As filed with the Securities and Exchange Commission on December 16, 2005
Securities Act No. 33-44964
Investment Company Act File No. 811-6526
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
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Post-Effective Amendment No. 118 [X]
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and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 120 [X]
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THE COVENTRY GROUP
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(Exact Name of Registrant as Specified in Charter)
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R. Jeffrey Young
BISYS Fund Services
3435 Stelzer Road
Columbus, Ohio 43219
It is proposed that this filing will become effective immediately upon filing
pursuant to paragraph (b) of Rule 485.
[BOSTON TRUST INVESTMENT MANAGEMENT, INC. LOGO]
PROSPECTUS AND PRIVACY POLICY
BOSTON TRUST SMALL CAP FUND
December 16, 2005
BOSTON TRUST SMALL CAP FUND
Notice of Privacy Policy & Practices
Boston Trust Small Cap Fund (the "Fund") recognizes and respects the privacy expectations of our customers(1). We are providing this notice to you so that you will know what kinds of information we collect about our customers and the circumstances in which that information may be disclosed to third parties who are not affiliated with the Fund.
COLLECTION OF CUSTOMER INFORMATION
We collect nonpublic personal information about our customers from the following sources:
- Account Applications and other forms, which may include a customer's name, address, social security number, and information about a customer's investment goals and risk tolerance;
- Account History, including information about the transactions and balances in a customer's accounts; and
- Correspondence, written, telephonic or electronic between a customer and the Fund or service providers to the Fund.
DISCLOSURE OF CUSTOMER INFORMATION
We may disclose all of the information described above to certain third parties who are not affiliated with the Fund under one or more of these circumstances:
- As Authorized -- if you request or authorize the disclosure of the information.
- As Permitted by Law -- for example, sharing information with companies who maintain or service customer accounts for the Fund is permitted and is essential for us to provide shareholders with necessary or useful services with respect to their accounts.
SECURITY OF CUSTOMER INFORMATION
We require service providers to the Fund:
- to maintain policies and procedures designed to assure only appropriate access to, and use of information about customers of the Fund; and
- to maintain physical, electronic and procedural safeguards that comply with federal standards to guard non public personal information of customers of the Fund.
We will adhere to the policies and practices described in this notice regardless of whether you are a current or former shareholder of the Fund.
(1) For purposes of this notice, the terms "customer" or "customers" includes both shareholders of the Fund and individuals who provide nonpublic personal information to the Fund, but do not invest in Fund shares.
This is not part of the Prospectus.
[BOSTON TRUST INVESTMENT MANAGEMENT, INC. LOGO]
BOSTON TRUST SMALL CAP FUND
Prospectus dated December 16, 2005
Neither the Securities and Exchange Commission nor any other regulatory body has approved the securities being offered by this prospectus or determined whether this prospectus is accurate and complete. It is unlawful for anyone to make any representation to the contrary.
TABLE OF CONTENTS
RISK/RETURN SUMMARY AND FUND EXPENSES
[SCALES]
Carefully review this 3 Boston Trust Small Cap Fund
important section for a
summary of the Fund's
investments, risks and fees.
INVESTMENT OBJECTIVE, STRATEGIES AND RISKS
[MAGNIFYING
GLASS]
This section contains 6 Boston Trust Small Cap Fund
details on the Fund's 9 Investment Risks
investment strategies and
risks.
SHAREHOLDER INFORMATION
[BOOK]
Consult this section to 10 Pricing of Fund Shares
obtain details on how shares 10 Purchasing and Adding to Your Shares
are valued, how to purchase, 13 Selling Your Shares
sell and exchange shares, 16 Dividends, Distributions and Taxes
related charges and payments
of dividends.
FUND MANAGEMENT
[LINE GRAPH]
Review this section for 17 The Investment Adviser
details on the people and 17 Portfolio Manager
organizations who oversee
the Fund and its
investments.
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RISK/RETURN SUMMARY
[SCALES ICON]
BOSTON TRUST SMALL CAP FUND
INVESTMENT OBJECTIVE The Fund seeks long-term capital growth through an
actively managed portfolio of stocks of small
capitalization companies.
PRINCIPAL INVESTMENT STRATEGIES The Adviser pursues the Fund's investment objective by
investing primarily (at least 80% of its net assets) in a
diversified portfolio of equity securities of small cap
companies. For these purposes, the Adviser defines small
cap issuers as those with market capitalizations within
the range encompassed by the Russell 2000 Index at the
time of purchase. As of October 31, 2005, the market
capitalization range of the Russell 2000 Index was
between $29 million and $3.8 billion.
PRINCIPAL INVESTMENT RISKS The Fund is subject to stock market risk. Therefore, the
value of the Fund's investments will fluctuate with
market conditions and the value of your investment in the
Fund will also vary. You could lose money on your
investment in the Fund, or the Fund could underperform
other investments. The Fund also invests primarily in the
stocks of small capitalization companies and is therefore
subject to the risks associated with small cap stocks
which may be more volatile than those of larger, more
established issuers.
WHO MAY WANT TO INVEST? Consider investing in the Fund if you are:
- investing for a period of time in excess of 3 to 5
years
- able to bear (emotionally and/or financially) the
risk of market value fluctuations in the short or
long-term
- looking to add a growth component to your portfolio
This Fund will not be appropriate for someone:
- investing for a period of time less than 3 to 5 years
- not comfortable with market fluctuations
- looking for current income
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RISK/RETURN SUMMARY
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BOSTON TRUST SMALL CAP FUND
The chart and table on this page show how the Fund has performed and how its performance has varied from year to year. The bar chart show's changes in the Fund's yearly performance for each of the past ten calendar years to demonstrate that the Fund's value varied at differing times. The table below it compares the Fund's performance over time (both before and after taxes) to that of its benchmark index, the Russell 2000 Index(3). The quoted performance for the Fund reflects the performance of a collective investment fund (the "Collective Fund") that was previously managed with full investment authority by the Fund's Adviser prior to the establishment of the Fund on December 16, 2005. The performance of the Collective Fund has been restated to reflect the net expenses (after applicable fee waivers and expense reimbursements) of the Fund for its initial year of investment operations. The assets of the Collective Fund were converted into assets of the Fund upon the establishment of the Fund.(4)
PERFORMANCE BAR CHART AND TABLE(1)
YEAR-BY-YEAR TOTAL RETURNS AS OF 12/31/04
[BAR GRAPH IN %]
1995 39.44 1996 7.28 1997 16.22 1998 2.07 1999 2.73 2000 35.44 2001 2.29 2002 -12.77 2003 39.15 2004 20.72 |
Past performance does not indicate how the Fund will perform in the future.
AVERAGE ANNUAL TOTAL RETURNS FOR THE COLLECTIVE FUND
(for the periods ending December 31, 2004(5))
Best quarter: Q2 2003 17.38%
Worst quarter: Q3 1998 -17.72%
YEAR 5 YEARS 10 YEARS
ENDED ENDED ENDED
12/31/04 12/31/04 12/31/04
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Before Taxes 20.72% 15.21% 13.98%
After Taxes on Distributions(2) n/a n/a n/a
After Taxes on Distributions and Sale of Fund Shares(2) n/a n/a n/a
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RUSSELL 2000(3) 18.33% 6.61% 11.53%
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The table assumes that shareholders redeem all their fund shares at the end of the period indicated.
(1) Both the chart and table assume reinvestment of dividends and distributions.
(2) After-tax returns are calculated using the historical highest individual federal marginal income tax rates, and do not reflect the impact of state and local taxes. Actual after-tax returns depend on the investor's tax situation and may differ from those shown. The after-tax returns shown are not relevant to investors who hold their Fund shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts. After-tax returns for the periods prior to the time the Fund became a registered investment company are not required to be presented.
(3) A widely recognized, unmanaged index generally representative of the performance of domestically traded common stocks of small to mid-sized companies. The index returns do not reflect the deduction of fees and expenses associated with a mutual fund or the impact of taxes.
(4) The Fund's investment objective and policies are substantially similar to those of the Collective Fund. The Collective Fund was not registered under the Investment Company Act of 1940 (the "1940 Act") and therefore was not subject to certain investment restrictions imposed by the 1940 Act. If the Collective Fund had been registered under the 1940 Act, its performance might have been adversely affected.
(5) For the period January 1, 2005 through September 30, 2005, the aggregate (non-annualized) total return for the Collective Fund was 7.84%.
FUND EXPENSES
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BOSTON TRUST SMALL CAP FUND
ANNUAL FEES AND EXPENSES
This table describes the fees and expenses that you may
pay if you buy and hold shares of the Fund.
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT) Maximum Sales Charge (load) on Purchases n/a Maximum Deferred Sales Charge (load) n/a ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS) Management Fees 0.75% Distribution and Service (12b-1) Fees n/a Other Expenses 0.92%* Total Fund Operating Expenses 1.67%* Fee waiver and/or Expense Reimbursement 0.42% Net Expenses 1.25%* |
* The Investment Adviser has entered into an expense limitation agreement with the Fund to limit the Total Fund Operating Expenses of the Fund to 1.25% of its average daily net assets for its current fiscal year. Without this expense limitation agreement, the Total Fund Operating Expenses are projected to be 1.67%. The Fund has agreed to repay the Adviser for amounts waived or reimbursed by the Adviser pursuant to the expense limitation agreement provided that such repayment does not cause the Fund's Total Fund Operating Expenses to exceed 1.25% of its average daily net assets and the repayment is made within three years after the year in which the Adviser incurred the expense. "Other Expenses" have been estimated for the Fund's initial fiscal year.
EXPENSE EXAMPLE
Use this table to compare fees and expenses with those of other funds. The table illustrates the amount of fees and expenses you would pay, assuming the following:
- $10,000 investment
- 5% annual return
- redemption at the end of each period
- no changes in the Fund's operating expenses
Because this example is hypothetical and for comparison purposes only, your actual costs will be different.
BOSTON TRUST SMALL CAP 1 3 5 10
FUND YEAR YEARS YEARS YEARS
$127 $486 $868 $1,941
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INVESTMENT OBJECTIVE, STRATEGIES AND RISKS
[MAGNIFYING GLASS ICON]
BOSTON TRUST SMALL CAP FUND
INVESTMENT OBJECTIVE
The investment objective of the Fund is to seek long-term capital growth through an actively managed portfolio of stocks of small capitalization companies.
POLICIES AND STRATEGIES
The Adviser pursues the Fund's investment objective by investing primarily
(at least 80% of its net assets) in a diversified portfolio of equity
securities of small cap companies. For these purposes, the Adviser defines
small cap issuers as those with market capitalizations within the range
encompassed by the Russell 2000 Index at the time of purchase. As of October
31, 2005, the market capitalization range of the Russell 2000 Index was
between $29 million and $3.8 billion.
Consistent with the Fund's investment objective, the Fund:
- invests substantially all, but in no event less than 80%, of its net
assets in U.S. domestic equity securities of small cap companies
- may purchase both common stock and preferred stock
- may, under certain circumstances, purchase bonds primarily of investment grade
- may invest in the securities of foreign issuers and may acquire sponsored
and unsponsored American Depositary Receipts and European Depositary
Receipts
- may engage in repurchase transactions pursuant to which the Fund purchases
a security and simultaneously commits to resell that security to the
seller (either a bank or a securities dealer) at an agreed upon price on
an agreed upon date (usually within seven days of purchase)
- may invest in other investment companies
INVESTMENT PROCESS
The Fund's investment process focuses on security selection and portfolio construction. The Adviser employs a fundamental stock selection process within the framework of a thematic approach. The Adviser's goal is to construct a diversified portfolio of innovative, higher quality small cap companies.
SECURITY SELECTION
In general, the Adviser begins the security selection process by identifying investment themes. The Adviser selects themes for investment in order to capitalize on secular market trends with long-term investment potential, such as demographics, consumer lifestyle, an increasingly technical workforce, and legal and regulatory issues. These themes often represent products or services for which consumers are willing to pay a premium. The Adviser implements a thematic approach to identify companies that have innovative products, services, or management practices that may provide long-term investment potential and address societal challenges. Current themes include, but are not limited to: Education, Environmental Efficiency, Healthy Living, Medical Care, Underserved Markets and Workplace Leaders.
INVESTMENT OBJECTIVE, STRATEGIES AND RISKS
[MAGNIFYING GLASS ICON]
BOSTON TRUST SMALL CAP FUND
- EDUCATION: Education spending accounts for 7% of U.S. GDP. Demographic trends, government funding and an increasingly technical workforce may boost demand for education-focused products and services.
- ENVIRONMENTAL EFFICIENCY: The world faces a constrained supply of key resources such as energy, clean water, and land. Greater demand for clean air and water has increased resource-related regulatory requirements. Products or services that maximize the efficient use of resources and foster regulatory compliance may provide significant cost savings.
- HEALTHY LIVING: Demographics, increased attention to diet, and regulations have all sustained the growth in demand for products or services that increase well-being.
- MEDICAL CARE: Health care spending accounts for approximately 15% of U.S. GDP, a level expected to rise due to demographic trends. Health care products or services that lower the cost, speed the delivery, reduce the invasiveness or pain of medical care, or offer new alternatives to medical conditions may experience greater market acceptance and success.
- UNDERSERVED MARKETS: Smaller companies may be well-positioned to offer
products and services that address the unique demands of specific markets,
communities or geographic areas. Demographic or regulatory trends may
create these niche opportunities.
- WORKPLACE LEADERS: Companies with superior workplace practices such as
comprehensive benefits and innovative work-lifestyle programs may improve
company performance by boosting employee productivity and lowering
turnover costs.
The Adviser looks for companies that can capitalize on at least one of the
investment themes listed above. The Adviser then evaluates each company's
business characteristics. In determining the investment attractiveness of
each company's stock, the Adviser looks for growing, profitable and
reasonably valued companies with strong balance sheets. The Adviser may
invest in companies that do not exhibit strength in these business
characteristics if the Adviser expects significant improvement.
The Adviser monitors each Fund holding, evaluating new information relative
to the original investment thesis. The Fund may sell a stock when
circumstances prompting the initial investment have changed significantly
relative to the investment objective or when the Adviser determines that
there are more attractive alternatives.
PORTFOLIO CONSTRUCTION
The Fund buys and sells securities subject to the following portfolio
construction guidelines:
- Under normal market conditions, the Fund invests at least 80% of its net
assets (plus any borrowings for investment purposes) in stocks of
companies that have market capitalizations similar in size to those
companies in the Russell 2000 Index. The Fund seeks to maintain a weighted
average market capitalization that falls within the range of the Russell
2000 Index.
- In the aggregate, the Fund expects to invest in a set of companies that has financial characteristics superior to those of the small cap market. Such characteristics generally include higher company profitability, greater sales and earnings growth, reasonable valuation, and lower risk.
INVESTMENT OBJECTIVE, STRATEGIES AND RISKS
[MAGNIFYING GLASS ICON]
BOSTON TRUST SMALL CAP FUND
- The Fund is broadly diversified across economic sectors. The Fund generally maintains economic sector weights comparable to those of the small cap market.
- The minimum investment in any single investment theme is 5% of the Fund's net assets at market value at the time of purchase.
- The weighting of any single investment generally does not exceed 3% of the Fund's net assets at market value at the time of purchase.
- The Fund attempts to maintain a cash and/or money market instrument position of no more than 5% of its net assets, although cash flows may cause the Fund's cash position to be higher or lower.
PORTFOLIO TURNOVER. The annual rate of portfolio turnover is not expected to exceed 100%. In general, the Adviser will not consider the rate of portfolio turnover to be a limiting factor in determining when or whether to purchase or sell securities in order to achieve the Fund's objective.
In the event that the Adviser determines that market conditions are not suitable for the Fund's typical investments, the Adviser may, for temporary defensive purposes during such unusual market conditions, invest all or any portion of the Fund's assets in money market instruments.
INVESTMENT OBJECTIVE, STRATEGIES AND RISKS
[MAGNIFYING GLASS ICON]
INVESTMENT RISKS
Any investment in the Fund is subject to investment risks, including the possible loss of the principal amount invested.
Generally, the Fund will be subject to the following risks:
- MARKET RISK: Market risk refers to the risk related to investments in securities in general and the daily fluctuations in the securities markets. The Fund's performance per share will change daily based on many factors, including fluctuation in interest rates, the quality of the instruments in the Fund's investment portfolio, national and international economic conditions and general market conditions.
- EQUITY RISK: The value of the equity securities held by the Fund, and thus the value of the Fund's shares, can fluctuate -- at times dramatically. The prices of equity securities are affected by various factors, including market conditions, political and other events, and developments affecting the particular issuer or its industry or geographic sector.
- SMALL CAP RISK: Small capitalization companies may not have the size, resources or other assets of large capitalization companies. These small capitalization companies may be subject to greater market risks and fluctuations in value than large capitalization companies and may not correspond to changes in the stock market in general.
Investments in the Fund are not deposits of Boston Trust Investment Management, Inc. or Boston Trust & Investment Management Company and are not insured or guaranteed by the Federal Deposit Insurance Corporation (the "FDIC") or any other government agency.
SHAREHOLDER INFORMATION
[BOOK ICON]
PRICING OF FUND SHARES
The NAV is calculated by adding the total value of the Fund's investments and other assets, subtracting its liabilities and then dividing that figure by the number of outstanding shares of the Fund:
Your order for purchase or sale of shares is priced at the next NAV calculated after your order is accepted by the Fund. This is known as the offering price.
The Fund's securities are valued generally at current market prices. If market quotations are not available, prices will be based on fair value as determined by the Fund's Trustees.
PURCHASING AND ADDING TO YOUR SHARES
You may purchase the Fund through the Distributor or through investment representatives, who may charge additional fees and may require higher minimum investments or impose other limitations on buying and selling shares. If you purchase shares through an investment representative, that party is responsible for transmitting orders by close of business and may have an earlier cut-off time for purchase and sale requests. Consult your investment representative for specific information.
The minimum initial investment in the Fund is $100,000. Subsequent investments must be at least $1,000. BISYS Fund Services Limited Partnership (the "Distributor") acts as Distributor of the Fund's shares. Shares of the Fund are offered continuously for purchase at the NAV per share of the Fund next determined after a purchase order is received. Investors may purchase shares of the Fund by check or wire, as described below.
All purchases must be in U.S. dollars. A fee will be charged for any checks that do not clear. Third-party checks, starter checks, traveler's checks, money orders, cash and credit card convenience checks are not accepted.
The Fund or the Adviser may waive its minimum purchase requirement, or the Distributor may reject a purchase order, if it is deemed to be in the best interest of the Fund and/or its shareholders.
FREQUENT TRADING POLICY
Frequent trading into and out of the Fund can have adverse consequences for the Fund and for long-term shareholders in the Fund. The Fund believes that frequent or excessive short-term trading activity by shareholders of the Fund may be detrimental to long-term shareholders because those activities may,
SHAREHOLDER INFORMATION
[BOOK ICON]
PURCHASING AND ADDING TO YOUR SHARES
CONTINUED
among other things: (a) dilute the value of shares held by long-term shareholders; (b) cause the Fund to maintain larger cash positions than would otherwise be necessary; (c) increase brokerage commissions and related costs and expenses, and (d) incur additional tax liability. The Fund therefore discourages frequent purchase and redemptions by shareholders and it does not make any effort to accommodate this practice. To protect against such activity, the Board of Trustees has adopted policies and procedures that are intended to permit the Fund to curtail frequent or excessive short-term trading by shareholders. At the present time the Fund does not impose limits on the frequency of purchases and redemptions, nor do they limit the number of exchanges into the Fund. The Fund reserves the right, however, to impose certain limitations at any time with respect to trading in shares of the Fund, including suspending or terminating trading privileges in Fund shares, for any investor whom the Fund believes has a history of abusive trading or whose trading, in the judgment of the Fund, has been or may be disruptive to the Fund. The Fund's ability to detect and prevent any abusive or excessive short-term trading may be limited to the extent such trading involves Fund shares held through omnibus accounts of a financial intermediary.
SHAREHOLDER SERVICES AGREEMENTS
The Fund is entitled to enter into Shareholder Services Agreements pursuant to which the Fund is authorized to make payments to certain entities which may include investment advisers, banks, trust companies, retirement plan administrators and other types of service providers which provide administrative services with respect to shares of the Fund attributable to or held in the name of the service provider for its clients or other parties with whom they have a servicing relationship. Under the terms of each Shareholder Services Agreement, the Fund is authorized to pay a service provider (which may include affiliates of the Fund) a shareholder services fee which is based on the average daily net asset value of the shares of the Fund attributable to or held in the name of the service provider for providing certain administrative services to Fund shareholders with whom the service provider has a servicing relationship.
INSTRUCTIONS FOR OPENING OR ADDING TO AN ACCOUNT
[PHONE ICON]
BY REGULAR MAIL OR OVERNIGHT SERVICE
INITIAL INVESTMENT:
1. Carefully read and complete the application. Establishing your account privileges now saves you the inconvenience of having to add them later.
2. Make check or certified check payable "Boston Trust Small Cap Fund".
3. Mail to: Boston Trust Mutual Funds, P.O. Box 183096, Columbus, OH 43218-3096.
SUBSEQUENT INVESTMENTS:
1. Subsequent investments should be made by check or certified check payable to the Fund and mailed to the address indicated above. Your account number should be written on the check.
SHAREHOLDER INFORMATION
[BOOK ICON]
[PHONE ICON]
BY WIRE TRANSFER
Note: Your bank may charge a wire transfer fee.
For initial and subsequent investments: Before wiring funds, you should call
1-800-439-9548 to advise that an investment will be made by wire.
For initial and subsequent investments: Instruct your bank to wire transfer your investment to:
SHAREHOLDER INFORMATION
[BOOK ICON]
SELLING YOUR SHARES
INSTRUCTIONS FOR SELLING SHARES
You may sell your shares
at any time. Your sales
price will be the next NAV
after your sell order is
received by the Fund, its
transfer agent, or your
investment representative.
Normally you will receive
your proceeds within a
week after your request is
received. See section on
"General Policies on
Selling Shares" below.
[PHONE ICON]
BY TELEPHONE
(unless you have declined telephone sales privileges)
1. Call 1-800-439-9548 with instructions as to how you wish to receive your funds (mail, wire, electronic transfer).
[PHONE ICON]
BY MAIL
2(a). Call 1-800-439-9548 to request redemption forms or write a letter of
instruction indicating:
- your Fund and account number
- amount you wish to redeem
- address to which your check should be sent
- account owner signature
2(b). Mail to: Boston Trust Mutual Funds, P.O. Box 183096, Columbus, OH 43218-3096.
[PHONE ICON]
BY OVERNIGHT SERVICE
SEE INSTRUCTION 2 ABOVE.
Send to: Boston Trust Mutual Funds, BISYS Fund Services, 3435 Stelzer Road, Suite 1000, Columbus, OH 43219.
[PHONE ICON]
BY WIRE TRANSFER
You must indicate this option on your application.
The Fund may charge a wire transfer fee.
Note: Your financial institution may also charge a separate fee.
Call 1-800-439-9548 to request a wire transfer.
If you call by 4 p.m. Eastern Standard Time, your payment normally will be wired to your bank on the next business day.
WITHDRAWING MONEY FROM YOUR FUND INVESTMENT
A request for a withdrawal in cash from the
Fund constitutes a redemption or sale of
shares for a mutual fund shareholder.
SHAREHOLDER INFORMATION
[BOOK ICON]
GENERAL POLICIES ON SELLING SHARES
REDEMPTIONS IN WRITING REQUIRED
You must request redemption in writing in the following situations:
1. Redemptions from Individual Retirement Accounts ("IRAs").
2. Circumstances under which redemption requests require a signature
guarantee include, but may not be limited to, each of the following.
- Your account address has changed within the last 10 business days.
- The check is not being mailed to the address on your account.
- The check is not being made payable to the owner(s) of the account.
- The redemption proceeds are being transferred to another Fund account
with a different registration.
- The redemption proceeds are being wired to bank instructions not on your
account.
Signature guarantees must be obtained from members of the STAMP (Securities Transfer Agents Medallion Program), MSP (New York Stock Exchange Medallion Program) or SEMP (Stock Exchanges Medallion Program). Members are subject to dollar limitations which must be considered when requesting their guarantee. The Transfer Agent may reject any signature guarantee if it believes the transaction would otherwise be improper.
VERIFYING TELEPHONE REDEMPTIONS
The Fund makes every effort to ensure that telephone redemptions are made only by authorized shareholders. For your protection you will be asked for information to verify your identity. Given these precautions, unless you have specifically indicated on your application that you do not want the telephone redemption feature, you may be responsible for any fraudulent telephone orders.
REDEMPTIONS WITHIN 15 DAYS OF SHARES PURCHASED BY CHECK
When you have made your investment by check, you cannot redeem any portion of it until the Transfer Agent is satisfied that the check has cleared (which may require up to 15 business days). You can avoid this delay by purchasing shares with a certified check.
REFUSAL OF REDEMPTION REQUEST
Payment for shares may be delayed under extraordinary circumstances or as permitted by the Securities and Exchange Commission in order to protect remaining shareholders.
REDEMPTION IN KIND
The Fund reserves the right to make payment in securities rather than cash, known as "redemption in kind." This could occur under extraordinary circumstances, such as a very large redemption that could affect Fund operations (a redemption of more than 1% of the Fund's net assets). If the Fund deems it advisable for the benefit of all shareholders, redemption in kind will consist of securities equal in market value to your shares. When you convert these securities to cash, you will pay brokerage charges.
SHAREHOLDER INFORMATION
[BOOK ICON]
CLOSING OF SMALL ACCOUNTS
If your account falls below $50,000, the Fund may ask you to increase your balance. If it is still below $50,000 after 60 days, the Fund may close your account and send you the proceeds at the then current NAV.
UNDELIVERABLE DISTRIBUTION CHECKS
For any shareholder who chooses to receive distributions in cash: If distribution checks (1) are returned and marked as "undeliverable" or (2) remain uncashed for six months, your account will be changed automatically so that all future distributions are reinvested in your account. Distribution checks that remain uncashed for six months will be canceled and the money reinvested in the Fund.
CUSTOMER IDENTIFICATION INFORMATION
To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify and record information that identifies each person that opens a new account, and to determine whether such person's name appears on government lists of known or suspected terrorists and terrorist organizations.
As a result, the Fund must obtain the following information for each person that opens a new account:
- Name;
- Date of birth (for individuals);
- Residential or business street address (although post office boxes are still permitted for mailing); and
- Social Security Number, Taxpayer Identification Number, or other identifying number.
You may also be asked for a copy of your driver's license, passport or other identifying documents in order to verify your identity. In addition, it may be necessary to verify your identity by cross-referencing your identification information with a consumer report or other electronic database. Additional information may be required to open accounts for corporations and other entities. Federal law prohibits the Fund and other financial institutions from opening a new account unless it receives the minimum identifying information listed above. After an account is opened, the Fund may restrict your ability to purchase additional shares until your identity is verified. The Fund may close your account or take other appropriate action if it is unable to verify your identity within a reasonable time. If your account is closed for this reason, your shares will be redeemed at the NAV next calculated after the account is closed.
SHAREHOLDER INFORMATION
[BOOK ICON]
DIVIDENDS, DISTRIBUTIONS AND TAXES
Any income the Fund receives in the form of dividends is paid out, less expenses, to its shareholders. Income dividends and capital gains distributions on the Fund usually are paid annually.
Dividends and distributions are treated in the same manner for federal income tax purposes whether you receive them in cash or in additional shares.
An exchange of shares is considered a sale, and gains from any sale or exchange may be subject to applicable taxes.
Dividends are taxable as ordinary income. Distributions designated by the Fund as long-term capital gain distributions will be taxable to you at your long-term capital gains rate, regardless of how long you have held your shares.
Dividends are taxable in the year they are paid or credited to your account. However, dividends declared in October, November or December to shareholders of record in such a month and paid by January 31st are taxable on December 31st of the year they are declared.
Currently effective tax legislation generally provides for a maximum tax rate for individual taxpayers of 15% on long-term gains and from certain qualifying dividends on corporate stock. These rate reductions do not apply to corporate taxpayers. The following are guidelines for how certain distributions by the Fund are generally taxed to individual taxpayers: (i) distributions of earnings from qualifying dividends and qualifying long-term capital gains will be taxed at a maximum rate of 15%; (ii) a shareholder will also have to satisfy a greater than 60-day holding period with respect to any distributions of qualifying dividends in order to obtain the benefit of the lower tax rate; and (iii) distributions of earnings from non-qualifying dividends, interest income, other types of ordinary income and short-term capital gains will be taxed at the ordinary income tax rate applicable to the taxpayer.
You will be notified in January each year about the federal tax status of distributions made by the Fund. Depending on your state of residence, distributions also may be subject to state and local taxes, including withholding taxes. There is a penalty on certain pre-retirement distributions from retirement accounts. Consult your tax adviser about the federal, state and local tax consequences in your particular circumstances.
Foreign shareholders may be subject to special withholding requirements.
The Fund is required to withhold 28% of taxable dividends, capital gains distributions and redemptions paid to shareholders who have not provided the Fund with their certified taxpayer identification number in compliance with IRS rules. To avoid this, make sure you provide your correct Tax Identification Number (social security number for most investors) on your account application.
This tax discussion is meant only as a general summary. Because each investor's tax situation is unique, you should consult your tax adviser about the particular consequences to you of investing in the Fund.
FUND MANAGEMENT
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THE INVESTMENT ADVISER
Boston Trust Investment Management, Inc. (the "Adviser"), One Beacon Street, Boston, MA 02108, is the investment adviser for the Fund. The Adviser is a wholly-owned subsidiary of Boston Trust & Investment Management Company, a Massachusetts state chartered bank and trust company.
The Adviser makes the day-to-day investment decisions for the Fund. In addition, the Adviser continuously reviews, supervises and administers the Fund's investment program. For these advisory services, the Fund pays the Adviser investment advisory fees equaling 0.75% of its average daily net assets.
Information regarding the factors considered by the Board of Trustees of the
Fund in connection with their approval of the Investment Advisory Agreement
with respect to the Fund is provided in the Fund's Annual Report to
Shareholders.
PORTFOLIO MANAGER
The following individual serves as portfolio manager for the Fund and is primarily responsible for the day-to-day management of the Fund's portfolio:
KENNETH SCOTT, CFA. Mr. Scott joined Boston Trust & Investment Management Company in January 1999. He manages small cap and large cap portfolios for individual and institutional clients. Mr. Scott also performs securities research responsibilities in a variety of market sectors. From 1993 through 1998, he worked for the Calvert Group. Mr. Scott served previously for three years at the Council on Economic Priorities. He earned a BA with Honors at Boston College and is a holder of the Chartered Financial Analyst (CFA) designation and a member of the Boston Security Analysts Society.
The Statement of Additional Information has more detailed information about the Adviser as well as additional information about the portfolio manager's compensation arrangements, other accounts managed, and ownership of securities of the Funds.
THE DISTRIBUTOR AND ADMINISTRATOR
BISYS Fund Services Limited Partnership is the Fund's distributor and BISYS Fund Services Ohio, Inc. is the Fund's administrator. Their address is 3435 Stelzer Road, Columbus, OH 43219.
CAPITAL STRUCTURE
The Coventry Group was organized as a Massachusetts business trust on January 8, 1992. Overall responsibility for the management of the Funds is vested in the Board of Trustees. Shareholders are entitled to one vote for each full share held and a proportionate fractional vote for any fractional shares held, and will vote in the aggregate and not by series except as otherwise expressly required by law. An annual or special meeting of shareholders to conduct necessary business is not required by the Coventry Group's Declaration of Trust, the Investment Company Act of 1940 or other authority, except under certain circumstances. Absent such circumstances, the Coventry Group does not intend to hold annual or special meetings.
DISCLOSURE OF FUND PORTFOLIO HOLDINGS
A complete list of the Fund's portfolio holdings is publicly available on a quarterly basis through filings made with the SEC on Forms N-CSR and N-Q. A description of the Fund's policies and procedures with respect to the disclosure of the Fund's portfolio securities is provided in the Statement of Additional Information.
[THIS PAGE INTENTIONALLY LEFT BLANK]
For more information about the Fund, the following documents are available free upon request:
ANNUAL/SEMI-ANNUAL REPORTS:
The Fund's annual and semi-annual reports to shareholders contain additional investment information. In the annual report, you will find a discussion of the market conditions and investment strategies that significantly affected the Fund's performance during its last fiscal year.
STATEMENT OF ADDITIONAL INFORMATION (SAI):
The SAI provides more detailed information about the Fund, including its operations and investment policies. It is incorporated by reference and is legally considered a part of this prospectus.
YOU CAN GET FREE COPIES OF REPORTS AND THE SAI, OR REQUEST OTHER INFORMATION AND DISCUSS YOUR QUESTIONS ABOUT THE FUND BY CONTACTING THE FUND AT:
BOSTON TRUST MUTUAL FUNDS
C/O BISYS FUND SERVICES
3435 STELZER ROAD
COLUMBUS, OHIO 43219
TELEPHONE: 1-800-439-9548
INFORMATION FROM THE SECURITIES AND EXCHANGE COMMISSION:
You can obtain copies of Fund documents from the SEC as follows:
IN PERSON:
Public Reference Room in Washington, D.C. (For their hours of operation, call 1-202-942-8090.)
BY MAIL:
Securities and Exchange Commission
Public Reference Section
Washington, D.C. 20549-0102
(The SEC charges a fee to copy any documents.)
ON THE EDGAR DATABASE VIA THE INTERNET:
www.sec.gov
BY ELECTRONIC REQUEST:
publicinfo@sec.gov
Investment Company Act file no. 811-6526.
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BOSTON TRUST SMALL CAP FUND
AN INVESTMENT PORTFOLIO OF
THE COVENTRY GROUP
STATEMENT OF ADDITIONAL INFORMATION
December 16, 2005
This Statement of Additional Information is not a prospectus but should be read in conjunction with the Prospectus for the Fund and dated the same date as the date hereof (the "Prospectus"). The Fund is a separate investment portfolio of The Coventry Group (the "Group"), an open-end investment management company. This Statement of Additional Information is incorporated in its entirety into the Prospectus. Copies of the Prospectus may be obtained by writing the Boston Trust Mutual Funds, c/o BISYS Fund Services, 3435 Stelzer Road, Columbus, Ohio 43219, or by telephoning toll free (800) 439-9548.
TABLE OF CONTENTS
INVESTMENT OBJECTIVE AND POLICIES.......................................... 3 Additional Information On Portfolio Instruments......................... 3 INVESTMENT RESTRICTIONS.................................................... 7 Portfolio Turnover...................................................... 9 NET ASSET VALUE............................................................ 9 Additional Purchase and Redemption Information.......................... 10 MANAGEMENT OF THE GROUP.................................................... 11 Trustees and Officers................................................... 11 Investment Adviser...................................................... 14 Code of Ethics.......................................................... 16 Portfolio Transactions.................................................. 16 Administrator And Fund Accounting Services.............................. 18 Distributor............................................................. 19 Custodian............................................................... 20 Transfer Agency Services................................................ 20 Shareholder Services Agreements......................................... 20 Independent Registered Public Accounting Firm........................... 21 Legal Counsel........................................................... 21 ADDITIONAL INFORMATION..................................................... 21 Description Of Shares................................................... 21 Vote Of A Majority Of The Outstanding Shares............................ 22 Additional Tax Information.............................................. 22 Yields And Total Returns................................................ 26 Performance Comparisons................................................. 29 Proxy Voting............................................................ 30 Disclosure of Fund Portfolio Holdings................................... 31 MISCELLANEOUS.............................................................. 31 FINANCIAL STATEMENTS....................................................... 32 |
STATEMENT OF ADDITIONAL INFORMATION
THE COVENTRY GROUP
The Coventry Group (the "Group") is an open-end investment management company which currently offers its shares in separate series. This Statement of Additional Information deals with one such portfolio: Boston Trust Small Cap Fund (the "Fund"). Much of the information contained in this Statement of Additional Information expands upon subjects discussed in the Prospectus. Capitalized terms not defined herein are defined in the Prospectus. No investment in shares of the Fund should be made without first reading the Prospectus.
INVESTMENT OBJECTIVE AND POLICIES
Additional Information On Portfolio Instruments
The following policies supplement the investment objective and policies of the Fund as set forth in the Prospectus.
MONEY MARKET INSTRUMENTS. Money market instruments selected for investment by the Fund include high grade, short-term obligations, including those issued or guaranteed by the U.S. Government, its agencies and instrumentalities, U.S. dollar-denominated certificates of deposit, time deposits and bankers' acceptances of U.S. banks (generally banks with assets in excess of $1 billion), repurchase agreements with recognized dealers and banks and commercial paper (including participation interests in loans extended by banks to issuers of commercial paper) that at the date of investment are rated A-1 by S&P or P-1 by Moody's, or, if unrated, of comparable quality as determined by the Adviser.
REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements. Under such agreements, the seller of a security agrees to repurchase it at a mutually agreed upon time and price. The repurchase price may be higher than the purchase price, the difference being income to the Fund, or the purchase and repurchase prices may be the same, with interest at a stated rate due to the Fund together with the repurchase price on repurchase. In either case, the income to the Fund is unrelated to the interest rate on the security itself. Such repurchase agreements will be made only with banks with assets of $500 million or more that are insured by the Federal Deposit Insurance Corporation or with Government securities dealers recognized by the Federal Reserve Board and registered as broker-dealers with the Securities and Exchange Commission ("SEC") or exempt from such registration. The Fund will enter generally into repurchase agreements of short durations, from overnight to one week, although the underlying securities generally have longer maturities. The Fund may not enter into a repurchase agreement with more than seven days to maturity if, as a result, more than 5% of the value of the Fund's net assets would be invested in illiquid securities including such repurchase agreements.
For purposes of the Investment Company Act of 1940 (the "1940 Act"), a repurchase agreement is deemed to be a loan from the Fund to the seller of the U.S. Government security subject to the repurchase agreement. In the event of the insolvency or default of the seller, the Fund could encounter delays and incur costs before being able to sell the security. Delays may involve loss of interest or a decline in price of the U.S. Government security. As with any
unsecured debt instrument purchased for the Fund, the Investment Adviser seeks to minimize the risk of loss through repurchase agreements by analyzing the creditworthiness of the obligor, in this case the seller of the U.S. Government security.
There is also the risk that the seller may fail to repurchase the security. However, the Fund will always receive as collateral for any repurchase agreement to which it is a party securities acceptable to it, the market value of which is equal to at least 100% of the amount invested by the Fund plus accrued interest, and the Fund will make payment against such securities only upon physical delivery or evidence of book entry transfer to the account of its Custodian. If the market value of the U.S. Government security subject to the repurchase agreement becomes less than the repurchase price (including interest), the Fund will direct the seller of the U.S. Government security to deliver additional securities so that the market value of all securities subject to the repurchase agreement will equal or exceed the repurchase price. It is possible that the Fund will be unsuccessful in seeking to impose on the seller a contractual obligation to deliver additional securities.
WHEN-ISSUED SECURITIES. The Fund is authorized to purchase securities on a "when-issued" basis. The price of such securities, which may be expressed in yield terms, is fixed at the time the commitment to purchase is made, but delivery and payment for the when-issued securities take place at a later date. Normally, the settlement date occurs within one month of the purchase; during the period between purchase and settlement, no payment is made by the Fund to the issuer and no interest accrues to the Fund. To the extent that assets of the Fund are held in cash pending the settlement of a purchase of securities, the Fund would earn no income; however, it is the Fund's intention to be fully invested to the extent practicable and subject to the policies stated above. While when-issued securities may be sold prior to the settlement date, any purchase of such securities would be made with the purpose of actually acquiring them unless a sale appears desirable for investment reasons. At the time the Fund makes the commitment to purchase a security on a when-issued basis, it will record the transaction and reflect the value of the security in determining its net asset value. The market value of the when-issued securities may be more or less than the purchase price. The Fund does not believe that its net asset value or income will be affected adversely by its purchase of securities on a when-issued basis. The Fund will designate liquid securities equal in value to commitments for when-issued securities. Such segregated assets either will mature or, if necessary, be sold on or before the settlement date.
FOREIGN SECURITIES. The Fund may invest up to 15% of its assets in foreign securities. Foreign investments can involve significant risks in addition to the risks inherent in U.S. investments. The value of securities denominated in or indexed to foreign currencies, and of dividends and interest from such securities, can change significantly when foreign currencies strengthen or weaken relative to the U.S. dollar. Foreign securities markets generally have less trading volume and less liquidity than U.S. markets, and prices on some foreign markets can be highly volatile. Many foreign countries lack uniform accounting and disclosure standards comparable to those applicable to U.S. companies, and it may be more difficult to obtain reliable information regarding an issuer's financial condition and operations. In addition, the costs of foreign investing, including withholding taxes, brokerage commissions, and custodial costs, generally are higher than for U.S. investments.
Foreign markets may offer less protection to investors than U.S. markets. Foreign issuers, brokers, and securities markets may be subject to less government supervision. Foreign securities trading practices, including those involving the release of assets in advance of payment, may involve increased risks in the event of a failed trade or the insolvency of a broker-dealer, and may involve substantial delays. It also may be difficult to enforce legal rights in foreign countries.
Investing abroad also involves different political and economic risks. Foreign investments may be affected by actions of foreign governments adverse to the interests of U.S. investors, including the possibility of expropriation or nationalization of assets, confiscatory taxation, restrictions on U.S. investment or on the ability to repatriate assets or convert currency into U.S. dollars, or other government intervention. There may be a greater possibility of default by foreign governments or foreign government-sponsored enterprises. Investments in foreign countries also involve a risk of local political, economic, or social instability, military action or unrest, or adverse diplomatic developments. There can be no assurance that the Adviser will be able to anticipate these potential events and/or counter their impacts on the Fund's share price.
Securities of foreign issuers may be held by the Fund in the form of American Depositary Receipts and European Depositary Receipts ("ADRs" and "EDRs"). These are certificates evidencing ownership of shares of a foreign-based issuer held in trust by a bank or similar financial institution. Designed for use in U.S. and European securities markets, respectively, ADRs and EDRs are alternatives to the purchase of the underlying securities in their national market and currencies.
The Fund may invest without regard to the 15% limitation in securities of foreign issuers which are listed and traded on a domestic national securities exchange.
DEBT SECURITIES AND RATINGS. Ratings of debt securities represent the rating agencies' (as described below) opinions regarding their quality, are not a guarantee of quality and may be reduced after the Fund has acquired the security.
If a security's rating is reduced while it is held by the Fund, the Adviser will consider whether the Fund should continue to hold the security, but the Fund is not required to dispose of it. Credit ratings attempt to evaluate the safety of principal and interest payments and do not evaluate the risks of fluctuations in market value. Also, rating agencies may fail to make timely changes in credit ratings in response to subsequent events, so that an issuer's current financial conditions may be better or worse than the rating indicates.
The Fund reserves the right to invest up to 20% of its assets in securities rated lower than BBB by Standard & Poor's Ratings Group ("S&P") or lower than Baa by Moody's Investors Service, Inc. ("Moody's"), but rated at least B by S&P or Moody's (or, in either case, if unrated, deemed by the Adviser to be of comparable quality). Lower-rated securities generally offer a higher current yield than that available for higher grade issues. However, lower-rated securities involve higher risks, in that they are especially subject to adverse changes in general economic conditions and in the industries in which the issuers are engaged, to changes, or perceived
changes, in the financial condition of the issuers and to price fluctuations in response to changes in interest rates. During periods of economic downturn or rising interest rates, highly leveraged issuers may experience financial stress which could affect adversely their ability to make payments of interest and principal and increase the possibility of default. In addition, the market for lower-rated debt securities has expanded rapidly in recent years, and its growth paralleled a long economic expansion. At times in recent years, the prices of many lower-rated debt securities declined substantially, reflecting an expectation that many issuers of such securities might experience financial difficulties. As a result, the yields on lower-rated debt securities rose dramatically, but such higher yields did not reflect the value of the income stream that holders of such securities expected, but rather, the risk that holders of such securities could lose a substantial portion of their value as a result of the issuers' financial restructuring or default. There can be no assurance that such declines will not recur. The market for lower-rated debt issues generally is smaller and less active than that for higher quality securities, which may limit the Fund's ability to sell such securities at fair value in response to changes in the economy or financial markets. Adverse publicity and investor perceptions, whether or not based on fundamental analysis, may also decrease the values and liquidity of lower-rated securities, especially in a smaller and less actively-traded market.
Lower-rated debt obligations also present risks based on payment expectations. If an issuer calls the obligation for redemption, the Fund may have to replace the security with a lower-yielding security, resulting in a decreased return to investors. Also, because the principal value of bonds moves inversely with movements in interest rates, in the event of rising interest rates, the value of the securities held by the Fund may decline proportionately more than funds consisting of higher-rated securities. If the Fund experiences unexpected net redemptions, it may be forced to sell its higher-rated bonds, resulting in a decline in the overall credit quality of the securities held by the Fund and increasing the exposure of the Fund to the risks of lower-rated securities. Investments in zero-coupon bonds may be more speculative and subject to greater fluctuations in value due to changes in interest rates than bonds that pay interest currently.
OPTIONS AND FUTURES CONTRACTS. To the extent consistent with its investment objectives and policies, the Fund may purchase and write call and put options on securities, securities indexes and on foreign currencies and enter into futures contracts and use options on futures contracts, to the extent of up to 5% of its assets. The Fund will engage in futures contracts and related options only for hedging purposes and will not engage in such transactions for speculation or leverage.
Transactions in options on securities and on indexes involve certain risks. For example, there are significant differences between the securities and options markets that could result in an imperfect correlation between these markets, causing a given transaction not to achieve its objectives. A decision as to whether, when and how to use options involves the exercise of skill and judgment, and even a well-conceived transaction may be unsuccessful to some degree because of market behavior or unexpected events.
There can be no assurance that a liquid market will exist when the Fund seeks to close out an option position. If the Fund were unable to close out an option that it had purchased on a security, it would have to exercise the option in order to realize any profit or the option would
expire worthless. If the Fund were unable to close out a covered call option that it had written on a security, it would not be able to sell the underlying security unless the option expired without exercise. As the writer of a covered call option, the Fund forgoes, during the option's life, the opportunity to profit from increases in the market value of the security covering the call option above the sum of the premium and the exercise price of the call.
If trading were suspended in an option purchased by the Fund, the Fund would not be able to close out the option. If restrictions on exercise were imposed, the Fund might be unable to exercise an option it had purchased. Except to the extent that a call option on an index written by the Fund is covered by an option on the same index purchased by the Fund, movements in the index may result in a loss to the Fund; such losses might be mitigated or exacerbated by changes in the value of the Fund's securities during the period the option was outstanding.
Use of futures contracts and options thereon also involves certain risks. The variable degree of correlation between price movements of futures contracts and price movements in the related portfolio positions of the Fund creates the possibility that losses on the hedging instrument may be greater than gains in the value of the Fund's position. Also, futures and options markets may not be liquid in all circumstances and certain over the counter options may have no markets. As a result, in certain markets, the Fund might not be able to close out a transaction at all or without incurring losses. Although the use of options and futures transactions for hedging should minimize the risk of loss due to a decline in the value of the hedged position, at the same time they tend to limit any potential gain which might result from an increase in the value of such position. If losses were to result from the use of such transactions, they could reduce net asset value and possibly income. The Fund may use these techniques to hedge against changes in interest rates or securities prices or as part of its overall investment strategy. The Fund will segregate liquid assets (or, as permitted by applicable regulation, enter into certain offsetting positions) to cover its obligations under options and futures contracts to avoid leveraging.
ILLIQUID AND RESTRICTED SECURITIES. The Fund may not invest more than 5% of its net assets in illiquid securities, including (i) securities for which there is no readily available market; (ii) securities the disposition of which would be subject to legal restrictions (so-called "restricted securities"); and (iii) repurchase agreements having more than seven days to maturity. A considerable period of time may elapse between the Fund's decision to dispose of such securities and the time when the Fund is able to dispose of them, during which time the value of the securities could decline. Securities which meet the requirements of Securities Act Rule 144A are restricted, but may be determined to be liquid by the Trustees, based on an evaluation of the applicable trading markets.
INVESTMENT RESTRICTIONS
The following policies and investment restrictions have been adopted by the Fund and (unless otherwise noted) are fundamental and cannot be changed without the affirmative vote of a majority of the Fund's outstanding voting securities as defined in the 1940 Act. The Fund may not:
1. Make loans to others, except (a) through the purchase of debt securities in accordance with its investment objectives and policies, or (b) to the extent the entry into a repurchase agreement is deemed to be a loan.
2. (a) Borrow money, except from banks for temporary or emergency purposes. Any such borrowing will be made only if immediately thereafter there is an asset coverage of at least 300% of all borrowings.
(b) Mortgage, pledge or hypothecate any of its assets except in connection with any such borrowings.
3. Purchase securities on margin, participate on a joint or joint and several basis in any securities trading account, or underwrite securities. (The Fund is not precluded from obtaining such short-term credit as may be necessary for the clearance of purchases and sales of its portfolio securities.)
4. Purchase or sell real estate, commodities or commodity contracts (other than futures transactions for the purposes and under the conditions described in the Prospectus and in this SAI).
5. Invest 25% or more of the market value of its assets in the securities of companies engaged in any one industry. (This restriction does not apply to investment in the securities of the U.S. Government, its agencies or instrumentalities.)
6. Issue senior securities, as defined in the 1940 Act, except that this restriction shall not be deemed to prohibit the Fund from (a) making any permitted borrowings, mortgages or pledges, or (b) entering into options, futures, forward or repurchase transactions.
7. Purchase the securities of any issuer, if as a result more than 5% of the total assets of the Fund would be invested in the securities of that issuer, other than obligations of the U.S. Government, its agencies or instrumentalities, provided that up to 25% of the value of the Fund's assets may be invested without regard to this limitation.
The Fund observes the following policies, which are not deemed fundamental and which may be changed without shareholder vote. The Fund may not:
1. Purchase any security if as a result the Fund would then hold more than 10% of any class of securities of an issuer (taking all common stock issues of an issuer as a single class, all preferred stock issues as a single class, and all debt issues as a single class) or more than 10% of the outstanding voting securities of a single issuer.
2. Invest in any issuer for purposes of exercising control or management.
3. Invest in securities of other investment companies which would result in the Fund owning more than 3% of the outstanding voting securities of any one such investment company, the Fund owning securities of another investment company having an aggregate value in excess of 5% of the value of the Fund's total assets, or the Fund owning securities of investment companies in the aggregate which would exceed 10% of the value of the Fund's total assets.
4. Invest, in the aggregate, more than 5% of its net assets in securities with legal or contractual restrictions on resale, securities which are not readily marketable and repurchase agreements with more than seven days to maturity.
5. Invest more than 15% of its assets in securities of foreign issuers (including American Depositary Receipts with respect to foreign issuers, but excluding securities of foreign issuers listed and traded on a domestic national securities exchange).
6. Invest in securities issued by any affiliate of the Adviser.
If a percentage restriction described in the Prospectus or this Statement of Additional Information is adhered to at the time of investment, a subsequent increase or decrease in a percentage resulting from a change in the values of assets will not constitute a violation of that restriction, except for the policies regarding borrowing and illiquid securities or as otherwise specifically noted.
Portfolio Turnover
The portfolio turnover rate for the Fund is calculated by dividing the lesser of the Fund's purchases or sales of portfolio securities for the year by the monthly average value of the portfolio securities. The calculation excludes all securities whose remaining maturities at the time of acquisition were one year or less.
The portfolio turnover rate may vary greatly from year to year, as well as within a particular year, and may also be affected by cash requirements for redemptions of Shares. High portfolio turnover rates generally will result in higher transaction costs, including brokerage commissions, to the Fund and may result in additional tax consequences to the Fund's Shareholders. Portfolio turnover will not be a limiting factor in making investment decisions.
NET ASSET VALUE
As indicated in the Prospectus, the net asset value of the Fund is determined once daily as of the close of public trading on the New York Stock Exchange (currently 4:00 p.m. Eastern Standard Time) on each day that the Exchange is open for trading. The New York Stock Exchange will not open in observance of the following holidays: New Year's Day, Martin Luther King, Jr.'s Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving, and Christmas. The Fund does not expect to determine the net asset value of its shares on any day when the Exchange is not open for trading, even if there is sufficient trading in portfolio securities on such days to materially affect the net asset value per share.
Investments in securities for which market quotations are readily available are valued based upon their current available prices in the principal market in which such securities are normally traded. Unlisted securities for which market quotations are readily available are valued at such market value. Securities and other assets for which quotations are not readily available are valued at their fair value as determined in good faith under consistently applied procedures established by and under the general supervision of the Trustees of the Group. Short-term securities (i.e., with maturities of 60 days or less) are valued at either amortized cost or original cost plus accrued interest, which approximates current value.
Among the factors that will be considered, if they apply, in valuing portfolio securities held by the Fund are the existence of restrictions upon the sale of the security by the Fund, the absence of a market for the security, the extent of any discount in acquiring the security, the estimated time during which the security will not be freely marketable, the expenses of registering or otherwise qualifying the security for public sale, underwriting commissions if underwriting would be required to effect a sale, the current yields on comparable securities for debt obligations traded independently of any equity equivalent, changes in the financial condition and prospects of the issuer, and any other factors affecting fair value. In making valuations, opinions of counsel may be relied upon as to whether or not securities are restricted securities and as to the legal requirements for public sale.
The Group may use a pricing service to value certain portfolio securities where the prices provided are believed to reflect the fair market value of such securities. A pricing service would normally consider such factors as yield, risk, quality, maturity, type of issue, trading characteristics, special circumstances and other factors it deems relevant in determining valuations of normal institutional trading units of debt securities and would not rely exclusively on quoted prices. Certain instruments, for which pricing services used for the Fund do not provide prices, may be valued by the Group using methodologies similar to those used by pricing services, where such methodologies are believed to reflect fair value of the subject security. The methods used by the pricing service and the Group and the valuations so established will be reviewed by the Group under the general supervision of the Group's Board of Trustees. Several pricing services are available, one or more of which may be used by the Adviser from time to time.
Additional Purchase and Redemption Information
Shares of the Fund are sold on a continuous basis by BISYS Fund Services Limited Partnership ("BISYS"), and BISYS has agreed to use appropriate efforts to solicit all purchase orders. In addition to purchasing Shares directly from BISYS, Shares may be purchased through procedures established by BISYS in connection with the requirements of accounts at the Adviser or the Adviser's affiliated entities (collectively, "Entities"). Customers purchasing Shares of the Fund may include officers, directors, or employees of the Adviser or the Entities.
The Group may suspend the right of redemption or postpone the date of payment for Shares during any period when (a) trading on the New York Stock Exchange (the "NYSE") is restricted by applicable rules and regulations of the Commission, (b) the NYSE is closed for other than customary weekend and holiday closings, (c) the Commission has by order permitted such suspension, or (d) an emergency exists as a result of which (i) disposal by the Group of
securities owned by it is not reasonably practical, or (ii) it is not reasonably practical for the Group to determine the fair value of its net assets.
MANAGEMENT OF THE GROUP
Trustees and Officers
Overall responsibility for management of the Group rests with its Board of Trustees. The Trustees elect the officers of the Group to supervise actively its day-to-day operations.
The names of the Trustees and officers of the Group, their addresses, ages and principal occupations during the past five years are provided in the tables below. Trustees that are deemed "interested persons," as defined in the 1940 Act, are listed as "Interested Trustees" in the table. Trustees who are not interested persons are referred to as Independent Trustees.
INTERESTED TRUSTEES*
POSITION(S) TERM OF OFFICE** PRINCIPAL NUMBER OF FUNDS IN
HELD WITH AND LENGTH OF OCCUPATION(S) DURING FUND COMPLEX OVERSEEN OTHER DIRECTORSHIPS
NAME, ADDRESS AND AGE THE FUNDS TIME SERVED PAST FIVE YEARS BY TRUSTEE HELD BY TRUSTEE
--------------------- ----------- ---------------- -------------------- --------------------- ---------------------
Walter B. Grimm Trustee Since 1996. From June 1992 to 18 American Performance
3435 Stelzer Road present, employee of Funds; Legacy Funds
Columbus, Ohio 43219 BISYS Fund Services. Group; Performance
Age: 59 Funds Trust; Variable
Insurance Funds
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* Mr. Grimm is considered to be an "interested person" of the Group as defined in the 1940 Act due to his employment with BISYS Fund Services, the Funds' distributor, administrator and transfer agent.
INDEPENDENT TRUSTEES
POSITION(S) TERM OF OFFICE** PRINCIPAL NUMBER OF FUNDS IN
HELD WITH AND LENGTH OF OCCUPATION(S) DURING FUND COMPLEX OVERSEEN OTHER DIRECTORSHIPS
NAME, ADDRESS AND AGE THE FUNDS TIME SERVED PAST FIVE YEARS BY TRUSTEE HELD BY TRUSTEE
--------------------- ----------- ---------------- -------------------- --------------------- -------------------
Maurice G. Stark Trustee Since 1992. Retired. 18 Variable Insurance
3435 Stelzer Road Funds
Columbus, Ohio 43219
Age: 69
Michael M. Van Buskirk Trustee Since 1992. From June 1991 to 18 Variable Insurance
3435 Stelzer Road present, employee of Funds
Columbus, Ohio 43219 and current Chief
Age: 58 Executive Officer of
The Ohio Bankers
Association (trade
association).
|
Diane E. Armstrong Trustee Since 2004. From August 2003 to 18 n/a
3435 Stelzer Road present, Principal
Columbus, Ohio 43219 of King, Dodson
Age: 40 Armstrong Financial
Advisors, Inc.; from
April 2000 to August
2003, Director of
Financial Planning,
Hamilton Capital
Management.
|
** Trustees hold their position with the Trust until their resignation or removal.
OFFICERS WHO ARE NOT TRUSTEES
POSITION(S) HELD TERM OF OFFICE** AND PRINCIPAL OCCUPATION(S) DURING
NAME, ADDRESS AND AGE WITH THE FUNDS LENGTH OF TIME SERVED PAST FIVE YEARS
--------------------- ---------------- --------------------- ------------------------------
R. Jeffrey Young President Since 2002. From October 1993 to present,
3435 Stelzer Road employee of BISYS Fund
Columbus, Ohio 43219 Service.
Age: 40
Chris Sabato Treasurer Since 2004. From February 1993 to present,
3435 Stelzer Road employee of BISYS Fund
Columbus, Ohio 43219 Services.
Age: 36
Timothy Bresnahan Secretary Since 2005. From February 2005 to present,
3435 Stelzer Road employee of BISYS Fund
Columbus, Ohio 43219 Services; from March 2004 to
Age: 36 February 2005, associate of
the law firm of Greenberg
Traurig, P.A.; from October
2003 to March 2004, employee
of Deutsche Bank Asset
Management, Inc.; from
September 2001 to February
2003, associate of the law
firm of Goodwin Procter, LLP
Alaina V. Metz Assistant Since 1995. From June 1995 to present,
3435 Stelzer Road Secretary employee of BISYS Fund
Columbus, Ohio 43219 Services.
Age: 37
George L. Stevens Chief Compliance Since 1996. From September 1996 to
3435 Stelzer Road Officer present, employee of BISYS
Columbus, Ohio 43219 Fund Services.
Age: 54
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** Officers hold their positions with the Trust until a successor has been duly elected and qualified.
BOARD COMMITTEES
The Board has an Audit Committee, Nominating Committee and Valuation Committee. The Audit Committee oversees the Group's accounting and financial reporting policies and practices and oversees the quality and objectivity of the Group's financial statements and the independent audit thereof. The members of the Audit Committee, which met twice during the
last fiscal year, include all of the Board's independent trustees: Maurice G. Stark, Michael M. Van Buskirk, and Diane E. Armstrong. The Nominating Committee, also comprised of all of the independent trustees, evaluates the qualifications of candidates and makes nominations for independent trustee membership on the Board. The Nominating Committee does not consider nominees recommended by shareholders. During the last fiscal year, the Nominating Committee held one meeting. The purpose of the Valuation Committee, which is comprised of at least two Trustees at all times, one of whom must be an Independent Trustee, is to oversee the implementation of the Group's valuation procedures and to make fair value determinations on behalf of the Board as specified in the valuation procedures. The Valuation Committee meets quarterly.
OWNERSHIP OF SECURITIES
As of the date of this Statement of Additional Information, the Group's Trustees and officers, as a group, owned less than 1% of the Fund's outstanding Shares. For the year ended December 31, 2004, the dollar range of equity securities owned beneficially by each Trustee in the Fund and in any registered investment companies overseen by the Trustee within the same family of investment companies as the Fund is as follows:
INTERESTED TRUSTEES
AGGREGATE DOLLAR RANGE
OF EQUITY SECURITIES
IN ALL REGISTERED
INVESTMENT COMPANIES
DOLLAR RANGE OF OVERSEEN BY TRUSTEE IN
EQUITY SECURITIES FAMILY OF INVESTMENT
NAME OF TRUSTEE IN THE FUND COMPANIES
--------------- ----------------- ----------------------
Walter B. Grimm $0 $0
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INDEPENDENT TRUSTEES
AGGREGATE DOLLAR
RANGE OF EQUITY
SECURITIES IN ALL
REGISTERED INVESTMENT
DOLLAR RANGE OF COMPANIES OVERSEEN BY
EQUITY SECURITIES TRUSTEE IN FAMILY OF
NAME OF TRUSTEE IN THE FUND INVESTMENT COMPANIES
--------------- ----------------- ---------------------
Maurice G. Stark $0 $10,000 - $50,000
Michael M. Van Buskirk $0 $0
Diane E. Armstrong $0 $0
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The Officers of the Group (other than the Chief Compliance Officer) receive no compensation directly from the Group for performing the duties of their offices. BISYS Fund Services may receive fees pursuant to the Distribution and Shareholder Services Plan and the Administrative Services Plan. BISYS Fund Services Ohio, Inc. ("BISYS") receives fees from the Fund for acting as administrator and transfer agent and for providing certain fund accounting
services. Messrs. Young, Grimm, Sabato, Bresnahan and Stevens and Ms. Metz are employees of BISYS.
Trustees of the Group not affiliated with BISYS or BISYS Fund Services receive from the Group an annual fee of $3,000, plus $2,250 for each regular meeting of the Board of Trustees attended and $1,000 for each special meeting of the Board attended in person and $500 for other special meetings of the Board attended by telephone, and are reimbursed for all out-of-pocket expenses relating to attendance at such meetings. Trustees of the Group also receive $1,000 for participation in Audit Committee meetings and $500 for participation in all other committee meetings. Trustees who are affiliated with BISYS or BISYS Fund Services do not receive compensation from the Group.
For the fiscal year ended March 31, 2005 the Trustees received the following compensation from the Group and from certain other investment companies (if applicable) that have the same investment adviser as the Fund or an investment adviser that is an affiliated person of the Group's investment advisor:
PENSION OR
RETIREMENT
BENEFITS ESTIMATED TOTAL COMPENSATION
AGGREGATE ACCRUED AS ANNUAL FROM THE FUND AND
COMPENSATION FROM PART OF FUNDS BENEFITS UPON FUND COMPLEX PAID
NAME OF TRUSTEE THE FUNDS EXPENSES RETIREMENT TO THE TRUSTEES
--------------- ----------------- ------------- ------------- ------------------
Walter B. Grimm $ 0 $0 $0 $ 0
Maurice G. Stark $4,630 $0 $0 $14,500
Michael M. Van Buskirk $4,630 $0 $0 $14,500
John H. Ferring IV* $2,808 $0 $0 $ 8,250
R. Jeffrey Young*** $ 0 $0 $0 $ 0
Diane E. Armstrong** $1,332 $0 $0 $ 4,000
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* Mr. Ferring resigned as a Trustee as of November 18, 2004.
** Ms. Armstrong was elected as a Trustee as of November 18, 2004.
*** Mr. Young resigned as a Trustee as of December 8, 2005.
Investment Adviser
Investment advisory and management services are provided to the Fund by Boston Trust Investment Management, Inc. (the "Adviser"), pursuant to an Investment Advisory Agreement dated as of September 30, 2004, and amended as of December 8, 2005. The Adviser is a wholly-owned subsidiary of Boston Trust & Investment Management Company, a Massachusetts chartered banking and trust company ("Boston Trust"), which in turn is a wholly-owned subsidiary of BTIM Company, a bank holding company organized as a Delaware corporation. Under the terms of the Investment Advisory Agreement, the Adviser has agreed to provide investment advisory services as described in the Prospectus of the Fund. For the services
provided and expenses assumed pursuant to the Investment Advisory Agreement, the Fund pays the Adviser a fee, computed daily and paid monthly, at the annual rate of 0.75% of the Fund's average daily net assets. The Adviser may from time to time voluntarily reduce all or a portion of its advisory fee with respect to the Fund to increase the net income of the Fund available for distribution as dividends.
Unless sooner terminated, the Investment Advisory Agreement for the Fund will continue in effect until February 28, 2007, and year to year thereafter for successive annual periods if such continuance is approved at least annually by the Group's Board of Trustees or by vote of a majority of the outstanding Shares of the Fund (as defined below), and a majority of the Trustees who are not parties to the Investment Advisory Agreement or interested persons (as defined in the 1940 Act) of any party to the Investment Advisory Agreement by votes cast in person at a meeting called for such purpose. The Investment Advisory Agreement is terminable as to the Fund at any time on 60 days' written notice without penalty by the Trustees, by vote of a majority of the outstanding Shares of the Fund, or by the Adviser. The Investment Advisory Agreement also terminates automatically in the event of any assignment, as defined in the 1940 Act, or for reasons as set forth in the Agreement.
The Investment Advisory Agreement provides that the Adviser shall not be liable for any error of judgment or mistake of law or for any loss suffered by the Fund in connection with the performance of the Investment Advisory 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 the Adviser of its duties and obligations thereunder.
The Investment Advisory Agreement for the Fund was approved by both a majority of the Trustees and a majority of the independent Trustees at a meeting held on December 8, 2005.
PORTFOLIO MANAGER INFORMATION
Kenneth Scott, CFA, serves as Portfolio Manager for the Fund. The following table lists the number and types of other accounts managed by Mr. Scott and assets under management in those accounts as of March 31, 2005:
OTHER REGISTERED OTHER POOLED TOTAL ASSETS
PORTFOLIO INVESTMENT COMPANY ASSETS MANAGED INVESTMENT ASSETS MANAGED ASSETS MANAGED MANAGED**$
MANAGER ACCOUNTS ($ MILLIONS) VEHICLE ACCOUNTS ($ MILLIONS) OTHER ACCOUNTS* ($ MILLIONS) MILLIONS)
--------- ------------------ -------------- ---------------- -------------- --------------- -------------- ------------
KENNETH SCOTT 0 n/a 2 5.2 37 155 160.2
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* The majority of these other accounts are invested in the other investment vehicles listed above, or are managed by the firm.
** If an account has a co-portfolio manager, the total number of accounts and assets has been allocated to each respective manager. Therefore, some accounts and assets have been counted twice.
As indicated in the table above, portfolio managers at the Adviser may manage accounts for multiple clients. Portfolio managers at the Adviser make investment decisions for each account based on the investment objectives and policies and other relevant investment considerations applicable to that portfolio. The management of multiple accounts may result in a portfolio manager devoting unequal time and attention to the management of each account. Even where multiple accounts are managed by the same portfolio manager within the same investment discipline, however, the Adviser may take action with respect to one account that may differ from the timing or nature of action taken, with respect to another account. Accordingly, the performance of each account managed by a portfolio manager will vary.
The Adviser's compensation structure is designed to recognize cumulative contribution to its investment policies and process, and client service. Compensation incentives align portfolio manager interests with the long-term interest of clients. Short-term, return based incentives, which may encourage undesirable risk are not employed. Returns and portfolios are monitored for consistency with investment policy parameters. The Adviser has adopted and implemented policies and procedures, including brokerage and trade allocation policies and procedures, which it believes address the potential conflicts associated with managing multiple accounts for multiple clients.
Mr. Scott holds less than $50,000 of the Fund in an account in which he has a beneficial interest.
Code Of Ethics
The Coventry Group, the Adviser and the Distributor have each adopted a Code of Ethics, pursuant to Rule 17j-1 under the Investment Company Act of 1940, applicable to securities trading practices of its personnel. Each Code permits covered personnel to trade in securities in which the Fund may invest, subject to certain restrictions and reporting requirements.
Portfolio Transactions
References to the Adviser with respect to portfolio transactions include its affiliate, Boston Trust & Investment Management Company. Pursuant to the Investment Advisory Agreement with respect to the Fund, the Adviser determines, subject to the general supervision of the Board of Trustees of the Group and in accordance with the Fund's investment objectives and restrictions, which securities are to be purchased and sold by the Fund, and which brokers are to be eligible to execute the Fund's portfolio transactions.
Purchases from underwriters of portfolio securities generally include a commission or concession paid by the issuer to the underwriter, and purchases from dealers serving as market makers may include the spread between the bid and asked price.
Transactions on stock exchanges involve the payment of negotiated brokerage commissions. Transactions in the over-the-counter market are generally principal transactions with dealers. With respect to the over-the-counter market, the Adviser, where possible, will deal directly with dealers who make a market in the securities involved except in those circumstances where better price and execution are available elsewhere.
Allocation of transactions, including their frequency, to various brokers and dealers is determined by the Adviser in its best judgment and in a manner deemed fair and reasonable to Shareholders. The primary consideration is prompt execution of orders in an effective manner at the most favorable price. Subject to this consideration, brokers and dealers who provide supplemental investment research to the Adviser may receive orders for transactions on behalf of the Fund. The Adviser is authorized to pay a broker-dealer who provides such brokerage and research services a commission for executing the Fund's brokerage transactions which are in excess of the amount of commission another broker 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 viewed in terms of that particular transaction or in terms of all of the accounts over which it exercises investment discretion. Any such research and other statistical and factual information provided by brokers to the Fund or to the Adviser is considered to be in addition to and not in lieu of services required to be performed by the Adviser under its respective agreement regarding management of the Fund. The cost, value and specific application of such information are indeterminable and hence are not practicably allocable among the Fund and other clients of the Adviser who may indirectly benefit from the availability of such information. Similarly, the Fund may indirectly benefit from information made available as a result of transactions effected for such other clients. Under the Investment Advisory Agreement, the Adviser is permitted to pay higher brokerage commissions for brokerage and research services in accordance with Section 28(e) of the Securities Exchange Act of 1934. In the event the Adviser does follow such a practice, it will do so on a basis which is fair and equitable to the Group and the Fund.
While the Adviser generally seeks competitive commissions, the Adviser may not necessarily pay the lowest commission available on each brokerage transaction, for reasons discussed above.
Except as otherwise disclosed to the Shareholders of the Fund and as permitted by applicable laws, rules and regulations, the Adviser will not, on behalf of the Fund, execute portfolio transactions through, acquire portfolio securities issued by, make savings deposits in, or enter into repurchase or reverse repurchase agreements with affiliates of the Adviser, BISYS, or their affiliates, and will not give preference to the Adviser's correspondents with respect to such transactions, securities, savings deposits, repurchase agreements, and reverse repurchase agreements.
Investment decisions for the Fund are made independently from those for the other mutual funds advised by the Adviser, other funds of the Group or any other investment company or account managed by the Adviser. Any such other fund, investment company or account may also invest in the same securities as the Group on behalf of the Fund. When a purchase or sale of the same security is made at substantially the same time on behalf of the Fund and another fund of the Group managed by the Adviser, investment company or account, the transaction will be averaged as to price and available investments will be allocated as to amount in a manner which the Adviser believes to be equitable to the Fund and such other fund, investment company or account. In some instances, this investment procedure may affect adversely the price paid or received by the Fund or the size of the position obtained by the Fund. To the extent permitted by
law, the Adviser may aggregate the securities to be sold or purchased for the Fund with those to be sold or purchased for the other Funds advised by the Adviser or for other investment companies or accounts in order to obtain best execution. As provided by the Investment Advisory Agreement, in making investment recommendations for the Fund, the Adviser will not inquire nor take into consideration whether an issuer of securities proposed for purchase or sale by the Group is a customer of the Adviser, any of its subsidiaries or affiliates and, in dealing with its customers, the Adviser, its subsidiaries and affiliates will not inquire or take into consideration whether securities of such customers are held by the Fund or any other fund of the Group.
Administrator And Fund Accounting Services
BISYS Ohio serves as administrator (the "Administrator") to the Funds pursuant to a Management and Administration Agreement originally dated as of March 23, 1999 (the "Administration Agreement"). The Administrator assists in supervising all operations of the Fund. The Administrator is a broker-dealer registered with the Commission, and is a member of the National Association of Securities Dealers, Inc. The Administrator provides financial services to institutional clients.
Under the Administration Agreement, the Administrator has agreed to maintain office facilities; furnish statistical and research data, clerical, certain bookkeeping services and stationery and office supplies; prepare the periodic reports to the Commission on Form N-SAR or any replacement forms therefor; compile data for, assist the Group or its designee in the preparation of, and file all of the Fund's federal and state tax returns and required tax filings other than those required to be made by the Fund's custodian and transfer agent; prepare compliance filings pursuant to state securities laws with the advice of the Group's counsel; assist to the extent requested by the Fund with the Fund's preparation of its Annual and Semi-Annual Reports to Shareholders and its Registration Statement (on Form N-1A or any replacement therefor); compile data for, prepare and file timely Notices to the Commission required pursuant to Rule 24f-2 under the 1940 Act; keep and maintain the financial accounts and records of the Fund, including calculation of daily expense accruals; and generally assist in all aspects of the Fund's operations. Under the Administration Agreement, the Administrator may delegate all or any part of its responsibilities thereunder.
The Administrator receives a fee from the Fund for its services as Administrator and expenses assumed pursuant to the Administration Agreement, equal to a fee calculated daily and paid periodically, at the annual rate equal to twenty one-hundredths of one percent (0.20%) of the Fund's average daily net assets.
The Administration Agreement is renewed automatically for successive one-year terms, unless written notice not to renew is given by the non-renewing party to the other party at least 60 days prior to the expiration of the then-current term. The Administration Agreement is terminable with respect to the Fund only upon mutual agreement of the parties to the Administration Agreement and for cause (as defined in the Administration Agreement) by the party alleging cause, on not less than 60 days' notice by the Group's Board of Trustees or by the Administrator.
The Administration Agreement provides that the Administrator shall not be liable for any error of judgment or mistake of law or any loss suffered by the Fund in connection with the matters to which the Administration Agreement relates, except a loss resulting from willful misfeasance, bad faith, or negligence in the performance of its duties, or from the reckless disregard by the Administrator of its obligations and duties thereunder.
In addition, BISYS Ohio provides certain fund accounting services to the Fund pursuant to a Fund Accounting Agreement originally dated as of March 23, 1999. Under such Agreement, BISYS Ohio maintains the accounting books and records for the Fund, including journals containing an itemized daily record of all purchases and sales of portfolio securities, all receipts and disbursements of cash and all other debits and credits, general and auxiliary ledgers reflecting all asset, liability, reserve, capital, income and expense accounts, including interest accrued and interest received, and other required separate ledger accounts; maintains a monthly trial balance of all ledger accounts; performs certain accounting services for the Fund, including calculation of the net asset value per share, calculation of the dividend and capital gain distributions, if any, and of yield, reconciliation of cash movements with the Fund's custodian, affirmation to the Fund's custodian of all portfolio trades and cash settlements, verification and reconciliation with the Fund's custodian of all daily trade activity; provides certain reports; obtains dealer quotations, prices from a pricing service or matrix prices on all portfolio securities in order to mark the portfolio to the market; and prepares an interim balance sheet, statement of income and expense, and statement of changes in net assets for the Fund.
Distributor
BISYS Fund Services Limited Partnership ("BISYS") serves as agent for the
Fund in the distribution of its Shares pursuant to a Distribution Agreement
originally dated as of June 14, 2005 (the "Distribution Agreement"). Unless
otherwise terminated, the Distribution Agreement will continue in effect for
successive annual periods if such continuance is approved at least annually by
(i) by the Group's Board of Trustees or by the vote of a majority of the
outstanding shares of the Fund, and (ii) by the vote of a majority of the
Trustees of the Group who are not parties to the Distribution Agreement or
interested persons (as defined in the 1940 Act) of any party to the Distribution
Agreement, cast in person at a meeting called for the purpose of voting on such
approval. The Distribution Agreement may be terminated in the event of any
assignment, as defined in the 1940 Act.
In its capacity as Distributor, BISYS may enter into selling agreements with intermediaries that solicit orders for the sale of Shares, advertises and pays the costs of advertising, office space and the personnel involved in such activities. BISYS receives annual compensation of $18,750 under the Distribution Agreement. BISYS has entered into a Distribution Services Agreement with the Adviser in connection with BISYS' services as distributor of the Fund pursuant to which the Adviser undertakes to pay BISYS amounts owed to BISYS under the terms of the Distribution Agreement to the extent that the Fund is not otherwise authorized to make such payments.
Custodian
Boston Trust & Investment Management Company, One Beacon Street, Boston, Massachusetts 02108 (the "Custodian"), serves as the Fund's custodian pursuant to the Custody Agreement originally dated as of March 23, 1999. The Custodian's responsibilities include safeguarding and controlling the Fund's cash and securities, handling the receipt and delivery of securities, and collecting interest and dividends on the Fund's investments. The Custodian is an affiliate of the Fund and it receives fees for the custodial services it provides.
Transfer Agency Services
BISYS Ohio serves as transfer agent (the "Transfer Agent") to the Fund pursuant to a Transfer Agency Agreement dated as of December 8, 2005 (the "Transfer Agency Agreement"). Pursuant to such Transfer Agency Agreement, the Transfer Agent, among other things, performs the following services in connection with the Fund's shareholders of record: maintenance of shareholder records for the Fund's shareholders of record; processing shareholder purchase and redemption orders; processing transfers and exchanges of shares of the Fund on the shareholder files and records; processing dividend payments and reinvestments; and assistance in the mailing of shareholder reports and proxy solicitation materials. For such services the Transfer Agent receives a fee based on the number of shareholders of record.
Shareholder Services Agreements
The Fund is entitled to enter into Shareholder Services Agreements pursuant to which the Fund is authorized to make payments to certain entities which may include investment advisers, banks, trust companies and other types of organizations ("Authorized Service Providers") for providing administrative services with respect to shares of the Fund attributable to or held in the name of the Authorized Service Provider for its clients or other parties with whom they have a servicing relationship. Under the terms of each Shareholder Services Agreement, the Fund is authorized to pay an Authorized Service Provider (which include affiliates of the Fund) a shareholder services fee which may be based on the average daily net asset value of the shares of the Fund attributable to or held in the name of the Authorized Service Provider for providing certain administrative services to Fund shareholders with whom the Authorized Service Provider has a servicing relationship, on a fixed dollar amount for each account serviced by the Authorized Service Provider, or some combination of each of these methods of calculation. Among the types of shareholder services that may be compensated under the Agreements are: (1) answering customer inquiries of a general nature regarding the Fund; (2) responding to customer inquiries and requests regarding statements of additional information, reports, notices, proxies and proxy statements, and other Fund documents; (3) delivering prospectuses and annual and semi-annual reports to beneficial owners of Fund shares; (4) assisting the Fund in establishing and maintaining shareholder accounts and records; (5) assisting customers in changing account options, account designations and account addresses; (6) sub-accounting for all Fund share transactions at the shareholder level; (7) crediting distributions from the Fund to shareholder accounts; (8) determining amounts to be reinvested in the Fund; and (9) providing such other administrative services as may be reasonably requested and which are deemed necessary and beneficial to the shareholders of the Fund.
Independent Registered Public Accounting Firm
The independent registered public accounting firm of Tait Weller & Baker has been selected as the independent accountants for the Fund for its current fiscal year. The independent registered public accounting firm performs an annual audit of the Fund's financial statements and provides other related services. Reports of their activities are provided to the Group's Board of Trustees.
Legal Counsel
Dechert LLP, 1775 I Street, N.W., Washington, D.C. 20006, is counsel to the Group.
ADDITIONAL INFORMATION
DESCRIPTION OF SHARES
The Group is a Massachusetts business trust organized on January 8, 1992. The Group's Declaration of Trust is on file with the Secretary of State of Massachusetts. The Declaration of Trust authorizes the Board of Trustees to issue an unlimited number of shares, which are shares of beneficial interest, with a par value of $0.01 per share. The Group consists of several funds organized as separate series of shares. The Group's Declaration of Trust authorizes the Board of Trustees to divide or redivide any unissued shares of the Group into one or more additional series by setting or changing in any one or more respects their respective preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends, qualifications, and terms and conditions of redemption.
Shares have no subscription or preemptive rights and only such conversion or exchange rights as the Board of Trustees may grant in its discretion. When issued for payment as described in the Prospectus and this Statement of Additional Information, the Shares will be fully paid and non-assessable. In the event of a liquidation or dissolution of the Group, shareholders of a fund are entitled to receive the assets available for distribution belonging to that fund, and a proportionate distribution, based upon the relative asset values of the respective Funds, of any general assets not belonging to any particular Fund which are available for distribution.
Rule 18f-2 under the 1940 Act provides that any matter required to be submitted to the holders of the outstanding voting securities of an investment company such as the Group shall not be deemed to have been effectively acted upon unless approved by the holders of a majority of the outstanding shares of each Fund affected by the matter. For purposes of determining whether the approval of a majority of the outstanding shares of the Fund will be required in connection with a matter, the Funds will be deemed to be affected by a matter unless it is clear that the interests of each Fund in the matter are identical, or that the matter does not affect any interest of the Funds. Under Rule 18f-2, the approval of an investment advisory agreement or any change in investment policy would be acted effectively upon with respect to the Funds only if approved by a majority of the outstanding shares of the Funds. However, Rule 18f-2 also provides that the approval of principal underwriting contracts and the election of Trustees may be effectively acted upon by shareholders of the Group voting without regard to series.
Under Massachusetts law, shareholders, under certain circumstances, could be held personally liable for the obligations of the Group. However, the Declaration of Trust disclaims liability of the Shareholders, Trustees or officers of the Group for acts or obligations of the Group, which are binding only on the assets and property of the Group, and requires that notice of the disclaimer be given in each contract or obligation entered into or executed by the Group or the Trustees. The Declaration of Trust provides for indemnification out of Group property for all loss and expense of any shareholder held personally liable for the obligations of the Group. The risk of a shareholder incurring financial loss on account of shareholder liability is limited to circumstances in which the Group itself would be unable to meet its obligations, and thus should be considered remote.
As of the date of this Statement of Additional Information, the following entities known to the Group owned beneficially or of record 5% or more of the outstanding shares of the Fund: Boston Trust & Investment Management Company, One Beacon Street, Boston, MA 02108, which owned of record 100% of the issued and outstanding Shares of the Fund.
Vote Of A Majority Of The Outstanding Shares
As used in the Prospectus and this Statement of Additional Information, a "vote of a majority of the outstanding Shares" of the Fund means the affirmative vote, at a meeting of Shareholders duly called, of the lesser of (a) 67% or more of the votes of Shareholders of the Fund present at a meeting at which the holders of more than 50% of the votes attributable to Shareholders of record of the Fund are represented in person or by proxy, or (b) the holders of more than 50% of the outstanding votes of Shareholders of the Fund.
Additional Tax Information
Set forth below is a discussion of certain U.S. federal income tax issues concerning the Fund and the purchase, ownership, and disposition of Fund shares. This discussion does not purport to be complete or to deal with all aspects of federal income taxation that may be relevant to Shareholders in light of their particular circumstances. This discussion is based upon present provisions of the Internal Revenue Code of 1986, as amended (the "Code"), the regulations promulgated thereunder, and judicial and administrative ruling authorities, all of which are subject to change, which change may be retroactive. Prospective investors should consult their own tax advisors with regard to the federal tax consequences of the purchase, ownership, or disposition of the Fund's shares, as well as the tax consequences arising under the laws of any state, foreign country, or other taxing jurisdiction.
The Fund is treated as a separate entity for federal income tax purposes and intends each year to qualify and elect to be treated as a "regulated investment company" under the Code, for so long as such qualification is in the best interest of the Fund's shareholders. To qualify as a regulated investment company, the Fund must, among other things: diversify its investments within certain prescribed limits; derive at least 90% of its gross income from dividends, interest, payments with respect to securities loans, and gains from the sale or other disposition of securities or foreign currencies, or other income derived with respect to its business of investing in such stock, securities, or currencies; and, distribute to its Shareholders at least 90% of its investment company taxable income for the year. In general, the Fund's investment company
taxable income will be its taxable income subject to certain adjustments and excluding the excess of any net mid-term or net long-term capital gain for the taxable year over the net short-term capital loss, if any, for such year.
A non-deductible 4% excise tax is imposed on regulated investment companies that do not distribute in each calendar year (regardless of whether they otherwise have a non-calendar taxable year) an amount equal to 98% of their ordinary income for the calendar year plus 98% of their capital gain net income for the one-year period ending on October 31 of such calendar year. The balance of such income must be distributed during the next calendar year. If distributions during a calendar year were less than the required amount, the Fund would be subject to a non-deductible excise tax equal to 4% of the deficiency.
Although the Fund expects to qualify as a "regulated investment company" and thus to be relieved of all or substantially all of its federal income tax liability, depending upon the extent of its activities in states and localities in which its offices are maintained, in which its agents or independent contractors are located, or in which its is otherwise deemed to be conducting business, the Fund may be subject to the tax laws of such states or localities. In addition, if for any taxable year the Fund does not qualify for the special tax treatment afforded regulated investment companies, all of its taxable income will be subject to federal tax at regular corporate rates (without any deduction for distributions to their Shareholders). In such event, dividend distributions would be taxable to Shareholders to the extent of earnings and profits, and would be eligible for the dividends received deduction for corporations.
It is expected that the Fund will distribute annually to Shareholders all or substantially all of the Fund's net ordinary income and net realized capital gains and that such distributed net ordinary income and distributed net realized capital gains will be taxable income to Shareholders for federal income tax purposes, even if paid in additional Shares of the Fund and not in cash.
The excess of net long-term capital gains over short-term capital losses realized and distributed by the Fund and designated as capital gain dividends, whether paid in cash or reinvested in Fund shares, will be taxable to Shareholders. Currently effective tax legislation generally provides for a maximum tax rate for individual taxpayers of 15% on long-term capital gains and on certain qualifying dividend income. The rate reductions do not apply to corporate taxpayers. The Fund will be able to separately designate distributions of any qualifying long-term capital gains or qualifying dividends earned by the Fund that would be eligible for the lower maximum rate. A shareholder would also have to satisfy a 60-day holding period with respect to any distributions of qualifying dividends in order to obtain the benefit of the lower rate. Distributions resulting from the Fund's investments in bonds and other debt instruments will not generally qualify for the lower rates. Note that distributions of earnings from dividends paid by "qualified foreign corporations" can also qualify for the lower tax rates on qualifying dividends. Qualified foreign corporations are corporations incorporated in a U.S. possession, corporations whose stock is readily tradable on an established securities market in the U.S., and corporations eligible for the benefits of a comprehensive income tax treaty with the United States which satisfy certain other requirements. Foreign personal holding companies, foreign investment companies, and passive foreign investment company are not treated as "qualified foreign
corporations." Foreign tax credits associated with dividends from "qualified foreign corporations" will be limited to reflect the reduced U.S. tax on those dividends.
Foreign taxes may be imposed on the Fund by foreign countries with respect to its income from foreign securities, if any. It is expected that, because less than 50% in value of the Fund's total assets at the end of its fiscal year will be invested in stocks or securities of foreign corporations, the Fund will not be entitled under the Code to pass through to its Shareholders their pro rata share of the foreign taxes paid by the Fund. Any such taxes will be taken as a deduction by the Fund.
The Fund may be required by federal law to withhold and remit to the U.S. Treasury 28% of taxable dividends, if any, and capital gain distributions to any Shareholder, and the proceeds of redemption or the values of any exchanges of Shares of the Fund by the Shareholder, if such Shareholder (1) fails to furnish the Group with a correct taxpayer identification number, (2) under-reports dividend or interest income, or (3) fails to certify to the Group that he or she is not subject to such withholding. An individual's taxpayer identification number is his or her Social Security number.
Information as to the Federal income tax status of all distributions will be mailed annually to each Shareholder.
MARKET DISCOUNT. If the Fund purchases a debt security at a price lower than the stated redemption price of such debt security, the excess of the stated redemption price over the purchase price is "market discount". If the amount of market discount is more than a de minimis amount, a portion of such market discount must be included as ordinary income (not capital gain) by the Fund in each taxable year in which the Fund owns an interest in such debt security and receives a principal payment on it. In particular, the Fund will be required to allocate that principal payment first to the portion of the market discount on the debt security that has accrued but has not previously been includable in income. In general, the amount of market discount that must be included for each period is equal to the lesser of (i) the amount of market discount accruing during such period (plus any accrued market discount for prior periods not previously taken into account) or (ii) the amount of the principal payment with respect to such period. Generally, market discount accrues on a daily basis for each day the debt security is held by the Fund at a constant rate over the time remaining to the debt security's maturity or, at the election of the Fund, at a constant yield to maturity which takes into account the semi-annual compounding of interest. Gain realized on the disposition of a market discount obligation must be recognized as ordinary interest income (not capital gain) to the extent of the "accrued market discount."
ORIGINAL ISSUE DISCOUNT. Certain debt securities acquired by the Fund may be treated as debt securities that were originally issued at a discount. Very generally, original issue discount is defined as the difference between the price at which a security was issued and its stated redemption price at maturity. Although no cash income on account of such discount is actually received by the Fund, original issue discount that accrues on a debt security in a given year generally is treated for federal income tax purposes as interest and, therefore, such income would be subject to the distribution requirements applicable to regulated investment companies.
Some debt securities may be purchased by the Fund at a discount that exceeds the original issue discount on such debt securities, if any. This additional discount represents market discount for federal income tax purposes (see above).
OPTIONS, FUTURES AND FORWARD CONTRACTS. Any regulated futures contracts and certain options (namely, nonequity options and dealer equity options) in which the Fund may invest may be "section 1256 contracts." Gains (or losses) on these contracts generally are considered to be 60% long-term and 40% short-term capital gains or losses. Also, section 1256 contracts held by the Fund at the end of each taxable year (and on certain other dates prescribed in the Code) are "marked to market" with the result that unrealized gains or losses are treated as though they were realized.
Transactions in options, futures and forward contracts undertaken by the Fund may result in "straddles" for federal income tax purposes. The straddle rules may affect the character of gains (or losses) realized by the Fund, and losses realized by the Fund on positions that are part of a straddle may be deferred under the straddle rules, rather than being taken into account in calculating the taxable income for the taxable year in which the losses are realized. In addition, certain carrying charges (including interest expense) associated with positions in a straddle may be required to be capitalized rather than deducted currently. Certain elections that the Fund may make with respect to its straddle positions may also affect the amount, character and timing of the recognition of gains or losses from the affected positions.
Because only a few regulations implementing the straddle rules have been promulgated, the consequences of such transactions to the Fund are not entirely clear. The straddle rules may increase the amount of short-term capital gain realized by the Fund, which is taxed as ordinary income when distributed to Shareholders. Because application of the straddle rules may affect the character of gains or losses, defer losses and/or accelerate the recognition of gains or losses from the affected straddle positions, the amount which must be distributed to Shareholders as ordinary income or long-term capital gain may be increased or decreased substantially as compared to a fund that did not engage in such transactions.
CONSTRUCTIVE SALES. Under certain circumstance, the Fund may recognize gain from the constructive sale of an appreciated financial position. If the Fund enter into certain transactions in property while holding substantially identical property, the Fund would be treated as if it had sold and immediately repurchased the property and would be taxed on any gain (but not loss) from the constructive sale. The character of gain from a constructive sale would depend upon the Fund's holding period in the property. Loss from a constructive sale would be recognized when the property was subsequently disposed of, and its character would depend on the Fund's holding period and the application of various loss deferral provisions of the Code. Constructive sale treatment does not apply to transactions closed in the 90-day period ending with the 30th day after the close of the taxable year, if certain conditions are met.
SECTION 988 GAINS OR LOSSES. Gains or losses attributable to fluctuations in exchange rates which occur between the time the Fund accrues income or other receivables or accrues expenses or other liabilities denominated in a foreign currency and the time the Fund actually collects such receivables or pays such liabilities generally are treated as ordinary income
or ordinary loss. Similarly, on disposition of some investments, including debt securities and certain forward contracts denominated in a foreign currency, gains or losses attributable to fluctuations in the value of the foreign currency between the acquisition and disposition of the position also are treated as ordinary gain or loss. These gains and losses, referred to under the Code as "section 988" gains or losses, increase or decrease the amount of the Fund's investment company taxable income available to be distributed to its Shareholders as ordinary income. If section 988 losses exceed other investment company taxable income during a taxable year, the Fund would not be able to make any ordinary dividend distributions, or distributions made before the losses were realized would be recharacterized as a return of capital to Shareholders, rather than as an ordinary dividend, reducing each Shareholder's basis in his or her Fund shares.
PASSIVE FOREIGN INVESTMENT COMPANIES. The Fund may invest in shares of foreign corporations that may be classified under the Code as passive foreign investment companies ("PFICs"). In general, a foreign corporation is classified as a PFIC if at least one-half of its assets constitute investment-type assets, or 75% or more of its gross income is investment-type income. If the Fund receives a so-called "excess distribution" with respect to PFIC stock, the Fund itself may be subject to a tax on a portion of the excess distribution, whether or not the corresponding income is distributed by the Fund to Shareholders. In general, under the PFIC rules, an excess distribution is treated as having been realized ratably over the period during which the Fund held the PFIC shares. The Fund will itself be subject to tax on the portion, if any, of an excess distribution that is so allocated to prior Fund taxable years and an interest factor will be added to the tax, as if the tax had been payable in such prior taxable years. Certain distributions from a PFIC as well as gain from the sale of PFIC shares are treated as excess distributions. Excess distributions are characterized as ordinary income even though, absent application of the PFIC rules, certain excess distributions might have been classified as capital gain.
The Fund may be eligible to elect alternative tax treatment with respect to PFIC shares. Under an election that currently is available in some circumstances, the Fund would be required to include in its gross income its share of the earnings of a PFIC on a current basis, regardless of whether distributions were received from the PFIC in a given year. If this election were made, the special rules, discussed above, relating to the taxation of excess distributions, would not apply. In addition, another election would involve marking to market the Fund's PFIC shares at the end of each taxable year, with the result that unrealized gains would be treated as though they were realized and reported as ordinary income. Any mark-to-market losses and any loss from an actual disposition of PFIC shares would be deductible as ordinary losses to the extent of any net mark-to-market gains included in income in prior years.
YIELDS AND TOTAL RETURNS
YIELD CALCULATIONS. Yields on the Fund's Shares are computed by dividing the net investment income per share (as described below) earned by the Fund during a 30-day (or one month) period by the maximum offering price per share on the last day of the period and annualizing the result on a semi-annual basis by adding one to the quotient, raising the sum to the power of six, subtracting one from the result and then doubling the difference. The net investment income per share of the Fund earned during the period is based on the average daily number of Shares of the Fund outstanding during the period entitled to receive dividends and
includes dividends and interest earned during the period minus expenses accrued for the period, net of reimbursements. This calculation can be expressed as follows:
a - b
Yield = 2 [(cd + 1)exp(6) - 1]
Where: a = dividends and interest earned during the period.
b = expenses accrued for the period (net of reimbursements).
c = the average daily number of Shares outstanding during the period that were entitled to receive dividends.
d = maximum offering price per Share on the last day of the period.
For the purpose of determining net investment income earned during the period (variable "a" in the formula), dividend income on equity securities held by the Fund is recognized by accruing 1/360 of the stated dividend rate of the security each day that the security is held by the Fund. Interest earned on any debt obligations held by the Fund is calculated by computing the yield to maturity of each obligation held by the Fund based on the market value of the obligation (including actual accrued interest) at the close of business on the last Business Day of each month, or, with respect to obligations purchased during the month, the purchase price (plus actual accrued interest) and dividing the result by 360 and multiplying the quotient by the market value of the obligation (including actual accrued interest) in order to determine the interest income on the obligation for each day of the subsequent month that the obligation is held by the Fund. For purposes of this calculation, it is assumed that each month contains 30 days. The maturity of an obligation with a call provision is the next call date on which the obligation reasonably may be expected to be called or, if none, the maturity date. With respect to debt obligations purchased at a discount or premium, the formula generally calls for amortization of the discount or premium. The amortization schedule will be adjusted monthly to reflect changes in the market values of such debt obligations.
Undeclared earned income will be subtracted from the net asset value per share (variable "d" in the formula). Undeclared earned income is the net investment income which, at the end of the base period, has not been declared as a dividend, but is reasonably expected to be and is declared as a dividend shortly thereafter.
During any given 30-day period, the Adviser, Administrator or Distributor may voluntarily waive all or a portion of their fees with respect to the Fund. Such waiver would cause the yield of the Fund to be higher than it would otherwise be in the absence of such a waiver.
TOTAL RETURN CALCULATIONS. Average annual total return is a measure of the change in value of an investment in the Fund over the period covered, which assumes any dividends or capital gains distributions are reinvested in Shares of the Fund immediately rather than paid to the investor in cash. The Fund computes the average annual total return by determining the average annual compounded rates of return during specified periods that equate the initial amount invested to the ending redeemable value of such investment. This is done by
dividing the ending redeemable value of a hypothetical $1,000 initial payment by $1,000 and raising the quotient to a power equal to one divided by the number of years (or fractional portion thereof) covered by the computation and subtracting one from the result. This calculation can be expressed as follows:
Average Annual
Total Return = [(ERV/P)exp(1/n)-1]
Where: ERV = ending redeemable value at the end of the period covered by the computation of a hypothetical $1,000 payment made at the beginning of the period.
P = hypothetical initial payment of $1,000.
n = period covered by the computation, expressed in terms of years.
The Fund computes its aggregate total return by determining the aggregate compounded rate of return during specified periods that likewise equate the initial amount invested to the ending redeemable value of such investment. The formula for calculating aggregate total return is as follows:
Aggregate Total Return = [(ERV/P)-1]
ERV = ending redeemable value at the end of the period covered by the computation of a hypothetical $1,000 payment made at the beginning of the period.
P = hypothetical initial payment of $1,000.
The calculations of average annual total return and aggregate total return assume the reinvestment of all dividends and capital gain distributions on the reinvestment dates during the period. The ending redeemable value (variable "ERV" in each formula) is determined by assuming complete redemption of the hypothetical investment and the deduction of all nonrecurring charges at the end of the period covered by the computations.
The Fund computes its average annual total return after taxes on distributions by determining the average annual compounded rates of return during specified periods that equate the initial amount invested to the ending redeemable value of such investment after taxes on fund distributions but not after taxes on redemptions. This is done by dividing the ending redeemable value after taxes on fund distributions of a hypothetical $1,000 initial payment by $1,000 and raising the quotient to a power equal to one divided by the number of years (or fractional portion thereof) covered by the computation and subtracting one from the result. This calculation can be expressed as follows:
Average Annual Total Return After Taxes = [(ATV(D)/P)exp(1/n)-1]
(after taxes on distributions)
Where: P = a hypothetical initial payment of $1,000.
n = number of years.
ATV(D) = ending value of a hypothetical $1,000 payment made at the beginning of the 1-, 5-, or 10-year periods at the end of such
periods after taxes on fund distributions but not after taxes on redemption.
The Fund compute its average annual total return after taxes on distributions and redemptions by determining the average annual compounded rates of return during specified periods that equate the initial amount invested to the ending redeemable value of such investment after taxes on fund distributions and redemptions. This is done by dividing the ending redeemable value after taxes on fund distributions and redemptions of a hypothetical $1,000 initial payment by $1,000 and raising the quotient to a power equal to one divided by the number of years (or fractional portion thereof) covered by the computation and subtracting one from the result. This calculation can be expressed as follows:
Average Annual Total Return After Taxes
(after taxes on distributions and
redemptions) = [(ATV(DR)/P)exp 1/n-1]
Where: P = a hypothetical initial payment of $1,000.
n = number of years.
ATV(DR) = ending value of a hypothetical $1,000 payment made at the beginning of the 1-, 5-, or 10-year periods at the end of such periods, after taxes on fund distributions and redemption.
After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor's tax situation and may differ from those shown, and after-tax returns shown are not relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts.
Performance Comparisons
Investors may analyze the performance of the Fund by comparing them to the performance of other mutual funds or mutual fund portfolios with comparable investment objectives and policies through various mutual fund or market indices such as those prepared by Frank Russell Company, Dow Jones & Co., Inc. and Standard & Poor's Corporation and to data prepared by Lipper Analytical Services, Inc., a widely recognized independent service which monitors the performance of mutual funds. Comparisons may also be made to indices or data published in Money Magazine, Forbes, Barron's, The Wall Street Journal, Morningstar, Inc., Ibbotson Associates, CDA/Wiesenberger, The New York Times, Business Week, USA Today and local periodicals. In addition to performance information, general information about the Fund that appears in a publication such as those mentioned above may be included in advertisements, sales literature and reports to shareholders. The Fund may also include in advertisements and reports to shareholders information discussing the performance of the Adviser in comparison to other investment advisers.
From time to time, the Group may include the following types of information
in advertisements, supplemental sales literature and reports to Shareholders:
(1) discussions of general economic or financial principles (such as the effects
of inflation, the power of
compounding and the benefits of dollar cost averaging); (2) discussions of general economic trends; (3) presentations of statistical data to supplement such discussions; (4) descriptions of past or anticipated portfolio holdings for one or more of the Funds within the Group; (5) descriptions of investment strategies for one or more of such Funds; (6) descriptions or comparisons of various investment products, which may or may not include the Fund; (7) comparisons of investment products (including the Fund) with relevant market or industry indices or other appropriate benchmarks; (8) discussions of fund rankings or ratings by recognized rating organizations; and (9) testimonials describing the experience of persons that have invested in one or more of the Funds. The Group may also include calculations, such as hypothetical compounding examples, which describe hypothetical investment results in such communications. Such performance examples must state clearly that they are based on an express set of assumptions and are not indicative of the performance of any Fund.
Current yields or total return will fluctuate from time to time and may not be representative of future results. Accordingly, the Fund's yield or total return may not provide for comparison with bank deposits or other investments that pay a fixed return for a stated period of time. Yield and total return are functions of the Fund's quality, composition and maturity, as well as expenses allocated to the Fund.
Proxy Voting
The Board of Trustees of the Group has adopted proxy voting policies and procedures (the "Group Policy"), pursuant to which the Trustees have delegated proxy voting responsibility to the Adviser and adopted the Adviser's proxy voting policies and procedures (the "Policy") which are described below. The Trustees will review the Fund's proxy voting records from time to time and will annually consider approving the Policy for the upcoming year. In the event that a conflict of interest arises between the Fund's Shareholders and the Adviser or any of its affiliates or any affiliate of the Fund, the Adviser will generally refrain from voting the proxies related to the companies giving rise to such conflict until it consults with the Board of Trustees. A Committee of the Board with responsibility for proxy oversight will instruct the Adviser on the appropriate course of action.
The Policy is designed to promote accountability of a company's management to its shareholders and to align the interests of management with those of shareholders. The Adviser generally reviews each matter on a case-by-case basis in order to make a determination of how to vote in a manner that best serves the interests of Fund shareholders. The Adviser may abstain from voting from time to time where it determines that the costs associated with voting a proxy outweigh the benefits derived from exercising the right to vote. In addition, the Adviser will monitor situations that may result in a conflict of interest between the Fund's shareholders and the Adviser or any of its affiliates or any affiliate of the Fund by maintaining a list of significant existing and prospective corporate clients. Information on how the Fund voted proxies relating to portfolio securities during each 12 month period ending June 30th of each year is available (1) without charge, upon request, by calling 1-800-282-8782, ext. 7050, and (2) on the Fund's Form N-PX on the Securities and Exchange Commission's website at http://www.sec.gov.
Disclosure of Fund Portfolio Holdings
The Board of Trustees has adopted policies and procedures for the public and nonpublic disclosure of the Fund's portfolio securities. A complete list of the Fund's portfolio holdings is made publicly available on a quarterly basis through filings made with the SEC on Forms N-CSR and N-Q. As a general matter, in order to protect the confidentiality of the Fund's portfolio holdings, no information concerning the portfolio holdings of the Fund may be disclosed to any unaffiliated third party except: (1) to service providers that require such information in the course of performing their duties (such as the Fund's custodian, fund accountants, investment adviser, administrator, independent public accountants, attorneys, officers and trustees and each of their respective affiliates and advisors) and are subject to a duty of confidentiality; (2) in marketing materials, provided that the information regarding the portfolio holdings contained therein is at least fifteen days old; or (3) pursuant to certain enumerated exceptions that serve a legitimate business purpose. These exceptions include: (1) disclosure of portfolio holdings only after such information has been publicly disclosed, and (2) to third-party vendors, such as Morningstar Investment Services, Inc. and Lipper Analytical Services that (a) agree to not distribute the portfolio holdings or results of the analysis to third parties, other departments or persons who are likely to use the information for purposes of purchasing or selling the Fund before the portfolio holdings or results of the analysis become publicly available; and (b) sign a written confidentiality agreement, or where the Board of Trustees has determined that the polices of the recipient are adequate to protect the information that is disclosed. The confidentiality agreement must provide, among other things, that the recipient of the portfolio holdings information agrees to limit access to the portfolio information to its employees (and agents) who, on a need to know basis, are (1) authorized to have access to the portfolio holdings information and (2) subject to confidentiality obligations, including duties not to trade on non-public information, no less restrictive than the confidentiality obligations contained in the confidentiality agreement. Such disclosures must be authorized by the President or Chief Compliance Officer of the Adviser and shall be reported periodically to the Board.
Neither the Fund nor the Adviser may enter into any arrangement providing for the disclosure of non-public portfolio holding information for the receipt of compensation or benefit of any kind. Any exceptions to the policies and procedures may only be made by the consent of a majority of the Board of Trustees upon a determination that such disclosure serves a legitimate business purpose and is in the best interests of the Fund. Any amendments to these policies and procedures must be approved and adopted by the Board of Trustees. The Board may, on a case-by-case basis, impose additional restrictions on the dissemination of portfolio holdings information beyond those found in the policies and procedures, as necessary.
MISCELLANEOUS
Individual Trustees are generally elected by the Shareholders and, subject to removal by the vote of two-thirds of the Board of Trustees, serve for a term lasting until the next meeting of shareholders at which Trustees are elected. Such meetings are not required to be held at any specific intervals.
The Group is registered with the Commission as an investment management company. Such registration does not involve supervision by the Commission of the management or policies of the Group.
The Prospectus and this Statement of Additional Information are not an offering of the securities herein described in any state in which such offering may not lawfully be made. No salesperson, dealer, or other person is authorized to give any information or make any representation other than those contained in the Prospectus and this Statement of Additional Information.
FINANCIAL STATEMENTS
The financial statements of the Fund, when available, will appear in the Fund's Annual Report to Shareholders and will be audited by Tait Weller & Baker, the Fund's independent registered public accounting firm.
ITEM 22. EXHIBITS
(a)(1) Declaration of Trust(1)
(a)(2) Establishment and Designation of Series of Shares (Boston Trust Small Cap Fund),(8)
(b)(1) By-Laws(2)
(c) Certificates for Shares are not issued. Articles IV, V, VI and VII of the Declaration of Trust, previously filed as Exhibit (a) hereto, define rights of holders of Shares(1)
(d)(1) Investment Advisory Agreement between Registrant and Boston Trust Investment Management(7)
(d)(2) Amended Schedule A to the Investment Advisory Agreement(8)
(e)(1) Distribution Agreement between Registrant and BISYS Fund Services(7)
(e)(2) Amended Schedule A to the Distribution Agreement(8)
(e)(3) Distribution Services Agreement(7)
(f) Not Applicable
(g) Custody Agreement between Registrant and Boston Trust & Investment Management Company(3)
(h)(1) Administration Agreement between the Registrant and BISYS Fund Services(3)
(h)(2) Amended Schedule A to the Administration Agreement(8)
(h)(3) Fund Accounting Agreement between the Registrant and BISYS Fund Services(3)
(h)(4) Transfer Agency Agreement between the Registrant and BISYS Fund Services(8)
(h)(5) Expense Limitation Agreement between the Registrant and United States Trust Company of Boston(3)
(h)(6) Amended Schedule A to the Expense Limitation Agreement(8)
(h)(7) Shareholder Services Agreement (for the Boston Trust Small Cap Fund)(8)
(i) Opinion and Consent of Counsel(8)
(j) Not Applicable
(k) Not Applicable
(l) Not Applicable
(m) Not Applicable
(n) Not Applicable
(o) Not Applicable
(p)(1) Code of Ethics of Registrant(6)
(p)(2) Code of Ethics of BISYS Fund Services(6)
1. Filed with initial Registration Statement on January 8, 1992 and
incorporated by reference herein.
2. Filed with Post-Effective Amendment No. 2 on September 4, 1992 and
incorporated by reference herein.
3. Filed with Post-Effective Amendment No. 51 on June 18, 1999 and
incorporated by reference herein.
4. Filed with Post-Effective Amendment No. 71 on June 30, 2000.
5. Filed with Post-Effective Amendment No. 93 on August 1, 2002.
6. Filed with Post-Effective Amendment No. 103 filed July 28, 2004.
7. Filed with Post-Effective Amendment No. 111 filed August 2, 2005.
8. Filed herewith.
ITEM 23. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
Not applicable.
ITEM 24. INDEMNIFICATION
Article IV of the Registrant's Declaration of Trust states
as follows:
SECTION 4.3. MANDATORY INDEMNIFICATION.
(a) Subject to the exceptions and limitations contained
in paragraph
(b) below:
(i) every person who is, or has been, a Trustee or officer of the Trust shall be indemnified by the Trust to the fullest extent permitted by law against all liability and against all expenses reasonably incurred or paid by him in connection with any claim, action, suit or proceeding in which he becomes involved as a party or otherwise by virtue of his being or having been a Trustee or officer and against amounts paid or incurred by him in the settlement thereof; and (ii) the words "claim," "action," "suit," or "proceeding" shall apply to all claims, actions, suits or proceedings (civil, criminal, administrative or other, including appeals), actual or threatened; and the words "liability" and "expenses" shall include, without limitation, attorneys fees, costs, judgments, amounts paid in settlement, fines, penalties and other liabilities.
(b) No indemnification shall be provided hereunder to a Trustee or officer:
(i) against any liability to the Trust, a Series thereof, or the Shareholders by reason of a final adjudication by a court or other body before which a proceeding was brought
that he engaged in willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his office;
(ii) with respect to any matter as to which he shall have been finally adjudicated not to have acted in good faith in the reasonable belief that his action was in the best interest of the Trust; or
(iii) in the event of a settlement or other disposition not involving a final adjudication as provided in paragraph (b)(i) or (b)(ii) resulting in a payment by a Trustee or officer, unless there has been a determination that such Trustee or officer did not engage in willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his office:
(A) by the court or other body approving the settlement or other disposition; or (B) based upon a review of readily available facts (as opposed to a full trial-type inquiry) by (1) vote of a majority of the Disinterested Trustees acting on the matter (provided that a majority of the Disinterested Trustees then in office acts on the matter) or (2) written opinion of independent legal counsel.
(c) The rights of indemnification herein provided may be insured against by policies maintained by the Trust, shall be severable, shall not affect any other rights to which any Trustee or officer may now or hereafter be entitled, shall continue as to a person who has ceased to be such Trustee or officer and shall inure to the benefit of the heirs, executors, administrators and assigns of such person. Nothing contained herein shall affect any rights to indemnification to which personnel of the Trust other than Trustees and officers may be entitled by contract or otherwise under law.
(d) Expenses of preparation and presentation of a defense to any claim, action, suit or proceeding of the character described in paragraph (a) of this Section 4.3 may be advanced by the Trust prior to final disposition thereof upon receipt of an undertaking by or on behalf of the recipient to repay such amount if it is ultimately determined that he is not entitled to indemnification under this Section 4.3, provided that either:
(i) such undertaking is secured by a surety bond or some other appropriate security provided by the recipient, or the Trust shall be insured against losses arising out of any such advances; or
(ii) a majority of the Disinterested Trustees acting on the matter
(provided that a majority of the Disinterested Trustees acts on the matter) or an independent legal counsel in a written opinion shall determine, based upon a review of readily available facts (as opposed to a full trial-type inquiry), that there is reason to believe that the recipient ultimately will be found entitled to indemnification.
As used in this Section 4.3, a "Disinterested Trustee" is one who is not (i) an Interested Person of the Trust (including anyone who has been exempted from being an Interested Person by any rule, regulation or order of the Commission), or (ii) involved in the claim, action, suit or proceeding.
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to trustees, officers and controlling persons of the Registrant by the Registrant pursuant to the Declaration of Trust or otherwise, the Registrant is aware that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Act, and therefore, is unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by trustees, officers or controlling persons of the Registrant in connection with the successful defense of any act, suit or proceeding) is asserted by such trustees, officers or controlling persons in connection with the shares being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issues.
ITEM 25. BUSINESS AND OTHER CONNECTIONS OF THE INVESTMENT ADVISER
(a) Boston Trust Investment Management, Inc., Boston, Massachusetts, is the investment adviser for the Funds. The business and other connections of Boston Trust Investment Management, Inc. are set forth in the Uniform Application for Investment Adviser Registration ("Form ADV") of Boston Trust Investment Management, Inc. as currently filed with the SEC which is incorporated by reference herein.
ITEM 26. PRINCIPAL UNDERWRITER
(a) BISYS Fund Services, Limited Partnership ("BISYS"
or the "Distributor") acts as principal underwriter
for the following investment companies;
American Independence Funds Trust
American Performance Funds
BB&T Funds
The Coventry Group
Excelsior Funds, Inc.
First Focus Funds, Inc.
The Hirtle Callaghan Trust
HSBC Advisor Funds Trust
HSBC Investor Funds
HSBC Investor Portfolios
Legacy Funds Group
Old Westbury Funds, Inc.
Pacific Capital Funds
STI Classic Funds
STI Classic Variable Trust
USAllianz Variable Insurance Products Trust
Variable Insurance Funds
Vintage Mutual Funds, Inc.
BISYS is registered with the Securities and Exchange Commission as a broker-dealer and is a member of the National Association of Securities Dealers. BISYS' main address is 100 Summer Street, 15th Floor, Boston, Massachusetts, 02110. Office of Supervisory Jurisdiction (OSJ) Branch is located at 3435 Stelzer Road, Columbus, Ohio 43219. BISYS is an indirect wholly-owned subsidiary of The BISYS Group, Inc.
(b) Information about Directors and Officers of BISYS is as follows:
Name and Principal Business Position with Underwriter Position with Registrant Address BISYS Fund Services Ohio, Inc. Sole Limited Partner None 3435 Stelzer Road Columbus, Ohio 43219 BISYS Fund Services, Inc.* Sole General Partner None 3435 Stelzer Road Columbus, Ohio 43219 |
* Richard F. Froio - Executive Representative and Supervising Principal
William J. Tomko - Supervising Principal, Columbus OSJ
(c) Not applicable
ITEM 27. LOCATION OF ACCOUNTS AND RECORDS
(a) The accounts, books, and other documents required to be maintained by Registrant pursuant to Section 31(a) of the Investment Company Act of 1940 and rules promulgated thereunder are in the possession of Boston Trust Investment Management, Inc., One Beacon Street, Boston, Massachusetts, 02108 (records relating to its function as investment adviser); BISYS Fund Services, 3435 Stelzer Road, Columbus, Ohio 43219 (records relating to its functions as administrator, distributor and transfer agent) and Boston Trust & Investment Management Company, One Beacon Street, Boston, Massachusetts 02108 (records relating to its function as custodian).
ITEM 28. MANAGEMENT SERVICES
Not Applicable.
ITEM 29. UNDERTAKINGS
None
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant certifies that it meets all of the requirements for effectiveness of this Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly caused this Post-Effective Amendment No. 118 to its Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Washington in the District of Columbia on the 16th day of December, 2005.
THE COVENTRY GROUP
By: /s/ R. Jeffrey Young
---------------------
R. Jeffrey Young
By: /s/ Patrick W.D. Turley
--------------------------
Patrick W.D. Turley, as attorney-in-fact
|
Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities and on the date indicated:
Signature Title Date ----------- ------ ------ /s/Walter B. Grimm Trustee December 16, 2005 ------------------------ Walter B. Grimm** /s/ Diane E. Armstrong Trustee December 16, 2005 ------------------------ Diane E. Armstrong**** /s/ Maurice G. Stark Trustee December 16, 2005 ------------------------ Maurice G. Stark* /s/ Michael M. Van Buskirk Trustee December 16, 2005 ------------------------ Michael M. Van Buskirk* /s/ R. Jeffrey Young President December 16, 2005 ------------------------ (Principal Executive Officer) R. Jeffrey Young*** /s/ Chris Sabato Treasurer (Principal December 16, 2005 ------------------------ Chris Sabato Financial and Accounting Officer) |
By: /s/ Patrick W.D. Turley
----------------------------------------
Patrick W.D. Turley, as attorney-in-fact
|
* Pursuant to power of attorney filed with Pre-Effective Amendment No. 3 on April 6, 1992.
** Pursuant to power of attorney filed with Post-Effective Amendment No. 26 on May 1, 1996.
*** Pursuant to power of attorney filed with Post-Effective Amendment No. 63 on November 30, 1999.
**** Pursuant to power of attorney filed with Post-Effective Amendment No. 107 on June 2, 2005.
EXHIBIT (a)(2)
THE COVENTRY GROUP
Establishment and Designation of a Series of Shares of Beneficial Interest, Par Value $0.01 Per Share
RESOLVED, that pursuant to Section 5.11 of the Declaration of Trust of The Coventry Group (the "Trust") dated January 8, 1992, ("Declaration"), a separate series of the shares of beneficial interest of the Trust shall hereby be established, relating to the Trust's new investment portfolio (the "Fund");
FURTHER RESOLVED, that the Fund shall have the following special and relative rights:
1. The Fund shall be designated: "Boston Trust Small Cap Fund."
2. The Fund shall be authorized to invest in cash, securities, instruments and other property as from time to time described in the Fund's then currently effective prospectus and registration statement under the Securities Act of 1933. Each share of beneficial interest of the Fund ("Share") shall be redeemable, shall be entitled to one vote (or fraction thereof in respect of a fractional Share) on matters on which Shares of the Fund shall be entitled to vote, shall represent a pro rata beneficial interest in the assets allocated to the Fund, and shall be entitled to receive its pro rata share of net assets of the Fund upon liquidation of the Fund, all as provided in the Declaration.
3. Shareholders of each series of shares of the Trust shall vote
separately as a class on any matter, except, consistent with the Investment
Company Act of 1940, as amended ("the Act"), and the rules thereunder, and the
Trust's registration statement, with respect to (i) the election of Trustees,
(ii) any amendment of the Declaration, unless the amendment affects fewer than
all classes of shares, in which case only shareholders of the affected classes
shall vote, and (iii) ratification of the selection of auditors. In each case of
separate voting, the Trustees shall determine whether, for the matter to be
effectively acted upon within the meaning of Rule 18f-2 under the Act (or any
successor rule) as to a series, the applicable percentage (as specified in the
Declaration, or the Act and the rules thereunder) of the shares of that series
alone must be voted in favor of the matter, or whether the favorable vote of
such applicable percentage of the shares of each series entitled to vote on the
matter is required.
4. The assets and liabilities of the Trust shall be allocated among the series of the Trust as set forth in Section 5.11(d) of the Declaration.
5. The Trustees shall have the right at any time and from time to time to reallocate assets and expenses or to change the designation of the Fund hereby created, or to otherwise change the special and relative rights of each such Fund, provided that such change shall not adversely affect the rights of the Shareholders of such Fund.
IN WITNESS WHEREOF, the undersigned have executed this instrument this 8th day of December, 2005.
/s/ Walter B. Grimm /s/ Diane E. Armstrong ------------------------- ------------------------ Walter B. Grimm Diane E. Armstrong /s/ Maurice G. Stark R. Jeffrey Young -------------------------- ------------------------ Maurice G. Stark R. Jeffrey Young /s/ Michael M. Van Buskirk -------------------------- Michael M. Van Buskirk |
EXHIBIT (d)(2)
Dated: December 16, 2005
Schedule A
to the
Investment Advisory Agreement
Between The Coventry Group and
Boston Trust Investment Management, Inc.
Name of Fund Compensation1
------------ ------------
Boston Balanced Fund .75% of average daily net assets
Boston Equity Fund .75% of average daily net assets
Boston Trust Small Cap Fund .75% of average daily net assets
Walden Social Balanced Fund .75% of average daily net assets
Walden Social Equity Fund .75% of average daily net assets
THE COVENTRY GROUP BOSTON TRUST INVESTMENT MANAGEMENT, INC.
By: By:
--------------------------- -------------------------------------
Name: Name:
------------------------- ------------------------------------
Title: Title:
------------------------ ----------------------------------
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EXHIBIT (e)(2)
Dated: December 16, 2005
Schedule A
to the
Distribution Agreement
between The Coventry Group and
BISYS Fund Services Limited Partnership
Name of Fund
Boston Balanced Fund
Boston Equity Fund
Boston Trust Small Cap Fund
Walden Social Balanced Fund
Walden Social Equity Fund
EXHIBIT(h)(2)
Dated: December 16, 2005
SCHEDULE A
TO THE ADMINISTRATION AGREEMENT
BETWEEN
THE COVENTRY GROUP
AND
BISYS FUND SERVICES OHIO, INC.
Portfolios: This Agreement shall apply to all Boston Trust/Walden Fund
Portfolios of The Coventry Group advised by Boston Trust
Investment Management, Inc. ("BTIM"), either now or hereafter
created (individually, the "Portfolio", and collectively, the
"Portfolios"). The current Portfolios of the Trust advised by
BTIM are set forth below:
Boston Balanced Fund
Boston Equity Fund
Boston Trust Small Cap Fund
Walden Social Balanced Fund
Walden Social Equity Fund
Fees: Pursuant to Article 4, in consideration of services rendered
and expenses assumed pursuant to this Agreement and pursuant
to the Fund Accounting Agreement executed between the Trust
and BISYS FUND SERVICES OHIO, INC. with respect to fund
accounting services to be provided by BISYS FUND SERVICES
OHIO, INC. to portfolios of the Boston Trust Funds, the Trust
will pay the Administrator on the first business day of each
month, or at such time(s) as the Administrator shall request
and the parties hereto shall agree, a fee computed daily at
the annual rate of:
.20% of each
Portfolio's average daily net assets.
The fee for the period from the day of the month this
Agreement is entered into until the end of that month shall be
prorated according to the proportion which such period bears
to the full monthly period. Upon any termination of this
Agreement before the end of any month, the fee for such part
of a month shall be prorated according to the proportion which
such period bears to the full monthly period and shall be
payable upon the date of termination of this Agreement.
For purposes of determining the fees payable to the
Administrator, the value of the net assets of a particular
Portfolio shall be computed in the manner described
|
in the Trust's Declaration of Trust or Articles of
Incorporation or in the Prospectus or Statement of Additional
Information respecting that Portfolio as from time to time is
in effect for the computation of the value of such net assets
in connection with the determination of the liquidating value
of the shares of such Portfolio.
The parties hereby confirm that the fees payable hereunder
shall be applied to each Portfolio as a whole, and not to
separate classes of shares within the Portfolios.
The fee payable by the Trust hereunder shall be allocated to
each Portfolio based upon its pro rata share of the total fee
payable hereunder. Such fee as is attributable to each
Portfolio shall be a separate (and not joint or joint and
several) obligation of each such Portfolio. The Administrator
may agree, from time to time, to waive any fees payable under
this Agreement. Such waiver shall be at the Administrator's
sole discretion.
Term: Pursuant to Article 7, the term of this Agreement shall
commence on date of the contract and shall remain in effect
through June 1, 2001 ("Initial Term"). Thereafter, unless
otherwise terminated as provided herein, this Agreement shall
be renewed automatically for successive one-year periods
("Rollover Periods"). This Agreement may be terminated without
penalty (i) by provision of a notice of nonrenewal in the
manner set forth below, (ii) by mutual agreement of the
parties or (iii) for "cause," as defined below, upon the
provision of 60 days advance written notice by the party
alleging cause. Written notice of nonrenewal must be provided
at least 60 days prior to the end of the Initial Term or any
Rollover Period, as the case may be.
For purposes of this Agreement, "cause" shall mean (a) a
material breach of this Agreement that has not been remedied
for thirty (30) days following written notice of such breach
from the non-breaching party; (b) a final, unappealable
judicial, regulatory or administrative ruling or order in
which the party to be terminated has been found guilty of
criminal or unethical behavior in the conduct of its business,
a final, unappealable judicial, regulatory or administrative
ruling or order in which the party to be terminated has been
found guilty of some substantive shortcoming in its business
practices with respect to the Funds; or (c) financial
difficulties on the part of the party to be terminated which
are evidenced by the authorization or commencement of, or
involvement by way of pleading, answer, consent or
acquiescence in, a voluntary or involuntary case under Title
11 of the United States Code, as from time to time is in
effect, or any applicable law, other than said Title 11, of
any jurisdiction relating to the liquidation or reorganization
of debtors or to the modification or alteration of the rights
of creditors.
Notwithstanding the foregoing, after such termination for so
long as the Administrator, with the written consent of the
Trust, in fact continues to perform
|
any one or more of the services contemplated by this Agreement or any schedule or exhibit hereto, the provisions of this Agreement, including without limitation the provisions dealing with indemnification, shall continue in full force and effect. Compensation due the Administrator and unpaid by the Trust upon such termination shall be immediately due and payable upon and notwithstanding such termination. The Administrator shall be entitled to collect from the Trust, in addition to the compensation described in this Schedule A, the amount of all of the Administrator's cash disbursements for services in connection with the Administrator's activities in effecting such termination, including without limitation, the delivery to the Trust and/or its designees of the Trust's property, records, instruments and documents.
If, for any reason other than (i) nonrenewal, (ii) mutual
agreement of the parties, (iii) "cause," as defined above, or
(iv) the termination of a Fund's operations for legitimate
economic reasons (e.g., diminished asset size), the
Administrator is replaced as administrator, or if a third
party is added to perform all or a part of the services
provided by the Administrator under this Agreement (excluding
any sub-administrator appointed by the Administrator as
provided in Article 7 hereof), then the Trust shall make a
one-time cash payment, in consideration of the fee structure
and services to be provided under this Agreement, and not as a
penalty, to the Administrator equal to the balance due the
Administrator for the lesser of: (i) the remainder of the
then-current term of this Agreement or (ii) the next twelve
(12) months of the then-current term of this Agreement,
assuming for purposes of calculation of the payment that such
balance shall be based upon the average amount of the Trust's
assets for the twelve months prior to the date the
Administrator is replaced or a third party is added.
In the event the Trust is merged into another legal entity in part or in whole pursuant to any form of business reorganization or is liquidated in part or in whole prior to the expiration of the then-current term of this Agreement, the parties acknowledge and agree that the liquidated damages provision set forth above shall be applicable in those instances in which the Administrator is not retained to provide administration services consistent with this Agreement. The one-time cash payment referenced above shall be due and payable on the day prior to the first day in which the Administrator is replaced or a third party is added.
EXHIBIT (h)(4)
TRANSFER AGENCY AGREEMENT
TRANSFER AGENCY AGREEMENT (the "Agreement") dated as of December 16, 2005 between The Coventry Group (the "Company") and BISYS Fund Services Ohio, Inc. ("BISYS").
WHEREAS, the Company is registered with the Securities and Exchange Commission (the "Commission") as an open-end management investment company under the Investment Company Act of 1940, as amended (the "1940 Act");
WHEREAS, the Company desires that BISYS perform transfer agency services for the Company and each investment portfolio of the Company as now in existence and listed on Schedule A to this Agreement and as hereafter may be established from time to time (individually referred to herein as the "Fund" and collectively as the "Funds"); and
WHEREAS, BISYS is willing to perform such services on the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the covenants hereinafter contained, the Company and BISYS hereby agree as follows:
1. Services
(a) BISYS shall perform for the Company the transfer agent services set forth in Schedule B to this Agreement. BISYS also agrees to perform for the Company such special services incidental to the performance of the services enumerated herein as agreed to by the parties from time to time. BISYS shall perform such additional services as are provided on an amendment to Schedule B of this Agreement, in consideration of such fees as the parties to this Agreement may agree.
(b) BISYS may utilize agents in its performance of its services and, with prior notice to the Company, may appoint in writing other parties qualified to perform transfer agency services reasonably acceptable to the Company (individually, a "Sub-Agent") to carry out some or all of its responsibilities under this Agreement; provided, however, that any Sub-Agent retained by BISYS shall be the agent of BISYS and not the agent of the Company, and that BISYS shall be fully responsible for the acts of such Sub-Agent and BISYS shall not be relieved of any of its responsibilities under this Agreement by the appointment of a Sub-Agent.
2. Fees
The Company shall pay BISYS for the services to be provided by BISYS under this Agreement in accordance with, and in the manner set forth in, Schedule C to this Agreement. Fees for any additional services to be provided by BISYS pursuant to an amendment to Schedule B to this Agreement shall be subject to mutual agreement at the time such amendment to Schedule B is proposed.
3. Reimbursement of Expenses and Miscellaneous Service Fees
(a) In addition to paying BISYS the fees set forth in Schedule C, the Company shall reimburse BISYS for BISYS' reasonable out-of-pocket expenses incurred in providing services under this Agreement, including without limitation, the following:
(i) All freight and other delivery and bonding charges incurred by BISYS in delivering materials to and from the Company and in delivering all materials to shareholders;
(ii) All printing, production (including graphics support, copying, and binding) and distribution expenses incurred in relation to materials for meetings of the Company's Board of Trustees (the "Board");
(iii) All direct telephone, telephone transmission and telecopy or other electronic transmission expenses incurred by BISYS in communication with the Company, the Company's investment adviser or custodian, dealers, shareholders or others as required for BISYS to perform the services to be provided under this Agreement;
(iv) Sales taxes paid on behalf of the Company;
(v) The cost of microfilm or microfiche or other electronic retention of records or other materials;
(vi) Courier (delivery expenses);
(vii) Check processing fees;
(viii) Records retention / storage fees;
(ix) Fulfillment;
(x) IRA custody and other related fees;
(xi) NSCC and related costs;
(xii) Sales taxes;
(xiii) Costs of statements and confirmations;
(xiv) Costs of tax forms;
(xv) Costs of all other shareholder correspondence;
(xvi) Post office boxes; and
(xvii)Any expenses BISYS shall incur at the written direction of an officer of the Company thereunto duly authorized.
(b) In addition, BISYS shall be entitled to receive the following fees:
(i) A fee for managing and overseeing the report, print and mail functions performed by BISYS' third-party vendors, not to exceed $.04 per page for statements and $.03 per page for confirmations; fees for programming in connection with creating or changing the forms of statements, billed at BISYS' then-current rate; and costs for postage, couriers, stock computer paper, computer disks, statements, labels, envelopes, checks, reports, letters, tax forms, proxies, notices or other forms of printed material (including the costs of preparing and printing all printed materials) which shall be required for the performance of the services to be provided under this Agreement;
(ii) System development fees, billed at BISYS' then-current rate, and all systems-related expenses, billed at BISYS' then-current rate, associated with the provision of special reports and services pursuant to Item 8 of Schedule D attached to this Agreement;
(iii) Fees for development of custom interfaces, billed at BISYS' then-current rate;
(iv) Ad hoc reporting fees;
(v) Interactive Voice Response System fees;
(vi) Expenses associated with the tracking of "as-of" trades; and
(vii) Expenses associated with BISYS' anti-fraud procedures and the performance of delegated services under the written anti-money laundering program ("AML Program") adopted by the Company.
4. Effective Date
This Agreement shall become effective as of the date first written above (the "Effective Date").
5. Term
(a) This Agreement shall continue in effect for an initial term of three years from the Effective Date (the "Initial Term"). Thereafter, unless otherwise terminated pursuant to this Agreement, this Agreement shall be renewed automatically for successive one year periods ("Rollover Periods"). This Agreement may be terminated only (i) by provision of a written notice of non-renewal provided at least 90 days before the end of the Initial Term or any Rollover Period (which notice of non-renewal will
cause this Agreement to terminate as of the end of the Initial Term or such Rollover Period, as applicable), or (ii) for "cause," as defined below, upon the provision of at least 90 days advance written notice by the party alleging cause.
(b) For purposes of this Section 5, "cause" shall mean (i) a material breach of this Agreement that has not been remedied within 30 days following written notice of such breach from the non-breaching party; (ii) a final, unappealable judicial, regulatory or administrative ruling or order in which the party to be terminated has been found guilty of criminal or unethical behavior in the conduct of its business; or (iii) financial difficulties on the part of the party to be terminated which are evidenced by the authorization or commencement of, or involvement by way of pleading, answer, consent or acquiescence in, a voluntary or involuntary case under Title 11 of the United States Code, as from time to time is in effect, or any applicable law, other than said Title 11, of any jurisdiction relating to the liquidation or reorganization of debtors or to the modification or alteration of the rights of creditors.
(c) Notwithstanding the foregoing termination provisions, following any such termination, in the event that BISYS in fact continues to perform any one or more of the services contemplated by this Agreement (or any Schedule or exhibit to this Agreement) with the consent of the Company, the provisions of this Agreement, including without limitation the provisions dealing with compensation and indemnification, shall continue in full force and effect. Fees and out-of-pocket expenses incurred by BISYS but unpaid by the Company upon such termination shall be immediately due and payable upon and notwithstanding such termination. The Company shall pay to BISYS, in addition to the fees and expenses provided in Sections 3 and 4 of this Agreement, the amount of all of BISYS' reasonable cash disbursements in connection with BISYS' activities in effecting such termination, including without limitation, the delivery to the Company, its investment adviser and/or other parties of the Company's property, records, instruments and documents, such amount to be paid on or before the date of such termination.
(d) If, for any reason other than (i) non-renewal, (ii) mutual agreement of the parties or (iii) "cause", the Company terminates this Agreement, or the Company terminates BISYS' services, or BISYS is replaced as service provider to the Company or some or all of the Funds, then the Company shall make a one-time cash payment to BISYS, in consideration of the fee structure and services to be provided under this Agreement, equal to the balance that would be due BISYS for its services under this Agreement during the lesser of (x) the balance of the Initial Term or any applicable Rollover Period, as the case may be, or (y )12 months, assuming for purposes of the calculation of the one-time payment that the fees that would be earned by BISYS for each month would be based upon the average fees payable to BISYS monthly during the 12 months before the date of the event that triggers such payment.
(e) In the event that the Company or any Fund is, in part or in whole, liquidated, dissolved, merged into a third party, acquired by a third party, or involved in any other transaction that materially reduces the assets and/or accounts serviced by BISYS pursuant to this Agreement, the liquidated damages provision set forth above shall be applicable.
(f) If one of the events described above is partial (e.g., a termination of BISYS as provider of some but not all of the services set forth in this Agreement, or a liquidation of some but not all of the Funds), the liquidated damages amount payable by the Company shall be appropriately adjusted on a pro rata basis.
(g) Any liquidated damages amount payable to BISYS shall be paid by the Company on or before the date of the event that triggers the payment obligation.
(h) The parties further acknowledge and agree that, upon the occurrence of any of the events described above: (i) a determination of actual damages incurred by BISYS would be extremely difficult, and (ii) the liquidated damages payment described above is intended to adequately compensate BISYS for damages incurred and is not intended to constitute any form of penalty.
6. Standard of Care; Force Majeure; Limitation of Liability
(a) BISYS shall use reasonable professional diligence in the performance of services under this Agreement, but shall not be liable to the Company for any action taken or omitted by BISYS in the absence of bad faith, willful misfeasance, negligence or reckless disregard by it of its obligations and duties. The duties of BISYS shall be confined to those expressly set forth in this Agreement, and no implied duties are assumed by or may be asserted against BISYS under this Agreement.
(b) Notwithstanding any other provision of this Agreement, BISYS assumes no responsibility hereunder, and shall not be liable for, any damage, loss of data, delay or any other loss whatsoever caused by events beyond BISYS' control. Events beyond BISYS' control include, without limitation, force majeure events, such as natural disasters, actions or decrees of governmental bodies, and communication lines failures that are not the fault of either party. In the event of force majeure, computer or other equipment failures or other events beyond its control, BISYS shall follow applicable procedures in its disaster recovery and business continuity plan and use all commercially reasonable efforts to minimize any service interruption.
(c) BISYS shall provide the Company, at such times as the Company may reasonably request, copies of reports rendered by independent auditors on the internal controls and procedures of BISYS relating to the services provided by BISYS under this Agreement.
(d) NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, IN NO EVENT SHALL BISYS, ITS AFFILIATES OR ANY OF ITS OR THEIR DIRECTORS, OFFICERS, EMPLOYEES, AGENTS OR SUBCONTRACTORS BE LIABLE FOR EXEMPLARY, PUNITIVE, SPECIAL, INCIDENTAL, INDIRECT OR CONSEQUENTIAL DAMAGES, OR LOST PROFITS, EACH OF WHICH IS HEREBY EXCLUDED BY AGREEMENT OF THE PARTIES REGARDLESS OF WHETHER SUCH DAMAGES WERE FORESEEABLE OR WHETHER EITHER PARTY OR ANY ENTITY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
7. Legal Advice
BISYS shall notify the Company at any time BISYS believes that it is in need of the advice of counsel (other than counsel in the regular employ of BISYS or any affiliated companies) with regard to BISYS' responsibilities and duties pursuant to this Agreement. After so notifying the Company, BISYS, at its discretion, shall be entitled to seek, receive and act upon advice of legal counsel of its choosing, such advice to be at the expense of the Company unless relating to a matter involving BISYS' willful misfeasance, bad faith, gross negligence or reckless disregard of BISYS' responsibilities and duties under this Agreement, and BISYS shall in no event be liable to the Company or any Fund or any shareholder or beneficial owner of the Company for any action reasonably taken pursuant to such advice.
8. Instructions / Certain Procedures, etc.
(a) Whenever BISYS is requested or authorized to take action under this Agreement pursuant to instructions from a shareholder, or a properly authorized agent of a shareholder ("shareholder's agent"), concerning an account in a Fund, BISYS shall be entitled to rely upon any certificate, letter or other instrument or communication (including electronic mail), reasonably believed by BISYS to be genuine and to have been properly made, signed or authorized by an officer or other authorized agent of the Company or by the shareholder or shareholder's agent, as the case may be, and shall be entitled to receive as conclusive proof of any fact or matter required to be ascertained by it under this Agreement a certificate signed by an officer of the Company or any other person authorized by the Board or by the shareholder or shareholder's agent, as the case may be.
(b) As to the services to be provided under this Agreement, BISYS may rely conclusively upon the terms of the Prospectuses and Statement of Additional Information of the Company relating to the relevant Funds to the extent that such services are described therein unless BISYS receives written instructions to the contrary in a timely manner from the Company.
(c) The parties to this Agreement may amend any procedures adopted, approved or set forth herein by written agreement as may be appropriate or practical under the circumstances, and BISYS may conclusively assume that any special procedure which has been approved by an executive officer of the Company (other than an officer or employee of BISYS) does not conflict with or violate any requirements of the Company's Charter, By-Laws or then-current prospectuses, or any rule, regulation or requirement of any regulatory body.
(d) The Company acknowledges receipt of a copy of BISYS' policy related to the acceptance of trades for prior day processing (the "BISYS As-Of Trading Policy"). BISYS may amend the BISYS As-of Trading Policy from time to time in its sole discretion. A copy of any such amendments shall be delivered to the Company upon request. BISYS may apply the BISYS As-Of Trading Policy whenever applicable, unless
BISYS agrees in writing to process trades according to such other as-of trading policy as may be adopted by the Company and furnished to BISYS by the Company.
(e) The Company acknowledges and agrees that deviations from BISYS' written transfer agent compliance procedures may involve a substantial risk of loss. In the event an authorized representative of the Company requests that an exception be made from any written compliance or transfer agency procedures adopted by BISYS, or any requirements of the AML Program, BISYS may in its sole discretion determine whether to permit such exception. In the event BISYS determines to permit such exception, the same shall become effective when set forth in a written instrument executed by an authorized representative of the Company (other than an employee of BISYS) and delivered to BISYS (an "Exception"); provided that an Exception concerning the requirements of the Company's AML Program shall be authorized by the Company's AML Compliance Officer (as defined in Section 15 of this Agreement). An Exception shall be deemed to remain effective until the relevant instrument expires according to its terms (or if no expiration date is stated, until BISYS receives written notice from the Company that such instrument has been terminated and the Exception is no longer in effect). Notwithstanding any provision in this Agreement that expressly or by implication provides to the contrary, as long as BISYS acts in good faith, BISYS shall have no liability for any loss, liability, expenses or damages to the Company resulting from the Exception, and the Company shall indemnify BISYS and hold BISYS harmless from any loss, liability, expenses (including reasonable attorneys fees) and damages resulting to BISYS therefrom.
9. Indemnification
(a) The Company shall indemnify and hold harmless BISYS and its employees, agents, directors, officers and nominees from and against any claims, demands, actions, suits, judgments, liabilities, losses, damages, costs, charges, counsel fees and other expenses including reasonable investigation expenses (collectively, "Losses") resulting directly and proximately from BISYS' performance of services under this Agreement or based, if applicable, upon BISYS' reasonable reliance on information, records, instructions or requests pertaining to services hereunder, that are given or made to BISYS by the Company, the investment adviser, or other authorized agents of the Company; provided that this indemnification shall not apply to actions or omissions of BISYS involving bad faith, willful misfeasance, negligence or reckless disregard by BISYS of its obligations and duties under this Agreement.
(b) BISYS shall indemnify, defend, and hold the Company, and its trustees, officers, agents and nominees harmless from and against Losses resulting directly and proximately from BISYS' willful misfeasance, bad faith or negligence in the performance of, or the reckless disregard of, its duties or obligations hereunder; provided that this indemnification shall not apply to actions or omissions of the Company involving bad faith, willful misfeasance, negligence or reckless disregard by the Company of its obligations and duties.
(c) In order that the indemnification provisions contained herein shall apply, if in any case a party may be asked to indemnify or hold the other party harmless, the other party shall fully and promptly advise the indemnifying party in writing of all pertinent facts concerning the situation in question. The party seeking indemnification will use all reasonable care to identify and notify the indemnifying party in writing promptly concerning any situation which presents or appears likely to present the probability of such a claim for indemnification against the indemnifying party, but failure to do so in good faith shall not affect the rights hereunder except to the extent the indemnifying party is materially prejudiced thereby. As to any matter eligible for indemnification, an indemnified party shall act reasonably and in accordance with good faith business judgment and shall not effect any settlement or confess judgment without the consent of the indemnifying party, which consent shall not be withheld or delayed unreasonably.
(d) The indemnifying party shall be entitled to participate in at its own expense or, if it so elects, to assume the defense of any claim or suit subject to this indemnity provision. If the indemnifying party elects to assume the defense of any such claim, the defense shall be conducted by counsel chosen by it and reasonably satisfactory to the indemnified party. In the event that the indemnifying party elects to assume the defense of any suit and retain counsel, the indemnified party shall bear the fees and expenses of any additional counsel retained by it. An indemnifying party shall not effect any settlement without the consent of the indemnified party (which shall not be withheld or delayed unreasonably by the indemnified party) unless such settlement imposes no liability, responsibility or other obligation upon the indemnified party and relieves it of all fault. If the indemnifying party does not elect to assume the defense of suit, it will reimburse the indemnified party for the reasonable fees and expenses of counsel retained by the indemnified party and reasonably satisfactory to the indemnifying party. The indemnity and defense provisions set forth herein shall survive the termination of this Agreement.
(e) This Section 9 is subject to the provisions of Section 6 of this Agreement.
10. Record Retention and Confidentiality
BISYS shall keep and maintain on behalf of the Company all books and
records which the Company or BISYS is, or may be, required to keep and maintain
pursuant to any applicable statutes, rules and regulations, including without
limitation Rules 31a-1 and 31a-2 under the 1940 Act, relating to the maintenance
of books and records in connection with the services to be provided under this
Agreement. BISYS further agrees that all such books and records shall be the
property of the Company and to make such books and records available for
inspection by the Company or by the Commission at reasonable times. BISYS shall
otherwise keep confidential all books and records relating to the Company and
its shareholders, except when (i) disclosure is required by law, (ii) BISYS is
advised by counsel that it may incur liability for failure to make a disclosure,
(iii) BISYS is requested to divulge such information by duly-constituted
authorities or court process, or (iv) BISYS is requested to make a disclosure by
a shareholder or shareholder's agent with respect to information concerning an
account as to which such
shareholder has either a legal or beneficial interest or when requested by the
Company or the dealer of record as to such account. BISYS shall provide the
Company with reasonable advance notice of disclosure pursuant to items (i) -
(iii) of the previous sentence, to the extent reasonably practicable. The
provisions of this Section 10 are subject to the provisions of Section 22 of
this Agreement.
11. Reports
BISYS shall furnish to the Company and to its properly-authorized auditors, investment advisers, examiners, distributors, dealers, underwriters, salesmen, insurance companies and others designated by the Company in writing, such reports at such times as are prescribed in Schedule D to this Agreement, or as subsequently agreed upon by the parties pursuant to an amendment to Schedule D. The Company agrees to examine each such report or copy within 20 days and will report or cause to be reported any errors or discrepancies therein. In the event that errors or discrepancies, except such errors and discrepancies as may not reasonably be expected to be discovered by the recipient within 20 days after conducting a diligent examination, are not so reported within the aforesaid period of time, a report will for all purposes be accepted by and binding upon the Company and any other recipient, and BISYS shall have no liability for errors or discrepancies therein and shall have no further responsibility with respect to such report except to perform reasonable corrections of such errors and discrepancies within a reasonable time after requested to do so by the Company.
12. Rights of Ownership
All computer programs and procedures employed or developed by or on behalf of BISYS to perform services required to be provided by BISYS under this Agreement are the property of BISYS. All records and other data except such computer programs and procedures are the exclusive property of the Company and all such other records and data shall be furnished to the Company in appropriate form as soon as practicable after termination of this Agreement for any reason.
13. Return of Records
BISYS may at its option at any time, and shall promptly upon the Company's demand, turn over to the Company and cease to retain BISYS' files, records and documents created and maintained by BISYS pursuant to this Agreement which are no longer needed by BISYS in the performance of its services or for its legal protection. If not so turned over to the Company, such documents and records shall be retained by BISYS for six years from the year of creation. At the end of such six-year period, such records and documents shall be turned over to the Company unless the Company authorizes in writing the destruction of such records and documents.
14. Bank Accounts
BISYS is hereby granted such power and authority as may be necessary to establish one or more bank accounts for the Company with such bank or banks as are selected or approved by the Company, as may be necessary or appropriate from time to
time in connection with the services required to be performed under this Agreement. The Company shall be deemed to be the customer of such Bank or Banks for all purposes in connection with such accounts. To the extent that the performance of such services under this Agreement shall require BISYS to disburse amounts from such accounts in payment of dividends, redemption proceeds or for other purposes under this Agreement, the Company shall provide such bank or banks with all instructions and authorizations necessary for BISYS to effect such disbursements.
15. Representations and Warranties of the Company
(a) The Company represents and warrants to BISYS that: (i) the Company
is registered with the Commission as an open-end management investment company
under the 1940 Act; (ii) as of the close of business on the Effective Date, each
Fund which is in existence as of the Effective Date has authorized unlimited
shares; (iii) by virtue of its Charter, shares of each Fund which are redeemed
by the Company may be sold by the Company from its treasury; (iv) this Agreement
has been duly authorized by the Company and, when executed and delivered by the
Company, will constitute a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting the rights and remedies of creditors and secured parties;
(v) it has all necessary authorizations, licenses and permits to carry out its
business as currently conducted; and (vi) it is in compliance in all material
respects with all laws and regulations applicable to its business and
operations.
(b) The Company also represents and warrants to BISYS that: (i) the Company has adopted the written AML Program that has been submitted to BISYS pursuant to Section 18 of this Agreement, and has appointed an officer of the Company as the Company's anti-money laundering compliance officer ("AML Compliance Officer"); (ii) the AML Program and the designation of the AML Officer have been approved by the Board; (iii) the delegation of certain services under this Agreement to BISYS, as provided in Section 22 of this Agreement, has been approved by the Board; and (iv) the Company will submit any material amendments to the AML Program to BISYS for BISYS' review and consent before adoption in accordance with Section 20 of this Agreement.
16. Representations and Warranties of BISYS
(a) BISYS represents and warrants to the Company that: (i) BISYS has been in, and shall continue to be in compliance in all material respects with all provisions of law, including Section 17A(c) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), required in connection with the performance of its duties under this Agreement; (ii) the various procedures and systems which BISYS has implemented with regard to safekeeping from loss or damage attributable to fire, theft or any other cause of the blank checks, records, and other data of the Company and BISYS' records, data, equipment, facilities and other property used in the performance of its obligations under this Agreement are adequate and that it will make such changes therein from time to time as are reasonably required for the secure performance of its obligations under this
Agreement; and (iii) this Agreement has been duly authorized by BISYS and, when executed and delivered by BISYS, will constitute a legal, valid and binding obligation of BISYS, enforceable against BISYS in accordance with its terms, subject to bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting the right and remedies of creditors and secured parties.
(b) EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, ALL REPRESENTATIONS AND WARRANTIES, INCLUDING, WITHOUT LIMITATION, ANY WARRANTIES REGARDING QUALITY, SUITABILITY, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR OTHERWISE (IRRESPECTIVE OF ANY COURSE OF DEALING, CUSTOM OR USAGE OF TRADE) CONCERNING THE SERVICES OR ANY GOODS PROVIDED INCIDENTAL TO THE SERVICES PROVIDED UNDER THIS AGREEMENT BY BISYS ARE COMPLETELY DISCLAIMED.
17. Insurance
BISYS shall maintain a fidelity bond covering larceny and embezzlement and an insurance policy with respect to directors and officers errors and omissions coverage in amounts that are appropriate in light of its duties and responsibilities under this Agreement. Upon the request of the Company, BISYS shall provide evidence that coverage is in place. BISYS shall notify the Company should its insurance coverage with respect to professional liability or errors and omissions coverage be canceled. Such notification shall include the date of cancellation and the reasons therefore. BISYS shall notify the Company of any material claims against it with respect to services performed under this Agreement, whether or not they may be covered by insurance, and shall notify the Company should the total outstanding claims made by BISYS under its insurance coverage materially impair, or threaten to materially impair, the adequacy of its coverage.
18. Information to be Furnished by the Company and Funds
The Company has furnished to BISYS, or will furnish upon request, the following, as amended and current as of the effective date of this Agreement:
(a) A copy of the Charter of the Company and of any amendments thereto, certified by the proper official of the state in which such Declaration has been filed.
(b) A copy of the Company's Bylaws and any amendments thereto;
(c) Certified copies of resolutions of the Board covering the following matters:
(i) Approval of this Agreement and authorization of a specified officer of the Company to execute and deliver this Agreement and authorization for specified officers of the Company to instruct BISYS under this Agreement; and
(ii) Authorization of BISYS to act as Transfer Agent for the Company.
(d) A list of all officers of the Company, with the Company's AML Compliance Officer included among the officers therein, and any other persons (who may be associated with the Company or its investment advisor), together with specimen signatures of those officers and other persons who (except as otherwise provided herein to the contrary) shall be authorized to instruct BISYS in all matters.
(e) Two copies of the following (if such documents are employed by the Company):
(i) Prospectuses and Statement of Additional Information;
(ii) Distribution Agreement; and
(iii) All other forms commonly used by the Company or its Distributor with regard to their relationships and transactions with shareholders of the Funds.
(f) A certificate as to shares of beneficial interest of the Company authorized, issued, and outstanding as of the Effective Date and as to receipt of full consideration by the Company for all shares outstanding, such statement to be certified by the Treasurer of the Company.
(g) A copy of the Company's written AML Program, including related Policies and Procedures.
19. Information Furnished by BISYS
BISYS has furnished to the Company, or will furnish upon request, evidence of the following:
(a) Approval of this Agreement by BISYS, and authorization of a specified officer of BISYS to execute and deliver this Agreement.
(b) Authorization of BISYS to act as Transfer Agent for the Company.
(c) The current BISYS "As-of" Trading Policy.
(d) The written program concerning anti-money laundering services rendered by BISYS to its various clients.
20. Amendments to Documents
The Company shall furnish BISYS written copies of any amendments to, or changes in, any of the items referred to in Section 18 of this Agreement forthwith upon such amendments or changes becoming effective. In addition, the Company agrees that no amendments will be made to the Prospectuses or Statement of Additional Information of the Company, or the AML Program, which might have the effect of changing the procedures employed by BISYS in providing the services agreed to under this Agreement
or which amendment might affect the duties of BISYS under this Agreement unless the Company first obtains BISYS' approval of such amendments or changes, which approval shall not be withheld unreasonably.
21. Reliance on Amendments
BISYS may rely on any amendments to or changes in any of the documents and other items to be provided by the Company pursuant to Sections 18 and 20 of this Agreement and, subject to the provisions of Section 6 of this Agreement, the Company hereby indemnifies and holds harmless BISYS from and against any and all claims, demands, actions, suits, judgments, liabilities, losses, damages, costs, charges, counsel fees and other expenses of every nature and character which may result from actions or omissions on the part of BISYS in reasonable reliance upon such amendments and/or changes. Although BISYS is authorized to rely on the above-mentioned amendments to and changes in the documents and other items to be provided pursuant to Sections 18 and 20 of this Agreement, in the event the same relate to services provided by BISYS under this Agreement, BISYS shall have no liability for failure to comply with or take any action in conformity with such amendments or changes unless the Company first obtains BISYS' written consent to and approval of such amendments or changes.
22. Compliance with Laws
(a) Except for the obligations of BISYS set forth in Section 10 of this Agreement, the Company assumes full responsibility for the preparation, contents, and distribution of each prospectus of the Company as to compliance with all applicable requirements of the Securities Act of 1933, as amended (the "1933 Act"), the 1940 Act, and any other laws, rules and regulations of governmental authorities having jurisdiction. BISYS shall have no obligation to take cognizance of any laws relating to the sale of the Company's shares. The Company represents and warrants that all shares of the Company that are offered to the public are covered by an effective registration statement under the 1933 Act and the 1940 Act.
(b) The Company acknowledges that it is a financial institution subject to the law entitled Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism ("U.S.A. Patriot") Act of 2001 and the Bank Secrecy Act (collectively, the "AML Acts") and shall comply with the AML Acts and applicable regulations adopted under this Agreement ( collectively, the "Applicable AML Laws") in all relevant respects, subject to the delegation of certain responsibilities to BISYS, as provided in the next paragraph below.
(c) The Company hereby delegates to BISYS the performance, on behalf of the Company, of the anti-money laundering services set forth under Item 6 of Schedule B (the "AML Services") as concerns the shareholder accounts maintained by BISYS pursuant to this Agreement (including direct accounts; accounts maintained through FUND/SERV and Networking, to the extent provided below, and omnibus accounts, to the extent provided below). BISYS agrees to the foregoing delegation and agrees to perform such services in accordance with the Company's AML Program. In connection
therewith, BISYS agrees to maintain policies and procedures, and related internal controls, that are consistent with the Company's AML Program and the requirement that the Company employ procedures reasonably designed to achieve compliance with the Applicable AML Laws, including the requirement to have policies and procedures that can be reasonably expected to detect and cause the reporting of transactions under Section 5318 of the Bank Secrecy Act. BISYS' obligations under this delegation shall be subject to Sections 20 and 21 of this Agreement, which require that the AML Program and any material amendments thereto be submitted to BISYS for its review and consent.
(d) The Company agrees and acknowledges that, notwithstanding the delegation provided for in the foregoing paragraph, the Company maintains full responsibility for ensuring that its AML Program is, and shall continue to be, reasonably designed to ensure compliance with the Applicable AML Laws, in light of the particular business of the Company, taking into account factors such as its size, location, activities and risks or vulnerabilities to money laundering.
(e) In connection with the foregoing delegation, the Company also
acknowledges that the performance of the AML Services involves the exercise of
discretion which in some circumstances may result in consequences to the Company
and its shareholders (such as in the case of the reporting of suspicious
activities and the freezing of shareholder accounts). In this regard, (i) under
circumstances in which the AML Program authorizes the taking of certain actions,
BISYS is granted the discretion to take any such action as may be authorized
under the AML Program, and consultation with Company shall not be required in
connection therewith unless specifically required under the AML Program, and
(ii) the Company instructs BISYS that it may avail the Company of any safe
harbor from civil liability that may be available under Applicable AML Laws for
making a disclosure or filing a report under this Agreement.
(f) As concerns Networking Level III accounts and omnibus accounts, the AML Services performed by BISYS are subject to a more limited scope, as discussed in the Release concerning the final rule of the Department of the Treasury, 31 CFR 103 and of the Commission, 17 CFR 270, entitled Customer Identification Programs for Mutual Funds issued on May 9, 2003 and subsequent guidance issued jointly by such agencies entitled Question and Answer Regarding the Mutual Fund Customer Identification Program Rule (31 CFR 103.131) issued on August 11, 2003.
23. Notices
Any notice provided under this Agreement shall be sufficiently given when sent by registered or certified mail to the party required to be served with such notice at the following address, or at such other address as such party may from time to time specify in writing to the other party pursuant to this Section 23:
If to the Company:
[Company to insert address and attention party]
If to BISYS:
BISYS Fund Services Ohio, Inc.
3435 Stelzer Road
Columbus, OH 43219
Attn: President
with a copy to:
The BISYS Group, Inc.
90 Park Ave., 10th floor
New York, NY 10016
Attn: General Counsel
24. Assignment.
This Agreement and the rights and duties under this Agreement shall not be assignable by either of the parties to this Agreement except with the written consent of the other party, which consent shall not be unreasonably withheld or delayed. This Section 24 shall not limit or in any way affect BISYS' right to appoint a Sub-Agent pursuant to Section 1 of this Agreement. This Agreement shall be binding upon, and shall inure to the benefit of, the parties to this Agreement and their respective successors and permitted assigns.
25. Governing Law.
This Agreement shall be governed by and provisions shall be construed in accordance with the laws of the State of Ohio and the applicable provisions of the 1940 Act. To the extent that the applicable laws of the State of Ohio, or any of the provisions herein, conflict with the applicable provisions of the 1940 Act, the latter shall control.
26. Activities of BISYS
The services of BISYS rendered to the Company under this Agreement are not to be deemed to be exclusive. BISYS is free to render such services to others and to have other businesses and interests. It is understood that trustees, directors, officers, employees and Shareholders of the Company are or may be or become interested in BISYS, as officers, employees or otherwise and that partners, officers and employees of BISYS and its counsel are or may be or become similarly interested in the Company, and that BISYS may be or become interested in the Company as a Shareholder or otherwise
27. Privacy
Nonpublic personal financial information relating to consumers or customers of the Company provided by, or at the direction of the Company to BISYS, or collected or retained by BISYS in the course of performing its duties as transfer agent, shall be considered confidential information. BISYS shall not give, sell or in any way transfer such confidential information to any person or entity, other than affiliates of BISYS
except at the direction of the Company or as required or permitted by law (including Applicable AML Laws). BISYS represents, warrants and agrees that it has in place and will maintain physical, electronic and procedural safeguards reasonably designed to protect the security, confidentiality and integrity of, and to prevent unauthorized access to or use of records and information relating to consumers or customers of the Company. The Company represents to BISYS that it has adopted a Statement of its privacy policies and practices as required by the Commission's Regulation S-P and agrees to provide BISYS with a copy of that statement annually.
28. Access to be Provided
BISYS shall grant reasonable access to each of the Company, the AML Compliance Officer, and regulators having jurisdiction over the Company, to the books and records maintained by BISYS as the same relates to the services performed under this Agreement on behalf of the Company. Records may be edited or redacted to maintain confidentiality of materials related to other clients of BISYS. BISYS shall make its relevant personnel available to meet with the Board concerning the AML Services at least annually or at such other intervals as may be reasonably necessary or appropriate.
29. Miscellaneous
(a) Section headings in this Agreement are included for convenience only and are not to be used to construe or interpret this Agreement.
(b) This Agreement constitutes the complete agreement of the parties to this Agreement as to the subject matter covered by this Agreement, and supersedes all prior negotiations, understandings and agreements bearing upon the subject matter covered herein.
(c) This Agreement may be executed in counterparts, each of which shall be an original but all of which, taken together, shall constitute one and the same agreement.
(d) No amendment to this Agreement shall be valid unless made in writing and executed by both parties to this Agreement.
* * * * *
IN WITNESS WHEREOF, the parties to this Agreement have caused this Agreement to be duly executed all as of the day and year first above written.
THE COVENTRY GROUP
By:________________________________
Name:
Title:
BISYS FUND SERVICES OHIO, INC.
By:________________________________
Name: Fred Naddaff
Title: President
SCHEDULE A
TO THE TRANSFER AGENCY AGREEMENT
BETWEEN THE COVENTRY GROUP
AND BISYS FUND SERVICES OHIO, INC.
DATED AS OF DECEMBER 16, 2005
FUNDS
Boston Trust Small Cap Fund
SCHEDULE B
TO THE TRANSFER AGENCY AGREEMENT
BETWEEN THE COVENTRY GROUP
AND BISYS FUND SERVICES OHIO, INC.
DATED AS OF DECEMBER 16, 2005
SERVICES
1. Shareholder Transactions
(a) Process shareholder purchase and redemption orders.
(b) Set up account information, including address, dividend option, taxpayer identification numbers and wire instructions.
(c) Issue confirmations in compliance with Rule 10b-10 under the Securities Exchange Act of 1934, as amended.
(d) Issue periodic statements for shareholders.
(e) Process transfers and exchanges.
(f) Process dividend payments, including the purchase of new shares, through dividend reimbursement.
2. Shareholder Information Services
(a) Make information available to shareholder servicing unit and other remote access units regarding trade date, share price, current holdings, yields, and dividend information.
(b) Produce detailed history of transactions through duplicate or special order statements upon request.
(c) Provide mailing labels for distribution of financial reports, prospectuses, proxy statements or marketing material to current shareholders.
3. Compliance Reporting
(a) Provide reports to the Securities and Exchange Commission, the National Association of Securities Dealers, Inc. and the States in which the Fund is registered.
(b) Prepare and distribute appropriate Internal Revenue Service forms for corresponding Fund and shareholder income and capital gains.
(c) Issue tax withholding reports to the Internal Revenue Service.
4. Dealer/Load Processing (if applicable)
(a) Provide reports for tracking rights of accumulation and purchases made under a Letter of Intent.
(b) Account for separation of shareholder investments from transaction sale charges for purchase of Fund shares.
(c) Calculate fees due under 12b-1 plans for distribution and marketing expenses.
(d) Track sales and commission statistics by dealer and provide for payment of commissions on direct shareholder purchases in a load Fund.
(e) Calculate redemption fees, if any.
5. Shareholder Account Maintenance
(a) Maintain all shareholder records for each account in the Company.
(b) Issue customer statements on scheduled cycle, providing duplicate second and third party copies if required.
(c) Record shareholder account information changes.
(d) Maintain account documentation files for each shareholder.
6. Anti-Money Laundering Services
(a) Verify shareholder identity upon opening new accounts.
(b) Monitor, identify and report shareholder transactions and identify and report suspicious activities that are required to be so identified and reported, and provide other required reports to the Securities and Exchange Commission, the U.S. Treasury Department, the Internal Revenue Service or each agency's designated agent, in each case consistent with the Company's AML Program.
(c) Place holds on transactions in shareholder accounts or freeze assets in shareholder accounts, as provided in the Company's AML Program.
(d) Create documentation to provide a basis for law enforcement authorities to trace illicit funds.
(e) Maintain all records or other documentation related to shareholder accounts and transactions therein that are required to be prepared and maintained pursuant to the Company's AML Program, and make the same available for inspection by (i) the Company's AML Compliance Officer, (ii) any auditor of the Company's AML Program or related procedures, policies or controls that has been designated by the Company in writing, or (iii) regulatory or law enforcement authorities, and otherwise make said records or other documents available at the direction of the Company's AML Compliance Officer.
SCHEDULE C
TO THE TRANSFER AGENCY AGREEMENT
BETWEEN THE COVENTRY GROUP
AND BISYS FUND SERVICES OHIO, INC.
DATED AS OF DECEMBER 16, 2005
FEES
ANNUAL BASE FEES:
Annual Fee Per Cusip $17,000 ANNUAL ACCOUNT-BASED FEES: Annual Fee per Direct Account $20 Annual Fee per NSCC Account $15 Annual Fee per closed account $2 |
For these purposes, the following categories constitute an open account on the BISYS system in any one month: open account with balance, open account with zero balance, open account with negative balance and closed account with activity. Closed accounts with no activity in the month are considered a closed account for billing purposes.
AML FEES AND COSTS:
Annual Fee: $4,500 for the first 50,000 accounts, plus
$7,000 for accounts in excess of 50,000
(to be billed in equal monthly installments)
Costs
Early Warning annual fee $575.00
Early Warning per record cost $0.22
|
for new account* registration review - does not apply to Network Level III
accounts
Equifax - per request cost $5.00
*Changes to account registration information or other account-related information may result in characterizing the account as a "new account" for these purposes.
ANNUAL FEE ADJUSTMENT
Commencing on the one-year anniversary of the Effective Date, BISYS may annually increase the fixed fees and other fees expressed as stated dollar amounts in this
Agreement by up to an amount equal to the greater of: (a) the most recent annual percentage increase in consumer prices for services as measured by the United States Consumer Price Index entitled "All Services Less Rent of Shelter" or a similar index should such index no longer be published, and (b) 10%.
SCHEDULE D
TO THE TRANSFER AGENCY AGREEMENT
BETWEEN THE COVENTRY GROUP
AND BISYS FUND SERVICES OHIO, INC.
DATED AS OF DECEMBER 16, 2005
REPORTS
1. Daily Shareholder Activity Journal
2. Daily Fund Activity Summary Report
(a) Beginning Balance
(b) Transactions
(c) Shareholder Transactions
(d) Reinvested Dividends
(e) Exchanges
(f) Adjustments
(g) Ending Balance
3. Daily Wire and Check Registers
4. Monthly Dealer Processing Reports
5. Monthly Dividend Reports
6. Sales Data Reports for Blue Sky Registration
7. A copy of the most recent report by independent public accountants describing control structure policies and procedures relating to transfer agency operations pursuant to AICPA Statement on Auditing Standards Number 70.
8. Such special reports and additional information that the parties may agree upon, from time to time.
In addition to the forgoing, following each quarterly period, BISYS will provide a report to the following effect pertaining to the AML Services rendered by BISYS under this Agreement during such quarterly period:
- performed good order review for all new and reregistered accounts;
- performed acceptance review for all monetary instruments received;
- administered signature guarantee policy in accordance with prospectus requirements;
- administered escrow hold policy in accordance with prospectus requirements;
- verified customer address changes;
- verified customer identification for all new accounts and all name changes on existing accounts;
- monitored all purchase transactions made with cash equivalents totaling in excess of $10,000 resulting in the filing of Form 8300 reports during the period. The Fund does not accept cash or currency;
- monitored all accounts for suspicious activity resulting in the filing of Form SAR reports during the period;
- reviewed shareholder names against lists of suspected terrorist and terrorist organizations supplied by various governmental organizations, such as the Office of Foreign Asset Control resulting in the freezing and reporting of accounts during the period;
- reviewed shareholder names in compliance with FinCEN 314(a) requests, resulting in the reporting of accounts during the period;
- created the documentation necessary to provide a basis for law enforcement authorities to trace illicit funds; and
- maintained all records and other documentation related to shareholder accounts and transactions required to e prepared and maintained pursuant to the Fund's anti-money laundering program for all BISYS transfer agent services.
The following will be provided in such report if the Company falls under the related USA PATRIOT Act provisions:
- performed the required due diligence to help prevent the opening of any accounts for foreign shell banks during the period either directly or through correspondent accounts; and
- performed required due diligence on any new correspondent accounts opened during the period.
EXHIBIT(h)(6)
Dated: December 16, 2005
Schedule A
to the
Expense Limitation Agreement
Between The Coventry Group and
Boston Trust Investment Management, Inc.
OPERATING EXPENSE LIMITS
Maximum Operating
Fund Name Expense Limit*
--------- -------------
Boston Balanced Fund 1.00%
Boston Equity Fund 1.00%
Boston Trust Small Cap Fund 1.25%
Walden Social Balanced Fund 1.00%
Walden Social Equity Fund 1.00%
|
* Expressed as a percentage of a Fund's average daily net assets.
Exhibit(h)(7)
SHAREHOLDER SERVICES AGREEMENT
FOR THE BOSTON TRUST SMALL CAP FUND
Ladies and Gentlemen:
The Coventry Group (the "Trust"), a Massachusetts business trust registered as a management investment company under the Investment Company Act of 1940 (the "1940 Act"), on behalf of its investment series the Boston Trust Small Cap Fund (the "Fund"), hereby appoints [Authorized Service Provider] (the "Service Provider") to provide shareholder services pursuant to this Shareholder Services Agreement (the "Agreement") as follows:
1. To the extent that the Service Provider provides administrative shareholder services and/or account maintenance services to those individuals or entities with whom the Service Provider has a servicing and/or other relationship and who may from time to time directly or beneficially own shares of the Fund, the Trust shall pay the Service Provider a fee periodically. Attached hereto as Schedule A is a list of certain types of services which are contemplated to be provided in accordance with this Agreement.
2. The fee to be paid with respect to the Fund will be computed and paid monthly at an annual rate not to exceed 0.__% of the average daily net asset value of the shares of the Fund purchased or acquired, provided that such shares are owned of record at the close of business on the last business day of the payment period by shareholders with whom the Service Provider has a servicing relationship as indicated by the records maintained by the Fund or its transfer agent (the "Subject Shares").
3. The Trust shall pay the Service Provider the total of the fees calculated for the Fund for any period with respect to which such calculations are made within 45 days after the close of such period.
4. The Trust reserves the right to withhold payment with respect to any Subject Shares purchased and redeemed or repurchased by the Fund within seven (7) business days after the date of its confirmation of such purchase.
5. The Service Provider shall furnish the Trust with such information as shall reasonably be requested by the Trustees with respect to the fees paid to the Service Provider pursuant to this Agreement.
6. Neither the Service Provider nor any of its employees or agents are authorized to make any representation concerning shares of the Fund except those contained in the then current Prospectus for the Fund, and the Service Provider shall have no authority to act as agent for the Fund outside the parameters of this Agreement.
7. This Agreement may be terminated by either party at any time without payment of any penalty upon sixty (60) days' written notice.
8. The Service Provider shall comply with all applicable state and Federal laws and the rules and regulations of authorized regulatory agencies. The Service Provider will not sell or
offer for sale shares of the Fund in any state where (i) it is not qualified to make such sales or (ii) the shares are not qualified for sale under the Blue Sky laws and regulations for such state, except for states in which they are exempt from qualification.
9. This Agreement and any Schedule hereto may not be revised except by mutual written agreement between the parties. This Agreement may be revised only after 60 days' written notice or upon such shorter notice as the parties may mutually agree.
10. All communications to the Fund should be sent to:
Boston Trust Small Cap Fund
c/o BISYS Fund Services
3435 Stelzer Road
Columbus, Ohio 43219
Attn:
Any notice to the Service Provider shall be sent to:
[Service Provider]
Attn:
11. All communications and any notices required hereunder shall be deemed to be duly given if mailed or telegraphed to the respective party at the address for such party specified above.
12. The parties to this Agreement mutually acknowledge that the Fund maintains and is subject to a Privacy Policy that restricts the disclosure of certain types of non-public information regarding the customers of the Fund and the parties agree to be bound by the restrictions imposed by such Privacy Policy.
13. The Trust agrees to indemnify and hold the Service Provider harmless against any losses, claims, damages, liabilities or expenses (including attorney's fees) to which the Service Provider may become subject insofar as such losses, claims, damages, liabilities or expenses or actions in respect thereof arise out of or are based upon any material breach by the Trust of any provision of this Agreement or the Trust's negligence or willful misconduct in carrying out its duties and responsibilities under this Agreement.
14. The Service Provider agrees to indemnify and hold the Trust harmless against any losses, claims, damages, liabilities or expenses (including attorney's fees) to which the Trust may become subject insofar as such losses, claims, damages, liabilities or expenses or actions in respect thereof arise out of or are based upon any material breach by the Service Provider of any provision of this Agreement or the Service Provider's negligence or willful misconduct in carrying out its duties and responsibilities under this Agreement.
15. This Agreement shall be construed in accordance with the laws of the State of Massachusetts.
IN WITNESS WHEREOF, the undersigned parties have executed this Agreement as of the ____ day of _______________, 200_.
THE COVENTRY GROUP,
ON BEHALF OF ITS INVESTMENT SERIES
THE BOSTON TRUST SMALL CAP FUND
[AUTHORIZED SERVICE PROVIDER]
SCHEDULE A
TO THE SHAREHOLDER SERVICES AGREEMENT RELATING
TO THE SALE OF SHARES OF THE BOSTON TRUST SMALL CAP FUND
(THE "FUND")
The types of shareholder services which may be compensated pursuant to the Agreement include, but are not necessarily limited to, the following:
1. Answering customer inquiries of a general nature regarding the Fund;
2. Responding to customer inquiries and requests regarding statements of additional information, reports, notices, proxies and proxy statements, and other Fund documents;
3. Delivering prospectuses and annual and semi-annual reports to beneficial owners of the Subject Shares;
4. Assisting the Fund in establishing and maintaining shareholder accounts and records;
5. Assisting customers in changing account options, account designations, and account addresses;
6. Sub-accounting for all Fund share transactions at the shareholder level;
7. Crediting distributions from the Fund to shareholder accounts;
8. Determining amounts to be reinvested in the Fund; and
9. Providing such other administrative services as may be reasonably requested and which are deemed necessary and beneficial to the holders of the Subject Shares.
EXHIBIT (i)
DECHERT LLP
1775 I Street, N.W.
Washington, D.C. 20006
December 16, 2005
The Coventry Group
3435 Stelzer Road
Columbus, Ohio 43219
Ladies and Gentlemen:
We have acted as counsel for The Coventry Group (the "Registrant") and its separate investment series, Boston Trust Small Cap Fund (the "New Fund"), and are familiar with Registrant's registration statement with respect to the New Fund under the Investment Company Act of 1940, as amended, and with the registration statement relating to its shares under the Securities Act of 1933, as amended (collectively, the "Registration Statement"). Registrant is organized as a business trust under the laws of the Commonwealth of Massachusetts.
We have examined Registrant's Declaration of Trust and other materials relating to the authorization and issuance of shares of beneficial interest of Registrant, Post-Effective Amendment No. 118 to the Registration Statement and such other documents and matters as we have deemed necessary to enable us to give this opinion.
Based upon the foregoing, we are of the opinion that the New Fund's shares proposed to be sold pursuant to Post-Effective Amendment No. 118 to the Registration Statement, when it is made effective by the Securities and Exchange Commission, will have been validly authorized and, when sold in accordance with the terms of such Registration Statement and the requirements of applicable federal and state law and delivered by Registrant against receipt of the net asset value of the shares of the New Fund and its classes of shares, as described in Post-Effective Amendment No. 118 to the Registration Statement, will have been legally and validly issued and will be fully paid and non-assessable by Registrant.
We hereby consent to the filing of this opinion as an exhibit to Post-Effective Amendment No. 118 to the Registration Statement, to be filed with the Securities and Exchange Commission in connection with the continuous offering of the New Fund's shares of beneficial interest, as indicated above, and to references to our firm, as counsel to Registrant, in the New Fund's Prospectus and Statement of Additional Information to be dated as of the effective date of Post-Effective Amendment No. 118 to the Registration Statement and in any revised or amended versions thereof, until such time as we revoke such consent.
Very truly yours,
/s/ Dechert LLP |