SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934 (Amendment No. )
------
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [ X ]
Check the appropriate box:
[ X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-11(c) or
Sec. 240.14a-12
BAYFUNDS
(Name of Registrant as Specified In Its Charter)
Federated Investors
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1.Title of each class of securities to which transaction applies:
2.Aggregate number of securities to which transaction applies:
3.Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
4.Proposed maximum aggregate value of transaction:
5. Total fee paid:
[ ] Fee paid previously with preliminary proxy materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1)Amount Previously Paid:
2)Form, Schedule or Registration Statement No.:
3)Filing Party:
4)Date Filed:
PRELIMINARY PROXY
BAYFUNDS
Notice of Special Meeting of Shareholders
to be held June 28, 1996
A special meeting of the shareholders of BayFunds (the "Trust") will be
held at 10:00 a.m. at the offices of Federated Administrative Services, 19th
Floor, Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh, PA
15222-3779, on June 28, 1996, for the following purposes:
1. To consider a new Investment Advisory Agreement. This new
Investment Advisory Agreement is required because the pending merger (the
"Merger") of Boston Merger Corp. ("Merger Corp."), a wholly-owned subsidiary
of Bank of Boston Corporation ("BKBC"), with and into BayBanks, Inc.
("BayBanks") will cause a legal termination of the existing Investment
Advisory Agreements between the Trust and BayBank, N.A. ("BBNA") and BayBanks
Investment Management, Inc. ("BBIM"), respectively. Upon the consummation of
the Merger, and contingent upon the approval of the new Investment Advisory
Agreement, The First National Bank of Boston, a subsidiary of BKBC, will
serve as Investment Adviser to the Trust. It is contemplated that, on or
after the date of the Merger, BBNA will merge with The First National Bank of
Boston (the "Bank Merger"), and the surviving bank will be named BayBank of
Boston, N.A. "BayBank of Boston" is used herein to refer to The First
National Bank of Boston, whether before or after the Bank Merger. The
effectiveness of the new Investment Advisory Agreement is contingent upon the
Merger but is not contingent upon the Bank Merger. The terms of the new
Investment Advisory Agreement are the same as the terms of the existing
Investment Advisory Agreements with BBNA and BBIM, except for the identity of
the Investment Adviser.
2. To transact such other business as may properly come before the meeting
or any adjournment thereof.
The Board of Trustees has fixed May 10, 1996 as the record date for
determination of shareholders entitled to vote at this meeting.
By Order of the Trustees
Victor R. Siclari
Secretary
May 17, 1996
YOU CAN HELP AVOID THE NECESSITY AND EXPENSE OF SENDING FOLLOW-UP LETTERS TO
ENSURE A QUORUM BY PROMPTLY RETURNING THE ENCLOSED PROXY. IF YOU ARE UNABLE
TO ATTEND THE MEETING, PLEASE MARK, SIGN, DATE AND RETURN THE ENCLOSED PROXY
SO THAT THE NECESSARY QUORUM MAY BE REPRESENTED AT THE SPECIAL MEETING. THE
ENCLOSED ENVELOPE REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
BAYFUNDS
1001 LIBERTY AVENUE
PITTSBURGH, PA 15222
PROXY STATEMENT
The enclosed proxy is solicited on behalf of the Board of Trustees (the
"Trustees") of BayFunds (the "Trust"). The proxy is revocable at any time
before it is voted by sending written notice of the revocation to the Trust
or by appearing personally at the June 28, 1996 special meeting of
shareholders of the Trust (the "Special Meeting"). The cost of preparing and
mailing the notice of meeting, the proxy card, this proxy statement and any
additional proxy material has been or is to be borne by The First National
Bank of Boston ("BayBank of Boston"), the Trust's proposed investment
adviser, unless the Merger (as hereinafter defined) is not consummated, in
which case such expenses will be borne by BayBank, N.A. ("BBNA"). Proxy
solicitations will be made primarily by mail, but may also be made by
telephone, telegraph, fax or personal interview conducted by certain officers
or employees of the Trust or of BayBank Systems, Inc. (the Trust's
shareholder servicing agent) or Federated Administrative Services (the
Trust's administrator) or, if necessary, a commercial firm retained for this
purpose. In the event that a shareholder signs and returns the proxy ballot,
but does not indicate a choice as to any of the proposals on the proxy
ballot, the proxy attorneys will vote those shares in favor of such
proposal(s).
Only shareholders of record at the close of business on May 10, 1996
will be entitled to vote at the Special Meeting. On May 10, the Trust had
outstanding shares of beneficial interest ("Shares"),
----------------------
each Share being entitled to one vote, and each fractional Share being
entitled to a proportionate fractional vote. On the same date, the BayFunds
Money Market Portfolio (the "Money Market Fund") had outstanding
-----------
Shares, the BayFunds U.S. Treasury Money Market Portfolio (the "U.S. Treasury
Fund") had outstanding Shares, the BayFunds Short Term Yield
-----------
Portfolio (the "Short Term Yield Fund") had outstanding Shares,
-----------
the BayFunds Bond Portfolio (the "Bond Fund") had outstanding
-----------
Shares, and the BayFunds Equity Portfolio (the "Equity Fund") had outstanding
Shares.
- -----------
For purposes of determining the presence of a quorum and counting votes
on the matters presented, Shares represented by abstentions and "broker non-
votes" will be counted as present, but not as votes cast, at the Special
Meeting. Under the Investment Company Act of 1940 (the "1940 Act"), the
affirmative vote necessary to approve the matter under consideration may be
determined with reference to a percentage of votes present at the Special
Meeting, which would have the effect of treating abstentions and non-votes as
if they were votes against the proposal.
The Trust's executive offices are located at Federated Investors Tower,
1001 Liberty Avenue, Pittsburgh, PA 15222-3779. This proxy statement and
the enclosed notice of meeting and proxy card are first being mailed on or
about May 31, 1996.
A COPY OF THE TRUST'S ANNUAL REPORT DATED DECEMBER 31, 1995 IS
AVAILABLE, WITHOUT CHARGE, UPON REQUEST AND MAY BE OBTAINED BY CALLING 1-800-
BAYFUND OR BY WRITING THE TRUST AT THE ADDRESS ABOVE.
SUMMARY OF PROPOSALS
This Special Meeting is being called for the following purposes: (1) to
approve or disapprove a new investment advisory agreement between the Trust
and BayBank of Boston (the "New Investment Advisory Agreement"); and (ii) to
transact such other business as may properly come before the meeting or any
adjournment thereof. The New Investment Advisory Agreement will be dated the
later of (i) approval of the New Investment Advisory Agreement by
shareholders and Trustees of the Trust or (ii) the consummation of the merger
(the "Merger") of Boston Merger Corp. ("Merger Corp."), a wholly-owned
subsidiary of Bank of Boston Corporation ("BKBC"), with and into BayBanks,
Inc. ("BayBanks").
Approval of Proposal (1) with respect to any of the five separate
investment portfolios of the Trust (each a "Fund," or collectively, the
"Funds") requires the affirmative vote of: (a) 67% or more of the Shares of
such Fund present at the Special Meeting, if the holders of more than 50% of
the outstanding Shares are present or represented by proxy, or (b) more than
50% of the outstanding Shares of such Fund, whichever is less.
PROPOSAL (1)
APPROVAL OR DISAPPROVAL OF THE NEW
INVESTMENT ADVISORY AGREEMENT
THE NEW INVESTMENT ADVISORY AGREEMENT
Consideration of the New Investment Advisory Agreement is being
requested because of the pending Merger. Upon the consummation of the
Merger, and contingent upon the approval of the New Investment Advisory
Agreement, The First National Bank of Boston, a subsidiary of BKBC, will
serve as investment adviser to the Trust. It is contemplated that, on or
after the date of the Merger, BayBank, N.A. ("BBNA") will merge with The
First National Bank of Boston (the "Bank Merger"), and the surviving bank
will be named BayBank of Boston, N.A. "BayBank of Boston" is used herein to
refer to The First National Bank of Boston, whether before or after the Bank
Merger. The effectiveness of the New Investment Advisory Agreement is
contingent upon the Merger but is not contingent upon the Bank Merger. The
terms of the New Investment Advisory Agreement are the same as the terms of
the Present Investment Advisory Agreements (as hereinafter defined) with BBNA
and BayBanks Investment Management, Inc. ("BBIM"), except for the identity of
the Investment Adviser.
Here are some of the factors you should consider in determining whether
to approve the New Investment Advisory Agreement:
The Board of Trustees has unanimously approved the New Investment
Advisory Agreement;
There will be no change in the Funds' investment objectives or
investment policies or in the duties of the investment adviser as a result of
approval of the New Investment Advisory Agreement;
There will be no change in the fees payable by the Funds to BayBank of
Boston for advisory services as a result of approval of the New Investment
Advisory Agreement; and
The Board of Trustees has been advised that BayBank of Boston management
currently intends that no significant changes in the persons currently
responsible for providing daily investment advice to the Funds will be made
by BayBank of Boston following the consummation of the Merger.
BBIM, 155 Federal Street, Boston, MA 02110, a wholly-owned subsidiary
of BBNA, serves as investment adviser to (i) the Money Market Fund pursuant
to an investment advisory agreement dated June 6, 1991; and (ii) the Short
Term Yield Fund, the Bond Fund, and the Equity Fund pursuant to an investment
advisory agreement dated September 1, 1992 (each a "Present Investment
Advisory Agreement"). BBNA, 175 Federal Street, Boston, MA 02110, a wholly-
owned subsidiary of BayBanks, serves as investment adviser to the U.S.
Treasury Fund pursuant to an investment advisory agreement dated September
1, 1992, as amended March 1, 1996 (a "Present Investment Advisory
Agreement" and, together with the investment advisory agreements between the
Trust and BBIM, the "Present Investment Advisory Agreements.")
Bank of Boston Corporation and BayBanks, Inc. have entered into an
Agreement and Plan of Merger, dated as of December 12, 1995 (the "Merger
Agreement"). BECAUSE THE MERGER WILL EFFECT A CHANGE IN CONTROL OF BBIM AND
BBNA, THE PRESENT INVESTMENT ADVISORY AGREEMENTS WILL AUTOMATICALLY TERMINATE
IN ACCORDANCE WITH THE TERMS OF EACH AS REQUIRED BY THE 1940 ACT. THUS,
APPROVAL OF THE NEW INVESTMENT ADVISORY AGREEMENT BY SHAREHOLDERS OF EACH
FUND IS BEING SOUGHT IN ORDER TO AVOID ANY INTERRUPTION IN THE PROVISION OF
ADVISORY SERVICES TO EACH FUND.
At meetings held on February 15 and May 16, 1996, the Trustees,
including a majority of the Trustees who are not interested persons (as
defined in the 1940 Act) of the Trust, BBNA or BBIM, considered and approved
the New Investment Advisory Agreement with BayBank of Boston, pursuant to
which BayBank of Boston will act as the Trust's investment adviser. THE
TERMS OF THE NEW INVESTMENT ADVISORY AGREEMENT ARE IDENTICAL TO THOSE OF THE
PRESENT INVESTMENT ADVISORY AGREEMENTS WITH RESPECT TO DUTIES, FEES AND THE
STANDARD OF CARE. The effective date of the New Investment Advisory
Agreement will be the later of (i) approval by shareholders of the New
Investment Advisory Agreement or (ii) the date of the consummation of the
Merger (the "Closing Date"). It is currently expected that the Closing Date
will occur during the third quarter of 1996. BayBank of Boston will be
headquartered at 100 Federal Street, Boston, Massachusetts.
Copies of the Present Investment Advisory Agreements and the New
Investment Advisory Agreement appear as Exhibits A, B, C, and D,
respectively, to this proxy statement and the descriptions of such agreements
contained herein are qualified in their entirety by the provisions of such
agreements as set forth in such exhibits.
The Present Investment Advisory Agreement with respect to the Money
Market Fund was approved by the Board of Trustees, including a majority of
the Trustees who are not interested persons of the Trust or BBIM (or its
affiliates), as defined in the 1940 Act (the "Requisite Vote of the Board of
Trustees"), on May 17, 1991, and was most recently reapproved on May 16,
1996. The Present Investment Advisory Agreement with respect to the Money
Market Fund was last submitted to a vote of shareholders on August 21, 1992,
for the purpose of complying with the requirements of Section 15 of the 1940
Act.
The Present Investment Advisory Agreement with respect to the Short Term
Yield Fund, the Bond Fund, and the Equity Fund was approved by the Requisite
Vote of the Board of Trustees on August 28, 1992, and was most recently
reapproved on May 16, 1996. The present Investment Advisory Agreement with
respect to the Short Term Yield Fund, the Bond Fund, and the Equity Fund was
last submitted to a vote of shareholders on January 18, 1993, for the
purpose of complying with the requirements of Section 15 of the 1940 Act.
The initial form of the Present Investment Advisory Agreement with
respect to the U.S. Treasury Fund was approved by the Requisite Vote of the
Board of Trustees on August 28, 1992. The current form of the Present
Investment Advisory Agreement with respect to the U.S. Treasury Fund (as
amended to reflect the reorganization of certain BayBanks subsidiaries into
BBNA) was approved by the Requisite Vote of the Board of Trustees on February
16, 1996, and was most recently reapproved, in its current form, on May 16,
1996. The Present Investment Advisory Agreement with respect to the U.S.
Treasury Fund was last submitted to a vote of shareholders on January 18,
1993, for the purpose of complying with the requirements of Section 15 of
the 1940 Act.
The terms of the New Investment Advisory Agreement (which are materially
unchanged from the Present Investment Advisory Agreements) provide that
BayBank of Boston, subject to the direction of the Board of Trustees, will
provide a continuous investment program for each Fund, including investment
research and management with respect to all securities and investments and
cash equivalents in said Funds. BayBank of Boston will determine from time
to time what securities and other investments will be purchased, retained or
sold by the Trust with respect to the Funds.
For its services under the Present Investment Advisory Agreements, BBIM
is entitled to receive a fee computed and paid daily at the annual rate of
(i) forty one-hundredths of one percent (.40%) of the Money Market Fund's
average daily net assets, (ii) fifty one-hundredths of one percent (.50%) of
the Short Term Yield Fund's average daily net assets, (iii) sixty one-
hundredths of one percent (.60%) of the Bond Fund's average daily net assets,
and (iv) seventy one-hundredths of one percent (.70%) of the Equity Fund's
average daily net assets. BBIM may voluntarily reduce such fee from time to
time by notice to the Trust. For its services under the Present Investment
Advisory Agreement, BBNA is entitled to receive from the U.S. Treasury Fund a
fee computed and paid daily at the annual rate of twenty one-hundredths of
one percent (.20%) of the Fund's average daily net assets. BBNA may
voluntarily reduce such fee from time to time by notice to the Trust.
These fees are identical in amount to the fees to which each of the
Funds will be contractually subject under the New Investment Advisory
Agreement.
The Present Investment Advisory Agreements and the New Investment
Advisory Agreement each provides that BBIM, BBNA, or BayBank of Boston
respectively, may, from time to time and for such periods as it deems
appropriate, further reduce its compensation by voluntarily reimbursing
certain expenses of the Funds. During the fiscal year ended December 31,
1995, BBNA earned investment advisory fees from the U.S. Treasury Fund of
$1,978,781. During the fiscal year ended December 31, 1995, BBIM earned
aggregate investment advisory fees of $2,374,966. For the fiscal year ended
December, 1995, investment advisory fees paid to BBIM, on a Fund by Fund
basis, were as follows:
Investment Advisory
Fees Paid
Money Market Fund $869,240
Short Term Yield Fund $361,786
Bond Fund $360,071
Equity Fund $783,869
BayBank Systems, Inc., a subsidiary of BayBanks, provides shareholder
services to the Trust pursuant to a Shareholder Services Agreement dated
December 1, 1992. For its services under the Shareholder Services
Agreement, BayBank Systems, Inc. is entitled to receive a fee computed
monthly at an annual rate of twenty-five one-hundredths of one percent (.25%)
of the average daily net assets held during the month of the Investment
Shares of each Fund. During the fiscal year ended December 31, 1995, BayBank
Systems, Inc. earned aggregate shareholder service fees of $633,979.
If approved by shareholders at this Special Meeting, the New Investment
Advisory Agreement will continue for two years from the effective date,
unless terminated, and may be renewed from year to year thereafter by the
Board of Trustees. The continuation of the New Investment Advisory Agreement
must be approved (a) by a majority vote of the Trustees, including a majority
of the Trustees who are not parties to the New Investment Advisory Agreement
or interested persons (as defined in the 1940 Act) of the Trust, BBIM, BBNA,
or BayBank of Boston cast in person at a meeting called for that purpose or
(b) by a vote of a majority of the outstanding voting securities of a Fund.
The New Investment Advisory Agreement may be terminated as to a particular
Fund at any time on sixty days' written notice, without the payment of any
penalty, by the Trust (by vote of the Trust's Board of Trustees or by vote of
a majority of the outstanding voting securities of such Fund) or by BayBank
of Boston. The New Investment Advisory Agreement may not be assigned and
shall terminate automatically in the event of its assignment, as defined in
the 1940 Act.
As do the Present Investment Advisory Agreements, the New Investment
Advisory Agreement provides that, in the absence of willful misfeasance, bad
faith, gross negligence, or reckless disregard of obligations or duties on
the part of the investment adviser in the performance of its duties under the
investment advisory agreement, the investment adviser shall not be liable to
the Trust or any of the Funds or to any shareholder for any act or omission
in the course of or connected in any way with rendering services or for any
losses that may be sustained in the purchase, holding or sale of any
security.
The Trustees of the Trust, including the Trustees who are not interested
persons (as defined in the 1940 Act) of the Trust, or of BayBank of Boston,
reviewed and unanimously approved the New Investment Advisory Agreement in
person at meetings on February 15 and May 16, 1996, and have directed that
it be submitted to the shareholders of the Trust for their approval.
If the New Investment Advisory Agreement is approved by Fund
shareholders and the Merger is thereafter consummated, the New Investment
Advisory Agreement will be executed and become effective on the Closing Date.
In the event the Merger is not consummated, the Present Investment Advisory
Agreements will continue in accordance with their terms. In the event the
Merger is consummated and the New Investment Advisory Agreement is not
approved by Fund shareholders, the Board of Trustees will consider what
further actions should be taken.
PROPOSED MERGER
The Merger Agreement provides for the merger of Merger Corp. (a wholly-
owned subsidiary of BKBC) with and into BayBanks with BayBanks surviving as a
wholly-owned subsidiary of BKBC. It is contemplated that on or after the
date of the Merger, their subsidiaries, The First National Bank of Boston and
BayBank, N.A. will combine to become BayBank of Boston, N.A.
Consummation of the Merger is subject to the satisfaction of certain
conditions, including the receipt of all necessary regulatory approvals. In
addition, approval of the Merger by the shareholders of BKBC and BayBanks was
obtained on April 25, 1996. Shareholders of the Trust are not being asked
to vote on the Merger. The Merger Agreement may be terminated and the Merger
abandoned at any time prior to the Closing Date by the mutual consent of the
parties or upon the occurrence of other events specified in the Merger
Agreement. Completion of the Merger will occur as soon as practicable after
satisfaction or waiver of the applicable conditions, which the parties
anticipate will occur in mid-1996. However, the consummation of the Merger
could be delayed as a result of delays in obtaining the necessary
governmental regulatory approvals.
TRUSTEES' RECOMMENDATIONS AND OTHER INFORMATION
The New Investment Advisory Agreement was approved by the Board of
Trustees of the Trust, including a majority of the Trustees who are not
interested persons (as defined in the 1940 Act) of the Trust or of BayBank of
Boston, at a meeting held on February 15, 1996.
THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS OF THE TRUST VOTE FOR THE
PROPOSED NEW INVESTMENT ADVISORY AGREEMENT. In making this recommendation,
the Trustees have considered information relating to BayBank of Boston's
status following the completion of the Merger, including present capabilities
and expertise in serving as investment adviser to the Trust. They have
reviewed the terms of the New Investment Advisory Agreement, including the
fact that no effective net change to the Trust's investment advisory fees is
being proposed.
Pursuant to the New Investment Advisory Agreement, BayBank of Boston
will determine, subject to the general supervision of the Board of Trustees
of the Trust and in accordance with each Fund's investment objective and
restrictions, which securities are to be purchased and sold by a Fund, and
which brokers are to be eligible to execute its portfolio transactions.
While BayBank of Boston will generally seek competitive spreads or
commissions on behalf of each of the Funds, the Trust may not necessarily pay
the lowest spread or commission available on each transaction. Allocation of
transactions to various dealers will be determined by BayBank of Boston in
its best judgment and in a manner deemed fair and reasonable to shareholders.
The primary consideration is prompt execution of orders in an effective
manner at the most favorable price. Subject to this consideration, dealers
who provide supplemental investment research to BayBank of Boston may receive
orders for transactions by the Trust. Information so received will be in
addition to and not in lieu of services required to be performed by BayBank
of Boston and will not reduce the advisory fees payable to BayBank of Boston
by the Trust. Such information may be useful to BayBank of Boston in serving
both the Trust and other clients and, conversely, supplemental information
obtained by the placement of business of other clients may be useful to
BayBank of Boston in carrying out its obligations to the Trust.
In connection with their recommendations to shareholders to vote for the
New Investment Advisory Agreement, the Trustees were advised by BBIM and BBNA
that no significant changes in the persons currently responsible for
providing daily investment advice to the Trust are currently planned to be
made by BayBank of Boston following consummation of the merger. BBIM and
BBNA also advised the Trustees that they intend to examine all mutual fund
activities of the combined entities subsequent to consummation of the Merger,
and that management of the Trust would be advised regarding the findings of
the examination of these activities. Accordingly, BBIM and BBNA have advised
the Trustees that they are unable currently to predict whether changes will
be recommended which would materially impact the Trust's operations or when
such changes, if recommended, would be proposed. Nevertheless, the Trustees,
including all members of the Board of Trustees who are not interested persons
of the Trust, BBIM and BBNA, or BayBank of Boston concluded that BayBank of
Boston will be fully capable of performing the services contemplated by the
New Investment Advisory Agreement and recommended that the New Investment
Advisory Agreement be approved by the shareholders of the Trust.
With regard to the New Investment Advisory Agreement, the 1940 Act
provides that, in connection with the sale of any interest in an investment
adviser which results in the "assignment" of an investment advisory contract,
an investment adviser of a registered investment company, or an affiliated
person of such investment adviser, may receive any amount or benefit if (i)
for a period of three years after the sale, at least 75% of the members of
the Board of Trustees of the investment company are not interested persons of
the investment adviser or the predecessor adviser, and (ii) there is no
"unfair burden" imposed on the investment company as a result of such sale or
any express or implied terms, conditions or understanding applicable thereto.
For this purpose, "unfair burden" is defined to include any arrangement
during the two-year period after the transaction, whereby the investment
adviser or its predecessor or successor investment advisers, or any
interested persons of any such adviser, receives or is entitled to receive
any compensation directly or indirectly (i) from any person in connection
with the purchase or sale of securities or other property to, from or on
behalf of the investment company other than bona fide ordinary compensation
as principal underwriter for such company, or (ii) from the investment
company or its security holders for other than bona fide investment advisory
or other services. This provision of the 1940 Act was enacted by Congress in
1975 to make it clear that an investment adviser (or an affiliated person of
the adviser) can realize a profit on the sale of the adviser's business
subject to the two safeguards described above. In accordance with the
safeguards imposed by the 1940 Act, at least 75% of the members of the Board
of Trustees of the Trust currently are not comprised of interested persons of
BBIM, BBNA, or BayBank of Boston. Also, for at least three years after the
Merger, the Trustees must continue to meet this composition percentage in
order for BayBank of Boston to continue to serve as investment adviser to the
Funds. Additionally, the Board of Trustees of the Trust has received
assurance from BBIM, BBNA and BayBank of Boston that no "unfair burden" will
be imposed on the Trust as a result of the proposed transaction.
THE BOARD OF TRUSTEES OF THE TRUST RECOMMENDS THAT THE SHAREHOLDERS
APPROVE THE NEW INVESTMENT ADVISORY AGREEMENT.
INFORMATION ABOUT BAYBANKS, BBNA AND BBIM
BayBanks
BayBanks, established in 1928, is a registered bank holding company and
savings and loan holding company that provides a complete range of banking,
investment, and related financial services, with particular emphasis on
consumer and middle market business customers. BayBanks' largest subsidiary
is BayBank, N.A., a national bank based in Boston with branches in
Massachusetts and Connecticut. BayBanks also has national bank and savings
association subsidiaries in New Hampshire. BayBanks is well known for its
use of advanced banking technology, featuring state-of-the-art computer and
telecommunications technology to process customer transactions, provide
customer information, and increase the efficiency of its data processing
activities. BayBanks is a recognized leader in consumer banking, with the
largest consumer market share in Massachusetts.
BBNA
BBNA, a wholly-owned subsidiary of BayBanks, is the adviser to the U.S.
Treasury Fund and manages approximately $1.1 billion of assets (as of
December 31, 1995) in the U.S. Treasury Fund. BBNA, through its Capital
Markets Division, manages more than $2.6 billion of assets in the investment
portfolios of BayBanks. BBNA is the successor to BayBank Boston, N.A., the
former adviser to the U.S. Treasury Fund. BBNA was created in order to
restructure the banking subsidiaries of BayBanks into a single national bank,
effective October 31, 1995.
BBIM
BBIM, a wholly-owned subsidiary of BBNA, is the adviser for the Money
Market, Short Term Yield, Bond and Equity Funds and is a registered
investment adviser that provides investment advisory services for trust and
other managed assets. BBIM was established as a separate subsidiary of
BayBanks in 1985, but its predecessor division and personnel have been
providing investment advisory services to BayBanks' customers for more than
65 years. As of December 31, 1995, the Trust Division of BBNA acted as
custodian for assets totaling $5.4 billion. Of this amount, BBIM managed
$1.7 billion of discretionary assets. BBIM and BBNA have been managing
commingled funds for over twenty years. At the present time BBIM serves as
adviser to 6 such commingled funds with total assets of approximately $308
million. BBIM has managed mutual funds since August 1991 and manages
approximately $448 million of assets (as of December 31, 1995) in various
portfolios of the Trust.
The principal executive offices of BayBanks and BBNA are located at 175
Federal Street, Boston, MA 02110. BBIM's principal executive offices are
located at 155 Federal Street, Boston, MA 02110.
INFORMATION ABOUT BKBC
AND BAYBANK OF BOSTON
BKBC
BKBC is a registered bank holding company, organized in 1970 under
Massachusetts law, which, through its subsidiaries and joint ventures, is
engaged in providing a wide variety of retail, corporate and international
financial services to individuals, corporate and institutional customers,
governments, and other financial institutions. These services include retail
banking, consumer finance, private banking, trust, mortgage origination and
servicing, domestic corporate and investment banking, leasing, international
banking, commercial real estate lending, correspondent banking, and
securities and payments processing. BKBC's principal subsidiary is BayBank
of Boston, a national banking association. Other major banking subsidiaries
of BKBC include Bank of Boston Connecticut and Rhode Island Hospital Trust
National Bank.
BKBC's and BayBank of Boston's principal executive offices are located
at 100 Federal Street, Boston, Massachusetts 02110.
BayBank of Boston
BayBank of Boston is the successor to a number of banking institutions,
the first of which was chartered in 1784. All of the capital stock of
BayBank of Boston (except directors' qualifying shares) is owned directly or
indirectly by BKBC. BayBank of Boston has been providing asset management
services since 1890. The Private Bank Division of BayBank of Boston is the
investment management group within BayBank of Boston that will advise the
Trust. As of December 31, 1995, The Private Bank was responsible for the
investment management of approximately $16 billion of individual,
institutional, endowment and corporate assets, including $2.5 billion of
1784 Funds assets, in money market, equity, and fixed income securities. The
Private Bank has earned national recognition and respect as investment
managers.
BayBank of Boston presently serves as investment adviser to 1784 Funds,
an open-end management investment company consisting of 14 portfolios. The
following table shows the name of each portfolio having an investment
objective similar to a portfolio of the Trust, the portfolio's assets under
management at
March 31, 1996 (in millions of dollars), the contractual investment advisory
fee as an annual percentage of assets under management, and the investment
advisory fee after voluntary waivers by BayBank of Boston:
Contractual
Fee After
Fund Assets Fee
Waiver
1784 U.S. Treasury Money Market Fund $71.1 0.40 0.40
1784 Institutional U.S. Treasury Money Fund 656.6 0.20 0.12
1784 Short-Term Income Fund 86.9 0.50 0.50
1784 Income Fund 223.4 0.74 0.60
1784 Growth Fund NA 0.74 0.74
1784 Growth and Income Fund 288.0 0.74 0.74
OFFICERS AND DIRECTORS
The principal executive officer and directors of BayBank of Boston
(prior to the Merger) are:*
NAME POSITION WITH PRINCIPAL OCCUPATION AND
BAYBANK OF BOSTON BUSINESS ADDRESS
Charles K. Gifford Principal Executive
Officer, Director Chairman, President and Chief
Executive Officer of BKBC and of
BayBank of Boston, 100 Federal
Street, Boston, MA 02110.
Wayne A. Budd Director
----------------------------
Alice F. Emerson Director Senior Fellow, The Andrew W.
Mellon Foundation, 140 East 62nd
St., New York, NY 10021.
Paul C. O'Brien Director President of The O'Brien Group,
Inc., One International Place-
30th Floor, Boston, MA 02110.
John W. Rowe Director President and Chief Executive
Officer of New England Electric
System, 25 Research Drive,
Westborough, MA 01582.
Gary L. Countryman Director Chairman and Chief Executive
Officer of Liberty Mutual
Insurance Company, 175 Berkeley
Street, Boston, MA 02117.
J. Donald Monan, S.J. Director President of Boston College, 18
Old Colony Road, Chestnut Hill,
MA 02167.
Richard A. Smith Director Chairman of the Board of Harcourt
General, Inc. and the Nieman-
Marcus Group, Inc.; Chairman and
Chief Executive Officer of GC
Companies, Inc. , 27 Boylston
Street, Chestnut Hill, MA 02167.
NAME POSITION WITH PRINCIPAL OCCUPATION AND
BAYBANK OF BOSTON BUSINESS ADDRESS
William C. Van Faasen Director President and Chief Executive
Officer of Blue Cross and Blue
Shield of Massachusetts, Inc.,
100 Summer Street-01-31, Boston,
MA 02110.
William F. Connell Director Chairman and Chief Executive
Officer of Connell Limited
Partnership, One International
Place, 31st Floor, Boston, MA
02110.
Thomas J. May Director Chairman, President and Chief
Executive Officer of Boston
Edison Company, 800 Boylston
Street, Boston, MA 02199.
Donald F. McHenry Director University Research Professor of
Diplomacy and International
Relations, Georgetown University,
Washington, D.C. 20057-1052.
Thomas B. Wheeler Director President and Chief Executive
Officer of Massachusetts Mutual
Life Insurance Company, 1295
State Street, Springfield, MA
01111.
Alfred M. Zeien Director Chairman of the Board and Chief
Executive Officer of The Gillette
Company, Prudential Tower
Building, Boston, MA 02199.
*From and after the Merger, the BayBank of Boston Board will be expanded by
four members, and William M. Crozier, Jr., John A. Cervieri Jr., Thomas R.
Piper, and Glenn P. Strehle, will be appointed as members of the BayBank of
Boston Board.
AFFILIATED BROKER TRANSACTIONS
In the fiscal year ended December 31, 1995, no brokerage commissions
were paid to affiliated brokers of the Trust or of BBIM or BBNA on account of
trading for the Funds.
OTHER MATTERS AND DISCRETION
OF PERSONS NAMED IN THE PROXY
The Trust is not required, and does not intend, to hold annual meetings
of shareholders. Shareholders wishing to submit proposals for consideration
for inclusion in a proxy statement for the next meeting of shareholders
should send their written proposals to BayFunds, Federated Investors Tower,
Pittsburgh, PA 15222-3779, so that they are received within a reasonable
time before any such meeting.
While the Special Meeting is called to act upon any other business that
may properly come before it, at the date of this proxy statement the only
business which the management intends to present or knows that others will
present is the business stated in the Notice of Meeting. If any other
matters lawfully come before the Special Meeting, and in all procedural
matters at said Special meeting, it is the intention that the enclosed proxy
shall be voted in accordance with the best judgment of the persons named as
proxies therein, or their substitutes, present and acting at the Special
Meeting.
If at the time any session of the Special Meeting is called to order, a
quorum is not present, in person or by proxy, the persons named as proxies
may vote those proxies that have been received to adjourn the Special Meeting
to a later date. In the event that a quorum is present but sufficient votes
in favor of one or more of the proposals have not been received, the persons
named as proxies may propose one or more adjournments of the Special Meeting
to permit further solicitation of proxies with respect to any such proposal.
All such adjournments will require the affirmative vote of a majority of the
Shares present in person or by proxy at the session of the Special Meeting to
be adjourned. The persons named as proxies will vote those proxies that they
are entitled to vote in favor of the proposal, in favor of such an
adjournment, and will vote those proxies required to be voted against the
proposal, against any such adjournment. A vote may be taken on one or more
of the proposals in this proxy statement prior to any such adjournment if
sufficient votes for its or their approval have been received and it is
otherwise appropriate.
As of May 10, 1996, the Trust believes that BBNA was the shareholder of
record of ( %) of the Investment Shares and ( %) of the
----- ---- ----- ----
Trust Shares of the Money Market Fund, ( %) of the Investment Shares
----- ----
and ( %) of the Institutional Shares of the U.S. Treasury Fund,
----- ----
( %) of the Investment Shares and ( %) of the Institutional
- ----- ---- ----- ----
Shares of the Short Term Yield Fund, ( %) of the Investment Shares
----- ----
and ( %) of the Institutional Shares of the Bond Fund, and
----- ---- -----
( %) of the Investment Shares and ( %) of the Institutional
---- ----- ----
Shares of the Equity Fund. As of May 10, 1996, the Trust believes that BBNA
had voting power with respect to ( %) of the Money Market Fund Trust
----- ----
Shares, ( %) of the U.S. Treasury Fund Institutional Shares,
----- ---- -----
( %) of the Short Term Yield Fund Institutional Shares, ( %) of
---- ----- ----
the Bond Fund Institutional Shares, and ( %) of the Equity Fund
----- ----
Institutional Fund Shares. As a result, BBNA may be deemed to be a
"controlling person" of each of the Funds under the 1940 Act.
The following list indicates the beneficial ownership of the
shareholders who, to the best knowledge of the Trust, are the beneficial
owners of more than 5% of the outstanding Shares of a Fund as of May 10,
1996:
PERCENTAGE OF
NUMBER OF SHARES BENEFICIAL
NAME AND ADDRESS BENEFICIALLY OWNED OWNERSHIP
The table below indicates each additional person other than BayBanks and
the beneficial owners listed above who own of record 5% or more of the
Investment Shares of the following Funds of the Trust as of May 10, 1996:
PERCENTAGE OF
NUMBER OF SHARES BENEFICIAL
NAME AND ADDRESS BENEFICIALLY OWNED OWNERSHIP
No person other than BBNA and beneficial owners listed above own of
record more than 5% of the Trust/Institutional Shares of a Fund. As of May
10, 1996, the Officers and Trustees of the Trust owned less than 1% of a
Fund's outstanding Shares.
INFORMATION ABOUT THE TRUST'S ADMINISTRATOR AND PRINCIPAL UNDERWRITER
The Trust's administrator is Federated Administrative Services ("FAS"),
Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh, PA 15222-3779.
The Trust's principal distributor is Federated Securities Corp., Federated
Investors Tower, 1001 Liberty Avenue, Pittsburgh, PA 15222-3779, a
Pennsylvania corporation organized on November 14, 1969. Federated
Securities Corp. and FAS each are subsidiaries of Federated Investors.
Federated Securities Corp. is the principal distributor for a number of
investment companies. The following persons are officers of the Trust and
may be deemed to have an interest in FAS or Federated Securities Corp. by
virtue of their status as employees and/or executive officers of Federated
Investors or its subsidiaries:
NAME POSITION WITH TRUST
Glen R. Johnson President and Treasurer
C. Christine Thomson Vice President and
Assistant Treasurer
Victor R. Siclari Secretary
BBIM and BBNA have dealer agreements with Federated Securities Corp.
pursuant to which BBIM and BBNA are authorized to place orders with the
Trust's Transfer Agent for the purchase of Shares and tender Shares to the
Transfer Agent for redemption.
If you do not expect to attend the Special Meeting, please sign your
proxy card promptly and return it in the enclosed envelope to avoid
unnecessary expense and delay. No postage is necessary.
May 17, 1996
EXHIBIT A
BAYFUNDS
INVESTMENT ADVISORY CONTRACT
This Contract is made this 6th day of June, 1991, between BAYBANKS
INVESTMENT MANAGEMENT, INC., an investment adviser registered under the
Investment Advisers Act of 1940, having its principal place of business in
Boston, Massachusetts (the "Adviser"), and BAYFUNDS, a Massachusetts business
trust having its principal place of business in Pittsburgh, Pennsylvania (the
"Trust").
WHEREAS, the Trust is an "open-end company" as that term is defined in
the Investment Company Act of 1940 (the "Act") and is registered as such
with the Securities and Exchange Commission; and
WHEREAS, the Adviser is engaged in the business of rendering investment
advisory and management services.
NOW, THEREFORE, the parties hereto, intending to be legally bound, agree
as follows:
1. The Trust hereby appoints Adviser as Investment Adviser for each of
the portfolios ("Funds") of the Trust on whose behalf the Trust executes an
exhibit to this Contract, and Adviser, by its execution of each such exhibit,
accepts the appointments. Subject to the direction of the Trustees of the
Trust, Adviser shall provide investment research and supervision of the
investments of each of the Funds and conduct a continuous program of
investment evaluation and of appropriate sale or other disposition and
reinvestment of each Fund's assets. The Adviser shall determine the
securities to be purchased or sold by the Fund and will place orders
pursuant to its determinations with or through such brokers or dealers in
conformity with such policies with respect to brokerage as the Trust shall
establish from time to time and convey to the Adviser.
2. Adviser, in its supervision of the investments of each of the Funds
will be guided by each Fund's fundamental investment policies and the
provisions and restrictions contained in the Declaration of Trust and
By-Laws of the Trust and as set forth in the Trust's Registration Statement
(as hereinafter defined) and exhibits thereto as may be on file with the
Securities and Exchange Commission. The Trust shall deliver copies of all
such investment policies and of the Declaration of Trust and By-Laws of the
Trust, as amended from time to time, and the Registration Statements to the
Adviser, promptly upon such documents becoming available.
3. The Trust shall pay or cause to be paid, on behalf of each Fund,
all of the Fund's expenses and the Fund's allocable share of Trust expenses,
including without limitation, the expenses of organizing the Trust and
continuing its existence; fees and expenses of officers and Trustees of the
Trust; fees for investment advisory services and administrative personnel
and services; fees and expenses of preparing and filing its Registration
Statements under the Securities Act of 1933 and the Act and any amendments
thereto (collectively, the "Registration Statements"); expenses of
registering and qualifying the Trust, the Funds and shares of the Funds
("Shares") under Federal and state laws and regulations; expenses of
preparing, printing and distributing prospectuses (and any amendments
thereto) and sales literature; interest expense, taxes, fees and commissions
of every kind; expenses of issue (including cost of Share certificates),
purchase, repurchase and redemption of Shares, including expenses
attributable to a program of periodic issue; charges and expenses of
custodians, transfer agents, dividend disbursing agents, shareholder
servicing agents and registrars; printing and mailing costs, auditing,
accounting and legal expenses; reports to shareholders and governmental
officers and commissions; expenses of meetings of Trustees and shareholders
and proxy solicitations therefor; insurance expenses; association membership
dues; and such nonrecurring items as may arise, including all losses and
liabilities incurred in administering the Trust and the Funds.
The Trust will also pay each Fund's allocable share of such extraordinary
expenses as may arise, including expenses incurred in connection with
litigation, proceedings, and claims and the legal obligations of the Trust
to indemnify its officers, Trustees, employees, distributors, and agents with
respect thereto.
4. The Trust, on behalf of each of the Funds, shall pay to Adviser,
for all services rendered to such Fund by Adviser hereunder, the fees set
forth in the exhibits attached hereto.
5. The net asset value of each Fund's Shares as used herein will be
calculated to the nearest 1/10th of one cent.
6. The Adviser may from time to time and for such periods as it deems
appropriate reduce its compensation (and, if appropriate, assume expenses of
one or more of the Funds) to the extent that any Fund's expenses exceed such
lower expense limitation as the Adviser may, by notice to the Fund,
voluntarily declare to be effective.
7. This Contract shall begin for each Fund as of the date of execution
of the applicable exhibit and shall continue in effect with respect to each
Fund presently set forth on an exhibit (and any subsequent Funds added
pursuant to an exhibit during the initial term of this contact) for two years
from the date of this contract set forth above and thereafter for successive
periods of one year, subject to the provisions for termination and all of the
other terms and conditions hereof if: (a) such continuation shall be
specifically approved at least annually by the vote of a majority of the
Trustees of the Trust, including a majority of the Trustees who are not
parties to this Contract or interested persons of any such party (other
than as Trustees of the Trust), cast in person at a meeting called for that
purpose; and (b) Adviser shall not have notified a Fund in writing at least
sixty (60) days prior to the anniversary date of this Contract in any year
thereafter that it does not desire such continuation with respect to that
Fund. If a Fund is added after the first approval by the Trustees as
described above, this Contract will be effective as to that Fund upon
execution of the applicable exhibit and will continue in effect until the
next annual approval of this Contract by the Trustees and thereafter for
successive periods of one year, subject to approval as described above.
8. Notwithstanding any provision in this Contract, it may be
terminated at any time with respect to any Fund, without the payment of any
penalty, by the Trustees of the Trust or by a vote of a majority of the
outstanding voting securities of that Fund, as defined in Section 2(a)(42) of
the Act on sixty (60) days' written notice to Adviser.
9. This Contract may not be assigned by Adviser and shall
automatically terminate in the event of any assignment. Adviser may employ
or contract with such other person, persons, corporation or corporations at
its own cost and expense as it shall determine in order to assist it in
carrying out this Contract.
10. In the absence of willful misfeasance, bad faith, gross negligence
or reckless disregard of obligations or duties under this Contract on the
part of Adviser, Adviser shall not be liable to the Trust or to any of the
Funds or to any shareholder for any act or omission in the course of or
connected in any way with rendering services or for any losses that may be
sustained in the purchase, holding or sale of any security.
11. This Contract may be amended at any time by agreement of the
parties provided that the amendment shall be approved both by the vote of a
majority of the Trustees of the Trust, including a majority of Trustees who
are not parties to this Contract or interested persons of any such party to
this Contract (other than as Trustees of the Trust), cast in person at a
meeting called for that purpose, and on behalf of a Fund by a majority of the
outstanding voting securities of such Fund as defined in Section 2(a)(42) of
the Act.
12. The Adviser acknowledges that all sales literature for investment
companies (such as the Trust) are subject to strict regulatory oversight.
The Adviser agrees to submit any proposed sales literature for the Trust
(or any Fund) or for itself or its affiliates which mentions the Trust
(or any Fund) to the Trust's distributor for review and filing with the
appropriate regulatory authorities prior to the public release of any such
sales literature. The Trust agrees to cause its distributors to promptly
review all such sales literature to ensure compliance with relevant
requirements, to promptly advise Adviser of any deficiencies contained in
such sales literature, to promptly file complying sales literature with the
relevant authorities, and to cause such sales literature to be distributed
to prospective investors in the Trust.
13. Adviser is hereby expressly put on notice of the limitation of
liability as set forth in Article XI of the Declaration of Trust and agrees
that the obligations pursuant to this Contract of a particular Fund and of
the Trust with respect to that particular Fund be limited solely to the
assets of that particular Fund, and Adviser shall not seek satisfaction of
any such obligation from the assets of any other Fund, the shareholders of
any Fund, the Trustees, officers, employees or agents of the Trust, or any of
them.
14. This Contract shall be construed in accordance with and governed by
the laws of the Commonwealth of Pennsylvania, provided, however, that nothing
herein shall be construed in a manner inconsistent with the Act, the
Investment Advisers Act of 1940, or the rules and regulations promulgated
pursuant to such respective Acts.
15. This Contract will become binding on the parties hereto upon their
execution of the attached exhibits to this Contract.
INVESTMENT ADVISORY CONTRACT
EXHIBIT A
BAYFUNDS MONEY MARKET PORTFOLIO
For all services rendered by Adviser hereunder, the Trust shall pay to
Adviser and Adviser agrees to accept as full compensation for all services
rendered hereunder, an annual investment advisory fee equal to .40 of 1% of
the average daily net assets of the Fund.
The fee shall be accrued daily at the rate of 1/365th of .40 of 1%
applied to the daily net assets of the Fund.
The advisory fee so accrued shall be paid to Adviser daily.
The right of the Adviser as set forth in Paragraph 6 of this Contract to
assume expenses of one or more of the Funds shall also apply as to any
classes of shares of the above-named Fund.
Witness the due execution hereof this 6th day of June, 1991.
Attest: BAYBANKS INVESTMENT MANAGEMENT, INC.
/s/ Judith Benson By: /s/ Richard J. Redick
Clerk Managing Director
Attest: BAYFUNDS
/s/ John W. McGonigle By: /s/ Edward C. Gonzales
Secretary President
Exhibit B
BAYFUNDS
INVESTMENT ADVISORY CONTRACT
This Contract is made this 1ST DAY OF SEPTEMBER, 1992, between BAYBANKS
INVESTMENT MANAGEMENT, INC., an investment adviser registered under the
Investment Advisers Act of 1940, having its principal place of business in
Cambridge, Massachusetts (the "Adviser"), and BAYFUNDS, a Massachusetts
business trust having its principal place of business in Pittsburgh,
Pennsylvania (the "Trust").
WHEREAS, the Trust is an "open-end company" as that term is defined in
the Investment Company Act of 1940 (the "Act") and is registered as such
with the Securities and Exchange Commission; and
WHEREAS, the Adviser is engaged in the business of rendering investment
advisory and management services.
NOW, THEREFORE, the parties hereto, intending to be legally bound, agree
as follows:
1. The Trust hereby appoints Adviser as Investment Adviser for each of
the portfolios ("Funds") of the Trust on whose behalf the Trust executes an
exhibit to this Contract, and Adviser, by its execution of each such exhibit,
accepts the appointments. Subject to the direction of the Trustees of the
Trust, Adviser shall provide investment research and supervision of the
investments of each of the Funds and conduct a continuous program of
investment evaluation and of appropriate sale or other disposition and
reinvestment of each Fund's assets. The Adviser shall determine the
securities to be purchased or sold by the Fund and will place orders pursuant
to its determinations with or through such brokers or dealers in conformity
with such policies with respect to brokerage as the Trust shall establish
from time to time and convey to the Adviser.
2. Adviser, in its supervision of the investments of each of the Funds
will be guided by each Fund's fundamental investment policies and the
provisions and restrictions contained in the Declaration of Trust and By-Laws
of the Trust and as set forth in the Trust's Registration Statement (as
hereinafter defined) and exhibits thereto as may be on file with the
Securities and Exchange Commission. The Trust shall deliver copies of all
such investment policies and of the Declaration of Trust and By-Laws of the
Trust, as amended from time to time, and the Registration Statements to the
Adviser, promptly upon such documents becoming available.
3. The Trust shall pay or cause to be paid, on behalf of each Fund, all
of the Funds' expenses and the Funds' allocable share of Trust expenses,
including without limitation, the expenses of organizing the Trust and
continuing its existence; fees and expenses of officers and Trustees of the
Trust; fees for investment advisory services and administrative personnel and
services; fees and expenses of preparing and filing its Registration
Statements under the Securities Act of 1933 and the Act and any amendments
thereto (collectively, the "Registration Statements"); expenses of
registering and qualifying the Trust, the Funds and shares of the Funds
("Shares") under Federal and state laws and regulations; expenses of
preparing, printing and distributing prospectuses (and any amendments
thereto) and sales literature; interest expense, taxes, fees and commissions
of every kind; expenses of issue (including cost of Share certificates),
purchase, repurchase and redemption of Shares, including expenses
attributable to a program of periodic issue; charges and expenses of
custodians, transfer agents, dividend disbursing agents, shareholder
servicing agents and registrars; printing and mailing costs, auditing,
accounting and legal expenses; reports to shareholders and governmental
officers and commissions; expenses of meetings of Trustees and shareholders
and proxy solicitations therefor; insurance expenses; association membership
dues; and such nonrecurring items as may arise, including all losses and
liabilities incurred in administering the Trust and the Funds. The Trust
will also pay each Fund's allocable share of such extraordinary expenses as
may arise, including expenses incurred in connection with litigation,
proceedings, and claims and the legal obligations of the Trust to indemnify
its officers, Trustees, employees, distributors, and agents with respect
thereto.
4. The Trust, on behalf of each of the Funds, shall pay to Adviser, for
all services rendered to such Fund by Adviser hereunder, the fees set forth
in the exhibits attached hereto.
5. The net asset value of each Fund's Shares as used herein will be
calculated to the nearest 1/10th of one cent.
6. The Adviser may from time to time and for such periods as it deems
appropriate reduce its compensation (and, if appropriate, assume expenses of
one or more of the Funds) to the extent that any Fund's expenses exceed such
lower expense limitation as the Adviser may, by notice to the Fund,
voluntarily declare to be effective.
7. This Contract shall begin for each Fund as of the date of execution
of the applicable exhibit and shall continue in effect with respect to each
Fund presently set forth on an exhibit (and any subsequent Funds added
pursuant to an exhibit during the initial term of this Contract) for two
years from the date of this Contract set forth above and thereafter for
successive periods of one year, subject to the provisions for termination and
all of the other terms and conditions hereof if: (a) such continuation shall
be specifically approved at least annually by the vote of a majority of the
Trustees of the Trust, including a majority of the Trustees who are not
parties to this Contract or interested persons of any such party (other than
as Trustees of the Trust), cast in person at a meeting called for that
purpose; and (b) Adviser shall not have notified a Fund in writing at least
sixty (60) days prior to the anniversary date of this Contract in any year
thereafter that it does not desire such continuation with respect to that
Fund. If a Fund is added after the first approval by the Trustees as
described above, this Contract will be effective as to that Fund upon
execution of the applicable exhibit and will continue in effect until the
next annual approval of this Contract by the Trustees and thereafter for
successive periods of one year, subject to approval as described above.
8. Notwithstanding any provision in this Contract, it may be terminated
at any time with respect to any Fund, without the payment of any penalty, by
the Trustees of the Trust or by a vote of a majority of the outstanding
voting securities of that Fund, as defined in Section 2(a)(42) of the Act on
sixty (60) days' written notice to Adviser.
9. This Contract may not be assigned by Adviser and shall automatically
terminate in the event of any assignment. For purposes of this Contract,
"assignment" shall have the meaning assigned to that term in Section 2(a)(4)
of the Act. Adviser may employ or contract with such other person, persons,
corporation or corporations at its own cost and expense as it shall determine
in order to assist it in carrying out this Contract.
10. In the absence of willful misfeasance, bad faith, gross negligence
or reckless disregard of obligations or duties under this Contract on the
part of Adviser, Adviser shall not be liable to the Trust or to any of the
Funds or to any shareholder for any act or omission in the course of or
connected in any way with rendering services or for any losses that may be
sustained in the purchase, holding or sale of any security.
11. This Contract may be amended at any time by agreement of the parties
provided that the amendment shall be approved by the vote of a majority of
the Trustees of the Trust, including a majority of Trustees who are not
parties to this Contract or interested persons of any such party to this
Contract (other than as Trustees of the Trust), cast in person at a meeting
called for that purpose, and, where required by Section 15(a)(2) of the Act,
on behalf of a Fund by a majority of the outstanding voting securities of
such Fund as defined in Section 2(a)(42) of the Act.
12. The Adviser acknowledges that all sales literature for investment
companies (such as the Trust) are subject to strict regulatory oversight.
The Trust agrees to cause its distributor to promptly review all such sales
literature to ensure compliance with relevant requirements, to promptly
advise Adviser of any deficiencies contained in such sales literature, to
promptly file complying sales literature with the relevant authorities, and
to cause such sales literature to be distributed to prospective investors in
the Trust.
13. Adviser is hereby expressly put on notice of the limitation of
liability as set forth in Article XI of the Declaration of Trust and agrees
that the obligations pursuant to this Contract of a particular Fund and of
the Trust with respect to that particular Fund be limited solely to the
assets of that particular Fund, and Adviser shall not seek satisfaction of
any such obligation from the assets of any other Fund, the shareholders of
any Fund, the Trustees, officers, employees or agents of the Trust, or any of
them.
14. This Contract shall be construed in accordance with and governed by
the laws of the Commonwealth of Pennsylvania, provided, however, that nothing
herein shall be construed in a manner inconsistent with the Act, the
Investment Advisers Act of 1940, or the rules and regulations promulgated
pursuant to such respective Acts.
15. This Contract will become binding on the parties hereto upon their
execution of the attached exhibits to this Contract.
16. The parties hereto acknowledge that BayBanks, Inc. has reserved the
right to grant the non-exclusive use of the name "BayFunds" or any derivative
thereof to any other investment company, investment company portfolio,
investment adviser, distributor or other business enterprise pursuant to the
terms of a Service Mark License Agreement, dated June 6, 1991.
INVESTMENT ADVISORY CONTRACT
EXHIBIT A
BAYFUNDS SHORT TERM YIELD PORTFOLIO
For all services rendered by Adviser hereunder, the Trust shall pay to
Adviser and Adviser agrees to accept as full compensation for all services
rendered hereunder, an annual investment advisory fee equal to .50 of 1% of
the average daily net assets of the Fund.
The fee shall be accrued daily at the rate of 1/365th of .50 of 1%
applied to the daily net assets of the Fund.
The advisory fee so accrued shall be paid to Adviser daily.
The right of the Adviser as set forth in Paragraph 6 of this Contract to
assume expenses of one or more of the Funds shall also apply as to any
classes of shares of the above-named Fund.
Witness the due execution hereof this 1ST DAY OF SEPTEMBER, 1992.
Attest: BAYBANKS INVESTMENT MANAGEMENT, INC.
/s/Judith K. Benson By:/s/John J. Arena
Clerk President
Attest: BAYFUNDS
/s/J. W. McGonigle By:/s/E. C. Gonzales
Secretary President
INVESTMENT ADVISORY CONTRACT
EXHIBIT B
BAYFUNDS EQUITY PORTFOLIO
For all services rendered by Adviser hereunder, the Trust shall pay to
Adviser and Adviser agrees to accept as full compensation for all services
rendered hereunder, an annual investment advisory fee equal to .70 of 1% of
the average daily net assets of the Fund.
The fee shall be accrued daily at the rate of 1/365th of .70 of 1%
applied to the daily net assets of the Fund.
The advisory fee so accrued shall be paid to Adviser daily.
The right of the Adviser as set forth in Paragraph 6 of this Contract to
assume expenses of one or more of the Funds shall also apply as to any
classes of shares of the above-named Fund.
Witness the due execution hereof this 1ST DAY OF SEPTEMBER, 1992.
Attest: BAYBANKS INVESTMENT MANAGEMENT, INC.
/s/Judith K. Benson By:John J. Arena
Clerk President
Attest: BAYFUNDS
/s/J. W. McGonigle By:/s/E. C. Gonzales
Secretary President
INVESTMENT ADVISORY CONTRACT
EXHIBIT C
BAYFUNDS BOND PORTFOLIO
For all services rendered by Adviser hereunder, the Trust shall pay to
Adviser and Adviser agrees to accept as full compensation for all services
rendered hereunder, an annual investment advisory fee equal to .60 of 1% of
the average daily net assets of the Fund.
The fee shall be accrued daily at the rate of 1/365th of .60 of 1%
applied to the daily net assets of the Fund.
The advisory fee so accrued shall be paid to Adviser daily.
The right of the Adviser as set forth in Paragraph 6 of this Contract to
assume expenses of one or more of the Funds shall also apply as to any
classes of shares of the above-named Fund.
Witness the due execution hereof this 1ST DAY OF SEPTEMBER, 1992.
Attest: BAYBANKS INVESTMENT MANAGEMENT, INC.
/s/Judith K. Benson By:/s/John J. Arena
Clerk President
Attest: BAYFUNDS
/s/J. W. McGonigle By:/s/E. C. Gonzales
Secretary President
Exhibit C
BAYFUNDS
INVESTMENT ADVISORY CONTRACT
This Contract is made this 1ST DAY OF SEPTEMBER, 1992, between BAYBANK
BOSTON, N.A., having its principal place of business in Boston, Massachusetts
(the "Adviser"), and BAYFUNDS, a Massachusetts business trust having its
principal place of business in Pittsburgh, Pennsylvania (the "Trust").
WHEREAS, the Trust is an "open-end company" as that term is defined in
the Investment Company Act of 1940 (the "Act") and is registered as such
with the Securities and Exchange Commission; and
WHEREAS, the Adviser is engaged in the business of rendering investment
advisory and management services.
NOW, THEREFORE, the parties hereto, intending to be legally bound, agree
as follows:
1. The Trust hereby appoints Adviser as Investment Adviser for each of
the portfolios ("Funds") of the Trust on whose behalf the Trust executes an
exhibit to this Contract, and Adviser, by its execution of each such exhibit,
accepts the appointments. Subject to the direction of the Trustees of the
Trust, Adviser shall provide investment research and supervision of the
investments of each of the Funds and conduct a continuous program of
investment evaluation and of appropriate sale or other disposition and
reinvestment of each Fund's assets. The Adviser shall determine the
securities to be purchased or sold by the Fund and will place orders pursuant
to its determinations with or through such brokers or dealers in conformity
with such policies with respect to brokerage as the Trust shall establish
from time to time and convey to the Adviser.
2. Adviser, in its supervision of the investments of each of the Funds
will be guided by each Fund's fundamental investment policies and the
provisions and restrictions contained in the Declaration of Trust and By-Laws
of the Trust and as set forth in the Trust's Registration Statement (as
hereinafter defined) and exhibits thereto as may be on file with the
Securities and Exchange Commission. The Trust shall deliver copies of all
such investment policies and of the Declaration of Trust and By-Laws of the
Trust, as amended from time to time, and the Registration Statements to the
Adviser, promptly upon such documents becoming available.
3. The Trust shall pay or cause to be paid, on behalf of each Fund, all
of the Funds' expenses and the Funds' allocable share of Trust expenses,
including without limitation, the expenses of organizing the Trust and
continuing its existence; fees and expenses of officers and Trustees of the
Trust; fees for investment advisory services and administrative personnel and
services; fees and expenses of preparing and filing its Registration
Statements under the Securities Act of 1933 and the Act and any amendments
thereto (collectively, the "Registration Statements"); expenses of
registering and qualifying the Trust, the Funds and shares of the Funds
("Shares") under Federal and state laws and regulations; expenses of
preparing, printing and distributing prospectuses (and any amendments
thereto) and sales literature; interest expense, taxes, fees and commissions
of every kind; expenses of issue (including cost of Share certificates),
purchase, repurchase and redemption of Shares, including expenses
attributable to a program of periodic issue; charges and expenses of
custodians, transfer agents, dividend disbursing agents, shareholder
servicing agents and registrars; printing and mailing costs, auditing,
accounting and legal expenses; reports to shareholders and governmental
officers and commissions; expenses of meetings of Trustees and shareholders
and proxy solicitations therefor; insurance expenses; association membership
dues; and such nonrecurring items as may arise, including all losses and
liabilities incurred in administering the Trust and the Funds. The Trust
will also pay each Fund's allocable share of such extraordinary expenses as
may arise, including expenses incurred in connection with litigation,
proceedings, and claims and the legal obligations of the Trust to indemnify
its officers, Trustees, employees, distributors, and agents with respect
thereto.
4. The Trust, on behalf of each of the Funds, shall pay to Adviser, for
all services rendered to such Fund by Adviser hereunder, the fees set forth
in the exhibits attached hereto.
5. The net asset value of each Fund's Shares as used herein will be
calculated to the nearest 1/10th of one cent.
6. The Adviser may from time to time and for such periods as it deems
appropriate reduce its compensation (and, if appropriate, assume expenses of
one or more of the Funds) to the extent that any Fund's expenses exceed such
lower expense limitation as the Adviser may, by notice to the Fund,
voluntarily declare to be effective.
7. This Contract shall begin for each Fund as of the date of execution
of the applicable exhibit and shall continue in effect with respect to each
Fund presently set forth on an exhibit (and any subsequent Funds added
pursuant to an exhibit during the initial term of this Contract) for two
years from the date of this Contract set forth above and thereafter for
successive periods of one year, subject to the provisions for termination and
all of
the other terms and conditions hereof if: (a) such continuation shall be
specifically approved at least annually by the vote of a majority of the
Trustees of the Trust, including a majority of the Trustees who are not
parties to this Contract or interested persons of any such party (other than
as Trustees of the Trust), cast in person at a meeting called for that
purpose; and (b) Adviser shall not have notified a Fund in writing at least
sixty (60) days prior to the anniversary date of this Contract in any year
thereafter that it does not desire such continuation with respect to that
Fund. If a Fund is added after the first approval by the Trustees as
described above, this Contract will be effective as to that Fund upon
execution of the applicable exhibit and will continue in effect until the
next annual approval of this Contract by the Trustees and thereafter for
successive periods of one year, subject to approval as described above.
8. Notwithstanding any provision in this Contract, it may be terminated
at any time with respect to any Fund, without the payment of any penalty, by
the Trustees of the Trust or by a vote of a majority of the outstanding
voting securities of that Fund, as defined in Section 2(a)(42) of the Act on
sixty (60) days' written notice to Adviser.
9. This Contract may not be assigned by Adviser and shall automatically
terminate in the event of any assignment. For purposes of this Contract,
"assignment" shall have the meaning assigned to that term in Section 2(a)(4)
of the Act. Adviser may employ or contract with such other person, persons,
corporation or corporations at its own cost and expense as it shall determine
in order to assist it in carrying out this Contract.
10. In the absence of willful misfeasance, bad faith, gross negligence
or reckless disregard of obligations or duties under this Contract on the
part of Adviser, Adviser shall not be liable to the Trust or to any of the
Funds or to any shareholder for any act or omission in the course of or
connected in any way with rendering services or for any losses that may be
sustained in the purchase, holding or sale of any security.
11. This Contract may be amended at any time by agreement of the parties
provided that the amendment shall be approved by the vote of a majority of
the Trustees of the Trust, including a majority of Trustees who are not
parties to this Contract or interested persons of any such party to this
Contract (other than as Trustees of the Trust), cast in person at a meeting
called for that purpose, and, where required by Section 15(a)(2) of the Act,
on behalf of a Fund by a majority of the outstanding voting securities of
such Fund as defined in Section 2(a)(42) of the Act.
12. The Adviser acknowledges that all sales literature for investment
companies (such as the Trust) are subject to strict regulatory oversight.
The Trust agrees to cause its distributor to promptly review all such sales
literature to ensure compliance with relevant requirements, to promptly
advise Adviser of any deficiencies contained in such sales literature, to
promptly file complying sales literature with the relevant authorities, and
to cause such sales literature to be distributed to prospective investors in
the Trust.
13. Adviser is hereby expressly put on notice of the limitation of
liability as set forth in Article XI of the Declaration of Trust and agrees
that the obligations pursuant to this Contract of a particular Fund and of
the Trust with respect to that particular Fund be limited solely to the
assets of that particular Fund, and Adviser shall not seek satisfaction of
any such obligation from the assets of any other Fund, the shareholders of
any Fund, the Trustees, officers, employees or agents of the Trust, or any of
them.
14. This Contract shall be construed in accordance with and governed by
the laws of the Commonwealth of Pennsylvania, provided, however, that nothing
herein shall be construed in a manner inconsistent with the Act, the
Investment Advisers Act of 1940, or the rules and regulations promulgated
pursuant to such respective Acts.
15. This Contract will become binding on the parties hereto upon their
execution of the attached exhibits to this Contract.
16. The parties hereto acknowledge that BayBanks, Inc. has reserved the
right to grant the non-exclusive use of the name "BayFunds" or any derivative
thereof to any other investment company, investment company portfolio,
investment adviser, distributor or other business enterprise pursuant to the
terms of a Service Mark License Agreement, dated June 6, 1991.
INVESTMENT ADVISORY CONTRACT
EXHIBIT A
BAYFUNDS U.S. TREASURY MONEY MARKET PORTFOLIO
For all services rendered by Adviser hereunder, the Trust shall pay to
Adviser and Adviser agrees to accept as full compensation for all services
rendered hereunder, an annual investment advisory fee equal to .20 of 1% of
the average daily net assets of the Fund.
The fee shall be accrued daily at the rate of 1/365th of .20 of 1%
applied to the daily net assets of the Fund.
The advisory fee so accrued shall be paid to Adviser daily.
The right of the Adviser as set forth in Paragraph 6 of this Contract to
assume expenses of one or more of the Funds shall also apply as to any
classes of shares of the above-named Fund.
Witness the due execution hereof this 1ST DAY OF SEPTEMBER, 1992.
Attest: BAYBANK BOSTON, N.A.
/s/Ilene Beal By:/s/John J. Arena
Clerk Vice Chairman BayBanks, Inc.
Attest: BAYFUNDS
/s/J. W. McGonigle By:/s/E. C. Gonzales
Secretary President
AMENDMENT No. 1
to the
Investment Advisory Contract
dated September 1, 1992
between BayBank Boston, N.A. and BayFunds
WHEREAS, BayBank Boston, N.A. has been reorganized and merged into
BayBank, N.A., effective October 31, 1995, as reflected in
discussions recorded in the Minutes of the Board of Trustees'
Meeting of BayFunds held November 9, 1995.
WHEREAS, this event does not constitute an "assignment" under the
Investment Company Act of 1940, as amended, of the Investment
Advisory Contract ("Contract") dated September 1, 1992
between BayBank Boston, N.A. and BayFunds, and that no other
changes to the Contract relating to this event are warranted.
THEREFORE, the Contract is hereby amended, effective March 1, 1996, as
follows.
The entity named "BayBank Boston, N.A." in the Contract is
hereby replaced with the entity named "BayBank, N.A."
In all other respects, the terms and fees under the Contract remain
unchanged.
Witness the due execution hereof this 1st day of March, 1996.
Attest: BayBank, N.A.
/s/ William W. Abendroth By: /s/ Richard F. Pollard
Assistant Secretary Vice Chairman
Attest: BayFunds
/s/ Victor R. Siclari By: /s/ Glen R. Johnson
Secretary President
Exhibit D
BAYFUNDS
INVESTMENT ADVISORY CONTRACT
This Contract is made this DAY OF , 1996, between
--- -------------
BAYBANK OF BOSTON, N.A., having its principal place of business in Boston,
Massachusetts (the "Adviser"), and BAYFUNDS, a Massachusetts business trust
having its principal place of business in Pittsburgh, Pennsylvania (the
"Trust").
WHEREAS, the Trust is an "open-end company" as that term is defined in
the Investment Company Act of 1940 (the "Act") and is registered as such with
the Securities and Exchange Commission; and
WHEREAS, the Adviser is engaged in the business of rendering investment
advisory and management services.
NOW, THEREFORE, the parties hereto, intending to be legally bound, agree
as follows:
1. The Trust hereby appoints Adviser as Investment Adviser for each of
the portfolios ("Funds") of the Trust on whose behalf the Trust executes an
exhibit to this Contract, and Adviser, by its execution of each such exhibit,
accepts the appointments. Subject to the direction of the Trustees of the
Trust, Adviser shall provide investment research and supervision of the
investments of each of the Funds and conduct a continuous program of
investment evaluation and of appropriate sale or other disposition and
reinvestment of each Fund's assets. The Adviser shall determine the
securities to be purchased or sold by the Fund and will place orders pursuant
to its determinations with or through such brokers or dealers in conformity
with such policies with respect to brokerage as the Trust shall establish
from time to time and convey to the Adviser.
2. Adviser, in its supervision of the investments of each of the Funds
will be guided by each Fund's fundamental investment policies and the
provisions and restrictions contained in the Declaration of Trust and By-Laws
of the Trust and as set forth in the Trust's Registration Statement (as
hereinafter defined) and exhibits thereto as may be on file with the
Securities and Exchange Commission. The Trust shall deliver copies of all
such investment policies and of the Declaration of Trust and By-Laws of the
Trust, as amended from time to time, and the Registration Statements to the
Adviser, promptly upon such documents becoming available.
3. The Trust shall pay or cause to be paid, on behalf of each Fund, all
of the Funds' expenses and the Funds' allocable share of Trust expenses,
including without limitation, the expenses of organizing the Trust and
continuing its existence; fees and expenses of officers and Trustees of the
Trust; fees for investment advisory services and administrative personnel and
services; fees and expenses of preparing and filing its Registration
Statements under the Securities Act of 1933 and the Act and any amendments
thereto (collectively, the "Registration Statements"); expenses of
registering and qualifying the Trust, the Funds and shares of the Funds
("Shares") under Federal and state laws and regulations; expenses of
preparing, printing and distributing prospectuses (and any amendments
thereto) and sales literature; interest expense, taxes, fees and commissions
of every kind; expenses of issue (including cost of Share certificates),
purchase, repurchase and redemption of Shares, including expenses
attributable to a program of periodic issue; charges and expenses of
custodians, transfer agents, dividend disbursing agents, shareholder
servicing agents and registrars; printing and mailing costs, auditing,
accounting and legal expenses; reports to shareholders and governmental
officers and commissions; expenses of meetings of Trustees and shareholders
and proxy solicitations therefor; insurance expenses; association membership
dues; and such nonrecurring items as may arise, including all losses and
liabilities incurred in administering the Trust and the Funds. The Trust
will also pay each Fund's allocable share of such extraordinary expenses as
may arise, including expenses incurred in connection with litigation,
proceedings, and claims and the legal obligations of the Trust to indemnify
its officers, Trustees, employees, distributors, and agents with respect
thereto.
4. The Trust, on behalf of each of the Funds, shall pay to Adviser, for
all services rendered to such Fund by Adviser hereunder, the fees set forth
in the exhibits attached hereto.
5. The net asset value of each Fund's Shares as used herein will be
calculated to the nearest 1/10th of one cent.
6. The Adviser may from time to time and for such periods as it deems
appropriate reduce its compensation (and, if appropriate, assume expenses of
one or more of the Funds) to the extent that any Fund's expenses exceed such
lower expense limitation as the Adviser may, by notice to the Fund,
voluntarily declare to be effective.
7. This Contract shall begin for each Fund as of the date of execution
of the applicable exhibit and shall continue in effect with respect to each
Fund presently set forth on an exhibit (and any subsequent Funds added
pursuant to an exhibit during the initial term of this Contract) for two
years from the date of this Contract set forth above and thereafter for
successive periods of one year, subject to the provisions for termination and
all of the other terms and conditions hereof if: (a) such continuation shall
be specifically approved at least annually by the vote of a majority of the
Trustees of the Trust, including a majority of the Trustees who are not
parties to this Contract or interested persons of any such party (other than
as Trustees of the Trust), cast in person at a meeting called for that
purpose; and (b) Adviser shall not have notified a Fund in writing at least
sixty (60) days prior to the anniversary date of this Contract in any year
thereafter that it does not desire such continuation with respect to that
Fund. If a Fund is added after the first approval by the Trustees as
described above, this Contract will be effective as to that Fund upon
execution of the applicable exhibit and will continue in effect until the
next annual approval of this Contract by the Trustees and thereafter for
successive periods of one year, subject to approval as described above.
8. Notwithstanding any provision in this Contract, it may be terminated
at any time with respect to any Fund, without the payment of any penalty, by
the Trustees of the Trust or by a vote of a majority of the outstanding
voting securities of that Fund, as defined in Section 2(a)(42) of the Act on
sixty (60) days' written notice to Adviser.
9. This Contract may not be assigned by Adviser and shall automatically
terminate in the event of any assignment. For purposes of this Contract,
"assignment" shall have the meaning assigned to that term in Section 2(a)(4)
of the Act. Adviser may employ or contract with such other person, persons,
corporation or corporations at its own cost and expense as it shall determine
in order to assist it in carrying out this Contract.
10. In the absence of willful misfeasance, bad faith, gross negligence
or reckless disregard of obligations or duties under this Contract on the
part of Adviser, Adviser shall not be liable to the Trust or to any of the
Funds or to any shareholder for any act or omission in the course of or
connected in any way with rendering services or for any losses that may be
sustained in the purchase, holding or sale of any security.
11. This Contract may be amended at any time by agreement of the parties
provided that the amendment shall be approved by the vote of a majority of
the Trustees of the Trust, including a majority of Trustees who are not
parties to this Contract or interested persons of any such party to this
Contract (other than as Trustees of the Trust), cast in person at a meeting
called for that purpose, and, where required by Section 15(a)(2) of the Act,
on behalf of a Fund by a majority of the outstanding voting securities of
such Fund as defined in Section 2(a)(42) of the Act.
12. The Adviser acknowledges that all sales literature for investment
companies (such as the Trust) are subject to strict regulatory oversight.
The Trust agrees to cause its distributor to promptly review all such sales
literature to ensure compliance with relevant requirements, to promptly
advise Adviser of any deficiencies contained in such sales literature, to
promptly file complying sales literature with the relevant authorities, and
to cause such sales literature to be distributed to prospective investors in
the Trust.
13. Adviser is hereby expressly put on notice of the limitation of
liability as set forth in Article XI of the Declaration of Trust and agrees
that the obligations pursuant to this Contract of a particular Fund and of
the Trust with respect to that particular Fund be limited solely to the
assets of that particular Fund, and Adviser shall not seek satisfaction of
any such obligation from the assets of any other Fund, the shareholders of
any Fund, the Trustees, officers, employees or agents of the Trust, or any of
them.
14. This Contract shall be construed in accordance with and governed by
the laws of the Commonwealth of Pennsylvania, provided, however, that nothing
herein shall be construed in a manner inconsistent with the Act, the
Investment Advisers Act of 1940, or the rules and regulations promulgated
pursuant to such respective Acts.
15. This Contract will become binding on the parties hereto upon their
execution of the attached exhibits to this Contract.
16. The parties hereto acknowledge that Bank of Boston Corporation has
reserved the right to grant the non-exclusive use of the name "BayFunds" or
any derivative thereof to any other investment company, investment company
portfolio, investment adviser, distributor or other business enterprise
pursuant to the terms of a Service Mark License Agreement, dated
, 1996.
- --------------------
INVESTMENT ADVISORY CONTRACT
EXHIBIT A
BAYFUNDS MONEY MARKET PORTFOLIO
For all services rendered by Adviser hereunder, the Trust shall pay to
Adviser and Adviser agrees to accept as full compensation for all services
rendered hereunder, an annual investment advisory fee equal to .40 of 1% of
the average daily net assets of the Fund.
The fee shall be accrued daily at the rate of 1/365th of .40 of 1%
applied to the daily net assets of the Fund.
The advisory fee so accrued shall be paid to Adviser daily.
The right of the Adviser as set forth in Paragraph 6 of this Contract to
assume expenses of one or more of the Funds shall also apply as to any
classes of shares of the above-named Fund.
Witness the due execution hereof this day of , 1996.
---- -------------
Attest: BAYBANK OF BOSTON, N.A.
/s/ By: /s/
Clerk President
Attest: BAYFUNDS
/s/ By: /s/
Secretary President
INVESTMENT ADVISORY CONTRACT
EXHIBIT B
BAYFUNDS U.S. TREASURY MONEY MARKET PORTFOLIO
For all services rendered by Adviser hereunder, the Trust shall pay to
Adviser and Adviser agrees to accept as full compensation for all services
rendered hereunder, an annual investment advisory fee equal to .20 of 1% of
the average daily net assets of the Fund.
The fee shall be accrued daily at the rate of 1/365th of .20 of 1%
applied to the daily net assets of the Fund.
The advisory fee so accrued shall be paid to Adviser daily.
The right of the Adviser as set forth in Paragraph 6 of this Contract to
assume expenses of one or more of the Funds shall also apply as to any
classes of shares of the above-named Fund.
Witness the due execution hereof this day of ,
---- ------------------
1996.
Attest: BAYBANK OF BOSTON, N.A.
/s/ By: /s/
Clerk President
Attest: BAYFUNDS
/s/ By: /s/
Secretary President
INVESTMENT ADVISORY CONTRACT
EXHIBIT C
BAYFUNDS SHORT TERM YIELD PORTFOLIO
For all services rendered by Adviser hereunder, the Trust shall pay to
Adviser and Adviser agrees to accept as full compensation for all services
rendered hereunder, an annual investment advisory fee equal to .50 of 1% of
the average daily net assets of the Fund.
The fee shall be accrued daily at the rate of 1/365th of .50 of 1%
applied to the daily net assets of the Fund.
The advisory fee so accrued shall be paid to Adviser daily.
The right of the Adviser as set forth in Paragraph 6 of this Contract to
assume expenses of one or more of the Funds shall also apply as to any
classes of shares of the above-named Fund.
Witness the due execution hereof this day of ,
---- ----------------
1996.
Attest: BAYBANK OF BOSTON, N.A.
/s/ By: /s/
Clerk President
Attest: BAYFUNDS
/s/ By: /s/
Secretary President
INVESTMENT ADVISORY CONTRACT
EXHIBIT D
BAYFUNDS EQUITY PORTFOLIO
For all services rendered by Adviser hereunder, the Trust shall pay to
Adviser and Adviser agrees to accept as full compensation for all services
rendered hereunder, an annual investment advisory fee equal to .70 of 1% of
the average daily net assets of the Fund.
The fee shall be accrued daily at the rate of 1/365th of .70 of 1%
applied to the daily net assets of the Fund.
The advisory fee so accrued shall be paid to Adviser daily.
The right of the Adviser as set forth in Paragraph 6 of this Contract to
assume expenses of one or more of the Funds shall also apply as to any
classes of shares of the above-named Fund.
Witness the due execution hereof this day of ,
---- -------------------
1996.
Attest: BAYBANK OF BOSTON, N.A.
/s/ By: /s/
Clerk President
7024347.01
Attest: BAYFUNDS
/s/ By: /s/
Secretary President
INVESTMENT ADVISORY CONTRACT
EXHIBIT E
BAYFUNDS BOND PORTFOLIO
For all services rendered by Adviser hereunder, the Trust shall pay to
Adviser and Adviser agrees to accept as full compensation for all services
rendered hereunder, an annual investment advisory fee equal to .60 of 1% of
the average daily net assets of the Fund.
The fee shall be accrued daily at the rate of 1/365th of .60 of 1%
applied to the daily net assets of the Fund.
The advisory fee so accrued shall be paid to Adviser daily.
The right of the Adviser as set forth in Paragraph 6 of this Contract to
assume expenses of one or more of the Funds shall also apply as to any
7024347.01
classes of shares of the above-named Fund.
Witness the due execution hereof this day of ,
---- -----------------
1996.
Attest: BAYBANK OF BOSTON, N.A.
/s/ By: /s/
Clerk President
Attest: BAYFUNDS
/s/ By: /s/
Secretary President
BAYFUNDS
7024347.01
Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh, PA 15222-3779
IMPORTANT PROXY
[ADDRESS] PLEASE FILL OUT AND SIGN PROXY TODAY.
PLEASE DETACH PROXY BELOW AND RETURN
USING THE ENCLOSED SELF-ADDRESSED
RETURN ENVELOPE.
THIS PROXY APPLIES TO THE ACCOUNTS LISTED BELOW
BAYFUNDS MONEY MARKET PORTFOLIO
[Account Number] Number of shares owned
[ ]
---------
PLEASE DO NOT HESITATE TO CONTACT
BAYFUNDS AT 1-800-BAYFUND
SHOULD YOU HAVE ANY QUESTIONS
THIS IS YOUR PROXY
DETACH AND RETURN BOTTOM PORTION IN THE ENCLOSED ENVELOPE
- -----------------------------------------------------------------------------
7024347.01
[Account Number] BAYFUNDS [ ]
--------
MONEY MARKET PORTFOLIO
Proxy for Special Meeting of Shareholders - June 28, 1996
The undersigned hereby appoints Colleen Conley, Patricia F. Conner,
Susan K. Maroni, Leanne O'Brien and Victor R. Siclari as proxies to vote and
act at the Special Meeting of Shareholders of the Money Market Portfolio (the
"Fund"), a portfolio of BayFunds, to be held at the offices of Federated
Administrative Services, 19th Floor, Federated Investors Tower, 1001 Liberty
Avenue, Pittsburgh, PA 15222-3779 at 10:00 a.m.on June 28, 1996 and at all
adjournments thereof, in respect of all Shares of the Fund as to which the
undersigned may be entitled to vote or act. Each proxy shall have power of
substitution and a majority of said proxies or their substitutes, or any one
if only one be present and acting, shall have all powers hereby granted.
The proxies are hereby authorized and instructed to vote upon the
matters specified in the notice of meeting as set forth on this side of this
proxy. If no choice is indicated as to a proposal, the proxies shall vote
FOR such proposal. The proxies may vote in their discretion on any other
matter which may properly come before the meeting.
(1) Proposal to approve the proposed New Investment Advisory Agreement.
FOR AGAINST ABSTAIN
--- --- ---
7024347.01
(2) Transaction of such other business as may properly come before the
meeting or any adjournment thereof.
FOR AGAINST ABSTAIN
--- --- ---
Please sign and return.
The proxies are hereby instructed to vote as specified.
x x DATED: , 1996
----------------- -------------- ------------
(Sign here exactly as name(s) appear above.
NOTE: Signature(s) should agree with name(s) as printed hereon. All joint
owners should sign. Fiduciaries please indicate their titles. THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF BAYFUNDS.
Please sign and return promptly in the enclosed envelope.
BAYFUNDS
Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh, PA 15222-3779
IMPORTANT PROXY
[ADDRESS] PLEASE FILL OUT AND SIGN PROXY TODAY.
7024347.01
PLEASE DETACH PROXY BELOW AND RETURN
USING THE ENCLOSED SELF-ADDRESSED
RETURN ENVELOPE.
THIS PROXY APPLIES TO THE ACCOUNTS LISTED BELOW
BAYFUNDS U.S. TREASURY MONEY MARKET PORTFOLIO
[Account Number] Number of shares owned
[ ]
---------
PLEASE DO NOT HESITATE TO CONTACT
BAYFUNDS AT 1-800-BAYFUND
SHOULD YOU HAVE ANY QUESTIONS
THIS IS YOUR PROXY
DETACH AND RETURN BOTTOM PORTION IN THE ENCLOSED ENVELOPE
- -----------------------------------------------------------------------------
[Account Number] BAYFUNDS [ ]
--------
U.S. TREASURY MONEY MARKET PORTFOLIO
Proxy for Special Meeting of Shareholders - June 28, 1996
The undersigned hereby appoints Colleen Conley, Patricia F. Conner,
Susan K. Maroni, Leanne O'Brien and Victor R. Siclari as proxies to vote and
act at the Special Meeting of Shareholders of the U.S. Treasury Money Market
7024347.01
Portfolio (the "Fund"), a portfolio of BayFunds, to be held at the offices of
Federated Administrative Services, 19th Floor, Federated Investors Tower,
1001 Liberty Avenue, Pittsburgh, PA 15222-3779 at 10:00 a.m. on June 28,
1996 and at all adjournments thereof, in respect of all Shares of the Fund as
to which the undersigned may be entitled to vote or act. Each proxy shall
have power of substitution and a majority of said proxies or their
substitutes, or any one if only one be present and acting, shall have all
powers hereby granted.
The proxies are hereby authorized and instructed to vote upon the
matters specified in the notice of meeting as set forth on this side of this
proxy. If no choice is indicated as to a proposal, the proxies shall vote
FOR such proposal. The proxies may vote in their discretion on any other
matter which may properly come before the meeting.
(1) Proposal to approve the proposed New Investment Advisory Agreement.
FOR AGAINST ABSTAIN
--- --- ---
(2) Transaction of such other business as may properly come before the
meeting or any adjournment thereof.
FOR AGAINST ABSTAIN
--- --- ---
Please sign and return.
The proxies are hereby instructed to vote as specified.
x x DATED: , 1996
----------------- -------------- ------------
7024347.01
(Sign here exactly as name(s) appear above.
NOTE: Signature(s) should agree with name(s) as printed hereon. All joint
owners should sign. Fiduciaries please indicate their titles. THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF BAYFUNDS.
Please sign and return promptly in the enclosed envelope.
BAYFUNDS
Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh, PA 15222-3779
IMPORTANT PROXY
[ADDRESS] PLEASE FILL OUT AND SIGN PROXY TODAY.
PLEASE DETACH PROXY BELOW AND RETURN
USING THE ENCLOSED SELF-
ADDRESSED RETURN ENVELOPE.
THIS PROXY APPLIES TO THE ACCOUNTS LISTED BELOW
BAYFUNDS SHORT TERM YIELD PORTFOLIO
[Account Number] Number of shares owned
7024347.01
[ ]
---------
PLEASE DO NOT HESITATE TO CONTACT
BAYFUNDS AT 1-800-BAYFUND
SHOULD YOU HAVE ANY QUESTIONS
THIS IS YOUR PROXY
DETACH AND RETURN BOTTOM PORTION IN THE ENCLOSED ENVELOPE
- -----------------------------------------------------------------------------
-------------------------------------
----
[Account Number] BAYFUNDS [ ]
--------
SHORT TERM YIELD PORTFOLIO
Proxy for Special Meeting of Shareholders - June 28, 1996
The undersigned hereby appoints Colleen Conley, Patricia F. Conner,
Susan K. Maroni, Leanne O'Brien and Victor R. Siclari as proxies to vote and
act at the Special Meeting of Shareholders of the Short Term Yield Portfolio
(the "Fund"), a portfolio of BayFunds, to be held at the offices of Federated
Administrative Services, 19th Floor, Federated Investors Tower, 1001 Liberty
Avenue, Pittsburgh, PA 15222-3779 at 10:00 a.m. on June 28, 1996 and at all
adjournments thereof, in respect of all Shares of the Fund as to which the
undersigned may be entitled to vote or act. Each proxy shall have power of
substitution and a majority of said proxies or their substitutes, or any one
if only one be present and acting, shall have all powers hereby granted.
7024347.01
The proxies are hereby authorized and instructed to vote upon the
matters specified in the notice of meeting as set forth on this side of this
proxy. If no choice is indicated as to a proposal, the proxies shall vote
FOR such proposal. The proxies may vote in their discretion on any other
matter which may properly come before the meeting.
(1) Proposal to approve the proposed New Investment Advisory Agreement.
FOR AGAINST ABSTAIN
--- --- ---
(2) Transaction of such other business as may properly come before the
meeting or any adjournment thereof.
FOR AGAINST ABSTAIN
--- --- ---
Please sign and return.
The proxies are hereby instructed to vote as specified.
x x DATED: , 1996
----------------- -------------- ------------
(Sign here exactly as name(s) appear above.
NOTE: Signature(s) should agree with name(s) as printed hereon. All joint
owners should sign. Fiduciaries please indicate their titles. THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF BAYFUNDS.
Please sign and return promptly in the enclosed envelope.
7024347.01
BAYFUNDS
Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh, PA 15222-3779
IMPORTANT PROXY
[ADDRESS] PLEASE FILL OUT AND SIGN PROXY TODAY.
PLEASE DETACH PROXY BELOW AND RETURN
USING THE ENCLOSED SELF-
ADDRESSED RETURN ENVELOPE.
THIS PROXY APPLIES TO THE ACCOUNTS LISTED BELOW
BAYFUNDS BOND PORTFOLIO
[Account Number] Number of shares owned
[ ]
---------
PLEASE DO NOT HESITATE TO CONTACT
BAYFUNDS AT 1-800-BAYFUND
SHOULD YOU HAVE ANY QUESTIONS
THIS IS YOUR PROXY
DETACH AND RETURN BOTTOM PORTION IN THE ENCLOSED ENVELOPE
7024347.01
- -----------------------------------------------------------------------------
-------------------------------------
----
[Account Number] BAYFUNDS [ ]
--------
BOND PORTFOLIO
Proxy for Special Meeting of Shareholders - June 28, 1996
The undersigned hereby appoints Colleen Conley, Patricia F. Conner,
Susan K. Maroni, Leanne O'Brien and Victor R. Siclari as proxies to vote and
act at the Special Meeting of Shareholders of the Bond Portfolio (the
"Fund"), a portfolio of BayFunds, to be held at the offices of Federated
Administrative Services, 19th Floor, Federated Investors Tower, 1001 Liberty
Avenue, Pittsburgh, PA 15222-3779 at 10:00 a.m. on June 28, 1996 and at all
adjournments thereof, in respect of all Shares of the Fund as to which the
undersigned may be entitled to vote or act. Each proxy shall have power of
substitution and a majority of said proxies or their substitutes, or any one
if only one be present and acting, shall have all powers hereby granted.
The proxies are hereby authorized and instructed to vote upon the
matters specified in the notice of meeting as set forth on this side of this
proxy. If no choice is indicated as to a proposal, the proxies shall vote
FOR such proposal. The proxies may vote in their discretion on any other
matter which may properly come before the meeting.
(1) Proposal to approve the proposed New Investment Advisory Agreement.
FOR AGAINST ABSTAIN
--- --- ---
7024347.01
(2) Transaction of such other business as may properly come before the
meeting or any adjournment thereof.
FOR AGAINST ABSTAIN
--- --- ---
Please sign and return.
The proxies are hereby instructed to vote as specified.
x x DATED: , 1996
----------------- -------------- ------------
(Sign here exactly as name(s) appear above.
NOTE: Signature(s) should agree with name(s) as printed hereon. All joint
owners should sign. Fiduciaries please indicate their titles. THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF BAYFUNDS.
Please sign and return promptly in the enclosed envelope.
BAYFUNDS
Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh, PA 15222-3779
IMPORTANT PROXY
[ADDRESS] PLEASE FILL OUT AND SIGN PROXY TODAY.
7024347.01
PLEASE DETACH PROXY BELOW AND RETURN
USING THE ENCLOSED SELF-
ADDRESSED RETURN ENVELOPE.
THIS PROXY APPLIES TO THE ACCOUNTS LISTED BELOW
BAYFUNDS EQUITY PORTFOLIO
[Account Number] Number of shares owned
[ ]
---------
PLEASE DO NOT HESITATE TO CONTACT
BAYFUNDS AT 1-800-BAYFUND
SHOULD YOU HAVE ANY QUESTIONS
THIS IS YOUR PROXY
DETACH AND RETURN BOTTOM PORTION IN THE ENCLOSED ENVELOPE
- -----------------------------------------------------------------------------
-------------------------------------
----
[Account Number] BAYFUNDS [ ]
--------
EQUITY PORTFOLIO
Proxy for Special Meeting of Shareholders - June 28, 1996
7024347.01
The undersigned hereby appoints Colleen Conley, Patricia F. Conner,
Susan K. Maroni, Leanne O'Brien and Victor R. Siclari as proxies to vote and
act at the Special Meeting of Shareholders of the Equity Portfolio (the
"Fund"), a portfolio of BayFunds, to be held at the offices of Federated
Administrative Services, 19th Floor, Federated Investors Tower, 1001 Liberty
Avenue, Pittsburgh, PA 15222-3779 at 10:00 a.m. on June 28, 1996 and at all
adjournments thereof, in respect of all Shares of the Fund as to which the
undersigned may be entitled to vote or act. Each proxy shall have power of
substitution and a majority of said proxies or their substitutes, or any one
if only one be present and acting, shall have all powers hereby granted.
The proxies are hereby authorized and instructed to vote upon the
matters specified in the notice of meeting as set forth on this side of this
proxy. If no choice is indicated as to a proposal, the proxies shall vote
FOR such proposal. The proxies may vote in their discretion on any other
matter which may properly come before the meeting.
(1) Proposal to approve the proposed New Investment Advisory Agreement.
FOR AGAINST ABSTAIN
--- --- ---
(2) Transaction of such other business as may properly come before the
meeting or any adjournment thereof.
FOR AGAINST ABSTAIN
--- --- ---
Please sign and return.
The proxies are hereby instructed to vote as specified.
7024347.01
x x DATED: , 1996
----------------- -------------- ------------
(Sign here exactly as name(s) appear above.
NOTE: Signature(s) should agree with name(s) as printed hereon. All joint
owners should sign. Fiduciaries please indicate their titles. THIS PROXY IS
SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF BAYFUNDS. Please sign and
return promptly in the enclosed envelope.
