EXHIBIT 5
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this 1st day of June, 1993, by and between 1784 Funds a
Massachusetts business trust (the "Trust"), and The First National Bank of
Boston, a national banking association (the "Adviser").
WHEREAS, the Trust is an open-end, diversified management investment
company registered under the Investment Company Act of 1940, as amended,
consisting of several series of shares, each having its own investment policies;
and
WHEREAS, the Trust has retained SEI Financial Management Corporation (the
"Administrator") to provide administration of the Trust's operations, subject to
the control of the Board of Trustees; and
WHEREAS, the Trust has retained The First National Bank of Boston (the
"Fund Accountant") to provide Fund Accounting and related Portfolio Accounting
services to the Trust;
WHEREAS, the Trust desires to retain the Adviser to render investment
management services with respect to its 1784 Growth and Income Fund, 1784 Asset
Allocation Fund, 1784 U.S. Government Medium-Term Income Fund, 1784 Tax-Exempt
Medium-Term Income Fund, 1784 Massachusetts Tax-Exempt Income Fund, 1784 Tax-
Free Money Market Fund, 1784 U.S. Treasury Money Market Fund and 1784
Institutional U.S. Treasury Money Market Fund portfolios and such other
portfolios as the Trust and the Adviser may agree upon (the "Portfolios"), and
the Adviser is willing to render such services:
NOW, THEREFORE, in consideration of mutual covenants herein contained, the
parties hereto agree as follows:
1. Duties of Adviser. The Trust employs the Adviser to manage the
investment and reinvestment of the assets, and to continuously review,
supervise, and administer the investment program of the Portfolios, to determine
in its discretion the securities to be purchased or sold, to provide the
Administrator and the Trust with records concerning the Adviser's activities
which the Trust is required to maintain, and to render regular reports to the
Administrator and to the Trust's Officers and Trustees concerning the Adviser's
discharge of the foregoing responsibilities.
The Adviser shall discharge the foregoing responsibilities subject to the
control of the Board of Trustees of the Trust and in compliance with such
policies as the Trustees may from time to time establish, and in compliance with
the objectives, policies, and limitations for each such Portfolio set forth in
the Trust's prospectus and statement of additional information as amended from
time to time, and applicable laws and regulations.
The Adviser accepts such employment and agrees, at its own expense, to
render the services and to provide the office space, furnishings and equipment
and the
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personnel required by it to perform the services on the terms and for the
compensation provided herein.
2. Portfolio Transactions. The Adviser is authorized to select the
brokers or dealers that will execute the purchases and sales of portfolio
securities for the Portfolios and is directed to use its best efforts to obtain
the best net results as described in the Trust's prospectus or prospectuses and
statement of additional information from time to time. The Adviser will
promptly communicate to the Administrator, the Fund Accountant and the officers
and the Trustees of the Trust such information relating to portfolio
transactions as they may reasonably request.
It is understood that the Adviser will not be deemed to have acted
unlawfully, or to have breached a fiduciary duty to the Trust or be in breach of
any obligation owing to the Trust under this Agreement, or otherwise, solely by
reason of its having directed a securities transaction on behalf of the Trust to
a broker-dealer in compliance with the provisions of Section 28(e) of the
Securities Exchange Act of 1934.
3. Compensation of the Adviser. For the services to be rendered by the
Adviser as provided in Sections 1 and 2 of this Agreement, the Trust shall pay
to the Adviser compensation at the rate specified in the Schedule(s) which are
attached hereto and made a part of this Agreement. Such compensation shall be
paid to the Adviser at the end of each month, and calculated by applying a daily
rate, based on the annual percentage rates as specified in the attached
Schedule(s), to the assets. The fee shall be based on the average daily net
assets for the month involved.
All rights of compensation under this Agreement for services performed as
of the termination date shall survive the termination of this Agreement.
4. Excess Expenses. If the expenses for any Portfolio for any fiscal
year (including fees and other amounts payable to the Adviser, but excluding
interest, taxes, brokerage costs, litigation, and other extraordinary costs) as
calculated every business day would exceed the expense limitations imposed on
investment companies by any applicable statute or regulatory authority of any
jurisdiction in which Shares are qualified for offer and sale, the Adviser shall
waive its fees, or reimburse to the Trust out of fees previously paid to the
Adviser for such year in the amount necessary to comply with the expense
limitation.
However, no waiver or reimbursement under the foregoing paragraph shall be
made which would result in the Trust's inability to qualify as a regulated
investment company under provisions of the Internal Revenue Code. Waivers or
reimbursements pursuant to this Section 4 shall be settled on a monthly basis
(subject to fiscal year end reconciliation) by a reduction in the fee payable to
the Adviser for such month pursuant to Section 3 and, if such reduction shall be
insufficient to offset such expenses, by reimbursing the Trust.
5. Reports. The Trust and the Adviser agree to furnish to each other, if
applicable, current prospectuses, proxy statements, reports to shareholders,
certified copies of their financial statements, and such other information with
regard to their affairs as each may reasonably request.
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6. Status of Adviser. The services of the Adviser to the Trust are not
to be deemed exclusive, and the Adviser shall be free to render similar services
to others so long as its services to the Trust are not impaired thereby. The
Adviser shall be deemed to be an independent contractor and shall, unless
otherwise expressly provided or authorized, have no authority to act for or
represent the Trust in any way or otherwise be deemed an agent of the Trust.
7. Certain Records. Any records required to be maintained and preserved
pursuant to the provisions of Rule 31a-1 and Rule 31a-2 promulgated under the
Investment Company Act of 1940 which are prepared or maintained by the Adviser
on behalf of the Trust are the property of the Trust and will be surrendered
promptly to the Trust on request.
8. Limitation of Liability of Adviser. The duties of the Adviser shall
be confined to those expressly set forth herein, and no implied duties are
assumed by or may be asserted against the Adviser hereunder. The Adviser shall
not be liable for any error of judgment or mistake of law or for any loss
arising out of any investment or for any act or omission in carrying out its
duties hereunder, except a loss resulting from willful misfeasance, bad faith or
gross negligence in the performance of its duties, or by reason of reckless
disregard of its obligations and duties hereunder, except as may otherwise be
provided under provisions of applicable state law which cannot be waived or
modified hereby. (As used in this Paragraph 8, the term "Adviser" shall include
directors, officers, employees and other corporate agents of the Adviser as well
as that corporation itself).
So long as the Adviser acts in good faith and with due diligence and
without gross negligence, the Trust assumes full responsibility and shall
indemnify the Adviser and hold it harmless from and against any and all actions,
suits and claims, whether groundless or otherwise, and from and against any and
all losses, costs, charges, reasonable counsel fees and disbursements, payments,
expenses and liabilities (including reasonable investigation expenses) arising
directly or indirectly out of said advisory relationship to the Trust or any
other service rendered to the Trust hereunder. The indemnity and defense
provisions set forth herein shall indefinitely survive the termination of this
Agreement.
The rights hereunder shall include the right to reasonable advances of
defense expenses in the event of any pending or threatened litigation with
respect to which indemnification hereunder may ultimately be merited. In order
that the indemnification provision contained herein shall apply, however, it is
understood that if in any case the Trust may be asked to indemnify or hold the
Adviser harmless, the Trust shall be fully and promptly advised of all pertinent
facts concerning the situation in question, and it is further understood that
the Adviser will use all reasonable care to identify and notify the Trust
promptly concerning any situation which presents or appears likely to present
the probability of such a claim for indemnification against the Trust, but
failure to do so in good faith shall not affect the rights hereunder.
The Adviser may apply to the Trust at any time for instructions and may
consult counsel for the Trust or its own counsel and with accountants and other
experts with respect to any matter arising in connection with the Adviser's
duties, and
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the Adviser shall not be liable or accountable for any action taken or omitted
by it in good faith in accordance with such instruction or with the opinion of
such counsel, accountants or other experts.
Also, the Adviser shall be protected in acting upon any document which it
reasonably believes to be genuine and to have been signed or presented by the
proper person or persons. Nor shall the Adviser be held to have notice of any
change of authority of any officers, employee or agent of the Trust until
receipt of written notice thereof from the Trust.
9. Permissible Interests. Trustees, agents, and shareholders of the
Trust are or may be interested in the Adviser (or any successor thereof) as
directors, partners, officers, or shareholders, or otherwise; directors,
partners, officers, agents, and shareholders of the Adviser are or may be
interested in the Trust as Trustees, shareholders or otherwise; and the Adviser
(or any successor) is or may be interested in the Trust as a shareholder or
otherwise. In addition, brokerage transactions for the Trust may be effected
through affiliates of the Adviser if approved by the Board of Trustees, subject
to the rules and regulations of the Securities and Exchange Commission.
10. Duration and Termination. This Agreement, unless sooner terminated as
provided herein, shall remain in effect until two years from date of execution,
and thereafter, for periods of one year so long as such continuance thereafter
is specifically approved at least annually (a) by the vote of a majority of
those Trustees of the Trust who are not parties to this Agreement or interested
persons of any such party, cast in person at a meeting called for the purpose of
voting on such approval, and (b) by the Trustees of the Trust or by vote of a
majority of the outstanding voting securities of each Portfolio; provided,
however, that if the shareholders of any Portfolio fail to approve the Agreement
as provided herein, the Adviser may continue to serve hereunder in the manner
and to the extent permitted by the Investment Company Act of 1940 and rules and
regulations thereunder. The foregoing requirement that continuance of this
Agreement be "specifically approved at least annually" shall be construed in a
manner consistent with the Investment Company Act of 1940 and the rules and
regulations thereunder.
This Agreement may be terminated as to any Portfolio at any time, without
the payment of any penalty by vote of a majority of the Trustees of the Trust or
by vote of a majority of the outstanding voting securities of the Portfolio on
not less than 30 days nor more than 60 days written notice to the Adviser, or by
the Adviser at any time without the payment of any penalty, on 90 days written
notice to the Trust. This Agreement will automatically and immediately
terminate in the event of its assignment.
As used in this Section 10, the terms "assignment", "interested persons",
and a "vote of a majority of the outstanding voting securities" shall have the
respective meanings set forth in the Investment Company Act of 1940 and the
rules and regulations thereunder; subject to such exemptions as may be granted
by the Securities and Exchange Commission under said Act.
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11. Notice. Any notice required or permitted to be given by either party
to the other shall be deemed sufficient if sent by registered or certified mail,
postage prepaid, addressed by the party giving notice to the other party at the
last address furnished by the other party to the party giving notice: if to the
Trust, at 000 Xxxx Xxxxxxxxxx Xxxx, Xxxxx, XX and if to the Adviser at: 000
Xxxxxxx Xxxxxx, Xxxxxx Xxxxxxxxxxxxx 00000, with copies to Xxxxxx X. Xxxx,
Assistant General Counsel, The First National Bank of Boston, 000 Xxxxxxx
Xxxxxx, 00-00-00, Xxxxxx Xxxxxxxxxxxxx 00000 and Xxxxx X. Xxxxxxxxxx, Director
of Mutual Funds, The First National Bank of Boston, 000 Xxxxxxx Xxxxxx, 00-00-
00, Xxxxxx, Xxxxxxxxxxxxx 00000.
12. Severability. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby.
A copy of the Declaration of Trust of the Trust is on file with the
Secretary of The Commonwealth of Massachusetts, and notice is hereby given that
this instrument is executed on behalf of the Trustees of the Trust as Trustees,
and that the obligations of this instrument are not binding upon any of the
Trustees, officers, or shareholders of the Trust individually but binding only
upon the assets and property of the Trust.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
executed as of the day and year first written above.
1784 Funds The First National Bank of Boston
By: Xxxxx X. Xxxxxxx, V.P. By: Xxxxxx X. Xxxxx, Xx.
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Chief Investment Officer - Private Bank
Attest: Attest: Xxxx Xxxxxxxx
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Schedule A
to the
Investment Advisory Agreement
between 1784 Funds
and
The First National Bank of Boston
Pursuant to Article 3, the Trust shall pay the Adviser compensation at an annual
rate as follows:
Portfolio Fee (in basis points)
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1784 Growth and Income Xxxx 00
0000 Xxxxx Allocation Fund 74
1784 Growth Fund 74
1784 U.S. Government Medium-Term Income Fund 74
1784 Tax-Exempt Medium-Term Income Fund 74
1784 Massachusetts Tax-Exempt Income Fund 74
1784 Florida Tax-Exempt Income Fund 74
1784 Rhode Island Tax-Exempt Income Fund 74
1784 Connecticut Tax-Exempt Income Fund 74
1784 Short-Term Income Fund 50
1784 Income Fund 74
1784 Tax-Free Money Market Fund 40
1784 U.S. Treasury Money Market Fund 40
1784 Institutional U.S. Treasury Money Market Fund 20
