner. Changes to the Funds name, investment goal and investment
strategy will not be effected unless shareholders approve a new sub-advisory agreement with CMA.
In addition, the Board is seeking your approval of an interim sub-advisory agreement with the
Trust, the Adviser and Lotsoff, the current sub-adviser of the Fund (the Interim Agreement), so
that Lotsoff may receive its full fee under the Interim Agreement. At a meeting held on August
11-12, 2009, Lotsoff informed the Board that a controlling block of Lotsoffs partnership interests
would be transferred to new owners (the Transfer). Under the 1940 Act, the Transfer would
constitute a change in control of Lotsoff resulting in the assignment, and automatic termination,
of its sub-advisory agreement with the Trust and the Adviser. At the August 11-12, 2009 meeting,
the Board approved the Interim Agreement in order for Lotsoff to continue to provide investment
sub-advisory services after the Transfer without first obtaining shareholder approval. The Interim
Agreement became effective on September 1, 2009. Lotsoff can serve pursuant to the Interim
Agreement for up to 150 days. Compensation Lotsoff earns is being held in an interest-bearing
escrow account during this time period. Under the 1940 Act, Lotsoff is only entitled to its full
fee (plus interest) held in the escrow account if the shareholders of the Fund approve the Interim
Agreement, or otherwise approve a new investment advisory agreement with Lotsoff. Because the
Board is recommending the approval of a new sub-advisory agreement with CMA, Lotsoff will not
receive its full fee in the escrow account unless shareholders approve the Interim Agreement. The
Board has determined that it is appropriate for Lotsoff to receive its full fee (plus interest) for
its services under the Interim Agreement and is therefore recommending your approval of the Interim
Agreement. The terms of the Interim Agreement are identical to the terms of the prior sub-advisory
agreement with Lotsoff, with the exception of the provisions relating to the duration and
termination of the Interim Agreement, and the manner in which Lotsoff is compensated, as described
above.
More specific information about each proposal is contained in the proxy statement, which you should
consider carefully.
THE BOARD OF TRUSTEES OF BISHOP STREET FUNDS HAS UNANIMOUSLY APPROVED THE PROPOSALS AND
RECOMMENDS THAT YOU VOTE FOR EACH PROPOSAL AS DESCRIBED IN THE PROXY STATEMENT.
YOUR VOTE IS IMPORTANT TO US. PLEASE TAKE A FEW MINUTES TO REVIEW THE PROXY STATEMENT AND VOTE
YOUR SHARES TODAY.
While you are, of course, welcome to join us at the Meeting, most shareholders cast their votes by
filling out and signing the enclosed proxy card. Whether or not you plan to attend the Meeting, we
need your vote. Please mark, sign, and date the enclosed proxy card and return it promptly in the
enclosed postage-paid envelope so that the maximum number of shares may be voted. You may also
vote your shares in person.
If we do not receive your vote promptly, you may be contacted by a representative of the Fund or
the Adviser, who will remind you to vote your shares.
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Please do not hesitate to call 1-800-262-9565 if you have any questions about the proposals under
consideration. Thank you for taking the time to consider these important proposals and for your
investment in the Fund.
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Sincerely,
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/s/ Philip T. Masterson
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Philip T. Masterson |
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President |
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PROMPT EXECUTION AND RETURN OF THE ENCLOSED PROXY CARD
IS REQUESTED. A SELF-ADDRESSED, POSTAGE-PAID ENVELOPE IS ENCLOSED
FOR YOUR CONVENIENCE.
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IMPORTANT NEWS FOR SHAREHOLDERS
While we encourage you to read the full text of the enclosed Proxy Statement, for your convenience
here is a brief overview of the matters affecting the Bishop Street Large Cap Core Equity Fund (the
Fund) that require a shareholder vote.
QUESTIONS & ANSWERS
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Why am I receiving this Proxy Statement? |
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You are receiving these proxy materials a booklet that includes the proxy statement and a
proxy card because you have the right to vote on the following important proposals
concerning your investment in the Fund: |
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To approve a new investment sub-advisory agreement for the Fund between Bishop Street
Capital Management (the Adviser or BSCM) and Columbia Management Advisors, LLC (CMA). |
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To approve a new investment goal for the Fund, which in the future would be changeable
by the Board of Trustees of Bishop Street Funds (the Trust) without shareholder approval. |
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To approve an interim sub-advisory agreement among the Trust, on behalf of the Fund,
the Adviser and Lotsoff Capital Management (Lotsoff). |
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Why am I being asked to vote on a new sub-adviser and new sub-advisory agreement with CMA? |
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The federal law that regulates mutual funds, the Investment Company Act of 1940 (the 1940
Act), requires shareholder approval of new investment advisory agreements. At a meeting of
the Trusts Board of Trustees (the Board) held on November 11-12, 2009, BSCM, the Funds
investment adviser, recommended to the Board that a number of changes be made to the Fund. At
the meeting, BSCM recommended, and the Board approved, replacing the Funds current
sub-adviser with CMA. The Board is in turn seeking shareholder approval of a new sub-advisory
agreement between the Adviser and CMA (the New Sub-Advisory Agreement). |
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How will the approval of a new sub-adviser and the New Sub-Advisory Agreement affect the
Funds expenses? |
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The New Sub-Advisory Agreement and the sub-advisory agreement currently in place with the
Fund are substantially similar except for the compensation to be paid under the New
Sub-Advisory Agreement. CMA would be entitled to a greater fee than Lotsoff under its
contract. However, BSCM, as the Funds investment adviser, will be responsible for paying any
advisory fees to the sub-adviser. As a result, the proposed changes will not result in
increased investment advisory fees to shareholders. |
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What happens if the New Sub-Advisory Agreement is not approved? |
(i)
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The Board has approved an interim agreement with the Funds current sub-adviser, Lotsoff (the
Interim Agreement), as discussed further below, which took effect on September 1, 2009 and
permits Lotsoff to continue to serve as the Funds sub-adviser for a period not to exceed 150
days from that date. If the New Sub-Advisory Agreement is not approved by shareholders, the
Fund will continue to operate under the Interim Agreement and the Board will consider such
further action as it deems in the best interests of the shareholders of the Fund, including
resubmitting the New Sub-Advisory Agreement to shareholders for approval. |
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Why am I being asked to vote for changes to the Funds investment goal? |
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Currently, the Funds investment goal is fundamental. Shareholders of the Fund are
entitled to vote for certain matters affecting the Trust as mandated by the 1940 Act,
including changing the fundamental investment goal of the Fund. In connection with its
proposal to change the sub-adviser to the Fund, BSCM recommended, and the Board approved,
changing the Funds fundamental investment goal from long-term capital appreciation to a
non-fundamental investment goal of total return, consisting of current income and capital
appreciation, to be more consistent with CMAs proposed approach to managing the Fund.
Because the change to the fundamental investment goal requires shareholder approval, the Board
is seeking shareholder approval to effect this change. However, if approved by shareholders,
the Funds investment goal will be non-fundamental, meaning that, in the future, the Board
would be able to change it without shareholder approval. The Board believes that it would
benefit shareholders of the Fund to allow the Fund and the Adviser greater flexibility to
change the Funds investment goal in response to changing market conditions or other
circumstances. Additionally, if shareholders approve a new non-fundamental investment goal,
the Fund would not bear the cost of soliciting shareholder approval of any subsequent changes
in the Funds investment goal. |
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What other changes are being made to the Fund? |
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In connection with its approvals to hire CMA for the Fund and the proposed change to the
Funds investment goal, the Board also approved a change in the Funds name from the Bishop
Street Large Cap Core Equity Fund to the Bishop Street Dividend Value Fund as well as a change
to the Funds investment strategy. Under the new investment strategy, the Fund will change
from investing at least 80% of its net assets in common stocks and other equity securities of
U.S. issuers with market capitalizations in excess of $5 billion, to investing at least 80% of
its net assets in income-producing (dividend-paying) equity securities, consisting primarily
of common stocks but also may include preferred stocks and convertible securities. Under the
new investment strategy, the Fund may invest in companies that have market capitalizations of
any size. In addition, the Fund may invest up to 20% of its net assets in debt securities
(including securities that, at the time of purchase, are rated below investment grade or
unrated but determined to be of comparable quality (high yield or junk bonds)). The Fund may
also invest up to 20% of its net assets in foreign securities. Additionally, the Fund may
invest in derivatives including futures, forwards, options and swap contracts. Consequently,
under this proposed new strategy, the principal risks of the Fund will include not only the
risk of |
(ii)
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investing in large cap securities, but also the risks of investing in mid and small
capitalization companies, debt securities (including high yield bonds), foreign securities
and derivatives. BSCM proposed, and the Board approved, these additional changes to the
Fund to make the Fund more consistent with CMAs proposed investment approach. Changes to
the Funds name, investment goal and investment strategy will not be effected unless
shareholders approve the New Sub-Advisory Agreement. |
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What will happen to the Funds current sub-adviser? |
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As discussed above, effective September 1, 2009, a controlling block of Lotsoffs partnership
interests were transferred to new owners (the Transfer). At its August 11-12, 2009 meeting,
the Board considered the Transfer and determined that it resulted in a change in control of
Lotsoff under the 1940 Act, which would result in the assignment, and automatic termination,
of Lotsoffs sub-advisory agreement with the Trust (the Prior Agreement). Consequently, the
Board approved the Interim Agreement in order for Lotsoff to continue to provide investment
sub-advisory services after the Transfer without first obtaining shareholder approval. Under
Rule 15a-4 under the 1940 Act, the Interim Agreement may continue for a term not to exceed 150
days. Because the Board is recommending the approval of CMA to replace Lotsoff as
sub-adviser, the Board is not seeking approval of a new sub-advisory agreement with Lotsoff.
The Interim Agreement will terminate the earlier of the effective date of a new sub-advisory
agreement with CMA, or the expiration of 150 days. The terms of the Interim Agreement, except
with respect to duration, termination and payment of compensation, are identical to the terms
of the Prior Agreement. |
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Why am I being asked to approve the Interim Agreement? |
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Pursuant to Rule 15a-4 under the 1940 Act, compensation paid to Lotsoff under the Interim
Agreement is being held in an interest-bearing escrow account during the term of the Interim
Agreement. Under Rule 15a-4, Lotsoff is only entitled to receipt of full compensation under
the Interim Agreement if the shareholders approve the Interim Agreement, or otherwise approve
a new investment advisory agreement with Lotsoff. If an agreement is not approved with
Lotsoff, Rule 15a-4 provides that Lotsoff will receive the lesser of costs incurred in
performing the Interim Agreement (plus interest) or the amount in the escrow account. As
stated, shareholders are not being asked to approve a new sub-advisory agreement with Lotsoff.
Therefore, without approval of the Interim Agreement by shareholders, Lotsoff may not receive
its full fee under the Interim Agreement. The Board has determined that, for its services
under the Interim Agreement, Lotsoff should receive its full fee and is therefore recommending
approval of the Interim Agreement. |
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What happens if the Interim Agreement is not approved? |
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If shareholders do not approve the Interim Agreement, Lotsoff will continue to serve under
the Interim Agreement, as it was approved in accordance with the requirements of Rule 15a-4 by
the Board. However, Lotsoff will only be entitled to receive compensation as provided for in
the Rule, as discussed above. The Interim Agreement will continue |
(iii)
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until the expiration of 150 days, or the effective date of a new sub-advisory agreement with
CMA, whichever is earlier. |
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How does the Board suggest that I vote? |
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After careful consideration, the Trustees unanimously recommend that you vote FOR each of
the proposals. Please see each proposal for a discussion of the Boards considerations in
making its recommendations. |
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Will my vote make a difference? |
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Yes. Your vote is needed to ensure that the proposals can be acted upon. We encourage all
shareholders to participate in the governance of the Fund. Additionally, your immediate
response on the enclosed proxy card will help save the costs of any further solicitations. |
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How do I place my vote? |
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You may provide the Trust with your vote via mail or in person. You may use the enclosed
postage-paid envelope to mail your proxy card. If you need more information on how to vote,
or if you have any questions, please call shareholder services at 1-800-262-9565. |
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Whom do I call if I have questions? |
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We will be happy to answer your questions about this proxy solicitation. Please call
shareholder services at 1-800-262-9565 between 8:30 a.m. and 5:00 p.m., Eastern Time, Monday
through Friday. |
PROMPT EXECUTION AND RETURN OF THE ENCLOSED PROXY CARD IS
REQUESTED. A SELF-ADDRESSED, POSTAGE-PAID ENVELOPE IS ENCLOSED
FOR YOUR CONVENIENCE.
(iv)
BISHOP STREET LARGE CAP CORE EQUITY FUND
a series of
BISHOP STREET FUNDS
999 Bishop Street, 28th Floor
Honolulu, Hawaii 96813
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON JANUARY 15, 2010
Notice is hereby given that a Meeting of Shareholders (the Meeting) of Bishop Street Funds Large
Cap Core Equity Fund (the Fund) will be held at the offices of SEI Investments, One Freedom
Valley Drive, Oaks, Pennsylvania 19456 on January 15, 2010 at 11:00 a.m. Eastern Time.
At the Meeting, shareholders of record of the Fund (the Shareholders) will be asked to consider
and act on the following proposals:
PROPOSAL 1: |
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Approval of a new investment sub-advisory agreement for the
Fund between Bishop Street Capital Management (BSCM or the Adviser)
and Columbia Management Advisors, LLC (CMA). |
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PROPOSAL 2: |
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Approval of a new investment goal for the Fund, which in the
future would be changeable by the Board of Trustees of Bishop
Street Funds (the Trust) without shareholder approval. |
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PROPOSAL 3: |
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Approval of an interim sub-advisory agreement among the
Bishop Street Funds Trust (the Trust), on behalf of the
Fund, the Adviser and Lotsoff Capital Management (Lotsoff). |
All Shareholders are cordially invited to attend the Meeting. However, if you are unable to attend
the Meeting, you are requested to mark, sign and date the enclosed proxy card and return it
promptly in the enclosed, postage-paid envelope so that the Meeting may be held and a maximum
number of shares may be voted. You may also vote in person. Your vote is important no matter how
many shares you own. You may change your vote even though you have already returned your proxy to
Bishop Street Funds by submitting a subsequent proxy by mail or by voting in person at the Meeting.
Shareholders of record at the close of business on December 11, 2009 are entitled to notice of and
to vote at the Meeting or any adjournment thereof.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE SHAREHOLDER MEETING TO BE
HELD ON JANUARY 15, 2010.
The proxy statement is available at www.proxyonline.com/docs/bishopstreet2010.pdf.
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By Order of the Board of Trustees
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/s/ Philip T. Masterson Philip T. Masterson
President
December 23, 2009
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BISHOP STREET LARGE CAP CORE EQUITY FUND
a series of
BISHOP STREET FUNDS
999 Bishop Street, 28th Floor
Honolulu, Hawaii 96813
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON JANUARY 15, 2010
This proxy statement is furnished in connection with the solicitation of proxies by the Board of
Trustees of Bishop Street Funds (the Trust) for use at the special meeting of Shareholders of the
Bishop Street Large Cap Core Equity Fund (the Fund) to be held on January 15, 2010 at 11:00 a.m.
Eastern Time at the offices of SEI Investments, One Freedom Valley Drive, Oaks, Pennsylvania 19456,
and at any adjourned session thereof (such special meeting and any adjournment thereof are
hereinafter referred to as the Meeting). Shareholders of record of the Fund at the close of
business on December 11, 2009 (Shareholders) are entitled to vote at the Meeting.
As of December, 11, 2009, the Fund had 6,452,450.24 units of beneficial interest
(shares) issued and outstanding.
INTRODUCTION AND GENERAL INFORMATION
I. General Information
As used in this proxy statement, the Trusts Board of Trustees is referred to as the Board, and
the term Trustee includes each trustee of the Trust. A Trustee that is an interested person of
the Trust is referred to in this proxy statement as an Interested Trustee. A Trustee may be an
interested person of the Trust because he or she is affiliated with the Trusts investment adviser,
Bishop Street Capital Management (BSCM or the Adviser), the Trusts principal underwriter, or
any of their affiliates. Trustees that are not interested persons of the Trust are referred to in
this proxy statement as Independent Trustees.
The Board has called the Meeting in order to permit the Shareholders to consider and vote on the
proposals set forth in the foregoing notice. If you wish to participate in the Meeting you may
submit the proxy card included with this proxy statement or attend in person. Your vote is
important no matter how many shares you own. You can vote easily and quickly by mail, or in
person. At any time before the Meeting, you may change your vote, even though a proxy has already
been returned, by written notice to the Trust c/o SEI Investments, One Freedom Valley Drive, Oaks,
Pennsylvania 19456, or by submitting a subsequent proxy by mail or in person at the Meeting.
Should Shareholders require additional information regarding the proposals or replacement proxy
cards, they may contact the Fund at 1-800-262-9565.
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In addition to the solicitation of proxies by mail, representatives of the Fund and the Adviser may
solicit proxies in person or by telephone. The Trust has also retained an outside firm, the Altman
Group, Inc. (the Altman Group), who specializes in proxy solicitation to assist with the proxy
solicitation process (tabulation, printing and mailing), the collection of proxies, and with any
necessary follow-up. Persons holding shares as nominees will, upon request, be reimbursed for
their reasonable expenses incurred in sending soliciting materials to their principals. The Fund
will bear the costs of the Meeting and proxy materials. All costs of solicitation, including (a)
printing and mailing of the proxy materials, (b) reimbursement of brokerage firms and others for
their expenses in forwarding solicitation material to the beneficial owners of the Funds shares
and (d) payment to the Altman Group for its services, are anticipated to amount to approximately
$2,000. The proxy card and this proxy statement are being mailed to Shareholders on or about
December 23, 2009.
Shares represented by duly executed proxies will be voted in accordance with the instructions
given. All proxy cards solicited that are properly executed and received in time to be voted at
the Meeting will be voted at the Meeting or any adjournment thereof according to the instructions
on the proxy card. If no specification is made on a proxy card with respect to any proposal, it
will be voted FOR the proposal.
II. Quorum and Meeting Adjournments
Each whole share is entitled to one vote and each fractional share is entitled to a proportionate
fractional vote on each matter as to which such shares are to be voted at the Meeting. A majority
of the shares entitled to vote (50.1% or more of total votes represented by all shares entitled to
vote and present at the Meeting either in person or by proxy) constitutes a quorum. For purposes
of determining the presence of a quorum, abstentions or broker non-votes will be counted as
present; however, they will have the effect of a vote AGAINST the proposal.
If a quorum is not present at the Meeting, or if a quorum is present at the Meeting but sufficient
votes to approve a proposal are not received, or if other matters arise requiring Shareholder
attention, the persons named as proxy agents may propose one or more adjournments of the Meeting to
permit further solicitation of proxies. Any such adjournment will require the affirmative vote of
a majority of those shares present at the Meeting or represented by proxy. The persons named as
proxies will vote those proxies that they are entitled to vote FOR such proposals in favor of
such an adjournment, and will vote those proxies required to be voted AGAINST such proposals,
against such an adjournment.
III. Vote Required to Approve Proposals
If a quorum is present at the Meeting, the approval of each proposal requires the affirmative vote
of a majority of the outstanding voting securities of the Fund. Under the Investment Company Act
of 1940, as amended (the 1940 Act), the vote of a majority of the outstanding voting securities
of the Fund means the affirmative vote of the lesser of (a) 67% or more of the voting securities
present at the meeting or represented by proxy if the holders of more than 50% of the outstanding
voting securities are present or represented by proxy or (b) more than 50% of the outstanding
voting securities. Each proposal will be voted on separately.
If the shareholders of the Fund do not approve the proposals, the Board will take such further
action as it deems in the best interests of the shareholders of the Fund.
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PROPOSAL 1: APPROVAL OF THE NEW INVESTMENT SUB-ADVISORY AGREEMENT
I. Synopsis of Proposal
The Board is recommending approval of a new sub-advisory agreement for the Fund between
BSCM and Columbia Management Advisors, LLC (CMA) (the New Sub-Advisory
Agreement). The Trustees, including the Independent Trustees, unanimously approved the New
Sub-Advisory Agreement at a meeting held on November 11-12, 2009.
II. Background Information
BSCM serves as investment adviser to the Fund pursuant to an investment advisory agreement between
the Trust and BSCM dated March 31, 1999 (the Advisory Agreement). BSCM also serves as investment
adviser to other Funds in the Trust. BSCM has managed the Fund since its inception on May 3, 2006.
Pursuant to the Advisory Agreement, BSCM is responsible for, among other things, managing the
investment and reinvestment of Fund assets and the continuous review, supervision, and
administration of the investment program of the Fund. Also under the Advisory Agreement, BSCM may
delegate all or any portion of its responsibilities to one or more sub-advisers, subject to the
supervision of BSCM and the Board. BSCM is responsible for rendering regular reports to the
Trusts officers and the Board concerning the Advisers discharge of its responsibilities under the
Advisory Agreement.
The Current Sub-Adviser
Lotsoff Capital Management (Lotsoff) is currently the sub-adviser to the Fund. Lotsoff has
served as sub-adviser to the Fund since the Funds inception on May 3, 2006. Prior to September 1,
2009, Lotsoff served pursuant to an investment sub-advisory agreement dated April 28, 2006 with the
Trust and BSCM (the Prior Agreement). Currently, Lotsoff is operating under an interim
sub-advisory agreement (with substantially similar terms as those of the Prior Agreement) that was
approved by the Board at its August 11-12, 2009 meeting (the Interim Agreement). At the August
meeting, Lotsoff informed the Board that a controlling block of Lotsoffs partnership interests
would be transferred to new owners (the Transfer). Under the 1940 Act, the Transfer would
constitute a change in control of Lotsoff resulting in the assignment, and automatic termination,
of the Prior Agreement. Under the 1940 Act, an investment adviser may serve pursuant to an Interim
Agreement after an existing agreement has been terminated by assignment, without shareholder
approval, provided that, among other things, it is approved by the Board, including a majority of
the Independent Trustees, and that the term of the agreement does not exceed 150 days. At the end
of the 150-day period, the Interim Agreement will terminate and shareholders must approve a new
sub-advisory agreement. At the August 11-12, 2009 meeting, the Board approved the Interim
Agreement in order for Lotsoff to continue to provide investment sub-advisory services after the
Transfer without first obtaining shareholder approval. The Interim Agreement and the Transfer were
effective September 1,
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2009. As discussed below, because the Board is asking shareholders to approve a new sub-adviser,
shareholders will not be asked to approve a new investment sub-advisory agreement with Lotsoff.
Consequently, the Interim Agreement will terminate the earlier of the effective date of the new
sub-advisory agreement with CMA, or the end of the 150-day period. However, the Board is seeking
shareholder approval of the Interim Agreement in order for Lotsoff to receive its full fee for its
services under the Interim Agreement. This proposal is discussed in further detail in Proposal 3.
Proposal to Approve a New Sub-Adviser
As part of its duties under the Advisory Agreement, BSCM is responsible for the supervision and
monitoring of the investment activities of the sub-adviser. At the November 11-12, 2009 meeting of
the Board, BSCM recommended that the Board approve CMA as the new sub-adviser for the Fund. BSCM
informed the Board that its reasons for recommending this change related to the Funds
underperformance during the prior three year period, the decline in Fund assets and the significant
overlap between the Funds strategy with the strategy of the Bishop Street Strategic Growth Fund,
another fund in the Trust.
BSCM reported to the Board that, from June 2006 to June 2009, the total return for the Fund (net of
expenses) had trailed its benchmark and that, for eight of the last twelve quarters, the Fund had
underperformed its benchmark. BSCM further reported that Fund assets had declined from $100.2
million in December 2006 to $51.2 million in September 2009. BSCM noted that the decline in Fund
assets was in part due to very difficult market conditions in the past year, but also attributable
to Fund performance and lack of marketing support.
In considering options for the Fund to address performance and asset decline, as well as evaluating
the overall strategic line up of its products, BSCM determined that it was in the best interests of
the Fund to hire a new sub-adviser and to change the Funds investment strategy. Currently, the
Fund and another fund in the Trust employ equity strategies that overlap significantly. The Fund
invests in large cap equity securities, defined by the Adviser as equity securities of U.S.
issuers with market capitalization in excess of $5 billion, and invests in a blend of growth and
value stocks. Growth stocks are stocks with above average rates in earnings growth and therefore a
potential for increase in stock price. Value stocks are stocks that are considered to be
undervalued in the market, but have the potential to exceed earnings expectations. The Bishop
Street Strategic Growth Fund (Strategic Growth), also a series of the Trust and managed by BSCM,
employs an investment strategy that is tilted towards investment in growth stocks. Consequently,
according to BSCM, shareholders who are invested in both Funds may have an unintentional additional
exposure to growth stocks. BSCM believes that a large cap value strategy would better complement
the other strategy in the Trust and offer better diversification to shareholders. Additionally,
BSCM believes that changes to the Fund as proposed would make it a more attractive investment
option for strategic asset allocation models, which typically target allocations in investments in
large cap growth and large cap value stocks, thereby giving the Fund greater potential for asset
growth.
5
New Sub-Adviser Selection Process
BSCM engaged investment consultant Pension Consulting Alliance, Inc. (PCA) to assist with its
search for and selection of a new sub-adviser. PCA employed a screening process that included the
identification of large cap value investment advisers from a database of over 8,000 investment
products. PCA then sent a request for information to 29 candidates and received responses from 28.
PCA used quantitative screening criteria (such as alpha, beta, volatility and trailing
performance) and a qualitative organizational assessment to narrow the list of candidates, who were
then evaluated by PCA and BSCM through a series of presentations and interviews.
Of the proposed sub-advisers, BSCM selected CMA as the most desirable choice for a new sub-adviser
for the Fund. In addition to other factors, BSCM chose CMA due to the following characteristics:
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a stable and experienced portfolio management team; |
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strong investment process based on fundamental research, with a focus on free cash flow,
capital discipline and dividend growth; |
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depth of investment organization (with 32 equity analysts supporting the large cap value
strategy); |
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compatibility with the Strategic Growth strategy; and |
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investment returns over three and five year periods well above the Russell 1000 Value
Index benchmark and five year performance through June 2009 was 4.66% ahead of the
benchmark on an annualized basis. |
III. Description of the New Sub-Advisory Agreement
A form of New Sub-Advisory Agreement is attached to this proxy statement as Exhibit A and the
description of the New Sub-Advisory Agreement is qualified in its entirety by references to Exhibit
A. Based on information it received at a meeting held on November 11-12, 2009, the Board approved
the New Sub-Advisory Agreement under which, subject to its approval by the Funds shareholders, CMA
will serve as the new investment sub-adviser to the Fund. The terms of the New Sub-Advisory
Agreement, the Prior Agreement and the Interim Agreement (the Prior and Interim Agreements
collectively, the Current Agreement) are substantially similar. As discussed in greater detail
below, the material difference between the New Sub-Advisory Agreement and the Current Agreement is
the level of compensation to be paid to CMA. The Prior Agreement was last approved by the Board on
February 17-18, 2009 in connection with its annual consideration and renewal and the Interim
Agreement, which replaced the Prior Agreement as discussed above, was approved on August 11-12,
2009.
Duties and Responsibilities of the Sub-Adviser
6
The Current Agreement and the New Sub-Advisory Agreement provide for the discharge of the duties
and responsibilities of the sub-adviser. Under the Current and New Sub-Advisory Agreements, the
Sub-Adviser will, subject to the supervision of the BSCM and the Board, regularly provide the Fund
with investment advice and research and furnish an investment program for the Fund, consistent with
its investment objectives and policies. Also under the Current and New Sub-Advisory Agreements,
the Sub-Adviser will determine what investments shall be purchased and sold for the Fund, subject
to the Trusts Agreement and Declaration of Trust and By-Laws, the Funds current effective
registration statement and the investment objectives, policies and restrictions of the Fund as may
be in effect from time to time.
Also under the Current and New Sub-Advisory Agreements, the Sub-Adviser is authorized to select
brokers or dealers that will execute the purchases and sales of securities of the Fund and directs
the Sub-Adviser to use its best efforts to seek on behalf of the Funds the best overall terms
available. Under the Current and New Sub-Advisory Agreements, the Sub-Adviser may, in selecting a
broker-dealer to execute a particular transaction, consider the brokerage and research services
provided, as defined in Section 28(e) of the Securities Exchange Act of 1934 (Exchange Act).
Consistent with any guidelines established by the Board and Section 28(e) of the Exchange Act, the
Sub-Adviser is authorized to pay a broker or dealer who provides such brokerage and research
services a commission for executing a portfolio transaction for the Fund that is in excess of the
amount of commission another broker or dealer would have charged for effecting that transaction but
only 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 the particular transaction or the Sub-Advisers overall responsibilities with respect to
its discretionary clients, including the Fund.
Information about Sub-Advisory Fees
Under the Current and New Sub-Advisory Agreements, BSCM pays the fees of the Sub-Advisers out of
the investment sub-advisory fee it receives from the Fund. BSCMs current advisory fee is 0.74% of
the average daily net assets of the Fund, calculated daily and paid monthly. That fee will not
change as a result of the approval of a New Sub-Advisory Agreement. Thus, notwithstanding the
proposed increase in sub-advisory fees as described below, there will be no change in the amount of
advisory fees paid by the Fund.
Pursuant to the New Sub-Advisory Agreement, BSCM will pay CMA a fee, calculated daily and paid
monthly, at an annual rate based on the average daily net assets of the Fund pursuant to the
following fee schedule:
0.36% on the first $75 million
0.35% on the next $75 million
0.325% on the next $100 million
0.30% on the next $250 million
0.25% on assets over $500 million
7
Under the Current Agreement, Lotsoff is entitled to a fee for its services, which is calculated
daily and paid monthly, at an annual rate specified below of the average daily net assets of the
Fund:
0.24% Up to (but not including) $300 million
0.225% $300 million to (but not including) $1 billion
0.20% $1 billion and over
The following table provides information on the aggregate amount of fees Lotsoff received during
the Funds last fiscal year, the amount that CMA would have received had the New Sub-Advisory
Agreement been in effect during the last fiscal year and the difference between the aggregate
amounts, stated as a percentage of the actual aggregate amount of fees received during the last
year.
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Amount of fees |
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received during |
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fiscal year ended |
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Percentage |
Sub-Adviser |
|
Fees |
|
December 31, 2008 |
|
Difference |
Lotsoff |
|
0.24% Up to (but not including) $300 million |
|
$ |
199,179 |
|
|
|
41.7 |
% |
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0.225% $300 million to (but not including) $1 billion |
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0.20% $1 billion and over |
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CMA |
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0.36% on the first $75 million |
|
(projected) |
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0.35% on the next $75 million |
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0.325% on the next $100 million |
|
$ |
282,185 |
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0.30% on the next $250 million |
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0.25% on assets over $500 million |
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Duration
With respect to duration, the New Sub-Advisory Agreement provides that, unless terminated as
described below, the New Sub-Advisory Agreement will continue for two years. Thereafter, the New
Sub-Advisory Agreement may continue for successive one year periods provided that it is
specifically approved at least annually by (i) a majority vote of the Trustees, including a
majority vote of such Trustees who are not interested persons of the Fund, BSCM or CMA, at a
meeting called for the purpose of voting on such approval; or (ii) the vote of a majority of the
outstanding voting securities of the Fund.
8
Termination
With respect to termination, the Adviser may terminate the New Sub-Advisory Agreement at any time,
without the payment of penalty, by not more than 60 days nor less than 30 days written notice to
the Sub-Adviser. The Sub-Adviser may terminate the New Sub-Advisory Agreement at any time, without
payment of penalty, upon at least 30 days and not more than 60 days written notice to the
Adviser. The Fund may terminate the New Sub-Advisory Agreement either (i) by vote of the Board
upon not more than sixty (60) days nor less than thirty (30) days written notice or (ii) upon the
affirmative vote of a majority of the outstanding voting securities of the Fund. The New
Sub-Advisory Agreement also provides that the agreement will terminate automatically and
immediately in the event of the termination of the Advisory Agreement.
Indemnification
Both the Current and New Sub-Advisory Agreements provide for indemnification of the Adviser and
Sub-Adviser. However, under the Current Agreement, obligations to indemnify are reduced by either
partys negligence, whereas in the New Sub-Advisory Agreement, neither party will be indemnified
for its gross negligence, but may be indemnified by the other party for its ordinary negligence.
Under the New Sub-Advisory Agreement, the Sub-Adviser agrees to indemnify the Trust and its
affiliated persons and all of their respective controlling persons against any and all losses
arising out of the Sub-Adviser being in material violation of any federal or state law, rule or
regulation or any investment policy or restriction set forth in the Funds registration statement
or any written guidelines or instruction provided in writing by the Board or the Funds failure to
satisfy diversification or source of income requirements under Subchapter M of the Internal Revenue
Code, or the Sub-Advisers willful misfeasance, bad faith or gross negligence generally in the
performance of its duties or its reckless disregard of its obligations and duties under the New
Sub-Advisory Agreement. However, the Adviser will not be indemnified for any losses sustained as a
result of the Advisers, the Trusts, their officers or their agents willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties under the New Sub-Advisory Agreement,
the Advisory Agreement, or applicable law.
Both the Current and New Sub-Advisory Agreements provide that the Adviser shall indemnify the
Sub-Adviser. Under the Current Agreement, the Adviser has agreed to indemnify the Sub-Adviser for
all losses arising from the performance of the Advisers obligations; provided, however, that the
Advisers obligation to indemnify is reduced to the extent any loss as a result of the
Sub-Advisers own willful misfeasance, bad faith or negligence, or the reckless disregard of its
duties. Under the New Sub-Advisory Agreement, the Adviser agrees to indemnify the Sub-Adviser and
its affiliated persons and all of their respective controlling persons against any and all losses
arising out of the Adviser being in material violation of any federal or state law, rule or
regulation or any investment policy or restriction set forth in the Funds registration statement
or any written guidelines or instruction provided in writing by the Board, or the Advisers willful
misfeasance, bad faith or gross negligence generally in the performance of the duties under the New
Sub-Advisory Agreement or under the Advisory Agreement or reckless disregard of obligations and
duties under the New Sub-Advisory Agreement or Advisory Agreement. However, the Sub-Adviser will
not be indemnified for any losses sustained as a result of the Sub-Advisers, the Trusts or their
officers or agents willful misfeasance, bad faith,
9
gross negligence or reckless disregard of the duties under the New Sub-Advisory Agreement, or
applicable law.
Additional Information about Columbia Management Advisors, LLC
Columbia Management Advisors, LLC, or CMA, 100 Federal Street, Boston, MA 02110, is an investment
adviser registered with the Securities and Exchange Commission (SEC) and an indirect, wholly
owned subsidiary of Bank of America, Bank of America Corporate Center, Charlotte, North Carolina
28255. CMAs management experience covers all major asset classes, including equity securities,
fixed income securities and money market instruments. In addition to serving as investment adviser
to mutual funds, CMA acts as investment manager for individuals, corporations, retirement plans,
private investment companies and financial intermediaries. As of September 30, 2009, CMA had
assets under management of approximately $303.1 billion.
On September 30, 2009, Bank of America announced that it entered into an agreement to sell a
portion of the asset management business of Columbia Management Group, LLC to Ameriprise Financial,
Inc. (Ameriprise). The transaction includes a sale of the part of the asset management business
(totaling approximately $165 billion) that advises long-term mutual funds, including the Fund
(assuming shareholder approval of the New Sub-Advisory Agreement). The transaction is subject to
certain approvals and other conditions to closing, and is currently expected to close in the spring
of 2010. The transaction would result in the termination of the New Sub-Advisory Agreement. In order for the assignee of CMAs long-term asset management business, RiverSource Investments, LLC (Riversource) to sub-advise
the Fund after the closing of the transaction, the Board and the Fund shareholders will be required
to approve a new sub-advisory agreement with Riversource.
The names, addresses and principal occupations of the principal executive officers and each member
of CMA are listed below. The business address for each person listed below is 100 Federal Street,
Boston, MA 02110.
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Principal |
Name |
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Occupation |
Michael A. Jones
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Manager, Chairman, Chief Executive Officer and President |
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Colin Moore
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Manager, Managing Director and Chief Investment Officer |
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Leonard A. Aplet
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Managing Director |
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Dean C. Athanasia
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Managing Director |
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Stephen Barbaro
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Managing Director |
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Paul J. Berlinguet
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Managing Director |
10
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Principal |
Name |
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Occupation |
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Beth Ann Brown
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Managing Director |
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Michael G. Clarke
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Managing Director |
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Wayne M. Collette
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Managing Director |
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Brian Condon
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Managing Director |
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J. Kevin Connaughton
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Managing Director |
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Kevin Cronk
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Managing Director |
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Richard E. Dahlberg
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Managing Director |
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James Dearborn
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Managing Director |
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Matt DiGennaro
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Managing Director |
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Lori Ensinger
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Managing Director |
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Stephen J. Harasimowicz
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Managing Director |
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David Hoffman
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Managing Director |
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Guy C. Holbrook
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Managing Director |
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Peter C. Larson
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Managing Director |
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Robert K. McConnaughey
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Managing Director |
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Laura Ostrander
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Managing Director |
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Christian F. Pineno
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Managing Director |
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Guy W. Pope
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Managing Director |
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Amy S. Roberts
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Managing Director |
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Marie M. Schofield
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Managing Director |
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Diane Sobin
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Managing Director |
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Atul Varma
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Chief Financial Officer |
11
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Principal |
Name |
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Occupation |
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Allen F. Bednarz
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Treasurer |
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Linda J. Wondrack
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Chief Compliance Officer |
The names of all parent companies of CMA are listed below and their basis of control of the
investment adviser. The business address for each is 100 Federal Street, Boston, MA 02110.
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Percentage of Voting |
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Securities Owned |
Entity |
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Basis of Control |
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(if applicable) |
Columbia Management Group, LLC
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Member of CMA |
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Bank of America, N.A.
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Member of Columbia
Management Group,
LLC |
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BANA Holding Corporation
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Shareholder of Bank
of America, N.A.
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100% |
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BAC North America Holding
Company
|
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Shareholder of BANA Holding Corporation
|
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100% |
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NB Holdings Corporation
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|
Shareholder of BAC North America Holding
Company
|
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100% |
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Bank of America
Corporation
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Shareholder of NB
Holdings Corporation
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100% |
CMA currently acts as investment adviser to the following registered investment company with the
same investment goal and strategies as that proposed for the Fund.
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Size as of |
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September 30, |
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Advisory |
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Fee Waivers and |
Name of Fund |
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Investment Goal |
|
2009 |
|
Fee |
|
Reimbursements |
Columbia Dividend Income Fund |
|
Total return, consisting of current income and capital
appreciation |
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$ |
1,695,057,495 |
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0.66 |
%1 |
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* |
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1 |
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For the 12-month period ended September 30, 2009, the effective investment advisory
fee rate |
12
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of the Columbia Dividend Income Fund (the Columbia Fund) was 0.66% of its average daily net
assets. CMA has implemented the following breakpoint schedule for the Columbia Funds investment
advisory fees: 0.70% for assets up to $500 million; 0.65% for assets in excess of $500 million and
up to $1 billion; 0.60% for assets in excess of $1 billion and up to $1.5 billion; 0.55% for
assets in excess of $1.5 billion and up to $3 billion; 0.53% for assets in excess of $3 billion
and up to $6 billion; and 0.51% for assets in excess of $6 billion. CMA also acts as
administrator to the Columbia Fund, for which it receives 0.067% of the Columbia
Funds average daily assets in addition to the advisory fee, for a total management fee of 0.73%
of average daily net assets in fees.
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* |
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CMA has voluntarily agreed to reimburse a portion of the Funds expenses so that the Funds
ordinary operating expenses (excluding any distribution and service fees, brokerage commissions,
interest, taxes and extraordinary expenses, but including custodian charges relating to overdrafts,
if any), after giving effect to any balance credits from the Funds custodian, do not exceed 0.80%
of the Funds average daily net assets on an annualized basis. CMA, in its discretion, may revise
or discontinue this arrangement at any time.
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IV. Board Considerations Regarding the New Sub-Advisory Agreement
At a Board meeting held in person on November 11-12, 2009, the Board, including the Independent
Trustees, discussed and unanimously approved the New Sub-Advisory Agreement. The Board, including
the Independent Trustees advised by their independent legal counsel, received and reviewed
materials relating to CMA and the New Sub-Advisory Agreement in advance of the meeting, and had the
opportunity to ask questions and request further information of BSCM and CMA. The materials
included, among other things, information regarding: (i) the nature, extent and quality of the
services to be provided by CMA; (ii) the investment performance of CMA; (iii) the costs of the
services to be provided; and (iv) comparisons of the services to be rendered and the amounts to be
paid under the New Sub-Advisory Agreement with the services and amounts paid under advisory
agreements of the same and other investment advisers, as discussed in further detail below.
At the November 11-12, 2009 meeting, representatives from BSCM and CMA, along with other service
providers of the Fund, presented additional oral and written information to help the Board evaluate
CMAs proposed fee and other aspects of the New Sub-Advisory Agreement. Among other things, the
representatives provided an overview of CMA by reviewing key personnel and BSCM and CMAs
investment strategies and processes. The Board then discussed the written materials that the Board
received before the meeting, BSCM and CMAs oral presentation and any other information that the
Board received at the meeting, and deliberated on the approval of the New Sub-Advisory Agreement in
light of this information. In its deliberations, the Board did not identify any single piece of
information discussed below that was all-important, controlling or determinative of its decision.
Nature, Extent and Quality of Sub-Advisory and Other Services
In considering the nature, extent and quality of the services to be provided by CMA as sub-adviser
to the Fund, the Board reviewed the portfolio management services to be provided by
13
CMA to the Fund. Among other things, the Board considered the quality of CMAs portfolio
management personnel. CMAs registration form (Form ADV) was provided to the Board, as was CMAs
responses to a detailed series of questions which included, among other things, information about
the background and experience of the portfolio managers who would be primarily responsible for the
day-to-day management of the Fund.
The Board also considered other services to be provided to the Fund by CMA, such as selecting
broker-dealers for executing portfolio transactions, monitoring adherence to the Funds investment
restrictions and monitoring compliance with various Fund policies and procedures and with
applicable securities regulations. Based on the factors above, as well as those discussed below,
the Board concluded that it was satisfied with the nature, extent and quality of the services to be
provided to the Fund by CMA.
The Board also took note of the proposed sale of a portion of the asset management business of
Columbia Management Group, LLC to Ameriprise Financial, Inc., announced by Bank of America on
September 30, 2009 (the Transaction). The Transaction would include a sale of the asset
management business that advises long-term mutual funds, which would include the Fund if the Board
and shareholders approved a new sub-advisory agreement with CMA. CMA noted that the Transaction
was still in its early stages, and that it would provide the Board with additional materials and
information on the Transaction as it progressed. The Board also noted that the Transaction would
result in the assignment of the New Sub-Advisory Agreement to Riversource, an affiliate of
Ameriprise, which would result in the termination of the New Sub-Advisory Agreement. The Board
further noted that such termination would require its approval, as well as the approval of Fund
shareholders, of a new sub-advisory agreement with Riversource.
Investment Performance of the Sub-Adviser
The Board evaluated the Funds investment performance and considered the performance of the
investment management personnel of CMA who were expected to manage the Fund. The Board concluded
that the historical investment performance record of CMA and its portfolio managers, as well as its
experience and performance in managing a large cap value strategy, supported a decision to approve
the New Sub-Advisory Agreement.
Costs of Services To Be Provided, Profitability and Economies of Scale
The Board considered the Funds overall fee level and noted that the advisory fee of the Fund would
remain the same under the New Sub-Advisory Agreement, as CMAs fees would be paid out of the
advisory fee that the Fund pays BSCM. Based on its review, the Board determined that the
sub-advisory fee was reasonable and appropriate in light of: 1) the services to be provided by CMA;
2) the advisory fees and the overall expense ratios of the Fund as compared to peer funds,
including funds advised by CMA and 3) the anticipated profitability to BSCM and CMA.
Conclusion
Based on the Boards deliberations and its evaluation of the information described above, the
Board, including the Independent Trustees, unanimously concluded that the terms of the New
Sub-Advisory Agreement are fair and reasonable and concluded that the sub-advisory fees are
reasonable in light of the services that CMA will provide to the Fund and agreed to approve the New
Sub-Advisory Agreement.
THE BOARD UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS OF THE FUND
VOTE TO APPROVE PROPOSAL 1.
14
PROPOSAL 2: APPROVAL OF NEW INVESTMENT GOAL FOR THE FUND, WHICH
IN THE FUTURE WOULD BE CHANGEABLE BY THE BOARD OF THE TRUST
WITHOUT SHAREHOLDER APPROVAL
I. Synopsis of Proposal
The Board is recommending that shareholders approve a new investment goal for the Fund, which in
the future would be changeable by the Board of the Trust without shareholder approval. If
approved, the investment goal would change from long-term capital appreciation to total return,
consisting of current income and capital appreciation. BSCM proposed the new investment goal to
make the Fund more consistent with the proposed investment approach of CMA, the proposed new
sub-adviser for the Fund (See Proposal 1).
II. Background
The Fund operates in accordance with the investment goal, policies and restrictions described in
its prospectus and statement of additional information. The 1940 Act requires that the Fund
classify specific investment policies as fundamental policies and requires a shareholder vote to
make changes to those policies. Other policies not enumerated in the 1940 Act can be designated by
the Fund as fundamental, and if so designated, may only be changed by a shareholder vote or can be
designated as non-fundamental and may be changed by the Board without shareholder approval. A
funds investment objective or goal is not required to be fundamental. Currently, the investment
goal of the Fund is fundamental, meaning that it cannot be changed without a vote of the Funds
shareholders.
As previously discussed, BSCM proposed that the Board approve hiring CMA as a new sub-adviser. In
connection with its proposal to hire CMA, BSCM also proposed that the Board approve changes to the
Funds name and investment goal, as well as a change in the Funds investment strategy from a large
cap core equity strategy to a large cap value strategy. Shareholders of the Fund are entitled to
vote for certain matters affecting the Trust as mandated by the 1940 Act, including changing the
fundamental investment goal of the Fund.
III. Proposed Change in Investment Goal
At its November 11-12, 2009 meeting the Board approved, and now recommends that shareholders
approve, the replacement of the Funds fundamental investment goal of long-term capital appreciation
with a non-fundamental investment goal of total return, consisting of current income and capital
appreciation. If approved, the Board will be able to change the investment goal without
shareholder approval. The proposed change to the Funds investment goal, as well as the
implementation of the Funds name change and change in investment strategy as discussed below, are
contingent upon the approval of CMA as the new sub-adviser to the Fund .
Consistent with the proposed change in investment goal, BSCM has also proposed to change the name
of the Fund and its investment strategy. At its November 11-12, 2009 Board meeting, BSCM proposed,
and the Board approved, a change in the Funds name from the Bishop Street Large Cap Core Equity
Fund to the Bishop Street Dividend Value Fund. Under Rule 35d-1
15
under the 1940 Act, a fund must adopt an investment strategy to invest at least 80% of its net
assets in the type of securities that its name suggests (80% policy). Currently, the Funds 80%
policy is to invest at least 80% of its net assets in common stocks and other equity securities of
U.S. issuers with market capitalizations in excess of $5 billion, otherwise known as large cap
companies. After the Funds name change to the Bishop Street Dividend Value Fund is effective,
this 80% policy will be replaced with a policy of investing at least 80% of its net assets in
income-producing (dividend-paying) equity securities. The equity securities will consist primarily
of common stocks but may include preferred stocks and convertible securities. Also under the
proposed new investment strategy, the Fund may invest in companies that have market capitalizations
of any size. In addition, the Fund may invest up to 20% of its net assets in debt securities
(including securities that, at the time of purchase, are rated below investment grade or unrated
but determined to be of comparable quality (high yield or junk bonds)). The Fund may also invest
up to 20% of its net assets in foreign securities. Additionally, the Fund may invest in
derivatives including futures, forwards, options and swap contracts. Consequently, under this
proposed new strategy, the principal risks of the Fund will include not only the risk of investing
in large cap securities, but also the risks of investing in mid and small capitalization companies,
debt securities (including high yield bonds), foreign securities and derivatives.
According to BSCM, the proposed new investment strategy of the Fund is more consistent with the
Funds proposed new investment goal. Specifically, the total return and current income components
of the proposed investment goal are characteristic of the income producing, dividend paying equity
securities that the Fund will primarily invest in under the revised strategy.
The Board also determined that the proposed investment goal will provide BSCM and CMA greater
flexibility to respond to changing market conditions or other circumstances in a timely manner. If
approved, the Funds new investment goal will be non-fundamental and may be changed by a vote of
the Board without the need to seek shareholder approval. Consequently, if approved, the Fund would
not bear the cost of soliciting shareholder approval of any subsequent changes in the Funds
investment goal.
Board Considerations in Approving a Non-Fundamental Investment Goal
At the November 11-12, 2009 meeting, the Board reviewed materials furnished by BSCM and CMA and
information provided by representatives of BSCM and CMA regarding the proposed investment goal. In
approving the non-fundamental investment goal, the Board considered, among other factors: 1) the
benefit to the Fund of changing its investment goal, 2) BSCM and CMAs experience with respect to
the proposed investment goal and 3) the opportunity to avoid expense to the Fund and the delay of
calling a shareholder meeting to change a fundamental investment goal. Based upon a review of
CMAs experience with respect to the proposed investment goal and the benefits to the Fund of the
new investment goal, the Board concluded that approving a new non-fundamental investment goal for
the Fund would be in the best interests of the Fund and its shareholders.
16
THE BOARD UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS OF THE FUND
VOTE TO APPROVE PROPOSAL 2.
17
PROPOSAL 3: APPROVAL OF INTERIM SUB-ADVISORY AGREEMENT
I. Synopsis of Proposal
The Board is recommending that shareholders approve an interim agreement among Lotsoff, BSCM and
the Trust (the Interim Agreement). The Trustees, including the Independent Trustees, unanimously
approved the Interim Agreement at a meeting held on August 11-12, 2009.
II. Background
Change in Control of Lotsoff Capital Management
Lotsoff Capital Management (Lotsoff) is currently the sub-adviser to the Fund. Lotsoff has
served as sub-adviser to the Fund since the Funds inception on May 3, 2006, pursuant to an
advisory agreement dated April 28, 2006 (the Prior Agreement). The Board last approved the
continuance of the Prior Agreement at a meeting held on February 17-18, 2009. At a meeting held on
August 11-12, 2009, Lotsoff informed the Board that a controlling block of Lotsoffs partnership
interests would be transferred to new owners (the Transfer). Under the 1940 Act, the Transfer
would constitute a change in control of Lotsoff resulting in the assignment, and automatic
termination, of Lotsoffs sub-advisory agreement with the Trust and BSCM (the Prior Agreement).
Under Rule 15a-4 of the 1940 Act, an investment adviser may serve pursuant to an interim agreement
after an existing agreement has been terminated by assignment, without obtaining shareholder
approval, provided that the Board, including a majority of the Independent Trustees: 1) approves
the interim agreement before the current agreement terminates and 2) determines that the scope and
quality of the services provided to the Fund under the interim agreement will be at least
equivalent to the scope and quality of services provided under the existing agreement. In
addition, compensation under the interim agreement cannot exceed the compensation under the current
agreement and the term of the interim agreement may not exceed other than 150 days. At the August
11-12, 2009 Board meeting, Lotsoff assured the Board that, other than the change in certain
ownership interests of the investment adviser, all other aspects of the relationship between
Lotsoff and the Fund would remain unchanged. The fees payable to Lotsoff would remain the same,
and Lotsoff reported to the Board that the Transfer also was not expected to affect the nature or
quality of services Lotsoff performed for the Fund. At its August 11-12, 2009 in-person Board
meeting, the Board approved an interim agreement among the Trust, BSCM and Lotsoff (the Interim
Agreement). The Transfer and the Interim Agreement became effective on September 1, 2009.
Shareholder Approval of the Interim Agreement
Consistent with the requirements of Rule 15a-4 under the 1940 Act, compensation earned by Lotsoff
during the period of the Interim Agreement is being held in an interest bearing escrow account,
until shareholder approval of a new investment sub-advisory agreement is obtained. Pursuant to
Rule 15a-4, if shareholders approve a new investment sub-advisory contract with the
18
investment adviser, compensation earned under the Interim Agreement will be paid to Lotsoff. If
shareholders do not approve a new investment sub-advisory agreement with Lotsoff, Lotsoff is
entitled to receive the lesser of 1) the costs incurred in performing the Interim Agreement (plus
the interest in the escrow account) or 2) the amount in the escrow account (plus interest).
Consequently, if shareholders do not approve an investment advisory agreement with Lotsoff, Lotsoff
may not receive its full fee under the Interim Agreement.
As discussed in Proposal 1 above, shareholders are being asked to approve a new sub-advisory
agreement for the Fund with CMA. As a result, a new sub-advisory agreement with Lotsoff is not
being proposed for approval by shareholders and the Interim Agreement will terminate. Without
shareholder approval of the Interim Agreement, Lotsoff will not be able to receive its full fee for
services performed under the Interim Agreement. The Board has determined that Lotsoff should
receive full compensation for its services under the Interim Agreement, and is recommending that
shareholders approve the Interim Agreement. If shareholders approve the Interim Agreement, Lotsoff
will receive compensation for its services for a term of the earlier of such time that CMA begins
providing services to the Fund, or the expiration of 150 days.
III. Description of the Interim Agreement
The Interim Agreement is attached to this proxy statement as Exhibit B and this
description is qualified in its entirety by references to Exhibit B. Except with respect to
duration, termination and payment of compensation, the terms of the Prior Agreement and the Interim
Agreement are substantially similar. As discussed above, with respect to the duration of the
Interim Agreement, the Interim Agreement provides that it will continue in effect for a term of 150
days or the date of approval of a new agreement by shareholders, whichever is shorter. In
addition, the Interim Agreement provides that it is terminable by the Trust or shareholders on 10
days notice. Also as discussed above, with respect to compensation, although the sub-advisory
fees under the Interim Agreement remain unchanged from the Prior Agreement, the Interim Agreement
provides that sub-advisory fees earned are paid into an escrow account pending shareholder approval
of a new agreement.
Pursuant to the Interim Agreement, Lotsoff will continue to serve as the Funds sub-adviser. The
Prior Agreement and the Interim Agreement both provide that the investment sub-adviser will manage
on a discretionary basis the securities and other assets of the Fund entrusted to it, and determine
the purchase and sale of securities of the Fund. The Prior Agreement and the Interim Agreement
authorizes Lotsoff to select brokers or dealers that will execute the purchases and sales of
securities of the Fund and directs Lotsoff to use its best efforts to seek on behalf of the Fund
the best overall terms available. Under the Interim Agreement, Lotsoff may, in selecting a
broker-dealer to execute a particular transaction, consider the brokerage and research services
provided, as defined in Section 28(e) of the Securities Exchange Act of 1934 (Exchange Act).
Consistent with any guidelines established by the Board and Section 28(e) of the Exchange Act,
Lotsoff is authorized to pay for a broker or dealer who provides such brokerage and research
services a commission for executing a portfolio transaction for the Fund that is in excess of the
amount of commission another broker or dealer would have charged for effecting that transaction but
only if Lotsoff 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
19
terms of either the particular transaction or Lotsoffs overall responsibilities with respect to
the Fund.
The Prior Agreement and the Interim Agreement also provide that Lotsoff shall discharge its
responsibilities subject to the supervision of BSCM and the Board, and in accordance with the
Funds investment objectives, policies and restrictions as set forth in the Funds prospectus and
statement of additional information, and applicable regulations. The Prior Agreement and Interim
Agreement require Lotsoff to indemnify BSCM for certain losses and expenses, unless such losses or
expenses arise out of BSCMs own willful misfeasance, bad faith or negligence, or to the reckless
disregard of its duties. BSCM must indemnify Lotsoff for certain losses and expenses, unless such
losses or expenses arise out of Lotsoffs own willful misfeasance, bad faith or negligence, or to
the reckless disregard of its duties.
Information on Investment Sub-Advisory Fees
The Interim Agreement provides that, for its services, Lotsoff is entitled to a fee, which is
calculated daily and paid monthly, at an annual rate specified below of the average daily net
assets of the Fund:
|
|
|
0.24% |
|
Up to (but not including) $300 million |
0.225% |
|
$300 million to (but not including) $1 billion |
0.20% |
|
$1 billion and over |
This compensation rate is identical to the compensation rate under the Prior Agreement. For the
fiscal year ended December 31, 2008, Lotsoff received advisory fees of $199,179.
IV. Additional Information on Lotsoff Capital Management
Lotsoff Capital Management is an SEC registered investment adviser under the Advisers Act first
organized as an Illinois general partnership in 1981, now organized as a limited liability company
under Illinois law, effective September 1, 2009. Lotsoff provides investment management services
for retirement plans, financial intermediaries, foundations, corporations, fund of funds, and high
net worth individuals and families. As of September 30, 2009, Lotsoff had approximately $1.6
billion in assets under management.
The names, addresses and principal occupations of the principal executive officers and each member
of Lotsoff are listed below. The business address for each person listed below is 20 N. Clark
Street, 34th Floor, Chicago, Illinois 60602.
20
|
|
|
Name |
|
Principal Occupation |
|
|
|
Joseph N. Pappo
|
|
Chief Executive Officer |
|
|
|
Donald W. Reid
|
|
Chief Financial Officer & Chief Investment Officer |
|
|
|
Allison J. Brink
|
|
Chief Marketing Officer |
|
|
|
Richard J. DeMatteo
|
|
Chief Operations Officer |
|
|
|
Margaret M. Baer
|
|
Chief Administrative Officer |
|
|
|
Terese K. Constantino
|
|
Controller |
V. Recommendation of the Board
Board Considerations Regarding the Interim Agreement
In approving the Interim Agreement at its meeting held on August 11-12, 2009, the Board relied on
information it had received at its February 17-18, 2009 Board meeting, at which time it considered
and renewed the Prior Agreement between the Trust, BSCM and Lotsoff. The Board also took into
account that it was sufficiently familiar with the services provided by Lotsoff, its respective
personnel and prior performance, based on past dealings with Lotsoff, its regular monitoring
process and the quarterly reports it receives from Lotsoff. The Board also considered that the
Prior Agreement may be deemed to be terminated as a result of the Transfer. Further, the terms of
the Interim Agreement were materially identical to those contained in the Prior Agreement, with the
exception of the effective date, duration, termination and payment of compensation, pursuant to
1940 Act requirements as discussed above.
At the February 17-18, 2009 Board meeting, the Board completed its annual review and approval of
the continuance of the Prior Agreement. Prior to the meeting, the Board, including the Independent
Trustees advised by their independent legal counsel, reviewed written materials from Lotsoff
regarding, among other things: (i) the nature, extent and quality of the services to be provided by
Lotsoff; (ii) the investment performance of the Fund and Lotsoff; (iii) the costs of the services
to be provided and profits to be realized by Lotsoff and its affiliates from its relationship with
the Fund; (iv) the extent to which economies of scale would be realized as the Fund grows; and (v)
whether fee levels reflect these economies of scale for the benefit of Fund investors. Many of the
factors considered at the February 17-18, 2009 meeting were applicable to the Boards evaluation of
the Interim Agreement at the August 11-12, 2009 meeting. Accordingly, in evaluating the Interim
Agreement, the Board relied upon their knowledge and experience with Lotsoff and considered the
information received and their evaluations and conclusions drawn at the February 17-18, 2009
meeting.
At the meeting, representatives from Lotsoff, along with other Fund service providers, presented
additional oral and written information to help the Board evaluate Lotsoffs fees and other aspects
of the Prior Agreement. Among other things, the representatives presented an overview of Lotsoff,
including its investment personnel, assets under management and investment process. The Trustees
then discussed the written materials that the Board received before the meeting and
21
Lotsoffs oral presentation and any other information that the Board received at the meeting, and
deliberated on the renewal of the Prior Agreement in light of this information. In its
deliberations, the Board considered the factors and reached the conclusions described below
relating to the selection of Lotsoff and the re-approval of the Prior Agreement, and did not
identify any single piece of information discussed below that was all-important, controlling or
determinative of its decision.
At the August 11-12, 2009 meeting, the Board considered the structure and terms of the Transfer,
the strategic plan and governance structure for Lotsoff following the Transfer, benefits or undue
burdens imposed on the Fund as a result of the Transfer, anticipated effects on the Funds expense
ratio following the Transfer, legal issues for the Fund as a result of the Transfer, and the costs
associated with obtaining necessary shareholder approvals and who would bear those costs. The
Board then deliberated on the approval of the Interim Agreement in light of this information. In
its deliberations, the Board considered the factors and reached the conclusions described below
relating to the approval of both the Prior Agreement and the Interim Agreement, and did not
identify any single piece of information discussed below that was all-important, controlling or
determinative of its decision.
Nature, Extent, and Quality of Services Provided by the Sub-Adviser
In considering the nature, extent and quality of the services provided by Lotsoff, the Board
considered, among other things, the expected impact, if any, of the Transfer on the operations,
facilities, organization and personnel of Lotsoff; the potential implications of regulatory
restrictions on the Fund following the Transfer; the ability of Lotsoff to perform its duties after
the Transfer; and any anticipated changes to the current investment and other practices of the
Fund. The Board noted that there were no material differences between the terms of the Prior
Agreement and the Interim Agreement, including the fees payable thereunder. The Trustees further
noted that key personnel of Lotsoff who have responsibility for the Fund were expected to be the
same following the Transfer. Based on its review along with its considerations regarding services
at the annual review, the Board concluded that the Transfer was not expected to adversely affect
the nature, quality or extent of services provided by Lotsoff and that the expected nature, quality
and extent of such services supported approval of the Interim Agreement.
Fund Performance and Investment Objectives
With respect to the performance of the Fund, the Board considered that the portfolio management
personnel responsible for the management of the Fund were expected to continue to manage the Fund
following the completion of the Transfer. During the annual review, the Board compared the Funds
performance to benchmark indices and other similar mutual funds over various periods of time and
concluded that it was satisfied with the investment performance of the Fund, in light of the
factors described by Lotsoff that contributed to the Funds performance. The Trustees further
noted that the Funds investment policies and strategies were not expected to change as a result of
the Transfer. In light of the foregoing factors, along with the prior findings regarding
performance at the annual review, the Board concluded that its findings with respect to performance
supported approval of the Interim Agreement.
22
Costs of Advisory Services, Profitability and Economies of Scale
During the annual review, the Trustees considered, among other things, the management fee and
expenses of the Fund and comparisons of such fee and expenses with peers. At the annual review, the
Trustees determined that the Funds advisory fee and expenses were reasonable. In evaluating the
profitability of Lotsoff under the Interim Agreement, the Trustees considered their conclusions at
their prior review and noted the fee schedule under the Interim Agreement is identical to that
under the Prior Agreement. Taking into consideration its prior evaluation of fees and expenses at
the annual renewal, the Board determined that the management fee and expenses were reasonable.
Moreover, the Trustees were satisfied that, at the annual review, Lotsoffs level of profitability
for its advisory activities was reasonable and not excessive and that Lotsoffs level of
profitability should continue to be reasonable and not excessive after the Transfer. In addition,
the Board considered whether economies of scale were realized during the current contract period,
but did not believe that such economies had yet occurred.
Based on their deliberations and evaluation of the information discussed previously, the Trustees,
including the Independent Trustees, unanimously concluded that the terms of the Interim Agreement
are fair and reasonable, that the scope and quality of services to be provided will be at least
equivalent to the scope and quality of services provided under the Prior Agreement, and that the
fees under the Interim Agreement are reasonable in light of the services to be provided to the
Fund. The Board, and the Independent Trustees voting separately, approved the Interim Agreement
and concluded that the Interim Agreement should be recommended to shareholders for approval.
THE BOARD UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS OF THE FUND
VOTE TO APPROVE PROPOSAL 3.
23
ADDITIONAL INFORMATION
Other Service Providers
SEI Investments Global Funds Services (SEIGFS) serves as the Funds administrator. SEI
Investments Distribution Co. (SIDCO) serves as the Funds distributor and principal underwriter.
SEIGFS and SIDCO are each located at One Freedom Valley Drive, Oaks, Pennsylvania, 19456.
Payment of Expenses
The Fund will bear the expenses incurred in the preparation, printing and mailing of this proxy
statement and its enclosures and all solicitations.
Beneficial Ownership of Shares
As of December 11, 2009, the following persons owned of record, or were known by the Trust to own
beneficially, more than 5% of the shares of the Fund. On that date, the Trustees and officers of
the Fund, together as a group, beneficially owned less than 1% of the Funds outstanding shares.
|
|
|
|
|
|
|
|
|
Name and Address |
|
Number of Shares |
|
Percent |
SEI Private
Trust Company c/o First Hawaiian
Bank
One Freedom Valley Drive
Oaks, Pennsylvania 19456-9989 |
|
|
4,310,167.83 |
|
|
|
67 |
% |
|
|
|
|
|
|
|
|
|
SEI Trust Company c/o First Hawaiian Bank
One Freedom Valley Drive
Oaks, Pennsylvania 19456-9989 |
|
|
2,108,263.54 |
|
|
|
33 |
% |
Shareholders Sharing the Same Address
If two or more Shareholders share the same address, only one copy of this proxy statement is being
delivered to that address, unless the Trust has received contrary instructions from one or more of
the Shareholders at that shared address. Upon written or oral request, the Trust will deliver
promptly a separate copy of this proxy statement to a Shareholder at a shared address. Please note
that each Shareholder will receive a separate proxy card, regardless of whether he or she resides
at a shared address. Please call 1-800-262-9565 or forward a written request to the Trust c/o SEI
Investments, One Freedom Valley Drive, Oaks, Pennsylvania 19456 if you would like to (1) receive a
separate copy of this proxy statement; (2) receive your annual reports or proxy statements
separately in the future; or (3) request delivery of a single copy of annual reports or proxy
statements if you are currently receiving multiple copies at a shared address.
Other Business
The Board does not intend to present any other business at the Meeting. If any other matter may
properly come before the Meeting, or any adjournment thereof, the persons named in the accompanying
proxy card(s) intend to vote, act, or consent thereunder in accordance with their best judgment at
that time on such matters. No annual or other special meeting is currently scheduled for the
Trust. Mere submission of a shareholder proposal does not guarantee the inclusion of the proposal
in the proxy statement or presentation of the proposal at the Meeting because inclusion and
presentation are subject to compliance with certain federal regulations.
Shareholder Proposals
24
The Trust is organized as a voluntary association under the laws of the Commonwealth of
Massachusetts. As such, the Trust is not required to hold annual shareholder meetings.
Shareholders wishing to submit proposals for inclusion or presentation in a proxy statement for a
future meeting should send their written proposals to the Secretary of the Trust c/o SEI
Investments, One Freedom Valley Drive, Oaks, Pennsylvania 19456. Shareholder proposals must be
received by the Trust within a reasonable time before any such meeting in order for the proposals
to be considered.
Communications with the Board
Shareholders wishing to submit written communications to the Board should send their communications
to Bishop Street Funds, c/o SEI Investments, One Freedom Valley Drive, Oaks, Pennsylvania 19456.
Any such communications received will be reviewed by the Board at its next regularly scheduled
meeting.
Annual and Semi-Annual Reports to Shareholders
The Annual Report of the Trust for the fiscal year ended December 31, 2008 is available upon
request, as is the Semi-Annual Report for the six-month period ended June 30, 2009 (unaudited).
The Annual Report and the Semi-Annual Report may be obtained by written request to the Trust at the
address listed above or by telephoning 1-800-262-9565.
PROMPT EXECUTION AND RETURN OF THE ENCLOSED PROXY CARD IS
REQUESTED. A SELF-ADDRESSED, POSTAGE-PAID ENVELOPE IS ENCLOSED FOR
YOUR CONVENIENCE.
25
EXHIBIT A
FORM
OF SUB-ADVISORY AGREEMENT
SUB-ADVISORY AGREEMENT (the Agreement) made as of this ___th day of _________, 20___ by and
between BISHOP STREET CAPITAL MANAGEMENT, a Hawaii corporation with its principal place of business
at 999 Bishop Street, 28th Floor, Honolulu, Hawaii 96813 (the Adviser), and COLUMBIA MANAGEMENT
ADVISORS, LLC, a Delaware limited liability company with its principal place of business at 100
Federal Street, Boston, MA 02111 (the Sub-Adviser). The Adviser is a direct subsidiary of First
Hawaiian Bank.
WITNESSETH
WHEREAS, BISHOP STREET FUNDS (the Trust) and First Hawaiian Bank entered into an Investment
Advisory Agreement dated March 31, 1999 (the Management Agreement);
WHEREAS, the Adviser and First Hawaiian Bank entered into Assignment and Assumption Agreement
dated February 22, 2000 whereby the Adviser assumed the Management Agreement and the obligations
contained therein;
WHEREAS, pursuant to authority granted to the Adviser by the Board of Trustees (the Board)
of the Trust on behalf of the series set forth on Schedule A to this Agreement (the Fund) and
pursuant to the provisions of the Management Agreement, the Adviser has selected the Sub-Adviser to
act as sub-investment adviser of the Fund and to provide certain related services, as more fully
set forth below, and to perform such services under the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and benefits set forth herein, the
Adviser and the Sub-Adviser do hereby agree as follows:
1. The Sub-Advisers Services.
(a) Discretionary Investment Management Services. The Sub-Adviser shall act as
sub-investment adviser with respect to the Fund. In such capacity, the Sub-Adviser shall,
subject to the supervision of the Adviser and the Board, regularly provide the Fund with
investment research, advice and supervision and shall furnish continuously an investment
program for such Fund assets as may be allocated by the Adviser to the Sub-Adviser for
purposes of investing Fund assets, consistent with the investment objectives and policies of
the Fund. The Sub-Adviser shall determine, from time to time, what investments shall be
purchased for the Fund and what such securities shall be held or sold by the Fund, subject
always to the provisions of the Trusts Agreement and Declaration of Trust, By-Laws and its
registration statement on Form N-1A (the Registration Statement) under the Investment
Company Act of 1940, as amended (the 1940 Act), and under the Securities Act of 1933, as
amended (the 1933 Act), covering Fund shares, as filed with the Securities and Exchange
Commission (the Commission), and to the investment objectives, policies and restrictions
of the Fund, as each of the same shall be from time to time in effect and set forth in the
Registration Statement. To carry out such obligations, the Sub-Adviser shall exercise full
discretion and act for the Fund in the same manner and with the same force and effect as the
Fund itself might or could do with respect to purchases, sales or other transactions and is
hereby appointed the Funds agent and attorney-in-fact for the limited purposes of executing
account documentation, agreements, contracts and other documents as the Sub-Adviser shall be
required by brokers, dealers, counterparties and other persons in connection with the
Sub-Advisers management of the Fund. Notwithstanding the foregoing, the Adviser may,
pursuant to
A-1
the Management Agreement and upon prior written instructions from the Adviser, effect
such portfolio transactions for the Fund as the Adviser may from time to time determine;
provided however, that the Sub-Adviser shall not be responsible for any such portfolio
transactions effected by the Adviser. No reference in this Agreement to the Sub-Adviser
having full discretionary authority over the Funds investments shall in any way limit the
right of the Adviser, in its sole discretion, to establish or revise policies in connection
with the management of the Funds assets or to otherwise exercise its right to control the
overall management of the Funds assets.
(b) Compliance. In the performance of its duties and obligations under this
Agreement, the Sub-Adviser agrees to comply in all material respects with the requirements
of the 1940 Act, the Investment Advisers Act of 1940, as amended (the Advisers Act), the
1933 Act, the Securities Exchange Act of 1934, as amended (the 1934 Act), the Commodity
Exchange Act and the respective rules and regulations thereunder, as applicable, as well as
with all other applicable federal and state laws, rules, regulations and case law that
relate to the services and relationships described hereunder and to the conduct of its
business as a registered investment adviser. The Sub-Adviser also agrees to comply with the
objectives, policies and restrictions set forth in the Registration Statement, as amended or
supplemented, of the Fund, and with any written policies, guidelines, instructions and
procedures approved by the Board or the Adviser and provided to the Sub-Adviser. In
selecting the Funds portfolio securities and performing the Sub-Advisers obligations
hereunder, the Sub-Adviser shall cause the Fund to comply with the diversification and
source of income requirements of Subchapter M of the Internal Revenue Code of 1986, as
amended (the Code), for qualification as a regulated investment company. With respect to
compliance with the requirements of Subchapter M of the Code, the Adviser shall cause the
Fund to provide to the Sub-Adviser such records as the Sub-Adviser may reasonably request.
The Adviser has furnished the Sub-Adviser with the Trusts current Declaration of Trust and
Bylaws, the Funds current prospectus and Statement of Additional Information and any other
policies, guidelines, instructions and procedures relevant to the Sub-Advisers services
under this Agreement and shall deliver, or cause to be delivered, to the Sub-Adviser all
changes to such documents and instruments a reasonable period of time prior to their
effectiveness. The Sub-Adviser has adopted and implemented, and will maintain, written
compliance policies and procedures that it believes are reasonably designed to prevent
violations by the Sub-Adviser and its supervised persons (as defined in the Advisers Act)
of the Advisers Act and the rules thereunder. The Sub-Adviser will review, no less
frequently than annually, the adequacy of its policies and procedures and the effectiveness
of their implementation. The Sub-Adviser has designated a Chief Compliance Officer
responsible for administering its policies and procedures. No supervisory activity
undertaken by the Adviser shall limit the Sub-Advisers full responsibility for any of the
foregoing.
(c) Proxy Voting. Pursuant to Board authority and the Management Agreement,
the Adviser has the authority and responsibility to vote proxies relating to securities held
by the Fund and may delegate that authority and responsibility to a third party. The Adviser
hereby delegates the authority and responsibility to vote proxies for the Funds securities
to the Sub-Adviser. The Sub-Adviser represents that it has adopted and implemented, and will
maintain, written policies and procedures that it believes are reasonably designed to ensure
that it votes the Funds securities in the best interests of the Fund, including procedures
to address material conflicts that may arise between the interests of the Sub-Adviser and
those of the Fund. The Sub-Adviser shall carry out the responsibility to vote proxies
relating to the securities held by the Fund in accordance with written instructions, if any,
that the Board or the Adviser may provide from time to time and shall
A-2
provide such reports and keep such records relating to proxy voting as the Board may
reasonably request or as may be necessary for the Fund to comply with the 1940 Act and other
applicable law. The delegation of proxy voting authority and responsibility to the
Sub-Adviser may be revoked or modified by the Board or the Adviser at any time.
The Sub-Adviser is authorized to instruct the Custodian and/or broker(s) for the Fund
to forward promptly to the Sub-Adviser or designated service provider copies of all proxies
and shareholder communications relating to securities held in the portfolio of the Fund
(other than materials relating to legal proceedings against the Fund). The Sub-Adviser may
also instruct the Custodian and/or broker(s) to provide reports of holdings in the portfolio
of the Fund. The Sub-Adviser has the authority to engage a service provider to assist with
administrative functions related to voting Fund proxies. The Trust shall direct the
Custodian and/or broker(s) to provide assistance requested by the Sub-Adviser in
facilitating the use of a service provider. In no event shall the Sub-Adviser have any
responsibility to vote proxies that are not received on a timely basis. The Adviser
acknowledges that the Sub-Adviser, consistent with the Sub-Advisers written proxy voting
policies and procedures, may refrain from voting a proxy if, in the Sub-Advisers
discretion, refraining from voting would be in the best interests of the Fund and its
shareholders or as otherwise may be provided in the Sub-Advisers written proxy voting
policies and procedures.
(d) Recordkeeping. The Sub-Adviser shall not be responsible for the provision
of administrative, bookkeeping or accounting services to the Fund, except as otherwise
provided herein or as may be necessary for the Sub-Adviser to supply to the Adviser, the
Fund or its Board the information required to be supplied under this Agreement.
The Sub-Adviser shall maintain separate books and detailed records of all matters
pertaining to the Funds assets advised by the Sub-Adviser required by subparagraphs (b)(5),
(6), (7), (9), (10) and (11) and paragraph (f) of Rule 31a-1 under the 1940 Act (other than
those records being maintained by the Adviser, any administrator, custodian, transfer agent
or other service provider appointed by the Fund) relating to its responsibilities provided
hereunder with respect to the Fund, and shall preserve such records for the periods and in a
manner prescribed therefore by Rule 31a-2 under the 1940 Act (the Fund Books and Records).
The Fund Books and Records shall be available to the Adviser and the Board upon reasonable
request and shall be delivered to the Fund upon the termination of this Agreement and shall
be available for telecopying without unreasonable delay during any day the Fund is open for
business.
(e) Holdings Information and Pricing. The Sub-Adviser shall provide regular
reports regarding the Funds holdings, and may, on its own initiative, furnish the Fund and
the Adviser from time to time with whatever information the Sub-Adviser believes is
appropriate for this purpose. The Sub-Adviser agrees to notify the Adviser promptly if the
Sub-Adviser reasonably believes that the value of any security held by the Fund may not
reflect fair value. The Sub-Adviser agrees to provide upon request any pricing information
of which the Sub-Adviser is aware to the Adviser and/or the Fund pricing agent to assist in
the determination of the fair value of the Fund holdings for which market quotations are not
readily available or as otherwise required in accordance with the 1940 Act or the Fund
valuation procedures for the purpose of calculating the Funds net asset value in accordance
with procedures and methods established by the Board.
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(f) Cooperation with Agents of the Adviser and the Fund. The Sub-Adviser
agrees to reasonably cooperate with and provide reasonable assistance to the Adviser, the
Fund and the Funds custodian and foreign sub-custodians, the Funds pricing agents and all
other agents and representatives of the Fund and the Adviser, such information with respect
to the Fund as such entities may reasonably request from time to time in the performance of
their obligations, provide prompt responses to reasonable requests made by such persons and
establish appropriate interfaces with each so as to promote the efficient exchange of
information and compliance with applicable laws and regulations.
2. Code of Ethics. The Sub-Adviser has adopted a written code of ethics that it reasonably
believes complies with the requirements of Rule 17j-1 under the 1940 Act (the Code of Ethics),
which it will provide to the Adviser and the Fund. The Sub-Adviser shall ensure that it has
adopted procedures reasonably necessary to prevent its Access Persons (as defined in Rule 17j-1)
from violating the Sub-Advisers Code of Ethics, as in effect from time to time. Upon request, the
Sub-Adviser shall provide the Fund with (i) a copy of the Sub-Advisers current Code of Ethics, as
in effect from time to time, and (ii) a certification that it has adopted procedures reasonably
necessary to prevent Access Persons from engaging in any conduct prohibited by the Sub-Advisers
Code of Ethics. Annually, upon request, the Sub-Adviser shall furnish a written report, which
complies with the requirements of Rule 17j-1, concerning the Sub-Advisers Code of Ethics to the
Trust and the Adviser. The Sub-Adviser shall respond to requests for information from the Adviser
as to material violations of the Code of Ethics by Access Persons and the sanctions imposed by the
Sub-Adviser in response to such material violations.
3. Information and Reporting. The Sub-Adviser shall provide the Fund, the Adviser, and their
respective officers with such periodic reports concerning the obligations the Sub-Adviser has
assumed under this Agreement as the Fund and the Adviser may from time to time reasonably request.
(a) Notification of Breach / Compliance Reports. The Sub-Adviser shall notify
the Trusts Chief Compliance Officer and Adviser promptly 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 Funds written policies,
guidelines or procedures provided to the Sub-Adviser. In addition, the Sub-Adviser shall
provide a quarterly report regarding the Funds compliance with its investment objectives
and policies and applicable law and the Funds policies, guidelines or procedures as
applicable to the Sub-Advisers obligations under this Agreement. The Sub-Adviser
acknowledges and agrees that the Adviser may, in its discretion, provide such quarterly
compliance certifications to the Board. The Sub-Adviser shall also provide the officers of
the Trust with supporting certifications in connection with such certifications of Fund
financial statements and disclosure controls pursuant to the Sarbanes-Oxley Act. The
Sub-Adviser will promptly notify 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 Funds ownership of shares in the defendant) or the compliance by the
Sub-Adviser with the federal or state securities laws if such actions, suits, proceedings,
inquiries or investigations would reasonably be expected to have a material adverse effect
on the Sub-Advisers ability to perform its services hereunder or (ii) the controlling
stockholder of the Sub-Adviser changes or an actual change in control resulting in an
assignment (as defined in the 1940 Act) has occurred or is otherwise proposed to occur.
A-4
(b) Inspection. Upon reasonable request, the Sub-Adviser agrees to make its
records and premises (including the availability of the Sub-Advisers employees for
interviews) to the extent that they relate to the conduct of services provided to the Fund
reasonably available for compliance audits by the Advisers or the Funds employees,
accountants or counsel; in this regard, the Fund and the Adviser acknowledge that the
Sub-Adviser shall have no obligations to make available proprietary information unrelated to
the services provided to the Fund or any information related to other clients of the
Sub-Adviser, except to the extent necessary for the Adviser to confirm compliance with any
laws, rules or regulations in the management of the Fund.
(c) Board and Filings Information. The Sub-Adviser will also provide the
Adviser with any information reasonably requested regarding its management of the Fund
required for any meeting of the Board, or for any shareholder report, Form N-CSR, Form N-Q,
Form N-PX, Form N-SAR, amended registration statement, proxy statement, or prospectus
supplement to be filed by the Fund with the Commission. The Sub-Adviser will make its
officers and employees available to meet with the Board from time to time on due notice to
review its investment management services to the Fund in light of current and prospective
economic and market conditions and shall furnish to the Board such information as may
reasonably be necessary in order for the Board to evaluate this Agreement or any proposed
amendments thereto.
(d) Transaction Information. The Sub-Adviser shall furnish to the Adviser such
information concerning portfolio transactions as may be necessary to enable the Adviser to
perform such compliance testing on the Fund and the Sub-Advisers services as the Adviser
may, in its sole discretion, determine to be appropriate. The provision of such information
by the Sub-Adviser in no way relieves the Sub-Adviser of its own responsibilities under this
Agreement.
4. Brokerage.
(a) Principal Transactions. In connection with purchases or sales of
securities for the account of the Fund, neither the Sub-Adviser nor any of its directors,
officers or employees will act as a principal or agent or receive any commission except as
permitted by the 1940 Act.
(b) Placement of Orders. The Sub-Adviser shall arrange for the placing of all
orders for the purchase and sale of securities for the Funds account with brokers or
dealers selected by the Sub-Adviser. In executing Fund transactions and selecting brokers
or dealers, the Sub-Adviser will use its best efforts to seek on behalf of the Fund the best
overall terms available. In assessing the best overall terms available for any transaction,
the Sub-Adviser shall consider all factors that it deems relevant, including the breadth of
the market in the security, the price of the security, the financial condition and execution
capability of the broker or dealer, and the reasonableness of the commission, if any, both
for the specific transaction and on a continuing basis. In evaluating the best overall terms
available, and in selecting the broker-dealer to execute a particular transaction, the
Sub-Adviser may also consider the brokerage and research services provided (as those terms
are defined in Section 28(e) of the Securities Exchange Act of 1934 (the Exchange Act)).
Consistent with any guidelines established by the Board of Trustees of the Trust and Section
28(e) of the Exchange Act, 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, but only if, the Sub-Adviser
determines in good faith that such commission was reasonable in relation to the value of the
brokerage and
A-5
research services provided by such broker or dealer viewed in terms of that
particular transaction or in terms of the overall responsibilities of the Sub-Adviser to its
discretionary clients, including the Fund. It is understood that the services provided by
such brokers may be useful to the Sub-Adviser in connection with its or its affiliates
services to other clients.
(c) Aggregated Transactions. On occasions when the Sub-Adviser deems the
purchase or sale of a security to be in the best interest of the Fund as well as other
clients of the Sub-Adviser, the Sub-Adviser may, to the extent permitted by applicable law
and regulations, aggregate the order for securities to be sold or purchased. In such event,
the Sub-Adviser will allocate securities or futures contracts so purchased or sold, as well
as the expenses incurred in the transaction, in the manner the Sub-Adviser reasonably
considers to be equitable, over time, and consistent with its fiduciary obligations to the
Fund and to such other clients under the circumstances.
(d) Affiliated Brokers. The Sub-Adviser or any of its affiliates may act as
broker in connection with the purchase or sale of securities or other investments for the
Fund, subject to: (a) the requirement that the Sub-Adviser seek to obtain best execution
and price within the policy guidelines determined by the Board and set forth in the Funds
current prospectus and SAI; (b) the provisions of the 1940 Act; (c) the provisions of the
Advisers Act; (d) the provisions of the 1934 Act; and (d) other provisions of applicable
law. These brokerage services are not within the scope of the duties of the Sub-Adviser
under this Agreement. Subject to the requirements of applicable law and any procedures
adopted by the Board, the Sub-Adviser or its affiliates may receive brokerage commissions,
fees or other remuneration from the Fund for these services in addition to the Sub-Advisers
fees for services under this Agreement.
5. Custody. Nothing in this Agreement shall permit the Sub-Adviser to take or receive
physical possession of cash, securities or other investments of the Fund.
6. Allocation of Charges and Expenses. The Sub-Adviser will bear its own costs of providing
services hereunder. Other than as herein specifically indicated, the Sub-Adviser shall not be
responsible for the Funds or the Advisers expenses, including without limitation brokerage and
other expenses incurred in placing orders for the purchase and sale of securities and other
investment instruments.
7. Representations, Warranties and Covenants.
(a) Properly Registered. The Sub-Adviser is registered as an investment
adviser under the Advisers Act, and will remain so registered for the duration of this
Agreement. The Sub-Adviser is not prohibited by the Advisers Act or the 1940 Act from
performing the services contemplated by this Agreement, and to the best knowledge of the
Sub-Adviser, there is no proceeding or investigation regarding the Sub-Adviser that is
reasonably likely to result in the Sub-Adviser being prohibited from performing the services
contemplated by this Agreement. The Sub-Adviser agrees to promptly notify the Trust of the
occurrence of any event that would disqualify the Sub-Adviser from serving as an investment
adviser to an investment company. The Sub-Adviser is in compliance in all material respects
with all applicable federal and state law in connection with its investment management
operations.
(b) ADV Disclosure. The Sub-Adviser has provided the Trust with a copy of its
Form ADV Part I as most recently filed with the SEC and its current Part II and will,
promptly
A-6
after filing any amendment to its Form ADV with the SEC or updating its Part II,
furnish a copy of such amendments or updates to the Trust and the Adviser. The information
contained in the Advisers Form ADV is accurate and complete in all material respects and
does not omit to state any material fact necessary in order to make the statements made, in
light of the circumstances under which they were made, not misleading.
(c) Fund Disclosure Documents. The Sub-Adviser has reviewed the current
prospectus and Statement of Additional Information of the Fund and represents and warrants
that with respect to disclosure about the Sub-Adviser, the manner in which the Sub-Adviser
will manage the Fund or information relating directly or indirectly to the Sub-Adviser, such
prospectus and Statement of Additional Information contain or will contain, as of the date
thereof, no untrue statement of any material fact and does not omit any statement of
material fact which was required to be stated therein or necessary to make the statements
contained therein not misleading. The Sub-Adviser, upon request, will in the future review
the Registration Statement, and any amendments or supplements thereto, the annual or
semi-annual reports to shareholders, other reports filed with the Commission and any
marketing material of the Fund (collectively the Disclosure Documents) and will certify
as to whether or not disclosure about the Sub-Adviser, the manner in which the Sub-Adviser
manages the Fund or information relating directly or indirectly to the Sub-Adviser, such
Disclosure Documents contain or will contain, as of the date thereof, no untrue statement of
any material fact and does not omit any statement of material fact which was required to be
stated therein or necessary to make the statements contained therein not misleading.
(d) Use Of Names. The Sub-Adviser has the right to use the names Bishop
Street Capital Management and Bishop Street Funds in connection with its services to the
Trust and that the Trust and the Adviser shall have the right to use the name Columbia
Management in connection with the management and operation of the Fund. The Sub-Adviser is
not aware of any threatened or existing actions, claims, litigation or proceedings that
would adversely affect or prejudice the rights of the Sub-Adviser or the Trust to use the
name Columbia Management.
(e) Insurance. The Sub-Adviser maintains errors and omissions insurance
coverage in an appropriate amount and shall provide prior written notice to the Trust (i) of
any material changes in its insurance policies or insurance coverage; or (ii) if any
material claims will be made on its insurance policies. Furthermore, the Sub-Adviser shall,
upon reasonable request, provide the Trust with any information it may reasonably require
concerning the amount of or scope of such insurance.
(f) No Detrimental Agreement. The Sub-Adviser represents and warrants that it
has no arrangement or understanding with any party, other than the Trust, that would cause
the Sub-Adviser to select securities for the Fund in a manner that is not in the best
interest of the Fund.
(g) Conflicts. The Sub-Adviser shall act honestly, in good faith and in the
best interests of the Trust including implementing procedures that require any of its
personnel responsible for management of the Fund to place the interest of the Fund ahead of
their own interests, in all personal trading scenarios that may involve a conflict of
interest with the Fund, consistent with its fiduciary duties under applicable law.
(h) Representations. The representations and warranties in this Section 7 shall
be deemed to be made on the date this Agreement is executed and at the time of delivery of
the
A-7
quarterly compliance report required by Section 3(a), whether or not specifically
referenced in such report.
(i) The Adviser (i) is registered as an investment adviser under the Advisers Act and
will remain so registered for the duration of this Agreement; (ii) is not prohibited by the
1940 Act or the Advisers Act from performing the services contemplated by this Agreement or
the Management Agreement; (iii) has met and will seek to continue to meet for so long as
this Agreement remains in effect, any other applicable federal or state requirements, or the
applicable requirements of any regulatory or industry self-regulatory agency necessary to be
met in order to perform the services contemplated by this Agreement or the Management
Agreement; (iv) has the authority to enter into and perform the services contemplated by
this Agreement; (v) will promptly notify Subadviser of the occurrence of any event that
would disqualify the Adviser from serving as an investment adviser of an investment company
pursuant to Section 9(a) of the 1940 Act or otherwise; and (vi) the Adviser and the Trust
have duly entered into the Management Agreement pursuant to which the Trust authorized the
Adviser to enter into this Agreement. The Adviser shall provide services to the Fund
pursuant to the Management Agreement in compliance with the terms thereof and in accordance
with applicable law.
8. Sub-Advisers Compensation. The Adviser shall pay to the Sub-Adviser, as compensation for
the Sub-Advisers services hereunder, a fee, determined as described in Schedule A that is attached
hereto and made a part hereof. Such fee shall be computed daily and paid monthly in arrears by the
Adviser. The Fund shall have no responsibility for any fee payable to the Sub-Adviser.
The Sub-Adviser will be compensated based on the portion of Fund assets allocated to the
Sub-Adviser by the Adviser. In the event of termination of this Agreement, the fee provided in this
Section shall be computed on the basis of the period ending on the last business day on which this
Agreement is in effect subject to a pro rata adjustment based on the number of days elapsed in the
current month as a percentage of the total number of days in such month.
9. Independent Contractor. In the performance of its duties hereunder, the Sub-Adviser is and
shall be an independent contractor and, unless otherwise expressly provided herein or otherwise
authorized in writing, shall have no authority to act for or represent the Fund or the Adviser in
any way or otherwise be deemed to be an agent of the Fund or the Adviser. If any occasion should
arise in which the Sub-Adviser gives any advice to its clients concerning the shares of the Fund,
the Sub-Adviser will act solely as investment counsel for such clients and not in any way on behalf
of the Fund. It is understood that the Sub-Adviser may give advice and take action for its other
clients that may differ from advice given, or the timing or nature of action taken, for the Fund.
The Sub-Adviser is not obligated to initiate transactions for the Fund in any security that the
Sub-Adviser, its principals, affiliates or employees may purchase or sell for its or their own
accounts or the accounts of other clients.
10. Assignment and Amendments. This Agreement shall automatically terminate, without the
payment of any penalty, (i) in the event of its assignment (as defined in section 2(a)(4) of the
1940 Act) or (ii) in the event of the termination of the Management Agreement; provided that such
termination shall not relieve the Adviser or the Sub-Adviser of any liability incurred hereunder.
This Agreement may not be added to or changed orally and may not be modified or rescinded
except by a writing signed by the parties hereto and in accordance with the 1940 Act, when
applicable.
11. Duration and Termination.
A-8
(a) This Agreement shall become effective as of the date executed and shall remain in
full force and effect continually thereafter, subject to renewal as provided in Section
11(c) and unless terminated automatically as set forth in Section 10 hereof or until
terminated as follows:
(b) The Adviser may at any time terminate this Agreement by not more than sixty (60)
days nor less than thirty (30) days written notice delivered or mailed by registered mail,
postage prepaid, to the Sub-Adviser. In addition, the Fund may cause this Agreement to
terminate either (i) by vote of its Board upon not more than sixty (60) days nor less than
thirty (30) days written notice or (ii) upon the affirmative vote of a majority of the
outstanding voting securities of the Fund; or
(c) The Sub-Adviser may at any time terminate this Agreement by not more than sixty
(60) days nor less than thirty (30) days written notice delivered or mailed by registered
mail, postage prepaid, to the Adviser; or
(d) This Agreement shall automatically terminate two years from the date of its
execution unless its renewal is specifically approved at least annually thereafter by (i) a
majority vote of the Trustees, including a majority vote of such Trustees who are not
interested persons of the Fund, the Adviser or the Sub-Adviser, at a meeting called for the
purpose of voting on such approval; or (ii) the vote of a majority of the outstanding voting
securities of the Fund; provided, however, that if the continuance of this Agreement is
submitted to the shareholders of the Fund for their approval and such shareholders fail to
approve such continuance of this Agreement as provided herein, the Sub-Adviser may continue
to serve hereunder as to the Fund in a manner consistent with the 1940 Act and the rules and
regulations thereunder; or
(e) This Agreement shall terminate automatically and immediately in the event of the
termination of the Management Agreement; and
(f) Termination of this Agreement pursuant to this Section shall be without payment of
any penalty.
In the event of termination of this Agreement for any reason, the Sub-Adviser shall,
immediately upon notice of termination or on such later date as may be specified in such
notice, cease all activity on behalf of the Fund and with respect to any Fund assets, except
as expressly directed by the Adviser or as otherwise required by any fiduciary duties of the
Sub-Adviser under applicable law. In addition, the Sub-Adviser shall deliver the Funds
Books and Records to the Adviser by such means and in accordance with such schedule as the
Adviser shall direct and shall otherwise cooperate, as reasonably directed by the Adviser,
in the transition of portfolio asset management to any successor of the Sub-Adviser,
including the Adviser, provided, however, that the Sub-Adviser is not required hereunder to
provide investment advisory services in such a transition. The Sub-Adviser may retain
copies of the Funds Books and Records following termination of this Agreement to the extent
required by applicable law.
A-9
12. Certain Definitions. For the purposes of this Agreement:
(a) Affirmative vote of a majority of the outstanding voting securities of the Fund
shall have the meaning as set forth in the 1940 Act, subject, however, to such exemptions as
may be granted by the Commission under the 1940 Act or any interpretations of the Commission
staff.
(b) Interested persons and Assignment shall have their respective meanings as set
forth in the 1940 Act, subject, however, to such exemptions as may be granted by the
Commission under the 1940 Act or any interpretations of the Commission staff.
13. Indemnification. The Sub-Adviser shall indemnify and hold harmless the Trust and all
affiliated persons thereof (within the meaning of Section 2(a)(3) of the 1940 Act) and all their
respective controlling persons (as described in Section 15 of the 1933 Act) (collectively, the
Sub-Adviser Indemnitees) against any and all losses, claims, damages, liabilities or litigation
(including reasonable legal and other expenses) by reason of or arising out of: (a) the Sub-Adviser
being in material violation of any applicable federal or state law, rule or regulation or any
investment policy or restriction set forth in the Funds Registration Statement or any written
guidelines or instruction provided in writing by the Board, (b) the Funds failure to satisfy the
diversification or source of income requirements of Subchapter M of the Code, or (c) the
Sub-Advisers willful misfeasance, bad faith, or gross negligence generally in the performance of
its duties hereunder or its reckless disregard of its obligations and duties under this Agreement;
provided, however, that the Sub-Adviser Indemnitees shall not be indemnified for any losses,
claims, damages, liabilities or litigation sustained as a result of the Advisers, the Trusts,
their officers, partners, employees, consultants or agents willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties under this Agreement or the Management
Agreement or violation of applicable law. The Adviser shall indemnify and hold harmless the
Sub-Adviser and all affiliated persons thereof (within the meaning of Section 2(a)(3) of the 1940
Act) and all their respective controlling persons (as described in Section 15 of the 1933 Act)
(collectively, the Adviser Indemnitees) against any and all losses, claims, damages, liabilities
or litigation (including reasonable legal and other expenses) by reason of or arising out of: (a)
the Adviser being in material violation of any applicable federal or state law, rule or regulation
or any investment policy or restriction set forth in the Funds Registration Statement or any
written guidelines or instruction provided in writing by the Board, provided that such violation
was not cause by the Sub-Adviser, or (b) the Advisers willful misfeasance, bad faith, or gross
negligence generally in the performance of its duties hereunder or the Management Agreement or its
reckless disregard of its obligations and duties under this Agreement or the Management Agreement;
provided, however, that the Adviser Indemnitees shall not be indemnified for any losses, claims,
damages, liabilities or litigation sustained as a result of the Sub-Advisers, the Trusts, their
officers, partners, employees, consultants or agents willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties under this Agreement or violation of applicable law.
14. Enforceability. Any term or provision of this Agreement which is invalid or unenforceable
in any jurisdiction shall, as to such jurisdiction be ineffective to the extent of such invalidity
or unenforceability without rendering invalid or unenforceable the remaining terms or provisions of
this Agreement or affecting the validity or enforceability of any of the terms or provisions of
this Agreement in any other jurisdiction.
15. Limitation of Liability. The parties to this Agreement acknowledge and agree that all
litigation arising hereunder, whether direct or indirect, and of any and every nature whatsoever
shall be satisfied solely out of the assets of the affected Fund and that no Trustee, officer or
holder of shares of beneficial interest of the Fund shall be personally liable for any of the
foregoing liabilities. The Trusts
A-10
Certificate of Trust, as amended from time to time, is on file in the Office of the Secretary of
State of the Commonwealth of Massachusetts. Such Certificate of Trust and the Trusts Agreement
and Declaration of Trust describe in detail the respective responsibilities and limitations on
liability of the Trustees, officers, and holders of shares of beneficial interest.
16. Change in the Advisers Ownership. The Sub-Adviser agrees that it shall notify the Trust
of any anticipated or otherwise reasonably foreseeable change in the ownership of the Sub-Adviser
within a reasonable time prior to such change being effected.
17. Jurisdiction. This Agreement shall be governed by and construed in accordance with the
substantive laws of the Commonwealth of Massachusetts and the Sub-Adviser consents to the
jurisdiction of courts, both state and federal, in Massachusetts, with respect to any dispute under
this Agreement.
18. Paragraph Headings. The headings of paragraphs contained in this Agreement are provided
for convenience only, form no part of this Agreement and shall not affect its construction.
19. Counterparts. This Agreement may be executed simultaneously 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.
20. Confidentiality. The Sub-Adviser and the Adviser agree that they shall exercise the same
standard of care that they use to protect their own confidential and proprietary information, but
no less than reasonable care, to protect the confidentiality of information supplied by either the
Sub-Adviser or the Adviser that is not otherwise in the public domain or previously known to the
other party in connection with the performance of its obligations and duties hereunder, including
Portfolio Information. As used herein Portfolio Information means confidential and proprietary
information of the Fund, the Sub-Adviser or the Adviser that is received by the other party in
connection with this Agreement, including information with regard to the portfolio holdings and
characteristics of the portion of each of the Funds allocated to the Sub-Adviser that the
Sub-Adviser manages under the terms of this Agreement. Other than as set forth in this Agreement
or required by applicable law, the Sub-Adviser and the Adviser will restrict access to the
Portfolio Information to those persons who will use it only for the purpose of managing the Fund or
servicing the Fund. The foregoing shall not prevent the Sub-Adviser from disclosing Portfolio
Information that is (1) publicly known or becomes publicly known through no unauthorized act of its
own, (2) rightfully received from a third party without obligation of confidentiality, (3) approved
in writing by the Adviser for disclosure, or (4) required to be disclosed pursuant to a requirement
of a governmental agency or law so long as the Sub-Adviser provides the Adviser with prompt written
notice of such requirement prior to any such disclosure. Nothing in this Agreement shall be
construed to prevent the Sub-Adviser from giving other entities investment advice about, or trading
on their behalf, in the portfolio securities of the Fund. The Adviser and its employees or agents
shall not use Portfolio Information, directly or indirectly, for the purpose of purchasing or
selling any securities for personal or other accounts, and shall maintain policies and procedures
reasonably designed to prevent the use of the portfolio holdings information for such prohibited
securities trading purposes.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be signed on their
behalf by their duly authorized officers as of the date first above written.
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ATTEST: |
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BISHOP STREET CAPITAL MANAGEMENT
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By: |
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Name: |
Michael K. Hirai |
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Title: |
President |
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ATTEST: |
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COLUMBIA MANAGEMENT ADVISORS, LLC
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By: |
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Name: |
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Title: |
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Accepted and Agreed to as of the day and year first above written.
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SCHEDULE A
to the
SUB-ADVISORY AGREEMENT
dated _____________, 20__ between
BISHOP STREET CAPITAL MANAGEMENT
and
COLUMBIA MANAGEMENT ADVISORS, LLC
The Adviser will pay to the Sub-Adviser as compensation for the Sub-Advisers services rendered, a
fee, computed daily at an annual rate based on the average daily net assets of the Fund under the
following fee schedule:
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Fund |
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Rate |
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Bishop Street Dividend Value Fund
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0.36% on the first $75 million; |
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0.35% on the next $75 million; |
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0.325% on the next $100 million; |
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0.30% on the next $250 million; and |
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0.25% on assets over $500 million |
A-13
EXHIBIT B
BISHOP STREET FUNDS
INTERIM INVESTMENT SUB-ADVISORY AGREEMENT
AGREEMENT made this 1st day of September, 2009 between Bishop Street Funds (the Trust),
Bishop Street Capital Management (the Adviser), and Lotsoff Capital Management (the
Sub-Adviser).
WHEREAS, Bishop Street Funds, a Massachusetts business trust (the Trust), is registered as
an open-end management investment company under the Investment Company Act of 1940, as amended (the
1940 Act); and
WHEREAS, the Adviser has entered into an Investment Advisory Agreement dated March 31, 1999
(the Advisory Agreement) with the Trust, pursuant to which the Adviser acts as investment adviser
to the series of the Trust; and
WHEREAS, the Adviser, with the approval of the Trust, desires to retain the Sub-Adviser to
provide investment advisory services to the Adviser in connection with the management of the Large
Cap Core Equity Fund (the Fund), and the Sub-Adviser is willing to render such investment
advisory services.
NOW, THEREFORE, in consideration of the mutual covenants and benefits set forth herein, the
parties hereto agree as follows:
1. |
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Duties of the Sub-Adviser. Subject to supervision by the Adviser and the Trusts Board of
Trustees, the Sub-Adviser shall manage on a discretionary basis all of the securities and
other assets of the Fund entrusted to it hereunder (the Assets), including the purchase,
retention and disposition of the Assets in accordance with the Funds investment objectives,
policies and restrictions as stated in the Funds prospectus and statement of additional
information, as currently in effect and as amended or supplemented from time to time (together
referred to as the Prospectus), and subject to the following: |
(a) |
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The Sub-Adviser shall, in consultation with and subject to the direction of the Adviser,
determine from time to time what Assets will be purchased, retained or sold by the Fund, and
what portion of the Assets will be invested or held uninvested in cash. |
(b) |
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In the performance of its duties and obligations under this Agreement, the Sub-Adviser may
delegate some or all of the performance of the services to its subsidiaries or affiliates.
The Sub-Adviser will, however, remain responsible to the Adviser for any such delegated
functions. |
B-1
(c) |
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In the performance of its duties and obligations under this Agreement, the Sub-Adviser shall
act in conformity with the Trusts Declaration of Trust (as defined herein), the Prospectus,
and with the written instructions and directions of the Adviser and of the Board of Trustees
of the Trust received from time to time, and will conform to and comply with the requirements
of the 1940 Act, the Internal Revenue Code of 1986 (the Code), and all other applicable
federal and state laws and regulations, as each is amended from time to time. |
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(d) |
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The Sub-Adviser shall determine the Assets to be purchased or sold by the Fund as provided in
subparagraph (a) and will place orders with or through such persons, brokers or dealers to
carry out the policy with respect to brokerage set forth in the Funds Prospectus or as the
Board of Trustees or the Adviser may direct in writing from time to time, in conformity with
all federal securities laws. Additionally, the Sub-Adviser is authorized to execute
agreements as agent for the Fund with brokers or dealers necessary to carry out its duties
under this Agreement. In executing Fund transactions and selecting brokers or dealers, the
Sub-Adviser will use its best efforts to seek on behalf of the Fund the best overall terms
available. In assessing the best overall terms available for any transaction, the Sub-Adviser
shall consider all factors that it deems relevant, including the breadth of the market in the
security, the price of the security, the financial condition and execution capability of the
broker or dealer, and the reasonableness of the commission, if any, both for the specific
transaction and on a continuing basis. In evaluating the best overall terms available, and in
selecting the broker-dealer to execute a particular transaction, the Sub-Adviser may also
consider the brokerage and research services provided (as those terms are defined in Section
28(e) of the Securities Exchange Act of 1934 (the Exchange Act)). Consistent with any
guidelines established by the Board of Trustees of the Trust and Section 28(e) of the Exchange
Act, 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 that is
in excess of the amount of commission another broker or dealer would have charged for
effecting that transaction if, but only if, the Sub-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 that particular transaction or in terms
of the overall responsibilities of the Sub-Adviser to its discretionary clients, including the
Fund. In addition, the Sub-Adviser is authorized to allocate purchase and sale orders for
securities to brokers or dealers (including brokers and dealers that are affiliated with the
Adviser, Sub-Adviser or the Trusts principal underwriter) and to take into account the sale
of shares of the Trust if the Sub-Adviser believes that the quality of the transaction and the
commission are comparable to what they would be with other qualified firms. In no instance,
however, will the Funds Assets be purchased from or sold to the Adviser, Sub-Adviser, the
Trusts principal underwriter, or any affiliated person of either the Trust, Adviser, the
Sub-Adviser or the principal underwriter, acting as principal in the transaction, except to
the extent permitted by the Securities and Exchange Commission (SEC) and the 1940 Act. |
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(e) |
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The Sub-Adviser shall maintain all books and records with respect to transactions involving
the Assets required by subparagraphs (b)(5), (6), (7), (9), (10) and (11) and |
B-2
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paragraph (f) of Rule 31a-1 under the 1940 Act. The Sub-Adviser shall provide to the
Adviser or the Board of Trustees such periodic and special reports, balance sheets or
financial information, and such other information with regard to its affairs as the Adviser
or Board of Trustees may reasonably request. |
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The Sub-Adviser shall keep the books and records relating to the Assets required to be
maintained by the Sub-Adviser under this Agreement and shall timely furnish to the Adviser
all information relating to the Sub-Advisers services under this Agreement needed by the
Adviser to keep the other books and records of the Fund required by Rule 31a-1 under the
1940 Act. The Sub-Adviser shall also furnish to the Adviser any other information relating
to the Assets that is required to be filed by the Adviser or the Trust with the SEC or sent
to shareholders under the 1940 Act (including the rules adopted thereunder) or any exemptive
or other relief that the Adviser or the Trust obtains from the SEC. The Sub-Adviser agrees
that all records that it maintains on behalf of the Fund are property of the Fund and the
Sub-Adviser will surrender promptly to the Fund any of such records upon the Funds request;
provided, however, that the Sub-Adviser may retain a copy of such records. In addition, for
the duration of this Agreement, the Sub-Adviser shall preserve for the periods prescribed by
Rule 31a-2 under the 1940 Act any such records as are required to be maintained by it
pursuant to this Agreement, and shall transfer said records to any successor sub-adviser
upon the termination of this Agreement (or, if there is no successor sub-adviser, to the
Adviser). |
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(f) |
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The Sub-Adviser shall provide the Funds custodian, on each business day, with information
relating to all transactions concerning the Funds Assets and shall provide the Adviser with
such information upon request of the Adviser. The Adviser has obtained the agreement of the
Funds custodian to act in accordance with the instructions of the Sub-Adviser. |
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(g) |
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The investment management services provided by the Sub-Adviser under this Agreement are not
to be deemed exclusive and the Sub-Adviser shall be free to render similar or different
services to others, as long as such services do not impair the services rendered to the
Adviser or the Trust. |
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Nothing in this Agreement shall limit or restrict the Sub-Adviser or any of its officers,
employees, affiliates, or subsidiaries from buying, selling, or trading in any securities
for its or their own account or accounts in compliance with applicable federal securities
laws as well as the Sub-Advisers Code of Ethics. The Trust and the Adviser acknowledge
that the Sub-Adviser and its officers, employees, affiliates, or subsidiaries and its other
clients may at any time have, acquire, increase, decrease, or dispose of positions in
investments that are at the same time being acquired or disposed of for the accounts of the
Fund in a manner consistent with the Sub-Advisers Code of Ethics. The Sub-Adviser will
have no obligation to acquire for the Fund a position in any investment that the
Sub-Adviser, its officers, employees, affiliates, or subsidiaries may acquire for its or
their own accounts or for the account of another client, if in the sole discretion of the
Sub-Adviser, it is not feasible or desirable to acquire a position in such investment for
the accounts of the Fund. |
B-3
(h) |
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The Sub-Adviser shall as soon as reasonably practicable notify the Adviser of any financial
condition that is likely to impair the Sub-Advisers ability to fulfill its commitment under
this Agreement. |
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(i) |
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The Sub-Adviser shall review all proxy solicitation materials and be responsible for voting
and handling all proxies in relation to the securities held as Assets in the Fund. The
Adviser shall instruct the custodian and other parties providing services to the Fund to
promptly forward misdirected proxies to the Sub-Adviser. |
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2. |
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Duties of the Adviser. The Adviser shall continue to have responsibility for all services to
be provided to the Fund pursuant to the Advisory Agreement and shall oversee and review the
Sub-Advisers performance of its duties under this Agreement; provided, however, that in
connection with its management of the Assets, nothing herein shall be construed to relieve the
Sub-Adviser of responsibility for compliance with the Trusts Declaration of Trust (as defined
herein), the Prospectus, the written instructions and directions of the Board of Trustees of
the Trust, the requirements of the 1940 Act, the Code, and all other applicable federal and
state laws and regulations, as each is amended from time to time. |
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3. |
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Delivery of Documents. The Adviser has furnished the Sub-Adviser with properly certified or
authenticated copies of each of the following documents: |
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(a) |
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The Trusts Agreement and Declaration of Trust, as filed with the Secretary of State of the
Commonwealth of Massachusetts (such Agreement and Declaration of Trust, as in effect on the
date of this Agreement and as amended from time to time, herein called the Declaration of
Trust); |
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(b) |
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By-Laws of the Trust (such By-Laws, as in effect on the date of this Agreement and as amended
from time to time, herein called the By-Laws); and |
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(c) |
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Prospectus. |
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The Adviser agrees to promptly furnish the Sub-Adviser with copies of any changes,
amendments or other modifications made to the Declaration of Trust, the By-Laws, the
Prospectus, or any other document relating to the Sub-Advisers services hereunder. |
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4. |
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Compensation to the Sub-Adviser. For the services to be provided by the Sub-Adviser pursuant
to this Agreement, the Adviser will pay the Sub-Adviser, and the Sub-Adviser agrees to accept
as full compensation therefor, a sub-advisory fee at the rate specified in Schedule A, which
is attached hereto and made part of this Agreement. The fee will be calculated based on the
average daily value of the Assets under the Sub-Advisers management. The compensation earned
under this Agreement will be held in an interest-bearing escrow account with the Funds
custodian bank. Upon approval of this Agreement by a vote of a majority of the outstanding
voting securities of the Fund, the amount in the escrow account (including any interest
earned) will be paid to the Sub- |
B-4
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Adviser. Except as may otherwise be prohibited by law or regulation (including any then
current SEC staff interpretation), the Sub-Adviser may, in its discretion and from time to
time, waive a portion of its fee. If this Agreement is not approved, the Sub-Adviser will
be paid out of the escrow account, the lesser of: (a) any costs incurred by the Sub-Adviser
in performing its obligations under the Agreement (plus interest earned on that amount while
in escrow); or (b) the total amount in the escrow account (plus interest earned). |
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All rights of compensation under this Agreement for services performed as of the termination
date shall survive the termination of this Agreement. |
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As used in this Section 4, the term vote of a majority of the outstanding voting
securities shall have the meanings set forth in the 1940 Act and the rules and regulations
thereunder; subject to such exemptions as may be granted by the SEC under said Act. |
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5. |
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Indemnification. The Sub-Adviser shall indemnify and hold harmless the Adviser from and
against any and all claims, losses, liabilities or damages (including reasonable attorneys
fees and other related expenses) howsoever arising from or in connection with the performance
of the Sub-Advisers obligations under this Agreement; provided, however, that the
Sub-Advisers obligation under this Section 5 shall be reduced to the extent that the claim
against, or the loss, liability or damage experienced by the Adviser, is caused by or is
otherwise directly related to the Advisers own willful misfeasance, bad faith or negligence,
or to the reckless disregard of its duties under this Agreement. |
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The Adviser shall indemnify and hold harmless the Sub-Adviser from and against any and all
claims, losses, liabilities or damages (including reasonable attorneys fees and other
related expenses) howsoever arising from or in connection with the performance of the
Advisers obligations under this Agreement; provided, however, that the Advisers obligation
under this Section 5 shall be reduced to the extent that the claim against, or the loss,
liability or damage experienced by the Sub-Adviser, is caused by or is otherwise directly
related to the Sub-Advisers own willful misfeasance, bad faith or negligence, or to the
reckless disregard of its duties under this Agreement. |
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6. |
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Duration and Termination. This Agreement shall continue in effect for the lesser of: (i) the
period from the effective date through the date of the approval of a new investment
sub-advisory agreement by vote of a majority of the outstanding voting securities of the Fund;
or (ii) 150 days; provided however that if the shareholders fail to approve a new investment
sub-advisory agreement, the Sub-Adviser may continue to serve hereunder as to the Fund in a
manner consistent with the 1940 Act and the rules and regulations thereunder. |
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Notwithstanding the foregoing, this Agreement may be terminated as to the Fund at any time,
without the payment of any penalty, on ten (10) days written notice, by (i) the majority
vote of the Trustees, including a majority vote of such Trustees who are not interested
persons of the Trust, at a meeting called for the purpose of voting on such approval; or
(ii) the vote of a majority of the outstanding voting securities of the Fund. This Agreement
will automatically and immediately terminate in the event of its |
B-5
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assignment. Any notice under this Agreement shall be given in writing, addressed and
delivered, or mailed postpaid, to the other party at any office of such party. |
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This Agreement shall terminate automatically and immediately in the event of its assignment
or in the event of a termination of the Advisory Agreement with the Trust. As used in this
Section 6, the terms assignment, interested persons and vote of a majority of the
outstanding voting securities shall have the respective meanings set forth in the 1940 Act
and the rules and regulations thereunder, subject to such exceptions as may be granted by
the SEC under the 1940 Act. |
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7. |
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Governing Law. This Agreement shall be governed by the internal laws of the Commonwealth of
Massachusetts without regard to conflict of law principles; provided, however, that nothing
herein shall be construed as being inconsistent with the 1940 Act. |
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8. |
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Severability. Should any part of this Agreement be held invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be affected thereby. |
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This Agreement shall be binding upon and shall inure to the benefit of the parties hereto
and their respective successors. |
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9. |
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Notice. Any notice, advice or report to be given pursuant to this Agreement shall be deemed
sufficient if delivered or mailed by registered, certified or overnight mail, postage prepaid
addressed by the party giving notice to the other party at the last address furnished by the
other party: |
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To the Adviser at: |
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Bishop Street Capital Management
999 Bishop Street, 28th Floor
Honolulu, HI 96813 |
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To the Sub-Adviser at: |
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Lotsoff Capital Management
20 N. Clark Street, 34th Floor
Chicago, IL 60602
Attention: Gary R. Lisk, Managing Director |
10. |
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Anti-Money Laundering. The Adviser agrees to provide the Sub-Adviser with any documentation
that it may reasonably require in order to comply with all applicable anti-money laundering
regulation, including but not limited to that of the United States and the United Kingdom. In
addition, the Adviser agrees that the Sub-Adviser may provide copies of such documentation to
counterparties which they may reasonably require in order to fulfill their anti-money
laundering procedures. |
B-6
11. |
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Entire Agreement; Amendment. This Agreement embodies the entire agreement and understanding
between the parties hereto, and supersedes all prior agreements and understandings relating to
this Agreements subject matter. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but such counterparts shall,
together, constitute only one instrument. |
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In the event that this Agreement is made applicable to any additional series of the Trust,
the Adviser is entering into this Agreement with the Sub-Adviser on behalf of the respective
series severally and not jointly, with the express intention that the provisions contained
in each numbered paragraph hereof shall be understood as applying separately with respect to
each series as if contained in separate agreements between the Adviser and Sub-Adviser for
each such series. |
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This Agreement may be amended in writing at any time by the mutual agreement of the Trust,
the Adviser and the Sub-Adviser. |
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12. |
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Miscellaneous. |
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(a) |
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A copy of the Declaration of Trust is on file with the Secretary of State of the Commonwealth
of Massachusetts, and notice is hereby given that the obligations of this instrument are not
binding upon any of the Trustees, officers or shareholders of the Fund or the Trust. |
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(b) |
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Where the effect of a requirement of the 1940 Act reflected in any provision of this
Agreement is altered by a rule, regulation or order of the SEC, whether of special or general
application, such provision shall be deemed to incorporate the effect of such rule, regulation
or order. |
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(c) |
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The Adviser and the Fund each hereby consent to being treated by the Sub-Adviser as a
qualified eligible person as defined in the rules promulgated under the United States
Commodity Exchange Act (the CEA) for the purposes of the CEA and the regulations thereunder. |
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(d) |
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The Sub-Adviser represents to the Adviser and the Fund that it is a registered commodity
trading advisor, as such term is defined in the CEA and the regulations promulgated
thereunder and shall during the term of this Agreement satisfy all applicable requirements of
the CEA relating to a registered commodity trading advisor. |
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PURSUANT TO AN EXEMPTION FROM THE COMMODITY FUTURES TRADING COMMISSION IN CONNECTION WITH
ACCOUNTS OF QUALIFIED ELIGIBLE CLIENTS, THIS BROCHURE OR ACCOUNT DOCUMENT IS NOT REQUIRED TO
BE, AND HAS NOT BEEN, FILED WITH THE COMMISSION. THE COMMISSION DOES NOT PASS UPON THE
MERITS OF PARTICIPATING IN A TRADING PROGRAM OR UPON THE ACCURACY OF COMMODITY TRADING
ADVISOR DISCLOSURE. |
B-7
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CONSEQUENTLY, THE COMMODITY FUTURES TRADING COMMISSION HAS NOT REVIEWED OR APPROVED THIS
TRADING PROGRAM OR ACCOUNT DOCUMENT. |
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their
officers designated below as of the day and year first written above.
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Bishop Street Funds |
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Lotsoff Capital Management |
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By:
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/s/ Joseph M. Gallo
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By:
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/s/ Margaret M. Baer |
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Name: Joseph M. Gallo
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Name: Margaret M. Baer |
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Title: Vice President and Secretary
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Title: Managing Director |
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Bishop Street Capital Management |
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By:
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/s/ Michael K. Hirai |
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Name: Michael K. Hirai
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Title: President and Chief Investment Officer |
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B-8
Schedule A
to the
Interim Investment Sub-Advisory Agreement
dated September 1, 2009
between
Bishop Street Funds,
Bishop Street Capital Management,
and
Lotsoff Capital Management
Compensation
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Aggregate Sub-Advised Assets |
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Annualized Fee |
Up to (but not including) $300 million |
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0.24 |
% |
$300 million to (but not including) $1 billion |
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0.225 |
% |
$1 billion and over |
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0.20 |
% |
B-9
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PROXY CARD FOR
Bishop Street Large Cap Core Equity Fund
a series of Bishop Street Funds |
FORM OF PROXY SOLICITED BY THE BOARD OF TRUSTEES FOR THE SPECIAL MEETING OF SHAREHOLDERS, TO BE
HELD ON JANUARY 15, 2010
The undersigned, revoking previous proxies with respect to the units of beneficial interest in the
name of undersigned (the Shares), hereby appoints Phil Masterson and Joseph Gallo as proxies,
each with full power of substitution, to vote all of the Shares at the Special Meeting of
Shareholders of the Large Cap Core Equity Fund (the Fund), a series of Bishop
Street Funds (the Trust), to be held at the offices of the Funds administrator, SEI Investments Global Funds
Services, One Freedom Valley Drive, Oaks, Pennsylvania 19456, at 11:00 a.m., Eastern Time, on
January 15, 2010, and any adjournments or postponements thereof (the Meeting); and on the reverse
the undersigned hereby instructs said proxies to vote.
Important Notice Regarding the Availability of Proxy Materials for the Bishop Street Large Cap Core
Equity Fund Shareholder Meeting to Be Held on January 15, 2010
The proxy statement for this meeting is available at: www.proxyonline.com/docs/bishopstreet2010.pdf
PLEASE FOLD HERE AND RETURN THE ENTIRE CARD DO NOT DETACH
BISHOP STREET LARGE CAP CORE EQUITY FUND
Proxy for Special Meeting of Shareholders January 15, 2010
Please see the instructions below if you wish to vote by MAIL or by FAX.
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MAIL: |
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To vote your proxy by mail, check the appropriate voting box on the reverse side of this
proxy card, sign and date the card and return it in the enclosed postage-paid envelope. |
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FAX: |
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You may return your completed proxy card via fax by sending it to 1-888-810-9042
(no cover page needed) |
NOTE: Your signature(s) acknowledge(s) receipt with this proxy of a copy of the Notice of Special
Meeting and the proxy statement. Your signature(s) on this proxy should be exactly as your name(s)
appear on this proxy. If the shares are held jointly, either holder may sign this proxy but the
name of the person signing should conform exactly to the name appearing on this proxy.
Attorneys-in-fact, executors, administrators, trustees or guardians should indicate the full title
and capacity in which they are signing.
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Shareholder sign here |
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Date |
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Joint owner sign here |
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Date |
IT IS IMPORTANT THAT PROXIES BE VOTED PROMPTLY. EVERY SHAREHOLDERS VOTE IS IMPORTANT.
BISHOP STREET LARGE CAP CORE EQUITY FUND
PLEASE DATE, SIGN AND RETURN PROMPTLY USING THE ENCLOSED
PSTAGE-PAID ENVELOPE WHETHER OR NOT YOU EXPECT TO ATTEND THE
MEETING. YOU MAY VOTE IN PERSON IF YOU ATTEND.
This proxy will, when properly executed, be voted as directed herein by the signing
shareholder(s). If no contrary direction is given when the duly executed proxy is
returned, this proxy will be voted FOR the foregoing Proposals and will be voted in
the appointed proxies discretion upon such other business as may properly come before
the Meeting.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR EACH OF THE FOLLOWING PROPOSALS:
PLEASE FOLD HERE AND RETURN THE ENTIRE CARD DO NOT DETACH
TO VOTE, MARK BOXES BELOW IN BLUE OR BLACK INK AS FOLLOWS. Example: n
1. To approve a new investment
sub-advisory agreement for the Fund
between Bishop Street Capital Management
and Columbia Management Advisors, LLC.
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FOR
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AGAINST
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ABSTAIN |
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o
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o
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o |
2. To approve a new investment goal for
the Fund, which in the future would be
changeable by the Board of Trustees of
Bishop Street Funds without shareholder
approval.
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FOR
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AGAINST
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ABSTAIN |
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o
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o
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3. To approve an interim sub-advisory
agreement among the Bishop Street
Funds, on behalf of the Fund, Bishop
Street Capital Management and Lotsoff
Capital Management.
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FOR
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AGAINST
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ABSTAIN |
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o
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o
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o |