SUB-ITEM 77Q1(E)
ALLEGIANT FUNDS
ADVISORY AGREEMENT
AGREEMENT made as of ____________ between ALLEGIANT FUNDS, a
Massachusetts business trust, located in King of Prussia,
Pennsylvania (the "Trust") and ALLEGIANT ASSET MANAGEMENT
COMPANY, located in Cleveland, Ohio (the "Adviser").
WHEREAS, the Trust is registered as an open-end, management
investment company under the Investment Company Act of 1940, as
amended ("1940 Act"); and
WHEREAS, the Trust desires to retain the Adviser as
investment adviser to the Multi-Factor Small Cap Core Fund,
Multi-Factor Small Cap Growth Fund and Multi-Factor Small Cap
Value Fund (the "Funds");
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, it is agreed among the parties hereto
as follows:
1. Delivery of Documents. The Adviser acknowledges that
it has received copies of each of the following:
(a) The Trust's Declaration of Trust, as filed with
the State Secretary of the Commonwealth of
Massachusetts on January 29, 1986 and all
amendments thereto (such Declaration of Trust, as
presently in effect and as it shall from time to
time be amended, is herein called the "Declaration
of Trust");
(b) The Trust's Code of Regulations, and amendments
thereto (such Code of Regulations, as presently in
effect and as it shall from time to time be
amended, is herein called the "Code of
Regulations");
(c) Resolutions of the Trust's Board of Trustees
authorizing the appointment of the Adviser and
approving this Agreement;
(d) The Trust's Notification of Registration on Form
N-8A under the 1940 Act as filed with the
Securities and Exchange Commission ("SEC") on
September 26, 1985 and all amendments thereto;
(e) The Trust's Registration Statement on Form N-1A
under the Securities Act of 1933, as amended
("1933 Act") (File No. 33-488) and under the 1940
Act as filed with the SEC on September 26, 1985
and all amendments thereto; and
(f) The Trust's most recent prospectuses and
statements of additional information with respect
to the Funds (such prospectuses and statements of
additional information, as presently in effect and
all amendments and supplements thereto are herein
called individually, a "Prospectus," and
collectively, the "Prospectuses").
The Trust will furnish the Adviser from time to time
with execution copies of all amendments of or supplements to
the foregoing.
2. Services. The Trust hereby appoints the Adviser to act
as investment adviser to the Funds for the period and on the
terms set forth in this Agreement. Intending to be legally
bound, the Adviser accepts such appointment and agrees to
furnish the services required herein to the Funds for the
compensation hereinafter provided.
Subject to the supervision of the Trust's Board of
Trustees, the Adviser will provide a continuous investment
program for the Funds, including investment research and
management with respect to all securities and investments and
cash equivalents in the Funds. The Adviser will determine
from time to time what securities and other investments will
be purchased, retained or sold by the Funds. The Adviser will
provide the services under this Agreement in accordance with
the Funds' investment objectives, policies, and restrictions
as stated in the Prospectus and resolutions of the Trust's
Board of Trustees applicable to the Funds.
3. Subcontractors. It is understood that the Adviser may
from time to time employ or associate with itself such
person or persons as the Adviser may believe to be
particularly fitted to assist in the performance of this
Agreement; provided, however, that the compensation of such
person or persons shall be paid by the Adviser and that the
Adviser shall be as fully responsible to the Trust for the
acts and omissions of any subcontractor as it is for its own
acts and omissions. Without limiting the generality of the
foregoing, it is agreed that investment advisory services to
the Funds may be provided by a sub-adviser agreeable to the
Adviser and approved in accordance with the provisions of
the 1940 Act. Any such sub-advisers are hereinafter
referred to as the "Sub-Advisers." In the event that any
Sub-Adviser appointed hereunder is terminated, the Adviser
may provide investment advisory services pursuant to this
Agreement to the Funds involved without further shareholder
approval. Notwithstanding the employment of any Sub-
Adviser, the Adviser shall in all events: (a) establish and
monitor general investment criteria and policies for the
Funds; (b) review investments in the Funds on a periodic
basis for compliance with their investment objectives,
policies and restrictions as stated in the Prospectus; (c)
review periodically any Sub-Adviser's policies with respect
to the placement of orders for the purchase and sale of
portfolio securities; (d) review, monitor, analyze and
report to the Board of Trustees on the performance of any
Sub-Adviser; (e) furnish to the Board of Trustees or any
Sub-Adviser, reports, statistics and economic information as
may be reasonably requested; and (f) recommend, either in
its sole discretion or in conjunction with any Sub-Adviser,
potential changes in investment policy.
4. Covenants by Adviser. The Adviser agrees with respect
to the services provided to the Funds that it:
(a) will comply with all applicable Rules and
Regulations of the SEC and will in addition
conduct its activities under this Agreement in
accordance with other applicable law;
(b) will use the same skill and care in providing such
services as it uses in providing services to
similar fiduciary accounts for which it has
investment responsibilities;
(c) will not make loans to any person to purchase or
carry shares in the Funds, or make interest-
bearing loans to the Trust or the Funds;
(d) will maintain a policy and practice of conducting
its investment management activities independently
of the commercial departments of all banking
affiliates. In making investment recommendations
for the Funds, personnel will not inquire or take
into consideration whether the issuers (or related
supporting institutions) of securities proposed
for purchase or sale for the Funds' accounts are
customers of the Commercial Department. In
dealing with commercial customers, the Commercial
Department will not inquire or take into
consideration whether securities of those
customers are held by the Funds;
(e) will place orders pursuant to its investment
determinations for the Funds either directly with
the issuer or with any broker or dealer. In
selecting brokers or dealers for executing
portfolio transactions, the Adviser will use its
best efforts to seek on behalf of the Trust and
the Funds the best overall terms available. In
assessing the best overall terms available for any
transaction the Adviser shall consider all factors
it deems relevant, including the breadth of the
market in the security, the price of the security,
the financial condition and execution capability
of the broker or dealer, and the reasonableness of
the commission, if any, both for the specific
transaction and on a continuing basis. In
evaluating the best overall terms available, and
in selecting the broker or dealer to execute a
particular transaction, the Adviser may also
consider the brokerage and research services (as
those terms are defined in Section 28(e) of the
Securities Exchange Act of 1934, as amended)
provided to the Funds and/or other accounts over
which the Adviser or any affiliate of the Adviser
exercises investment discretion. The Adviser is
authorized, subject to the prior approval of the
Board, to negotiate and pay to a broker or dealer
who provides such brokerage and research services
a commission for executing a portfolio transaction
for any of the Funds which is in excess of the
amount of commission another broker or dealer
would have charged for effecting that transaction
if, but only if, the Adviser determines in good
faith that such commission was reasonable in
relation to the value of the brokerage and
research services provided by such broker or
dealer viewed in terms of that particular
transaction or in terms of the overall
responsibilities of the Adviser with respect to
the accounts as to which it exercises investment
discretion. In no instance will any of the Funds'
securities be purchased from or sold to the
Adviser, any Sub-Adviser, Professional Funds
Distributors, LLC ("PFD") (or any other principal
underwriter to the Trust) or an affiliated person
of either the Trust, the Adviser, Sub-Adviser, or
PFD (or such other principal underwriter) unless
permitted by an order of the SEC or applicable
rules. In executing portfolio transactions for
the Funds, the Adviser may, but shall not be
obligated to, to the extent permitted by
applicable laws and regulations, aggregate the
securities to be sold or purchased with those of
other investment portfolios of the Trust and its
other clients where such aggregation is not
inconsistent with the policies set forth in the
Trust's registration statement. In such event,
the Adviser will allocate the securities so
purchased or sold, and the expenses incurred in
the transaction, in the manner it considers to be
the most equitable and consistent with its
fiduciary obligations to the Funds and such other
clients;
(f) will maintain all books and records with respect
to the securities transactions for the Funds and
furnish the Trust's Board of Trustees such
periodic and special reports as the Board may
request; and
(g) will treat confidentially and as proprietary
information of the Trust all records and other
information relative to the Funds and prior,
present or potential shareholders, and will not
use such records and information for any purpose
other than performance of its responsibilities and
duties hereunder (except after prior notification
to and approval in writing by the Trust, which
approval shall not be unreasonably withheld and
may not be withheld and will be deemed granted
where the Adviser may be exposed to civil or
criminal contempt proceedings for failure to
comply, when requested to divulge such information
by duly constituted authorities, or when so
requested by the Trust).
5. Services Not Exclusive. The services furnished by the
Adviser hereunder are deemed not to be exclusive, and the
Adviser shall be free to furnish similar services to others
so long as its services under this Agreement are not
impaired thereby.
6. Books and Records. In compliance with the requirements
of Rule 31a-3 under the 1940 Act, the Adviser hereby agrees
that all records which it maintains for the Trust are the
property of the Trust and further agrees to surrender
promptly to the Trust any of such records upon the Trust's
request. The Adviser further agrees to preserve for the
periods prescribed by Rule 31a-2 under the 1940 Act the
records required to be maintained by Rule 31a-1 under the
1940 Act.
7. Expenses. During the term of this Agreement, the
Adviser will pay all expenses incurred by it in connection
with its activities under this Agreement other than the cost
of securities (including brokerage commissions, if any)
purchased for the Funds.
8. Compensation. For the services provided to the Funds
and the expenses assumed pursuant to this Agreement, the
Trust will pay the Adviser from the assets belonging to each
Fund and the Adviser will accept as full compensation
therefor fees, computed daily and paid monthly, at the
annual rate of 1.00% of the average daily net assets of each
Fund;
9. Limitation of Liability. The Adviser shall not be
liable for any error of judgment or mistake of law or for
any loss suffered by the Trust in connection with the
performance of this Agreement, except a loss resulting from
a breach of fiduciary duty with respect to the receipt of
compensation for services or a loss resulting from willful
misfeasance, bad faith or gross negligence on the part of
the Adviser in the performance of its duties or from
reckless disregard by it of its obligations and duties under
this Agreement.
10. Duration and Termination. This Agreement will become
effective with respect to a Fund upon approval of this
Agreement by vote of a majority of the outstanding voting
securities of such Fund, and, unless sooner terminated as
provided herein, shall continue in effect until September
30, 2006. Thereafter, if not terminated, this Agreement
shall continue in effect with respect to a Fund for
successive twelve month periods ending on September 30,
provided such continuance is specifically approved at least
annually (a) by the vote of a majority of those members of
the Trust's Board of Trustees who are not interested persons
of any party to this Agreement, cast in person at a meeting
called for the purpose of voting on such approval, and (b)
by the Trust's Board of Trustees or by vote of a majority of
the outstanding voting securities of such Fund.
Notwithstanding the foregoing, this Agreement may be
terminated at any time with respect to a Fund, without the
payment of any penalty, by the Trust (by the Trust's Board
of Trustees or by vote of a majority of the outstanding
voting securities of such Fund), or by the Adviser on 60
days' written notice. This Agreement will immediately
terminate in the event of its assignment. (As used in this
Agreement, the terms "majority of the outstanding voting
securities," "interested persons" and "assignment" shall
have the same meaning of such terms in the 1940 Act.)
11. Amendment of this Agreement. No provision of this
Agreement may be changed, waived, discharged or terminated
orally, but only by an instrument in writing signed by the
party against which enforcement of the change, waiver,
discharge or termination is sought. No amendment of this
Agreement shall be effective with respect to a Fund until
approved by vote of a majority of the outstanding voting
securities of such Fund.
12. Miscellaneous. The captions in this Agreement are
included for convenience of reference only and in no way
define or delimit any of the provisions hereof or otherwise
affect their construction or effect. If any provision of
this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby. This Agreement
shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and shall be
governed by Delaware law.
13. Names. The names "ALLEGIANT FUNDS" and "Trustees of
ALLEGIANT FUNDS" refer respectively to the Trust created and
the Trustees, as trustees but not individually or
personally, acting from time to time under a Declaration of
Trust dated January 28, 1986 which is hereby referred to and
a copy of which is on file at the office of the State
Secretary of the Commonwealth of Massachusetts and the
principal office of the Trust. The obligations of
"ALLEGIANT FUNDS" entered into in the name or on behalf
thereof by any of the Trustees, representatives or agents
are made not individually, but in such capacities, and are
not binding upon any of the Trustees, shareholders, or
representatives of the Trust personally, but bind only the
Trust property, and all persons dealing with any class of
shares of the Trust must look solely to the Trust property
belonging to such class for the enforcement of any claims
against the Trust.
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed by their officers designated below as
of the day and year first above written.
ALLEGIANT FUNDS
By: ______________________
Title:
ALLEGIANT ASSET
MANAGEMENT COMPANY
By: _______________________
Title:
