UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. _____)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE
14A-6(E)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-12
1838 INVESTMENT ADVISORS FUNDS
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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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):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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1838 INVESTMENT ADVISORS FUNDS
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NOTICE OF A SPECIAL MEETING OF SHAREHOLDERS OF
1838 INTERNATIONAL EQUITY FUND AND
1838 FIXED INCOME FUND
TO BE HELD ON
JULY 20, 2004
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KING OF PRUSSIA, PENNSYLVANIA
JUNE 14, 2004
To Shareholders:
A Special Meeting of Shareholders (the "Meeting") of 1838
International Equity Fund and 1838 Fixed Income Fund (each, a "Fund" and
together, the "Funds") of 1838 Investment Advisors Funds (the "Trust") will be
held at the offices of the Funds, 2701 Renaissance Boulevard, Fourth Floor,
King of Prussia, Pennsylvania 19406 on July 20, 2004 at 9:00 a.m. Eastern Time,
for the following purposes:
1. Approval of the following Investment Advisory Agreements:
The following item is to be voted on ONLY by shareholders of record
of 1838 International Equity Fund:
(a) To approve a new Investment Advisory Agreement between 1838
Investment Advisors, LP and the Trust on behalf of the 1838
International Equity Fund.
The following items are to be voted on ONLY by shareholders of
record of 1838 Fixed Income Fund:
(b) To approve a new Investment Advisory Agreement between 1838
Investment Advisors, LP and the Trust on behalf of the 1838
Fixed Income Fund.
(c) To approve a new Sub-Investment Advisory Agreement between 1838
Investment Advisors, LP and MBIA Capital Management Corp.
relating to 1838 Fixed Income Fund.
2. To transact such other business as may properly come before the
Meeting, or any adjournment thereof.
Shareholders of record at the close of business on June 1,
2004 are entitled to vote at the Meeting or any adjournment thereof. In the
event that the necessary quorum to transact business or the vote required to
approve any of the proposals is not obtained at the Meeting, the persons named
as proxies may propose one or more adjournments of the Meeting, in accordance
with applicable law, to permit further solicitation of proxies with respect to
that Proposal. Any such adjournment as to a matter will require the affirmative
vote of the holders of a majority of the shares of the applicable Fund present
in person or by proxy at a Meeting. The persons named as proxies will vote FOR
any such adjournment those proxies which they are entitled to vote in favor of
the proposal and will vote AGAINST any such adjournment those proxies to be
voted against the proposal.
Your vote is important to us. Thank you for taking the time to consider
these important proposals.
By Order of the Board of Trustees
ANNA M. BENCROWSKY
Secretary
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IMPORTANT
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE MARK YOUR VOTING
INSTRUCTIONS ON THE ENCLOSED PROXY AND PROMPTLY DATE, SIGN AND RETURN IT IN THE
ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES. WE ASK
YOUR COOPERATION IN HELPING THE TRUST BY MAILING YOUR PROXY PROMPTLY.
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PROXY SUMMARY
Q. WHY IS A SHAREHOLDER VOTE NECESSARY?
A. The Investment Company Act of 1940, as amended, requires a shareholder
vote on an investment management agreement whenever there is a change
in the investment advisor. 1838 Investment Advisors, LLC ("1838 LLC")
entered into an agreement to sell substantially all of its assets to
Andover Acquisition Co., LP (an affiliate of the Seattle-based private
equity firm, Orca Bay Partners) (the "Sale"). The Sale has resulted in
a change in the investment advisor and, therefore, requires a
shareholder vote on new investment management agreements and a new
sub-investment advisory agreement.
Q. WILL THE INVESTMENT MANAGEMENT FEES BE THE SAME?
A. Yes, under the terms of each proposed investment management agreement,
the investment management fees paid by your Fund will remain the same.
Q. HOW WILL THE SALE AFFECT THE FUND, OR ME AS A FUND SHAREHOLDER?
A. Your Fund and its investment objectives and policies will not change.
You will still own the same shares in the same Fund. Upon shareholder
approval of the new investment management agreements, the investment
manager for each Fund will be 1838 Investment Advisors, LP, the
successor to the business of 1838 LLC.
Q. WHO IS PAYING THE COSTS ASSOCIATED WITH THE SALE, THE SHAREHOLDER
MEETING AND THIS PROXY SOLICITATION?
A. 1838 LP, and not your Fund, will bear the costs associated with
consideration of the Sale, including the costs of the Special Meeting
of Shareholders and the proxy solicitation.
Q. HOW DOES THE BOARD OF TRUSTEES OF MY FUND SUGGEST THAT I VOTE?
A. After careful consideration, the Board of Trustees of your Fund,
including the independent Trustees, unanimously recommend that you
vote "FOR" all the items on the enclosed proxy card.
PLEASE VOTE THE ENCLOSED PROXY CARD
YOUR VOTE IS IMPORTANT
1838 INVESTMENT ADVISORS FUNDS
1838 INVESTMENT ADVISORS FUNDS
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1838 INTERNATIONAL EQUITY FUND
1838 FIXED INCOME FUND
2701 Renaissance Blvd., Fourth Floor
King of Prussia, PA 19406
PROXY STATEMENT
DATED JUNE 14, 2004 FOR THE
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON
JULY 20, 2004
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This Proxy Statement is being furnished in connection with the
solicitation of proxies by the Board of Trustees of 1838 Investment Advisors
Funds (the "Trust") on behalf of the 1838 International Equity Fund and 1838
Fixed Income Fund (each, a "Fund" and together, the "Funds") for use at the
special meeting of shareholders of the Funds to be held at the offices of the
Funds, 2701 Renaissance Boulevard, Fourth Floor, King of Prussia, Pennsylvania
19406 on July 20, 2004 at 9:00 a.m. Eastern time, or at such later time made
necessary by any and all adjournments or postponements thereof (the "Meeting").
This Proxy Statement, the Notice of Special Meeting and the proxy card(s) are
first being mailed to shareholders on or about June 14, 2004 or as soon as
practicable thereafter.
THE TRUST PROVIDES PERIODIC REPORTS TO ITS SHAREHOLDERS, WHICH
HIGHLIGHT RELEVANT INFORMATION ABOUT THE FUNDS, INCLUDING INVESTMENT RESULTS AND
A REVIEW OF PORTFOLIO INVESTMENTS. YOU MAY RECEIVE AN ADDITIONAL COPY OF THE
MOST RECENT ANNUAL REPORT AND SEMIANNUAL REPORT OF THE FUNDS, WITHOUT CHARGE, BY
WRITING TO 1838 INVESTMENT ADVISORS FUNDS AT 2701 RENAISSANCE BOULEVARD, FOURTH
FLOOR, KING OF PRUSSIA, PENNSYLVANIA 19406 OR BY CALLING THE TRUST'S DISTRIBUTOR
AT 1-877-367-1838.
PURPOSE OF MEETING
The Trust is organized as a Delaware business trust and is not
required to hold an annual meeting of shareholders. The Meeting is being called
to ask shareholders of the Funds to consider and vote on the following
proposals:
(1) Approval of the following Investment Advisory Agreements:
The following item is to be voted on ONLY by shareholders of
record of 1838 International Equity Fund:
(a) To approve a new Investment Advisory Agreement
between 1838 Investment Advisors, LP and the Trust on
behalf of the 1838 International Equity Fund.
The following items are to be voted on ONLY by shareholders of
record of 1838 Fixed Income Fund:
(b) To approve a new Investment Advisory Agreement
between 1838 Investment Advisors, LP and the Trust
on behalf of the 1838 Fixed Income Fund.
(c) To approve a new Sub-Investment Advisory Agreement
between 1838 Investment Advisors, LP and MBIA
Capital Management Corp. relating to the 1838 Fixed
Income Fund.
(2) To transact such other business as may properly come before the
Meeting, or any adjournment thereof.
PROPOSAL NO. 1
APPROVAL OF INVESTMENT ADVISORY AGREEMENTS
Shareholders of the Funds are being asked to approve new
investment advisory agreements ("Proposed Advisory Agreements") between 1838
Investment Advisors, LP ("1838 LP") and 1838 Investment Advisors Funds (the
"Trust") on behalf of the Funds. Shareholders of 1838 Fixed Income Fund are also
being asked to approve a new sub-investment advisory agreement ("Proposed
Sub-Advisory Agreement," and collectively with the Proposed Advisory Agreements,
the "Proposed Agreements") between 1838 LP and MBIA Capital Management Corp.
("MBIA-CMC").
Shareholders are being asked to approve the Proposed
Agreements because, on March 26, 2004, 1838 Investment Advisors, LLC ("1838
LLC") entered into an agreement to sell its business to Andover Acquisition Co.,
LP (an affiliate of the Seattle-based private equity firm, Orca Bay Partners)
(the "Sale"). After the Sale, Andover Acquisition Co., LP changed its name to
1838 Investment Advisors, LP ("1838 LP") and 1838 Investment Advisors LLC
changed its name to KOP Management, LLC. The Sale closed on May 13, 2004.
Following the Sale, the investment teams that managed the Funds remained intact,
with the same investment management personnel and with new capital being used to
augment investment resources and capabilities. Under the Investment Company Act
of 1940, as amended ("1940 Act"), the Sale resulted in an assignment of the then
existing investment advisory agreements relating to the Funds between 1838 LLC
and the Trust, which automatically terminated those agreements.
The Funds have operated under interim investment advisory
agreements with 1838 LP (the "Interim Advisory Agreements") and, in the case of
the Fixed Income Fund, an interim sub-investment advisory agreement with
MBIA-CMC (the "Interim Sub-Advisory Agreement, and collectively with the Interim
Advisory Agreements, the "Interim Agreements") since the closing of the Sale.
The Trustees approved the Interim Sub-Advisory Agreement with MBIA-CMC in order
to retain the services of the Fixed Income Fund's portfolio manager Clifford D.
Corso, who is not employed with 1838 LP. Prior to the Sale, Mr. Corso was an
officer of 1838 LLC and MBIA-CMC and is currently the Managing Director of
MBIA-CMC. Neither Mr. Corso nor MBIA-CMC receives any compensation under the
Interim Sub-Advisory Agreement. The Interim Agreements will remain in effect
until the earlier of the effective date of the Proposed Agreements or 150 days
after the effective date of the Interim Agreements.
The Board of Trustees of the Trust, on behalf of the Funds,
has approved the Proposed Agreements, which must be submitted to each Fund's
shareholders for their approval. The following summary provides information
about the Interim Agreements, 1838 LP and MBIA-CMC, as well as the terminated
investment advisory agreement for each Fund (the "Prior Agreements") and the
Proposed Agreements.
INFORMATION CONCERNING THE INTERIM AGREEMENTS
On May 13, 2004, 1838 LP assumed its responsibilities as each
Fund's interim investment adviser pursuant to Interim Advisory Agreements that
are substantially similar to the Prior Agreements. On that same date, MBIA-CMC
assumed its responsibilities as the 1838 Fixed Income Fund's interim
sub-investment adviser pursuant to an Interim Sub-Advisory Agreement pursuant to
which MBIA-CMC receives no compensation. The Interim Agreements were unanimously
approved by the Board of Trustees on March 31, 2004, in accordance with Rule
15a-4 under the 1940 Act to ensure that the Funds would continue to receive
investment advisory services when the Prior Agreements terminated. Rule 15a-4
allows the Interim Agreements to take effect, and to remain in effect for up to
150 days, without receiving prior shareholder approval, provided that the fees
payable under such agreement do not exceed the fees payable under the Prior
Agreements and that certain contractual provisions are included in the Interim
Agreements.
Specifically, Rule 15a-4 requires that the Interim Agreements
provide that they may be terminated by the Board or holders of a majority of a
Fund's shares at any time without penalty on not more than ten days' written
notice. Furthermore, the Interim Agreements require all fees earned to be placed
in escrow pending shareholder approval of the Proposed Agreements. If
shareholders do not approve the Proposed Agreements, 1838 LP will only be
entitled to the lesser of its actual costs in providing services to the Funds
during the term of the Interim Agreements (plus interest earned on the amount
while in escrow), or the total amount in the escrow account (plus interest
earned).
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The Interim Agreements will terminate on the earlier of the
effective date of the Proposed Agreements or 150 days after the effective date
of the Interim Agreements. In order for 1838 LP and MBIA-CMC to continue to
provide investment advisory services beyond the interim period, shareholders of
each of the Funds will need to approve the Proposed Agreements.
The Board considered the approval of the Interim Agreements
and the Proposed Agreements at the same time and took into consideration
information regarding the management, financial position and business of 1838 LP
and MBIA-CMC, as well as the experience of their portfolio management teams. The
Board also considered whether 1838 LP or MBIA-CMC, separately and collectively,
would provide investment advisory services at the same or at a higher level than
that of 1838 LLC prior to the Sale. The Board's evaluation of 1838 LP, MBIA-CMC
and the Sale is discussed in more detail below.
INFORMATION CONCERNING 1838 LP
1838 LP is a Delaware limited partnership and is an investment
adviser registered under the Investment Advisers Act of 1940, as amended (the
"Advisers Act"). 1838 LP has offices at 2701 Renaissance Boulevard, Fourth
Floor, King of Prussia, PA 19406. The general partner of 1838 LP is Andover
Management LLC, a Delaware limited liability company located at 1301 First
Avenue, Suite 201, Seattle, WA 98101. Each officer or director of the Trust who
is also an officer, director, employee, general partner and/or a shareholder of
1838 LP is listed below:
NAME AND POSITION WITH THE FUND POSITION WITH 1838 LP
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Anna M. Bencrowsky, Vice President, Vice President & Chief Compliance Officer
Secretary & Treasurer
Hans van den Berg, Vice President Managing Director - International Portfolio
Manager
INFORMATION CONCERNING MBIA-CMC
MBIA-CMC is a Delaware corporation and is an investment
adviser registered under the Advisers Act. MBIA-CMC, an indirect wholly-owned
subsidiary of MBIA Inc., a Connecticut corporation with principal offices at 113
King Street, Armonk, NY, 10504. MBIA Inc. is a reporting company under the
Securities Exchange Act of 1934. Each officer or director of the Trust who is
also an officer, director, employee, general partner and/or a shareholder of
MBIA-CMC is listed below as follows:
NAME AND POSITION WITH THE FUND POSITION WITH MBIA-CMC
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Clifford D. Corso, Vice President President and Chief Investment Officer of
MBIA Capital Management Corp.;
Managing Director and Chief Investment
Officer of MBIA Insurance Corporation;
and Managing Director, 1838 Investment
Advisors, LLC
INFORMATION CONCERNING THE PRIOR AGREEMENTS
Subject to the supervision of the Board, 1838 LLC provided
portfolio management, research and analysis, advice and recommendations with
respect to the purchase and sale of securities for each Fund pursuant to the
Prior Agreements between the Trust, on behalf of each Fund, and 1838 LLC, dated
December 31, 2000. 1838 LLC also maintained certain books and records in
connection with its services to the Trust.
The Prior Agreements provided that all costs and expenses not
expressly assumed by 1838 LLC under the Agreements shall be paid by the Trust,
including, but not limited to, the expenses incurred in: (1) the maintenance of
its corporate existence; (2) the maintenance of its own books, records and
procedures; (3) shareholder relations; (4) the payment of dividends; (5)
transfer of stock, including issuance, redemption and repurchase of shares; (6)
preparation of share certificates; (7) reports and notices to shareholders; (8)
calling and holding of shareholders' meetings; (9) miscellaneous office
expenses; (10) brokerage commissions; (11) custodian fees; (12) legal and
accounting fees; and (13) taxes.
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Pursuant to the Prior Agreements, 1838 LLC was entitled to an
annual fee, payable monthly, equal to the following percentages of a Fund's
average daily net assets: 1838 International Equity Fund, 0.75% and 1838 Fixed
Income Fund, 0.50%. For the fiscal year ended October 31, 2003, after fee
waivers by 1838 LLC, the Funds paid the following amounts to 1838 LLC for its
services: 1838 International Equity Fund, $347,332; and 1838 Fixed Income Fund,
$168,328. 1838 LP has voluntarily agreed to waive its fees and/or reimburse the
Funds so that such fee waivers will remain in effect.
Under the Prior Agreements, 1838 LLC was not subject to
liabilities to the Funds or to any shareholder of the Funds for any action or
omission in the course of, or connected with, rendering services under the Prior
Agreements or for any losses sustained in the purchase, holding or sale of any
security, or otherwise in the absence of willful misfeasance, bad faith, gross
negligence, or a reckless disregard of the performance of duties of 1838 LLC to
the Funds.
The Prior Agreements were approved for a two year period by
the initial shareholders of each Fund, and were last approved by the Trustees at
a meeting held for that purpose on June 18, 2003. The Prior Agreements were to
remain in effect from year to year if specifically approved at least annually by
vote of "a majority of the outstanding voting securities" of the Funds, as
defined under the 1940 Act, or by the Board of Trustees and, in either event, by
the vote of a majority of the Trustees who are not parties to the Prior
Agreements or interested persons of any such party, cast in person at a meeting
called for such purpose. The Prior Agreements provided for termination by either
the Trust or 1838 LLC without penalty at any time on sixty (60) days' written
notice to the other party.
The Sale resulted in the assignment (as defined in the 1940
Act) of the Prior Agreements and, under the 1940 Act, resulted in the automatic
termination of such Agreements. As permitted under rules promulgated under the
1940 Act, the Board of Trustees has also approved the Interim Agreements.
However, for the Funds to continue to receive investment advisory services from
1838 LP beyond the interim period, each of the Funds and 1838 LP must enter into
the Proposed Agreements. The Proposed Agreements will only take effect if
approved by shareholders holding a majority of the shares in the Funds.
INFORMATION CONCERNING THE PROPOSED ADVISORY AGREEMENTS
The Proposed Agreements are identical to the Prior Agreements
in all material respects, except for a change in the effective and termination
dates and change in investment adviser from 1838 LLC to 1838 LP. Forms of the
Proposed Advisory Agreements are attached to this Proxy Statement as Exhibit A
(International Equity Fund) and Exhibit B (Fixed Income Fund).
It is anticipated that the Proposed Advisory Agreements will
be dated as of the day after shareholder approval of the Agreements is obtained.
The Proposed Advisory Agreements will continue in effect for an initial term of
two years and may continue thereafter from year to year if specifically approved
at least annually by the vote of "a majority of the outstanding voting
securities" of the Funds or by the Board of Trustees of the Trust and, in either
event, by the vote of a majority of the Trustees who are not parties to the
Proposed Advisory Agreements or interested persons of any such party, cast in
person at a meeting called for such purpose.
If the Proposed Advisory Agreements are not approved by the
shareholders of the Funds, the Trustees of the Trust will consider what other
action is appropriate based upon the best interests of the shareholders.
INFORMATION CONCERNING THE PROPOSED SUB-ADVISORY AGREEMENT (FIXED INCOME FUND
ONLY)
Upon approval of shareholders of the Fixed Income Fund, 1838
LP intends to enter into the Proposed Sub-Advisory Agreement with MBIA-CMC.
Currently, an Interim Sub-Advisory Agreement on behalf of the Fixed Income Fund
is in place. The Interim Sub-Advisory Agreement will remain in effect for 150
days, or until shareholders approve a new contract for the Fund. (See
"Information Concerning the Interim Agreements" for a more detailed discussion
of these requirements.) A form of the proposed Sub-Advisory Agreement is
attached to this Proxy Statement as Exhibit C.
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The Proposed Sub-Advisory Agreement provides that, subject to
the supervision of the Board of Trustees of the Trust and 1838 LP, MBIA-CMC will
provide recommendations for a continuous investment program for the Fund,
including investment research and management with respect to securities and
investments, including cash and cash equivalents in the Fund. The services under
the Proposed Sub-Advisory Agreement will be provided in accordance with the
Fund's investment objective, policies and restrictions. For the period from
approval of the Proposed Sub-Advisory Agreement through December 31, 2004, the
sub-advisor will receive no compensation for its services. After December 31,
2004, the investment advisor will pay the Fixed Income Fund's sub-investment
advisor out of its own income an annual fee of 0.05% based on the Fixed Income
Fund's average daily net asset value at the end of each month.
Under the Proposed Sub-Advisory Agreement, MBIA-CMC would not
be liable for any error or judgment or mistake of law for any loss suffered by
1838 LP or the Fund in connection with any matters to which the Agreement
relates except for losses resulting from MBIA-CMC's willful misfeasance, bad
faith, or gross negligence in the performance of its duties or by reckless
disregard of the obligations or duties under the Agreement.
It is anticipated that the Proposed Sub-Advisory Agreement
will be dated as of the day after shareholder approval of the Agreement is
obtained. The Proposed Sub-Advisory Agreement will continue in effect for an
initial term of two years and may continue thereafter from year to year if
specifically approved at least annually by the vote of "a majority of the
outstanding voting securities" of the Fund or by the Board of Trustees of the
Trust, and, in either event, by the vote of a majority of the Trustees who are
not parties to the Proposed Sub-Advisory Agreement or interested persons of such
party, cast in person at a meeting called for such purpose.
The Proposed Sub-Advisory Agreement may be terminated by the
Trust, 1838 LP, or MBIA-CMC without penalty at any time on sixty (60) days'
written notice to the other party. The Proposed Sub-Advisory Agreement will also
terminate (i) upon the termination or assignment of the investment advisory
agreement between 1838 LP and the Trust on behalf of the Fixed Income Fund or
(ii) upon the assignment of the Proposed Sub-Advisory Agreement.
EVALUATION OF THE PROPOSED AGREEMENTS BY THE BOARD OF TRUSTEES
The Board of Trustees of the Trust met on March 31, 2004 to
consider the Sale and its anticipated effects upon the investment management
services that 1838 LLC provided to the Funds. The Board, including a majority of
the Trustees who are not parties to the Proposed Agreements or "interested
persons" of any such party, voted to recommend the Proposed Agreements to the
Funds' shareholders for their approval.
At the March 31, 2004 meeting, the Trustees had the
opportunity to meet with representatives of 1838 LP to determine why 1838 LP
chose to acquire the business of 1838 LLC and to determine whether the Sale will
be beneficial to the Funds. 1838 LP, in acquiring the business of 1838 LLC, is
seeking to expand the business of Orca Bay Partners, 1838 LP's affiliate and a
Seattle-based private equity firm. The Board of Trustees of the Trust considered
how the Funds, and an affiliated closed-end fund will blend with the Orca Bay
large cap experience. The Board of Trustees also considered 1838 LP's reasons
for acquiring the business of 1838 LLC including the attractive size of 1838
LLC's business, its personnel, and its tax-efficient advisory products. The
Board of Trustees also considered Orca Bay Partners' investment in other
investment advisory firms, including firms that have advised registered
investment companies. The Trustees considered the proposed structure of 1838 LP
following the Sale, how 1838 LP plans to integrate 1838 LLC's existing
operations into its business model, and how 1838 LP plans to grow its investment
advisory business. In addition, Orca Bay Partners and other investors of 1838 LP
will put capital and additional personnel into developing and expanding the 1838
external marketing network, which also should be beneficial to the Funds by
helping to expand the Funds' asset base to achieve economies of scale.
The Board of Trustees, on behalf of each Fund, requested and
reviewed various materials with respect to 1838 LP and the Sale, including
materials furnished by 1838 LP. These materials included information about 1838
LP and its personnel, operations and financial condition. The Board of Trustees
also reviewed the terms of the Sale and evaluated the ability to provide a
stable financial environment for the provision of services to the Funds.
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In considering the Proposed Agreements the Trustees considered
that the terms do not contemplate any change in (i) the personnel managing the
Funds; or (ii) the fees paid by the Funds to 1838 LP for its investment advisory
services. 1838 LP has informed the Board of Trustees that the Sale is not
expected to result in any changes to the foregoing. 1838 LP is expected to
continue to operate the investment advisory business conducted by 1838 LLC in
substantially the same manner as previously conducted by 1838 LLC. There can be
no assurances, however, that changes may not occur. If changes in the conduct of
this business are proposed that might materially affect the services to the
Funds, the Board of Trustees will consider the effect of those changes and take
such action as it deems advisable under the circumstances.
Section 15(f) of the 1940 Act permits, in the context of an
investment adviser to a registered investment company selling its business, the
receipt by such adviser, or any of its affiliated persons, of any amount or
benefit in connection with a sale of an interest in the adviser, as long as two
conditions are satisfied. First, an "unfair burden" (as defined in the 1940 Act)
must not be imposed on the investment company as a result of the sale of the
interest in the company's adviser. For purposes of Section 15(f), an unfair
burden would include any arrangement during a two year period after the sale of
such interest whereby the investment adviser, or any interested persons of such
adviser, receives or is entitled to receive any compensation from the investment
company or its shareholders other than the fees for bona fide investment
advisory or other services. The second condition of Section 15(f) is that,
during the three year period after the sale of such interest, at least 75% of
the investment company's board of directors must not be "interested persons" of
the investment company's adviser or predecessor adviser.
Management of the Trust is not aware of any circumstances
arising from the Sale that might result in the imposition of an "unfair burden"
on the Trust. Furthermore, the second condition of Section 15(f), the 75%
disinterested director requirement, was satisfied as of the closing of the Sale.
REQUIRED VOTE
Shareholders of the Funds will vote separately with respect to
the approval of their respective Fund's new investment advisory agreement with
1838, LP, and only shareholders of the Fixed Income Fund will vote on the new
sub-investment advisory agreement. A majority of each Fund's outstanding shares
entitled to vote shall constitute a quorum for the transaction of business at
the Meeting. If a quorum is present, the vote of the holders of a "majority of
the outstanding voting securities" of each Fund, as defined in the 1940 Act,
represented at the meeting in person or by proxy, is required for approval of
the applicable agreement ("1940 Act Majority Vote"). A 1940 Act Majority Vote
means the vote of (a) at least 67% of the shares of a Fund present in person or
by proxy, if more than 50% of the shares of the Fund are represented at the
meeting, or (b) more than 50% of the outstanding shares of the Fund, whichever
is less.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS OF THE FUNDS
VOTE "FOR" THE APPROVAL OF THE PROPOSED ADVISORY AGREEMENTS AND THE PROPOSED
SUB-ADVISORY AGREEMENT.
OTHER BUSINESS
The Board of Trustees know of no matters to be brought before
the Meeting other than those mentioned in this Proxy Statement. If other matters
do come before the Meeting, it is intended that the shares represented by
proxies will be voted in accordance with the judgment of the person or persons
exercising at the Meeting the authority conferred by the proxies.
GENERAL INFORMATION
ADDITIONAL SERVICE PROVIDERS
Since consummation of the Sale on May 13, 2004, 1838 LP, has
served as the administrator. MBIA Municipal Investors Service Corporation
("MBIA-MISC") provides accounting services and serves as dividend disbursing and
transfer agent for the Trust. 1838 LP has offices at 2701 Renaissance Blvd.,
Fourth Floor, King of Prussia, PA 19406. MBIA-CMC serves as the distributor for
the Trust, and is located at 113 King Street, Armonk, NY 10504.
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VOTING AND SOLICITATION INFORMATION
The cost of preparing, printing and mailing the enclosed proxy
card(s) and this Proxy Statement, and all other costs incurred in connection
with the solicitation of proxies, including any additional solicitation made by
letter, telephone or telegraph, will be paid by 1838 LP. In addition to
solicitation by mail, Trustees, certain officers and representatives of the
Trust, directors, officers and employees of 1838 LP, and certain financial
services firms and their representatives, who will receive no extra compensation
for their services, may solicit proxies by telephone, telegram or personally.
If a shareholder wishes to participate in the Meeting, the
shareholder may submit the proxy card(s) originally sent with this Proxy
Statement or attend in person. Should shareholders require additional
information regarding the proxy or replacement proxy card(s), they may contact
the MBIA-MISC, the Fund's transfer agent at 1-877-367-1838.
REVOCATION OF PROXY
Any proxy given by a shareholder is revocable until voted at
the Meeting. Shareholders of the Funds giving a proxy have the power to revoke
it by mail (addressed to the Secretary of the Trust, at 2701 Renaissance
Boulevard, Fourth Floor, King of Prussia, Pennsylvania 19406) or in person at
the Meeting, by executing a superseding proxy or by submitting a notice of
revocation to the Trust. All properly executed proxies received in time for the
Meeting will be voted as specified in the proxy or, if no specification is made,
in favor of the Proposals referred to in this Proxy Statement.
QUORUM REQUIREMENT
The presence at the Meeting, in person or by proxy, of the
holders of record of a majority of the shares outstanding of a Fund, as of the
record date, shall constitute a quorum for the transaction of business with
respect to that Fund at the Meeting, except as otherwise provided by the 1940
Act or in the Trust's Declaration of Trust. If, however, a quorum of a Fund's
shareholders shall not be present or represented at the Meeting, the holders of
a majority of the shares present for such Fund, in person or by proxy, shall
have the power to adjourn the meeting with respect to those proposals pertaining
to such Fund, without notice other than announcement at the Meeting, until a
quorum shall be present or represented, to a date not more than 120 days after
the original record date. At such adjourned meeting at which a quorum shall be
present or represented, any business may be transacted which might have been
transacted at the Meeting as originally notified.
Under Delaware law, abstentions and broker non-votes will be
included for purposes of determining whether a quorum is present at the Meeting,
but will be treated as votes not cast and, therefore, will not be counted for
purposes of determining whether a Proposal has been approved.
SHAREHOLDINGS INFORMATION
Holders of record of the shares of the Funds at the close of
business on June 1, 2004 (the "Record Date"), as to any matter on which they are
entitled to vote, will be entitled to vote on all business of the Meeting.
As of the record date, the 1838 International Equity Fund and
the 1838 Fixed Income Fund had 3,468,916 shares, and 2,293,455 shares,
respectively, issued and outstanding. To the best of the knowledge of the Trust,
as of the Record Date, no person owned beneficially more than 5% of either
Fund's outstanding shares, except as stated in Exhibit D.
As of the Record Date, the Trustees and officers of the Trust,
as a group, beneficially owned less than 1% of the Funds' outstanding shares.
-7-
SHAREHOLDER PROPOSALS FOR SUBSEQUENT MEETINGS
Any shareholder who desires to submit a shareholder proposal
may do so by submitting such proposal in writing, addressed to the Secretary of
the Trust, at 2701 Renaissance Blvd., Fourth Floor, King of Prussia, PA 19406.
The Trust is not required to hold an annual shareholder meeting and does not
currently intend to do so.
By Order of the Board of Trustees
ANNA M. BENCROWSKY
Secretary
JUNE 14, 2004
-8-
EXHIBIT A
1838 INVESTMENT ADVISORS FUNDS
1838 INTERNATIONAL EQUITY FUND
INVESTMENT ADVISORY AGREEMENT
AGREEMENT, made by and between 1838 INVESTMENT ADVISORS FUNDS,
a Delaware business trust (hereinafter called the "Trust"), on behalf of its
1838 INTERNATIONAL EQUITY FUND series (the "Fund"), and 1838 INVESTMENT
ADVISORS, LP, a Delaware limited partnership (hereinafter called the "Investment
Adviser").
W I T N E S S E T H:
WHEREAS, the Trust has been organized and operates as an
investment company registered under the Investment Company Act of 1940 (the
"1940 Act") and engages in the business of investing and reinvesting its assets
in securities, and the Investment Adviser is a registered Investment Adviser
under the Investment Advisers Act of 1940 (the "Advisers Act") and engages in
the business of providing investment management services; and
WHEREAS, the Trust has selected the Investment Adviser to
serve as the investment adviser for the Fund effective as of the date of this
Agreement.
NOW, THEREFORE, in consideration of the mutual covenants
herein contained, and each of the parties hereto intending to be legally bound,
it is agreed as follows:
1. The Trust on behalf of the Fund hereby employs the
Investment Adviser to manage the investment and reinvestment of the Fund's
assets and to administer its affairs, subject to the direction of the Board of
Trustees and officers of the Trust for the period and on the terms hereinafter
set forth. The Investment Adviser hereby accepts such employment and agrees
during such period to render the services and assume the obligations herein set
forth for the compensation herein provided. The Investment Adviser shall, for
all purposes herein, be deemed to be an independent contractor, and shall,
unless otherwise expressly provided and authorized, have no authority to act for
or to represent the Trust or the Fund in any way, or in any way be deemed an
agent of the Trust or the Fund. The Investment Adviser shall regularly make
decisions as to what securities to purchase and sell on behalf of the Fund and
shall record and implement such decisions and shall furnish the Board of
Trustees of the Trust with such information and reports regarding the Fund's
investments as the Investment Adviser deems appropriate or as the Trustees of
the Trust may reasonably request. Subject to compliance with the requirements of
the 1940 Act, the Investment Adviser may retain as a sub-adviser to the Fund, at
the Investment Adviser's own expense, any investment adviser registered under
the Advisers Act.
Exhibit A-1
2. The Fund shall conduct its own business and affairs and
shall bear the expenses and salaries necessary and incidental thereto including,
but not in limitation of the foregoing, the costs incurred in: the maintenance
of its corporate existence; the maintenance of its own books, records and
procedures; dealing with its own shareholders; the payment of dividends;
transfer of stock, including issuance, redemption and repurchase of shares;
preparation of share certificates; reports and notices to shareholders; calling
and holding of shareholders' meetings; miscellaneous office expenses; brokerage
commissions; custodian fees; legal and accounting fees; and taxes. Officers and
employees of the Investment Adviser may be trustees, directors, officers and
employees of the funds of which the Investment Adviser serves as investment
adviser. Officers and employees of the Investment Adviser who are trustees,
officers and/or employees of the Trust shall not receive any compensation from
the Trust for acting in such dual capacity.
In the conduct of the respective businesses of the parties
hereto and in the performance of this Agreement, the Trust and Investment
Adviser may share facilities common to each, with appropriate proration of
expenses between them.
3. (a) The Investment Adviser shall place and execute Fund
orders for the purchase and sale of portfolio securities with broker-dealers.
Subject to the primary objective of obtaining the best available prices and
execution, the Investment Adviser will place orders for the purchase and sale of
portfolio securities for the Fund with such broker-dealers as it may select from
time to time, including brokers who provide statistical, factual and financial
information and services to the Fund, to the Investment Adviser, or to any other
fund for which the Investment Adviser provides investment advisory services
and/or with broker-dealers who sell shares of the Fund or who sell shares of any
other fund for which the Investment Adviser provides investment advisory
services. Broker-dealers who sell shares of the funds of which the Investment
Adviser is investment adviser shall only receive orders for the purchase or sale
of portfolio securities to the extent that the placing of such orders is in
compliance with the Rules of the Securities and Exchange Commission and the
National Association of Securities Dealers, Inc.
(b) Notwithstanding the provisions of subparagraph (a)
above and subject to such policies and procedures as may be adopted by the Board
of Trustees and officers of the Trust, the Investment Adviser is authorized to
pay a member of an exchange, broker or dealer an amount of commission for
effecting a securities transaction in excess of the amount of commission another
member of an exchange, broker or dealer would have charged for effecting that
transaction in such instances where the Investment Adviser has determined in
good faith that such amount of commission was reasonable in relation to the
value of the brokerage and research services provided by such member, broker or
dealer, viewed in terms of either that particular transaction or the Investment
Adviser's overall responsibilities with respect to the Fund and to other funds
for which the Investment Adviser exercises investment discretion.
Exhibit A-2
4. As compensation for the services to be rendered to the Fund
by the Investment Adviser under the provisions of this Agreement, the Trust on
behalf of the Fund shall pay to the Investment Adviser from the Fund's assets an
annual fee equal to 0.75% of the daily average net assets of the Fund, payable
on a monthly basis, subject to reduction to the extent necessary to comply with
the most stringent limits prescribed by any state in which the Fund's shares are
offered for sale.
If this Agreement is terminated prior to the end of any
calendar month, the management fee shall be prorated for the portion of any
month in which this Agreement is in effect according to the proportion which the
number of calendar days during which the Agreement is in effect bears to the
number of calendar days in the month, and shall be payable within 10 days after
the date of termination.
5. The services to be rendered by the Investment Adviser to
the Trust on behalf of the Fund under the provisions of this Agreement are not
to be deemed to be exclusive, and the Investment Adviser shall be free to render
similar or different services to others so long as its ability to render the
services provided for in this Agreement shall not be impaired thereby.
6. The Investment Adviser, its officers, employees, and agents
may engage in other businesses, may render investment advisory services to other
investment companies, or to any other corporation, association, firm or
individual, and may render underwriting services to the Trust on behalf of the
Fund or to any other investment company, corporation, association, firm or
individual.
7. In the absence of willful misfeasance, bad faith, gross
negligence, or a reckless disregard of the performance of duties of the
Investment Adviser to the Fund, the Investment Adviser shall not be subject to
liabilities to the Fund or to any shareholder of the Fund for any action or
omission in the course of, or connected with, rendering services hereunder or
for any losses that may be sustained in the purchase, holding or sale of any
security, or otherwise.
Exhibit A-3
8. The Trust agrees that, in the event that the Investment
Adviser ceases to be the Fund's investment adviser for any reason, the Trust
will (unless the Investment Adviser otherwise agrees in writing) promptly take
all necessary steps to propose to the Fund's shareholders at the next regular
meeting that the Fund change to a name not including the word "1838." The Trust
agrees that the word "1838" in the Fund's name is derived from the name of the
Investment Adviser and is the property of the Investment Adviser for copyright
and all other purposes and that therefore such word may be freely used by the
Investment Adviser as to other investment activities or other investment
products.
9. This Agreement shall be executed and become effective as of
the date written below. It may be renewed thereafter only so long as such
renewal and continuance is specifically approved at least annually by the Board
of Trustees or by vote of a majority of the outstanding voting securities of the
Fund and only if the terms and the renewal hereof have been approved by the vote
of a majority of the Trustees of the Trust who are not parties hereto or
interested persons of any such party, cast in person at a meeting called for the
purpose of voting on such approval. No amendment to this Agreement shall be
effective unless the terms thereof have been approved by the vote of a majority
of the outstanding voting securities of the Fund and by the vote of a majority
of Trustees of the Trust who are not parties to the Agreement or interested
persons of any such party, cast in person at a meeting called for the purpose of
voting on such approval. Notwithstanding the foregoing, this Agreement may be
terminated by the Trust at any time, without the payment of a penalty, on sixty
days' written notice to the Investment Adviser of the Trust's intention to do
so, pursuant to action by the Board of Trustees of the Trust or pursuant to a
vote of a majority of the outstanding voting securities of the Fund. The
Investment Adviser may terminate this Agreement at any time, without the payment
of penalty on sixty days' written notice to the Trust of its intention to do so.
Upon termination of this Agreement, the obligations of all the parties hereunder
shall cease and terminate as of the date of such termination, except for any
obligation to respond for a breach of this Agreement committed prior to such
termination, and except for the obligation of the Trust to pay to the Investment
Adviser the fee provided in Paragraph 4 hereof, prorated to the date of
termination. This Agreement shall automatically terminate in the event of its
assignment.
Exhibit A-4
10. This Agreement shall extend to and bind the heirs,
executors, administrators and successors of the parties hereto.
11. For the purposes of this Agreement, the terms "vote of a
majority of the outstanding voting securities"; "interested persons"; and
"assignment" shall have the meaning defined in the 1940 Act.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be signed on their behalf by their respective officers thereunto duly authorized
all as of _______, 2004.
1838 INVESTMENT ADVISORS FUNDS
By _____________________________
W. Thacher Brown
President
1838 INVESTMENT ADVISORS, LP
By: Andover Management LLC
its General Partner
By: _____________________________
Timothy J. Carver, Manager
Exhibit A-5
EXHIBIT B
1838 INVESTMENT ADVISORS FUNDS
1838 FIXED INCOME FUND
INVESTMENT ADVISORY AGREEMENT
AGREEMENT, made by and between 1838 INVESTMENT ADVISORS FUNDS,
a Delaware business trust (hereinafter called the "Trust"), on behalf of its
1838 FIXED INCOME FUND series (the "Fund"), and 1838 INVESTMENT ADVISORS, LP, a
Delaware limited partnership (hereinafter called the "Investment Adviser").
W I T N E S S E T H:
WHEREAS, the Trust has been organized and operates as an
investment company registered under the Investment Company Act of 1940 (the
"1940 Act") and engages in the business of investing and reinvesting its assets
in securities, and the Investment Adviser is a registered Investment Adviser
under the Investment Advisers Act of 1940 (the "Advisers Act") and engages in
the business of providing investment management services; and
WHEREAS, the Trust has selected the Investment Adviser to
serve as the investment adviser for the Fund effective as of the date of this
Agreement.
NOW, THEREFORE, in consideration of the mutual covenants
herein contained, and each of the parties hereto intending to be legally bound,
it is agreed as follows:
1. The Trust on behalf of the Fund hereby employs the
Investment Adviser to manage the investment and reinvestment of the Fund's
assets and to administer its affairs, subject to the direction of the Board of
Trustees and officers of the Trust for the period and on the terms hereinafter
set forth. The Investment Adviser hereby accepts such employment and agrees
during such period to render the services and assume the obligations herein set
forth for the compensation herein provided. The Investment Adviser shall, for
all purposes herein, be deemed to be an independent contractor, and shall,
unless otherwise expressly provided and authorized, have no authority to act for
or to represent the Trust or the Fund in any way, or in any way be deemed an
agent of the Trust or the Fund. The Investment Adviser shall regularly make
decisions as to what securities to purchase and sell on behalf of the Fund and
shall record and implement such decisions and shall furnish the Board of
Trustees of the Trust with such information and reports regarding the Fund's
investments as the Investment Adviser deems appropriate or as the Trustees of
the Trust may reasonably request. Subject to compliance with the requirements of
the 1940 Act, the Investment Adviser may retain as a sub-adviser to the Fund, at
the Investment Adviser's own expense, any investment adviser registered under
the Advisers Act.
Exhibit B-1
2. The Fund shall conduct its own business and affairs and
shall bear the expenses and salaries necessary and incidental thereto including,
but not in limitation of the foregoing, the costs incurred in: the maintenance
of its corporate existence; the maintenance of its own books, records and
procedures; dealing with its own shareholders; the payment of dividends;
transfer of stock, including issuance, redemption and repurchase of shares;
preparation of share certificates; reports and notices to shareholders; calling
and holding of shareholders' meetings; miscellaneous office expenses; brokerage
commissions; custodian fees; legal and accounting fees; and taxes. Officers and
employees of the Investment Adviser may be trustees, directors, officers and
employees of the funds of which the Investment Adviser serves as investment
adviser. Officers and employees of the Investment Adviser who are trustees,
officers and/or employees of the Trust shall not receive any compensation from
the Trust for acting in such dual capacity.
In the conduct of the respective businesses of the parties
hereto and in the performance of this Agreement, the Trust and Investment
Adviser may share facilities common to each, with appropriate proration of
expenses between them.
3. (a) The Investment Adviser shall place and execute Fund
orders for the purchase and sale of portfolio securities with broker-dealers.
Subject to the primary objective of obtaining the best available prices and
execution, the Investment Adviser will place orders for the purchase and sale of
portfolio securities for the Fund with such broker-dealers as it may select from
time to time, including brokers who provide statistical, factual and financial
information and services to the Fund, to the Investment Adviser, or to any other
fund for which the Investment Adviser provides investment advisory services
and/or with broker-dealers who sell shares of the Fund or who sell shares of any
other fund for which the Investment Adviser provides investment advisory
services. Broker-dealers who sell shares of the funds of which the Investment
Adviser is investment adviser shall only receive orders for the purchase or sale
of portfolio securities to the extent that the placing of such orders is in
compliance with the Rules of the Securities and Exchange Commission and the
National Association of Securities Dealers, Inc.
(b) Notwithstanding the provisions of subparagraph (a)
above and subject to such policies and procedures as may be adopted by the Board
of Trustees and officers of the Trust, the Investment Adviser is authorized to
pay a member of an exchange, broker or dealer an amount of commission for
effecting a securities transaction in excess of the amount of commission another
member of an exchange, broker or dealer would have charged for effecting that
transaction in such instances where the Investment Adviser has determined in
good faith that such amount of commission was reasonable in relation to the
value of the brokerage and research services provided by such member, broker or
dealer, viewed in terms of either that particular transaction or the Investment
Adviser's overall responsibilities with respect to the Fund and to other funds
for which the Investment Adviser exercises investment discretion.
Exhibit B-2
4. As compensation for the services to be rendered to the Fund
by the Investment Adviser under the provisions of this Agreement, the Trust on
behalf of the Fund shall pay to the Investment Adviser from the Fund's assets an
annual fee equal to .50% of the daily average net assets of the Fund, payable on
a monthly basis, subject to reduction to the extent necessary to comply with the
most stringent limits prescribed by any state in which the Fund's shares are
offered for sale.
If this Agreement is terminated prior to the end of any
calendar month, the management fee shall be prorated for the portion of any
month in which this Agreement is in effect according to the proportion which the
number of calendar days during which the Agreement is in effect bears to the
number of calendar days in the month, and shall be payable within 10 days after
the date of termination.
5. The services to be rendered by the Investment Adviser to
the Trust on behalf of the Fund under the provisions of this Agreement are not
to be deemed to be exclusive, and the Investment Adviser shall be free to render
similar or different services to others so long as its ability to render the
services provided for in this Agreement shall not be impaired thereby.
6. The Investment Adviser, its officers, employees, and agents
may engage in other businesses, may render investment advisory services to other
investment companies, or to any other corporation, association, firm or
individual, and may render underwriting services to the Trust on behalf of the
Fund or to any other investment company, corporation, association, firm or
individual.
7. In the absence of willful misfeasance, bad faith, gross
negligence, or a reckless disregard of the performance of duties of the
Investment Adviser to the Fund, the Investment Adviser shall not be subject to
liabilities to the Fund or to any shareholder of the Fund for any action or
omission in the course of, or connected with, rendering services hereunder or
for any losses that may be sustained in the purchase, holding or sale of any
security, or otherwise.
Exhibit B-3
8. The Trust agrees that, in the event that the Investment
Adviser ceases to be the Fund's investment adviser for any reason, the Trust
will (unless the Investment Adviser otherwise agrees in writing) promptly take
all necessary steps to propose to the Fund's shareholders at the next regular
meeting that the Fund change to a name not including the word "1838." The Trust
agrees that the word "1838" in the Fund's name is derived from the name of the
Investment Adviser and is the property of the Investment Adviser for copyright
and all other purposes and that therefore such word may be freely used by the
Investment Adviser as to other investment activities or other investment
products.
9. This Agreement shall be executed and become effective as of
the date written below. It may be renewed thereafter only so long as such
renewal and continuance is specifically approved at least annually by the Board
of Trustees or by vote of a majority of the outstanding voting securities of the
Fund and only if the terms and the renewal hereof have been approved by the vote
of a majority of the Trustees of the Trust who are not parties hereto or
interested persons of any such party, cast in person at a meeting called for the
purpose of voting on such approval. No amendment to this Agreement shall be
effective unless the terms thereof have been approved by the vote of a majority
of the outstanding voting securities of the Fund and by the vote of a majority
of Trustees of the Trust who are not parties to the Agreement or interested
persons of any such party, cast in person at a meeting called for the purpose of
voting on such approval. Notwithstanding the foregoing, this Agreement may be
terminated by the Trust at any time, without the payment of a penalty, on sixty
days' written notice to the Investment Adviser of the Trust's intention to do
so, pursuant to action by the Board of Trustees of the Trust or pursuant to a
vote of a majority of the outstanding voting securities of the Fund. The
Investment Adviser may terminate this Agreement at any time, without the payment
of penalty on sixty days' written notice to the Trust of its intention to do so.
Upon termination of this Agreement, the obligations of all the parties hereunder
shall cease and terminate as of the date of such termination, except for any
obligation to respond for a breach of this Agreement committed prior to such
termination, and except for the obligation of the Trust to pay to the Investment
Adviser the fee provided in Paragraph 4 hereof, prorated to the date of
termination. This Agreement shall automatically terminate in the event of its
assignment.
Exhibit B-4
10. This Agreement shall extend to and bind the heirs,
executors, administrators and successors of the parties hereto.
11. For the purposes of this Agreement, the terms "vote of a
majority of the outstanding voting securities"; "interested persons"; and
"assignment" shall have the meaning defined in the 1940 Act.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be signed on their behalf by their respective officers thereunto
duly authorized all as of _____, 2004.
1838 INVESTMENT ADVISORS FUNDS
By: ___________________________________
W. Thacher Brown
President
1838 INVESTMENT ADVISORS, LP
By: Andover Management LLC
its General Partner
By: ___________________________________
Timothy J. Carver, Manager
Exhibit B-5
EXHIBIT C
SUB-INVESTMENT ADVISORY AGREEMENT
BETWEEN
1838 INVESTMENT ADVISORS, LP
AND
MBIA CAPITAL MANAGEMENT CORP.
SUB-INVESTMENT ADVISORY AGREEMENT (the "Agreement") made this
_____ day of _____ 2004, by and between 1838 INVESTMENT ADVISORS, LP (the
"Investment Adviser") and MBIA CAPITAL MANAGEMENT CORP. (the "Sub-Adviser"),
which Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original, but all of which together shall constitute
but one instrument.
WITNESSETH:
WHEREAS, the Investment Adviser has entered into an Investment
Advisory Agreement dated as of ______, 2004 (the "Investment Advisory
Agreement") with 1838 Investment Advisors Funds (the "Trust"), pursuant to which
the Investment Adviser provides portfolio management services to 1838 Fixed
Income Fund series of the Trust (the "Fund"); and
WHEREAS, the Investment Adviser wishes to enter into a
contract with the Sub-Adviser to render to the Investment Adviser the following
services:
To furnish research, analysis, advice and recommendations with
respect to the purchase and sale of securities and the making of investment
commitments by the Investment Adviser regarding all of the assets of the Fund,
subject to oversight by the Board of Trustees of the Trust and the supervision
of the Investment Adviser; and
WHEREAS, the Sub-Adviser is willing to perform such services
on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual agreements
herein contained, and intending to be bound, the parties agree as follows:
1. As compensation for all services, facilities furnished and
expenses borne by the Sub-Adviser under this Agreement, the Investment Adviser
will pay the Sub-Adviser an annual fee, which fee shall be payable monthly in
arrears. The amount of such monthly fee shall be (i) for months ending on or
before December 31, 2004: zero and (ii) for months ending after December 31,
2004: 1/240th (0.05% on an annualized basis) of the net asset value of the
assets in the Fund at the close of business on the last business day of the
month to which the payment relates.
The Sub-Adviser shall send the Investment Adviser an invoice
for each such monthly fee within a reasonable time after the amount of such fee
is determinable, and the Investment Adviser shall pay this amount to the
Sub-Adviser within 10 business days of receiving the invoice.
2. This Agreement shall become effective as of the date first
above written, subject to the approval of the shareholders of the Fund in
accordance with the provisions of the Investment Company Act of 1940, as amended
(the "1940 Act").
3. This Agreement shall continue for a period ending two years
from its effective date and thereafter, but only so long as such renewal and
continuance is specifically approved at least annually by the Board of Trustees
of the Trust or by a vote of the majority of the outstanding voting securities
of the Fund as prescribed by the 1940 Act and only if the terms and the renewal
hereof have been approved by a vote of a majority of the Trust's Trustees, who
are not parties to such Agreement or interested persons of such a party, cast in
person at a meeting called for the purpose of voting on such approval. This
Agreement will (i) terminate automatically without the payment of any penalty
upon termination of the Investment Advisory Agreement, (ii) may be terminated by
the Trust (by the Board of Trustees of the Trust or by a vote of a majority of
the Fund's outstanding voting securities) or by the Investment Adviser without
penalty upon sixty days' written notice by the Trust or the Investment Adviser
to the Sub-Adviser, and (iii) may be terminated by the Sub-Adviser without
penalty upon sixty days' written notice to the Investment Adviser and the Trust.
This Agreement shall terminate automatically in the event of its assignment or
the assignment of the Investment Advisory Agreement.
Exhibit C-1
4. Subject to the supervision of the Board of Trustees of the
Trust and the Investment Adviser, the Sub-Adviser will provide recommendations
for a continuous investment program for the Fund, including investment research
and management with respect to securities and investments, including cash and
cash equivalents in the Fund. The Sub-Adviser will recommend to the Investment
Adviser from time to time what securities and other investments should be
purchased, retained or sold by the Fund. The Sub-Adviser will provide the
services under this Agreement in accordance with (i) the Fund's investment
objective, policies and restrictions as stated in the then effective Prospectus
and Statement of Additional Information relating to the Fund (ii) any additional
policies or guidelines established by the Investment Adviser or by the Board of
Trustees that have been furnished to the Sub-Adviser, and (iii) the provisions
of the Internal Revenue Code, as amended, applicable to "regulated investment
companies" (as defined in Section 851 of the Internal Revenue Code). The
Sub-Adviser further agrees that it:
(a) will conform with all applicable provisions of law,
including without limitation all applicable provisions of the 1940 Act and all
applicable rules and regulations of the Securities and Exchange Commission
("SEC") and will, in addition, conduct its activities under this Agreement in
accordance with regulations of any other Federal or State agencies which now has
or in the future will have jurisdiction over its activities;
(b) (1) will recommend placement of orders, and may place
orders, pursuant to its investment determinations for the Fund either directly
with any broker or dealer, or with the issuer. In recommending placement of
orders with brokers or dealers, the Sub-Adviser will attempt to assist the
Investment Adviser to obtain the best net price and the most favorable execution
of its orders. In placing orders with brokers or dealers, the Sub-Adviser will
attempt to obtain the best net price and most favorable execution of its orders.
(2) Notwithstanding the provisions of paragraph
4(b)(1) above and subject to the policies and procedures as may be adopted by
the Board of Trustees and officers of the Trust and notified to the Sub-Adviser,
the Sub-Adviser is authorized to pay a member of an exchange, broker or dealer
an amount of commission for effecting a securities transaction in excess of the
amount of commission another member of an exchange, broker or dealer would have
charged for effecting that transaction in such instances where the Sub-Adviser
has determined in good faith that such amount of commission was reasonable in
relation to the value of the brokerage and research services provided by such
member, broker or dealer, viewed in terms of either that particular transaction
or the Sub-Adviser's overall responsibilities with respect to the Fund and to
other funds for which the Sub-Adviser exercises investment discretion.
(3) In no instance will securities be purchased from
or sold to the Sub-Adviser or any affiliated person of the Sub-Adviser as
principal. Notwithstanding the foregoing sentence, the Sub-Adviser may arrange
for the execution of, or place, brokered transactions through an affiliated
broker-dealer in conformity with policies and procedures for such purpose if,
when, and as established by the Trustees of the Trust and notified to the
Sub-Adviser and provided that such transactions comply with Rule 17e-1 under the
1940 Act in all respects; and
(c) will pay its own expenses incurred in furnishing the
services to be provided by it pursuant to this Agreement and will provide, at
its own cost, all office space and facilities necessary to furnish such
services.
5. The Investment Adviser shall be responsible for sending
shareholders any documents or other information required to be sent to
shareholders and otherwise acting as the contact person with the shareholders.
The Investment Adviser shall be responsible for maintaining accounting records
relating to the shareholders.
Exhibit C-2
6. The Sub-Adviser shall furnish the Investment Adviser and
the administrator of the Fund (the "Administrator") monthly, quarterly and
annual reports concerning portfolio transactions and performance of the Fund in
such form as may be mutually agreed upon, and agrees to review the Fund and
discuss the management of the Fund with representatives or agents of the
Investment Adviser, the Administrator or the Trust at their reasonable request.
The Sub-Adviser shall permit all books and records with respect to the Fund to
be inspected and audited by the Investment Adviser and the Administrator at all
reasonable times during normal business hours, upon reasonable notice. The
Sub-Adviser shall also provide the Investment Adviser, the Administrator or the
Trust with such other information and reports as may reasonably be requested by
the Investment Adviser, the Administrator or the Trust from time to time,
including without limitation all material as reasonably may be requested by the
trustees of the Trust pursuant to Section 15(c) of the 1940 Act.
7. The Sub-Adviser shall provide to the Investment Adviser a
copy of the Sub-Adviser's Form ADV as filed with the SEC and as amended from
time to time and a list of the persons whom the Sub-Adviser wishes to have
authorized to give written and/or oral instructions to custodians of assets of
the Fund.
8. The Sub-Adviser shall maintain and be bound by a Code of
Ethics satisfying the requirements of Rule 17j-1 under the 1940 Act, and shall
provide to the Trust a current copy of such Code of Ethics, as amended from time
to time.
9. It is expressly understood and agreed that the services to
be rendered by the Sub-Adviser to the Investment Adviser under the provisions of
this Agreement are not to be deemed to be exclusive, and the Sub-Adviser shall
be free to render similar or different services to others so long as its ability
to render the services provided for in this Agreement shall not be materially
impaired thereby.
10. When the Sub-Adviser considers that the purchase or sale
of an investment is in the best interest of the Fund, as well as other clients
of the Sub-Adviser, the Sub-Adviser, to the extent permitted by applicable laws
and regulations, may, but is not obligated to, aggregate the investments to be
bought or sold in order to obtain best execution under the circumstances. The
Sub-Adviser shall allocate the investments so bought or sold, and the expenses
incurred in the transactions, in the manner the Sub-Adviser considers to be most
equitable and consistent with its fiduciary obligations to the Fund and to such
other clients.
11. The Sub-Adviser is not obligated to buy or sell, or
recommend for purchase or sale, for the Fund any investment which it or its
officers, directors, affiliates or employees may buy or sell for the
Sub-Adviser, for such officer's, director's, affiliate's or employee's own
accounts or for the account of any of the Sub-Adviser's other clients, advisory
or otherwise.
12. The Sub-Adviser may give advice and take action with
respect to other clients or funds, or for its own account, that may differ from
the advice or the timing or nature of action taken with respect to the Fund.
13. The Investment Adviser agrees that it will furnish
currently to the Sub-Adviser all information reasonably necessary to permit the
Sub-Adviser to give the advice called for under this Agreement and such
information with reference to the Fund that is reasonably necessary to permit
the Sub-Adviser to carry out its responsibilities under this Agreement
(including, without limitation, the Fund's declaration of trust and bylaws, the
Investment Advisory Agreement, documents filed with the SEC relating to the
Fund, and resolutions, policies and procedures adopted by the Fund or the
Investment Adviser relating to the Fund, and any amendments of or supplements to
such documents). The Investment Adviser shall give the Sub-Adviser, prior to
use, copies of all reports to shareholders, sales literature, or other material
prepared for distribution to shareholders or to the public that refer to the
Sub-Adviser, and shall not use such material if the Sub-Adviser reasonably
objects in writing within five business days (or such other time period as may
be mutually agreed) after receipt. The Investment Adviser shall advise the
Sub-Adviser promptly of any transaction involving the portfolio securities of
the Fund or the Sub-Adviser's services under this Agreement of which the
Sub-Adviser would not otherwise have knowledge. The parties agree that they will
from time to time consult and make appropriate arrangements as to specific
information that is required under this paragraph and the frequency and manner
with which it shall be supplied.
Exhibit C-3
14. The Sub-Adviser shall not be liable to the Investment
Adviser or the Fund for any error of judgment or mistake of law or for any loss
suffered by the Investment Adviser or the Fund in connection with any matters to
which this Agreement relates except that nothing herein contained shall be
construed to protect the Sub-Adviser against any liability by reason of the
Sub-Adviser's willful misfeasance, bad faith, or gross negligence in the
performance of its duties or by reckless disregard of its obligations or duties
under this Agreement.
15. The Sub-Adviser may use the "1838" name when referring to
the names of the Investment Adviser, the Trust and the Fund in connection with
its activities relating to this Agreement. The Sub-Adviser acknowledges that, as
between it and the Investment Adviser, and subject to this right, the Investment
Adviser retains all rights to the "1838" name.
16. Information and recommendations supplied by the
Sub-Adviser in performing its obligations under this Agreement are confidential
and for use only by the Investment Adviser, or such persons as the Investment
Adviser designates, in connection with the Fund. Information supplied to the
Sub-Adviser in connection with performing its obligations under this Agreement
is confidential and for use only by the Sub-Adviser in connection with the Fund.
The Sub-Adviser shall maintain and enforce adequate security procedures with
respect to the documents and data relating to its responsibilities under this
Agreement.
17. In performing its duties under this Agreement, the
Sub-Adviser is an independent contractor and, except as otherwise provided in
this Agreement or otherwise authorized in writing, has no authority to act for
or represent, or otherwise be an agent of, the Investment Adviser.
18. No provision of this Agreement may be changed or waived
except by an instrument in writing signed by the party against whom enforcement
of the change or waiver is sought. No amendment of this Agreement shall be
effective until approved in a manner consistent with the 1940 Act and rules and
regulations thereunder and any applicable SEC exemptive order therefrom, SEC
no-action letter or SEC interpretive guidance.
19. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of the
Agreement shall not be affected thereby. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of Delaware, without
applying the principles of conflicts of law thereunder.
20. Any notice to be given hereunder may be given by personal
notification or by first class mail, postage prepaid, to the party specified at
the address stated below:
(a) To the Investment Adviser at:
1838 Investment Advisors, LP
2701 Renaissance Blvd.
Fourth Floor
King of Prussia, PA 19406
Attn: Timothy J. Carver
(b) To the Sub-Adviser at:
MBIA Capital Management Corp.
113 King Street
Armonk, NY 10504
Attn: Clifford D. Corso
(c) To the Trust at:
1838 Investment Advisors Funds
2701 Renaissance Blvd.
Fourth Floor
King of Prussia, PA 19406
Attn: W. Thacher Brown
Exhibit C-4
(d) With copies to:
Joseph V. Del Raso, Esquire
Pepper Hamilton LLP
3000 Two Logan Square
18th & Arch Streets
Philadelphia, PA 19103-2799
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be signed by their duly authorized officers as of the day and year
first above written.
1838 INVESTMENT ADVISORS, LP
By: Andover Management LLC
its General Partner
By: ____________________________________
Timothy J. Carver, Manager
MBIA CAPITAL MANAGEMENT CORP.
By: ____________________________________
Exhibit C-5
EXHIBIT D
PRINCIPAL SHAREHOLDERS
The following shareholders beneficially owned more than 5% of
either Fund's outstanding shares as of the Record Date:
NAME AND ADDRESS PERCENTAGE
---------------- ----------
1838 INTERNATIONAL EQUITY FUND:
Byrd & Co. 56.68%
c/o Wachovia Bank, N.A.
123 S. Broad Street
PA4903
Philadelphia, PA 19109
Charles Schwab & Co., Inc. 6.00%
Attn: Mutual Funds
101 Montgomery Street
San Francisco, CA 94104
1838 FIXED INCOME FUND:
Charles Schwab & Co., Inc. 16.57%
Attn: Mutual Funds
101 Montgomery Street
San Francisco, CA 94104
Wachovia Bank, N.A. 12.83%
FBO Binswanger Corp. PSP
1525 W WT Harris Blvd.,
NC 1151
PA4903
Charlotte, NC 28288
Saxon & Co. 11.01%
FBO Fairmount Park Art Assn.
P.O. Box 7780-1888
Philadelphia, PA 19182
SEI Private Trust Co. 8.05%
c/o Mellon Bank
FBO 108414JC009
1 Freedom Valley Drive
Oaks, PA 19456
Wachovia Bank, N.A. 7.06%
FBO AAAAI General Research
123 S. Broad Street
PA4903
Philadelphia, PA 19109
Wachovia Bank, N.A. 6.66%
FBO AAAA Education & Research
123 S. Broad Street
PA4903
Philadelphia, PA 19109
Wachovia Bank, N.A. 6.40%
FBO Upland Country Day School
123 S. Broad Street
PA4903
Philadelphia, PA 19109
Exhibit D-1
FORM OF PROXY
PROXY SOLICITED BY THE BOARD OF TRUSTEES
OF 1838 INVESTMENT ADVISORS FUNDS
P The undersigned hereby appoints W. Thacher Brown, as attorney, with full
powers of substitution and revocation, to attend the Special Meeting of
R Shareholders of 1838 Investment Advisors Funds on July 20, 2004 and any
adjournments thereof and thereat to vote all shares which the undersigned
O would be entitled to vote if personally present, upon the following matters,
as set forth in the Notice of Special Meeting of Shareholders, and upon such
X other business as may properly come before the meeting or any adjournment
thereof.
Y
The undersigned revokes any proxy or proxies heretofore given to vote such
shares at said meeting or any adjournment thereof.
ALL PROXIES WILL BE VOTED, AND WILL BE VOTED IN ACCORDANCE WITH THE
INSTRUCTIONS NOTED HEREON.
IF INSTRUCTIONS ARE NOT GIVEN, THIS PROXY WILL BE TREATED AS GRANTING
AUTHORITY TO VOTE IN FAVOR OF THE NEW ADVISORY AGREEMENTS, AND THE
SUB-ADVISORY AGREEMENT.
You are encouraged to specify your choices by marking ----------------
the appropriate boxes on the reverse side, but you need SEE REVERSE
not mark any box with regard to a particular proposal if SIDE
you wish to vote FOR such proposal. The Proxies cannot ----------------
vote your shares unless you sign and return this card.
6427
---------
- ---------------------------------------
PLEASE MARK YOUR VOTES AS IN
THIS EXAMPLE
- ---------------------------------------
1. Approval of the following agreements
FOR AGAINST ABSTAIN
(a) For 1838 INTERNATIONAL EQUITY FUND [ ] [ ] [ ]
Shareholders ONLY:
FOR AGAINST ABSTAIN
(b) For 1838 FIXED INCOME FUND Shareholders ONLY: [ ] [ ] [ ]
NEW INVESTMENT ADVISORY AGREEMENT
FOR AGAINST ABSTAIN
(c) For 1838 FIXED INCOME FUND Shareholders ONLY: [ ] [ ] [ ]
NEW INVESTMENT SUB-ADVISORY
AGREEMENT
Please sign as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such.
__________________________________________________________________
__________________________________________________________________
SIGNATURE(S) DATE