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SCHEDULE 14A
(RULE 14a)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
The Sessions Group
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies: .......
(2) Aggregate number of securities to which transaction applies: ..........
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined): ............
(4) Proposed maximum aggregate value of transaction: ......................
(5) Total fee paid: .......................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: ...............................................
(2) Form, Schedule or Registration Statement No.: .........................
(3) Filing Party: .........................................................
(4) Date Filed: ...........................................................
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1ST SOURCE MONOGRAM INCOME EQUITY FUND
1ST SOURCE MONOGRAM DIVERSIFIED EQUITY FUND
1ST SOURCE MONOGRAM SPECIAL EQUITY FUND
1ST SOURCE MONOGRAM INCOME FUND
SERIES OF THE SESSIONS GROUP
3435 STELZER ROAD
COLUMBUS, OHIO 43219
September 8, 1998
Dear Shareholder:
I am writing to inform you of the upcoming special meeting of the
shareholders of each of the 1st Source Monogram Funds (the "Funds"). At this
meeting, you are being asked to vote on a proposed reorganization of the Funds,
which are currently series of The Sessions Group ("Group"), an Ohio business
trust. After reorganization, each of the Funds would be a series of The Coventry
Group ("Coventry"), a Massachusetts business trust. Moving the Funds to Coventry
will preserve for them the cost-spreading advantages of an "umbrella" fund
structure -- i.e., a structure that permits the expenses of a single board of
trustees and certain other costs to be spread over a number of fund groups.
Although the Group was originally designed as an "umbrella" fund, changes in its
component funds have made it unsuitable for that purpose because certain of the
other component funds have elected also to reorganize themselves as series of
another investment company due to their growth in assets while others have been
dissolved and liquidated for various business reasons. The reorganization will
not cause any change in the Funds' investment objectives or policies or in their
portfolio management, although a change in sub-adviser is proposed for 1st
Source Monogram Diversified Equity Fund as well as a reduction in the investment
advisory fees paid by such Fund and the sub-investment advisory fees paid to one
of its current sub-advisers. Apart from these changes, the Funds will retain
their current investment adviser, as well as the other two current sub-advisers
to 1st Source Monogram Diversified Equity Fund, and there will be no other
changes in the rates of fees payable by the Funds for investment advisory or
other services (except for transfer agency fees for the Funds which are being
reduced). The Board of Trustees unanimously believes that the proposed
reorganization is in each Fund's and your best interests.
Finally, a "manager of managers" arrangement is being proposed for 1st
Source Monogram Diversified Equity Fund. Under such an arrangement, the Trustees
would be authorized to appoint, replace or terminate sub-advisers as recommended
by 1st Source Bank without seeking shareholder approval, thereby reducing the
time and cost associated with modifying portfolio management strategies as 1st
Source Bank considers in shareholders' best interests.
PLEASE TAKE A FEW MINUTES TO REVIEW THIS PROXY STATEMENT AND SIGN AND
RETURN ALL PROXY CARDS TODAY. If you hold shares in more than one of the Funds,
you will receive a separate proxy card for each of the Funds you hold. Please be
sure to sign and return each proxy card regardless of how many you receive.
The Board of Trustees of the Group has unanimously approved these proposals
and recommends a vote "FOR" each proposal. If you have any questions regarding
the issues to be voted on or need assistance in completing your proxy card,
please contact us at 1-800-766-8938.
Sincerely,
/s/ Walter B. Grimm
Walter B. Grimm
President
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1ST SOURCE MONOGRAM INCOME EQUITY FUND
1ST SOURCE MONOGRAM DIVERSIFIED EQUITY FUND
1ST SOURCE MONOGRAM SPECIAL EQUITY FUND
1ST SOURCE MONOGRAM INCOME FUND
SERIES OF THE SESSIONS GROUP
3435 STELZER ROAD
COLUMBUS, OHIO 43219
---------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
OCTOBER 16, 1998
---------------
To the Shareholders of the above-referenced Funds:
Notice is hereby given that a Special Meeting of Shareholders (the
"Meeting") of each of 1st Source Monogram Income Equity Fund ("Income Equity
Fund"), 1st Source Monogram Diversified Equity Fund ("Diversified Equity Fund"),
1st Source Monogram Special Equity Fund ("Special Equity Fund") and 1st Source
Monogram Income Fund ("Income Fund") (each a "Fund" and collectively, the
"Funds"), will be held at 8:30 a.m., Eastern Time, on Friday, October 16, 1998,
at the offices of the Funds' administrator, BISYS Fund Services Limited
Partnership ("BISYS"), 3435 Stelzer Road, Columbus, Ohio 43219, for the
following purposes:
I. TO BE VOTED ON SEPARATELY BY SHAREHOLDERS OF EACH FUND: To vote upon
the approval of an Agreement and Plan of Reorganization and
Liquidation, in the form set forth in Appendix A to the attached Proxy
Statement, for adoption by each of Income Equity Fund, Diversified
Equity Fund, Special Equity Fund and Income Fund, pursuant to which
each Fund would be reorganized as a separate series of The Coventry
Group, a Massachusetts business trust, as described in the attached
Proxy Statement.
IIa. TO BE VOTED ON ONLY BY SHAREHOLDERS OF DIVERSIFIED EQUITY FUND: To
vote upon the approval of a new Sub-Investment Advisory Agreement
between 1st Source Bank and Standish, Ayer and Wood, Inc. with respect
to the Diversified Equity Fund.
IIb. TO BE VOTED ON ONLY BY SHAREHOLDERS OF DIVERSIFIED EQUITY FUND: To
vote upon the approval of an amendment to the Sub-Investment Advisory
Agreement between 1st Source Bank and Loomis Sayles & Company with
respect to the Diversified Equity Fund to reduce the sub-advisory fees
payable to Loomis Sayles & Company by 1st Source Bank.
IIc. TO BE VOTED ON ONLY BY SHAREHOLDERS OF DIVERSIFIED EQUITY FUND: To
vote upon the approval of an amendment to the Investment Advisory
Agreement between The Coventry Group and 1st Source Bank to reduce the
investment advisory fees payable to 1st Source Bank with respect to
the Diversified Equity Fund.
IId. TO BE VOTED ON ONLY BY SHAREHOLDERS OF DIVERSIFIED EQUITY FUND: To
vote upon the authorization of the Board of Trustees of The Coventry
Group to appoint, replace or terminate sub-advisers recommended by 1st
Source Bank or amend the terms of any sub-investment advisory
agreement for the Diversified Equity Fund without shareholder
approval.
III. To transact such other business as may come properly before the
Meeting and any adjournment thereof.
Note: Each of Proposals I, IIa, IIb and IIc is conditioned upon the
approval of the other three Proposals so that for any one to pass, they must all
pass. Also votes on Proposals IIa, IIb, IIc and IId shall be deemed to be
<PAGE> 4
instructions to officers of the Group to vote shares of The Coventry Group
received in the Reorganization in the same manner for, against or abstain on
such Proposals as they relate to The Coventry Group.
Shareholders of record at the close of business on August 19, 1998 are
entitled to notice of, and to vote at, the Meeting.
By Order of the Board of Trustees of The
Sessions Group
George L. Stevens
George L. Stevens
Secretary
Columbus, Ohio
September 8, 1998
PLEASE RESPOND -- YOUR VOTE IS IMPORTANT.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, SIGN, DATE AND
MAIL THE ENCLOSED PROXY OR PROXIES IN THE ENCLOSED ENVELOPE SO THAT YOU WILL BE
REPRESENTED AT THE MEETING.
<PAGE> 5
1ST SOURCE MONOGRAM INCOME EQUITY FUND
1ST SOURCE MONOGRAM DIVERSIFIED EQUITY FUND
1ST SOURCE MONOGRAM SPECIAL EQUITY FUND
1ST SOURCE MONOGRAM INCOME FUND
SERIES OF THE SESSIONS GROUP
3435 STELZER ROAD
COLUMBUS, OHIO 43219
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
INTRODUCTION
This Proxy Statement is being furnished in connection with the solicitation
of proxies on behalf of the Board of Trustees of The Sessions Group (the
"Group") from shareholders of: 1st Source Monogram Income Equity Fund ("Income
Equity Fund"), 1st Source Monogram Diversified Equity Fund ("Diversified Equity
Fund"), 1st Source Monogram Special Equity Fund ("Special Equity Fund") and 1st
Source Monogram Income Fund ("Income Fund") (each a "Fund' and collectively, the
"Funds"), to be held at 8:30 a.m., Eastern Time, on October 16, 1998 and any
adjournment thereof (the "Meeting"), at the offices of the Funds' administrator
and principal underwriter, BISYS Fund Services Limited Partnership ("BISYS"),
3435 Stelzer Road, Columbus, Ohio 43219. The cost of the solicitation (including
printing and mailing this Proxy Statement, Notice of Meeting and Proxy, as well
as any supplementary solicitation) will be borne by BISYS. The Notice of the
Meeting, Proxy Statement and Proxies are being mailed to shareholders on or
about September 8, 1998.
The presence in person or by proxy of the holders of record of a majority
of the votes attributable to the outstanding shares of each Fund entitled to
vote shall constitute a quorum at the Meeting for that Fund. If, however, such
quorum for any Fund shall not be present or represented at the Meeting or if
fewer votes are present in person or by proxy than the minimum required for any
Fund to approve any proposal presented at the Meeting, the holders of a majority
of the votes attributable to the shares present in person or by proxy shall have
the power to adjourn the Meeting from time to time, without notice other than
announcement at the Meeting, until the requisite number of votes shall be
present at the Meeting. The persons named as proxies will vote in favor of such
adjournment those proxies which they are entitled to vote in favor of the
Agreement and Plan of Reorganization and Liquidation and will vote against any
such adjournment those proxies required to be voted against such Agreement. At
any such adjourned Meeting, if the relevant quorum is subsequently constituted,
any business may be transacted which might have been transacted at the Meeting
as originally called.
The Board of Trustees of the Group has fixed the close of business on
August 19, 1998, as the record date (the "Record Date") for the determination of
shareholders entitled to notice of and to vote at the Meeting and at any
adjournments thereof. The numbers of outstanding shares of each Fund as of the
Record Date, are indicated in the following table:
<TABLE>
<CAPTION>
FUND SHARES
---- -------------
<S> <C>
Income Equity Fund......................................... 4,304,676.748
Diversified Equity Fund.................................... 7,211,120.838
Special Equity Fund........................................ 3,443,768.241
Income Fund................................................ 6,533,313.573
</TABLE>
Each share is entitled to one vote for each dollar of net asset value of
such share (and a proportionate fractional vote for any fractional dollar value)
as of the close of business on the Record Date. As of such time, the net asset
values per share of the Funds were as follows: Income Equity Fund -- $11.62;
Diversified Equity Fund -- $12.55; Special Equity Fund -- $8.81; and Income
Fund -- $10.37.
<PAGE> 6
VOTING
Approval of Proposal 1, which involves a proposed reorganization, requires,
for each Fund, the affirmative vote of a majority of the votes attributable to
that Fund's outstanding shares. Approval of each of the other Proposals, each of
which relates only to the Diversified Equity Fund, requires approval by the
lesser of (a) 67% or more of the votes attributable to shares present at the
Meeting, if the holders of more than 50% of votes attributable to shareholders
of record of Diversified Equity Fund are present in person or by proxy; or (b)
more than 50% of votes are attributable to the outstanding shares of Diversified
Equity Fund.
All shares represented by the enclosed form of proxy will be voted in
accordance with the instructions indicated on the proxy if it is completed,
dated, signed and returned in time to be voted at the Meeting and is not
subsequently revoked. If the proxy is returned properly signed and dated, but no
instructions are given, the shares represented will be voted in favor of the
applicable Proposal or Proposals. Any proxy may be revoked by the timely
submission of a properly executed, subsequently dated proxy; by delivery to the
Group of a timely written revocation; or otherwise by giving notice of
revocation in open meeting prior to the finalization of the vote on a Proposal.
Execution and submission of a proxy does not affect a shareholder's right to
attend the Meeting in person. Due to applicable legal principles that the
Proposals be approved by specified percentages of the votes attributable to each
Fund's outstanding shares in order to be adopted, an abstention by a shareholder
from voting, either by proxy or in person at the Meeting, while counted towards
determining whether a quorum is present, has the same effect as a negative vote
on a Proposal. Shares that are held by a broker-dealer or other fiduciary as
record owner for the account of a beneficial owner will be counted for purposes
of determining the presence of a quorum and as votes on matters presented if the
beneficial owner has executed and timely delivered the necessary instructions
for the record owner to vote the shares, or if the record owner has, and
exercises, discretionary voting power. If the record owner does not have
discretionary voting power as to a matter presented and has not timely received
voting instructions from the beneficial owner, shares will be counted neither
toward the quorum nor to determine whether a Proposal has been approved or
rejected.
Each of Proposals I, IIa, IIb and IIc is conditioned upon the approval of
the other three Proposals so that for any one to pass, they all must pass. If
any Proposal is not passed, the Reorganization described below will not occur as
described herein, and the Board of Trustees will consider what other actions, if
any, should be taken.
In addition to the solicitation of proxies by use of the mail, proxies may
be solicited by officers of the Group, by officers and employees of the Funds'
investment adviser, 1st Source Bank ("Adviser") or the Group's administrator,
BISYS, personally or by telephone or telegraph, without special compensation.
The most recent annual report of the Funds, including financial statements,
for the year ended June 30, 1998 has been mailed previously to shareholders. If
you have not received this report or would like to receive additional copies
free of charge, please contact the Funds at their address set forth on the first
page of this proxy statement or by calling (800) 766-8938 and it will be sent
within three business days by first class mail.
PROPOSAL I
APPROVAL OF AN AGREEMENT AND PLAN OF REORGANIZATION AND LIQUIDATION
Management has proposed, and the Trustees have approved, a restructuring of
the organization of the Funds. Currently, the Funds are each separate series of
the Group, which is an Ohio business trust. The proposed reorganization would
make each of the Funds separate series of The Coventry Group ("Coventry"), a
Massachusetts business trust (the "Reorganization"). (The Group and Coventry may
be referred to herein as "Trusts" or the "Trust.") Like the Group, Coventry's
affairs are overseen by a board of trustees and BISYS serves as administrator
and distributor for each of its series of shares. Other than a change in one of
the trustees and the proposed changes in the sub-advisory arrangements for
Diversified Equity Fund described below, there would be no change in the
management of the Funds, and no changes to the Funds' investment objectives or
policies. The Adviser would continue to serve as investment adviser. There would
be no change in two of the current subadvisers to Diversified Equity Fund. There
would be no change in the Funds' other service providers. Except with respect to
the proposed reduction in the investment advisory fees for Diversified Equity
Fund, and a slight decrease in the expense ratio of each Acquiring Series (as
defined below), the Reorganization is not
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expected to affect the Funds' fees or expenses (except for transfer agency fees
for the Funds which are being reduced).
The Reorganization is designed to preserve for the Funds the advantages of
being part of an "umbrella" fund structure. An umbrella fund is one in which a
single registered investment company, such as the Group or Coventry, has series
that include various independently managed funds. By organizing these funds as
series of a single umbrella fund, the funds get the benefit of certain
efficiencies and cost savings. Among other things, a single board of trustees
oversees all of the component funds, and costs related to the trustees (their
fees, expenses of trustees' meetings), are spread across all the component
funds. Due to recent changes in the component funds of the Group, it is no
longer advisable to operate it as an umbrella fund. Coventry, by contrast, does,
and is expected to continue to, operate as an umbrella fund.
Each aspect of the Reorganization has received unanimous approval from the
Group's Board of Trustees and from Coventry's Board of Trustees. The
Reorganization is proposed to be accomplished pursuant to an Agreement and Plan
of Reorganization and Liquidation providing for the transfer of all of the
assets of the relevant Fund ("Acquired Series") to a corresponding series
("Acquiring Series") of Coventry created for such purpose, in exchange for
shares of the Acquiring Series as described below, and for the assumption by the
corresponding Acquiring Series of all of the liabilities of the Acquired Series.
The completion of these transactions will result in the complete liquidation of
each Acquired Series. As a result of the Reorganization, shareholders of each
Fund would become shareholders of their corresponding Acquiring Series and have
the same proportionate interest in the same portfolio of assets as prior to the
Reorganization.
TERMS OF THE PLAN
The Reorganization is subject to a number of conditions for each Fund,
including the approval of the shareholders of the relevant Acquired Series.
Accordingly, Shareholders of each Acquired Series are being asked to vote upon
the approval of an Agreement and Plan of Reorganization and Liquidation (the
"Plan") pursuant to which the Reorganization would be consummated. The following
descriptions of the Plan and the features of the proposed reorganizations are
qualified in their entirety by reference to the text of the Plan. A copy of the
Plan is set forth as Exhibit A to this Proxy Statement.
The Plan provides, among other things, for the transfer of all of the
assets of each Acquired Series to its corresponding Acquiring Series in exchange
for (i) the assumption by the Acquiring Series of all of the identified
liabilities of the Acquired Series and (ii) the issuance to the Acquired Series
of shares of beneficial interest (the "Acquiring Series Shares") in the
Acquiring Series, the number of which shall be calculated based upon the value
of the net assets of the Acquired Series then outstanding as of 4:00 p.m.
Eastern Time on the Valuation Time (defined in the Plan to be October 24, 1998,
or such other date as may be agreed upon by the Group and Coventry).
Specifically, on the Exchange Date (the date following the Valuation Date) the
Acquiring Series will deliver to the Acquired Series a number of full and
fractional Acquiring Series Shares having an aggregate net asset value equal to
the value of the assets of the Acquired Series attributable to its shares of
beneficial interest (the "Acquired Series Shares"), transferred to the
corresponding Acquiring Series on the Exchange Date, less the value of the
liabilities of the Acquired Series, assumed by the Acquiring Series on that
date. After receipt of the Acquiring Series Shares, each Acquired Series will
cause the Acquiring Series Shares to be distributed to its shareholders, in
complete liquidation of the Acquired Series. Each shareholder will be entitled
to receive that proportion of Acquiring Series Shares which the number of
Acquired Series Shares held by such shareholder bears to the total number of
Acquired Series Shares outstanding on such date. The distribution of Acquiring
Series Shares will be accomplished by the establishment of accounts on the share
records of the corresponding Acquiring Series in the names of the Acquired
Series shareholders, each account representing the respective number of full and
fractional Acquiring Series Shares due to such shareholder. Certificates with
respect to Acquiring Series Shares will not be issued.
The consummation of the Reorganization is subject to the conditions set
forth in the Plan, including receipt from the U.S. Securities and Exchange
Commission (the "SEC") of an exemption order from the provisions of Section 17
of the Investment Company Act of 1940, as amended (the "1940 Act"). There can be
no assurance that the Group and Coventry will receive such an order. The Plan
may be terminated and the Reorganization
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abandoned at any time, before or after approval by the Shareholders of each
Acquired Series, by mutual consent of the respective Trustees of the Group and
Coventry. The Plan may also be amended before or after its approval by
shareholders of the Acquired Series, and the Group and Coventry may waive any
condition to their respective obligations under the Plan provided that no
amendment or waiver of a condition after such approval may adversely affect the
interests of shareholders of the Acquired Series or the Acquiring Series.
EFFECT OF SHAREHOLDER APPROVAL OF THE PLAN
The Funds' current Investment Advisory Agreement is, technically, an
agreement between the Group and the Adviser. Thus, upon the Reorganization, this
agreement will have to be terminated and a new investment advisory agreement
will be entered into between the Adviser and Coventry. The termination of the
current Investment Advisory Agreement will also automatically terminate each of
the Sub-Investment Advisory Agreements between the Adviser and each of the
current Sub-Advisers to Diversified Equity Fund.
An investment company registered under the 1940 Act is required to obtain
shareholder approval with regard to an investment advisory agreement with the
company's investment adviser and any sub-adviser. As part of the proposal to
reorganize the Funds, approval by the requisite vote of the Shareholders of the
Plan will also constitute, for the purposes of the 1940 Act: approval of the
proposed Investment Advisory Agreement between Coventry on behalf of each
Acquiring Series (other than Diversified Equity Fund) and 1st Source Bank, as
well as the proposed Sub-Investment Advisory Agreement between the Adviser and
Miller Anderson, & Sherrerd LLP on behalf of Diversified Equity Fund. (See
"Information Concerning the Investment Adviser and Sub-Advisers After the
Reorganization".) The terms of each of these agreements will be substantially
the same as the current agreements with the Group on behalf of each respective
Fund except for: (1) their date and term; (2) the fact that Coventry instead of
the Group will be a party; (3) the elimination of provisions relating to state
expense limitations that are no longer applicable to registered investment
companies; and (4) technical revisions to reflect the change from an Ohio to a
Massachusetts business trust. One current Sub-Adviser to the Diversified Equity
Fund, Columbus Circle Investors, is not proposed to be renewed. Instead, as
described under Proposal IIa, shareholders of Diversified Equity Fund are being
asked to consider approving a new Sub-Investment Advisory Agreement between 1st
Source Bank and Standish, Ayer & Wood, Inc. As described under Proposal IIb,
shareholders of Diversified Equity Fund are being asked to consider approving a
new Sub-Investment Advisory Agreement between 1st Source Bank and Loomis, Sayles
& Company to reduce the sub-advisory fees payable to Loomis, Sayles & Company.
In Proposal IIc, shareholders of Diversified Equity Fund are being asked to
consider approving a reduction in the investment advisory fees payable to the
Adviser by such Fund to reflect the lower sub-advisory fees to be paid to
Loomis, Sayles & Company and to Standish, Ayer & Wood, Inc. (relative to
Columbus Circle Investors).
Assuming shareholder approval of the Plan, each Acquired Series, as the
sole shareholder of the corresponding Acquiring Series immediately prior to the
completion of the Reorganization, will effect the required advisory agreement
approvals by voting its respective shares in each Acquiring Series (other than
Diversified Equity Fund) in favor of the new Investment Advisory Agreement on
behalf of its shareholders prior to the Reorganization. Diversified Equity Fund
Acquired Series will also vote its shares of Diversified Equity Fund Acquiring
Series in favor of the new Sub-Investment Advisory Agreement with current
Sub-Adviser Miller Anderson & Sherrerd LLP on behalf of its shareholders
immediately prior to the completion of the Reorganization. Assuming approval by
Diversified Equity Fund Acquired Series Shareholders of Proposals IIa, IIb, IIc,
and IId, Diversified Equity Fund Acquired Series will vote its shares of
Diversified Equity Fund Acquiring Series in favor of the proposed new
Sub-Advisory Agreement with Standish, Ayer & Wood, Inc., the proposed new Sub-
Investment Advisory Agreement with Loomis, Sayles & Company, the new Investment
Advisory Agreement and the manager-of-managers arrangement. Coventry will then
consider the shareholder approval requirements of the 1940 Act referred to above
to have been satisfied with respect to those agreements.
DESCRIPTION OF ACQUIRING SERIES SHARES
Shares will be issued to each of the Acquired Series' shareholders in
accordance with the Plan as discussed above. The shares will be authorized for
issuance in series by the Board of Trustees of Coventry in accordance with
Coventry's Declaration of Trust and Massachusetts business trust law. The
Acquiring Series will have
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substantially identical purchase, redemption and exchange procedures as are
currently in effect for the Acquired Series, as described in each Fund's current
prospectus and statement of additional information.
INVESTMENT POLICIES AND INVESTMENT RESTRICTIONS
No changes will be made in the Funds' investment objectives, policies or
investment restrictions.
FEE STRUCTURE AND EXPENSES
Except as described in Proposal IIc with respect to the reduction in
investment advisory fees for Diversified Equity Fund (and except for transfer
agency fees which are being reduced), the Reorganization will not cause any
change in fee rates or the nature of expenses to which each Acquiring Series
will be subject subsequent to the Reorganization, except that the Acquiring
Series's allocated portion of Coventry's trust-level expenses may be different
from what the allocated portion of the Group's trust-level expenses would have
been and this difference is expected to provide a slight improvement in the
expense ratio of each Acquiring Series.
EXPENSES OF THE REORGANIZATION
BISYS will bear all expenses associated with the transactions contemplated
by the Plan, including expenses associated with the solicitation of proxies.
FEDERAL INCOME TAX CONSEQUENCES
As a condition to each Acquired Series' obligation to consummate its
Reorganization, the Group will receive an opinion from Dechert Price & Rhoads,
counsel to Coventry, to the effect that, on the basis of the existing provisions
of the Internal Revenue Code of 1986, as amended, (the "Code"), current
administrative rules and court decisions, the transactions contemplated by the
Plan constitute a tax-free reorganization for federal income tax purposes.
THE COVENTRY GROUP
Coventry was organized as a Massachusetts business trust on January 8,
1992. Coventry consists of several separate series managed by a number of
different investment advisers. Although there may be variations in the service
provider arrangements for different series (or groups of series), BISYS (or its
affiliates) typically provides administration, distribution, transfer agent and
fund accounting services to each of the series. Coventry's affairs are overseen
by a Board of Trustees. The four Trustees, three of whom are also Trustees of
the Group, are as follows:
WALTER B. GRIMM. Mr. Grimm serves as Chairman of the Board of Trustees and
President of Coventry. He is also Chairman of the Board of Trustees and
President of the Group. He has been an employee of BISYS Fund Services since
1992. As an employee of Coventry's distributor, Mr. Grimm is currently the only
Trustee of Coventry who is an "interested person," as defined in the 1940 Act.
MAURICE G. STARK. Trustee of Coventry and the Group. Currently retired, Mr.
Stark served until the end of 1994 as Vice President-Finance and Treasurer of
Battelle Memorial Institute, a scientific research and development service
corporation.
MICHAEL M. VAN BUSKIRK. Trustee of Coventry. Mr. Van Buskirk has been
Executive Vice President of The Ohio Bankers' Association, a trade association,
since 1991.
JOHN H. FERRING IV. Trustee of Coventry and the Group. Since 1979,
President and owner of Plaze, Incorporated, St. Louis, Missouri.
COMPENSATION OF TRUSTEES
Those Trustees who are not affiliated with the Adviser or BISYS receive
from Coventry an annual fee of $1,000, 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 special meetings of the Board attended by
telephone. They
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are also reimbursed for out-of-pocket expenses related to attendance at such
meetings. Trustees who are affiliated with BISYS or the Adviser do not receive
compensation from Coventry.
COMPARISON OF OHIO AND MASSACHUSETTS BUSINESS TRUST LAW
The primary source of regulation for the Funds is the 1940 Act. However,
laws of the state of organization, and the form of organization, affect certain
operational and procedural matters for a mutual fund. Because of the
comprehensiveness of 1940 Act regulation, registered investment companies
generally prefer to organize under state laws that offer both maximum
flexibility and low cost. The Massachusetts business trust has long been one of
the more popular forms of organization for open-end investment companies -- the
first U.S. open-end fund was organized in 1924 as a Massachusetts business
trust. The Ohio business trust statute is considerably more recent and has
therefore been less widely used by investment companies. Both the Ohio and
Massachusetts statutes contain few provisions and impose few requirements, thus
offering considerable flexibility to a fund. Neither, for example, requires
annual meetings of shareholders, and each permits the authorization of an
unlimited number of shares. The advantage of the Massachusetts business trust
form is its long history of successful use by investment companies. The
advantage of the Ohio business trust is that the Ohio statute expressly limits
the personal liability of trustees and shareholders, while a Massachusetts
business trust provides for these limitations in its organizational and
contractual documents.
COMPARISON OF THE DECLARATIONS OF TRUST OF THE GROUP AND COVENTRY
Following is a summary description of certain provisions of the
Declarations of Trust ("Declarations") for the Group and Coventry (each, a
"Trust"). This description is qualified in its entirety by reference to the full
text of each Declaration. Copies of each Declaration are available at no charge
upon request to BISYS by calling (614) 470-8000 or by writing to BISYS at 3435
Stelzer Road, Columbus, Ohio 43219.
Trustees. Each Declaration provides the Trustees with general authority to
manage the business of the Trust and to enter into agreements with investment
advisers and other service providers. Neither Declaration requires a specified
number of Trustees, provides for classes of Trustees, or sets a limited term of
office for Trustees. Each contains provisions for filling vacancies, for
resignation, and for removal of Trustees by the Trustees or by shareholders.
Shares and Shareholders. Each Declaration provides for an unlimited number
of authorized shares and provides for the creation of separate series and
classes of shares. Each Declaration provides shareholders with rights consistent
with those required by the 1940 Act for shareholders of registered investment
companies. The Group's Declaration provides that shareholders shall have no
preemptive or other rights to subscribe to additional securities of the Trust,
while Coventry's Declaration provides that shareholders shall have no
preference, preemptive, appraisal, conversion or exchange rights, except as the
Trustees may determine with respect to a particular series of shares. The
Group's Declaration provides that shareholders have one vote for each dollar of
share value, while Coventry's Declaration provides for one vote for each whole
share and a fractional vote for each share fraction. As a result, each
shareholder of an Acquiring Series will have the same number of votes per share
(one) regardless of the net asset value per share.
Each Declaration provides that shareholders may vote only (a) to elect or
remove Trustees, subject to certain conditions; (b) on matters required by the
1940 Act to be submitted to shareholders; (c) on the reorganization or
termination of the Trust; (d) to the same extent as shareholders of an Ohio or
Massachusetts corporation, respectively, regarding the institution of
shareholder derivative or class actions; (e) and on amendments to the
Declaration. (Trustees also have limited rights to amend the Declaration,
without shareholder approval, to conform to applicable law, to change the name
of the Trust, and to make certain other changes. New series can also be added,
and their names changed, without shareholder approval.) The Coventry Declaration
prohibits amendments that would impair shareholder exemption from personal
liability, while the Group Declaration permits such a change only with the
approval of each affected shareholder. Amendments to each Declaration require
the vote of a majority of outstanding shares entitled to vote, but the Coventry
Declaration requires that two-thirds of such shares approve any amendment that
would reduce the amount payable with respect to shares upon liquidation or that
would reduce shareholder voting rights. The Group Declaration provides for a
6
<PAGE> 11
shareholder-initiated meeting upon the written request of at least 20% of
shareholders entitled to vote on the particular matter to be presented, while
the Coventry Declaration permits a shareholder-initiated meeting upon the
written request of only 10% of the Trust's outstanding shares. However, the
Group has undertaken to the SEC to hold a special meeting of shareholders of the
Group for the purpose of considering the removal of one or more of the Group's
Trustees upon written request therefor from shareholders owning not less than
10% of the outstanding votes of the Group entitled to vote.
Liability of Shareholders and Trustees. Each Declaration provides that
shareholders shall not be subject to personal liability in connection with the
Trust's affairs and shall be indemnified by the Trust against any liability and
related expenses to which a shareholder, as such, might be subject. Each
Declaration also provides that Trustees and Trust officers are protected from
personal liability and will be indemnified by the Trust except for liability
arising from bad faith, willful misfeasance, gross negligence or reckless
disregard of duties.
BASIS FOR THE BOARDS' RECOMMENDATIONS
The Board of Trustees of the Group, including a majority of those Trustees
who are not "interested persons" of the Group, as defined in the 1940 Act (the
"Independent Trustees"), unanimously approved the Plan at a meeting held on July
23, 1998.
In approving the Plan, the Trustees of the Group determined that the
proposed Reorganization would be in the best interests of each of the Acquired
Series, and that the interests of the shareholders would not be diluted as a
result of effecting the Reorganization. The Board considered various factors in
recommending that shareholders approve the Plan, including the tax-free nature
of the Reorganization and the payment of all the Reorganization expenses by
BISYS, as described above, and those factors set forth below.
The Trustees also considered whether there might be significant differences
between the Ohio business trust form of organization and the Massachusetts
business trust. They noted the long history of successful use of the
Massachusetts business trust form for open-end investment companies. They noted
that the more recent Ohio statute had not been as widely used or tested. They
noted the differences in methods for providing for limitation of trustee and
shareholder liability between the two types of trusts, noting that while the
relative certainty provided by the Ohio statute on these points was desirable,
the procedures used by Coventry to establish these limitations through its
organizational documents and contracts had not been shown, to the knowledge of
the Trustees, to be ineffective. They noted that each statute provides
considerable efficiency as well as flexibility with regard to various matters of
corporate governance, and that each type of trust could have unlimited
authorized capital and would not be required to hold annual meetings of
shareholders. On balance, they determined that each format was suitable.
The Trustees also considered that the investment objective, policies and
restrictions of each Acquired Series are substantially identical to those of the
corresponding Acquiring Series and that, except for the proposed new Sub-Adviser
for Diversified Equity Fund (see Proposal IIa), each Acquiring Series would be
managed by the same personnel and in accordance with the same investment
strategies and techniques utilized in the management of the corresponding
Acquired Series immediately prior to the Reorganization. For these reasons, the
Board concluded that an investment in shares of the Acquiring Series will
provide Shareholders with an investment opportunity substantially identical to
that afforded by the corresponding Acquired Series immediately prior to the
Reorganization, except that a portion of the assets of Diversified Equity Fund
would have a different Sub-Adviser -- a change that requires separate approval
by Shareholders of Diversified Equity Fund. The Board further considered
estimates of operating expense ratios for each Acquired Series and its
corresponding Acquiring Series.
CONTINUATION OF SHAREHOLDER ACCOUNTS AND PLANS
BISYS, as Coventry's transfer agent will establish accounts for all current
Acquired Series shareholders containing the appropriate number of Acquiring
Series shares to be received by that shareholder in accordance with the terms
and provisions of the Plan. These accounts will be identical in all material
respects to the accounts currently maintained by each Acquired Series on behalf
of its shareholders.
7
<PAGE> 12
INFORMATION CONCERNING THE ADVISER TO THE FUNDS AND THE
CONTINUING SUBADVISERS TO THE DIVERSIFIED EQUITY FUND
THE ADVISER AND THE CONTINUING SUBADVISERS
1st Source Bank, 100 North Michigan Street, South Bend, Indiana 46601, is a
wholly owned subsidiary of 1st Source Corporation, a publicly held bank holding
company. The Adviser has served as investment adviser to the Funds since their
inception. Additionally, the Adviser and its affiliates administer and manage,
on behalf of their clients, trust assets which, as of June 30, 1998, totaled
approximately $1.7 billion. The Adviser has over 60 years of banking experience
and, as of June 30, 1998, had, on a consolidated basis with its parent, over
$2.4 billion in assets.
As permitted by the Investment Advisory Agreement, the Adviser has retained
the following sub-advisers to the Diversified Equity Fund:
Miller Anderson & Sherrerd LLP ("Miller Anderson"), One Tower Bridge, Suite
1100, West Conshohocken, Pennsylvania 19428 ("Miller Anderson"), which was
founded in 1969 and is currently a wholly-owned subsidiary of Morgan Stanley,
Dean Witter, Discover & Co. Miller Anderson provides advice primarily to
institutions, including other investment companies, and currently has
approximately $47.2 billion in assets under management.
Loomis, Sayles & Company ("Loomis"), 3 First National Plaza, Suite 5450,
Chicago, Illinois 60600, which was founded in 1926 and established its Chicago
office in 1952. Loomis' sole general partner is Loomis, Sayles & Company,
Incorporated.
THE INVESTMENT ADVISORY AGREEMENT AND SUB-INVESTMENT ADVISORY AGREEMENTS
A vote to approve the Plan would also have the effect of approval of the
proposed Investment Advisory Agreement between Coventry on behalf of each
Acquiring Series (other than Diversified Equity Fund as described in Proposal
IIc below) and the Adviser, and the Sub-Investment Advisory Agreement between
the Adviser and Miller Anderson.
THE INVESTMENT ADVISORY AGREEMENT
The Investment Advisory Agreement proposed for each Acquiring Series is
substantially identical to the Investment Advisory Agreement in place currently
between the Adviser and the Group with respect to each Acquired Series, except
for the name of the trust party, the date and term, the removal of a provision
concerning state expense limit rules that are no longer applicable to registered
investment companies, and technical changes to reflect the fact that Coventry is
a Massachusetts, rather than an Ohio, business trust. The fee rates contained in
the proposed Investment Advisory Agreement are the same as those in the current
Investment Advisory Agreement with respect to each of the Funds except for
Diversified Equity Fund. For Diversified Equity Fund, the fee rates are proposed
to be reduced as described in Proposal IIc below. A form of the proposed
Investment Advisory Agreement is set forth as Exhibit B to this Proxy Statement.
Information regarding the current and proposed Investment Advisory Agreements is
set forth below.
Under both the current Investment Advisory Agreement, dated as of August
20, 1996, between the Group and the Adviser, and the proposed Investment
Advisory Agreement between Coventry and the Adviser, each with respect to the
Funds ("Agreements"), the Adviser agrees to provide the Funds with investment
advisory services, including the selection of brokers and dealers to execute
portfolio transactions, either directly or through one or more sub-advisers.
In exchange for the services provided under the Agreements, each Fund pays
the Adviser a fee which is computed daily and payable monthly at the following
annual rates based on the average daily net assets of the Fund: (1) for the
Diversified Equity Fund, one hundred ten one-hundredths of one percent (1.10%)
under the current Investment Advisory Agreement and ninety-nine one-hundredths
of one percent (0.99%) under the proposed Investment Advisory Agreement; (2) for
both the Income Equity Fund and the Special Equity Fund, eighty one-hundredths
of one percent (0.80%); and (3) for the Income Fund, fifty-five one-hundredths
of one
8
<PAGE> 13
percent (0.55%). Out of these fees, the Adviser pays its expenses of providing
its services to the Funds (except the costs of the Funds' securities and related
transaction costs), and the Adviser pays the fees of the Sub-Advisers. Each
Agreement provides that, unless sooner terminated, it will continue in effect
with respect to a Fund for two years and from year to year thereafter provided
it is approved after such two year period and at least annually thereafter by
the Trustees or by vote of a majority of the outstanding shares of that Fund,
and by a majority of the Trustees who are not parties to the Agreement or
interested persons, as defined in the 1940 Act, of any such party cast in person
at a meeting called for such purpose. The Agreements are terminable at any time
with respect to a Fund on 60 days' notice, without penalty, by the Trustees, by
vote of a majority of the outstanding shares of that Fund, or by the Adviser.
The Agreements also terminate automatically upon assignment, as defined in the
1940 Act.
Each Agreement provides that the Adviser shall not be liable for any error
of judgment or mistake of law or for any loss suffered by a Fund in connection
with the performance of the 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.
Each Agreement contains a notice that the obligations of the Trust are not
personally binding on shareholders, or the Trustees or officers of the Trust,
but bind only the assets of the particular Fund. Each Agreement also contains an
acknowledgment by the Trust of the Adviser's property rights to the name "1st
Source Monogram" and an agreement by the Adviser permitting the Funds, on a
non-exclusive, royalty-free basis, to use the name "1st Source Monogram" so long
as the Agreement is in effect. At such time as the current or proposed Agreement
is no longer in effect, the Adviser may require the Funds to cease using the
name "1st Source Monogram."
THE SUB-INVESTMENT ADVISORY AGREEMENTS FOR DIVERSIFIED EQUITY FUND
The Sub-Investment Advisory Agreement ("Sub-Agreement") proposed for the
Acquiring Series Diversified Equity Fund with Miller Anderson is substantially
identical to the Sub-Agreement in place currently between the Adviser and Miller
Anderson with respect to the Acquired Series Diversified Equity Fund, except for
the name of the Trust, the date and term, the removal of a provision concerning
state expense limit rules that are no longer applicable to registered investment
companies, and technical changes to reflect the fact that Coventry is a
Massachusetts, rather than an Ohio, business trust. The fee rates contained in
the proposed Sub-Agreement with Miller Anderson are the same as those in the
current Sub-Agreement. The Sub-Agreement provides that, in exchange for the
services provided under the Sub-Agreement, the Adviser pays Miller Anderson a
fee which is computed daily and payable monthly at the following annual rates
based on the average daily net assets of the portion of the assets of
Diversified Equity Fund allocated to Miller Anderson -- 0.625% for assets up to
$25,000,000, and 0.375% for assets in excess of $25,000,000. Out of these fees,
Miller Anderson pays its expenses of providing its services to Diversified
Equity Fund, except the costs of the Fund's securities and related transaction
costs.
Except for the changes referred to above, the terms of the current and
proposed Sub-Agreements are substantially similar to those of the proposed new
Sub-Agreements with Standish, Ayer & Wood, Inc. described in Proposal IIa, and
with Loomis, Sayles & Company, described in Proposal IIb, except that the fees
for Miller Anderson are as noted above. A form of the proposed Sub-Agreement
with Miller Anderson is set forth as Exhibit C to this Proxy Statement.
DETERMINATIONS BY THE TRUSTEES
The current Advisory Agreement, dated as of August 20, 1996, was last
approved by the Trustees of the Group on August 13, 1998. The current
Sub-Agreement with Miller Anderson, dated as of August 20, 1996, was last
approved by the Trustees of the Group on August 13, 1998. The proposed Advisory
Agreement was reviewed on August 13, 1998 by the Trustees of the Group. Those
Trustees, including a majority of the independent Trustees, approved the
proposed Advisory Agreement. They determined to recommend that shareholders of
the Funds approve the proposed Advisory Agreement. The proposed Advisory
Agreement and the proposed Sub-
9
<PAGE> 14
Advisory Agreement with Miller Anderson were approved by the Trustees of
Coventry at a meeting held August 12, 1998.
In determining to approve these agreements and recommend their approval by
shareholders, the Group's Trustees evaluated information presented to them
regarding the Adviser and Miller Anderson, including information on their
performance records, qualifications of their advisory personnel and other
factors. They considered the fees payable to the Adviser and to Miller Anderson,
including consideration of the relative split in fees between the Adviser,
Miller Anderson, Loomis, Sayles & Company (see Proposal IIb), and the proposed
new Sub-Adviser (see Proposal IIa), and determined the fees to be reasonable.
The Trustees gave considerable weight in their deliberations to the fact that
they believed the investment management of the Funds had been satisfactory and
that it was desirable to maintain continuity in their management.
THE BOARD OF TRUSTEES OF THE GROUP, INCLUDING THE INDEPENDENT TRUSTEES,
UNANIMOUSLY RECOMMEND APPROVAL OF PROPOSAL I.
PROPOSAL IIa
(FOR SHAREHOLDERS OF DIVERSIFIED EQUITY FUND ONLY)
APPROVAL OF A SUB-INVESTMENT ADVISORY AGREEMENT
BETWEEN THE ADVISER AND STANDISH, AYER & WOOD, INC.
Coventry's Board of Trustees, upon the recommendation of the Adviser, has
determined not to retain Columbus Circle Investors ("Columbus") due to the
Adviser's dissatisfaction with Columbus' investment performance and investment
style and has approved, subject to shareholder approval, a new Sub-Agreement
with Standish, Ayer & Wood, Inc., One Financial Center, Boston, Massachusetts
02111. The Group's Board of Trustees also reviewed and approved the proposed new
Sub-Agreement with Standish, Ayer & Wood, Inc.
Standish, Ayer & Wood, Inc. ("Standish"), was founded in 1933 and is a
registered investment adviser and an independent investment counseling firm
which manages over $44 billion for more than 450 clients, including individuals,
endowments, pension plans, insurance companies and banks. Standish is also
investment adviser to a family of mutual funds with over $6.3 billion in assets.
Standish's investment management experience includes a broad range of both
domestic and international equity and fixed income securities. Standish is owned
and operated by its Directors.
Standish currently serves as investment adviser to the following investment
company that has an investment objective that is similar to the Fund's
investment objective:
<TABLE>
<CAPTION>
TOTAL ASSETS AS INVESTMENT
OF JUNE 30, 1998 ADVISORY FEE RATE
---------------- -------------------------
<S> <C> <C>
The Standish Equity Asset Fund................ $220.2 million 0.50% of the Fund's
average daily net assets.
</TABLE>
The terms of the proposed Sub-Agreement with Standish (the "Standish
Sub-Agreement") are substantially similar to those of the proposed
Sub-Agreements with Miller Anderson and Loomis, Sayles & Company except for the
different fee rates for each Sub-Adviser. (The terms are also substantially
similar to those of the current Sub-Agreements with Miller Anderson and Loomis,
Sayles & Company, except as noted under Proposal I, above.) The following
description, except as otherwise noted, is applicable to the current
Sub-Agreements between the Adviser and Miller Anderson and Loomis, Sayles &
Company, the continuing Sub-Advisers, dated as of August 20, 1996, and the
proposed Sub-Agreements between the Adviser and each of Miller Anderson and
Loomis, Sayles & Company, as well as the proposed Standish Sub-Agreement
(collectively, the "Sub-Agreements"). A copy of the proposed Standish
Sub-Agreement is attached hereto as Exhibit D.
Under the Sub-Agreements, the Adviser appoints each Sub-Adviser, and each
Sub-Adviser agrees to provide investment advisory services to Diversified Equity
Fund, in accordance with that Fund's investment objectives, policies and
restrictions, for such portion of Diversified Equity Fund's assets as the
Adviser shall designate and
10
<PAGE> 15
subject to the instructions and supervision of the Adviser under the direction
and control of the Trustees. Each Sub-Agreement provides that the Sub-Adviser
shall be deemed an independent contractor.
Each Sub-Agreement provides that the respective Sub-Adviser shall
determine, with respect to the portion of the Fund's assets assigned to it, what
investments will be purchased, retained or sold, what portion should be invested
in particular foreign countries or regions, the use of foreign exchange
contracts and other foreign currency matters, and the manner in which voting
rights on the Fund's portfolio securities should be exercised. Each Sub-Adviser
is also authorized to select brokers to execute portfolio transactions for the
Fund.
In exchange for the services provided under the Sub-Agreements, the Adviser
pays each Sub-Adviser a fee. As described under Proposal I, in this Proposal IIa
and in Proposal IIb, the fee to each Sub-Adviser is computed daily and payable
monthly at the following annual rates based on the average daily net assets of
the portion of the assets of Diversified Equity Fund allocated to that
Sub-Adviser: Miller Anderson -- 0.625% for assets up to $25,000,000, and 0.375%
for assets in excess of $25,000,000; Loomis -- 0.40% of assets; and
Standish -- 0.45% of assets. (Columbus has been paid 1.00% on the first
$10,000,000 and 0.50% on assets over $10,000,000.) Out of these fees, each
Sub-Adviser pays its expenses of providing its services to Diversified Equity
Fund, except the costs of the Fund's securities and related transaction costs.
Each Sub-Agreement provides that, unless sooner terminated, it will continue in
effect for two years and from year to year thereafter provided it is approved
after such two year period and at least annually thereafter by the Trustees or
by vote of a majority of the outstanding shares of that Fund, and by a majority
of the Trustees who are not parties to the Sub-Agreement or interested persons,
as defined in the 1940 Act, of any such party cast in person at a meeting called
for such purpose. The Sub-Agreements are terminable at any time on 60 days'
notice, without penalty, by the Trustees, by the Adviser, by vote of a majority
of the outstanding shares of Diversified Equity Fund, or by the Sub-Adviser. The
Sub-Agreements also terminate automatically upon assignment, as defined in the
1940 Act.
Each Sub-Agreement provides that the Sub-Adviser shall not be liable for
any error of judgment or mistake of law or for any loss suffered by Diversified
Equity Fund in connection with the performance of the Sub-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 Sub-Adviser in the performance of
its duties, or from reckless disregard by the Sub-Adviser of its duties and
obligations thereunder.
Each Sub-Agreement contains an acknowledgment by the Sub-Adviser that it
has been notified of, and accepts, the limitations in the applicable Declaration
regarding liability of the Trust, the Fund, the shareholders, Trustees and
officers.
DETERMINATIONS BY THE TRUSTEES
The Trustees of the Group reviewed information presented regarding
Standish's qualifications, including information regarding Standish's
performance history, the range of its experience and the qualifications of its
personnel. It also considered the favorable opinion of the Adviser regarding
Standish and gave considerable weight to the Adviser's recommendation, as
supported by the other information presented regarding Standish. The Trustees
considered the proposed fees to be paid by the Adviser to Standish and noted
that they were lower than those that are paid to Columbus. Columbus received
fees, based on the average daily net assets of the portion of Diversified Equity
Fund's assets allocated by the Adviser to Columbus, at an annual rate of 1.00%
of the first $10 million of those assets and 0.50% on any excess over $10
million. The fees proposed to be paid by the Adviser to Standish are at the
annual rate of 0.45% based on the average daily net assets of the portion of the
Diversified Equity Fund's assets that are allocated by the Adviser to Standish.
The Trustees noted that this lower fee would be reflected in a reduction in the
investment advisory fees proposed to be paid by Diversified Equity Fund as
described in Proposal IIc below. The Trustees determined that the proposed fees,
including the allocation of fees between the Adviser and Standish were
reasonable for the services to be provided by Standish and would not cause a
reduction in the overall level of investment advisory service provided to
Diversified Equity Fund.
The proposed Standish Sub-Agreement was approved by the Trustees of the
Group, including a majority of the independent Trustees, at a meeting held
August 13, 1998, when they also determined to recommend that
11
<PAGE> 16
shareholders of Diversified Equity Fund approve the Standish Sub-Agreement. The
proposed Standish Sub-Agreement was approved by the Trustees of Coventry at a
meeting held on August 12, 1998. If Proposal I, Proposal IIa, Proposal IIb and
Proposal IIc are approved by shareholders, Acquired Series Diversified Equity
Fund will vote its shares of Acquiring Series Diversified Equity Fund in favor
of the proposed Standish Sub-Agreement.
THE BOARD OF TRUSTEES OF THE GROUP, INCLUDING THE INDEPENDENT TRUSTEES,
UNANIMOUSLY RECOMMEND APPROVAL OF PROPOSAL IIa.
PROPOSAL IIb
(FOR SHAREHOLDERS OF DIVERSIFIED EQUITY FUND ONLY)
APPROVAL OF A NEW SUB-INVESTMENT ADVISORY AGREEMENT
BETWEEN THE ADVISER AND LOOMIS SAYLES & COMPANY
Coventry's Board of Trustees, upon the recommendation of the Adviser, has
approved, subject to shareholder approval, a new Sub-Agreement with Loomis
Sayles & Company, Inc. ("Loomis") (the "New Loomis Sub-Agreement") which, among
other things, provides for a reduction in the investment advisory fee payable to
Loomis. The Group's Board of Trustees also reviewed and approved the proposed
Sub-Agreement with Loomis.
Under the New Loomis Sub-Agreement, Loomis would receive an annual
investment advisory fee based on the average daily net assets of the portion of
the assets of the Diversified Equity Fund allocated to it at the rate of 0.40%
of assets. This fee represents a reduction in the investment advisory fees
payable to Loomis under the current Loomis Sub-Agreement which are payable at a
rate of 0.65% on the first $5 million of assets and 0.50% on assets in excess of
$5 million. A copy of the New Loomis Sub-Agreement is attached hereto as Exhibit
E.
Loomis was founded in 1926 and currently manages investments in excess of
$68 billion. The general partner of Loomis is a special purpose corporation that
is an indirect wholly-owned subsidiary of Nvest Companies, L.P. ("Nvest
Companies"). Nvest Companies' managing general partner, Nvest Corporation, is a
direct wholly-owned subsidiary of Metropolitan Life Insurance Company ("Met
Life"), a mutual insurance company. Nvest Companies' advising general partner,
Nvest, L.P., is a publicly traded company listed on the New York Stock Exchange.
Nvest Corporation is the sole general partner of Nvest, L.P.
Loomis currently serves as investment adviser to the following investment
companies that have investment objectives that are similar to the Fund's
investment objective:
<TABLE>
<CAPTION>
TOTAL ASSETS AS INVESTMENT
OF JUNE 30, 1998 ADVISORY FEE RATE
---------------- -------------------------
<S> <C> <C>
The Loomis Sayles Core Value Fund............. $74.8 million 0.50% of the Fund's
average daily net assets.
The Loomis Sayles Growth Fund................. $31.3 million 0.50% of the Fund's
average daily net assets.
The Loomis Sayles Strategic Value Fund........ $ 1.5 million 0.50% of the Fund's
average daily net assets.
The Loomis Sayles Core Growth Fund............ $22.1 million 0.50% of the Fund's
average daily net assets.
</TABLE>
The New Loomis Sub-Agreement provides that, unless sooner terminated, it
will continue in effect for two years and from year to year thereafter provided
it is approved after such two year period and at least annually thereafter by
the Trustees or by vote of a majority of the outstanding shares of that Fund,
and by a majority of the Trustees who are not parties to the Sub-Agreement or
interested persons, as defined in the 1940 Act, of any such party cast in person
at a meeting called for such purpose. The New Loomis Sub-Agreement is terminable
at any time on 60 days' notice, without penalty, by the Trustees, by the
Adviser, by vote of a majority of the outstanding
12
<PAGE> 17
shares of Diversified Equity Fund, or by Loomis. The New Loomis Sub-Agreement
also terminates automatically upon assignment, as defined in the 1940 Act.
DETERMINATIONS BY THE TRUSTEES
In determining to approve the New Loomis Sub-Agreement, the Trustees of the
Group reviewed information presented regarding Loomis' qualifications, including
information regarding Loomis' performance history, the range of its experience
and the qualifications of its personnel. It also considered the favorable
opinion of the Adviser regarding Loomis and gave considerable weight to the
Adviser's recommendation, as supported by the other information presented
regarding Loomis. The Board took note of the fact that Loomis has successfully
managed the assets allocated to it since the Fund's inception. The Board also
took note of the fact that the fees proposed to be paid by the Adviser to Loomis
are at the annual rate of 0.40% based on the average daily net assets of the
portion of the Diversified Equity Fund's assets that are allocated by the
Adviser to Loomis and that this represented a reduction in the advisory fee rate
applicable to Loomis. The Trustees noted that this lower fee would be reflected
in the reduction in the investment advisory fees proposed to be paid by
Diversified Equity Fund as described in Proposal IIc below. The Trustees
determined that the proposed fees, including the allocation of fees between the
Adviser and Loomis were reasonable for the services to be provided by Loomis and
would not cause a reduction in the overall level of investment advisory service
provided to Diversified Equity Fund.
The proposed New Loomis Sub-Agreement was approved by the Trustees of the
Group, including a majority of the independent Trustees, at a meeting held
August 12 and 13, 1998. The proposed New Loomis Sub-Agreement was approved by
the Trustees of Coventry at a meeting held on August 12, 1998. If Proposal I and
Proposal IIa are approved by shareholders, Acquired Series Diversified Equity
Fund will vote its shares of Acquiring Series Diversified Equity Fund in favor
of the proposed New Loomis Sub-Agreement.
THE BOARD OF TRUSTEES OF THE GROUP, INCLUDING THE INDEPENDENT TRUSTEES,
UNANIMOUSLY RECOMMEND APPROVAL OF PROPOSAL IIb.
PROPOSAL IIc
(FOR SHAREHOLDERS OF DIVERSIFIED EQUITY FUND ONLY)
APPROVAL OF NEW INVESTMENT ADVISORY AGREEMENT
BETWEEN COVENTRY AND THE ADVISER
The Group's Board of Trustees has approved, subject to shareholder
approval, a new Investment Advisory Agreement (the "New Advisory Agreement")
with First Source Bank (the "Adviser"). The New Advisory Agreement reflects a
reduction in the investment advisory fees payable to the Adviser by Diversified
Equity Fund.
Under the current Advisory Agreement, the Adviser is paid an investment
advisory fee with respect to the Diversified Equity Fund at an annual rate of
1.10% of the average daily net assets of the Fund. It is being proposed under
the terms of the New Advisory Agreement that the investment advisory fee be
reduced to a new rate equal on an annual basis to 0.99% of the average daily net
assets of the Fund. This reduction in the fee rate is being made to coordinate
with the reduction in the investment advisory fee payable to Loomis and the
reduced investment advisory fee payable to Standish (as compared to that payable
to Columbus).
Set forth below is an illustration of the advisory fees payable under both
the current fee rates and the pro forma fee rates with respect to those
Agreements that are proposed to be amended as set forth herein:
<TABLE>
<CAPTION>
INVESTMENT ADVISORY
FEES PAID TO 1ST SOURCE BANK
FOR THE FISCAL YEAR ENDED JUNE 30, 1998
-------------------------------------------------------------
TOTAL AGGREGATE PRO FORMA AGGREGATE
FEES UNDER THE FEES PAYABLE UNDER PERCENTAGE CHANGE
CURRENT AGREEMENT THE NEW AGREEMENT IN FEES PAID
----------------- ------------------- -----------------
<S> <C> <C> <C>
Diversified Equity Fund......... $970,429 $873,386 (10)%
</TABLE>
13
<PAGE> 18
<TABLE>
<CAPTION>
SUB-INVESTMENT ADVISORY
FEES PAID BY 1ST SOURCE BANK TO LOOMIS SAYLES
FOR THE FISCAL YEAR ENDED JUNE 30, 1998
-------------------------------------------------------------
TOTAL AGGREGATE PRO FORMA AGGREGATE
FEES UNDER THE FEES PAYABLE UNDER PERCENTAGE CHANGE
CURRENT AGREEMENT THE NEW AGREEMENT IN FEES PAID
----------------- ------------------- -----------------
<S> <C> <C> <C>
Diversified Equity Fund......... $148,692 $133,824 (10)%
</TABLE>
In exchange for the services provided under the New Advisory Agreement, the
Fund pays the Adviser a fee that is computed daily and payable monthly. Out of
these fees, the Adviser pays its expenses of providing its services to
Diversified Equity Fund, except the costs of the Fund's securities and related
transaction costs. The New Advisory Agreement provides that, unless sooner
terminated, it will continue in effect for two years and from year to year
thereafter provided it is approved after such two year period and at least
annually thereafter by the Trustees or by vote of a majority of the outstanding
shares of that Fund, and by a majority of the Trustees who are not parties to
the New Advisory Agreement or interested persons, as defined in the 1940 Act, of
any such party cast in person at a meeting called for such purpose. The New
Advisory Agreement is terminable at any time on 60 days' notice, without
penalty, by the Trustees, by the Adviser or by vote of a majority of the
outstanding shares of Diversified Equity Fund. The New Advisory Agreement also
terminates automatically upon assignment, as defined in the 1940 Act.
DETERMINATIONS BY THE TRUSTEES
The Trustees of the Group reviewed information presented regarding the
Adviser's qualifications, including information regarding the Adviser's
performance history, the range of its experience and the qualifications of its
personnel. The Trustees considered the proposed fees to be paid to the Adviser.
The Trustees determined that the proposed fee payable to the Adviser were
reasonable for the services to be provided by the Adviser and would not cause a
reduction in the overall level of investment advisory service provided to
Diversified Equity Fund.
The New Agreement was approved by the Trustees of the Group, including a
majority of the independent Trustees, at a meeting held August 13, 1998. The New
Agreement was approved by the Trustees of Coventry at a meeting held on August
12, 1998. If Proposal I, Proposal IIa, Proposal IIb and Proposal IIc are
approved by shareholders, Acquired Series Diversified Equity Fund will vote its
shares of Acquiring Series Diversified Equity Fund in favor of the New Advisory
Agreement.
THE BOARD TRUSTEES OF THE GROUP, INCLUDING THE INDEPENDENT TRUSTEES,
UNANIMOUSLY RECOMMEND APPROVAL OF PROPOSAL IIc.
PROPOSAL IId
(FOR SHAREHOLDERS OF DIVERSIFIED EQUITY FUND ONLY)
APPROVAL OF THE AUTHORIZATION OF THE BOARD OF TRUSTEES
TO APPOINT, REPLACE OR TERMINATE SUB-ADVISERS RECOMMENDED
BY THE ADVISER OR AMEND THE TERMS OF ANY SUB-AGREEMENT
FOR DIVERSIFIED EQUITY FUND WITHOUT SHAREHOLDER APPROVAL
Section 15(a) of the 1940 Act requires that all contracts pursuant to which
persons serve as investment adviser to investment companies be approved by
shareholders. As interpreted, this requirement also applies to the appointment
of sub-advisers to Diversified Equity Fund. The SEC, however, has granted
conditional exemptions for the shareholder approval requirements for situations
where a fund utilizes a multi-manager approach to portfolio investing. The
Adviser, the Group and Coventry intend to apply for such an exemption with
respect to Diversified Equity Fund. If the exemption is granted and this
proposal is approved by the shareholders of Diversified Equity Fund, the Board
of Trustees of Coventry would, with respect to such series, without further
shareholder approval, be able to appoint additional or replacement sub-advisers,
terminate sub-advisers, rehire existing sub-advisers whose agreements have been
assigned (and thus automatically terminated) and enter into or modify
sub-investment advisory agreements.
14
<PAGE> 19
This Proposal IId is intended to facilitate the efficient operation of the
multi-manager structure with respect to Diversified Equity Fund and afford such
Fund increased management flexibility. Under the multi-manager structure, the
Adviser, with the approval of Coventry's Board of Trustees, would have the same
authority and flexibility with respect to sub-advisers for Diversified Equity
Fund that it has for its own internal portfolio managers; namely that the
Adviser can continually monitor their performance and replace them if the
Adviser, with the approval of the Board of Trustees, believes such action is
appropriate (for example, if the performance is not satisfactory). Under the
multi-manager structure, the Adviser will continuously monitor the performance
of each sub-adviser and may from time to time recommend that the Board of
Trustees add, replace or terminate one or more sub-advisers or appoint
additional sub-advisers, depending on the Adviser's assessment of what
combination of sub-advisers it believes will optimize Diversified Equity Fund's
chances of achieving its investment objective.
While there is no way of knowing exactly how often the Adviser may
recommend, and the Board may approve, the selection of an additional
sub-adviser, or the replacement or termination of an existing sub-adviser, each
of which would typically require a shareholder meeting, it is likely that the
multi-manager structure would result in more frequent shareholder meetings than
would otherwise be the case. However, if the SEC grants the exemption, the
Trustees will not be required to call a shareholder meeting each time a new
sub-adviser is approved (or to reapprove a sub-adviser whose sub-advisory
agreement is automatically terminated because it has been purchased by another
entity) and accordingly, shareholders will forego their existing privilege of
having a vote on such matters.
Shareholder meetings entail substantial costs, and may entail substantial
delays, which could reduce the desired benefits of the multi-manager structure.
These costs and delays must be weighed against the benefits of shareholder
scrutiny of proposed contracts with additional or replacement sub-advisers;
however, even in the absence of shareholder approval, any proposal to add or
replace sub-advisers would receive careful review. First, the Adviser would
assess Diversified Equity Fund's needs and, if it believed additional or
replacement sub-advisers could benefit Diversified Equity Fund, it would
systematically search the relevant universe of available investment managers.
Second, any recommendations made by the Adviser would have to be approved by a
majority of the Trustees, including a majority of the Trustees who are not
interested persons of the Adviser within the meaning of the 1940 Act. Third, any
selections of additional sub-advisers or replacement sub-advisers would have to
comply with conditions contained in the SEC's exemptive order, if granted.
Finally the Board of Trustees would not be able to replace the Adviser as
investment adviser for Diversified Equity Fund without obtaining shareholder
approval of the new investment adviser.
The Trustees of Coventry and the Group approved the multi-manager structure
at meetings held on August 12 and 13, 1998, respectively. If Proposal IId is
approved by shareholders, Acquired Series Diversified Equity Fund will vote its
shares of Acquiring Series Diversified Equity Fund, immediately prior to
completion of the Reorganization, in favor of authorizing the Board of Trustees
of Coventry to appoint, replace or terminate sub-advisers recommended by the
Adviser or amend the terms of any sub-agreement for Diversified Equity Fund
without shareholder approval.
THE BOARD OF TRUSTEES OF THE GROUP, INCLUDING THE INDEPENDENT TRUSTEES,
UNANIMOUSLY RECOMMEND APPROVAL OF PROPOSAL IId.
15
<PAGE> 20
PRINCIPAL HOLDERS OF VOTING SECURITIES
The following table sets forth certain information as of August 19, 1998,
for each of the Funds with respect to each person or group known by the Group to
be the beneficial owner of more than 5% of any class of the Funds' outstanding
voting securities:
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF PERCENT
NAME AND ADDRESS OF BENEFICIAL OF
TITLE OF CLASS BENEFICIAL OWNER OWNERSHIP CLASS
-------------- ------------------------- ------------- -------
<S> <C> <C> <C>
Shares of Diversified Equity Fund........ 1st Source Bank 6,939,560.882(1) 97.020%
P.O. Box 1602
South Bend, Indiana 46634
Shares of Income Equity Fund............. 1st Source Bank 4,061,500.177(1) 95.351%
P.O. Box 1602
South Bend, Indiana 46634
Shares of Special Equity Fund............ 1st Source Bank 3,239,432.416(1) 95.195%
P.O. Box 1602
South Bend, Indiana 46634
Shares of Income Fund.................... 1st Source Bank 6,214,891.167(1) 95.825%
P.O. Box 1602
South Bend, Indiana 46634
</TABLE>
- ---------------
(1) The designated beneficial owner possesses on behalf of its underlying
accounts voting or investment power with respect to these Shares.
OTHER MATTERS
The Board does not currently know of any matters to be presented at the
Meeting other than those mentioned in this Proxy Statement. If any other matters
come properly before the Meeting, the shares represented by proxies will be
voted with respect thereto in accordance with the best judgment of the person or
persons voting the proxies.
The Funds do not hold annual or regular meetings of their shareholders.
Proposals of shareholders which are intended to be presented at a future
shareholders' meeting must be received by the Funds by a reasonable time prior
to the Funds' solicitation of proxies relating to such future meeting.
Shareholder proposals must meet certain requirements and there is no guarantee
that any proposal will be presented at a shareholders' meeting.
16
<PAGE> 21
EXHIBIT A
AGREEMENT AND PLAN OF REORGANIZATION AND LIQUIDATION
Agreement and Plan of Reorganization and Liquidation ("Agreement") dated as
of July 23, 1998, by and between The Sessions Group, an Ohio business trust
("Group"), on behalf of each of the Acquired Series (as defined below), and The
Coventry Group, a Massachusetts business trust ("Funds"), on behalf of each of
the Acquiring Series (as defined below). For purposes of Section 5 hereof, the
Agreement is also between Group and Funds (on behalf of their respective
Acquired and Acquiring Series, as defined below) on the one hand, and BISYS Fund
Services Limited Partnership, an Ohio limited partnership ("BISYS"), on the
other hand.
WHEREAS, Group is registered under the Investment Company Act of 1940, as
amended ("1940 Act"), as an open-end investment company of the management type
and has issued and outstanding shares of beneficial interest of one class,
without par value, of several series, including the following four series: 1st
Source Monogram Diversified Equity Fund ("Group Diversified Equity Fund"), 1st
Source Monogram Special Equity Fund ("Group Special Equity Fund"), 1st Source
Monogram Income Fund ("Group Income Fund"), and 1st Source Monogram Income
Equity Fund ("Group Income Equity Fund," and, together with Group's other three
series described above, the "Acquired Series"; each of the Acquired Series also
may, as the context requires, individually be referred to as the or an "Acquired
Series"); and
WHEREAS, Funds is registered under the 1940 Act as an open-end investment
company of the management type, and has issued and outstanding shares of
beneficial interest of one class, without par value, of several series,
including the following four series: 1st Source Monogram Diversified Equity Fund
("Funds Diversified Equity Fund"), 1st Source Monogram Special Equity Fund
("Funds Special Equity Fund"), 1st Source Monogram Income Fund ("Funds Income
Fund"), and 1st Source Monogram Income Equity Fund ("Funds Income Equity Fund,"
and, together with each of Funds' other three series described above, the
"Acquiring Series"; each of the Acquiring Series also may, as the context
requires, individually be referred to as the or an "Acquiring Series"); and
WHEREAS, Each of the Acquired Series will transfer all assets belonging to
such series, and will assign all of the liabilities belonging to such series, to
the corresponding Acquiring Series, in exchange for shares of beneficial
interest, without par value, of the corresponding Acquiring Series ("Acquiring
Series Shares"), followed by the distribution of the Acquiring Series Shares by
each Acquired Series to the shareholders of the Acquired Series in connection
with the dissolution of the Acquired Series, all upon the terms and provisions
of this Agreement (individually a "Reorganization", and together, the
"Reorganizations"); and
WHEREAS, The Acquired Series and the Acquiring Series correspond to one
another as follows: Group Diversified Equity Fund corresponds to Funds
Diversified Equity Fund, Group Special Equity Fund corresponds to Funds Special
Equity Fund, Group Income Fund corresponds to Funds Income Fund, and Group
Income Equity Fund corresponds to Funds Income Equity Fund; and
WHEREAS, BISYS has agreed to be responsible for all of the direct and
indirect fees, costs and expenses of the Reorganizations; and
WHEREAS, This Agreement is intended to be and is adopted as a plan of
reorganization and liquidation (or as plans of reorganization and liquidation)
within the meaning of Section 368(a)(1) of the United States Internal Revenue
Code of 1986, as amended (the "Code"), for each Acquired Series and its
corresponding Acquiring Series; and
WHEREAS, The trustees of Group have determined that the Reorganizations are
in the best interests of Group, and that the interests of its shareholders will
not be diluted as a result thereof, and
WHEREAS, The trustees of Funds have determined that the Reorganizations are
in the best interests of Funds and that the interests of its shareholders will
not be diluted as a result thereof,
A-1
<PAGE> 22
NOW, THEREFORE, in consideration of the mutual promises herein contained,
the parties hereto covenant and agree as follows:
1. Plan of Reorganization and Liquidation.
(a) SALE OF ASSETS, ASSUMPTION OF LIABILITIES. With respect to each
Reorganization, and subject to the prior approval of shareholders of the
Acquired Series and to the other terms and conditions contained herein
(including the condition that the Acquired Series shall distribute to its
shareholders all of its investment company taxable income and net capital
gain as described in Section 9(h) herein), Group on behalf of the Acquired
Series, agrees to assign, convey, transfer and deliver to Funds and the
corresponding Acquiring Series, and Funds, on behalf of the corresponding
Acquiring Series, agrees to acquire from Group on the Exchange Date (as
defined below), all of the Investments (as defined below), cash and other
assets of the corresponding Acquired Series in exchange for that number of
full and fractional Acquiring Series Shares of the corresponding Acquiring
Series having an aggregate net asset value equal to the value of all assets
of the Acquired Series transferred to the corresponding Acquiring Series,
as provided in Section 4, less the liabilities of the Acquired Series
assumed by the corresponding Acquiring Series.
(b) ASSETS ACQUIRED. With respect to each Reorganization, the assets
to be acquired by an Acquiring Series from the corresponding Acquired
Series shall consist of all of Acquired Series' property, including,
without limitation, all Investments (as defined below), cash and dividends
or interest receivables which are owned by the Acquired Series and any
deferred or prepaid expenses shown as an asset on the books of the Acquired
Series as of the Valuation Time described in Section 4.
(c) LIABILITIES ASSUMED. With respect to each Reorganization, prior to
the Exchange Date the corresponding Acquired Series will endeavor to
discharge or cause to be discharged, or make provision for the payment of,
all of the known liabilities and obligations of the corresponding Acquired
Series. The corresponding Acquiring Series shall assume all liabilities,
expenses, costs, charges and reserves of the Acquired Series, contingent or
otherwise, reflected in the unaudited statement of assets and liabilities
of the Acquired Series as of the Valuation Time, prepared by or on behalf
of Group in accordance with generally accepted accounting principles
consistently applied from and after June 30, 1997, and shall not assume any
other liabilities, whether absolute or contingent, nor reflected therein.
(d) LIQUIDATION AND DISSOLUTION. With respect to each Reorganization,
upon consummation of the transactions described in Section 1(a), 1(b), and
1(c) above, the Acquired Series shall distribute in complete liquidation to
its shareholders of record as of the Exchange Date the Acquiring Series
Shares of the corresponding Acquiring Series received by it, each Acquired
Series shareholder of record being entitled to receive that number of
Acquiring Series Shares equal to the proportion which the number of shares
of beneficial interest, without par value, of the Acquired Series held by
such shareholder bears to the total number of such shares of the Acquired
Series outstanding on such date, and shall take such further action as may
be required, necessary or appropriate under Group's Declaration of Trust,
Ohio law and the Code to effect the complete liquidation and dissolution of
the Acquired Series. Group will fulfill all reporting requirements under
the 1940 Act and the Code regarding the Acquired Series, both before and
after the Reorganization.
2. Representations, Warranties and Agreements of Group. Group represents
and warrants to and agrees with Funds and the Acquiring Series that:
(a) Group is an Ohio business trust, validly existing under the laws
of the State of Ohio and has the power and authority to own all of its
properties and assets and to carry out its obligations under this
Agreement.
(b) Group is registered under the 1940 Act as an open-end investment
company of the management type, and such registration has not been revoked
or rescinded and is in full force and effect. Group has elected to qualify
and has qualified each of the Acquired Series as a regulated investment
company under Part I of Subchapter M of the Code as of and since its
inception, and has been eligible to and has computed its federal income tax
under Section 852 of the Code, and each such Acquired Series qualifies, and
intends
A-2
<PAGE> 23
to continue to qualify as a regulated investment company for its taxable
year ending upon its liquidation, and to be eligible to and to compute its
federal income tax under Section 852 of the Code.
(c) The statements of assets and liabilities, including the schedules
of portfolio investments as of June 30, 1997, and the related statements of
operations for the year then ended, and statements of changes in net assets
for each of the two years (or such shorter period as the Fund shall have
operated) in the period then ended, for each Acquired Series, such
statements having been audited by Coopers & Lybrand LLP (now,
PricewaterhouseCoopers LLP), independent auditors of the Acquired Series,
have been furnished to Funds. Such statements of assets and liabilities
fairly present the financial position of each Acquired Series as of such
date and such statements of operations and changes in net assets fairly
reflect the results of operations and changes in net assets for the periods
covered thereby in conformity with generally accepted accounting
principles, and there are no known material liabilities of the Acquired
Series as of such date which are not disclosed therein.
(d) The Prospectus of each Acquired Series dated October 31, 1997, as
supplemented to date (the "Acquired Series Prospectus"), and its related
Statement of Additional Information of even date therewith, in the forms
filed under the Securities Act of 1933, as amended ("1933 Act") with the
Securities and Exchange Commission ("Commission") and previously furnished
to Funds, did not as of its date and do not as of the date hereof contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading.
(e) Except as may have been previously disclosed to Funds, there are
no material legal, administrative or other proceedings pending or, to the
knowledge of Group, threatened against Group or any Acquired Series.
(f) There are no material contracts outstanding to which Group, on
behalf of any Acquired Series, is a party, other than as disclosed in the
Acquired Series Prospectus and the corresponding Statement of Additional
Information, and there are no such contracts or commitments (other than
this Agreement) which will be terminated with liability to Group on behalf
of any Acquired Series on or prior to the Exchange Date.
(g) No Acquired Series has any known liabilities of a material nature,
contingent or otherwise, other than those shown as belonging to the
Acquired Series on their statement of assets and liabilities at June 30,
1997, and those incurred in the ordinary course of the Group's business as
an investment company since that date.
(h) As used in this Agreement, the term "Investments" with respect to
each Acquired Series shall mean the Acquired Series' investments shown on
the statement of assets and liabilities at June 30, 1997, referred to in
Section 2(g) hereof, as supplemented with such changes as Group has made
after June 30, 1997, in the ordinary course of its business.
(i) Group, on behalf of each Acquired Series, has filed all tax
returns (including information returns) which are required to be filed by
Group (or any Acquired Series) and has paid all taxes shown to be due on
said returns or on any assessments received by Group. All tax liabilities
of Group, on behalf of an Acquired Series, have been adequately provided
for on its books, and no tax deficiency or liability of Group, on behalf of
an Acquired Series, has been asserted, and no question with respect thereto
has been raised, by the Internal Revenue Service or by any state or local
tax authority for taxes in excess of those already paid.
(j) With respect to each Reorganization, as of both the Valuation Time
and the Exchange Date and except for shareholder approval and otherwise as
described in Section 2(l), Group will have full right, power and authority
to assign, transfer and deliver the Investments and any other of an
Acquired Series' assets and liabilities to be transferred to Funds and the
corresponding Acquiring Series pursuant to this Agreement; on the Exchange
Date, subject only to the delivery of the Investments and any such other
assets and liabilities as contemplated by this Agreement, Funds, on behalf
of the Acquiring Series, will acquire the Investments and any such other
assets subject to no encumbrances, liens or security interests in favor of
any third party creditor of Group or the Acquired Series and, except as
described in Section 2(k), without any restrictions upon the transfer
thereof.
A-3
<PAGE> 24
(k) No registration under the 1933 Act of any of the Investments would
be required if they were, as of the time of such transfer, the subject of a
public distribution by either of Group or Funds, except as previously
disclosed to Funds by Group prior to the date hereof.
(l) No consent, approval, authorization or order of any court or
governmental authority is required to be obtained by Group in order to
permit the consummation of the transactions contemplated by this Agreement,
except such as may be required under the Securities Exchange Act of 1934,
as amended (the "1934 Act"), 1940 Act, state securities or blue sky laws
(which term as used herein shall include the laws of the District of
Columbia and of Puerto Rico) and state business trust laws.
(m) Group will call a Special Meeting of Shareholders of the Acquired
Series ("Special Meeting") to consider and act upon this Agreement, the
Reorganizations and related matters. In connection with such meeting, Group
will solicit proxies from the Acquired Series shareholders pursuant to
proxy solicitation materials complying in all material respects with the
1934 Act and the Rules and Regulations of the Commission thereunder ("1934
Act Regulations") and the 1940 Act and the Rules and Regulations of the
Commission thereunder ("1940 Act Regulations").
(n) Group's registration statement on Form N-1A regarding the Acquired
Series (the "Group Registration Statement") under the 1933 Act and the 1940
Act, as of the date hereof and as of the Exchange Date, (i) complies and
will comply in all material respects with the provisions of the 1933 Act
and the Rules and Regulations of the Commission thereunder (the "1933 Act
Regulations") and the 1940 Act and the 1940 Act Regulations, and (ii) does
not and will not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading.
(o) No Acquired Series will dispose of any of its investments, except
as part of the ordinary course of its investment activity.
3. Representations, Warranties and Agreements of Funds. Funds represents
and warrants to and agrees with Group and the Acquired Funds that:
(a) Funds is a business trust validly existing under the laws of the
Commonwealth of Massachusetts and has the power and authority to carry on
the business of an investment company and to carry out its obligations
under this Agreement.
(b) Funds is registered under the 1940 Act as an open-end investment
company of the management type. On or before the Exchange Date, the Funds'
Registration Statement under the 1933 Act on Form N-1A regarding the
Acquiring Series (the "Funds Registration Statement"), shall have been
declared effective by the Commission. Each Acquiring Series expects to
qualify as a regulated investment company under Subchapter M of the Code
and will take all actions necessary to do so.
(c) The Acquiring Series will have no assets or liabilities as of the
Valuation Time.
(d) Except as Funds has previously disclosed to Group, there are no
material legal, administrative or other proceedings pending or, to the
knowledge of Funds, threatened against Funds or any of the Acquiring
Series, which assert liability on the part of Funds or any of the Acquiring
Series.
(e) There are no material contracts outstanding to which Funds or any
of the Acquiring Series is a party, other than this Agreement and material
contracts disclosed in the Funds Registration Statement.
(f) Funds and each of the Acquiring Series will file all federal and
state tax returns which, to the knowledge of Funds' officers, are required
to be filed by Funds and any of the Acquiring Series and will pay all
federal and state taxes shown to be due on such returns or on any
assessments received by Funds or any of the Acquiring Series.
(g) No consent, approval, authorization or order of any governmental
authority is required to be obtained by Funds in order to permit the
consummation of the transactions contemplated by this Agreement, except
such as may be required under the 1933 Act, 1940 Act or state securities or
blue sky laws.
A-4
<PAGE> 25
(h) With respect to each Reorganization, as of both the Valuation Time
and the Exchange Date and otherwise as described in Section 3(g), Funds and
the Acquiring Series will have full right, power and authority to acquire
the Investments and any other assets and assume the liabilities of the
corresponding Acquired Series to be transferred to the Acquiring Series
pursuant to this Agreement.
(i) With respect to each Reorganization, at the time the Funds
Registration Statement becomes effective and as of the Exchange Date, the
Funds Registration Statement (i) will comply in all material respects with
the provisions of the 1933 Act and the 1933 Act Regulations and the 1940
Act and the 1940 Act Regulations, and (ii) will not contain an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading.
(j) With respect to each Reorganization, Funds has no plan or
intention to issue additional Acquiring Series Shares following the
Reorganization except for shares issued in the ordinary course of the
Funds' business as an open-end investment company; nor does Funds have any
plan or intention to redeem or otherwise reacquire any Acquiring Series
Shares issued to corresponding Acquired Series shareholders pursuant to the
Reorganization, other than through redemptions arising in the ordinary
course of that business; Funds will continue the Acquired Series' business
in the same manner that the Acquired Series conducted it immediately before
the Reorganization and has no plan or intention to sell or otherwise
dispose of any of the assets to be acquired by the Acquiring Series in the
Reorganization, except for dispositions made in the ordinary course of its
business and dispositions necessary to maintain the status of each
Acquiring Series as a regulated investment company under Subchapter M of
the Code.
(k) With respect to each Reorganization, the Acquiring Series Shares
to be issued by Funds have been duly authorized and when issued and
delivered by Funds and the Acquiring Series to Group for the benefit of the
corresponding Acquired Series pursuant to this Agreement will be legally
and validly issued by Funds and will be fully paid and nonassessable, and
no shareholder of Funds will have any preemptive right of subscription or
purchase in respect thereof.
(l) With respect to each Reorganization, the issuance of Acquiring
Series Shares pursuant to this Agreement will be in compliance with all
applicable federal and state securities laws. Pursuant to Rule 145(a)(2)
under the 1933 Act, the Agreement and the Reorganizations contemplated
therein will not result in any offer, offer to sell, offer for sale or sale
by Funds of the Acquiring Series Shares to the Group and the corresponding
Acquired Series shareholders under the 1933 Act and Funds need not register
the Acquiring Series Shares for sale under the 1933 Act on Form N-14, or
otherwise.
(m) Each Acquiring Series, upon filing its first income tax return at
the completion of its first taxable year, will elect to be a regulated
investment company for federal income tax purposes and will take all steps
necessary to ensure its qualification as a regulated investment company.
4. Exchange Date; Valuation Time. With respect to each Reorganization, on
the Exchange Date, Funds, on behalf of each Acquiring Series, will deliver to
Group and the corresponding Acquired Series a number of Acquiring Series Shares
having an aggregate net asset value equal to the value of the assets of the
corresponding Acquired Series acquired by the Acquiring Series, less the value
of the liabilities of the corresponding Acquired Series assumed, determined as
hereafter provided in this Section 4.
(a) With respect to each Reorganization, the net assets of each
Acquired Series will be computed as of the Valuation Time, using the
valuation procedures set forth in the Acquired Series Prospectus.
(b) The net asset value of each of the Acquiring Series Shares will be
determined to the nearest full cent as of the Valuation Time, and shall be
set at the net asset value per share of the corresponding Acquired Series
as of the Valuation Time.
(c) The Valuation Time shall be 4:00 P.M., Eastern Standard Time, on
October 23, 1998, or such earlier or later day as may be mutually agreed
upon in writing by the parties hereto (the "Valuation Time").
(d) With respect to each Reorganization, the Acquiring Series shall
issue its Acquiring Series Shares to Group on one share deposit receipt
registered in the name of Group. Group shall constructively distribute in
A-5
<PAGE> 26
liquidation the Acquiring Series Shares received by it hereunder pro rata
to its shareholders by redelivering such share deposit receipt to Funds'
transfer agent, which will as soon as practicable make such modifications
to the accounts for each Funds shareholder as may be necessary and
appropriate to reflect the ownership of the Acquiring Series Shares.
(e) With respect to each Reorganization, the Acquiring Series shall
assume the liabilities of the corresponding Acquired Series described in
subsection 1(c) hereof in connection with the acquisition of assets and
subsequent dissolution of such Acquired Series or otherwise, except that
recourse for assumed liabilities relating to the Acquired Series shall be
limited to the corresponding Acquiring Series.
5. Expenses, Fees, etc. With respect to each Reorganization, neither Group
or the Acquired Series, nor Funds or the Acquiring Series, will be responsible
for any of the direct or indirect fees, costs or expenses of the Reorganization;
proxy solicitation and other costs associated with Group's Special Meeting,
professional fees and expenses in connection with the preparation and closing of
the Agreement and Reorganization and in connection with the preparation of an
exemption application to be filed with the Commission in connection with the
Reorganization (as described in Section 8(i)), organization expenses of the
Acquiring Series, trustees and officers tail insurance to be purchased by Group
in connection with the Reorganization, and all other direct and indirect fees,
costs and expenses of the Reorganization, shall be assumed and paid by BISYS.
6. Exchange Date. With respect to each Reorganization, delivery of the
assets of the Acquired Series to be transferred, assumption of the liabilities
of the Acquired Series to be assumed, and the delivery of the corresponding
Acquiring Series Shares to be issued shall be made at the offices of the Group,
3435 Stelzer Road, Columbus, Ohio as of October 24, 1998, or at such other time,
date, and location agreed to by Group and Funds, the date and time as of which
such delivery is to take place being referred to herein as the "Exchange Date."
7. Special Meeting of Shareholders; Dissolution.
(a) Group agrees to call the Special Meeting as soon as is practicable
for the purpose of authorizing and approving this Agreement (including the
liquidation and dissolution of each Acquired Series), and it shall be a
condition to the obligations of each of the parties hereto that the holders
of shares of beneficial interest, without par value, of each of the
Acquired Series shall have approved this Agreement, and the transactions
contemplated herein, including the liquidation and dissolution of the
Acquired Series, in the manner required by law and Group's Declaration of
Trust at such a meeting on or before the Valuation Time.
(b) Group agrees that the liquidation and dissolution of each Acquired
Series will be effected in the manner provided in Group's Declaration of
Trust and in accordance with applicable law, and that it will not make any
constructive distribution of any Acquiring Series Shares to the
shareholders of the corresponding Acquired Series without first paying or
adequately providing for the payment of all of the Acquired Series' known
debts, obligations and liabilities.
(c) Each of Group and Funds will cooperate with the other, and each
will furnish to the other the information relating to itself required by
the 1934 Act and 1940 Act and the 1934 Act Regulations and 1940 Act
Regulations to be set forth in the proxy solicitation materials to be
prepared by Group and utilized in connection with the Special Meeting.
8. Conditions of Group's Obligations. The obligations of Group and each of
the Acquired Series hereunder shall be subject to the following conditions:
(a) This Agreement shall have been authorized and the transactions
contemplated hereby, including the liquidation and dissolution of each
Acquired Series, shall have been approved by the trustees and shareholders
of Group, and by the trustees of Funds, in the manner required by law.
(b) Funds shall have executed and delivered to Group an Assumption of
Liabilities dated as of the Exchange Date pursuant to which each Acquiring
Series will assume the liabilities, expenses, costs, charges and reserves
of the corresponding Acquired Series described in Section l(c) hereof in
connection with the
A-6
<PAGE> 27
transactions contemplated by this Agreement; provided that recourse for
assumed liabilities relating to the Acquired Series shall be limited to the
corresponding Acquiring Series.
(c) As of the Valuation Time and as of the Exchange Date, all
representations and warranties of Funds made in this Agreement are true and
correct in all material respects as if made at and as of such dates, Funds
and the Acquiring Series have complied with all of the agreements and
satisfied all of the conditions on their part to be performed or satisfied
at or prior to each of such dates, and Funds shall have furnished to Group
a statement, dated the Exchange Date, signed by Fund's President (or any
Vice President) and Treasurer (or other financial officer) certifying those
facts as of such dates.
(d) There shall not be any material litigation pending or overtly
threatened with respect to the matters contemplated by this Agreement.
(e) Group shall have received an opinion of Dechert Price & Rhoads, in
form reasonably satisfactory to Group and dated the Exchange Date, to the
effect that (i) Funds is a business trust validly existing under the laws
of the Commonwealth of Massachusetts, (ii) all of the Acquiring Series
Shares to be delivered to Group as provided for by this Agreement are duly
authorized and upon such delivery will be validly issued and will be fully
paid and nonassessable by Funds and no shareholder of Funds has any
preemptive right to subscription or purchase in respect thereof, (iii) this
Agreement has been duly authorized, executed and delivered by Funds, on
behalf of each Acquiring Series, and assuming due authorization, execution
and delivery of this Agreement by Group, is a valid and binding obligation
of Funds and the Acquiring Series enforceable in accordance with its terms,
except as the same may be limited by bankruptcy, insolvency, reorganization
or other similar laws affecting the enforcement of creditors' rights
generally and other equitable principles, (iv) the execution and delivery
of this Agreement did not, and the consummation of the transactions
contemplated hereby will not, violate Funds' Declaration of Trust or its
By-Laws or any provision of any agreement known to such counsel to which
Funds or the Acquiring Series is a party or by which it is bound, (v) to
the knowledge of such counsel no consent, approval, authorization or order
of any court or governmental authority is required to be obtained by Funds
in order to permit the consummation by Funds or the Acquiring Series of the
transactions contemplated herein, except such as have been obtained under
the 1933 Act, 1934 Act and 1940 Act and such as may be required under state
securities or blue sky laws or as may be required under state business
trust laws. In rendering such opinion Dechert Price & Rhoads may rely on
certain reasonable assumptions and certifications of fact received from
Group and Funds.
(f) With respect to each Reorganization, Group shall have received an
opinion of Dechert Price & Rhoads, addressed to Group and each Acquired
Series and Funds and the corresponding Acquiring Series, and in a form
reasonably satisfactory to Group and dated the Exchange Date, with respect
to the matters specified in Section 9(e) of this Agreement. In rendering
such opinion Dechert Price & Rhoads may rely on certain reasonable
assumptions and certifications of fact received from Group (on behalf of
the Acquired Series), Funds (on behalf of the Acquiring Series) and certain
of their shareholders.
(g) All necessary proceedings taken by Funds in connection with the
transactions contemplated by this Agreement and all documents incidental
thereto reasonably shall be satisfactory in form and substance to Group and
Baker & Hostetler LLP.
(h) The Funds Registration Statement shall have become effective under
the 1933 Act, Funds shall be eligible to sell its securities under
applicable Blue Sky provisions, and no stop order suspending such
effectiveness or right to sell shall have been instituted or, to the
knowledge of Funds, contemplated by the Commission or any state regulatory
authority.
(i) Group and Funds shall have received from the Commission, if
necessary, a written order of exemption, satisfactory in form and substance
to Group and Funds, exempting the Reorganization from the provisions of
Section 17(a) of the 1940 Act.
(j) Funds shall have authorized and entered into service provider
agreements, including an Investment Advisory Agreement and Distribution
Agreement, and adopted a Distribution and Shareholder Service Plan,
identical in all material respects to those entered into and adopted by
Group.
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<PAGE> 28
9. Conditions of Funds' Obligations. The obligations of Funds and each of
the Acquiring Series hereunder shall be subject to the following conditions:
(a) This Agreement shall have been authorized and the transactions
contemplated hereby, including the liquidation and dissolution of each
Acquired Series, shall have been approved by the trustees and shareholders
of Group, and the trustees of Funds, in the manner required by law.
(b) As of the Valuation Time and as of the Exchange Date, all
representations and warranties of Group made in this Agreement are true and
correct in all material respects as if made at and as of such dates, Group
has complied with all the agreements and satisfied all the conditions on
its part to be performed or satisfied at or prior to each of such dates,
and Group shall have furnished to Funds a statement, dated the Exchange
Date, signed by Group's President (or any Vice President) and Treasurer (or
other financial officer) certifying those facts as of such dates.
(c) There shall not be any material litigation pending or overtly
threatened with respect to the matters contemplated by this Agreement.
(d) Funds shall have received an opinion of Baker & Hostetler LLP, in
form reasonably satisfactory to Funds and dated the Exchange Date, to the
effect that (i) Group is a business trust validly existing under the laws
of the State of Ohio, (ii) this Agreement has been duly authorized,
executed and delivered by Group, on behalf of each Acquired Series, and,
assuming due authorization, execution and delivery of this Agreement by
Funds, is a valid and binding obligation of Group and the Acquiring Series,
enforceable in accordance with its terms, except as the same may be limited
by bankruptcy, insolvency, reorganization or other similar laws affecting
the enforcement of creditors' rights generally and other equitable
principles, (iii) Group, on behalf of each Acquired Series, has power to
assign, convey, transfer and deliver the Investments and other assets
contemplated hereby and, upon consummation of the transactions contemplated
hereby in accordance with the terms of this Agreement, Group, on behalf of
each Acquired Series, will have duly assigned, conveyed, transferred and
delivered such Investments and other assets to Funds and the corresponding
Acquiring Series, (iv) the execution and delivery of this Agreement did not
and the consummation of the transactions contemplated hereby will not,
violate Group's Declaration of Trust or its By-Laws, as amended, or any
provision of any agreement known to such counsel to which Group is a party
or by which it is bound, and (v) to the knowledge of such counsel no
consent, approval, authorization or order of any court or governmental
authority is required to be obtained by the Group in order to permit the
consummation by Group or the Acquired Series of the transactions
contemplated herein, except such as have been obtained under the 1934 Act
and 1940 Act and such as may be required under state securities or blue sky
laws or state business trust laws. In rendering such opinion, Baker &
Hostetler LLP may rely upon certain reasonable and customary assumptions
and certifications of fact received from Group and Funds.
(e) With Respect to each Reorganization, Funds shall have received an
opinion of Dechert Price & Rhoads, addressed to Funds and the Acquiring
Series and Group and the corresponding Acquired Series, and in a form
reasonably satisfactory to Funds and dated the Exchange Date, to the effect
that for Federal income tax purposes (i) the transfer of all or
substantially all of Acquired Series' assets in exchange for the Acquiring
Series Shares and the assumption by the Acquiring Series of liabilities of
Acquired Series will constitute a "reorganization" within the meaning of
Section 368(a) of the Code, and each of the Acquiring Series and Acquired
Series is a "party to a reorganization" within the meaning of Section
368(b) of the Code; (ii) no gain or loss will be recognized by Acquired
Series upon the transfer of the assets of the Acquired Series in exchange
for Acquiring Series Shares and the assumption by the Acquiring Series of
the liabilities of Acquired Series or upon the constructive distribution of
Acquiring Series Shares by Acquired Series to its shareholders in
liquidation; (iii) no gain or loss will be recognized by the shareholders
of Acquired Series upon the exchange of their shares for Acquiring Series
Shares, (iv) the basis of the Acquiring Series Shares an Acquired Series
shareholder receives in connection with the Reorganization will be the same
as the basis of his or her shares exchanged therefor; (v) an Acquired
Series shareholder's holding period for his or her Acquiring Series Shares
will be determined by including the period for which he or she held
Acquired Series shares exchanged therefor, provided that he or she held
such shares as capital assets; (vi) no gain or loss will be recognized by
the Acquiring Series upon the receipt of the assets of the
A-8
<PAGE> 29
corresponding Acquired Series in exchange for Acquiring Series Shares and
the assumption by the Acquiring Series of the liabilities of the
corresponding Acquired Series; (vii) the basis in the hands of the
Acquiring Series of the assets of the corresponding Acquired Series
transferred to the Acquiring Series will be the same as the basis of the
assets in the hands of the corresponding Acquired Series immediately prior
to the transfer; and (viii) the Acquiring Series' holding periods of the
assets of the corresponding Acquired Series will include the period for
which such assets of the corresponding Acquired Series were held by the
corresponding Acquired Series. The delivery of such opinion is conditioned
upon receipt by Dechert Price & Rhoads of representations it shall request
from Group (on behalf of the Acquired Series) and from Funds (on behalf of
the Acquiring Series).
(f) The Funds Registration Statement shall have become effective under
the 1933 Act, Funds shall be eligible to sell the securities of each of the
Acquiring Series under applicable Blue Sky provisions, and no stop order
suspending such effectiveness or right to sell shall have been instituted
or, to the knowledge of Funds, contemplated by the Commission or any state
regulatory authority.
(g) All necessary proceedings taken by Group (or each Acquired Series)
in connection with the transactions contemplated by this Agreement and all
documents incidental thereto reasonably shall be satisfactory in form and
substance to Funds and Dechert Price & Rhoads.
(h) Prior to the Exchange Date, each Acquired Series shall have
declared a dividend or dividends which, together with all previous such
dividends, shall have the effect of distributing to its shareholders all of
its investment company taxable income for its taxable year ended June 30,
1998 and the short taxable year beginning on July 1, 1998 and ending on the
Valuation Time (computed without regard to any deduction for dividends
paid), and all of its net capital gain realized in its taxable year ended
June 30, 1998 and the short taxable year beginning July 1, 1998 and ending
on the Valuation Time (after reduction for any capital loss carryover).
(i) Group shall have duly executed and delivered to Funds a bill of
sale, assignment, certificate and other instruments of transfer ("Transfer
Documents") as Funds may deem necessary or desirable to transfer all of
Group's and each Acquired Series' entire right, title and interest in and
to the Investments and all other assets of each Acquired Series to the
corresponding Acquiring Series.
(j) Funds and Group shall have received from the Commission, if
necessary, a written order of exemption, satisfactory in form and substance
to Funds and Group, exempting the Reorganization from the provisions of
Section 17(a) of the 1940 Act.
10. Indemnification.
(a) Funds shall, subject to Section 17(h) of the 1940 Act and Section
10(b) hereof, indemnify and hold harmless Group, its current and former
trustees and officers (for purposes of this Section, the "Indemnified
Parties"), and advance expenses in connection therewith, (i) against any
and all expenses, losses, claims, damages and liabilities at any time
imposed upon or reasonably incurred by any one or more of the Indemnified
Parties in connection with, arising out of, or resulting from any claim,
action, suit or proceeding in which any one or more of the Indemnified
Parties may be involved or with which any one or more of the Indemnified
Parties who is a current or former trustee or officer may be threatened by
reason of their serving as trustees and officers of the Group, including,
without limitation, any amounts paid by any one or more of the Indemnified
Parties in a reasonable compromise or settlement of any such claim, action,
suit or proceeding, or threatened claim, action, suit or proceeding, made
with the prior consent of Funds, and (ii) to the maximum extent that
trustees and officers of Funds can be indemnified, and their expenses
advanced, by Funds under Funds' Declaration of Trust and By-Laws. The
Indemnified Parties will notify Funds in writing within ten days after the
receipt by any one or more of the Indemnified Parties of any notice of
legal process or any suit brought against or claim made against such
Indemnified Party as to any matters covered by this Section 10(a). Funds
shall be entitled to participate at its own expense in the defense of any
claim, action, suit or proceeding covered by this Section 10(a), or, if it
so elects, to assume at its expense by counsel satisfactory to the
Indemnified Parties in the defense of any such claim, action, suit or
proceeding, and if Funds elects to assume such defense, the Indemnified
Parties shall be entitled to participate in the defense of
A-9
<PAGE> 30
any such claim, action, suit or proceeding at their expense. Funds'
obligation under this Section 10(a) to indemnify and hold harmless the
Indemnified Parties shall constitute a guarantee of payment so that Funds
will pay in the first instance any expenses, losses, claims, damages and
liabilities required to be paid by it under this Section 10(a) without the
necessity of the Indemnified Parties' first paying the same.
(b) Notwithstanding the provisions of Section 10(a), the obligation of
Funds to indemnify thereunder shall be limited to the activities, acts or
omissions of one or more of the Indemnified Parties directly or indirectly
related to the affairs of the Acquired Series and shall not cover any other
activity, act or omission, including those regarding any other present or
former series of Group.
11. Termination. Group and Funds may, by mutual consent of their respective
trustees, terminate this Agreement, and Group or Funds, after consultation with
counsel and by consent of their respective trustees or an officer authorized by
such trustees, may, subject to Section 12 of this Agreement, waive any condition
to their respective obligations hereunder.
12. Sole Agreement; Governing Law; Amendments. This Agreement supersedes
all previous correspondence and oral communications between the parties
regarding the subject matter hereof, constitutes the only understanding with
respect to such subject matter and shall be construed in accordance with and
governed by the laws of the State of Ohio.
This Agreement may be amended at any time by action of the trustees of
Group and Funds, notwithstanding approval thereof by the shareholders of the
Acquired Series, or a duly authorized officer thereof, provided that no
amendment shall have a material adverse effect on the interests of the
shareholders of the Acquired Series or of the shareholders of the Acquiring
Series.
If, as a result of a position, whether or not publicly announced, taken by
the staff of the Commission, or otherwise, counsel for Funds determines that it
would be advisable for Funds to register the Acquiring Series Shares to be
offered and sold in connection with the Reorganization contemplated by this
Agreement on Form N-14 under the 1933 Act, the parties hereto shall execute an
amendment to this Agreement, modifying the representations and warranties set
forth in this Agreement to reflect the same and adding such additional
representations and warranties as are agreed and as are customary in agreements
for the acquisition of the assets subject to liabilities of one registered
investment company for shares of another registered investment company.
13. Agreement and Declaration of Trust. The Sessions Group is a business
trust organized under Chapter 1746, Ohio Revised Code and under a Declaration of
Trust, to which reference is hereby made and a copy of which is on file at the
office of the Secretary of State of Ohio as required by law, and to any and all
amendments thereto so filed or hereafter filed. The obligations of "The Sessions
Group" entered into in the name or on behalf thereof by any of the trustees,
officers, employees or agents are made not individually, but in such capacities,
and are not binding upon any of the trustees, officers, employees, agents or
shareholders of Group personally, but bind only the assets of the Group, as set
forth in Section 1746.13(A), Ohio Revised Code, and all persons dealing with any
of the series or funds of the Group, such as the Acquired Series, must look
solely to the assets of Group belonging to such series or funds for the
enforcement of any claims against Group.
The names "The Coventry Group" and "Trustees of The Coventry Group' refer
respectively to the Trust created and the Trustees, as trustees but not
individually or personally, acting from time to time under an Agreement and
Declaration of Trust dated as of January 8, 1992, to which reference is made and
a copy of which is on file at the office of the Secretary of State of The
Commonwealth of Massachusetts and elsewhere as required by law, and to any and
all amendments thereto so filed or hereafter filed. The obligations of "The
Coventry Group' entered into in the name or on behalf thereof by any of the
Trustees, representatives or agents are made not individually, but in such
capacities, and are not binding upon any of the Trustees, shareholders or
representatives of the Trust personally, but bind only the assets of the Trust
and all persons dealing with any series of shares of the Trust, such as the
Acquiring Series, must look solely to the assets of the Trust belonging to such
series for the enforcement of any claims against the Trust.
A-10
<PAGE> 31
This Agreement may be executed in any number of counterparts, each of
which, when executed and delivered, shall be deemed to be an original.
THE SESSIONS GROUP, on behalf of 1st
Source Monogram Diversified Equity Fund
By /s/ WALTER B. GRIMM
-----------------------------------------------------
Walter B. Grimm, President
THE SESSIONS GROUP, on behalf of 1st
Source Monogram Diversified Equity Fund
By /s/ WALTER B. GRIMM
-----------------------------------------------------
Walter B. Grimm, President
THE SESSIONS GROUP, on behalf of 1st
Source Monogram Diversified Equity Fund
By /s/ WALTER B. GRIMM
-----------------------------------------------------
Walter B. Grimm, President
THE SESSIONS GROUP, on behalf of 1st
Source Monogram Diversified Equity Fund
By /s/ WALTER B. GRIMM
-----------------------------------------------------
Walter B. Grimm, President
THE COVENTRY GROUP, on behalf of 1st
Source Monogram Diversified Equity Fund
By /s/ WALTER B. GRIMM
-----------------------------------------------------
Walter B. Grimm, President
THE COVENTRY GROUP, on behalf of 1st
Source Monogram Diversified Equity Fund
By /s/ WALTER B. GRIMM
-----------------------------------------------------
Walter B. Grimm, President
THE COVENTRY GROUP, on behalf of 1st
Source Monogram Diversified Equity Fund
By /s/ WALTER B. GRIMM
-----------------------------------------------------
Walter B. Grimm, President
THE COVENTRY GROUP, on behalf of 1st
Source Monogram Diversified Equity Fund
By /s/ WALTER B. GRIMM
-----------------------------------------------------
Walter B. Grimm, President
For purposes of Section 5 Only
BISYS Fund Services Limited Partnership
By BISYS Fund Services, Inc., General Partner
By /s/ WILLIAM J. TOMKO
--------------------------------------------------------------------------
A-11
<PAGE> 32
EXHIBIT B
INVESTMENT ADVISORY AGREEMENT
This Agreement is made as of October , 1998 between THE CONVENTRY GROUP,
a Massachusetts business trust (the "Trust"), and 1st Source Bank, an Indiana
banking corporation (the "Investment Adviser").
WHEREAS, the Trust is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended ("1940 Act"); and
WHEREAS, the Trust desires to retain the Investment Adviser to provide, or
to arrange for the provision of, investment advisory services to certain
investment portfolios of the Trust and may retain the Investment Adviser to
serve in such capacity to certain additional investment portfolios of the Trust,
all as now or hereafter may be identified in Schedule A hereto (such current
investment portfolios and any such additional investment portfolios together
called the "Funds") and the Investment Adviser represents that it is willing and
possesses legal authority to so furnish such services without violation of
applicable laws (including the Glass-Steagall Act) and regulations;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
SECTION 1. Appointment. The Trust hereby appoints the Investment Adviser to
act as investment adviser to the Funds for the period and on the terms set forth
in this Agreement. The Investment Adviser accepts such appointment and agrees to
furnish the services herein set forth for the compensation herein provided.
Additional investment portfolios may from time to time be added to those covered
by this Agreement by the parties executing a new Schedule A which shall become
effective upon its execution and shall supersede any Schedule A having an
earlier date.
SECTION 2. Delivery of Documents. The Trust has furnished the Investment
Adviser with copies properly certified or authenticated of each of the
following:
(a) the Trust's Declaration of Trust, and any and all amendments
thereto or restatements thereof (such Declaration, as presently in effect
and as it shall from time to time be amended or restated, is herein called
the "Declaration of Trust") ;
(b) the Trust's By-Laws and any amendments thereto;
(c) resolutions of the Trust's Board of Trustees authorizing the
appointment of the Investment Adviser and approving this Agreement;
(d) the Trust's Notification of Registration on Form N-8A under the
1940 Act as filed with the Securities and Exchange Commission and all
amendments thereto;
(e) the Trust's Registration Statement on Form N-1A under the
Securities Act of 1933, as amended ("1933 Act"), and under the 1940 Act as
filed with the Securities and Exchange Commission and the most recent
amendment thereto; and
(f) the most recent Prospectus and Statement of Additional Information
of each of the Funds (such Prospectus and Statement of Additional
Information, as presently in effect, and all amendments and supplements
thereto, are herein collectively called the "Prospectus").
The Trust will furnish the Investment Adviser from time to time with copies
of all amendments of or supplements to the foregoing.
SECTION 3. Management. Subject to the supervision of the Trust's Board of
Trustees, the Investment Adviser will provide, or arrange for the provision of,
a continuous investment program for each of the Funds, including investment
research and management with respect to all securities and investments and cash
equivalents in the Funds. The Investment Adviser will determine, or arrange for
others to determine, from time to time what
B-1
<PAGE> 33
securities and other investments will be purchased, retained or sold by the
Trust with respect to the Funds and will implement, or arrange for others to
implement, such determinations through the placement, in the name of the Funds,
of orders for the execution of portfolio transactions with or through such
brokers or dealers as it may select. The Investment Adviser will provide, or
arrange for the provision of, the services under this Agreement in accordance
with each of the Fund's investment objectives, policies, and restrictions as
stated in the Prospectus and resolutions of the Trust's Board of Trustees.
Subject to the provisions of this Agreement, the Declaration of Trust and
the 1940 Act, the Investment Adviser directly and indirectly may select and
enter into contracts with one or more qualified investment advisers
("Sub-Advisers") to provide to the Trust some or all of the services required by
this Agreement. With respect to any such appointment by the Investment Adviser
of any of the Sub-Advisers, the Investment Adviser will, as appropriate:
(a) advise the Sub-Advisers with respect to economic conditions and
trends;
(b) assist Sub-Advisers with the placement of orders for the purchase
and sale of securities;
(c) assist and consult with the Sub-Advisers in connection with the
Funds' continuous investment programs; and
(d) periodically review, evaluate and report to the Trust's Board of
Trustees with respect to the performance of the Sub-Advisers.
In fulfilling its responsibilities hereunder, the Investment Adviser
further agrees that it will, or, with respect to services provided to the Trust
by any of the Sub-Advisers appointed by the Investment Adviser, that it will
require that each of the Sub-Advisers:
(a) use the same skill and care in providing such services as it uses
in providing services to fiduciary accounts for which it has investment
responsibilities;
(b) conform with all applicable Rules and Regulations of the
Securities and Exchange Commission and in addition will conduct its
activities under this Agreement (or any applicable sub-investment advisory
agreement) in accordance with any applicable regulations of any
governmental authority pertaining to the investment advisory activities of
the Investment Adviser;
(c) not make loans to any person to purchase or carry shares of
beneficial interest in the Trust or make loans to the Trust;
(d) place orders pursuant to its investment determinations for the
Funds either directly with the issuer or with any broker or dealer. In
placing orders with brokers and dealers, the Investment Adviser will
attempt to obtain, or require that each of the Sub-Advisers obtain, prompt
execution of orders in an effective manner at the most favorable price. In
assessing the best execution available for any transaction, the Investment
Adviser or any of the Sub-Advisers shall consider all factors it deems
relevant, including the breadth of the market in the security, the price of
the security, the financial condition and execution capability of the
broker-dealer and the reasonableness of the commission, if any (for the
specific transaction and on a continuing basis). Consistent with this
obligation, the Investment Adviser and any of the Sub-Advisers may, in its
discretion and to the extent permitted by law, purchase and sell portfolio
securities to and from brokers and dealers who provide brokerage and
research services (within the meaning of Section 28(e) of the Securities
Exchange Act of 1934) to or for the benefit of the Funds and/or other
accounts over which the Investment Adviser or any of the Sub-Advisers
exercises investment discretion. Subject to the review of the Trust's Board
of Trustees from time to time with respect to the extent and continuation
of the policy, the Investment Adviser and any of the Sub-Advisers are
authorized to pay a broker or dealer who provides such brokerage and
research services a commission for effecting a securities transaction for
any of the Funds which is in excess of the amount of commission another
broker or dealer would have charged for effecting that transaction if, but
only if, the Investment Adviser or Sub-Advisers determine in good faith
that such commission was reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer, viewed
in terms of either that particular transaction or the overall
responsibilities of the Investment Adviser or Sub-Advisers with respect to
the accounts as to which it exercises investment
B-2
<PAGE> 34
discretion. In placing orders with brokers and dealers, consistent with
applicable laws, rules and regulations, the Investment Adviser may consider
the sale of shares of the Trust. Except as otherwise permitted by
applicable laws, rules and regulations, in no instance will portfolio
securities be purchased from or sold to BISYS Fund Services Limited
Partnership, the Investment Adviser, any Sub-Adviser, or any affiliated
person of the Trust, BISYS Fund Services Limited Partnership, the
Investment Adviser or any Sub-Adviser;
(e) will maintain all books and records with respect to the securities
transactions of the Funds and will furnish the Trust's Board of Trustees
such periodic and special reports as the Board may request;
(f) will treat confidentially and as proprietary information of the
Trust all records and other information relative to the Trust and the Funds
and prior, present, or potential shareholders, and will not use such
records and information for any purpose other than performance of its
responsibilities and duties hereunder, except after prior notification to
and approval in writing by the Trust, which approval shall not be
unreasonably withheld and may not be withheld where the Investment Adviser
or any Sub-Adviser may be exposed to civil or criminal contempt proceedings
for failure to comply, when requested to divulge such information by duly
constituted authorities, or when so requested by the Trust; and
(g) will maintain its policy and practice of conducting its fiduciary
functions independently. In making investment recommendations for the
Funds, the Investment Adviser's or Sub-Advisers' personnel will not inquire
or take into consideration whether the issuers of securities proposed for
purchase or sale for the Trust's account are customers of the Investment
Adviser or any Sub-Adviser or of their respective parents, subsidiaries or
affiliates. In dealing with such customers, the Investment Adviser or any
Sub-Adviser and their respective parents, subsidiaries, and affiliates will
not inquire or take into consideration whether securities of those
customers are held by the Trust.
SECTION 4. Services Not Exclusive. The investment management services
furnished by the Investment Adviser and any Sub-Adviser hereunder are not to be
deemed exclusive, and the Investment Adviser and any Sub-Adviser shall be free
to furnish similar services to others so long as its services under this
Agreement or any sub-advisory agreement are not impaired thereby.
SECTION 5. Books and Records. In compliance with the requirements of Rule
31a-3 under the 1940 Act, the Investment Adviser hereby agrees that all records
which it maintains for the Funds are the property of the Trust and further
agrees to surrender promptly, and to require each of the Sub-Advisers to
surrender promptly, to the Trust any of such records upon the Trust's request.
The Investment Adviser further agrees to preserve, and to require each of the
Sub-Advisers to preserve, for the periods prescribed by Rule 31a-2 under the
1940 Act, the records required to be maintained by Rule 31a-1 under the 1940
Act.
SECTION 6. Expenses. During the term of this Agreement, the Investment
Adviser will pay all expenses, including as applicable, the compensation of any
Sub-Advisers appointed by it, incurred by it in connection with its activities
under this Agreement other than the cost of securities (including brokerage
commissions, if any) purchased for the Funds.
SECTION 7. Compensation. For the services provided and the expenses assumed
pursuant to this Agreement, each of the Funds will pay the Investment Adviser
and the Investment Adviser will accept as full compensation therefor a fee as
set forth on Schedule A hereto. The obligations of the Funds to pay the above-
described fee to the Investment Adviser will begin as of the respective dates of
the initial public sale of shares in the Funds; provided, however, that the
Investment Adviser may from time to time waive some or all of such fees until
such time as it notifies the Trust that it has terminated such waiver.
SECTION 8. Limitation of Liability. The Investment Adviser shall not be
liable for any error of judgment or mistake of law or for any loss suffered by
the Funds in connection with the performance of this Agreement, except a loss
resulting from a breach of fiduciary duty with respect to the receipt of
compensation for services or a loss resulting from willful misfeasance, bad
faith or gross negligence on the part of the Investment Adviser in the
performance of its duties or from reckless disregard by it of its obligations
and duties under this Agreement.
B-3
<PAGE> 35
SECTION 9. Duration And Termination. This Agreement will become effective
as of the date first written above (or, if a particular Fund is not in existence
on that date, on the date a registration statement relating to that Fund becomes
effective with the Securities and Exchange Commission and Schedule A hereto is
amended to add such Fund), provided that it shall have been approved by vote of
a majority of the outstanding voting securities of such Fund, in accordance with
the requirements under the 1940 Act, and, unless sooner terminated as provided
herein, shall continue in effect until , .
Thereafter, if not terminated, this Agreement shall continue in effect as
to a particular Fund for successive periods of twelve months each ending on
of each year, provided such continuance is specifically approved
at least annually (a) by the vote of a majority of those members of the Trust's
Board of Trustees who are not parties to this Agreement or interested persons of
any party to this Agreement, cast in person at a meeting called for the purpose
of voting on such approval, and (b) by the vote of a majority of the Trust's
Board of Trustees or by the vote of a majority of all votes attributable to the
outstanding Shares of such Fund. Notwithstanding the foregoing, this Agreement
may be terminated as to a particular Fund at any time on sixty days' written
notice, without the payment of any penalty, by the Trust (by vote of the Trust's
Board of Trustees or by vote of a majority of the outstanding voting securities
of such Fund) or by the Investment Adviser. This Agreement will immediately
terminate in the event of its assignment. (As used in this Agreement, the terms
"majority of the outstanding voting securities," "interested persons" and
"assignment" shall have the same meanings as ascribed to such terms in the 1940
Act.)
SECTION 10. Investment Adviser's Representations. The Investment Adviser
hereby represents that it is willing and possesses all requisite legal authority
to provide the services contemplated by this Agreement without violation of
applicable laws and regulations, including but not limited to the Glass-Steagall
Act and the regulations promulgated thereunder.
SECTION 11. Amendment of this Agreement. No provision of this Agreement may
be changed, waived, discharged or terminated orally, but only by an instrument
in writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought.
SECTION 12. Name. The Trust hereby-acknowledges that the name "1st Source
Monogram" is a property right of the Investment Adviser. The Investment Adviser
agrees that the Trust and the Funds may, so long as this Agreement remains in
effect, use "1st Source" as part of its name. The Investment Adviser may permit
other persons, firms or corporations, including other investment companies, to
use such name and may, upon termination of this Agreement, require the Trust and
the Funds to refrain from using the name "1st Source" in any form or combination
in its name or in its business or in the name of any of its Funds, and the Trust
shall, as soon as practicable following its receipt of any such request from the
Investment Adviser, so refrain from using such name.
SECTION 13. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and shall be
governed by the law of the Commonwealth of Massachusetts.
The Coventry Group is a business trust organized under the laws of the
Commonwealth of Massachusetts and under a Declaration of Trust, to which
reference is hereby made and a copy of which is on file at the office of the
Secretary of State of Massachusetts, and to any and all amendments thereto so
filed or hereafter filed. The obligations of "The Coventry Group" entered into
in the name or on behalf thereof by any of the Trustees, officers, employees or
agents are made not individually, but in such capacities, and are not binding
upon any of the Trustees, officers, employees, agents or shareholders of the
Trust personally, but bind only the assets of the Trust, and all persons dealing
with any of the Funds of the Trust must look solely to the assets of the Trust
belonging to such Fund for the enforcement of any claims against the Trust.
B-4
<PAGE> 36
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
THE COVENTRY GROUP
By:
------------------------------------
Name:
----------------------------------
Title:
-----------------------------------
1ST SOURCE BANK
By:
------------------------------------
Name:
----------------------------------
Title:
-----------------------------------
B-5
<PAGE> 37
Dated: October , 1998
SCHEDULE A
TO THE
INVESTMENT ADVISORY AGREEMENT
BETWEEN THE COVENTRY GROUP AND
1ST SOURCE BANK DATED AS OF OCTOBER , 1998
<TABLE>
<CAPTION>
NAME OF FUND COMPENSATION(1) DATE
------------ ------------------------------------ ----------------
<S> <C> <C>
1st Source Monogram Diversified Annual rate of ninety-nine October , 1998
Equity Fund one-hundredths of one percent
(0.99%) of such Fund's average daily
net assets
1st Source Monogram Income Equity Annual rate of eighty one-hundredths October , 1998
Fund of one percent (0.80.%) of such
Fund's average daily net assets
1st Source Monogram Special Equity Annual rate of eighty one-hundredths October , 1998
Fund of one percent (0.80%) of such
Fund's average daily net assets
1st Source Monogram Income Fund Annual rate of fifty-five October , 1998
one-hundredths of one percent
(0.55%) of such Fund's average daily
net assets
THE COVENTRY GROUP 1ST SOURCE BANK
</TABLE>
By
- ---------------------------------------------------- By
- ----------------------------------------------------
Name:
- ------------------------------------------------ Name:
- ------------------------------------------------
Title:
- -------------------------------------------------- Title:
- --------------------------------------------------
- ---------------
(1) All Fees are computed daily and paid monthly.
B-6
<PAGE> 38
EXHIBIT C
SUB-INVESTMENT ADVISORY AGREEMENT
This Sub-Investment Advisory Agreement is made as of the day
of October, 1998, by and between 1st Source Bank, an Indiana banking corporation
(the "Adviser"), and Miller Anderson & Sherrerd LLP, a Delaware limited
liability partnership (the "Sub-Adviser").
WHEREAS, the Adviser serves as investment adviser of certain portfolios of
The Coventry Group, a Massachusetts business trust and an open-end management
investment company (the "Trust"), which has filed a registration statement (the
"Registration Statement") under the Investment Company Act of 1940, as amended
(the "1940 Act") and the Securities Act of 1933.
WHEREAS, the Trust is comprised of several separate investment portfolios,
one of which is 1st Source Monogram Diversified Equity Fund (the "Fund"); and
WHEREAS, the Adviser desires to avail itself of the services, information,
advice, assistance and facilities of an investment adviser experienced in the
management of a portfolio of equity securities to assist the Adviser in
performing services for a portion of the Fund; and
WHEREAS, the Sub-Adviser represents that it has the legal power and
authority to perform the services contemplated hereunder without violation of
applicable law (including the Investment Advisers Act of 1940), and is engaged
in the business of rendering investment advisory services to investment
companies and desires to provide such services to the Trust and the Adviser; and
WHEREAS, the Sub-Adviser is familiar with the investment objectives,
policies and restrictions of the Fund and has reviewed the Investment Advisory
Agreement dated as of October , 1998, between the Adviser and the Trust (the
"Adviser Agreement").
NOW, THEREFORE, in consideration of the terms and conditions hereinafter
set forth, it is agreed as follows:
SECTION 1. Appointment of the Sub-Adviser. The Adviser hereby appoints the
Sub-Adviser to provide a continuous investment program for that portion of the
Fund designated by the Adviser (the "MAS Portfolio"), subject to such
instructions and supervision as the Adviser may from time to time furnish and
further subject to the control and direction of the Trust's Board of Trustees,
for the period and on the terms hereinafter set forth. The Sub-Adviser hereby
accepts such appointment and agrees during such period to render the services
and to assume the obligations herein set forth for the compensation herein
provided. The Sub-Adviser will provide the services under this Agreement in
accordance with the Fund's and the MAS Portfolio's investment objectives,
policies and restrictions as stated in the Fund's most recent Prospectus and
Statement of Additional Information and as the same may, from time to time, be
supplemented or amended and in resolutions of the Trust's Board of Trustees. The
Adviser agrees to furnish the Sub-Adviser from time to time copies of all
amendments of or supplements to such Prospectus and Statement of Additional
Information. The Sub-Adviser shall for all purposes herein be deemed to be an
independent contractor and shall, except as expressly provided or authorized
(whether herein or otherwise), have no authority to act for or represent the
Adviser, the Fund or the Trust in any way.
SECTION 2. Sub-Advisory Services. Subject to such instructions and
supervision as the Adviser may from time to time furnish, the continuous
investment program of the MAS Portfolio provided by the Sub-Adviser shall
include, among other things, investment research and management with respect to
all securities, investments and cash equivalents in the MAS Portfolio. The
Sub-Adviser will determine from time to time what securities and other
investments will be purchased, retained or sold by the Fund for the MAS
Portfolio, the appropriate portion of the MAS Portfolio's assets to be invested
in particular countries or geographic regions, the use of foreign exchange
contracts and other foreign currency matters, and the manner in which voting
rights, rights to consent to corporate action and other rights pertaining to the
MAS Portfolio's investments should be exercised. The Sub-Adviser will implement
such determinations through the placement, in the name of the Fund for the MAS
Portfolio, of orders for the execution of portfolio transactions with it through
such brokers or dealers as it may select.
C-1
<PAGE> 39
In fulfilling its responsibilities hereunder, the Sub-Adviser agrees that
it will:
(a) use the same skill and care in providing such services as it uses
in providing services to other fiduciary accounts for which it has
investment responsibilities;
(b) conform with all applicable Rules and Regulations of the United
States Securities and Exchange Commission ("SEC") and in addition will
conduct its activities under this Agreement in accordance with any
applicable regulations of any government authority pertaining to the
investment advisory activities of the Sub-Adviser and shall furnish such
written reports or other documents substantiating such compliance as the
Adviser reasonably may from time to time request;
(c) not make loans to any person to purchase or carry shares of
beneficial interest in the Trust or make loans to the Trust;
(d) place orders pursuant to investment determinations for the MAS
Portfolio either directly with the issuer or with an underwriter, market
maker or broker or dealer. In placing orders with brokers and dealers, the
Sub-Adviser will use its reasonable best efforts to obtain prompt execution
of orders in an effective manner at the most favorable price. Consistent
with this obligation, the Sub-Adviser may, to the extent permitted by law,
purchase and sell portfolio securities to and from brokers and dealers who
provide brokerage and research services (within the meaning of Section
28(e) of the Securities Exchange Act of 1934) to or for the benefit of the
Fund and/or other accounts over which the Sub-Adviser exercises investment
discretion. Subject to the review of the Trust's Board of Trustees from
time to time with respect to the extent and continuation of the policy, the
Sub-Adviser is authorized to pay a broker or dealer who provides such
brokerage and research services a commission for effecting a securities
transaction for the Fund which is in excess of the amount of commission
another broker or dealer would have charged for effecting that transaction
if the Sub-Adviser determines in good faith that such commission was
reasonable in relation to the value of the brokerage and research services
provided by such broker or dealer, viewed in terms of either that
particular transaction or the overall responsibilities of the Sub-Adviser
with respect to the accounts as to which it exercises investment
discretion. In placing orders with brokers and dealers, consistent with
applicable laws, rules and regulations, the Sub-Adviser may consider the
sale of shares of the Trust. In no instance will portfolio securities be
purchased from or sold to the Trust, BISYS Fund Services Limited
Partnership, the Adviser, any other sub-investment adviser for the Trust
("other sub-advisers"), or the Sub-Adviser or any affiliate of the
foregoing except as may be permitted by the 1940 Act or an exemption
therefrom;
(e) maintain all necessary or appropriate books and records with
respect to the MAS Portfolio's securities transactions in accordance with
all applicable laws, rules and regulations, including but not limited to
Section 31 (a) of the 1940 Act and will furnish the Trust's Board of
Trustees such periodic and special reports as the Board reasonably may
request;
(f) treat confidentially and as proprietary information of the Adviser
and the Trust all records and other information relative to the Adviser and
the Trust and prior, present, or potential shareholders, and will not use
such records and information for any purpose other than performance of its
responsibilities and duties hereunder, except that subject to prompt
notification to the Trust and the Adviser, the Sub-Adviser may divulge such
information to duly constituted authorities, or when so requested by the
Adviser and the Trust; provided, however, that nothing contained herein
shall prohibit the Sub-Adviser from advertising or soliciting the public
generally with respect to other products or services, regardless of whether
such advertisement or solicitation may include prior, present or potential
shareholders of the Fund;
(g) maintain its policy and practice of conducting its fiduciary
functions independently. In making investment recommendations for the
Trust, the Sub-Adviser's personnel will not inquire or take into
consideration whether the issuers of securities proposed for purchase or
sale for the Trust's account are customers of the Adviser, other
sub-advisers, the Sub-Adviser or of their respective parents, subsidiaries
or affiliates. In dealing with such customers, the Sub-Adviser and its
parent, subsidiaries, and affiliates will not inquire or take into
consideration whether securities of those customers are held by the Trust;
and
C-2
<PAGE> 40
(h) render, upon request of the Adviser or the Trust's Board of
Trustees, written reports concerning the investment activities of the MAS
Portfolio.
SECTION 3. Expense. During the term of this Agreement, the Sub-Adviser will
pay all expenses incurred by it in connection with its activities under this
Agreement other than the cost of securities (including brokerage commissions, if
any) purchased for the MAS Portfolio.
SECTION 4. Books and Records. In compliance with the requirements of Rule
31 a-3 under the 1940 Act, the Sub-Adviser hereby agrees that all records, if
any, which it maintains for the MAS Portfolio are the property of the Fund and
further agrees to surrender promptly to the Adviser or the Trust any such
records upon the Adviser's or the Trust's request and that such records shall be
available for inspection by the SEC. The Sub-Adviser further agrees to preserve
for the periods and at the places prescribed by Rule 31 a-2 under the 1940 Act
the records required to be maintained by Rule 31 a-1 under the 1940 Act.
SECTION 5. Compensation of the Sub-Adviser. In consideration of services
rendered pursuant to this Agreement, the Adviser will pay the Sub-Adviser a fee
at the annual rate of the value of the MAS Portfolio's average daily net assets
set forth in Schedule A hereto, provided, however, that the Sub-Adviser may from
time to time waive some or all of such fees until such time as it notifies the
Trust that it has terminated such waiver. Such fee shall be accrued daily and
paid monthly as soon as practicable after the end of each month. If the
Sub-Adviser shall serve for less than the whole of any month, the foregoing
compensation shall be prorated. For the purpose of determining fees payable to
the Sub-Adviser, the value of the MAS Portfolio's net assets shall be computed
at the times and in the manner specified in the Trust's Registration Statement.
If the Adviser is required to reduce its fee or to reimburse the Trust because
the expenses of the Fund are in excess of any voluntary expense limitations set
forth in the Trust's current Registration Statement, the Sub-Adviser's fee
hereunder shall be reduced by an amount equal to such excess expense multiplied
by the ratio that the Sub-Adviser's fee hereunder bears to the sum of the fees
paid to and retained by the Adviser and paid to BISYS Fund Services Limited
Partnership (under the Trust's Administration Agreement with BISYS Fund Services
Limited Partnership with respect to the Fund) by the Trust with respect to the
MAS Portfolio. Notwithstanding anything contained herein to the contrary, the
Sub-Adviser shall not be compensated on the basis of a share of capital gains or
upon capital appreciation of the MAS Portfolio or any portion thereof except as
may be authorized by applicable law.
SECTION 6. Services Not Exclusive. The services of the Sub-Adviser
hereunder are not to be deemed exclusive, and the Sub-Adviser shall be free to
render similar services to others and to engage in other activities, so long as
the services rendered hereunder are not impaired. It is understood that the
action taken by the Sub-Adviser under this Agreement may differ from the advice
given or the timing or nature of action taken with respect to other clients of
the Sub-Adviser, and that a transaction in a specific security may not be
accomplished for all clients of the Sub-Adviser at the same time or at the same
price.
SECTION 7. Use of Names. The Adviser shall not use the name of the
Sub-Adviser in any prospectus, sales literature or other material relating to
the Trust in any manner not approved prior thereto by the Sub-Adviser; provided,
however, that the Sub-Adviser shall approve all uses of its name which merely
refer in accurate terms to its appointment hereunder or which are required by
the SEC or a state securities commission; and, provided further, that in no
event shall such approval be unreasonably withheld. The Sub-Adviser shall not
use the name of the Trust, the Fund or the Adviser in any material relating to
the Sub-Adviser in any manner not approved prior thereto by the Adviser;
provided, however, that the Adviser shall approve all uses of its and the Fund's
or the Trust's name which merely refer in accurate terms to the appointment of
the Sub-Adviser hereunder or which are required by the SEC or a state securities
commission, and, provided further, that in no event shall such approval be
unreasonably withheld.
SECTION 8. Liability of the Sub-Adviser. Absent willful misfeasance, bad
faith, gross negligence, or reckless disregard of obligations or duties
hereunder on the part of the Sub-Adviser, or loss resulting from breach of
fiduciary duty with respect to the receipt of compensation for services, the
Sub-Adviser shall not be liable for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security.
C-3
<PAGE> 41
SECTION 9. Limitation of Trust's Liability. The Sub-Adviser acknowledges
that it has received notice of and accepts the limitations upon the Trust's and
the Fund's liability set forth in its Declaration of Trust and under
Massachusetts law. The Sub-Adviser agrees that any of the Trust's obligations
shall be limited to the assets of the Fund and that the Sub-Adviser shall not
seek satisfaction of any such obligation from the shareholders of the Trust nor
from any Trustee, officer, employee or agent of the Trust.
The names "The Coventry Group" and "Trustees of the Coventry Group' refer
respectively to the Trust created and the Trustees, as trustees but not
individually or personally, acting from time to time under an Agreement and
Declaration of Trust dated as of January 8, 1992 to which reference is hereby
made and a copy of which is on file at the office of the Secretary of State of
the Commonwealth of Massachusetts and elsewhere as required by law, and to any
and all amendments thereto so filed or hereafter filed. The obligations of "The
Coventry Group" entered into in the name or on behalf thereof, or in the name or
on behalf of any series or class of shares of the Trust, by any of the Trustees,
representatives or agents are made not individually, but in such capacities, and
are not binding upon any of the Trustees, shareholders or representatives of the
Trust personally, but bind only the assets of the Trust, and all persons dealing
with any series or class of shares of the Trust must look solely to the assets
of the Trust belonging to such series or class for the enforcement of any claims
against the Trust.
SECTION 10. Duration Renewal Termination and Amendment. This Agreement will
become effective as of the date first written above, provided that it shall have
been approved by vote of a majority of the outstanding voting securities of the
Fund, in accordance with the requirements under the 1940 Act, and, unless sooner
terminated as provided herein, shall continue in effect until ,
2000.
Thereafter, if not terminated, this Agreement shall continue in effect with
respect to the Fund for successive periods of one year each ending on
of each year, provided such continuance is specifically approved
at least annually (a) by the vote of a majority of those members of the Trust's
Board of Trustees who are not parties to this Agreement or interested persons of
any party to this Agreement, cast in person at a meeting called for the purpose
of voting on such approval, and (b) by the vote of a majority of the Trust's
Board of Trustees or by the vote of a majority of all votes attributable to the
outstanding Shares of the Fund. This Agreement may be terminated as to the Fund
at any time, without payment of any penalty, by the Trust's Board of Trustees,
by the Adviser, or by a vote of the majority of the outstanding voting
securities of the Fund upon, 60 days' prior written notice to the Sub-Adviser,
or by the Sub-Adviser upon 60 days' prior written notice to the Adviser and the
Trust's Board of Trustees, or upon such shorter notice as may be mutually agreed
upon. This Agreement shall terminate automatically and immediately upon
termination of the Adviser Agreement. This Agreement shall terminate
automatically and immediately in the event of its assignment. No assignment of
this Agreement shall be made by the Sub-Adviser without the consent of the
Adviser and the Board of Trustees of the Trust. The terms "assignment" and "vote
of a majority of the outstanding voting securities" shall have the meaning set
forth for such terms in the 1940 Act. This Agreement may be amended at any time
by the Adviser and the Sub-Adviser, subject to approval by the Trust's Board of
Trustees and, if required by the 1940 Act and applicable SEC rules and
regulations, a vote of a majority of the Fund's outstanding voting securities.
SECTION 11. Confidential Relationship. Any information and advice furnished
by either party to this Agreement to the other shall be treated as confidential
and shall not be disclosed to third parties except as required by law or by this
Agreement.
SECTION 12. Severability. If any provision of this Agreement shall be held
or made invalid by a court decision, statute, rule or otherwise, the remainder
of this agreement shall not be affected thereby.
SECTION 13. Miscellaneous. This Agreement constitutes the full and complete
agreement of the parties hereto with respect to the subject matter hereof each
party agrees to perform such further actions and execute such further documents
as are necessary to effectuate the purposes hereof This Agreement shall be
construed and enforced in accordance with and governed by the laws of the State
of Indiana. The captions in this Agreement are included for convenience only and
in no way define or delimit any of the provisions hereof or otherwise affect
their construction or effect. This Agreement may be executed in several
counterparts, all of which together shall for all purposes constitute one
Agreement, binding on all parties.
C-4
<PAGE> 42
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first written above.
1ST SOURCE BANK
By:
------------------------------------
Name:
----------------------------------
Title:
-----------------------------------
MILLER ANDERSON & SHERRERD LLP
By:
------------------------------------
Name:
----------------------------------
Title:
-----------------------------------
C-5
<PAGE> 43
Dated: October , 1998
SCHEDULE A
TO THE SUB-INVESTMENT ADVISORY AGREEMENT
BETWEEN 1ST SOURCE BANK AND
MILLER ANDERSON & SHERRERD LLP
<TABLE>
<CAPTION>
NAME OF FUND COMPENSATION* DATE
------------ ------------- ----
<S> <C> <C>
1st Source Monogram Diversified Annual Rate of 0.625% up to October , 1998
Equity Fund $25,000,000 of the average daily net
assets of the MAS Portfolio and
0.375% of the excess over
$25,000,000
</TABLE>
- ---------------
* All fees are computed daily and paid monthly.
1ST SOURCE BANK
By:
------------------------------------
Name:
----------------------------------
Title:
-----------------------------------
MILLER ANDERSON & SHERRERD LLP
By:
------------------------------------
Name:
----------------------------------
Title:
-----------------------------------
C-6
<PAGE> 44
EXHIBIT D
SUB-INVESTMENT ADVISORY AGREEMENT
This Sub-Investment Advisory Agreement is made as of the day
of October, 1998, by and between 1st Source Bank, an Indiana banking corporation
(the "Adviser"), and Standish, Ayer & Wood, Inc., a Massachusetts corporation
(the "Sub-Adviser").
WHEREAS, the Adviser serves as investment adviser of certain portfolios of
The Coventry Group, a Massachusetts business trust and an open-end management
investment company (the "Trust"), which has filed a registration statement (the
"Registration Statement") under the Investment Company Act of 1940, as amended
(the "1940 Act") and the Securities Act of 1933.
WHEREAS, the Trust is comprised of several separate investment portfolios,
one of which is 1st Source Monogram Diversified Equity Fund (the "Fund"); and
WHEREAS, the Adviser desires to avail itself of the services, information,
advice, assistance and facilities of an investment adviser experienced in the
management of a portfolio of equity securities to assist the Adviser in
performing services for a portion of the Fund; and
WHEREAS, the Sub-Adviser represents that it has the legal power and
authority to perform the services contemplated hereunder without violation of
applicable law (including the Investment Advisers Act of 1940), and is engaged
in the business of rendering investment advisory services to investment
companies and desires to provide such services to the Trust and the Adviser; and
WHEREAS, the Sub-Adviser is familiar with the investment objectives,
policies and restrictions of the Fund and has reviewed the Investment Advisory
Agreement dated as of October , 1998, between the Adviser and the Trust (the
"Adviser Agreement").
NOW, THEREFORE, in consideration of the terms and conditions hereinafter
set forth, it is agreed as follows:
SECTION 1. Appointment of the Sub-Adviser. The Adviser hereby appoints the
Sub-Adviser to provide a continuous investment program for that portion of the
Fund designated by the Adviser (the "SAW Portfolio"), subject to such
instructions and supervision as the Adviser may from time to time furnish and
further subject to the control and direction of the Trust's Board of Trustees,
for the period and on the terms hereinafter set forth. The Sub-Adviser hereby
accepts such appointment and agrees during such period to render the services
and to assume the obligations herein set forth for the compensation herein
provided. The Sub-Adviser will provide the services under this Agreement in
accordance with the Fund's and the SAW Portfolio's investment objectives,
policies and restrictions as stated in the Fund's most recent Prospectus and
Statement of Additional Information and as the same may, from time to time, be
supplemented or amended and in resolutions of the Trust's Board of Trustees. The
Adviser agrees to furnish the Sub-Adviser from time to time copies of all
amendments of or supplements to such Prospectus and Statement of Additional
Information. The Sub-Adviser shall for all purposes herein be deemed to be an
independent contractor and shall, except as expressly provided or authorized
(whether herein or otherwise), have no authority to act for or represent the
Adviser, the Fund or the Trust in any way.
SECTION 2. Sub-Advisory Services. Subject to such instructions and
supervision as the Adviser may from time to time furnish, the continuous
investment program of the SAW Portfolio provided by the Sub-Adviser shall
include, among other things, investment research and management with respect to
all securities, investments and cash equivalents in the SAW Portfolio. The
Sub-Adviser will determine from time to time what securities and other
investments will be purchased, retained or sold by the Fund for the SAW
Portfolio, the appropriate portion of the SAW Portfolio's assets to be invested
in particular countries or geographic regions, the use of foreign exchange
contracts and other foreign currency matters, and the manner in which voting
rights, rights to consent to corporate action and other rights pertaining to the
SAW Portfolio's investments should be exercised. The Sub-Adviser will implement
such determinations through the placement, in the name of the Fund for the SAW
Portfolio, of orders for the execution of portfolio transactions with it through
such brokers or dealers as it may select.
D-1
<PAGE> 45
In fulfilling its responsibilities hereunder, the Sub-Adviser agrees that
it will:
(a) use the same skill and care in providing such services as it uses
in providing services to other fiduciary accounts for which it has
investment responsibilities;
(b) conform with all applicable Rules and Regulations of the United
States Securities and Exchange Commission ("SEC") and in addition will
conduct its activities under this Agreement in accordance with any
applicable regulations of any government authority pertaining to the
investment advisory activities of the Sub-Adviser and shall furnish such
written reports or other documents substantiating such compliance as the
Adviser reasonably may from time to time request;
(c) not make loans to any person to purchase or carry shares of
beneficial interest in the Trust or make loans to the Trust;
(d) place orders pursuant to investment determinations for the SAW
Portfolio either directly with the issuer or with an underwriter, market
maker or broker or dealer. In placing orders with brokers and dealers, the
Sub-Adviser will use its reasonable best efforts to obtain prompt execution
of orders in an effective manner at the most favorable price. Consistent
with this obligation, the Sub-Adviser may, to the extent permitted by law,
purchase and sell portfolio securities to and from brokers and dealers who
provide brokerage and research services (within the meaning of Section
28(e) of the Securities Exchange Act of 1934) to or for the benefit of the
Fund and/or other accounts over which the Sub-Adviser exercises investment
discretion. Subject to the review of the Trust's Board of Trustees from
time to time with respect to the extent and continuation of the policy, the
Sub-Adviser is authorized to pay a broker or dealer who provides such
brokerage and research services a commission for effecting a securities
transaction for the Fund which is in excess of the amount of commission
another broker or dealer would have charged for effecting that transaction
if the Sub-Adviser determines in good faith that such commission was
reasonable in relation to the value of the brokerage and research services
provided by such broker or dealer, viewed in terms of either that
particular transaction or the overall responsibilities of the Sub-Adviser
with respect to the accounts as to which it exercises investment
discretion. In placing orders with brokers and dealers, consistent with
applicable laws, rules and regulations, the Sub-Adviser may consider the
sale of shares of the Trust. In no instance will portfolio securities be
purchased from or sold to the Trust, BISYS Fund Services Limited
Partnership, the Adviser, any other sub-investment adviser for the Trust
("other sub-advisers"), or the Sub-Adviser or any affiliate of the
foregoing except as may be permitted by the 1940 Act or an exemption
therefrom;
(e) maintain all necessary or appropriate books and records with
respect to the SAW Portfolio's securities transactions in accordance with
all applicable laws, rules and regulations, including but not limited to
Section 31 (a) of the 1940 Act and will furnish the Trust's Board of
Trustees such periodic and special reports as the Board reasonably may
request;
(f) treat confidentially and as proprietary information of the Adviser
and the Trust all records and other information relative to the Adviser and
the Trust and prior, present, or potential shareholders, and will not use
such records and information for any purpose other than performance of its
responsibilities and duties hereunder, except that subject to prompt
notification to the Trust and the Adviser, the Sub-Adviser may divulge such
information to duly constituted authorities, or when so requested by the
Adviser and the Trust; provided, however, that nothing contained herein
shall prohibit the Sub-Adviser from advertising or soliciting the public
generally with respect to other products or services, regardless of whether
such advertisement or solicitation may include prior, present or potential
shareholders of the Fund;
(g) maintain its policy and practice of conducting its fiduciary
functions independently. In making investment recommendations for the
Trust, the Sub-Adviser's personnel will not inquire or take into
consideration whether the issuers of securities proposed for purchase or
sale for the Trust's account are customers of the Adviser, other
sub-advisers, the Sub-Adviser or of their respective parents, subsidiaries
or affiliates. In dealing with such customers, the Sub-Adviser and its
parent, subsidiaries, and affiliates will not inquire or take into
consideration whether securities of those customers are held by the Trust;
and
D-2
<PAGE> 46
(h) render, upon request of the Adviser or the Trust's Board of
Trustees, written reports concerning the investment activities of the SAW
Portfolio.
SECTION 3. Expense. During the term of this Agreement, the Sub-Adviser will
pay all expenses incurred by it in connection with its activities under this
Agreement other than the cost of securities (including brokerage commissions, if
any) purchased for the SAW Portfolio.
SECTION 4. Books and Records. In compliance with the requirements of Rule
31 a-3 under the 1940 Act, the Sub-Adviser hereby agrees that all records, if
any, which it maintains for the SAW Portfolio are the property of the Fund and
further agrees to surrender promptly to the Adviser or the Trust any such
records upon the Adviser's or the Trust's request and that such records shall be
available for inspection by the SEC. The Sub-Adviser further agrees to preserve
for the periods and at the places prescribed by Rule 31 a-2 under the 1940 Act
the records required to be maintained by Rule 31 a-1 under the 1940 Act.
SECTION 5. Compensation of the Sub-Adviser. In consideration of services
rendered pursuant to this Agreement, the Adviser will pay the Sub-Adviser a fee
at the annual rate of the value of the SAW Portfolio's average daily net assets
set forth in Schedule A hereto, provided, however, that the Sub-Adviser may from
time to time waive some or all of such fees until such time as it notifies the
Trust that it has terminated such waiver. Such fee shall be accrued daily and
paid monthly as soon as practicable after the end of each month. If the
Sub-Adviser shall serve for less than the whole of any month, the foregoing
compensation shall be prorated. For the purpose of determining fees payable to
the Sub-Adviser, the value of the SAW Portfolio's net assets shall be computed
at the times and in the manner specified in the Trust's Registration Statement.
If the Adviser is required to reduce its fee or to reimburse the Trust because
the expenses of the Fund are in excess of any voluntary expense limitations set
forth in the Trust's current Registration Statement, the Sub-Adviser's fee
hereunder shall be reduced by an amount equal to such excess expense multiplied
by the ratio that the Sub-Adviser's fee hereunder bears to the sum of the fees
paid to and retained by the Adviser and paid to BISYS Fund Services Limited
Partnership (under the Trust's Administration Agreement with BISYS Fund Services
Limited Partnership with respect to the Fund) by the Trust with respect to the
SAW Portfolio. Notwithstanding anything contained herein to the contrary, the
Sub-Adviser shall not be compensated on the basis of a share of capital gains or
upon capital appreciation of the SAW Portfolio or any portion thereof except as
may be authorized by applicable law.
SECTION 6. Services Not Exclusive. The services of the Sub-Adviser
hereunder are not to be deemed exclusive, and the Sub-Adviser shall be free to
render similar services to others and to engage in other activities, so long as
the services rendered hereunder are not impaired. It is understood that the
action taken by the Sub-Adviser under this Agreement may differ from the advice
given or the timing or nature of action taken with respect to other clients of
the Sub-Adviser, and that a transaction in a specific security may not be
accomplished for all clients of the Sub-Adviser at the same time or at the same
price.
SECTION 7. Use of Names. The Adviser shall not use the name of the
Sub-Adviser in any prospectus, sales literature or other material relating to
the Trust in any manner not approved prior thereto by the Sub-Adviser; provided,
however, that the Sub-Adviser shall approve all uses of its name which merely
refer in accurate terms to its appointment hereunder or which are required by
the SEC or a state securities commission; and, provided further, that in no
event shall such approval be unreasonably withheld. The Sub-Adviser shall not
use the name of the Trust, the Fund or the Adviser in any material relating to
the Sub-Adviser in any manner not approved prior thereto by the Adviser;
provided, however, that the Adviser shall approve all uses of its and the Fund's
or the Trust's name which merely refer in accurate terms to the appointment of
the Sub-Adviser hereunder or which are required by the SEC or a state securities
commission, and, provided further, that in no event shall such approval be
unreasonably withheld.
SECTION 8. Liability of the Sub-Adviser. Absent willful misfeasance, bad
faith, gross negligence, or reckless disregard of obligations or duties
hereunder on the part of the Sub-Adviser, or loss resulting from breach of
fiduciary duty with respect to the receipt of compensation for services, the
Sub-Adviser shall not be liable for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security.
D-3
<PAGE> 47
SECTION 9. Limitation of Trust's Liability. The Sub-Adviser acknowledges
that it has received notice of and accepts the limitations upon the Trust's and
the Fund's liability set forth in its Declaration of Trust and under
Massachusetts law. The Sub-Adviser agrees that any of the Trust's obligations
shall be limited to the assets of the Fund and that the Sub-Adviser shall not
seek satisfaction of any such obligation from the shareholders of the Trust nor
from any Trustee, officer, employee or agent of the Trust.
The names "The Coventry Group" and "Trustees of the Coventry Group' refer
respectively to the Trust created and the Trustees, as trustees but not
individually or personally, acting from time to time under an Agreement and
Declaration of Trust dated as of January 8, 1992 to which reference is hereby
made and a copy of which is on file at the office of the Secretary of State of
the Commonwealth of Massachusetts and elsewhere as required by law, and to any
and all amendments thereto so filed or hereafter filed. The obligations of "The
Coventry Group" entered into in the name or on behalf thereof, or in the name or
on behalf of any series or class of shares of the Trust, by any of the Trustees,
representatives or agents are made not individually, but in such capacities, and
are not binding upon any of the Trustees, shareholders or representatives of the
Trust personally, but bind only the assets of the Trust, and all persons dealing
with any series or class of shares of the Trust must look solely to the assets
of the Trust belonging to such series or class for the enforcement of any claims
against the Trust.
SECTION 10. Duration Renewal Termination and Amendment. This Agreement will
become effective as of the date first written above, provided that it shall have
been approved by vote of a majority of the outstanding voting securities of the
Fund, in accordance with the requirements under the 1940 Act, and, unless sooner
terminated as provided herein, shall continue in effect until ,
2000.
Thereafter, if not terminated, this Agreement shall continue in effect with
respect to the Fund for successive periods of one year each ending on
of each year, provided such continuance is specifically approved
at least annually (a) by the vote of a majority of those members of the Trust's
Board of Trustees who are not parties to this Agreement or interested persons of
any party to this Agreement, cast in person at a meeting called for the purpose
of voting on such approval, and (b) by the vote of a majority of the Trust's
Board of Trustees or by the vote of a majority of all votes attributable to the
outstanding Shares of the Fund. This Agreement may be terminated as to the Fund
at any time, without payment of any penalty, by the Trust's Board of Trustees,
by the Adviser, or by a vote of the majority of the outstanding voting
securities of the Fund upon, 60 days' prior written notice to the Sub-Adviser,
or by the Sub-Adviser upon 60 days' prior written notice to the Adviser and the
Trust's Board of Trustees, or upon such shorter notice as may be mutually agreed
upon. This Agreement shall terminate automatically and immediately upon
termination of the Adviser Agreement. This Agreement shall terminate
automatically and immediately in the event of its assignment. No assignment of
this Agreement shall be made by the Sub-Adviser without the consent of the
Adviser and the Board of Trustees of the Trust. The terms "assignment" and "vote
of a majority of the outstanding voting securities" shall have the meaning set
forth for such terms in the 1940 Act. This Agreement may be amended at any time
by the Adviser and the Sub-Adviser, subject to approval by the Trust's Board of
Trustees and, if required by the 1940 Act and applicable SEC rules and
regulations, a vote of a majority of the Fund's outstanding voting securities.
SECTION 11. Confidential Relationship. Any information and advice furnished
by either party to this Agreement to the other shall be treated as confidential
and shall not be disclosed to third parties except as required by law or by this
Agreement.
SECTION 12. Severability. If any provision of this Agreement shall be held
or made invalid by a court decision, statute, rule or otherwise, the remainder
of this agreement shall not be affected thereby.
SECTION 13. Miscellaneous. This Agreement constitutes the full and complete
agreement of the parties hereto with respect to the subject matter hereof each
party agrees to perform such further actions and execute such further documents
as are necessary to effectuate the purposes hereof This Agreement shall be
construed and enforced in accordance with and governed by the laws of the State
of Indiana. The captions in this Agreement are included for convenience only and
in no way define or delimit any of the provisions hereof or otherwise affect
their construction or effect. This Agreement may be executed in several
counterparts, all of which together shall for all purposes constitute one
Agreement, binding on all parties.
D-4
<PAGE> 48
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first written above.
1ST SOURCE BANK
By:
------------------------------------
Name:
----------------------------------
Title:
-----------------------------------
STANDISH, AYER & WOOD, INC.
By:
------------------------------------
Name:
----------------------------------
Title:
-----------------------------------
D-5
<PAGE> 49
Dated: October , 1998
SCHEDULE A
TO THE SUB-INVESTMENT ADVISORY AGREEMENT
BETWEEN 1ST SOURCE BANK AND
STANDISH, AYER & WOOD, INC.
<TABLE>
<CAPTION>
NAME OF FUND COMPENSATION* DATE
------------ ------------- ----
<S> <C> <C>
1st Source Monogram Diversified Annual Rate of 0.45% of the average October , 1998
Equity Fund daily net assets of the SAW
Portfolio
</TABLE>
- ---------------
* All fees are computed daily and paid monthly.
1ST SOURCE BANK
By:
------------------------------------
Name:
----------------------------------
Title:
-----------------------------------
STANDISH, AYER & WOOD, INC.
By:
------------------------------------
Name:
----------------------------------
Title:
-----------------------------------
D-6
<PAGE> 50
EXHIBIT E
SUB-INVESTMENT ADVISORY AGREEMENT
This Sub-Investment Advisory Agreement is made as of the day
of October, 1998, by and between 1st Source Bank, an Indiana banking corporation
(the "Adviser"), and Loomis Sayles & Company, L.P., a Delaware limited
partnership (the "Sub-Adviser").
WHEREAS, the Adviser serves as investment adviser of certain portfolios of
The Coventry Group, a Massachusetts business trust and an open-end management
investment company (the "Trust"), which has filed a registration statement (the
"Registration Statement") under the Investment Company Act of 1940, as amended
(the "1940 Act") and the Securities Act of 1933.
WHEREAS, the Trust is comprised of several separate investment portfolios,
one of which is 1st Source Monogram Diversified Equity Fund (the "Fund"); and
WHEREAS, the Adviser desires to avail itself of the services, information,
advice, assistance and facilities of an investment adviser experienced in the
management of a portfolio of equity securities to assist the Adviser in
performing services for a portion of the Fund; and
WHEREAS, the Sub-Adviser represents that it has the legal power and
authority to perform the services contemplated hereunder without violation of
applicable law (including the Investment Advisers Act of 1940), and is engaged
in the business of rendering investment advisory services to investment
companies and desires to provide such services to the Trust and the Adviser; and
WHEREAS, the Sub-Adviser is familiar with the investment objectives,
policies and restrictions of the Fund and has reviewed the Investment Advisory
Agreement dated as of October , 1998, between the Adviser and the Trust (the
"Adviser Agreement").
NOW, THEREFORE, in consideration of the terms and conditions hereinafter
set forth, it is agreed as follows:
SECTION 1. Appointment of the Sub-Adviser. The Adviser hereby appoints the
Sub-Adviser to provide a continuous investment program for that portion of the
Fund designated by the Adviser (the "LSC Portfolio"), subject to such
instructions and supervision as the Adviser may from time to time furnish and
further subject to the control and direction of the Trust's Board of Trustees,
for the period and on the terms hereinafter set forth. The Sub-Adviser hereby
accepts such appointment and agrees during such period to render the services
and to assume the obligations herein set forth for the compensation herein
provided. The Sub-Adviser will provide the services under this Agreement in
accordance with the Fund's and the LSC Portfolio's investment objectives,
policies and restrictions as stated in the Fund's most recent Prospectus and
Statement of Additional Information and as the same may, from time to time, be
supplemented or amended and in resolutions of the Trust's Board of Trustees. The
Adviser agrees to furnish the Sub-Adviser from time to time copies of all
amendments of or supplements to such Prospectus and Statement of Additional
Information. The Sub-Adviser shall for all purposes herein be deemed to be an
independent contractor and shall, except as expressly provided or authorized
(whether herein or otherwise), have no authority to act for or represent the
Adviser, the Fund or the Trust in any way.
SECTION 2. Sub-Advisory Services. Subject to such instructions and
supervision as the Adviser may from time to time furnish, the continuous
investment program of the LSC Portfolio provided by the Sub-Adviser shall
include, among other things, investment research and management with respect to
all securities, investments and cash equivalents in the LSC Portfolio. The
Sub-Adviser will determine from time to time what securities and other
investments will be purchased, retained or sold by the Fund for the LSC
Portfolio, the appropriate portion of the LSC Portfolio's assets to be invested
in particular countries or geographic regions, the use of foreign exchange
contracts and other foreign currency matters, and the manner in which voting
rights, rights to consent to corporate action and other rights pertaining to the
LSC Portfolio's investments should be exercised. The Sub-Adviser will implement
such determinations through the placement, in the name of the Fund for the LSC
Portfolio, of orders for the execution of portfolio transactions with it through
such brokers or dealers as it may select.
E-1
<PAGE> 51
In fulfilling its responsibilities hereunder, the Sub-Adviser agrees that
it will:
(a) use the same skill and care in providing such services as it uses
in providing services to other fiduciary accounts for which it has
investment responsibilities;
(b) conform with all applicable Rules and Regulations of the United
States Securities and Exchange Commission ("SEC") and in addition will
conduct its activities under this Agreement in accordance with any
applicable regulations of any government authority pertaining to the
investment advisory activities of the Sub-Adviser and shall furnish such
written reports or other documents substantiating such compliance as the
Adviser reasonably may from time to time request;
(c) not make loans to any person to purchase or carry shares of
beneficial interest in the Trust or make loans to the Trust;
(d) place orders pursuant to investment determinations for the LSC
Portfolio either directly with the issuer or with an underwriter, market
maker or broker or dealer. In placing orders with brokers and dealers, the
Sub-Adviser will use its reasonable best efforts to obtain prompt execution
of orders in an effective manner at the most favorable price. Consistent
with this obligation, the Sub-Adviser may, to the extent permitted by law,
purchase and sell portfolio securities to and from brokers and dealers who
provide brokerage and research services (within the meaning of Section
28(e) of the Securities Exchange Act of 1934) to or for the benefit of the
Fund and/or other accounts over which the Sub-Adviser exercises investment
discretion. Subject to the review of the Trust's Board of Trustees from
time to time with respect to the extent and continuation of the policy, the
Sub-Adviser is authorized to pay a broker or dealer who provides such
brokerage and research services a commission for effecting a securities
transaction for the Fund which is in excess of the amount of commission
another broker or dealer would have charged for effecting that transaction
if the Sub-Adviser determines in good faith that such commission was
reasonable in relation to the value of the brokerage and research services
provided by such broker or dealer, viewed in terms of either that
particular transaction or the overall responsibilities of the Sub-Adviser
with respect to the accounts as to which it exercises investment
discretion. In placing orders with brokers and dealers, consistent with
applicable laws, rules and regulations, the Sub-Adviser may consider the
sale of shares of the Trust. In no instance will portfolio securities be
purchased from or sold to the Trust, BISYS Fund Services Limited
Partnership, the Adviser, any other sub-investment adviser for the Trust
("other sub-advisers"), or the Sub-Adviser or any affiliate of the
foregoing except as may be permitted by the 1940 Act or an exemption
therefrom;
(e) maintain all necessary or appropriate books and records with
respect to the LSC Portfolio's securities transactions in accordance with
all applicable laws, rules and regulations, including but not limited to
Section 31 (a) of the 1940 Act and will furnish the Trust's Board of
Trustees such periodic and special reports as the Board reasonably may
request;
(f) treat confidentially and as proprietary information of the Adviser
and the Trust all records and other information relative to the Adviser and
the Trust and prior, present, or potential shareholders, and will not use
such records and information for any purpose other than performance of its
responsibilities and duties hereunder, except that subject to prompt
notification to the Trust and the Adviser, the Sub-Adviser may divulge such
information to duly constituted authorities, or when so requested by the
Adviser and the Trust; provided, however, that nothing contained herein
shall prohibit the Sub-Adviser from advertising or soliciting the public
generally with respect to other products or services, regardless of whether
such advertisement or solicitation may include prior, present or potential
shareholders of the Fund;
(g) maintain its policy and practice of conducting its fiduciary
functions independently. In making investment recommendations for the
Trust, the Sub-Adviser's personnel will not inquire or take into
consideration whether the issuers of securities proposed for purchase or
sale for the Trust's account are customers of the Adviser, other
sub-advisers, the Sub-Adviser or of their respective parents, subsidiaries
or affiliates. In dealing with such customers, the Sub-Adviser and its
parent, subsidiaries, and affiliates will not inquire or take into
consideration whether securities of those customers are held by the Trust;
and
E-2
<PAGE> 52
(h) render, upon request of the Adviser or the Trust's Board of
Trustees, written reports concerning the investment activities of the LSC
Portfolio.
SECTION 3. Expense. During the term of this Agreement, the Sub-Adviser will
pay all expenses incurred by it in connection with its activities under this
Agreement other than the cost of securities (including brokerage commissions, if
any) purchased for the LSC Portfolio.
SECTION 4. Books and Records. In compliance with the requirements of Rule
31 a-3 under the 1940 Act, the Sub-Adviser hereby agrees that all records, if
any, which it maintains for the LSC Portfolio are the property of the Fund and
further agrees to surrender promptly to the Adviser or the Trust any such
records upon the Adviser's or the Trust's request and that such records shall be
available for inspection by the SEC. The Sub-Adviser further agrees to preserve
for the periods and at the places prescribed by Rule 31 a-2 under the 1940 Act
the records required to be maintained by Rule 31 a-1 under the 1940 Act.
SECTION 5. Compensation of the Sub-Adviser. In consideration of services
rendered pursuant to this Agreement, the Adviser will pay the Sub-Adviser a fee
at the annual rate of the value of the LSC Portfolio's average daily net assets
set forth in Schedule A hereto, provided, however, that the Sub-Adviser may from
time to time waive some or all of such fees until such time as it notifies the
Trust that it has terminated such waiver. Such fee shall be accrued daily and
paid monthly as soon as practicable after the end of each month. If the
Sub-Adviser shall serve for less than the whole of any month, the foregoing
compensation shall be prorated. For the purpose of determining fees payable to
the Sub-Adviser, the value of the LSC Portfolio's net assets shall be computed
at the times and in the manner specified in the Trust's Registration Statement.
If the Adviser is required to reduce its fee or to reimburse the Trust because
the expenses of the Fund are in excess of any voluntary expense limitations set
forth in the Trust's current Registration Statement, the Sub-Adviser's fee
hereunder shall be reduced by an amount equal to such excess expense multiplied
by the ratio that the Sub-Adviser's fee hereunder bears to the sum of the fees
paid to and retained by the Adviser and paid to BISYS Fund Services Limited
Partnership (under the Trust's Administration Agreement with BISYS Fund Services
Limited Partnership with respect to the Fund) by the Trust with respect to the
LSC Portfolio. Notwithstanding anything contained herein to the contrary, the
Sub-Adviser shall not be compensated on the basis of a share of capital gains or
upon capital appreciation of the LSC Portfolio or any portion thereof except as
may be authorized by applicable law.
SECTION 6. Services Not Exclusive. The services of the Sub-Adviser
hereunder are not to be deemed exclusive, and the Sub-Adviser shall be free to
render similar services to others and to engage in other activities, so long as
the services rendered hereunder are not impaired. It is understood that the
action taken by the Sub-Adviser under this Agreement may differ from the advice
given or the timing or nature of action taken with respect to other clients of
the Sub-Adviser, and that a transaction in a specific security may not be
accomplished for all clients of the Sub-Adviser at the same time or at the same
price.
SECTION 7. Use of Names. The Adviser shall not use the name of the
Sub-Adviser in any prospectus, sales literature or other material relating to
the Trust in any manner not approved prior thereto by the Sub-Adviser; provided,
however, that the Sub-Adviser shall approve all uses of its name which merely
refer in accurate terms to its appointment hereunder or which are required by
the SEC or a state securities commission; and, provided further, that in no
event shall such approval be unreasonably withheld. The Sub-Adviser shall not
use the name of the Trust, the Fund or the Adviser in any material relating to
the Sub-Adviser in any manner not approved prior thereto by the Adviser;
provided, however, that the Adviser shall approve all uses of its and the Fund's
or the Trust's name which merely refer in accurate terms to the appointment of
the Sub-Adviser hereunder or which are required by the SEC or a state securities
commission, and, provided further, that in no event shall such approval be
unreasonably withheld.
SECTION 8. Liability of the Sub-Adviser. Absent willful misfeasance, bad
faith, gross negligence, or reckless disregard of obligations or duties
hereunder on the part of the Sub-Adviser, or loss resulting from breach of
fiduciary duty with respect to the receipt of compensation for services, the
Sub-Adviser shall not be liable for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security.
E-3
<PAGE> 53
SECTION 9. Limitation of Trust's Liability. The Sub-Adviser acknowledges
that it has received notice of and accepts the limitations upon the Trust's and
the Fund's liability set forth in its Declaration of Trust and under
Massachusetts law. The Sub-Adviser agrees that any of the Trust's obligations
shall be limited to the assets of the Fund and that the Sub-Adviser shall not
seek satisfaction of any such obligation from the shareholders of the Trust nor
from any Trustee, officer, employee or agent of the Trust.
The names "The Coventry Group" and "Trustees of the Coventry Group" refer
respectively to the Trust created and the Trustees, as trustees but not
individually or personally, acting from time to time under an Agreement and
Declaration of Trust dated as of January 8, 1992 to which reference is hereby
made and a copy of which is on file at the office of the Secretary of State of
the Commonwealth of Massachusetts and elsewhere as required by law, and to any
and all amendments thereto so filed or hereafter filed. The obligations of "The
Coventry Group" entered into in the name or on behalf thereof, or in the name or
on behalf of any series or class of shares of the Trust, by any of the Trustees,
representatives or agents are made not individually, but in such capacities, and
are not binding upon any of the Trustees, shareholders or representatives of the
Trust personally, but bind only the assets of the Trust, and all persons dealing
with any series or class of shares of the Trust must look solely to the assets
of the Trust belonging to such series or class for the enforcement of any claims
against the Trust.
SECTION 10. Duration Renewal Termination and Amendment. This Agreement will
become effective as of the date first written above, provided that it shall have
been approved by vote of a majority of the outstanding voting securities of the
Fund, in accordance with the requirements under the 1940 Act, and, unless sooner
terminated as provided herein, shall continue in effect until ,
2000.
Thereafter, if not terminated, this Agreement shall continue in effect with
respect to the Fund for successive periods of one year each ending on
of each year, provided such continuance is specifically approved
at least annually (a) by the vote of a majority of those members of the Trust's
Board of Trustees who are not parties to this Agreement or interested persons of
any party to this Agreement, cast in person at a meeting called for the purpose
of voting on such approval, and (b) by the vote of a majority of the Trust's
Board of Trustees or by the vote of a majority of all votes attributable to the
outstanding Shares of the Fund. This Agreement may be terminated as to the Fund
at any time, without payment of any penalty, by the Trust's Board of Trustees,
by the Adviser, or by a vote of the majority of the outstanding voting
securities of the Fund upon, 60 days' prior written notice to the Sub-Adviser,
or by the Sub-Adviser upon 60 days' prior written notice to the Adviser and the
Trust's Board of Trustees, or upon such shorter notice as may be mutually agreed
upon. This Agreement shall terminate automatically and immediately upon
termination of the Adviser Agreement. This Agreement shall terminate
automatically and immediately in the event of its assignment. No assignment of
this Agreement shall be made by the Sub-Adviser without the consent of the
Adviser and the Board of Trustees of the Trust. The terms "assignment" and "vote
of a majority of the outstanding voting securities" shall have the meaning set
forth for such terms in the 1940 Act. This Agreement may be amended at any time
by the Adviser and the Sub-Adviser, subject to approval by the Trust's Board of
Trustees and, if required by the 1940 Act and applicable SEC rules and
regulations, a vote of a majority of the Fund's outstanding voting securities.
SECTION 11. Confidential Relationship. Any information and advice furnished
by either party to this Agreement to the other shall be treated as confidential
and shall not be disclosed to third parties except as required by law or by this
Agreement.
SECTION 12. Severability. If any provision of this Agreement shall be held
or made invalid by a court decision, statute, rule or otherwise, the remainder
of this agreement shall not be affected thereby.
SECTION 13. Miscellaneous. This Agreement constitutes the full and complete
agreement of the parties hereto with respect to the subject matter hereof each
party agrees to perform such further actions and execute such further documents
as are necessary to effectuate the purposes hereof This Agreement shall be
construed and enforced in accordance with and governed by the laws of the State
of Indiana. The captions in this Agreement are included for convenience only and
in no way define or delimit any of the provisions hereof or otherwise affect
their construction or effect. This Agreement may be executed in several
counterparts, all of which together shall for all purposes constitute one
Agreement, binding on all parties.
E-4
<PAGE> 54
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first written above.
1ST SOURCE BANK
By:
------------------------------------
Name:
----------------------------------
Title:
-----------------------------------
LOOMIS SAYLES & COMPANY, L.P.
By:
------------------------------------
Name:
----------------------------------
Title:
-----------------------------------
E-5
<PAGE> 55
Dated: October , 1998
SCHEDULE A
TO THE SUB-INVESTMENT ADVISORY AGREEMENT
BETWEEN 1ST SOURCE BANK AND
LOOMIS SAYLES & COMPANY, L.P.
<TABLE>
<CAPTION>
NAME OF FUND COMPENSATION* DATE
------------ ------------- ----
<S> <C> <C>
1st Source Monogram Diversified Annual Rate of 0.40% of the average October , 1998
Equity Fund daily net assets of the LSC
Portfolio
</TABLE>
- ---------------
* All fees are computed daily and paid monthly.
1ST SOURCE BANK
By:
------------------------------------
Name:
----------------------------------
Title:
-----------------------------------
LOOMIS SAYLES & COMPANY, L.P.
By:
------------------------------------
Name:
----------------------------------
Title:
-----------------------------------
817787
<PAGE> 56
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 57
BISYS - 1ST SOURCE MONOGRAM FUNDS
3435 STELZER ROAD
COLUMBUS, OH 43219
PROXY
1ST SOURCE MONOGRAM-INCOME EQUITY FUND
SPECIAL MEETING OF SHAREHOLDERS
October 16, 1998
The undersigned hereby appoints George L. Stevens and Kathy M. Loken as
proxies with full power of substitution to vote and act with respect to all
shares of 1ST SOURCE MONOGRAM-INCOME EQUITY FUND (the "Fund") held by the
undersigned at the Special Meeting of Shareholders of the Fund to be held at
8:30 a.m., Eastern Time, on October 16, 1998, at the offices of the Fund's
administrator, BISYS Fund Services, 3435 Stelzer Road, Columbus, Ohio 43219 and
at any adjournment thereof (the "Meeting"), and instructs them to vote as
indicated on the matters referred to in the Proxy Statement for the Meeting,
receipt of which is hereby acknowledged, with discretionary power to vote upon
such other business as may properly come before the Meeting.
THIS PROXY IS SOLICITED BY THE BOARD OF
TRUSTEES OF THE FUND.
The Board of Trustees recommends that you vote FOR the following proposal:
This proxy will be voted as specified. IF NO SPECIFICATION IS MADE, THIS PROXY
WILL BE VOTED FOR THE PROPOSAL.
Receipt of the Notice of Special Meeting and Proxy Statement is hereby
acknowledged.
This proxy must be signed by the beneficial owner of Fund shares. If signing as
attorney, executor, guardian or in some representative capacity or as an
officer of a corporation, please add title as such.
PLEASE VOTE, SIGN AND DATE THIS PROXY AND RETURN IT IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.
TO VOTE: MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: X
KEEP THIS PORTION FOR YOUR RECORDS
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
1ST SOURCE MONOGRAM-INCOME EQUITY FUND
Vote On Proposal
1. Approval of an Agreement and Plan of Reorganization and Liquidation for the
Fund and the transactions contemplated thereunder.
For Against Abstain
[ ] [ ] [ ]
- ----------------------------------------------------------
| | |
- ----------------------------------------------------------
Signature [PLEASE SIGN WITHIN BOX] Date
- ----------------------------------------------------------
| | |
- ----------------------------------------------------------
Signature (Joint Owners) Date
<PAGE> 58
BISYS - 1ST SOURCE MONOGRAM FUNDS
3435 STELZER ROAD
COLUMBUS, OH 43219
PROXY
1ST SOURCE MONOGRAM-SPECIAL EQUITY FUND
SPECIAL MEETING OF SHAREHOLDERS
October 16, 1998
The undersigned hereby appoints George L. Stevens and Kathy M. Loken as
proxies with full power of substitution to vote and act with respect to all
shares of 1ST SOURCE MONOGRAM-SPECIAL EQUITY FUND (the "Fund") held by the
undersigned at the Special Meeting of Shareholders of the Fund to be held at
8:30 a.m., Eastern Time, on October 16, 1998, at the offices of the Fund's
administrator, BISYS Fund Services, 3435 Stelzer Road, Columbus, Ohio 43219 and
at any adjournment thereof (the "Meeting"), and instructs them to vote as
indicated on the matters referred to in the Proxy Statement for the Meeting,
receipt of which is hereby acknowledged, with discretionary power to vote upon
such other business as may properly come before the Meeting.
THIS PROXY IS SOLICITED BY THE BOARD OF
TRUSTEES OF THE FUND.
The Board of Trustees recommends that you vote FOR the following proposal:
This proxy will be voted as specified. IF NO SPECIFICATION IS MADE, THIS PROXY
WILL BE VOTED FOR THE PROPOSAL.
Receipt of the Notice of Special Meeting and Proxy Statement is hereby
acknowledged.
This proxy must be signed by the beneficial owner of Fund shares. If signing as
attorney, executor, guardian or in some representative capacity or as an
officer of a corporation, please add title as such.
PLEASE VOTE, SIGN AND DATE THIS PROXY AND RETURN IT IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.
TO VOTE: MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: X
KEEP THIS PORTION FOR YOUR RECORDS
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
1ST SOURCE MONOGRAM-SPECIAL EQUITY FUND
Vote On Proposal
1. Approval of an Agreement and Plan of Reorganization and Liquidation for the
Fund and the transactions contemplated thereunder.
For Against Abstain
[ ] [ ] [ ]
- ----------------------------------------------------------
| | |
- ----------------------------------------------------------
Signature [PLEASE SIGN WITHIN BOX] Date
- ----------------------------------------------------------
| | |
- ----------------------------------------------------------
Signature (Joint Owners) Date
<PAGE> 59
BISYS - 1ST SOURCE MONOGRAM FUNDS
3435 STELZER ROAD
COLUMBUS, OH 43219
PROXY
1ST SOURCE MONOGRAM-INCOME FUND
SPECIAL MEETING OF SHAREHOLDERS
October 16, 1998
The undersigned hereby appoints George L. Stevens and Kathy M. Loken as
proxies with full power of substitution to vote and act with respect to all
shares of 1ST SOURCE MONOGRAM-INCOME FUND (the "Fund") held by the undersigned
at the Special Meeting of Shareholders of the Fund to be held at 8:30 a.m.,
Eastern Time, on October 16, 1998, at the offices of the Fund's administrator,
BISYS Fund Services, 3435 Stelzer Road, Columbus, Ohio 43219 and at any
adjournment thereof (the "Meeting"), and instructs them to vote as indicated on
the matters referred to in the Proxy Statement for the Meeting, receipt of which
is hereby acknowledged, with discretionary power to vote upon such other
business as may properly come before the Meeting.
THIS PROXY IS SOLICITED BY THE BOARD OF
TRUSTEES OF THE FUND.
The Board of Trustees recommends that you vote FOR the following proposal:
This proxy will be voted as specified. IF NO SPECIFICATION IS MADE, THIS PROXY
WILL BE VOTED FOR THE PROPOSAL.
Receipt of the Notice of Special Meeting and Proxy Statement is hereby
acknowledged.
This proxy must be signed by the beneficial owner of Fund shares. If signing as
attorney, executor, guardian or in some representative capacity or as an
officer of a corporation, please add title as such.
PLEASE VOTE, SIGN AND DATE THIS PROXY AND RETURN IT IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.
TO VOTE: MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: X
KEEP THIS PORTION FOR YOUR RECORDS
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
1ST SOURCE MONOGRAM-INCOME FUND
Vote On Proposal
1. Approval of an Agreement and Plan of Reorganization and Liquidation for the
Fund and the transactions contemplated thereunder.
For Against Abstain
[ ] [ ] [ ]
- ----------------------------------------------------------
| | |
- ----------------------------------------------------------
Signature [PLEASE SIGN WITHIN BOX] Date
- ----------------------------------------------------------
| | |
- ----------------------------------------------------------
Signature (Joint Owners) Date
<PAGE> 60
BISYS - 1ST SOURCE MONOGRAM FUNDS
3435 STELZER ROAD
COLUMBUS, OH 43219
PROXY
1ST SOURCE MONOGRAM-DIVERSIFIED EQUITY FUND
SPECIAL MEETING OF SHAREHOLDERS
October 16, 1998
The undersigned hereby appoints George L. Stevens and Kathy M. Loken as
proxies with full power of substitution to vote and act with respect to all
shares of 1ST SOURCE MONOGRAM-DIVERSIFIED EQUITY FUND (the "Fund") held by the
undersigned at the Special Meeting of Shareholders of the Fund to be held at
8:30 a.m., Eastern Time, on October 16, 1998, at the offices of the Fund's
administrator, BISYS Fund Services, 3435 Stelzer Road, Columbus, Ohio 43219 and
at any adjournment thereof (the "Meeting"), and instructs them to vote as
indicated on the matters referred to in the Proxy Statement for the Meeting,
receipt of which is hereby acknowledged, with discretionary power to vote upon
such other business as may properly come before the Meeting.
THIS PROXY IS SOLICITED BY THE BOARD OF
TRUSTEES OF THE FUND.
The Board of Trustees recommends that you vote FOR the following proposal:
This proxy will be voted as specified. IF NO SPECIFICATION IS MADE, THIS PROXY
WILL BE VOTED FOR THE PROPOSAL.
Receipt of the Notice of Special Meeting and Proxy Statement is hereby
acknowledged.
This proxy must be signed by the beneficial owner of Fund shares. If signing as
attorney, executor, guardian or in some representative capacity or as an
officer of a corporation, please add title as such.
PLEASE VOTE, SIGN AND DATE THIS PROXY AND RETURN IT IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.
TO VOTE: MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: X
KEEP THIS PORTION FOR YOUR RECORDS
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
1ST SOURCE MONOGRAM-DIVERSIFIED EQUITY FUND
Vote On Proposal
1. Approval of an Agreement and Plan of Reorganization and Liquidation for
the Fund and the transactions contemplated thereunder.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2a. Approval of a new Sub-Investment Advisory Agreement for the Fund
between 1st Source Bank and Standish, Ayer & Wood, Inc.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2b. Approval of a new Sub-Investment Advisory Agreement for the Fund
between 1st Source Bank and Loomis Sayles & Company, L.P..
[ ]FOR [ ]AGAINST [ ]ABSTAIN
2c. Approval of a new Investment Advisory Agreement between The Coventry
Group on behalf of the Fund and 1st Source Bank.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2d. Approval of the adoption of a "multi-manager" arrangement for the Fund
as set forth in the Proxy Statement.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
- ----------------------------------------------------------
| | |
- ----------------------------------------------------------
Signature [PLEASE SIGN WITHIN BOX] Date
- ----------------------------------------------------------
| | |
- ----------------------------------------------------------
Signature (Joint Owners) Date
