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As filed with the Securities and Exchange Commission on July 30, 1999
Securities Act No. 33-44964
Investment Company Act File No. 811-6526
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. 55 [ ]
Post-Effective Amendment No. [X]
--
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 57 [X]
THE COVENTRY GROUP
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(Exact Name of Registrant as Specified in Charter)
3435 Stelzer Road, Columbus, Ohio 43219
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(Address of Principal Executive Offices)
Registrant's Telephone Number: (614) 470-8000
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Jeffrey L. Steele, Esq.
Dechert Price & Rhoads
1775 Eye Street, NW
Washington, D.C. 20006
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(Name and Address of Agent for Service)
With Copies to:
---------------
Walter B. Grimm
BISYS Fund Services
3435 Stelzer Road
Columbus, Ohio 43219
It is proposed that this filing will become effective immediately upon filing.
<PAGE> 2
UNITED STATES TRUST COMPANY OF BOSTON
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<C> <S>
WALDEN ASSET MANAGEMENT
logo A Division of United States Trust Company of Boston
</TABLE>
PROSPECTUS FOR THE FOLLOWING PORTFOLIOS:
Walden/BBT Domestic Social Index Fund
Walden/BBT International Social Index Fund
July 30, 1999
INVESTMENT ADVISER
WALDEN ASSET MANAGEMENT, A DIVISION OF
UNITED STATES TRUST COMPANY OF BOSTON
40 COURT STREET
BOSTON, MASSACHUSETTS 02108
TELEPHONE: (617) 726-7250
Neither the Securities and Exchange Commission nor any other regulatory body has
approved the securities being offered by this prospectus or determined whether
this prospectus is accurate and complete. It is unlawful for anyone to make any
representation to the contrary.
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WALDEN/BBT SOCIAL INDEX
FUNDS TABLE OF CONTENTS
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RISK/RETURN SUMMARY AND FUND EXPENSES
LOGO
Carefully review this 3 Walden/BBT Domestic Social Index Fund
important section for a 5 Walden/BBT International Social Index Fund
summary of each Fund's
investments, risks and fees
INVESTMENT OBJECTIVES AND STRATEGIES
LOGO
This section contains 8 Walden/BBT Domestic Social Index Fund
details on each Fund's 9 Walden/BBT International Social Index Fund
investment strategies and 10 Investment Risks
risks
SHAREHOLDER INFORMATION
LOGO
Consult this section to 12 Pricing of Fund Shares
obtain details on how shares 12 Purchasing and Adding to Your Shares
are valued, how to purchase, 14 Selling Your Shares
sell and exchange shares, 16 Exchanging Your Shares
related charges and payments 17 Dividends, Distributions And Taxes
of dividends
FUND MANAGEMENT
LOGO
Review this section for 18 The Investment Adviser
details on the people and 18 Portfolio Manager
organizations who oversee
the Funds and their
investments
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2
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RISK/RETURN SUMMARY AND FUND EXPENSES
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WALDEN/BBT DOMESTIC SOCIAL INDEX
FUND
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INVESTMENT OBJECTIVE The Domestic Social Index Fund seeks long-term capital
growth through a portfolio of stocks intended to parallel
the investment performance of the Standard & Poor's 500
Index (the "S&P 500 Index"), while incorporating social
investment objectives. The S&P 500 Index contains 500
frequently traded, large capitalization common stocks
listed on the New York Stock Exchange, the American Stock
Exchange and on NASDAQ.
PRINCIPAL INVESTMENT STRATEGIES The Fund invests primarily in equity securities and
utilizes "indexing' techniques to approximate the
performance of the S&P 500 Index. The percentage of each
stock held in the Fund generally will be based on that
stock's weighting in the S&P 500 Index. Modifications, as
necessary, will adjust for securities which are not
included due to social investment criteria.
PRINCIPAL INVESTMENT RISKS The Fund is subject to stock market risk. Therefore, the
value of the Fund's investments will fluctuate with
market conditions and the value of your investment in the
Fund will also vary. You could lose money on your
investment in the Fund, or the Fund could underperform
other investments. The Fund's investment results may fail
to match the results of the S&P 500 Index.
WHO MAY WANT TO INVEST? Consider investing in the Fund if you are:
- Interested in ensuring that your investments are
consistent with your social concerns and values
- Investing for a period of time in excess of 3 to 5
years
- Able to bear the risk of market value fluctuations in
the short-term
- Looking for exposure to stock investments for growth.
This Fund will not be appropriate for someone:
- Investing for a period of time less than 3 to 5 years
- Not comfortable with market fluctuations in the
short-term
- Looking primarily for a high level of current income
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3
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RISK/RETURN SUMMARY AND FUND EXPENSES
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SHAREHOLDER TRANSACTION FEES
(FEES PAID DIRECTLY FROM YOUR INVESTMENT)
Maximum Sales Charge (load) on Purchases n/a
Maximum Deferred Sales Charge (load) n/a
Account Maintenance Fee
(for accounts under $8,000) $ 25/year*
ANNUAL FUND OPERATING EXPENSES
(EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
Management Fees 0.50%
Distribution and Service (12b-1) Fees n/a
Other Expenses 0.43%**
Total Fund Operating Expenses 0.93%**
Fee Waiver and/or Expense Reimbursement 0.18%**
Net Expenses 0.75%**
</TABLE>
ANNUAL FEES AND EXPENSES
This table describes the
fees and expenses that
you may pay if you buy
and hold shares of the
Domestic Social Index
Fund.
* The account maintenance fee will be deducted
from your annual distribution of the Fund's
dividends. If your distribution is less than the
fee, fractional shares will be redeemed
automatically to make up the difference.
** The Adviser has entered into an expense
limitation agreement with the Trust to limit the
Total Fund Operating Expenses of the Domestic
Social Index Fund to 0.75% of its average daily
net assets for its current fiscal year. Without
this expense limitation agreement, the Total
Fund Operating Expenses for the Domestic Social
Index Fund's initial fiscal year are estimated
to be 0.93%. The Fund has agreed to repay the
Adviser for amounts waived or reimbursed by the
Adviser pursuant to the expense limitation
agreement provided that such repayment does not
cause the Fund's Total Fund Operating Expenses
to exceed 0.75% of its average daily net assets
and the repayment is made within three years
after the year in which the Adviser incurred the
expense.
EXPENSE EXAMPLE
Use this table to compare fees
and expenses with those of
other funds. The table
illustrates the amount of fees
and expenses you would pay,
assuming the following:
- $10,000 investment
- 5% annual return
- redemption at the end of
each period
- no changes in the Fund's
operating expenses
Because this example is
hypothetical and for comparison
purposes only, your actual
costs will be different.
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<S> <C> <C> <C> <C>
DOMESTIC SOCIAL 1 3 5 10
INDEX FUND YEAR YEARS YEARS YEARS
$192 $387 $599 $1,208
</TABLE>
4
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RISK/RETURN SUMMARY AND FUND EXPENSES
logo
WALDEN/BBT INTERNATIONAL
SOCIAL INDEX FUND
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INVESTMENT OBJECTIVE The International Social Index Fund seeks long-term
capital growth through a portfolio of international
equities intended to parallel the performance of the
Morgan Stanley Capital International/Europe, Asia and Far
East Index (the "MSCI/EAFE Index"). The MSCI/EAFE Index
is comprised of stocks traded on the exchanges in Europe,
Asia and the Far East.
PRINCIPAL INVESTMENT STRATEGIES The Fund invests primarily in international equity
securities and utilizes "indexing" techniques to
approximate the performance of the MSCI/EAFE Index. The
percentage of each stock held in the Fund generally will
be based on that stock's weighting in the MSCI/EAFE
Index. Modifications, as necessary, will adjust for
securities which are not included due to social
investment criteria.
PRINCIPAL INVESTMENT RISKS The Fund is subject to stock market risk. Therefore, the
value of the Fund's investments will fluctuate with
market conditions and the value of your investment in the
Fund will also vary. The Fund is also subject to foreign
investment risk because it invests primarily in foreign
issuers. Foreign investments may be more risky than
domestic U.S. investments due to unstable international
political and economic conditions, currency exchange
rates and a lack of liquidity. You could lose money on
your investment in the Fund, or the Fund could
underperform other investments. The Fund's investment
results may fail to match the results of the MSCI/EAFE
Index.
WHO MAY WANT TO INVEST? Consider investing in the Fund if you are:
- Interested in ensuring that your investments are
consistent with your social concerns and values
- Investing for a period of time in excess of 3 to 5
years
- Looking for a high-quality, well-diversified,
all-equity portfolio that provides the potential for
growth of your investment
- Comfortable with market value fluctuations in the
short-term
This Fund will not be appropriate for someone:
- Investing for a period of time less than 3 to 5 years
- Not comfortable with market value fluctuations in the
short term
- Looking for current income
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RISK/RETURN SUMMARY AND FUND EXPENSES
logo
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SHAREHOLDER TRANSACTION FEES
(FEES PAID DIRECTLY FROM YOUR INVESTMENT)
Maximum Sales Charge (load) on Purchases n/a
Transaction Fee on Purchases 1.00%*
Maximum Deferred Sales Charge (load) n/a
ANNUAL FUND OPERATING EXPENSES
(EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
Management Fees 0.50%
Distribution and Service (12b-1) Fees n/a
Other Expenses 0.41%**
Total Fund Operating Expenses 0.91%**
</TABLE>
ANNUAL FEES AND EXPENSES
This table describes the
fees and expenses that
you may pay if you buy
and hold shares of the
International Social
Index Fund.
* The transaction fee on purchases is deducted
from all purchases (including exchanges from
other affiliated funds) but not from reinvested
dividends and capital gains.
** The Other Expenses and the Total Fund
Operating Expenses are estimated for the Fund's
initial fiscal year. The Adviser has entered
into an expense limitation agreement with the
Trust to limit the Total Fund Operating Expenses
of the International Social Index Fund to 1.00%
of its average daily net assets for its current
fiscal year, if applicable. The Fund has agreed
to repay the Adviser for amounts waived or
reimbursed by the Adviser pursuant to the
expense limitation agreement provided that such
repayment does not cause the Fund's Total Fund
Operating Expenses to exceed 1.00% of its
average daily net assets and the repayment is
made within three years after the year in which
the Adviser incurred the expense.
EXPENSE EXAMPLE
Use this table to compare fees
and expenses with those of
other Funds. It illustrates the
amount of fees and expenses you
would pay, assuming the
following:
- $10,000 investment
- 5% annual return
- redemption at the end of
each period
- no changes in the Fund's
operating expenses
Because this example is
hypothetical and for comparison
purposes only, your actual
costs will be different.
<TABLE>
<S> <C> <C> <C> <C>
1 3 5 10
YEAR YEARS YEARS YEARS
INTERNATIONAL SOCIAL
INDEX FUND $93 $290 $504 $1,120
</TABLE>
6
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INVESTMENT OBJECTIVES AND STRATEGIES
logo
SOCIAL RESPONSIBILITY CRITERIA OF EACH FUND
WALDEN/BBT DOMESTIC SOCIAL INDEX
FUND
The Walden/BBT Domestic Social Index Fund seeks to assist in the betterment
of society, primarily through the use of shareholder advocacy. The Fund will
endeavor to use its position as shareholder to advocate for and initiate
actions that increase the respect shown by companies for human dignity,
social welfare and our natural environment. To this end, it will strive to
exclude companies that appear to be inextricably committed to industries or
products that are inherently harmful. These include tobacco, weapons,
alcoholic beverages and gaming activities.
With regard to the companies in its portfolio of holdings, the Fund may
address the following areas through communication and shareholder
initiatives: respect and care for the natural environment; elimination of
discrimination against employees and other constituencies; racial and gender
diversity of boards of directors, management and officers; fair wages; fair
practices with unions and union organizing efforts; safe, healthy and
rewarding workplace conditions; positive employee participation; safe and
useful products; respect and support for human rights; and full and honest
disclosure on issues of corporate responsibility.
The Fund may lend its name, voice, and efforts to influence public policy as
a way of ending harmful or unjust business practices.
Specifically, the Fund avoids investing in companies that, to the Advisor's
knowledge:
- Earn significant revenues from tobacco products, alcoholic beverages or
gaming activities.
- Earn significant revenues from the manufacture or sale of military
weapons systems or firearms.
These criteria may be supplemented or amended whenever the Advisor, in its
sole discretion, believes such supplements or amendments are needed to
satisfy the Fund's social or financial objectives.
WALDEN/BBT INTERNATIONAL SOCIAL
INDEX FUND
The Walden/BBT International Social Index Fund seeks to assist in the
betterment of society through the use of socially responsive investment
criteria, shareholder dialogue, and proxy voting. The Fund will look for
opportunities to encourage companies to improve their social performance.
The Fund seeks to invest in companies that the Advisor believes:
- Are above average in their industry for environmental performance,
employment practices, community relations, and product quality.
The Fund avoids investing in companies that, to the Advisor's knowledge:
- Earn significant revenues from tobacco, alcoholic beverages, or gaming
activities.
- Earn significant revenues from the manufacture or sale of military weapon
systems or firearms.
- Have critical, direct involvement in nuclear power production.
- Significantly support human rights abuses.
These criteria may be supplemented or amended whenever the Advisor, in its
sole discretion, believes such supplements or amendments are needed to
satisfy the Fund's social or financial objectives.
7
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INVESTMENT OBJECTIVES AND STRATEGIES
logo
WALDEN/BBT DOMESTIC SOCIAL INDEX
FUND
INVESTMENT OBJECTIVE
The investment objective of the Domestic Index Fund is to seek long-term
capital growth through a portfolio of stocks intended to parallel the
performance of the S&P 500 Index, while incorporating social investment
objectives.
POLICIES AND STRATEGIES
Selection of stocks for the Fund is a two-part process. Initially, the
Advisor chooses stocks from a universe comprised of the S&P 500 Index and
certain other domestic stocks that meet the Fund's social criteria. From this
pool, the Advisor then selects stocks that it feels will best help the Fund
most closely parallel the performance of the S&P 500 Index.
The Fund may also engage in shareholder dialogue with companies to encourage
them to improve their social or environmental performance.
The Fund avoids investing in companies that, to the Advisor's knowledge:
- Derive significant revenues from the manufacture of weapons systems.
- Derive significant revenues from tobacco products, alcoholic beverages,
or gaming activities.
The Fund's guidelines are subject to change without shareholder approval.
8
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INVESTMENT OBJECTIVES AND STRATEGIES
logo
WALDEN/BBT INTERNATIONAL SOCIAL
INDEX FUND
INVESTMENT OBJECTIVE
The investment objective of the International Social Index Fund is to seek
long-term growth of capital through a portfolio of international equities
intended to parallel the performance of the MSCI/EAFE Index, while
incorporating social investment objectives.
POLICIES AND STRATEGIES
Selection of stocks for the Fund is a two-part process. Initially, the
Advisor chooses stocks from a universe comprised of the MSCI/EAFE Index and
other international stocks that meet the Fund's social criteria. From this
pool, the Advisor selects stocks that it feels will help the Fund most
closely parallel the performance of the MSCI/EAFE Index. The Fund may invest
in stocks that do not meet completely all of the Fund's stringent social
criteria, in order that the Fund achieve its financial objectives.
The Fund may also engage in shareholder dialogue with companies to encourage
them to improve their social or environmental performance.
The Fund seeks to invest in companies that are above average in their
respective industries for environmental performance and management,
employment practices, or marketing of socially beneficial products.
The Fund avoids investing in companies that, to the Advisor's knowledge:
- Directly support human rights abuses.
- Have essential involvement in nuclear power production.
- Derive significant revenues from the manufacture or sale of weapons
systems.
- Derive significant revenues from tobacco products, alcoholic beverages,
or gaming activities.
The Fund's guidelines are subject to change without shareholder approval.
Consistent with the Fund's investment objective, the Fund:
- may invest in the following types of foreign equity securities: common
stocks, preferred stocks, securities convertible or exchangeable into
common stocks, warrants and any rights to purchase common stocks
- may invest in sponsored and unsponsored American Depositary Receipts,
European Depositary Receipts and Global Depositary Receipts.
- may buy or sell foreign currencies
- may enter into forward foreign currency exchange contracts
- may buy or sell options, futures on options or futures relating to
foreign currencies
- may purchase and write exchange-listed put and call options on stock
indices
- may engage in interest rate swaps
- may invest in certain restricted and illiquid securities
- may engage in repurchase transactions pursuant to which the Fund
purchases a security and simultaneously commits to resell that security
to the seller (either a bank or a securities dealer) at an agreed upon
price on an agreed upon date (usually within seven days of purchase)
9
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INVESTMENT OBJECTIVES AND STRATEGIES
logo
INVESTMENT RISKS
Any investment in the Funds is subject to investment risks, including the
possible loss of the principal amount invested.
Generally, the Funds will be subject to the following risks:
- MARKET RISK: Market risk refers to the risk related to investments in
securities in general and the daily fluctuations in the securities
markets. The Funds' performance per share will change daily based on many
factors, including fluctuation in interest rates, the quality of the
instruments in each Fund's investment portfolio, national and
international economic conditions and general market conditions.
- INTEREST RATE RISK: Interest rate risk refers to the risk that the value
of either Fund's fixed income securities can change in response to
changes in prevailing interest rates causing volatility and possible loss
of value as rates increase.
- CREDIT RISK: Credit risk refers to the risk related to the credit quality
of the issuer of a security held in either Fund's portfolio. The Funds
could lose money if the issuer of a security is unable to meet its
financial obligations.
- YEAR 2000 RISK: Like other funds and business organizations around the
world, the Funds could be affected adversely if the computer systems used
by the Adviser and the Funds' other service providers do not properly
process and calculate date related information for the year 2000 and
beyond. In addition, Year 2000 issues may affect adversely companies in
which the Funds invest where, for example, such companies incur
substantial costs to address Year 2000 issues or suffer losses caused by
the failure to do so adequately, and in a timely manner.
The Funds have been advised that the Adviser and the Funds' other service
providers (i.e., Administrator, Transfer Agent, Fund Accounting Agent,
Custodian and Distributor) have developed and are implementing clearly
defined and documented plans intended to minimize risks associated with Year
2000 issues with regard to services critical to the Funds' operations.
Internal efforts include a commitment of adequate staff and funding to
identify and remedy Year 2000 issues, and specific actions such as taking
inventory of software systems, determining inventory items that may not
function properly after December 31, 1999, reprogramming or replacing such
systems, and retesting for Year 2000 readiness.
In the event that any systems upon which the Funds are dependent are not Year
2000 ready by December 31, 1999, administrative errors and account
maintenance failures would likely occur.
While the ultimate costs or consequences of incomplete or untimely resolution
of Year 2000 issues by the Adviser or the Funds' service providers cannot be
assessed accurately at this time, the Funds currently have no reason to
believe that the Year 2000 plans of the Adviser and each Fund's service
providers will not be completed by December 31, 1999, or that the anticipated
costs associated with full implementation of their plans will have a material
adverse impact on either their business operations or the financial condition
of the Funds. The Funds and the Adviser will continue to monitor closely
developments relating to this issue, including establishment by the Adviser
and the Funds' service providers of contingency plans.
10
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INVESTMENT OBJECTIVES AND STRATEGIES
logo
- FOREIGN INVESTMENT RISK: SPECIFIC RISK FACTOR FOR THE INTERNATIONAL
SOCIAL INDEX FUND:
The International Social Index Fund invests primarily in foreign securities
which are subject to investment risks different from those associated with
domestic securities. Foreign investments may be riskier than domestic U.S.
investments because of unstable international political and economic
conditions, foreign controls or investment and currency exchange rates,
withholding taxes, or a lack of adequate company information, lack of
liquidity and lack of governmental regulation.
Investments in the Funds are not deposits of United States Trust Company of
Boston or any of its affiliates and are not insured or guaranteed by the
Federal Deposit Insurance Corporation (the "FDIC") or any other government
agency.
11
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SHAREHOLDER INFORMATION
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PRICING OF FUND SHARES
---------------------------
HOW NAV IS CALCULATED
The NAV is calculated by
adding the total value of
the Fund's investments and
other assets, subtracting
its liabilities and then
dividing that figure by the
number of outstanding
shares of the Fund:
NAV =
Total Assets - Liabilities
------------------------------
Number of Shares
Outstanding
You can find each Fund's
NAV daily in The Wall
Street Journal and other
financial newspapers.
---------------------------
The net asset value (NAV) per share of
each Fund is determined at the time
trading closes on the New York Stock
Exchange ("NYSE") (currently 4:00
p.m., Eastern Standard Time, Monday
through Friday), except on business
holidays when the NYSE is closed. The
NYSE recognizes the following
holidays: New Year's Day, President's
Day, Martin Luther King, Jr. Day, Good
Friday, Memorial Day, Fourth of July,
Labor Day, Thanksgiving Day, and
Christmas Day. Any other holiday
recognized by the NYSE will be
considered a business holiday on which
the net asset value of each Fund will
not be calculated.
Your order for purchase, sale or
exchange of shares is priced at the
next NAV calculated after your order
is accepted by the Funds. This is
known as the offering price.
Each Fund's securities are valued
generally at current market prices. If
market quotations are not available,
prices will be based on fair value as
determined by the Funds' Trustees.
PURCHASING AND ADDING TO YOUR SHARES
You may purchase the Funds through the Distributor or through investment
representatives, who may charge additional fees and may require higher
minimum investments or impose other limitations on buying and selling shares.
If you purchase shares through an investment representative, that party is
responsible for transmitting orders by close of business and may have an
earlier cut-off time for purchase and sale requests. Consult your investment
representative for specific information.
The minimum initial investment in the Domestic Social Index Fund is $2,500
and the minimum initial investment in the International Social Index Fund is
$50,000. Subsequent investments must be at least $500. BISYS Fund Services
(the "Distributor") acts as Distributor of each Fund's shares. Shares of the
Funds are offered continuously for purchase at the net asset value per share
of the respective Fund next determined after a purchase order is received.
Investors may purchase shares of the Funds by check or wire, as described
below.
The International Social Index Fund imposes a portfolio transaction fee on
share purchases equal to 1.00% of the dollar amount invested. This fee, which
is not a sales charge, is paid directly to the Fund and not to any other
party. The fee is deducted automatically from the amount invested and cannot
be paid separately. The fee applies to the initial investment in the Fund
(including purchases made as a result of exchanges from another affiliated
fund) and all subsequent purchases, but not to reinvested dividend or capital
gains distributions. The purpose of the portfolio transaction fee is to
allocate transaction costs associated with Fund purchases to the shareholder
making the transaction and thus insulate other shareholders from those
transaction costs. In this manner, the Fund attempts to track its index more
closely.
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SHAREHOLDER INFORMATION
logo
PURCHASING AND ADDING TO YOUR SHARES
CONTINUED
The Domestic Social Index Fund assesses an annual account maintenance fee of
$25 for each shareholder account. This fee, which is deducted from the Fund's
annual dividend, is waived for shareholders with an account balance of $8,000
or more at the time of the annual contribution. The purpose of this fee is to
allocate a portion of the costs of maintaining shareholder accounts equally
to all accounts.
All purchases must be in U.S. dollars. A fee will be charged for any checks
that do not clear. Third-party checks are not accepted.
A Fund or the Adviser may waive its minimum purchase requirement, or the
Distributor may reject a purchase order, if it is deemed to be in the best
interest of either Fund and its shareholders.
INSTRUCTIONS FOR OPENING OR ADDING TO AN ACCOUNT
logo BY REGULAR MAIL OR OVERNIGHT SERVICE
INITIAL INVESTMENT:
1. Carefully read and complete the application. Establishing your account
privileges now saves you the inconvenience of having to add them later.
2. Make check, certified check or money order payable to either "Walden/BBT
Domestic Social Index Fund" or "Walden/BBT International Social Index
Fund", as applicable.
3. Mail to: Walden/BBT Funds, P.O. Box 182218, Columbus, Ohio 43218-2218.
SUBSEQUENT INVESTMENT:
1. Subsequent investments should be made by check payable to the applicable
fund and mailed to the address indicated above. Your account number should
be written on the check.
logo BY WIRE TRANSFER
Note: Your bank may charge a wire transfer fee.
For initial investment: Before wiring funds, you should call 1-877-4-WALDEN
to advise that an initial investment will be made by wire and to receive an
account number. Follow the instructions below after receiving your account
number.
For initial and subsequent investments: Instruct your bank to wire transfer
your investment to:
Huntington National Bank
Routing Number: ABA #044000024
DDA#01892024206
Include:
Your name
Your account number
Fund name
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SHAREHOLDER INFORMATION
logo
SELLING YOUR SHARES
INSTRUCTIONS FOR SELLING SHARES
You may sell your shares at
any time. Your sales price
will be the next NAV after
your sell order is received by
the Funds, its transfer agent,
or your investment
representative. Normally you
will receive your proceeds
within a week after your
request is received. See
section on "General Policies
on Selling Shares" below.
WITHDRAWING MONEY FROM YOUR FUND
INVESTMENT
A request for a withdrawal in cash from
either Fund constitutes a redemption or
sale of shares for a mutual fund
shareholder.
logo BY TELEPHONE
(unless you have declined telephone sales privileges)
1. Call 1-877-4-WALDEN with instructions as to how you wish to receive your
funds (mail, wire, electronic transfer).
logo BY MAIL
2(a). Call 1-877-4-WALDEN to request redemption forms or write a letter of
instruction indicating:
- your Fund and account number
- amount you wish to redeem
- address where your check should be sent
- account owner signature
2(b). Mail to: WALDEN/BBT FUNDS P.O. Box 182218, Columbus, Ohio 43218-2218
logo BY OVERNIGHT SERVICE
SEE INSTRUCTION 2 ABOVE.
Send to: WALDEN/BBT FUNDS c/o BISYS Fund Services Attn: T.A. Operations 3435
Stelzer Road Columbus, Ohio 43219
logo BY WIRE TRANSFER
You must indicate this option on your application
Call 1-877-4-WALDEN to request a wire transfer. If you call by 4 p.m. Eastern
Standard Time, your payment normally will be wired to your bank on the next
business day.
The Funds may charge a wire transfer fee.
Note: Your financial institution may also charge a separate fee.
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SHAREHOLDER INFORMATION
logo
GENERAL POLICIES ON SELLING SHARES
REDEMPTIONS IN WRITING REQUIRED
You must request redemption in writing in the following situations:
- Circumstances under which redemption requests require a signature guarantee
include, but may not be limited to, each of the following:
- Redemptions over $10,000
- Your account registration or the name(s) on your account has changed
within the last 15 days
- The check is not being mailed to the address on your account
- The check is not being made payable to the owner of the account
- The redemption proceeds are being transferred to another Fund account
with a different registration
A signature guarantee can be obtained from a financial institution, such as a
bank, broker-dealer, credit union, clearing agency, or savings association.
VERIFYING TELEPHONE REDEMPTIONS
The Funds make every effort to ensure that telephone redemptions are made
only by authorized shareholders. All telephone calls are recorded for your
protection and you will be asked for information to verify your identity.
Given these precautions, unless you have specifically indicated on your
application that you do not want the telephone redemption feature, you may be
responsible for any fraudulent telephone orders.
REDEMPTIONS WITHIN 10 DAYS OF INITIAL INVESTMENT
When you have made your initial investment by check, you cannot redeem any
portion of it until the Transfer Agent is satisfied that the check has
cleared (which may require up to 10 business days). You can avoid this delay
by purchasing shares with a wire transfer or a certified check.
REFUSAL OF REDEMPTION REQUEST
Payment for shares may be delayed under extraordinary circumstances or as
permitted by the Securities and Exchange Commission in order to protect
remaining shareholders.
REDEMPTION IN KIND
The Funds reserve the right to make payment in securities rather than cash,
known as "redemption in kind." This could occur under extraordinary
circumstances, such as a very large redemption that could affect Fund
operations (a redemption of more than 1% of the Fund's net assets). If either
Fund deems it advisable for the benefit of all shareholders, redemption in
kind will consist of securities equal in market value to your shares. When
you convert these securities to cash, you will pay brokerage charges.
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SHAREHOLDER INFORMATION
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CLOSING OF SMALL ACCOUNTS
If your account falls below $500, the Fund may ask you to increase your
balance. If it is still below $500 after 60 days, the Fund may close your
account and send you the proceeds at the then current NAV.
UNDELIVERABLE REDEMPTION CHECKS
For any shareholder who chooses to receive distributions in cash: If
distribution checks (1) are returned and marked as "undeliverable" or (2)
remain uncashed for six months, your account will be changed automatically so
that all future distributions are reinvested in your account. Checks that
remain uncashed for six months will be canceled and the money reinvested in
the Fund.
EXCHANGING YOUR SHARES
You can exchange your shares in one Fund for shares of another Boston Trust
Mutual Fund, Domestic Social Index Fund and International Social Index Fund
only. No transaction fees are charged for exchanges.
You must meet the minimum investment requirements for the Fund into which you
are exchanging.
INSTRUCTIONS FOR EXCHANGING SHARES
Exchanges may be made by sending a written request to Walden/BBT Funds, P.O.
Box 182218, Columbus, Ohio 43218-2218 or by calling 1-877-4-WALDEN. Please
provide the following information:
- Your name and telephone number
- The exact name on your account and account number
- Taxpayer identification number (usually your Social Security number)
- Dollar value or number of shares to be exchanged
- The name of the Fund from which the exchange is to be made
- The name of the Fund into which the exchange is being made
Please refer to "Selling Your Shares" for important information about
telephone transactions.
NOTES ON EXCHANGES
- To prevent disruption in the management of the Funds, exchange activity
may be limited to 4 exchanges within a calendar year.
- The registration and tax identification numbers of the two accounts must
be identical.
- The Exchange Privilege (including automatic exchanges) may be changed or
eliminated at any time upon a 60-day notice to shareholders.
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<PAGE> 18
SHAREHOLDER INFORMATION
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DIVIDENDS, DISTRIBUTIONS AND TAXES
Any income a Fund receives in the form of dividends is paid out, less
expenses, to its shareholders. Income dividends and capital gains
distributions on the Funds usually are paid annually.
Dividends and distributions are treated in the same manner for federal income
tax purposes whether you receive them in cash or in additional shares.
An exchange of shares is considered a sale, and gains from any sale or
exchange may be subject to applicable taxes.
Dividends are taxable as ordinary income. Distributions designated by a Fund
as long-term capital gain distributions will be taxable to you at your
long-term capital gains rate, regardless of how long you have held your
shares.
Dividends are taxable in the year in which they are paid, even if they appear
on your account statement in the following year.
You will be notified in January of each year about the federal tax status of
distributions made by the Funds. Depending on your state of residence,
distributions also may be subject to state and local taxes, including
withholding taxes. There is a penalty on certain pre-retirement distributions
from retirement accounts.
Foreign shareholders may be subject to special withholding requirements.
The Funds are required to withhold 31% of taxable dividends, capital gains
distributions and redemptions paid to shareholders who have not provided the
Funds with their certified taxpayer identification number in compliance with
IRS rules. To avoid this, make sure you provide your correct Tax
Identification Number (Social Security Number for most investors) on your
account application.
This tax discussion is meant only as a general summary. Because each
investor's tax situation is unique, you should consult your tax adviser about
the particular consequences to you of investing in the Funds.
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FUND MANAGEMENT
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WALDEN ASSET MANAGEMENT, A DIVISION OF THE INVESTMENT
ADVISER
United States Trust Company of Boston, (the "Adviser"), 40 Court Street,
Boston, Massachusetts 02108, is the investment adviser for the Funds and has
designated its Walden division to fulfill its obligations with respect to the
Funds. The Adviser is a Massachusetts-chartered banking and trust company
established in 1895 and is a wholly-owned subsidiary of UST Corp., a
Massachusetts bank holding company. The Trust Department of the Adviser has
managed assets as a fiduciary for over 50 years. The Adviser began offering
socially responsive professional investment management services in 1974 with
the establishment of its Asset Management Division. Neither the Adviser nor
UST Corp. is affiliated with United States Trust Company of New York.
SOCIAL INVESTING
For many, the primary goal of socially responsive investing is moral
consistency: not owning and profiting from investments in companies which
violate personal ethical standards. This goal is achieved best by using
specific social criteria to screen potential investments.
For others, the goal of socially responsive investing is social change.
Recognizing corporations as key participants effecting social and economic
justice, this strategy uses the power of ownership to influence corporate
behavior. Walden Asset Management utilizes both social screening and social
change strategies in both Funds to achieve its financial and social
objectives.
The Funds are engaged actively in promoting positive corporate change through
company dialogue and shareholder resolutions, social screening, public policy
testimony and technical assistance to non-profit entities.
The Funds are committed to making socially responsive investing an effective
instrument of social change at home and abroad. Walden has an in-house social
research process to fully harness the power of shareholder activism. Through
dialogue with management and in partnership with other agents of change,
Walden and the Funds use their leverage as shareholders to foster progressive
corporate practices.
The Funds work to focus companies on the sustainability of their profits by
urging corporate management to treat their workers, customers, communities
and the environment as valuable, long-term assets. Our research and advocacy
work is dedicated to finding the practical linkages between these
constituencies, and helping use shareholder power productively.
PORTFOLIO MANAGER
The following individual serves as portfolio manager for the Funds and is
primarily responsible for the day-to-day management of each Fund's portfolio:
Ms. Geeta B. Aiyer, Senior Portfolio Manager of the Adviser, is the portfolio
manager for each Fund. Ms. Aiyer founded Walden Capital Management in 1994
and joined the Adviser in 1998 when the Adviser acquired Walden. Ms. Aiyer
had served as a portfolio manager for the Adviser prior to her starting
Walden in 1994. Ms. Aiyer earned an M.A. from the University of Delhi, India
and an M.B.A. from Harvard University. Ms. Aiyer is a Chartered Financial
Analyst and a member of the Boston Security Analysts Society.
The Statement of Additional Information has more detailed information about
the Adviser.
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FUND MANAGEMENT
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THE DISTRIBUTOR AND ADMINISTRATOR
BISYS Fund Services is the Funds' distributor and administrator and is
located at 3435 Stelzer Road, Columbus, OH 43219.
CAPITAL STRUCTURE
The Coventry Group was organized as a Massachusetts business trust on January
8, 1992. Overall responsibility for the management of the Funds is vested in
its Board of Trustees. Shareholders are entitled to one vote for each full
share held and a proportionate fractional vote for any fractional shares held
and will vote in the aggregate and not by series except as otherwise
expressly required by law. An annual or special meeting of shareholders to
conduct necessary business is not required by the Coventry Group's
Declaration of Trust, the 1940 Act or other authority, except under certain
circumstances. Absent such circumstances, the Coventry Group does not intend
to hold annual or special meetings.
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For more information about the Funds, the following documents are available
free upon request:
ANNUAL/SEMI-ANNUAL REPORTS:
Each Fund's annual and semi-annual reports to shareholders contain additional
investment information. In the annual report, you will find a discussion of
the market conditions and investment strategies that significantly affected
each Fund's performance during its most recent fiscal year.
STATEMENT OF ADDITIONAL INFORMATION (SAI):
The SAI provides more detailed information about the Funds, including their
operations and investment policies. It is incorporated by reference and is
legally considered a part of this prospectus.
YOU CAN RECEIVE FREE COPIES OF REPORTS AND THE SAI, OR REQUEST OTHER
INFORMATION AND DISCUSS YOUR QUESTIONS ABOUT THE FUNDS BY CONTACTING THE
FUNDS AT:
WALDEN MUTUAL FUNDS
3435 STELZER ROAD
COLUMBUS, OHIO 43219
TELEPHONE: 1-877-4-WALDEN
You can also review each Fund's reports and the SAI at the Public Reference
Room of the Securities and Exchange Commission. You can get text-only copies:
- For a duplicating fee, by writing the Public Reference Section of the
Commission, Washington, D.C. 20549-6009 or calling 1-800-SEC-0330.
- Free from the Commission's Website at http://www.sec.gov.
Investment Company Act file no. 811-6526.
<PAGE> 22
WALDEN/BBT DOMESTIC SOCIAL INDEX FUND
WALDEN/BBT INTERNATIONAL SOCIAL INDEX FUND
Each an Investment Portfolio of
The Coventry Group
Statement of Additional Information
[July 30], 1999
This Statement of Additional Information is not a prospectus but should
be read in conjunction with the prospectus for Walden/BBT Domestic Social Index
Fund and Walden/BBT International Social Index Fund (collectively, the "Funds"),
dated the same date as the date hereof (the "Prospectus"). The Funds are
separate investment portfolios of The Coventry Group (the "Group"), an open-end
investment management company. This Statement of Additional Information is
incorporated in its entirety into the Prospectus. Copies of the Prospectus may
be obtained by writing the Funds at 40 Court Street, Boston, Massachusetts
02108, or by telephoning toll free (800) 441-8782, ext. 4050.
<PAGE> 23
STATEMENT OF ADDITIONAL INFORMATION
THE COVENTRY GROUP
The Coventry Group (the "Group") is an open-end investment
management company which offers currently its shares in separate series. This
Statement of Additional Information deals with two such portfolios: Walden/BBT
Domestic Social Index Fund and Walden/BBT International Social Index Fund (the
"Funds"). Much of the information contained in this Statement of Additional
Information expands upon subjects discussed in the Prospectus. Capitalized terms
not defined herein are defined in the Prospectus. No investment in shares of a
Fund should be made without first reading the Prospectus.
INVESTMENT OBJECTIVES AND POLICIES
ADDITIONAL INFORMATION ON PORTFOLIO INSTRUMENTS
The following policies supplement the investment objectives and
policies of each Fund as set forth in the Prospectus.
Money Market Instruments
Money market instruments selected for investment by the Funds
include high grade, short-term obligations, including those issued or guaranteed
by the U.S. Government, its agencies and instrumentalities, U.S.
dollar-denominated certificates of deposit, time deposits and bankers'
acceptances of U.S. banks (generally banks with assets in excess of $1 billion),
repurchase agreements with recognized dealers and banks and commercial paper
(including participation interests in loans extended by banks to issuers of
commercial paper) that at the date of investment are rated A-1 by S&P or P-1 by
Moody's, or, if unrated, of comparable quality as determined by the Adviser.
Repurchase Agreements
The Funds may enter into repurchase agreements. Under such
agreements, the seller of a security agrees to repurchase it at a mutually
agreed upon time and price. The repurchase price may be higher than the purchase
price, the difference being income to the Fund, or the purchase and repurchase
prices may be the same, with interest at a stated rate due to the Fund together
with the repurchase price on repurchase. In either case, the income to the Fund
is unrelated to the interest rate on the security itself. Such repurchase
agreements will be made only with banks with assets of $500 million or more that
are insured by the Federal Deposit Insurance Corporation or with Government
securities dealers recognized by the Federal Reserve Board and registered as
broker-dealers with the Securities and Exchange Commission ("SEC") or exempt
from such registration. The Funds will enter generally into repurchase
agreements of short durations, from overnight to one week, although the
underlying securities generally have longer maturities. A Fund may not enter
into a repurchase agreement with more than seven days to
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maturity if, as a result, more than 5% of the value of the Fund's net assets
would be invested in illiquid securities including such repurchase agreements.
For purposes of the Investment Company Act of 1940 (the "1940
Act"), a repurchase agreement is deemed to be a loan from the Fund to the seller
of the U.S. Government security subject to the repurchase agreement. In the
event of the insolvency or default of the seller, the Fund could encounter
delays and incur costs before being able to sell the security. Delays may
involve loss of interest or a decline in price of the U.S. Government security.
As with any unsecured debt instrument purchased for a Fund, the Investment
Adviser seeks to minimize the risk of loss through repurchase agreements by
analyzing the creditworthiness of the obligor, in this case the seller of the
U.S. Government security.
There is also the risk that the seller may fail to repurchase the
security. However, a Fund will always receive as collateral for any repurchase
agreement to which it is a party securities acceptable to it, the market value
of which is equal to at least 100% of the amount invested by the Fund plus
accrued interest, and the Fund will make payment against such securities only
upon physical delivery or evidence of book entry transfer to the account of its
Custodian. If the market value of the U.S. Government security subject to the
repurchase agreement becomes less than the repurchase price (including
interest), the Fund will direct the seller of the U.S. Government security to
deliver additional securities so that the market value of all securities subject
to the repurchase agreement will equal or exceed the repurchase price. It is
possible that a Fund will be unsuccessful in seeking to impose on the seller a
contractual obligation to deliver additional securities.
When-Issued Securities
The Funds are authorized to purchase securities on a
"when-issued" basis. The price of such securities, which may be expressed in
yield terms, is fixed at the time the commitment to purchase is made, but
delivery and payment for the when-issued securities take place at a later date.
Normally, the settlement date occurs within one month of the purchase; during
the period between purchase and settlement, no payment is made by the Fund to
the issuer and no interest accrues to the Fund. To the extent that assets of the
Fund are held in cash pending the settlement of a purchase of securities, the
Fund would earn no income; however, it is the Fund's intention to be fully
invested to the extent practicable and subject to the policies stated above.
While when-issued securities may be sold prior to the settlement date, any
purchase of such securities would be made with the purpose of actually acquiring
them unless a sale appears desirable for investment reasons. At the time the
Fund makes the commitment to purchase a security on a when-issued basis, it will
record the transaction and reflect the value of the security in determining its
net asset value. The market value of the when-issued securities may be more or
less than the purchase price. The Fund does not believe that its net asset value
or income will be affected adversely by its purchase of securities on a
when-issued basis. The Fund will designate liquid securities equal in value to
commitments for when-issued securities. Such segregated assets either will
mature or, if necessary, be sold on or before the settlement date.
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Debt Securities and Ratings
Ratings of debt securities represent the rating agencies'
opinions regarding their quality, are not a guarantee of quality and may be
reduced after a Fund has acquired the security. If a security's rating is
reduced while it is held by a Fund, the Adviser will consider whether the Fund
should continue to hold the security, but the Fund is not required to dispose of
it. Credit ratings attempt to evaluate the safety of principal and interest
payments and do not evaluate the risks of fluctuations in market value. Also,
rating agencies may fail to make timely changes in credit ratings in response to
subsequent events, so that an issuer's current financial conditions may be
better or worse than the rating indicates.
Options and Futures Contracts
To the extent consistent with its investment objectives and
policies, each Fund may purchase and write call and put options on securities,
securities indexes and on foreign currencies and enter into futures contracts
and use options on futures contracts, to the extent of up to 5% of its assets.
The Funds will engage in futures contracts and related options only for hedging
purposes and will not engage in such transactions for speculation or leverage.
Transactions in options on securities and on indexes involve
certain risks. For example, there are significant differences between the
securities and options markets that could result in an imperfect correlation
between these markets, causing a given transaction not to achieve its
objectives. A decision as to whether, when and how to use options involves the
exercise of skill and judgment, and even a well-conceived transaction may be
unsuccessful to some degree because of market behavior or unexpected events.
There can be no assurance that a liquid market will exist when
the Fund seeks to close out an option position. If the Fund were unable to close
out an option that it had purchased on a security, it would have to exercise the
option in order to realize any profit or the option would expire worthless. If
the Fund were unable to close out a covered call option that it had written on a
security, it would not be able to sell the underlying security unless the option
expired without exercise. As the writer of a covered call option, the Fund
forgoes, during the option's life, the opportunity to profit from increases in
the market value of the security covering the call option above the sum of the
premium and the exercise price of the call.
If trading were suspended in an option purchased by the Fund, the
Fund would not be able to close out the option. If restrictions on exercise were
imposed, the Fund might be unable to exercise an option it had purchased. Except
to the extent that a call option on an index written by the Fund is covered by
an option on the same index purchased by the Fund, movements in the index may
result in a loss to the Fund; such losses might be mitigated or exacerbated by
changes in the value of the Fund's securities during the period the option was
outstanding.
Use of futures contracts and options thereon also involves
certain risks. The variable degree of correlation between price movements of
futures contracts and price
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movements in the related portfolio positions of the Fund creates the possibility
that losses on the hedging instrument may be greater than gains in the value of
the Fund's position. Also, futures and options markets may not be liquid in all
circumstances and certain over the counter options may have no markets. As a
result, in certain markets, the Fund might not be able to close out a
transaction at all or without incurring losses. Although the use of options and
futures transactions for hedging should minimize the risk of loss due to a
decline in the value of the hedged position, at the same time they tend to limit
any potential gain which might result from an increase in the value of such
position. If losses were to result from the use of such transactions, they could
reduce net asset value and possibly income. The Fund may use these techniques to
hedge against changes in interest rates or securities prices or as part of its
overall investment strategy. The Fund will segregate liquid assets (or, as
permitted by applicable regulation, enter into certain offsetting positions) to
cover its obligations under options and futures contracts to avoid leveraging of
the Fund.
Stock Index Options
The Funds may purchase and write exchange-listed put and call
options on stock indices to hedge against risks of market-wide price movements.
A stock index measures the movement of a certain group of stocks by assigning
relative values to the common stocks included in the index. Options on stock
indices do not involve the delivery of an underlying security; instead, the
option represents the holder's right to obtain from the writer in cash a fixed
multiple of the amount by which the exercise price exceeds (in the case of a
put) or is less than (in the case of a call) the closing value of the underlying
index on the exercise date. When a Fund writes an option on a stock index, it
will deposit cash or cash equivalents or a combination of both in an amount
equal to the market value of the option, in a segregated account with the
custodian, and will maintain the account while the option is open.
Illiquid and Restricted Securities.
A fund may not invest more than 5% of its net assets in illiquid
securities, including (i) securities for which there is no readily available
market; (ii) securities the disposition of which would be subject to legal
restrictions (so-called "restricted securities"); and (iii) repurchase
agreements having more than seven days to maturity. A considerable period of
time may elapse between a Fund's decision to dispose of such securities and the
time when the Fund is able to dispose of them, during which time the value of
the securities could decline. Securities which meet the requirements of
Securities Act Rule 144A are restricted, but may be determined to be liquid by
the Trustees, based on an evaluation of the applicable trading markets.
ADDITIONAL INVESTMENT INFORMATION RELATING TO THE INTERNATIONAL INDEX FUND
Foreign Securities
The International Index Fund may invest all of its assets in
foreign securities. Foreign investments can involve significant risks in
addition to the risks inherent in U.S.
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investments. The value of securities denominated in or indexed to foreign
currencies, and of dividends and interest from such securities, can change
significantly when foreign currencies strengthen or weaken relative to the U.S.
dollar. Foreign securities markets generally have less trading volume and less
liquidity than U.S. markets, and prices on some foreign markets can be highly
volatile. Many foreign countries lack uniform accounting and disclosure
standards comparable to those applicable to U.S. companies, and it may be more
difficult to obtain reliable information regarding an issuer's financial
condition and operations. In addition, the costs of foreign investing, including
withholding taxes, brokerage commissions, and custodial costs, generally are
higher than for U.S. investments.
Foreign markets may offer less protection to investors than U.S.
markets. Foreign issuers, brokers, and securities markets may be subject to less
government supervision. Foreign securities trading practices, including those
involving the release of assets in advance of payment, may involve increased
risks in the event of a failed trade or the insolvency of a broker-dealer, and
may involve substantial delays. It also may be difficult to enforce legal rights
in foreign countries.
Investing abroad also involves different political and economic
risks. Foreign investments may be affected by actions of foreign governments
adverse to the interests of U.S. investors, including the possibility of
expropriation or nationalization of assets, confiscatory taxation, restrictions
on U.S. investment or on the ability to repatriate assets or convert currency
into U.S. dollars, or other government intervention. There may be a greater
possibility of default by foreign governments or foreign government-sponsored
enterprises. Investments in foreign countries also involve a risk of local
political, economic, or social instability, military action or unrest, or
adverse diplomatic developments. There can be no assurance that the Advisor will
be able to anticipate or counter these potential events and their impacts on a
Fund's share price.
Securities of foreign issuers may be held by the Fund in the form
of American Depositary Receipts and European Depositary Receipts ("ADRs" and
"EDRs"). These are certificates evidencing ownership of shares of a
foreign-based issuer held in trust by a bank or similar financial institution.
Designed for use in U.S. and European securities markets, respectively, ADRs and
EDRs are alternatives to the purchase of the underlying securities in their
national market and currencies.
Currency Transactions
The International Index Fund may make use of active currency
management from time to time. To effectively manage the currency fluctuation and
related effects that such exposures give rise to, the Fund may buy or sell
foreign currencies; enter into forward foreign currency exchange contracts; buy
or sell options, futures or options on futures relating to foreign currencies;
purchase securities indexed to the performance of one or more foreign
currencies; and/or use currency management techniques to hedge against adverse
movements in exchange rates.
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Such management actions as those described above are of a routine
nature, are undertaken only within the limits of and in accordance with the
investment policies of the Fund, and are, typically, limited in scope and
duration.
The International Fund may conduct foreign currency exchange
transactions on a spot (i.e., cash) basis at the spot rate prevailing in the
foreign currency exchange market or by entering into forward contracts to
purchase or sell foreign currencies. A forward contract involves an obligation
to purchase or sell a specific currency amount at a future date, which may be
any fixed number of days from the date of the contract. These transactions will
require that the Fund segregate cash or liquid securities to the extent the
Fund's obligations are not otherwise "covered," by the Fund owning or having the
right to acquire or sell the underlying currency.
When the Adviser believes that the currency of a particular
country may suffer a significant decline against the U.S. dollar or against
another currency, the Fund may enter into a forward contract to sell, for a
fixed amount of U.S. dollars or other appropriate currency, the amount of
foreign currency approximating the value of some or all of the Fund's securities
denominated in such foreign currency. The precise matching of the forward
contract amounts and the value of the securities involved will not generally be
possible since the future value of such securities in foreign currencies will
change as a consequence of market movements in the value of those securities
between the date the forward contract is entered into and the date it matures.
At the maturity of a forward contract, the Fund may either sell a portfolio
security and make delivery of the foreign currency, or it may retain the
security and terminate its contractual obligation to deliver the foreign
currency by purchasing an "offsetting" contract with the same currency trader
obligating it to purchase, on the same maturity date, the same amount of the
foreign currency. The Fund may realize a gain or loss from currency
transactions. The Fund's ability to engage in forward contracts may also be
limited by tax considerations.
In the alternative, the Fund may engage in currency "cross
hedging" when, in the opinion of the Adviser, the historical relationship among
foreign currencies suggests that the Fund may achieve the same protection for a
foreign security at reduced cost through the use of a forward foreign currency
contract relating to a currency other than the U.S. dollar or the foreign
currency in which the security is denominated. By engaging in cross hedging
transactions, the Fund assumes the risk of imperfect correlations between the
subject currencies.
The International Index Fund may purchase and write put and call
options on foreign currencies (traded on U.S. and foreign exchanges or
over-the-counter). Call options on foreign currency written by the Fund will be
covered, which means that the Fund will own an equal amount of the underlying
foreign currency. With respect to put options on foreign currency written by the
Fund, the Fund will deposit cash or cash equivalents or a combination of both in
a segregated account with the custodian in an amount equal to the amount the
Fund would be required to pay upon exercise of the put.
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INVESTMENT RESTRICTIONS
The following policies and investment restrictions have been
adopted by each Fund and (unless otherwise noted) are fundamental and cannot be
changed without the affirmative vote of a majority of the Fund's outstanding
voting securities as defined in the 1940 Act. The Funds may not:
1. Make loans to others, except (a) through the purchase of debt
securities in accordance with its investment objectives and policies, or (b) to
the extent the entry into a repurchase agreement is deemed to be a loan.
2. (a) Borrow money, except from banks for temporary or emergency
purposes. Any such borrowing will be made only if immediately thereafter there
is an asset coverage of at least 300% of all borrowings.
(b) Mortgage, pledge or hypothecate any of its assets except
in connection with any such borrowings.
3. Purchase securities on margin, participate on a joint or joint
and several basis in any securities trading account, or underwrite securities.
(A Fund is not precluded from obtaining such short-term credit as may be
necessary for the clearance of purchases and sales of its portfolio securities.)
4. Purchase or sell real estate, commodities or commodity
contracts (other than futures transactions for the purposes and under the
conditions described in the Prospectus and in this Statement of Additional
Information).
5. Invest 25% or more of the market value of its assets in the
securities of companies engaged in any one industry. (Does not apply to
investment in the securities of the U.S. Government, its agencies or
instrumentalities.)
6. Issue senior securities, as defined in the 1940 Act, except
that this restriction shall not be deemed to prohibit a Fund from (a) making any
permitted borrowings, mortgages or pledges, or (b) entering into options,
futures, forward or repurchase transactions.
7. Purchase the securities of any issuer, if as a result more
than 5% of the total assets of a Fund would be invested in the securities of
that issuer, other than obligations of the U.S. Government, its agencies or
instrumentalities, provided that up to 25% of the value of a Fund's assets may
be invested without regard to this limitation.
The Funds observe the following policies, which are not deemed
fundamental and which may be changed without shareholder vote. The Funds may
not:
1. Purchase any security if as a result a Fund would then hold
more than 10% of any class of securities of an issuer (taking all common stock
issues of an issuer as a single
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class, all preferred stock issues as a single class, and all debt issues as a
single class) or more than 10% of the outstanding voting securities of a single
issuer.
2. Invest in any issuer for purposes of exercising control or
management.
3. Invest in securities issued by UST Corp. (parent corporation
of the Adviser).
If a percentage restriction described in the Prospectus or this
Statement of Additional Information is adhered to at the time of investment, a
subsequent increase or decrease in a percentage resulting from a change in the
values of assets will not constitute a violation of that restriction, except for
the policies regarding borrowing and illiquid securities or as otherwise
specifically noted.
PORTFOLIO TURNOVER
The portfolio turnover rate for each of the Funds is calculated
by dividing the lesser of a Fund's purchases or sales of portfolio securities
for the year by the monthly average value of the portfolio securities. The
calculation excludes all securities whose remaining maturities at the time of
acquisition were one year or less.
The portfolio turnover rate may vary greatly from year to year,
as well as within a particular year, and may also be affected by cash
requirements for redemptions of Shares. High portfolio turnover rates generally
will result in higher transaction costs, including brokerage commissions, to a
Fund and may result in additional tax consequences to a Fund's Shareholders.
Portfolio turnover will not be a limiting factor in making investment decisions.
NET ASSET VALUE
As indicated in the Prospectus, the net asset value of each Fund
is determined once daily as of the close of public trading on the New York Stock
Exchange (currently 4:00 p.m. Eastern Standard time) on each day that the
Exchange is open for trading. The New York Stock Exchange will not open in
observance of the following holidays: New Year's Day, Martin Luther King, Jr.'s
Day, President's Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving, and Christmas. The Funds do not expect to determine the net asset
value of their shares on any day when the Exchange is not open for trading even
if there is sufficient trading in portfolio securities on such days to
materially affect the net asset value per share.
Investments in securities for which market quotations are readily
available are valued based upon their current available prices in the principal
market in which such securities are normally traded. Unlisted securities for
which market quotations are readily available are valued at such market value.
Securities and other assets for which quotations are not readily available are
valued at their fair value as determined in good faith under consistently
applied procedures established by and under the general supervision of the
Trustees of the Group. Short-
- 9 -
<PAGE> 31
term securities (i.e., with maturities of 60 days or less) are valued at either
amortized cost or original cost plus accrued interest, which approximates
current value.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
The Group may suspend the right of redemption or postpone the
date of payment for Shares during any period when (a) trading on the New York
Stock Exchange (the "Exchange") is restricted by applicable rules and
regulations of the Commission, (b) the Exchange is closed for other than
customary weekend and holiday closings, (c) the Commission has by order
permitted such suspension, or (d) an emergency exists as a result of which (i)
disposal by the Group of securities owned by it is not reasonably practical, or
(ii) it is not reasonably practical for the Group to determine the fair value of
its net assets.
MANAGEMENT OF THE GROUP
TRUSTEES AND OFFICERS
Overall responsibility for management of the Group rests with its
Board of Trustees. The Trustees elect the officers of the Group to supervise
actively its day-to-day operations.
The names of the Trustees and officers of the Group, their
addresses, ages and principal occupations during the past five years are as
follows:
<TABLE>
<CAPTION>
Position(s) Held With the Principal Occupation During Past 5 Years
Name, Address and Age Group
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Walter B. Grimm Chairman, President From June 1992 to present, employee of BISYS
3435 Stelzer Road and Trustee Fund Services
Columbus, Ohio 43219
Age: 53
Maurice G. Stark Trustee From June 1991 to present, Executive Vice
505 King Avenue President-Finance and Treasurer, Battelle
Columbus, Ohio 43201 Memorial Institute (scientific research and
Age: 63 development service corporation).
Michael M. Van Buskirk Trustee From June 1991 to present, Executive Vice
37 West Board Street President of The Ohio Bankers' Association
Suite 1001 (trade association); from September 1987
Columbus, Ohio 43215-4162 to June 1991, Vice President-Communications,
Age: 51 TRW Information Systems Group (electronic and
space engineering).
</TABLE>
- 10 -
<PAGE> 32
<TABLE>
<CAPTION>
Position(s) Held With the Principal Occupation During Past 5 Years
Name, Address and Age Group
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
John H. Ferring IV Trustee From 1979 to present, President and Owner of
105 Bolte Lane Plaze, Incorporated, St. Clair, Missouri
St. Clair, Missouri
Age: 46
J. David Huber Vice President From June 1987 to present, employee of BISYS
3435 Stelzer Road Fund Services
Columbus, Ohio 43219
Age: 52
Jennifer R. Brooks Vice President From October, 1988 to present, employee of
3435 Stelzer Road BISYS Fund Services.
Columbus, Ohio 43219
Age: 32
Gary Tenkman Treasurer From April 1998 to present, employee of BISYS
3435 Stelzer Road Fund Services; from September 1990 to March
Columbus, Ohio 43219 1998, employee of Ernst & Young LLP.
Age: 28
George L. Stevens Secretary From September 1996 to present, employee of
3435 Stelzer Road BISYS Fund Services; from September 1995 to
Columbus, Ohio 43219 September 1996, Independent Consultant;
Age: 48 from September 1989 to September 1995,
Senior Vice President, AmSouth Bank, N.A.
Alaina V. Metz Assistant Secretary From June 1995 to present, employee of BISYS
3435 Stelzer Road Fund Services; from May 1989 to June 1995,
Columbus, Ohio 43219 employee of Alliance Capital Management.
Age: 31
</TABLE>
- ------------
* Mr. Grimm is considered to be an "interested person" of the Group as
defined in the 1940 Act.
As of the date of this Statement of Additional Information, the
Group's Officers and Trustees, as a group, own less than 1% of the Funds'
outstanding Shares.
The officers of the Group receive no compensation directly from
the Group for performing the duties of their offices. BISYS Fund Services
receives fees from the Funds for acting as Administrator. BISYS Fund Services
Ohio, Inc. receives fees from the Funds for providing certain fund accounting
services. Messrs. Huber, Tenkman, Stevens and Grimm and Ms. Metz and Ms. Brooks
are employees of BISYS Fund Services.
- 11 -
<PAGE> 33
Trustees of the Group not affiliated with BISYS Fund Services
receive from the Group 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 other special meetings of the Board
attended by telephone and are reimbursed for all out-of-pocket expenses relating
to attendance at such meetings. Trustees who are affiliated with BISYS Fund
Services do not receive compensation from the Group.
For the twelve-month period ended March 31, 1999, the Trustees
received the following compensation from the Group and from certain other
investment companies (if applicable) that have the same investment adviser as
the Funds or an investment adviser that is an affiliated person of the Group's
investment adviser:
<TABLE>
<CAPTION>
Pension or Total Compensation
Aggregate Retirement Benefits From Registrant and
Compensation from Accrued As Part of Est. Annual Benefits Fund Complex Paid
Name of Trustee the Funds Fund Expenses Upon Retirement to Trustee
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Walter B. Grimm $ 0 $0 $0 $ 0
Maurice G. Stark $7,500 $0 $0 $7,500
Michael Van Buskirk $7,500 $0 $0 $7,500
John H. Ferring IV $7,500 $0 $0 $7,500
</TABLE>
INVESTMENT ADVISER
Investment advisory and management services are provided to the
Funds by United States Trust Company of Boston (the "Adviser"), pursuant to an
Investment Advisory Agreement dated as of March 23, 1999. Under the terms of the
Investment Advisory Agreement, the Adviser has agreed to provide investment
advisory services as described in the Prospectuses of the Funds. For the
services provided and expenses assumed pursuant to the Investment Advisory
Agreement, each Fund pays the Adviser a fee, computed daily and paid monthly, at
the following annual rates: Walden/BBT Domestic Social Index Fund 0.50% and
Walden/BBT International Social Index Fund 0.50%. The Adviser may from time to
time voluntarily reduce all or a portion of its advisory fee with respect to a
Fund to increase the net income of that Fund available for distribution as
dividends.
- 12 -
<PAGE> 34
Unless sooner terminated, the Investment Advisory Agreement will
continue in effect until June 1, 2001, and year to year thereafter for
successive annual periods if, as to each Fund, such continuance is approved at
least annually by the Group's Board of Trustees or by vote of a majority of the
outstanding Shares of the relevant Fund (as defined in the Funds' Prospectuses),
and a majority of the Trustees who are not parties to the Investment Advisory
Agreement or interested persons (as defined in the 1940 Act) of any party to the
Investment Advisory Agreement by votes cast in person at a meeting called for
such purpose. The Investment Advisory Agreement is terminable as to a Fund at
any time on 60 days' written notice without penalty by the Trustees, by vote of
a majority of the outstanding Shares of that Fund, or by the Adviser. The
Investment Advisory Agreement also terminates automatically in the event of any
assignment, as defined in the 1940 Act, or for reasons as set forth in the
Agreement.
The Investment Advisory Agreement provides that the Adviser shall
not be liable for any error of judgment or mistake of law or for any loss
suffered by a Fund in connection with the performance of the Investment Advisory
Agreement, except a loss resulting from a breach of fiduciary duty with respect
to the receipt of compensation for services or a loss resulting from willful
misfeasance, bad faith, or gross negligence on the part of the Adviser in the
performance of its duties, or from reckless disregard by the Adviser of its
duties and obligations thereunder.
PORTFOLIO TRANSACTIONS
Pursuant to the Investment Advisory Agreement with respect to
each Fund, the Adviser determines, subject to the general supervision of the
Board of Trustees of the Group and in accordance with each such Fund's
investment objective and restrictions, which securities are to be purchased and
sold by a Fund, and which brokers are to be eligible to execute such Fund's
portfolio transactions.
Purchases from underwriters of portfolio securities generally
include a commission or concession paid by the issuer to the underwriter, and
purchases from dealers serving as market makers may include the spread between
the bid and asked price.
Transactions on stock exchanges involve the payment of negotiated
brokerage commissions. Transactions in the over-the-counter market are generally
principal transactions with dealers. With respect to the over-the-counter
market, the Group, where possible, will deal directly with dealers who make a
market in the securities involved except in those circumstances where better
price and execution are available elsewhere.
Allocation of transactions, including their frequency, to various
brokers and dealers is determined by the Adviser in its best judgment and in a
manner deemed fair and reasonable to Shareholders. The primary consideration is
prompt execution of orders in an effective manner at the most favorable price.
Subject to this consideration, brokers and dealers who provide supplemental
investment research to the Adviser may receive orders for transactions on behalf
of the Funds. The Adviser is authorized to pay a broker-dealer who provides such
brokerage and research services a commission for executing each such Fund's
brokerage transactions which is in excess of the amount of commission another
broker would
- 13 -
<PAGE> 35
have charged for effecting that transaction if, but only if, the Adviser
determines in good faith that such commission was reasonable in relation to the
value of the brokerage and research services provided by such broker viewed in
terms of that particular transaction or in terms of all of the accounts over
which it exercises investment discretion. Any such research and other
statistical and factual information provided by brokers to a Fund or to the
Adviser is considered to be in addition to and not in lieu of services required
to be performed by the Adviser under its respective agreement regarding
management of the Fund. The cost, value and specific application of such
information are indeterminable and hence are not practicably allocable among the
Funds and other clients of the Adviser who may indirectly benefit from the
availability of such information. Similarly, the Funds may indirectly benefit
from information made available as a result of transactions effected for such
other clients. Under the Investment Advisory Agreement, the Adviser is permitted
to pay higher brokerage commissions for brokerage and research services in
accordance with Section 28(e) of the Securities Exchange Act of 1934. In the
event the Adviser does follow such a practice, it will do so on a basis which is
fair and equitable to the Group and the Funds.
While the Adviser generally seeks competitive commissions, the
Group may not necessarily pay the lowest commission available on each brokerage
transaction, for reasons discussed above.
Except as otherwise disclosed to the Shareholders of the Funds
and as permitted by applicable laws, rules and regulations, the Group will not,
on behalf of the Funds, execute portfolio transactions through, acquire
portfolio securities issued by, make savings deposits in, or enter into
repurchase or reverse repurchase agreements with the Adviser, BISYS, or their
affiliates, and will not give preference to the Adviser's correspondents with
respect to such transactions, securities, savings deposits, repurchase
agreements, and reverse repurchase agreements.
Investment decisions for each Fund are made independently from
those for the other Funds, other funds of the Group or any other investment
company or account managed by the Adviser. Any such other fund, investment
company or account may also invest in the same securities as the Group on behalf
of the Funds. When a purchase or sale of the same security is made at
substantially the same time on behalf of a Fund and another fund of the Group
managed by the Adviser, investment company or account, the transaction will be
averaged as to price and available investments will be allocated as to amount in
a manner which the Adviser believes to be equitable to the Fund and such other
fund, investment company or account. In some instances, this investment
procedure may affect adversely the price paid or received by a Fund or the size
of the position obtained by a Fund. To the extent permitted by law, the Adviser
may aggregate the securities to be sold or purchased for a Fund with those to be
sold or purchased for the other Funds or for other investment companies or
accounts in order to obtain best execution. As provided by the Investment
Advisory Agreement, in making investment recommendations for the Funds, the
Adviser will not inquire nor take into consideration whether an issuer of
securities proposed for purchase or sale by the Group is a customer of the
Adviser, any of its subsidiaries or affiliates and, in dealing with its
customers, the Adviser, its subsidiaries and affiliates will not
- 14 -
<PAGE> 36
inquire or take into consideration whether securities of such customers are held
by the Funds or any other fund of the Group.
ADMINISTRATOR
BISYS serves as administrator (the "Administrator") to the Funds
pursuant to a Management and Administration Agreement dated as of May 10, 1999
(the "Administration Agreement"). The Administrator assists in supervising all
operations of each Fund. The Administrator is a broker-dealer registered with
the Commission, and is a member of the National Association of Securities
Dealers, Inc. The Administrator provides financial services to institutional
clients.
Under the Administration Agreement, the Administrator has agreed
to maintain office facilities; furnish statistical and research data, clerical,
certain bookkeeping services and stationery and office supplies; prepare the
periodic reports to the Commission on Form N-SAR or any replacement forms
therefor; compile data for, assist the Group or its designee in the preparation
of, and file all of the Funds' federal and state tax returns and required tax
filings other than those required to be made by the Funds' custodian and
Transfer Agent; prepare compliance filings pursuant to state securities laws
with the advice of the Group's counsel; assist to the extent requested by the
Group with the Group's preparation of its Annual and Semi-Annual Reports to
Shareholders and its Registration Statement (on Form N-1A or any replacement
therefor); compile data for, prepare and file timely Notices to the Commission
required pursuant to Rule 24f-2 under the 1940 Act; keep and maintain the
financial accounts and records of each Fund, including calculation of daily
expense accruals; and generally assist in all aspects of the Funds' operations.
Under the Administration Agreement, the Administrator may delegate all or any
part of its responsibilities thereunder.
The Administrator receives a fee from each Fund for its services
as Administrator and expenses assumed pursuant to the Administration Agreement,
equal to a fee calculated daily and paid periodically, at the annual rate equal
to Twenty one-hundredths of one percent 0.20% of that Fund's average daily net
assets.
Unless sooner terminated as provided therein, the Administration
Agreement has an initial term expiring on June 1, 2001. The Administration
Agreement thereafter shall be renewed automatically for successive one-year
terms, unless written notice not to renew is given by the non-renewing party to
the other party at least 60 days prior to the expiration of the then-current
term. The Administration Agreement is terminable with respect to a particular
Fund only upon mutual agreement of the parties to the Administration Agreement
and for cause (as defined in the Administration Agreement) by the party alleging
cause, on not less than 60 days' notice by the Group's Board of Trustees or by
the Administrator.
The Administration Agreement provides that the Administrator
shall not be liable for any error of judgment or mistake of law or any loss
suffered by any Fund in connection with the matters to which the Administration
Agreement relates, except a loss resulting from willful
- 15 -
<PAGE> 37
misfeasance, bad faith, or negligence in the performance of its duties, or from
the reckless disregard by the Administrator of its obligations and duties
thereunder.
DISTRIBUTOR
BISYS serves as agent for each of the Funds in the distribution
of its Shares pursuant to a Distribution Agreement dated as of March 23, 1999
(the "Distribution Agreement"). Unless otherwise terminated, the Distribution
Agreement will continue in effect for successive annual periods if, as to each
Fund, such continuance is approved at least annually by (i) by the Group's Board
of Trustees or by the vote of a majority of the outstanding shares of that Fund,
and (ii) by the vote of a majority of the Trustees of the Group who are not
parties to the Distribution Agreement or interested persons (as defined in the
1940 Act) of any party to the Distribution Agreement, cast in person at a
meeting called for the purpose of voting on such approval. The Distribution
Agreement may be terminated in the event of any assignment, as defined in the
1940 Act.
In its capacity as Distributor, BISYS solicits orders for the
sale of Shares, advertises and pays the costs of advertising, office space and
the personnel involved in such activities. BISYS receives no compensation under
the Distribution Agreement.
CUSTODIAN
Fifth Third Bank, Cincinnati, Ohio (the "Custodian"), serves as
the Funds' custodian pursuant to the Custody Agreement dated as of July 1, 1999,
1999. The Custodian's responsibilities include safeguarding and controlling the
Funds' cash and securities, handling the receipt and delivery of securities, and
collecting interest and dividends on the Funds' investments.
TRANSFER AGENCY AND FUND ACCOUNTING SERVICES
BISYS serves as transfer agent and dividend disbursing agent (the
"Transfer Agent") for the Funds pursuant to the Transfer Agency Agreement dated
as of May 23, 1999. Pursuant to such Transfer Agency Agreement, the Transfer
Agent, among other things, performs the following services in connection with
each Fund's shareholders of record: maintenance of shareholder records for each
of the Fund's shareholders of record; processing shareholder purchase and
redemption orders; processing transfers and exchanges of shares of the Funds on
the shareholder files and records; processing dividend payments and
reinvestments; and assistance in the mailing of shareholder reports and proxy
solicitation materials. For such services the Transfer Agent receives a fee
based on the number of shareholders of record.
In addition, BISYS Fund Services, Inc. provides certain fund
accounting services to the Funds pursuant to a Fund Accounting Agreement dated
as of March 23, 1999.
- 16 -
<PAGE> 38
Under such Agreement, BISYS Fund Services, Inc. maintains the accounting books
and records for each Fund, including journals containing an itemized daily
record of all purchases and sales of portfolio securities, all receipts and
disbursements of cash and all other debits and credits, general and auxiliary
ledgers reflecting all asset, liability, reserve, capital, income and expense
accounts, including interest accrued and interest received, and other required
separate ledger accounts; maintains a monthly trial balance of all ledger
accounts; performs certain accounting services for the Fund, including
calculation of the net asset value per share, calculation of the dividend and
capital gain distributions, if any, and of yield, reconciliation of cash
movements with the Fund's custodian, affirmation to the Fund's custodian of all
portfolio trades and cash settlements, verification and reconciliation with the
Fund's custodian of all daily trade activity; provides certain reports; obtains
dealer quotations, prices from a pricing service or matrix prices on all
portfolio securities in order to mark the portfolio to the market; and prepares
an interim balance sheet, statement of income and expense, and statement of
changes in net assets for each Fund.
AUDITORS
Arthur Andersen LLP, Boston, Massachusetts, has been selected as
independent auditors for the Funds for their current fiscal year. Arthur
Andersen LLP performs an annual audit of the Funds' financial statements and
provides other related services.
LEGAL COUNSEL
Dechert Price & Rhoads, 1775 Eye Street, N.W., Washington, D.C.
20006, is counsel to the Group.
ADDITIONAL INFORMATION
DESCRIPTION OF SHARES
The Group is a Massachusetts business trust organized on January
8, 1992. The Group's Declaration of Trust is on file with the Secretary of State
of Massachusetts. The Declaration of Trust authorizes the Board of Trustees to
issue an unlimited number of shares, which are shares of beneficial interest,
with a par value of $0.01 per share. The Group consists of several funds
organized as separate series of shares. The Group's Declaration of Trust
authorizes the Board of Trustees to divide or redivide any unissued shares of
the Group into one or more additional series by setting or changing in any one
or more respects their respective preferences, conversion or other rights,
voting powers, restrictions, limitations as to dividends, qualifications, and
terms and conditions of redemption.
Shares have no subscription or preemptive rights and only such
conversion or exchange rights as the Board of Trustees may grant in its
discretion. When issued for payment as described in the Prospectus and this
Statement of Additional Information, the Shares will be fully paid and
non-assessable. In the event of a liquidation or dissolution of the Group,
shareholders of a fund are entitled to receive the assets available for
distribution belonging to
- 17 -
<PAGE> 39
that fund, and a proportionate distribution, based upon the relative asset
values of the respective funds, of any general assets not belonging to any
particular fund which are available for distribution.
Rule 18f-2 under the 1940 Act provides that any matter required
to be submitted to the holders of the outstanding voting securities of an
investment company such as the Group shall not be deemed to have been
effectively acted upon unless approved by the holders of a majority of the
outstanding shares of each fund affected by the matter. For purposes of
determining whether the approval of a majority of the outstanding shares of a
fund will be required in connection with a matter, a fund will be deemed to be
affected by a matter unless it is clear that the interests of each fund in the
matter are identical, or that the matter does not affect any interest of the
fund. Under Rule 18f-2, the approval of an investment advisory agreement or any
change in investment policy would be acted effectively upon with respect to a
fund only if approved by a majority of the outstanding shares of such fund.
However, Rule 18f-2 also provides that the approval of principal underwriting
contracts and the election of Trustees may be effectively acted upon by
shareholders of the Group voting without regard to series.
Under Massachusetts law, shareholders, under certain
circumstances, could be held personally liable for the obligations of the Group.
However, the Declaration of Trust disclaims liability of the Shareholders,
Trustees or officers of the Group for acts or obligations of the Group, which
are binding only on the assets and property of the Group, and requires that
notice of the disclaimer be given in each contract or obligation entered into or
executed by the Group or the Trustees. The Declaration of Trust provides for
indemnification out of Group property for all loss and expense of any
shareholder held personally liable for the obligations of the Group. The risk of
a shareholder incurring financial loss on account of shareholder liability is
limited to circumstances in which the Group itself would be unable to meet its
obligations, and thus should be considered remote.
As of July 30, 1999, the Group is not aware of any Shareholder
who owns of record or beneficially 5% or more of the outstanding Shares of any
Fund.
VOTE OF A MAJORITY OF THE OUTSTANDING SHARES
As used in the Prospectus and this Statement of Additional
Information, a "vote of a majority of the outstanding Shares" of a Fund means
the affirmative vote, at a meeting of Shareholders duly called, of the lesser of
(a) 67% or more of the votes of Shareholders of that Fund present at a meeting
at which the holders of more than 50% of the votes attributable to Shareholders
of record of that Fund are represented in person or by proxy, or (b) the holders
of more than 50% of the outstanding votes of Shareholders of that Fund.
- 18 -
<PAGE> 40
ADDITIONAL TAX INFORMATION
Set forth below is a discussion of certain U.S. federal income
tax issues concerning the Funds and the purchase, ownership, and disposition of
Fund shares. This discussion does not purport to be complete or to deal with all
aspects of federal income taxation that may be relevant to Shareholders in light
of their particular circumstances. This discussion is based upon present
provisions of the Internal Revenue Code of 1986, as amended (the "Code"), the
regulations promulgated thereunder, and judicial and administrative ruling
authorities, all of which are subject to change, which change may be
retroactive. Prospective investors should consult their own tax advisors with
regard to the federal tax consequences of the purchase, ownership, or
disposition of Fund shares, as well as the tax consequences arising under the
laws of any state, foreign country, or other taxing jurisdiction.
Each of the Funds is treated as a separate entity for federal
income tax purposes and intends each year to qualify and elect to be treated as
a "regulated investment company" under the Code, for so long as such
qualification is in the best interest of that Fund's shareholders. To qualify as
a regulated investment company, each Fund must, among other things: diversify
its investments within certain prescribed limits; derive at least 90% of its
gross income from dividends, interest, payments with respect to securities
loans, and gains from the sale or other disposition of securities or foreign
currencies, or other income derived with respect to its business of investing in
such stock, securities, or currencies; and, distribute to its Shareholders at
least 90% of its investment company taxable income for the year. In general, a
Fund's investment company taxable income will be its taxable income subject to
certain adjustments and excluding the excess of any net mid-term or net
long-term capital gain for the taxable year over the net short-term capital
loss, if any, for such year.
A non-deductible 4% excise tax is imposed on regulated investment
companies that do not distribute in each calendar year (regardless of whether
they otherwise have a non-calendar taxable year) an amount equal to 98% of their
ordinary income for the calendar year plus 98% of their capital gain net income
for the one-year period ending on October 31 of such calendar year. The balance
of such income must be distributed during the next calendar year. If
distributions during a calendar year were less than the required amount, a Fund
would be subject to a non-deductible excise tax equal to 4% of the deficiency.
Although each Fund expects to qualify as a "regulated investment
company" and thus to be relieved of all or substantially all of its federal
income tax liability, depending upon the extent of its activities in states and
localities in which its offices are maintained, in which its agents or
independent contractors are located, or in which it is otherwise deemed to be
conducting business, a Fund may be subject to the tax laws of such states or
localities. In addition, if for any taxable year a Fund does not qualify for the
special tax treatment afforded regulated investment companies, all of its
taxable income will be subject to federal tax at regular corporate rates
(without any deduction for distributions to its Shareholders). In such event,
dividend distributions would be taxable to Shareholders to the extent of
earnings and profits, and would be eligible for the dividends received deduction
for corporations.
- 19 -
<PAGE> 41
It is expected that each Fund will distribute annually to
Shareholders all or substantially all of the Fund's net ordinary income and net
realized capital gains and that such distributed net ordinary income and
distributed net realized capital gains will be taxable income to Shareholders
for federal income tax purposes, even if paid in additional Shares of the Fund
and not in cash.
The excess of net long-term capital gains over short-term capital
losses realized and distributed by a Fund and designated as capital gain
dividends, whether paid in cash or reinvested in Fund shares, will be taxable to
Shareholders. Capital gain dividends will generally be taxable to Shareholders
as long-term capital gains, regardless of how long a Shareholder has held a
Fund's shares.
Each Fund may be required by federal law to withhold and remit to
the U.S. Treasury 31% of taxable dividends, if any, and capital gain
distributions to any Shareholder, and the proceeds of redemption or the values
of any exchanges of Shares of a Fund by the Shareholder, if such Shareholder (1)
fails to furnish the Group with a correct taxpayer identification number, (2)
under-reports dividend or interest income, or (3) fails to certify to the Group
that he or she is not subject to such withholding. An individual's taxpayer
identification number is his or her Social Security number.
Information as to the Federal income tax status of all
distributions will be mailed annually to each Shareholder.
MARKET DISCOUNT. If a Fund purchases a debt security at a price
lower than the stated redemption price of such debt security, the excess of the
stated redemption price over the purchase price is "market discount". If the
amount of market discount is more than a de minimis amount, a portion of such
market discount must be included as ordinary income (not capital gain) by the
Fund in each taxable year in which the Fund owns an interest in such debt
security and receives a principal payment on it. In particular, the Fund will be
required to allocate that principal payment first to the portion of the market
discount on the debt security that has accrued but has not previously been
includable in income. In general, the amount of market discount that must be
included for each period is equal to the lesser of (i) the amount of market
- 20 -
<PAGE> 42
discount accruing during such period (plus any accrued market discount for prior
periods not previously taken into account) or (ii) the amount of the principal
payment with respect to such period. Generally, market discount accrues on a
daily basis for each day the debt security is held by a Fund at a constant rate
over the time remaining to the debt security's maturity or, at the election of
the Fund, at a constant yield to maturity which takes into account the
semi-annual compounding of interest. Gain realized on the disposition of a
market discount obligation must be recognized as ordinary interest income (not
capital gain) to the extent of the "accrued market discount."
ORIGINAL ISSUE DISCOUNT. Certain debt securities acquired by a
Fund may be treated as debt securities that were originally issued at a
discount. Very generally, original issue discount is defined as the difference
between the price at which a security was issued and its stated redemption price
at maturity. Although no cash income on account of such discount is actually
received by the Fund, original issue discount that accrues on a debt security in
a given year generally is treated for federal income tax purposes as interest
and, therefore, such income would be subject to the distribution requirements
applicable to regulated investment companies. Some debt securities may be
purchased by the Fund at a discount that exceeds the original issue discount on
such debt securities, if any. This additional discount represents market
discount for federal income tax purposes (see above).
OPTIONS, FUTURES AND FORWARD CONTRACTS. Any regulated futures
contracts and certain options (namely, nonequity options and dealer equity
options) in which a Fund may invest may be "section 1256 contracts." Gains (or
losses) on these contracts generally are considered to be 60% long-term and 40%
short-term capital gains or losses. Also, section 1256 contracts held by the
Fund at the end of each taxable year (and on certain other dates prescribed in
the Code) are "marked to market" with the result that unrealized gains or losses
are treated as though they were realized.
Transactions in options, futures and forward contracts undertaken
by a Fund may result in "straddles" for federal income tax purposes. The
straddle rules may affect the character of gains (or losses) realized by the
Fund, and losses realized by the Fund on positions that are part of a straddle
may be deferred under the straddle rules, rather than being taken into account
in calculating the taxable income for the taxable year in which the losses are
realized. In addition, certain carrying charges (including interest expense)
associated with positions in a straddle may be required to be capitalized rather
than deducted currently. Certain elections that a Fund may make with respect to
its straddle positions may also affect the amount, character and timing of the
recognition of gains or losses from the affected positions.
Because only a few regulations implementing the straddle rules
have been promulgated, the consequences of such transactions to a Fund are not
entirely clear. The straddle rules may increase the amount of short-term capital
gain realized by the Fund, which is taxed as ordinary income when distributed to
Shareholders. Because application of the straddle rules may affect the character
of gains or losses, defer losses and/or accelerate the recognition of gains or
losses from the affected straddle positions, the amount which must be
distributed to Shareholders
- 21 -
<PAGE> 43
as ordinary income or long-term capital gain may be increased or decreased
substantially as compared to a fund that did not engage in such transactions.
CONSTRUCTIVE SALES. Under certain circumstances, a Fund may
recognize gain from the constructive sale of an appreciated financial position.
If a Fund enters into certain transactions in property while holding
substantially identical property, the Fund would be treated as if it had sold
and immediately repurchased the property and would be taxed on any gain (but not
loss) from the constructive sale. The character of gain from a constructive sale
would depend upon the Fund's holding period in the property. Loss from a
constructive sale would be recognized when the property was subsequently
disposed of, and its character would depend on the Fund's holding period and the
application of various loss deferral provisions of the Code. Constructive sale
treatment does not apply to transactions closed in the 90-day period ending
with the 30th day after the close of the taxable year, if certain conditions are
met.
FOREIGN TAX CREDIT. A Fund may be subject to certain taxes
imposed by the countries in which it invests or operates. If the Fund qualifies
as a regulated investment company and if more the 50% of the value of the Fund's
total assets at the close of any taxable year consists of stocks or securities
of foreign corporations, the Fund may elect, for U.S. federal income tax
purposes, to treat any foreign taxes paid by the Fund that qualify as income or
similar taxes under U.S. income tax principles as having been paid by the Fund's
Shareholders. For any year for which the Fund makes such an election, each
Shareholder will be required to include in its gross income an amount equal to
its allocable share of such taxes paid by the Fund and the Shareholders will be
entitled, subject to certain limitations, to credit their portions of these
amounts against their U.S. federal income tax liability, if any, or to deduct
their portions from their U.S. taxable income, if any. No deduction for foreign
taxes may be claimed by individuals who do not itemize deductions. In any year
in which it elects to "pass through" foreign taxes to Shareholders, the Fund
will notify Shareholders within 60 days after the close of the Fund's taxable
year of the amount of such taxes and the sources of its income.
Generally, a credit for foreign taxes paid or accrued is subject
to the limitation that it may not exceed the Shareholder's U.S. tax attributable
to his or her total foreign source taxable income. For this purpose, the source
of a Fund's income flows through to its shareholders. Gains from the sale of
securities may have to be treated as derived from U.S. sources and certain
currency fluctuation gains, including Section 988 gains (defined below), may
have to be treated as derived from U.S. sources. The limitation of the foreign
tax credit is applied separately to foreign source passive income, including
foreign source passive income received from a Fund. Shareholders may be unable
to claim a credit for the full amount of their proportionate share of the
foreign taxes paid by the Fund. The foreign tax credit can be applied to offset
no more than 90% of the alternative minimum tax imposed on corporations and
individuals.
The foregoing is only a general description of the foreign tax
credit. Because application of the credit depends on the particular
circumstances of each shareholder, Shareholders are advised to consult their own
tax advisers.
SECTION 988 GAINS OR LOSSES. Gains or losses attributable to
fluctuations in exchange rates which occur between the time a Fund accrues
income or other receivables or accrues expenses or other liabilities denominated
in a foreign currency and the time the Fund actually collects such receivables
or pays such liabilities generally are treated as ordinary income or ordinary
loss. Similarly, on disposition of some investments, including debt securities
and certain forward contracts denominated in a foreign currency, gains or losses
attributable to fluctuations in the value of the foreign currency between the
acquisition and disposition of the position also are treated as ordinary gain or
loss. These gains and losses, referred to under the Code as "section 988" gains
or losses, increase or decrease the amount of the Fund's investment company
taxable income available to be distributed to its Shareholders as ordinary
income. If section 988 losses exceed other investment company taxable income
during a taxable year, the Fund would not be able to make any ordinary dividend
distributions, or distributions made before the losses were realized would be
recharacterized as a return of capital to Shareholders, rather than as an
ordinary dividend, reducing each Shareholder's basis in his or her Fund shares.
PASSIVE FOREIGN INVESTMENT COMPANIES. A Fund may invest in shares
of foreign corporations that may be classified under the Code as passive foreign
investment companies ("PFICs"). In general, a foreign corporation is classified
as a PFIC if at least one-half of its assets constitute investment-type assets,
or 75% or more of its gross income is investment-type income. If a Fund receives
a so-called "excess distribution" with respect to PFIC stock, the Fund itself
may be subject to a tax on a portion of the excess distribution, whether or not
the corresponding income is distributed by the Fund to Shareholders. In general,
under the PFIC rules, an excess distribution is treated as having been realized
ratably over the period during which the Fund held the PFIC shares. The Fund
will itself be subject to tax on the portion, if any, of an excess distribution
that is so allocated to prior Fund taxable years and an interest factor will be
added to the tax, as if the tax had been payable in such prior taxable years.
Certain distributions from a PFIC as well as gain from the sale of PFIC shares
are treated as excess distributions. Excess distributions are characterized as
ordinary income even though, absent application of the PFIC rules, certain
excess distributions might have been classified as capital gain.
- 22 -
<PAGE> 44
A Fund may be eligible to elect alternative tax treatment with
respect to PFIC shares. Under an election that currently is available in some
circumstances, a Fund would be required to include in its gross income its share
of the earnings of a PFIC on a current basis, regardless of whether
distributions were received from the PFIC in a given year. If this election were
made, the special rules, discussed above, relating to the taxation of excess
distributions, would not apply. In addition, another election would involve
marking to market the Fund's PFIC shares at the end of each taxable year, with
the result that unrealized gains would be treated as though they were realized
and reported as ordinary income. Any mark-to-market losses and any loss from an
actual disposition of PFIC shares would be deductible as ordinary losses to the
extent of any net mark-to-market gains included in income in prior years.
YIELD
Yields of the Funds will be computed by annualizing net
investment income per share for a recent 30-day period and dividing that amount
by a Fund share's maximum offering price (reduced by any undeclared earned
income expected to be paid shortly as a dividend) on the last trading day of
that period. Net investment income will reflect amortization of any market value
premium or discount of fixed income securities (except for obligations backed by
mortgages or other assets) and may include recognition of a pro rata portion of
the stated dividend rate of dividend paying portfolio securities. The yield will
vary from time to time depending upon market conditions, the composition of the
particular Fund's portfolio and operating expenses of the Group allocated to
each Fund. These factors and possible differences in the methods used in
calculating yield should be considered when comparing a Fund's yield to yields
published for other investment companies and other investment vehicles. Yield
should also be considered relative to changes in the value of a Fund's Shares
and to the relative risks associated with the investment objectives and policies
of each of the Funds.
CALCULATION OF TOTAL RETURN
Average annual total return is a measure of the change in value
of an investment in a Fund over the period covered, which assumes any dividends
or capital gains distributions are reinvested in the Fund immediately rather
than paid to the investor in cash. Average annual total return will be
calculated by: (1) adding to the total number of Shares purchased by a
hypothetical $1,000 investment in that Fund all additional Shares which would
have been purchased if all dividends and distributions paid or distributed
during the period had been immediately reinvested; (2) calculating the value of
the hypothetical initial investment of $1,000 as of the end of the period by
multiplying the total number of Shares owned at the end of the period by the net
asset value per share on the last trading day of the period; (3) assuming
redemption at the end of the period; and (4) dividing this account value for the
hypothetical investor by the initial $1,000 investment and annualizing the
result for periods of less than one year.
- 23 -
<PAGE> 45
PERFORMANCE COMPARISONS
Investors may judge the performance of the Funds by comparing
them to the performance of other mutual funds or mutual fund portfolios with
comparable investment objectives and policies through various mutual fund or
market indices such as those prepared by Dow Jones & Co., Inc. and Standard &
Poor's Corporation and to data prepared by Lipper Analytical Services, Inc., a
widely recognized independent service which monitors the performance of mutual
funds. Comparisons may also be made to indices or data published in Money
Magazine, Forbes, Barron's, The Wall Street Journal, Morningstar, Inc., Ibbotson
Associates, CDA/Wiesenberger, The New York Times, Business Week, U.S.A. Today
and local periodicals. In addition to performance information, general
information about these Funds that appears in a publication such as those
mentioned above may be included in advertisements, sales literature and reports
to shareholders. The Funds may also include in advertisements and reports to
shareholders information discussing the performance of the Adviser in comparison
to other investment advisers.
From time to time, the Group may include the following types of
information in advertisements, supplemental sales literature and reports to
Shareholders: (1) discussions of general economic or financial principles (such
as the effects of inflation, the power of compounding and the benefits of dollar
cost averaging); (2) discussions of general economic trends; (3) presentations
of statistical data to supplement such discussions; (4) descriptions of past or
anticipated portfolio holdings for one or more of the Funds within the Group;
(5) descriptions of investment strategies for one or more of such Funds; (6)
descriptions or comparisons of various investment products, which may or may not
include the Funds; (7) comparisons of investment products (including the Funds)
with relevant market or industry indices or other appropriate benchmarks; (8)
discussions of fund rankings or ratings by recognized rating organizations; and
(9) testimonials describing the experience of persons that have invested in one
or more of the Funds. The Group may also include calculations, such as
hypothetical compounding examples, which describe hypothetical investment
results in such communications. Such performance examples must state clearly
that they are based on an express set of assumptions and are not indicative of
the performance of any Fund.
Current yields or total return will fluctuate from time to time
and may not be representative of future results. Accordingly, a Fund's yield or
total return may not provide for comparison with bank deposits or other
investments that pay a fixed return for a stated period of time. Yield and total
return are functions of a Fund's quality, composition and maturity, as well as
expenses allocated to such Fund.
MISCELLANEOUS
Individual Trustees are generally elected by the Shareholders
and, subject to removal by the vote of two-thirds of the Board of Trustees,
serve for a term lasting until the next meeting of shareholders at which
Trustees are elected. Such meetings are not required to be held at any specific
intervals.
- 24 -
<PAGE> 46
The Group is registered with the Commission as an investment
management company. Such registration does not involve supervision by the
Commission of the management or policies of the Group.
The Prospectus and this Statement of Additional Information are
not an offering of the securities herein described in any state in which such
offering may not lawfully be made. No salesperson, dealer, or other person is
authorized to give any information or make any representation other than those
contained in the Prospectuses and this Statement of Additional Information.
- 25 -
<PAGE> 47
PART C
-----------
OTHER INFORMATION
-----------------
ITEM 23. EXHIBITS
(a)(1) Declaration of Trust(1)
(a)(2) Establishment and Designation of Series of Shares
(Walden/BBT Domestic Social Index Fund and Walden/BBT
International Social Index Fund)
(b) By-Laws(2)
(c) Certificates for Shares are not issued. Articles IV,
V, VI and VII of the Declaration of Trust, previously
filed as Exhibit (a) hereto, define rights of holders
of Shares(1)
(d) Investment Advisory Agreement between Registrant and
United States Trust Company of Boston
(e) Distribution Agreement between Registrant and BISYS
Fund Services
(f) Not Applicable
(g) Custody Agreement between Registrant and The Fifth
Third Bank
(h)(1) Management and Administration Agreement between the
Registrant and BISYS Fund Services
(h)(2) Fund Accounting Agreement between the Registrant and
BISYS Fund Services Ohio, Inc.
(h)(3) Transfer Agency Agreement between the Registrant and
BISYS Fund Services Ohio, Inc.
(h)(4) Expense Limitation Agreement between the Registrant
and United States Trust Company of Boston
(i) Not Applicable
(j) Not Applicable
(k) Not Applicable
C-1
<PAGE> 48
(l) Not Applicable
(m) Not Applicable
(n) Not Applicable
(o) Not Applicable
__________________
1. Filed with initial Registration Statement on January 8, 1992.
2. Filed with Post-Effective Amendment No. 2 on September 4, 1992.
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
Not applicable.
ITEM 25. INDEMNIFICATION
Article IV of the Registrant's Declaration of Trust states
as follows:
SECTION 4.3. MANDATORY INDEMNIFICATION.
(a) Subject to the exceptions and limitations contained
in paragraph
(b) below:
(i) every person who is, or has been, a Trustee
or officer of the Trust shall be indemnified
by the Trust to the fullest extent permitted
by law against all liability and against all
expenses reasonably incurred or paid by him
in connection with any claim, action, suit
or proceeding in which he becomes involved
as a party or otherwise by virtue of his
being or having been a Trustee or officer
and against amounts paid or incurred by him
in the settlement thereof; and (ii) the
words "claim," "action," "suit," or
"proceeding" shall apply to all claims,
actions, suits or proceedings (civil,
criminal, administrative or other, including
appeals), actual or threatened; and the
words "liability" and "expenses" shall
include, without limitation, attorneys fees,
costs, judgments, amounts paid in
settlement, fines, penalties and other
liabilities.
(b) No indemnification shall be
provided hereunder to a Trustee or
officer:
(i) against any liability to the
Trust, a Series thereof, or the
Shareholders by reason of a final
adjudication by a court or other
body before which a proceeding was
brought
C-2
<PAGE> 49
that he engaged in willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties
involved in the conduct of his office;
(ii) with respect to any matter as to which he shall
have been finally adjudicated not to have acted in
good faith in the reasonable belief that his action
was in the best interest of the Trust; or
(iii) in the event of a settlement or other
disposition not involving a final adjudication as
provided in paragraph (b)(i) or (b)(ii) resulting in
a payment by a Trustee or officer, unless there has
been a determination that such Trustee or officer did
not engage in willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties
involved in the conduct of his office:
(A) by the court or other body approving the
settlement or other disposition; or (B)
based upon a review of readily available
facts (as opposed to a full trial-type
inquiry) by (1) vote of a majority of the
Disinterested Trustees acting on the matter
(provided that a majority of the
Disinterested Trustees then in office acts
on the matter) or (2) written opinion of
independent legal counsel.
(c) The rights of indemnification herein provided may be insured
against by policies maintained by the Trust, shall be severable, shall
not affect any other rights to which any Trustee or officer may now or
hereafter be entitled, shall continue as to a person who has ceased to
be such Trustee or officer and shall inure to the benefit of the heirs,
executors, administrators and assigns of such person. Nothing contained
herein shall affect any rights to indemnification to which personnel of
the Trust other than Trustees and officers may be entitled by contract
or otherwise under law.
(d) Expenses of preparation and presentation of a defense to any claim,
action, suit or proceeding of the character described in paragraph (a)
of this Section 4.3 may be advanced by the Trust prior to final
disposition thereof upon receipt of an undertaking by or on behalf of
the recipient to repay such amount if it is ultimately determined that
he is not entitled to indemnification under this Section 4.3, provided
that either:
(i) such undertaking is secured by a surety bond or some other
appropriate security provided by the recipient, or the Trust
shall be insured against losses arising out of any such
advances; or
(ii) a majority of the Disinterested Trustees acting on the
matter
C-3
<PAGE> 50
(provided that a majority of the Disinterested Trustees acts
on the matter) or an independent legal counsel in a written
opinion shall determine, based upon a review of readily
available facts (as opposed to a full trial-type inquiry),
that there is reason to believe that the recipient ultimately
will be found entitled to indemnification.
As used in this Section 4.3, a "Disinterested Trustee" is one who is
not (i) an Interested Person of the Trust (including anyone who has
been exempted from being an Interested Person by any rule, regulation
or order of the Commission), or (ii) involved in the claim, action,
suit or proceeding.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to trustees, officers
and controlling persons of the Registrant by the Registrant
pursuant to the Declaration of Trust or otherwise, the
Registrant is aware that in the opinion of the Securities and
Exchange Commission, such indemnification is against public
policy as expressed in the Act, and therefore, is
unenforceable. In the event that a claim for indemnification
against such liabilities controlling persons of the Registrant
in connection with the successful defense of any act, suit or
proceeding) is asserted by such trustees, officers or
controlling persons in connection with the shares being
registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final
adjudication of such issues.
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER AND
THEIR OFFICERS AND DIRECTORS
Incorporated by reference to the responses in the current
Form 10-K of UST Corp., on file with the Commission.
ITEM 27. PRINCIPAL UNDERWRITER
(a) BISYS Fund Services, Limited Partnership ("BISYS Fund
Services") acts as distributor for Registrant. BISYS
Fund Services also distributes the securities of
Alpine Equity Trust, American Performance Funds, the
AmSouth Mutual Funds, The BB&T Mutual Funds Group,
ESC Strategic Funds, Inc., The Eureka Funds, Fifth
Third Funds, Governor Funds, Gradison Custodian
Trust, Gradison Growth Trust, Gradison-McDonald Cash
Reserves Trust, Gradison-McDonald Municipal Custodian
Trust, Hirtle Callaghan Trust, HSBC Funds Trust, HSBC
Mutual Funds Trust, INTRUST Funds Trust, The Infinity
Mutual Funds, Inc., The Kent Funds, Magna Funds, MMA
Praxis Mutual Funds, Mercantile Mutual Funds, Inc.,
Meyers Investment Trust, M.S.D.&T Funds, Pacific
Capital Funds, The Parkstone Advantage Fund, Puget
Sound Alternative Investment Series Trust, The
Republic Funds Trust, The Republic Advisors Funds
C-4
<PAGE> 51
Trust, Sefton Funds Trust, SSgA International Liquidity Fund,
Summit Investment Trust, Variable Insurance Funds, The Victory
Portfolios, The Victory Variable Insurance Funds and The
Vintage Mutual Funds, Inc.
(b) Partners of BISYS Fund Services, as of July 30, 1999,
were as follows:
<TABLE>
<CAPTION>
Name and Principal Business Position and Offices with Underwriter Positions and Offices with Registrant
Address
<S> <C> <C>
BISYS Fund Services, Inc. Sole General Partner None
3435 Stelzer Road
Columbus, Ohio 43219
WC Subsidiary Corporation Sole Limited Partner None
150 Clove Road
Little Falls, New Jersey 07424
</TABLE>
(c) Not Applicable.
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS
(a) The accounts, books, and other documents required to
be maintained by Registrant pursuant to Section 31(a)
of the Investment Company Act of 1940 and rules
promulgated thereunder are in the possession of
United States Trust Company of Boston (records
relating to its function as investment adviser);
BISYS Fund Services, 3435 Stelzer Road, Columbus,
Ohio 43219 (records relating to its functions as
general manager, transfer agent, administrator and
distributor).
ITEM 29. MANAGEMENT SERVICES
Not Applicable.
ITEM 30. UNDERTAKINGS.
None
C-5
<PAGE> 52
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this
Post-Effective Amendment No. 55 to its Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Washington in the District of Columbia on the 30th day of July, 1999.
THE COVENTRY GROUP
By: /s/ Walter B. Grimm
---------------------
Walter B. Grimm
By: /s/ Jeffrey L. Steele
--------------------------
Jeffrey L. Steele, as attorney-in-fact
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated:
<TABLE>
<CAPTION>
Signature Title Date
- ----------- ------ ------
<S> <C> <C>
/s/Walter B. Grimm Chairman, President and Trustee July 30, 1999
- ------------------------
Walter B. Grimm** (Principal Executive Officer)
/s/ John H. Ferring IV Trustee July 30, 1999
- ------------------------
John H. Ferring IV***
/s/ Maurice G. Stark Trustee July 30, 1999
- ------------------------
Maurice G. Stark*
/s/ Michael M. Van Buskirk Trustee July 30, 1999
- ------------------------
Michael M. Van Buskirk*
/s/ Gary R. Tenkman Treasurer (Principal July 30, 1999
- ------------------------
Gary R. Tenkman**** Financial and Accounting Officer)
</TABLE>
By: /s/ Jeffrey L. Steele
--------------------------------------
Jeffrey L. Steele, as attorney-in-fact
* Pursuant to power of attorney filed with Pre-Effective Amendment
No. 3 on April 6, 1992.
** Pursuant to power of attorney filed with Post-Effective Amendment
No. 26 on May 1, 1996.
*** Pursuant to power of attorney filed with Post-Effective Amendment
No. 39 on July 31, 1998.
**** Pursuant to power of attorney filed with Post-Effective Amendment
No. 46 on May 14, 1999.
C-6
<PAGE> 1
Exhibit 99(a)(2)
THE COVENTRY GROUP
Establishment and Designation of Two Series of Shares
of Beneficial Interest, Par Value $0.01 Per Share
RESOLVED, that pursuant to Section 5.11 of the Declaration of Trust of The
Coventry Group (the "Trust") dated January 8, 1992, Declaration"), four separate
series of the shares of beneficial interest of the Trust shall hereby be
established, relating to the Trust's new investment portfolios (the "Funds");
FURTHER RESOLVED, that the Funds shall have the following special and
relative rights.
1. The Funds shall be designated: "Walden/BBT Domestic Social Index Fund"
and "Walden/BBT International Social Index Fund."
2. The Funds shall be authorized to invest in cash, securities, instruments
and other property as from time to time described in each Fund's then currently
effective prospectus and registration statement under the Securities Act of
1933. Each share of beneficial interest of a Fund ("Share") shall be redeemable,
shall be entitles to one vote (or fraction thereof in respect of a fractional
Share) on matters on which Shares of a Fund shall be entitled to vote, shall
represent a pro rata beneficial interest in the assets allocated to a Fund, and
shall be entitled to receive its pro rata share of net assets of the Fund upon
liquidation of the Fund, all as provided in the Declaration.
3. Shareholders of each series of shares of the Trust shall vote separately
as a class on any matter, except, consistent with the Investment Company Act of
1940, as amended ("the Act"), and the rules thereunder, and the Trust's
registration statement, with respect to (i) the election of Trustees, (ii) any
amendment of the Declaration, unless the amendment affects fewer than all
classes of shares, in which case only shareholders of the affected classes shall
vote, and (iii) ratification of the selection of auditors. In each case of
separate voting, the Trustees shall determine whether, for the matter to be
effectively acted upon within the meaning of Rule 18f-2 under the Act (or any
successor rule) as to a series, the applicable percentage (as specified in the
Declaration, or the Act and the rules thereunder) of the shares of that series
alone must be voted in favor of the matter, or whether the favorable vote of
such applicable percentage of the shares of each series entitled to vote on the
matter is required.
4. The assets and liabilities of the Trust shall be allocated among the
series of the Trust as set forth in Section 5.11(d) of the Declaration.
5. The Trustees shall have the right at any time and from time to time to
reallocate assets and expenses or to change the designation of the Funds hereby
created, or to otherwise change the special and relative rights of each such
Fund, provided that such change shall not adversely affect the rights of the
Shareholders of each such Fund.
<PAGE> 2
IN WITNESS WHEREOF, the undersigned have executed this instrument this 20th
day of May, 1999.
/s/ Walter B. Grimm
------------------------------
Walter B. Grimm
/s/ Maurice G. Stark
------------------------------
Maurice G. Stark
/s/ Michael M. Van Buskirk
------------------------------
Michael M. Van Buskirk
/s/ John H. Ferring IV
------------------------------
John H. Ferring IV
<PAGE> 1
Exhibit 99(d)
INVESTMENT ADVISORY AGREEMENT
This Agreement is made as of March 23, 1999 between THE COVENTRY GROUP,
a Massachusetts business trust (the "Trust"), and United States Trust Company of
Boston, a Massachusetts chartered banking and trust company (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
<PAGE> 2
(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 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 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;
2
<PAGE> 3
(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, state or federal, 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 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, or select others to maintain on its behalf,
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;
3
<PAGE> 4
(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 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.
4
<PAGE> 5
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.
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 June 1, 2001.
Thereafter, if not terminated, this Agreement shall continue in effect
as to a particular Fund for successive periods of twelve months each ending on
June 1st 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 "Boston
Trust/Walden" 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 "Boston Trust" 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
"Boston Trust/Walden" in any form or
5
<PAGE> 6
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.
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:
-------------------------
UNITED STATES TRUST
COMPANY OF BOSTON
By
-----------------------------
Name:
--------------------------
Title:
-------------------------
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<PAGE> 7
Dated: March 23, 1999
Schedule A
to the
Investment Advisory Agreement
between The Coventry Group and
United States Trust Company of Boston dated March 23, 1999
NAME OF FUND COMPENSATION(1)
- ------------ ---------------
Boston Trust Balanced Fund .75 % of average daily net assets
Boston Trust Equity Fund .75 % of average daily net assets
Walden Social Equity Fund .75 % of average daily net assets
Walden Social Balanced Fund .75 % of average daily net assets
Walden/BBT International Social Index .50 % of average daily net assets
Fund
Walden/BBT Domestic Social Index Fund .50 % of average daily net assets
THE COVENTRY GROUP UNITED STATES TRUST COMPANY OF BOSTON
By By
----------------------------- -----------------------------
Name: Name:
-------------------------- --------------------------
Title: Title:
------------------------- -------------------------
- --------
1. All Fees are computed daily and paid monthly.
7
<PAGE> 1
Exhibit 99(e)
DISTRIBUTION AGREEMENT
This Agreement is made this March 23, 1999, between The Coventry Group,
a Massachusetts business trust (the "Trust"), 3435 Stelzer Road, Columbus, Ohio
43219, and BISYS Fund Services Limited Partnership d/b/a BISYS Fund Services, an
Ohio limited partnership ("Distributor"), 3435 Stelzer Road, Columbus, Ohio
43219.
WHEREAS, the Trust is an open-end management investment company,
organized as a Massachusetts business trust and registered with the Securities
and Exchange Commission (the "Commission") under the Investment Company Act of
1940, as amended (the "1940 Act"); and
WHEREAS, it is intended that Distributor act as the distributor of the
units of beneficial interest ("Shares") of each of the investment portfolios of
the Trust identified on Schedule A hereto as such Schedule may be amended from
time to time (such portfolios being referred to individually as a "Fund" and
collectively as the "Funds").
NOW, THEREFORE, in consideration of the mutual premises and covenants
herein set forth, the parties agree as follows:
1. SERVICES AS DISTRIBUTOR.
1.1 Distributor will act as agent for the distribution of the Shares
covered by the registration statement and prospectus of the Trust then in effect
under the Securities Act of 1933, as amended ("1933 Act"). As used in this
Agreement, the term "registration statement" shall mean Parts A (the prospectus)
, B (the Statement of Additional Information) and C of each registration
statement that is filed on Form N-1A, or any successor thereto, with the
commission, together with any amendments thereto. The term "prospectus" shall
mean each form of prospectus and Statement of Additional Information used by the
Funds for delivery to shareholders and prospective shareholders after the
effective dates of the above referenced registration statements, together with
any amendments and supplements thereto.
1.2 Distributor agrees to use appropriate efforts to solicit orders for
the sale of the Shares and will undertake such advertising and promotion as it
believes reasonable in connection with such solicitation. The Trust understands
that Distributor is now and, in the future, may be the distributor of the shares
of several investment companies or series (together, "Companies") including
Companies having investment objectives similar to those of the Trust. The Trust
further understands that investors and potential investors in the Trust may
invest in shares of such other companies. The Trust agrees that Distributor's
duties to such Companies shall not be deemed in conflict with its duties to the
Trust under this paragraph 1.2.
Except as provided in Section 2 herein, Distributor shall, at its own
expense, finance appropriate activities which it deems reasonable which are
primarily intended to result in the sale of the Shares, including, but not
limited to, advertising, compensation of underwriters, dealers and sales
personnel, the printing and mailing of prospectuses to other than current
Shareholders, and the printing and mailing of sales literature.
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<PAGE> 2
1.3 In its capacity as distributor of the Shares, all activities of
Distributor and its partners, agents, and employees shall comply with all
applicable laws, rules and regulations, including, without limitation, the 1940
Act, all rules and regulations promulgated by the Commission thereunder and all
rules and regulations adopted by any securities association registered under the
Securities Exchange Act of 1934.
1.4 Distributor will provide one or more persons, during normal
business hours, to respond to telephone questions with respect to the Trust.
1.5 Distributor will transmit any orders received by it for purchase
or redemption of the Shares to the transfer agent and custodian for the Funds.
1.6 Whenever in their judgment such action is warranted by unusual
market, economic or political conditions, or by abnormal circumstances of any
kind, the Trust's officers may decline to accept any orders for, or make any
sales of, the Shares until such time as those officers deem it advisable to
accept such orders and to make such sales.
1.7 Distributor will act only on its own behalf as principal if it
chooses to enter into selling agreements with selected dealers or others.
1.8 The Trust agrees at its own expense to execute any and all
documents and to furnish any and all information and otherwise to take all
actions that may be reasonably necessary in connection with the qualification of
the Shares for sale in such states as Distributor may designate.
1.9 The Trust shall furnish from time to time, for use in connection
with the sale of the Shares, such information with respect to the Funds and the
Shares as Distributor may reasonably request; and the Trust warrants that the
statements contained in any such information shall fairly show or represent what
they purport to show or represent. The Trust shall also furnish Distributor upon
request with: (a) unaudited semi-annual statements of the Funds' books and
accounts prepared by the Trust, (b) a monthly itemized list of the securities in
the Funds, (c) monthly balance sheets as soon as practicable after the end of
each month, and (d) from time to time such additional information regarding the
financial condition of the Funds as Distributor may reasonably request. The
Distributor shall furnish such records of its activities with respect to the
Funds to the Trust as the Trust may reasonably request.
1.10 The Trust represents to Distributor that, with respect to the
Shares, all registration statements and prospectuses filed by the Trust with the
commission under the 1933 Act have been carefully prepared in conformity with
the requirements of said Act and rules and regulations of the Commission
thereunder and all statements of fact contained in any such registration
statement and prospectus will be true and correct when such registration
statement becomes effective. Furthermore, neither any registration statement nor
any prospectus when such registration statement becomes effective includes an
untrue statement of a material fact or omits to state a material fact required
to be stated therein or necessary to make the statements therein
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<PAGE> 3
not misleading to a purchaser of the Shares. The Trust may, but shall not be
obligated to, propose from time to time such amendment or amendments to any
registration statement and such supplement or supplements to any prospectus as,
in the light of future developments, may, in the opinion of the Trust's counsel,
be necessary or advisable. If the Trust shall not propose such amendment or
amendments and/or supplement or supplements within fifteen days after receipt by
the Trust of a written request from Distributor to do so, Distributor may, at
its option, terminate this Agreement. The Trust shall not file any amendment to
any registration statement or supplement to any prospectus without giving
Distributor reasonable notice thereof in advance; provided, however, that
nothing contained in this Agreement shall in any way limit the Trust's right to
file at any time such amendments to any registration statement and/or
supplements to any prospectus, of whatever character, as the Trust may deem
advisable, such right being in all respects absolute and unconditional.
1.11 The Trust authorizes Distributor and dealers to use any
prospectus in the form furnished from time to time in connection with the sale
of the Shares. The Trust agrees to indemnify, defend and hold Distributor, its
several partners and employees, and any person who controls Distributor within
the meaning of Section 15 of the 1933 Act free and harmless from and against any
and all claims, demands, liabilities and expenses (including the cost of
investigating or defending such claims, demands or liabilities and any counsel
fees incurred in connection therewith) which Distributor, its partners and
employees, or any such controlling person, may incur under the 1933 Act or under
common law or otherwise, arising out of ' or based upon any untrue statement, or
alleged untrue statement, of a material fact contained in any registration
statement or any prospectus or arising out of or based upon any omission, or
alleged omission, to state a material fact required to be stated in either any
registration statement or any prospectus or necessary to make the statements in
either thereof not misleading; provided, however, that the Trust's agreement to
indemnify Distributor, its partners or employees, and any such controlling
person shall not be deemed to cover any claims, demands, liabilities or expenses
arising out of any statements or representations as are contained in any
prospectus and in such financial and other statements as are furnished in
writing to the Trust by Distributor and used in the answers to the registration
statement or in the corresponding statements made in the prospectus, or arising
out of or based upon any omission or alleged omission to state a material fact
in connection with the giving of such information required to be stated in such
answers or necessary to make the answers not misleading; and further provided
that the Trust's agreement to indemnify Distributor and the Trust's
representations and warranties hereinbefore set forth in paragraph 1.10 shall
not be deemed to cover any liability to the Trust or its Shareholders to which
Distributor would otherwise be subject by reason of willful misfeasance, bad
faith or negligence in the performance of its duties, or by reason of
Distributor's reckless disregard of its obligations and duties under this
Agreement. The Trust's agreement to indemnify Distributor., its partners and
employees, and any such controlling person, as aforesaid, is expressly
conditioned upon the Trust's being notified of any action brought against
Distributor, its partners or employees, or any such controlling person, such
notification to be given by letter or by telegram addressed to the Trust at its
principal office in Columbus, Ohio and sent to the Trust by the person against
whom such action is brought, within 10 days after the summons or other first
legal process shall have been served. The failure to so notify the Trust of any
such action shall not relieve the Trust from any liability which the Trust may
have to the person against whom
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<PAGE> 4
such action is brought by reason of any such untrue, or allegedly untrue,
statement or omission, or alleged omission, otherwise than on account of the
Trust's indemnity agreement contained in this paragraph 1.11. The Trust will be
entitled to assume the defense of any suit brought to enforce any such claim,
demand or liability, but, in such case, such defense shall be conducted by
counsel of good standing chosen by the Trust and approved by Distributor, which
approval shall not be unreasonably withheld. In the event the Trust elects to
assume the defense of any such suit and retain counsel of good standing approved
by Distributor, the defendant or defendants in such suit shall bear the fees and
expenses of any additional counsel retained by any of them; but in case the
Trust does not elect to assume the defense of any such suit, or in case
Distributor reasonably does not approve of counsel chosen by the Trust, the
Trust will reimburse Distributor, its partners and employees, or the controlling
person or persons named as defendant or defendants in such suit, for the fees
and expenses of any counsel retained by Distributor or them. The Trust's
indemnification agreement contained in this paragraph 1.11 and the Trust's
representations and warranties in this Agreement shall remain operative and in
full force and effect regardless of any investigation made by or on behalf of
Distributor, its partners and employees, or any controlling person, and shall
survive the delivery of any Shares.
This agreement of indemnity will inure exclusively to Distributor's
benefit, to the benefit of its several partners and employees, and their
respective estates, and to the benefit of the controlling persons and their
successors. The Trust agrees promptly to notify Distributor of the commencement
of any litigation or proceedings against the Trust or any of its officers or
Trustees in connection with the issue and sale of any Shares.
1.12 Distributor agrees to indemnify, defend and hold the Trust, its
several officers and Trustees and any person who controls the Trust within the
meaning of Section 15 of the 1933 Act free and harmless from and against any and
all claims, demands, liabilities and expenses (including the costs of
investigating or defending such claims, demands or liabilities and any counsel
fees incurred in connection therewith) which the Trust, its officers or Trustees
or any such controlling person, may incur under the 1933 Act or under common law
or otherwise, but only to the extent that such liability or expense incurred by
the Trust, its officers or Trustees or such controlling person resulting from
such claims or demands, shall arise out of or be based upon any untrue, or
alleged untrue, statement of a material fact contained in information furnished
in writing by Distributor to the Trust and used in the answers to any of the
items of the registration statement or in the corresponding statements made in
the prospectus, or shall arise out of or be based upon any omission, or alleged
omission, to state a material fact in connection with such information furnished
in writing by Distributor to the Trust required to be stated in such answers or
necessary to make such information not misleading. Distributor's agreement to
indemnify the Trust, its officers and Trustees, and any such controlling person,
as aforesaid, is expressly conditioned upon Distributor's being notified of any
action brought against the Trust, its officers or Trustees, or any such
controlling person, such notification to be given by letter or telegram
addressed to Distributor at its principal office in Columbus, Ohio, and sent to
Distributor by the person against whom such action is brought, within 10 days
after the summons or other first legal process shall have been served.
Distributor shall have the right of first control of the defense of such action,
with counsel of its own choosing, satisfactory to the Trust, if such action is
based solely upon such alleged misstatement or omission on Distributor's part,
and in
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<PAGE> 5
any other event the Trust, its officers or Trustees or such controlling person
shall each have the right to participate in the defense or preparation of the
defense of any such action. The failure to so notify Distributor of any such
action shall not relieve Distributor from any liability which Distributor may
have to the Trust, its officers or Trustees, or to such controlling person by
reason of any such untrue or alleged untrue statement, or omission or alleged
omission, otherwise than on account of Distributor's indemnity agreement
contained in this paragraph 1.12.
1.13 No Shares shall be offered by either Distributor or the Trust
under any of the provisions of this Agreement and no orders for the purchase or
sale of Shares hereunder shall be accepted by the Trust if and so long as the
effectiveness of the registration statement then in effect or any necessary
amendments thereto shall be suspended under any of the provisions of the 1933
Act or if and so long as a current prospectus as required by Section 10(a) of
said Act is not on file with the Commission; provided, however, that nothing
contained in this paragraph 1.13 shall in any way restrict or have an
application to or bearing upon the Trust's obligation to repurchase Shares from
any Shareholder in accordance with the provisions of the Trust's prospectus,
Declaration of Trust, or By-Laws.
1.14 The Trust agrees to advise Distributor as soon as reasonably
practical by a notice in writing delivered to Distributor or its counsel:
(a) of any request by the Commission for amendments to the
registration statement or prospectus then in effect or for additional
information;
(b) in the event of the issuance by the Commission of any
stop order suspending the effectiveness of the registration statement
or prospectus then in effect or the initiation by service of process on
the Trust of any proceeding for that purpose;
(c) of the happening of any event that makes untrue any
statement of a material fact made in the registration statement or
prospectus then in effect or which requires the making of a change in
such registration statement or prospectus in order to make the
statements therein not misleading; and
(d) of all action of the Commission with respect to any
amendment to any registration statement or prospectus which may from
time to time be filed with the Commission.
For purposes of this section, informal requests by or acts of the
Staff of the Commission shall not be deemed actions of or requests by the
Commission.
1.15 Distributor agrees on behalf of itself and its partners and
employees to treat confidentially and as proprietary information of the Trust
all records and other information relative to the Trust and its prior, present
or potential Shareholders, and not to 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
Distributor may be exposed
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<PAGE> 6
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.
1.16 This Agreement shall be governed by the laws of the State of
Massachusetts .
2. FEE.
Distributor shall receive from the Funds identified on Schedule B
hereto (the "Distribution Plan Funds") a 12b-1 fee at the rate and upon the
terms and conditions set forth in the Distribution and Shareholder Service Plan
attached as Schedule C hereto, and as amended from time to time. The 12b-1 fee
shall be accrued daily and shall be paid on the first business day of each
month, or at such time(s) as Distributor shall reasonably request.
3. SALE AND PAYMENT.
Under this Agreement, the following provisions shall apply with
respect to the sale of and payment of Shares of a Fund sold at an offering price
which includes a sales load (collectively, the "Load Shares;" individually, a
"Load Share") as described in the prospectuses of any Funds identified on
Schedule D hereto (collectively, the "Load Funds"; individually, a "Load Fund"):
(a) Distributor shall have the right, as principal, to
purchase Load Shares at their net asset value and to sell such Load
Shares to the public against orders therefor at the applicable public
offering price, as defined in Section 4 hereof. Distributor shall also
have the right, as principal, to sell Load Shares to dealers against
orders therefor at the public offering price less a concession
determined by Distributor, which concession shall not exceed the
amount of the sales charge or underwriting discount, if any, referred
to in Section 4 below.
(b) Prior to the time of delivery of any Load Shares by a
Load Fund to, or on the order of, Distributor, Distributor shall pay
or cause to be paid to the Load Fund or to its order an amount in
Boston or New York clearing house funds equal to the applicable net
asset value of such Shares. Distributor may retain so much of any
sales charge or underwriting discount as is not allowed by Distributor
as a concession to dealers.
4. PUBLIC OFFERING PRICE.
The public offering price of a Load Share shall be the net asset value
of such Load Shares, plus any applicable sales charge, all as set forth in the
current prospectus of the Load Fund. The net asset value of Shares shall be
determined in accordance with the provisions of the Declaration of Trust and
By-Laws of the Trust and the then current prospectus of the Load Fund.
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<PAGE> 7
5. ISSUANCE OF SHARES.
The Trust reserves the right to issue, transfer or sell Load Shares at
net asset value (a) in connection, with the merger or consolidation of the Trust
or the Load Fund(s) with any other investment company or the acquisition by the
Trust or the Load Fund(s) of all or substantially all of the assets or of the
outstanding Shares of any other investment company; (b) in connection with a pro
rata distribution directly to the holders of Shares in the nature of a stock
dividend or split; (c) upon the exercise of subscription rights granted to the
holders of Shares on a pro rata basis; (d) in connection with the issuance of
Load Shares pursuant to any exchange and reinvestment privileges described in
any then current prospectus of the Load Fund; and (e) otherwise in accordance
with any then current prospectus of the Load Fund.
6. TERM, DURATION AND MATTERS RELATING TO THE TRUST AS A MASSACHUSETTS
BUSINESS TRUST.
This Agreement shall become effective with respect to each Fund listed
on Schedule A hereof as of the date first set forth above (or, if a particular
Fund is not in existence on such date, on the date an amendment to Schedule A to
this Agreement relating to that Fund is executed), and, unless sooner terminated
as provided herein, shall continue in effect until June 1, 2001. Thereafter, if
not terminated as provided herein, this Agreement shall continue with respect to
a particular Fund in effect automatically for successive one-year periods ending
on June 1st of each year with respect to each of the Funds, provided such
continuance is specifically approved at least annually by (a) the Trust's Board
of Trustees or (b) by "vote of a majority of the outstanding voting securities"
(as defined below) of the Trust, provided, however, that in either event the
continuance is also approved by a majority of the Trust's Trustees who are not
parties to the Agreement or interested persons (as defined in the 1940 Act) of
any such party, by vote cast in person at a meeting called for the purpose of
voting on such approval. This Agreement is terminable without penalty, on not
less than sixty days" prior written notice, by the Trust's Board of Trustees, by
vote of a majority of the outstanding voting securities (as defined in the 1940
Act) of the Trust or by Distributor. This Agreement will also terminate
automatically in the event of its assignment (as defined in the 1940 Act).
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 the Commonwealth 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.
-7-
<PAGE> 8
BISYS FUND SERVICES THE COVENTRY GROUP
LIMITED PARTNERSHIP
By: BISYS Fund Services, Inc., By:
General Partner ---------------------
Name:
-------------------
By: Title:
--------------------- ------------------
Name:
-------------------
Title:
------------------
-8-
<PAGE> 9
Dated: March 23, 1999
Schedule A
to the
Distribution Agreement
between The Coventry Group and
BISYS Fund Services Limited Partnership
March 23, 1999
NAME OF FUND DATE
Boston Trust Balanced Fund March 23, 1999
Boston Trust Equity Fund March 23, 1999
Walden Social Equity Fund March 23 1999
Walden International Social Index Fund March 23, 1999
Walden Social Balanced Fund March 23, 1999
Walden Domestic Social Index Fund March 23, 1999
BISYS FUND SERVICES LIMITED THE COVENTRY GROUP
PARTNERSHIP
By: BISYS Fund Services, Inc.,
General Partner
By: By:
-------------------- --------------------
Name: Name:
------------------ ----------------
Title: Title:
----------------- -----------------
-9-
<PAGE> 10
Dated: March 23 1999
Schedule B
to the
Distribution Agreement
between The Coventry Group and
BISYS Fund Services Limited Partnership
March 23, 1999
NAME OF DISTRIBUTION PLAN FUND DATE
- ------------------------------ ----
*********************************** **************
*********************************** **************
*********************************** **************
BISYS FUND SERVICES LIMITED THE COVENTRY GROUP
PARTNERSHIP
By: BISYS Fund Services, Inc.,
General Partner
By: By:
-------------------- --------------------
Name: Name:
----------------- ------------------
Title: Title:
----------------- -----------------
-1-
<PAGE> 1
Exhibit 99(g)
CUSTODY AGREEMENT
THIS AGREEMENT is made as of July 1, 1999, by and between The Coventry
Group, a Massachusetts business trust, and FIFTH THIRD BANK, a banking company
organized under the laws of the State of Ohio (the "Custodian").
WITNESSETH:
WHEREAS, the Trust desires that the Securities and cash of each of the
investment portfolios identified in Exhibit A hereto (such investment portfolios
and individually referred to herein as a "Fund" and collectively as the
"Funds"), be held and administered by the Custodian pursuant to this
Agreement; and
WHEREAS, the Trust is an open-end management investment company registered
under the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Custodian represents that it is a bank having the
qualifications prescribed in Section 26(a)(i) of the 1940 Act.
NOW, THEREFORE, in consideration of the mutual agreements herein made, the
Trust and the Custodian hereby agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases, unless
the context otherwise requires, shall have the following meanings:
1.1 "AUTHORIZED PERSON" means any Officer or other person duly authorized
by resolution of the Board of Trustees to give Oral Instructions and Written
Instructions on behalf of the Trust and named in Exhibit B hereto or in such
resolutions of the Board of Trustees, certified by an Officer, as may be
received by the Custodian from time to time.
1.2 "BOARD OF TRUSTEES" shall mean the Trustees form time to time serving
under the Trust's Agreement and Declaration of Trust, dated January 8, 1992, as
from time to time amended.
1.3 "BOOK-ENTRY SYSTEM" shall mean a federal book-entry system as provided
in Subpart O of Treasury Circular No. 300,31 CFR 306, in Subpart B of 31 CFR
Part 350, or in such book-entry regulations of federal agencies as are
substantially in the form of such Subpart O.
1.4 "BUSINESS DAY" shall mean any day recognized as a settlement day by The
New York Stock Exchange, Inc. and any other day for which the Fund computes
the net asset value of the Fund.
1.5 "NASD" shall mean The National Association of Securities Dealers, Inc.
1.6 "OFFICER" shall mean the President, any Vice President, the Secretary,
any Assistant Secretary, the Treasurer, or any Assistant Treasurer of the Trust.
1.7 "ORAL INSTRUCTIONS" shall mean instructions orally transmitted to and
accepted by the Custodian because such instructions are: (i) reasonably
believed by the Custodian to have been given by an Authorized Person, (ii)
recorded and kept among the records of the Custodian made in the ordinary
course of business and (iii) orally confirmed by the Custodian. The Trust shall
cause all Oral Instructions to be confirmed by Written Instructions. If such
Written Instructions confirming Oral Instructions are not received by the
Custodian prior to a transaction, it shall in no way affect the validity of the
transaction or the authorization thereof by the Trust. If Oral Instructions
vary from the Written Instructions which purport to confirm them, the Custodian
shall notify the Trust of such variance but such Oral Instructions will govern
unless the Custodian has not yet acted.
1.8 "CUSTODY ACCOUNT" shall mean any account in the name of the Trust,
which is provided for in Section 3.2
<PAGE> 2
below.
1.9 "PROPER INSTRUCTION" shall mean Oral Instructions or Written
Instructions. Proper Instructions may be continuing Written Instructions when
deemed appropriate by both parties.
1.10 "SECURITY DEPOSITORY" shall mean The Participants Trust Company or
The Depository Trust Company and (provided that Custodian shall have received a
copy of a resolution of the Board of Trustees, certified by an Officer,
specifically approving the use of such clearing agency as a depository for the
Trust) any other clearing agency registered with the Securities and Exchange
Commission under Section 17A of the Securities and Exchange Act of 1934 (the
"1934 Act"), which acts as a system for the central handing of Securities where
all Securities of any particular class or series of an issuer deposited within
the system are treated as fungible and may be transferred or pledged by
bookkeeping entry without physical delivery of the Securities.
1.11 "SECURITIES" shall include, without limitation, common and preferred
stocks, bonds, call options, put options, debentures, notes, bank certificates
of deposit, bankers' acceptances, mortgage-backed securities, other money
market instruments or other obligations, and any certificates, receipts,
warrants or other instruments or documents representing rights to receive,
purchase or subscribe for the same, or evidencing or representing any other
rights or interests therein, or any similar property or assets that the
Custodian has the facilities to clear and to service.
1.12 "SHARES" shall mean the units of beneficial interest issued by the
Trust.
1.13 "WRITTEN INSTRUCTIONS" shall mean (i) written communications actually
received by the Custodian and signed by one or more persons as the Board of
Trustees shall have from time to time authorized, or (ii) communications by
telex or any other such system from a person or persons reasonable believed by
the Custodian to be Authorized, or (iii) communications transmitted
electronically through the Institutional Delivery System (IDS), or any other
similar electronic instruction system acceptable to Custodian and approved by
resolutions of the Board of Trustees, a copy of which, certified by an Officer,
shall have been delivered to the Custodian.
ARTICLE II
----------
APPOINTMENT OF CUSTODIAN
------------------------
2.1 APPOINTMENT. The Trust hereby constitutes and appoints the Custodian
as custodian of all Securities and cash owned by or in the possession of the
Trust at any time during the period of this Agreement, provided that such
Securities or cash at all times shall be and remain the property of the Trust.
2.2 ACCEPTANCE. The Custodian hereby accepts appointment as such custodian
and agrees to perform the duties thereof as hereinafter set forth and in
accordance with the 1940 Act as amended. Except as specifically set forth
herein, the Custodian shall have no liability and assumes no responsibly for
any non-compliance by the Trust or a Fund of any laws, rules or regulations.
ARTICLE III
-----------
CUSTODY OF CASH AND SECURITIES
------------------------------
3.1 SEGREGATION. All Securities and non-cash property held by the
Custodian for the account of the Fund, except Securities maintained in a
Securities Depository or Book-Entry System, shall be physically segregated from
other Securities and non-cash property in the possession of the Custodian and
shall be identified as subject to this Agreement.
3.2 CUSTODY ACCOUNT. The Custodian shall open and maintain in its trust
department a custody account in the name of each Fund, subject only to draft or
order of the Custodian, in which the Custodian shall enter and carry all
Securities, cash and other assets of the Fund which are delivered to it.
3.3 APPOINTMENT OF AGENTS. In its discretion, the Custodian may appoint,
and at any time remove, any domestic bank or trust company, which has been
approved by the Board of Trustees and is qualified to act as a custodian
<PAGE> 3
under the 1940 Act, as sub-custodian to hold Securities and cash of the Funds
and to carry out such other provisions of this Agreement as it may determine,
and may also open and maintain one or more banking accounts with such a bank
or trust company (any such accounts to be in the name of the Custodian and
subject only to its draft or order), provided, however, that the appointment of
any such agent shall not relieve the Custodian of any of its obligations or
liabilities under this Agreement.
3.4 DELIVERY OF ASSETS TO CUSTODIAN. The Fund shall deliver, or cause to
be delivered, to the Custodian all of the Fund's Securities, cash and other
assets, including (a) all payments of income, payments of principal and capital
distributions received by the Fund with respect to such Securities, cash or
other assets owned by the Fund at any time during the period of this Agreement,
and (b) all cash received by the Fund for the issuance, at any time during such
period, of Shares. The Custodian shall not be responsible for such Securities,
cash or other assets until actually received by it.
3.5 SECURITIES DEPOSITORIES AND BOOK-ENTRY SYSTEMS. The Custodian may
deposit and/or maintain Securities of the Funds in a Securities Depository or
in a Book-Entry System, subject to the following provisions:
(a) Prior to a deposit of Securities of the Funds in any Securities
Depository or Book-Entry System, the Fund shall deliver to the
Custodian a resolution of the Board of Trustees, certified by an
Officer, authorizing and instructing the Custodian on an on-going
basis to deposit in such Securities Depository or Book-Entry System
all Securities eligible for deposit therein and to make use of such
Securities Depository or Book-Entry System to the extent possible and
practical in connection with its performance hereunder, including,
without limitation, in connection with settlements of purchases and
sales of Securities, loans of Securities, and deliveries and returns
of collateral consisting of Securities. So long as such Securities
Depository or Book-Entry System shall continue to be employed for the
deposit of Securities of the Funds, the Trust shall annually re-adopt
such resolution and deliver a copy thereof, certified by an Officer,
to the Custodian.
(b) Securities of the Fund kept in a Book-Entry System or Securities
Depository shall be kept in an account ("Depository Account") of the
Custodian in such Book-Entry System or Securities Depository which
includes only assets held by the Custodian as a fiduciary, custodian
or otherwise for customers.
(c) The records of the Custodian and the Custodian's account on the books
of the Book-Entry System and Securities Depository as the case may
be, with respect to Securities of a Fund maintained in a Book-Entry
System or Securities Depository shall, by book-entry, or otherwise
identify such Securities as belonging to the Fund.
(d) If Securities purchases by the Fund are to be held in a Book-Entry
System or Securities Depository, the Custodian shall pay for such
Securities upon (i) receipt of advice from the Book-Entry System or
Securities Depository that such Securities have been transferred to
the Depository Account, and (ii) the making of an entry on the
records of the Custodian to reflect such payment and transfer for the
account of the Fund. If Securities sold by the Fund are held in a
Book-Entry System or Securities Depository, the Custodian shall
transfer such Securities upon (i) receipt of advice from the
Book-Entry System or Securities depository that payment for such
Securities has been transferred to the Depository Account, and
(ii) the making of an entry on the records of the Custodian to
reflect such transfer and payment for the account of the Fund.
(e) Upon request, the Custodian shall provide the Fund with copies of any
report (obtained by the Custodian from a Book-Entry System or
Securities Depository in which Securities of the Fund is kept) on the
internal accounting controls and procedures for safeguarding
Securities deposited in such Book-Entry System or Securities
Depository.
(f) Anything to the contrary in this Agreement notwithstanding, the
Custodian shall be liable to the Trust for any loss or damage to the
Trust resulting (i) from the use of a Book-Entry System or Securities
Depository by reason of any negligence or willful misconduct on the
part of Custodian or any sub-custodian appointed pursuant to Section
3.3 above or any of its or their employees, or (ii) from failure of
Custodian or any such sub-custodian to enforce effectively such
rights as it may have against a Book-Entry System or Securities
Depository. At its election, the Trust shall be subrogated to the
rights of the Custodian with respect to any
3
<PAGE> 4
claim against a Book-Entry System or Securities Depository or any
other person for any loss or damage to the Funds arising from the use
of such Book-Entry System or Securities Depository, if and to the
extent that the Trust has been made whole for any such loss or damage.
3.6 DISBURSEMENT OF MONEYS FROM CUSTODY ACCOUNTS. Upon receipt of Proper
Instructions, the Custodian shall disburse moneys from a Fund Custody Account
but only in the following cases:
(a) For the purchase of Securities for the Fund but only upon compliance
with Section 4.1 of this Agreement and only (i) in the case of
Securities (other than options on Securities, futures contracts and
options on futures contracts), against the delivery to the Custodian
(or any sub-custodian appointed pursuant to Section 3.3 above) of
such Securities registered as provided in Section 3.9 below in proper
form for transfer, or if the purchase of such Securities is effected
through a Book-Entry System or Securities Depository, in accordance
with the conditions set forth in Section 3.5 above; (ii) in the case
of options on Securities, against delivery to the Custodian (or such
sub-custodian) of such receipts as are required by the customs
prevailing among dealers in such options; (iii) in the case of futures
contracts and options on futures contracts, against delivery to the
Custodian (or such sub-custodian) of evidence of title thereto in
favor of the Trust or any nominee referred to in Section 3.9 below;
and (iv) in the case of repurchase or reverse repurchase agreements
entered into between the Trust and a bank which is a member of the
Federal Reserve System or between the Trust and a primary dealer in
U.S. Government securities, against delivery of the purchased
Securities either in certificate form or through an entry crediting
the Custodian's account at a Book-Entry System or Securities
Depository for the account of the Fund with such Securities;
(b) In connection with the conversion, exchange or surrender, as set
forth in Section 3.7(f) below, of Securities owned by the Fund;
(c) For the payment of any dividends or capital gain distributions
declared by the Fund;
(d) In payment of the redemption price of Shares as provided in Section
5.1 below;
(e) For the payment of any expense or liability incurred by the Trust,
including but not limited to the following payments for the account
of a Fund: interest; taxes; administration, investment management,
investment advisory, accounting, auditing, transfer agent, custodian,
trustee and legal fees; and other operating expenses of a Fund; in
all cases, whether or not such expenses are to be in whole or in part
capitalized or treated as deferred expenses;
(f) For transfer in accordance with the provisions of any agreement among
the Trust, the Custodian and a broker-dealer registered under the
1934 Act and a member of the NASD, relating to compliance with rules
of The Options Clearing Corporation and of any registered national
securities exchange (or of any similar organization or organizations)
regarding escrow or other arrangements in connection with
transactions by the Trust;
(g) For transfer in accordance with the provisions of any agreement among
the Trust, the Custodian, and a futures commission merchant
registered under the Commodity Exchange Act, relating to compliance
with the rules of the Commodity Futures Trading Commission and/or any
contract market (or any similar organization or organizations)
regarding account deposits in connection with transactions by the
Trust;
(h) For the funding of any uncertificated time deposit or other
interest-bearing account with any banking institution (including the
Custodian), which deposit or account has a term of one year or less;
and
(i) For any other proper purposes, but only upon receipt, in addition to
Proper Instructions, of a copy of a resolution of the Board of
Trustees, certified by an Officer, specifying the amount and purpose
of such payment, declaring such purpose to be a proper corporate
purpose, and naming the person or persons to whom such payment is to
be made.
3.7 DELIVERY OF SECURITIES FROM FUND CUSTODY ACCOUNTS. Upon receipt of
Proper Instructions, the Custodian shall release and deliver Securities from a
Custody Account but only in the following cases:
4
<PAGE> 5
(a) Upon the sale of Securities for the account of a Fund but only against
receipt of payment therefor in cash, by certified or cashiers check or
bank credit;
(b) In the case of a sale effected through a Book-Entry System or
Securities Depository, in accordance with the provisions of Section
3.5 above;
(c) To an Offeror's depository agent in connection with tender or other
similar offers for Securities of a Fund; provided that, in any such
case, the cash or other consideration is to be delivered to the
Custodian;
(d) To the issuer thereof or its agent (i) for transfer into the name of
the Trust, the Custodian or any sub-custodian appointed pursuant to
Section 3.3 above, or of any nominee or nominees of any of the
foregoing, or (ii) for exchange for a different number of certificates
or other evidence representing the same aggregate face amount or
number of units; provided that, in any such case, the new Securities
are to be delivered to the Custodian;
(e) To the broker selling Securities, for examination in accordance with
the "street delivery" custom;
(f) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment of
the issuer of such Securities, or pursuant to provisions for
conversion contained in such Securities, or pursuant to any deposit
agreement, including surrender or receipt of underlying Securities in
connection with the issuance or cancellation of depository receipts;
provided that, in any such case, the new Securities and cash, if any,
are to be delivered to the Custodian;
(g) Upon receipt of payment therefor pursuant to any repurchase or reverse
repurchase agreement entered into by a Fund;
(h) In the case of warrants, rights or similar Securities, upon the
exercise thereof, provided that, in any such case, the new Securities
and cash, if any, are to be delivered to the Custodian;
(i) For delivery in connection with any loans of Securities of a Fund, but
only against receipt of such collateral as the Trust shall have
specified to the Custodian in Proper Instructions;
(j) For delivery as security in connection with any borrowings by the
Trust on behalf of a Fund requiring a pledge of assets by such Fund,
but only against receipt by the Custodian of the amounts borrowed;
(k) Pursuant to any authorized plan of liquidation, reorganization,
merger, consolidation or recapitalization of the Trust or a Fund;
(l) For delivery in accordance with the provisions of any agreement among
the Trust, the Custodian and a broker-dealer registered under the 1934
Act and a member of the NASD, relating to compliance with the rules of
The Options Clearing Corporation and of any registered national
securities exchange (or of any similar organization or organizations)
regarding escrow or other arrangements in connection with transactions
by the Trust on behalf of a Fund;
(m) For delivery in accordance with the provisions of any agreement among
the Trust on behalf of a Fund, the Custodian, and a futures commission
merchant registered under the Commodity Exchange Act, relating to
compliance with the rules of the Commodity Futures Trading Commission
and/or any contract market (or any similar organization or
organizations) regarding account deposits in connection with
transactions by the Trust on behalf of a Fund; or
(n) For any other proper corporate purposes, but only upon receipt, in
addition to Proper Instructions, of a copy of a resolution of the
Board of Trustees, certified by an Officer, specifying the Securities
to be delivered, setting forth the purpose for which such delivery is
to be made, declaring such purpose to be a proper corporate purpose,
and naming the person or persons to whom delivery of such Securities
shall be made.
5
<PAGE> 6
3.8 ACTIONS NOT REQUIRING PROPER INSTRUCTIONS. Unless otherwise
instructed by the Trust, the Custodian shall with respect to all Securities
held for a Fund;
(a) Subject to Section 7.4 below, collect on a timely basis all income and
other payments to which the Trust is entitled either by law or
pursuant to custom in the securities business;
(b) Present for payment and, subject to Section 7.4 below, collect on a
timely basis the amount payable upon all Securities which may mature
or be called, redeemed, or retired, or otherwise become payable:
(c) Endorse for collection, in the name of the Trust, checks, drafts and
other negotiable instruments;
(d) Surrender interim receipts or Securities in temporary form for
Securities in definitive form;
(e) Execute, as custodian, any necessary declarations or certificates of
ownership under the federal income tax laws or the laws or regulations
of any other taxing authority now or hereafter in effect, and prepare
and submit reports to the Internal Revenue Service ("IRS") and to the
Trust at such time, in such manner and containing such information as
is prescribed by the IRS;
(f) Hold for a Fund, either directly or, with respect to Securities held
therein, through a Book-Entry System or Securities Depository, all
rights and similar securities issued with respect to Securities of the
Fund; and
(g) In general, and except as otherwise directed in Proper Instructions,
attend to all non-discretionary details in connection with sale,
exchange, substitution, purchase, transfer and other dealings with
Securities and assets of the Fund.
3.9 REGISTRATION AND TRANSFER OF SECURITIES. All Securities held for a
Fund that are issued or issuable only in bearer form shall be held by the
Custodian in that form, provided that any such Securities shall be held in a
Book-Entry System for the account of the Trust on behalf of a Fund, if eligible
therefor. All other Securities held for a Fund may be registered in the name of
the Trust on behalf of such Fund, the Custodian, or any sub-custodian appointed
pursuant to Section 3.3 above, or in the name of any nominee of any of them, or
in the name of a Book-Entry System, Securities Depository or any nominee of
either thereof; provided, however, that such Securities are held specifically
for the account of the Trust on behalf of a Fund. The Trust shall furnish to
the Custodian appropriate instruments to enable the Custodian to hold or
deliver in proper form for transfer, or to register in the name of any of the
nominees hereinabove referred to or in the name of a Book-Entry System or
Securities Depository, any Securities registered in the name of a Fund.
3.10 RECORDS. (a) The Custodian shall maintain, by Fund, complete and
accurate records with respect to Securities, cash or other property held for
the Trust, including (i) journals or other records of original entry containing
an itemized daily record in detail of all receipts and deliveries of Securities
and all receipts and disbursements of cash; (ii) ledgers (or other records)
reflecting (A) Securities in transfer, (B) Securities in physical possession,
(C) monies and Securities borrowed and monies and Securities loaned (together
with a record of the collateral therefor and substitutions of such collateral),
(D) dividends and interest received, and (E) dividends receivable and interest
accrued; and (iii) canceled checks and bank records related thereto. The
Custodian shall keep such other books and records of the Trust as the Trust
shall reasonably request, or as may be required by the 1940 Act, including, but
not limited to Section 3.1 and Rule 31a-1 and Rule 31a-2 promulgated thereunder.
(b) All such books and records maintained by the Custodian shall (i) be
maintained in a form acceptable to the Trust and in compliance with rules and
regulations of the Securities and Exchange Commission, (ii) be the property of
the Trust and at all times during the regular business hours of the Custodian
be made available upon request for inspection by duly authorized officers,
employees or agents of the Trust and employees or agents of the Securities and
Exchange Commission, and (iii) if required to be maintained by Rule 31a-1 under
the 1940 Act, be preserved for the periods prescribed in Rule 31a-2 under the
1940 Act.
3.11 FUND REPORTS BY CUSTODIAN. The Custodian shall furnish the Trust with
a daily activity statement by Fund and a summary of all transfers to or from
the Custody Account on the day following such transfers. At least monthly and
from time to time, the Custodian shall furnish the Trust with a detailed
statement, by Fund, of the Securities and moneys held
6
<PAGE> 7
for the Trust under this Agreement.
3.12 OTHER REPORTS BY CUSTODIAN. The Custodian shall provide the Trust
with such reports, as the Trust may reasonably request from time to time, on
the internal accounting controls and procedures for safeguarding Securities,
which are employed by the Custodian or any sub-custodian appointed pursuant to
Section 3.3 above.
3.13 PROXIES AND OTHER MATERIALS. The Custodian shall cause all proxies if
any, relating to Securities which are not registered in the name of a Fund, to
be promptly executed by the registered holder of such Securities, without
indication of the manner in which such proxies are to be voted, and shall
include all other proxy materials, if any, promptly deliver to the Trust such
proxies, all proxy soliciting materials, which should include all other proxy
materials, if any, and all notices to such Securities.
3.14 INFORMATION ON CORPORATE ACTIONS. Custodian will promptly notify the
Trust of corporate actions, limited to those Securities registered in nominee
name and to those Securities held at a Depository or sub-Custodian acting as
agent for Custodian. Custodian will be responsible only if the notice of such
corporate actions is published by the Financial Daily Card Service, J.J. Kenny
Called Bond Service, DTC, or received by first class mail from the agent. For
market announcements not yet received and distributed by Custodian's services,
Trust will inform its custody representative with appropriate instructions.
Custodian will, upon receipt of Trust's response within the required deadline,
affect such action for receipt or payment for the Trust. For those responses
received after the deadline, Custodian will affect such action for receipt or
payment, subject to the limitations of the agent(s) affecting such actions.
Custodian will promptly notify Trust for put options only if the notice is
received by first class mail from the agent. The Trust will provide or cause to
be provided to Custodian with all relevant information contained in the
prospectus for any security which has unique put/option provisions and provide
Custodian with specific tender instructions at least ten business days prior to
the beginning date of the tender period.
ARTICLE IV
PURCHASE AND SALE OF INVESTMENTS OF THE FUND
4.1 PURCHASE OF SECURITIES. Promptly upon each purchase of Securities for
the Trust, Written Instructions shall be delivered to the Custodian, specifying
(a) the name of the issuer or writer of such Securities, and the title or other
description thereof, (b) the number of shares, principal amount (and accrued
interest, if any) or other units purchased, (c) the date of purchase and
settlement, (d) the purchase price per unit, (e) the total amount payable upon
such purchase, and (f) the name of the person to whom such amount is payable.
The Custodian shall upon receipt of such Securities purchased by a Fund pay out
of the moneys held for the account of such Fund the total amount specified in
such Written Instructions to the person named therein. The Custodian shall not
be under any obligation to pay out moneys to cover the cost of a purchase of
Securities for a Fund, if in the relevant Custody Account there is insufficient
cash available to the Fund for which such purchase was made.
4.2 LIABILITY FOR PAYMENT IN ADVANCE OF RECEIPT OF SECURITIES PURCHASED.
In any and every case where payment for the purchase of Securities for a Fund
is made by the Custodian in advance of receipt for the account of the Fund of
the Securities purchased but in the absence of specific Written or Oral
Instructions to so pay in advance, the Custodian shall be liable to the Fund
for such Securities to the same extent as if the Securities had been received
by the Custodian.
4.3 SALE OF SECURITIES. Promptly upon each sale of Securities by a Fund,
Written Instructions shall be delivered to the Custodian, specifying (a) the
name of the issuer or writer of such Securities, and the title or other
description thereof, (b) the number of shares, principal amount (and accrued
interest, if any), or other units sold, (c) the date of sale and settlement
(d) the sale price per unit, (e) the total amount payable upon such sale, and
(f) the person to whom such Securities are to be delivered. Upon receipt of the
total amount payable to the Trust as specified in such Written Instructions, the
Custodian shall deliver such Securities to the person specified in such Written
Instructions. Subject to the foregoing, the Custodian may accept payment in such
form as shall be satisfactory to it, and may deliver Securities and arrange for
payment in accordance with the customs prevailing among dealers in Securities.
4.4 DELIVERY OF SECURITIES SOLD. Notwithstanding Section 4.3 above or any
other provision of this Agreement, the Custodian, when instructed to deliver
Securities against payment, shall be entitled, if in accordance with generally
accepted market practice, to deliver such Securities prior to actual receipt of
final payment therefor. In any such case, the Trust shall bear the risk that
final payment for such Securities may not be made or that such Securities may
be returned or
7
<PAGE> 8
otherwise held or disposed of by or through the person to whom they were
delivered, and the Custodian shall have no liability for any of the foregoing.
4.5 PAYMENT FOR SECURITIES SOLD, ETC. In its sole discretion and from time
to time, the Custodian may credit the relevant Custody Account, prior to actual
receipt of final payment thereof, with (i) proceeds from the sale of Securities
which it has been instructed to deliver against payment, (ii) proceeds from the
redemption of Securities or other assets of the Trust, and (iii) income from
cash, Securities or other assets of the Trust. Any such credit shall be
conditional upon actual receipt by Custodian of final payment and may be
reversed if final payment is not actually received in full. The Custodian may,
in its sole discretion and from time to time, permit the Trust to use funds so
credited to its Custody Account in anticipation of actual receipt of final
payment. Any such funds shall be repayable immediately upon demand made by the
Custodian at any time prior to the actual receipt of all final payments in
anticipation of which funds were credited to the Custody Account.
4.6 ADVANCES BY CUSTODIAN FOR SETTLEMENT. The Custodian may, in its sole
discretion and from time to time, advance funds to the Trust to facilitate the
settlement of a Trust transactions on behalf of a Fund in its Custody Account.
Any such advance shall be repayable immediately upon demand made by Custodian.
ARTICLE V
REDEMPTION OF TRUST SHARES
TRANSFER OF FUNDS. From such funds as may be available for the purpose in
the relevant Custody Account, and upon receipt of Proper Instructions
specifying that the funds are required to redeem Shares of a Fund, the
Custodian shall wire each amount specified in such Proper Instructions to or
through such bank as the Trust may designate with respect to such amount in
such Proper Instructions. Upon effecting payment or distribution in accordance
with proper Instruction, the Custodian shall not be under any obligation or
have any responsibility thereafter with respect to any such paying bank.
ARTICLE VI
SEGREGATED ACCOUNTS
Upon receipt of Proper Instructions, the Custodian shall establish and
maintain a segregated account or accounts for and on behalf of each Fund, into
which account or accounts may be transferred cash and/or Securities, including
Securities maintained in a Depository Account,
(a) in accordance with the provisions of any agreement among the Trust, the
Custodian and a broker-dealer registered under the 1934 Act and a
member of the NASD (or any futures commission merchant registered under
the Commodity Exchange Act), relating to compliance with the rules of
The Options Clearing Corporation and of any registered national
securities exchange (or the Commodity Futures Trading commission or any
registered contract market), or of any similar organization or
organizations, regarding escrow or other arrangements in connection
with transactions by the Trust,
(b) for purposes of segregating cash or Securities in connection with
securities options purchased or written by a Fund or in connection with
financial futures contracts (or options thereon) purchased or sold by a
Fund,
(c) which constitute collateral for loans of Securities made by a Fund,
(d) for purposes of compliance by the Trust with requirements under the
1940 Act for the maintenance of segregated accounts by registered
investment companies in connection with reverse repurchase agreements
and when-issued, delayed delivery and firm commitment transactions, and
(e) for other proper corporate purposes, but only upon receipt of, in
addition to Proper Instructions, a certified copy of a resolution of
the Board of Trustees, certified by an Officer, setting forth the
purpose or purposes of such segregated account and declaring such
purposes to be proper corporate purposes.
ARTICLE VII
CONCERNING THE CUSTODIAN
7.1 STANDARD OF CARE. The Custodian shall be held to the exercise of
reasonable care in carrying out its
8
<PAGE> 9
obligations under this Agreement, and shall be without liability to the Trust
for any loss, damage, cost, expense (including attorneys' fees and
disbursements), liability or claim unless such loss, damages, cost, expense,
liability or claim arises from negligence, bad faith or willful misconduct on
its part or on the part of any sub-custodian appointed pursuant to Section 3.3
above. The Custodian's cumulative liability within a calendar year shall be
limited with respect to the Trust or any party claiming by, through or on
behalf of the Trust for the initial and all subsequent renewal terms of this
Agreement, to the actual damages sustained by the Trust, (actual damages for
uninvested funds shall be the overnight Fed funds rate). The Custodian shall be
entitled to rely on and may act upon advice of counsel on all matters, and
shall be without liability for any action reasonably taken or omitted pursuant
to such advice. The Custodian shall promptly notify the Trust of any action
taken or omitted by the Custodian pursuant to advice of counsel. The Custodian
shall not be under any obligation at any time to ascertain whether the Trust is
in compliance with the 1940 Act, the regulations thereunder, the provisions of
the Trust's charter documents or by-laws, or its investment objectives and
policies as then in effect.
7.2 ACTUAL COLLECTION REQUIRED. The Custodian shall not be liable for, or
considered to be the custodian of, any cash belonging to the Trust or any money
represented by a check, draft or other instrument for the payment of money,
until the Custodian or its agents actually receive such cash or collect on such
instrument.
7.3 NO RESPONSIBILITY FOR TITLE, ETC. So long as and to the extent that it
is in the exercise of reasonable care, the Custodian shall not be responsible
for the title, validity or genuineness of any property or evidence of title
thereto received or delivered by it pursuant to this Agreement.
7.4 LIMITATION ON DUTY TO COLLECT. Custodian shall not be required to
enforce collection, by legal means or otherwise, of any money or property due
and payable with respect to Securities held for the Trust if such Securities
are in default or payment is not made after due demand or presentation.
7.5 RELIANCE UPON DOCUMENTS AND INSTRUCTIONS. The Custodian shall be
entitled to rely upon any certificate, notice or other instrument in writing
received by it and reasonably believed by it to be genuine. The Custodian shall
be entitled to rely upon any Oral Instructions and/or any Written Instructions
actually received by it pursuant to this Agreement.
7.6 EXPRESS DUTIES ONLY. The Custodian shall have no duties or obligations
whatsoever except such duties and obligations as are specifically set forth in
this Agreement, and no covenant or obligation shall be implied in this
Agreement against the Custodian.
7.7 COOPERATION. The Custodian shall cooperate with and supply necessary
information, by the Trust, to the entity or entities appointed by the Trust to
keep the books of account of the Trust and/or compute the value of the assets
of the Trust. The Custodian shall take all such reasonable actions as the Trust
may from time to time request to enable the Trust to obtain, from year to year,
favorable opinions from the Trust's independent accountants with respect to the
Custodian's activities hereunder in connection with (a) the preparation of the
Trust's report on Form N-1A and Form N-SAR and any other reports required by
the Securities and Exchange Commission, and (b) the fulfillment by the Trust of
any other requirements of the Securities and Exchange Commission.
ARTICLE VIII
INDEMNIFICATION
8.1 INDEMNIFICATION. The Trust shall indemnify and hold harmless the
Custodian and any sub-custodian appointed pursuant to Section 3.3 above, and
any nominee of the Custodian or of such sub-custodian from and against any
loss, damage, cost, expense (including attorneys' fees and disbursements),
liability (including, without limitation, liability arising under the
Securities Act of 1933, the 1934 Act, the 1940 Act, and any state or foreign
securities and/or banking laws) or claim arising directly or indirectly (a)
from the fact that Securities are registered in the name of any such nominee,
or (b) from any action or inaction by the Custodian or such sub-custodian
(i) at the request or direction of or in reliance on the advice of the Trust, or
(ii) upon Proper Instructions, or (c) generally, from the performance of its
obligations under this Agreement or any sub-custody agreement with a
sub-custodian appointed pursuant to Section 3.3 above or, in the case of any
such sub-custodian, from the performance of its obligations under such custody
agreement, provided that neither the Custodian nor any such sub-custodian shall
be indemnified and held harmless from and against any such loss, damage, cost,
expense, liability or claim arising from the Custodian's or such sub-custodian's
negligence, bad faith or willful misconduct.
9
<PAGE> 10
8.2 INDEMNITY TO BE PROVIDED. If the Trust requests the Custodian to take
any action with respect to Securities, which may, in the opinion of the
custodian, result in the Custodian or its nominee becoming liable for the
payment of money or incurring liability of some other form, the Custodian shall
not be required to take such action until the Trust shall have provided
indemnity therefor to the Custodian in an amount and form satisfactory to the
Custodian.
ARTICLE IX
----------
FORCE MAJEURE
-------------
Neither the Custodian nor the Trust shall be liable for any failure or
delay in performance of its obligations under this Agreement arising out of or
caused, directly or indirectly, by circumstances beyond its reasonable control,
including, without limitation, acts of God; earthquakes; fires; floods; wars;
civil or military disturbances; sabotage; strikes; epidemics; riots; power
failures; computer failure and any such circumstances beyond its reasonable
control as may cause interruption, loss or malfunction of utility,
transportation, computer (hardware or software) or telephone communication
service; accidents; labor disputes, acts of civil or military authority;
governmental actions; or inability to obtain labor, material, equipment or
transportation; provided, however, that the Custodian in the event of a failure
or delay shall use its best efforts to ameliorate the effects of any such
failure or delay. Notwithstanding the foregoing, the Custodian shall maintain
sufficient disaster recovery procedures to minimize interruptions.
ARTICLE X
---------
EFFECTIVE PERIOD; TERMINATION
-----------------------------
10.1 EFFECTIVE PERIOD. This Agreement shall become effective as of the
date first set forth above and shall continue in full force and effect until
terminated as hereinafter provided.
10.2 TERMINATION. Either party hereto may terminate this Agreement by
giving to the other party a notice in writing specifying the date of such
termination, which shall be not less than ninety (90) days after the date of
the giving of such notice. If a successor custodian shall have been appointed
by the Board of Trustees, the Custodian shall, upon receipt of a notice of
acceptance by the successor custodian, on such specified date of termination
(a) deliver directly to the successor custodian all Securities (other than
Securities held in a Book-Entry System or Securities Depository) and cash then
owned by the Trust and held by the Custodian as custodian, and (b) transfer any
Securities held in a Book-Entry System or Securities Depository to an account
of or for the benefit of the Trust at the successor custodian, provided that
the Trust shall have paid to the Custodian all fees, expenses and other amounts
to the payment or reimbursement of which it shall then be entitled. Upon such
delivery and transfer, the Custodian shall be relieved of all obligations under
this Agreement. The Trust may at any time immediately terminate this Agreement
in the event of the appointment of a conservator or receiver for the Custodian
by regulatory authorities in the State of Ohio or upon the happening of a like
event at the direction of an appropriate regulatory agency or court of
competent jurisdiction.
10.3 FAILURE TO APPOINT SUCCESSOR CUSTODIAN. If a successor custodian is
not designated by the Trust on or before the date of termination specified
pursuant to Section 10.1 above, then the Custodian shall have the right to
deliver to a bank or trust company of its own selection, which is (a) a "Bank"
as defined in the 1940 Act, (b) has aggregate capital, surplus and undivided
profits as shown on its then most recent published report of not less than $25
million, and (c) is doing business in New York, New York, all Securities, cash
and other property held by Custodian under this Agreement and to transfer to an
account of or for the Trust at such bank or trust company all Securities of the
Trust held in a Book-Entry System or Securities Depository. Upon such delivery
and transfer, such bank or trust company shall be the successor custodian under
this Agreement and the Custodian shall be relieved of all obligations under
this Agreement. If, after reasonable inquiry, Custodian cannot find a successor
custodian as contemplated in this Section 10.3, then Custodian shall have the
right to deliver to the Trust all Securities and cash then owned by the Trust
and to transfer any Securities held in a Book-Entry System or Securities
Depository to an account of or for the Trust. Thereafter, the Trust shall be
deemed to be its own custodian with respect to the Trust and the Custodian
shall be relieved of all obligations under this Agreement.
ARTICLE XI
----------
COMPENSATION OF CUSTODIAN
-------------------------
The Custodian shall be entitled to compensation as agreed upon from time
to time by the Trust and the Custodian. The fees and other charges in effect on
the date hereof and applicable to the Funds are set forth in Exhibit B attached
hereto.
10
<PAGE> 11
ARTICLE XII
-----------
LIMITATION OF LIABILITY
-----------------------
The Trust is a business trust organized under the State of Mass. and under
a Declaration of Trust, to which reference is hereby made a copy of which is on
file at the office of the Secretary of State of Massachusetts as required by
law, and to any and all amendments thereto so filed or hereafter filed. The
obligations of the Trust entered into in the name of the Trust 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 or the Funds
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.
ARTICLE XIII
------------
NOTICES
-------
Unless otherwise specified herein, all demands, notices, instructions, and
other communications to be given hereunder shall be in writing and shall be
sent or delivered to The receipt at the address set forth after its name herein
below:
To the Trust:
------------
The Coventry Group
c/o BISYS Fund Services
3435 Stelzer Road
Columbus, OH 43219
Attn: John Danko
Telephone: (614) 470-8957
Facsimile: (614) 470-8752
To the Custodian:
----------------
The Fifth Third Bank
38 Fountain Square Plaza
Cincinnati, Ohio 45263
Attn: Area Manager - Trust Operations
Telephone: (513) 579-5672
Facsimile: (513) 579-5444
or at such other address as either party shall have provided to the other by
notice given in accordance with this Article XIII. Writing shall include
transmission by or through teletype, facsimile, central processing unit
connection, on-line terminal and magnetic tape.
ARTICLE XIV
-----------
MISCELLANEOUS
-------------
14.1 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Ohio.
14.2 REFERENCES TO CUSTODIAN. The Trust shall not circulate any printed
matter which contains any reference to Custodian without the prior written
approval of Custodian, excepting printed matter contained in the prospectus or
statement of additional information or its registration statement for the Trust
and such other printed matter as merely identifies Custodian as custodian for
the Trust. The Trust shall submit printed matter requiring approval to
Custodian in draft form, allowing sufficient time for review by Custodian and
its counsel prior to any deadline for printing.
14.3 NO WAIVER. No failure by either party hereto to exercise and no
delay by such party in exercising, any right hereunder shall operate as a
waiver thereof. The exercise by either party hereto of any right hereunder
shall not preclude the exercise of any other right, and the remedies provided
herein are cumulative and not exclusive of any remedies provided at law or in
equity.
11
<PAGE> 12
14.4 AMENDMENTS. This Agreement cannot be changed orally and no amendment
to this Agreement shall be effective unless evidenced by an instrument in
writing executed by the parties hereto.
14.5 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, and by the parties hereto on separate counterparts, each of which
shall be deemed an original but all of which together shall constitute but one
and the same instrument.
14.6 SEVERABILITY. If any provision of this Agreement shall be invalid,
illegal or unenforceable in any respect under any applicable law, the validity,
legality and enforceability of the remaining provisions shall not be affected
or impaired thereby.
14.7 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that this Agreement shall not be
assignable by either party hereto without the written consent of the other
party hereto.
14.8 HEADINGS. The headings of sections in this Agreement are for
convenience of reference only and shall not affect the meaning or construction
of any provision of this Agreement.
12
<PAGE> 13
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed and delivered in its name and on its behalf by its
representatives thereunto duly authorized, all as of the day and year first
above written.
ATTEST: THE COVENTRY GROUP
/s/ Kathy M. Loke
Walter Grimm By: [Illegible]
- ------------------------------- -------------------------------
Its: President
------------------------------
ATTEST: THE FIFTH THIRD BANK
By:
- ------------------------------- ----------------------------
Its: Vice President
13
<PAGE> 14
Dated: July 1, 1999
------
EXHIBIT A
TO THE CUSTODY AGREEMENT BETWEEN
THE COVENTRY GROUP ON BEHALF OF THE WALDEN SOCIAL INDEX FUNDS
AND FIFTH THIRD BANK
JULY 1, 1999
Name of Fund Date
------------ ----
Walden Domestic Social Index Fund
Walden International Social Index Fund
THE COVENTRY GROUP
By: [Illegible]
-----------------------------
Its: President
-----------------------------
THE FIFTH THIRD BANK
By:
-----------------------------
Its: Vice President
14
<PAGE> 15
Dated: July 1, 1999
-------
EXHIBIT B
TO THE CUSTODY AGREEMENT BETWEEN
THE COVENTRY GROUP ON BEHALF OF THE WALDEN SOCIAL INDEX FUNDS AND
FIFTH THIRD BANK
July 1, 1999
-------
AUTHORIZED PERSONS
Set forth below are the names and specimen signatures of the persons
authorized by the Trust to Administer each Custody Account.
Name Signature
---- ---------
Brian Agnew /s/ Brian Agnew
__________________________________ __________________________________
Mary Madick /s/ Mary Madick
__________________________________ __________________________________
Matt Ebersbach /s/ Matt Ebersbach
__________________________________ __________________________________
Dana Sims /s/ Dana Sims
__________________________________ __________________________________
Shawn Smith /s/ Shawn Smith
__________________________________ __________________________________
15
<PAGE> 16
SIGNATURE RESOLUTION
--------------------
RESOLVED, That all of the following officers of THE COVENTRY GROUP and any of
them, namely the President, Vice President(s), Treasurer, Secretary, Assistant
Treasurer, and Assistant Secretary, are hereby authorized as signers for the
conduct of business for and on behalf of the Funds with FIFTH THIRD BANK:
Walter B. Grimm PRESIDENT /s/ Walter B. Grimm
__________________ __________________________________
J. David Huber VICE PRESIDENT /s/ J. David Huber
__________________ __________________________________
Jennifer J. Brooks VICE PRESIDENT /s/ Jennifer J. Brooks
__________________ __________________________________
Gary R. Tenkman TREASURER /s/ Gary R. Tenkman
__________________ __________________________________
George L. Stevens SECRETARY /s/ George L. Stevens
__________________ __________________________________
Alaina V. Metz ASSISTANT SECRETARY /s/ Alaina V. Metz
__________________ __________________________________
ASSISTANT SECRETARY
__________________ __________________________________
The undersigned officers THE COVENTRY GROUP hereby certify that the foregoing
is within the parameters of a Resolution adopted by Trustees of the Trust in a
meeting held May 20, 1999, directing and authorizing preparation of documents
and to do everything necessary to effect the Custody Agreement between THE
COVENTRY GROUP and THE FIFTH THIRD BANK.
By: /s/ Alaina S. Metz
-------------------------------------
Its: Assistant Secretary
------------------------------------
16
<PAGE> 17
EXHIBIT C
TO THE CUSTODY AGREEMENT BETWEEN
THE COVENTRY GROUP AND THE FIFTH THIRD BANK
JULY 1, 1999
MUTUAL FUND CUSTODY FEE SCHEDULE
<TABLE>
<S> <C>
BASIC ACCOUNT CHARGE
FUND SIZE
Less than $25MM .01%
$25MM - $100MM .0075%
$100MM - $200MM .005%
Over $200MM .0025%
Minimum Annual Fee $2,400.00
TRANSACTION FEES
DTC/FED Eligible Trades $7.00
DTC/FED Ineligible Trades $25.00
Amortized Security Trades $25.00
Repurchase Agreements (purchase and maturity) $9.00
Third Party Repo's (purchase and maturity) $9.00
Physical Commercial Paper Trades $25.00
(purchase and maturity)
Book-Entry Commercial Paper Trades $9.00
(purchase and maturity)
Options, each transaction $25.00
Amortized Security Paydowns $5.00
International Securities Per the attached global schedule
</TABLE>
A transaction is a purchase, sale, maturity, redemption, tender, exchange,
dividend reinvestment, deposit or withdrawal of a security (with the exception
of Fifth Third Certificates of Deposit, Commercial Paper & Repo). All foreign
currency exchange shall transact through Fifth Third Bank's International
Department.
MISCELLANEOUS FEES
Wire Transfer $7.00
Check Disbursements $6.00
17
<PAGE> 1
Exhibit 99(h)(1)
ADMINISTRATION AGREEMENT
THIS AGREEMENT is made as of this March 10, 1999, by and between THE
COVENTRY GROUP, a Massachusetts business trust (the "Trust"), having its
principal place of business at 3435 Stelzer Road, Columbus, Ohio 43219, and
BISYS FUND SERVICES OHIO, INC., an Ohio corporation (the "Administrator"),
having its principal place of business at 3435 Stelzer Road, Columbus, Ohio
43219.
WHEREAS, the Trust is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), consisting of several series of shares of beneficial interest or common
stock ("Shares"); and
WHEREAS, the Trust desires the Administrator to provide, and the
Administrator is willing to provide, management and administrative services to
each of the BOSTON TRUST/WALDEN FUNDS advised by United States Trust Company of
Boston (the "USTB"), and such additional funds advised by USTB as the Trust and
the Administrator may agree on from time to time ("Portfolios") and as listed on
Schedule A attached hereto and made a part of this Agreement, on the terms and
conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, the Trust and the Administrator hereby agree as follows:
ARTICLE 1. RETENTION OF THE ADMINISTRATOR. The Trust hereby retains the
Administrator to act as the administrator of the Portfolios and to furnish the
Portfolios with the management and administrative services as set forth in
Article 2 below. The Administrator hereby accepts such employment to perform the
duties set forth below.
The Administrator shall, for all purposes herein, be deemed to be an
independent contractor and, unless otherwise expressly provided or authorized,
shall have no authority to act for or represent the Trust in any way and shall
not be deemed an agent of the Trust.
ARTICLE 2. ADMINISTRATIVE SERVICES. The Administrator shall perform or
supervise the performance by others of other administrative services in
connection with the operations of the Portfolios, and, on behalf of the Trust,
will investigate, assist in the selection of and conduct relations with
custodians, depositories, accountants, legal counsel, underwriters, brokers and
dealers, corporate fiduciaries, insurers, banks and persons in any other
capacity deemed to be necessary or desirable for the Portfolios' operations. The
Administrator shall provide the Board of Trustees of the Trust (hereafter
referred to as the "Trustees") with such reports regarding investment
performance as they may reasonably request but shall have no responsibility for
supervising the performance by any investment adviser or sub-adviser of its
responsibilities.
The Administrator shall provide the Trust with regulatory reporting,
all necessary office space, equipment, personnel, compensation and facilities
(including facilities for Shareholders'
<PAGE> 2
and Trustees' meetings) for handling the affairs of the Portfolios and such
other services as the Administrator shall, from time to time, determine to be
necessary to perform its obligations under this Agreement. In addition, at the
request of the Trustees, the Administrator shall make reports to the Trust's
Trustees concerning the performance of its obligations hereunder.
Without limiting the generality of the foregoing, the Administrator
shall:
(a) calculate contractual Trust expenses and control all
disbursements for the Trust, and as appropriate compute the
Trust's yields, total return, expense ratios, portfolio
turnover rate and, if required, portfolio average
dollar-weighted maturity;
(b) assist Trust counsel with the preparation of prospectuses,
statements of additional information, registration statements
and proxy materials;
(c) prepare such reports, applications and documents
(including reports regarding the sale and redemption of Shares
as may be required in order to comply with Federal and state
securities law) as may be necessary or desirable to register
the Trust's Shares with state securities authorities, monitor
the sale of Trust Shares for compliance with state securities
laws, and file with the appropriate state securities
authorities the registration statements and reports for the
Trust and the Trust's Shares and all amendments thereto, as
may be necessary or convenient to register and keep effective
the Trust and the Trust's Shares with state securities
authorities to enable the Trust to make a continuous offering
of its Shares;
(d) develop and prepare, with the assistance of the Trust's
investment adviser, communications to Shareholders, including
the annual report to Shareholders, coordinate the mailing of
prospectuses, notices, proxy statements, proxies and other
reports to Trust Shareholders, and supervise and facilitate
the proxy solicitation process for all shareholder meetings,
including the tabulation of shareholder votes;
(e) administer contracts on behalf of the Trust with, among
others, the Trust's investment adviser, distributor,
custodian, transfer agent and fund accountant;
(f) supervise the Trust's transfer agent with respect to the
payment of dividends and other distributions to Shareholders;
(g) calculate performance data of the Portfolios for
dissemination to information services covering the investment
company industry;
(h) coordinate and supervise the preparation and filing of the
Trust's tax returns;
2
<PAGE> 3
(i) examine and review the operations and performance of the
various organizations providing services to the Trust or any
Portfolio of the Trust, including, without limitation, the
Trust's investment adviser, distributor, custodian, fund
accountant, transfer agent, outside legal counsel and
independent public accountants, and at the request of the
Trustees, report to the Board on the performance of
organizations;
(j) assist with the layout and printing of publicly
disseminated prospectuses and assist with and coordinate
layout and printing of the Trust's semi-annual and annual
reports to Shareholders;
(k) assist with the design, development, and operation of the
Portfolios, including new classes, investment objectives,
policies and structure;
(l) provide individuals reasonably acceptable to the Trust's
Trustees to serve as officers of the Trust, who will be
responsible for the management of certain of the Trust's
affairs as determined by the Trust's Trustees;
(m) advise the Trust and its Trustees on matters concerning
the Trust and its affairs;
(n) obtain and keep in effect fidelity bonds and trustees and
officers/errors and omissions insurance policies for the Trust
in accordance with the requirements of Rules 17g-1 and
17d-1(7) under the 1940 Act as such bonds and policies are
approved by the Trust's Trustees;
(o) monitor and advise the Trust and its Portfolios on their
registered investment company status under the Internal
Revenue Code of 1986, as amended;
(p) perform all administrative services and functions of the
Trust and each Portfolio to the extent administrative services
and functions are not provided to the Trust or such Portfolio
pursuant to the Trust's or such Portfolio's investment
advisory agreement, distribution agreement, custodian
agreement, transfer agent agreement and fund accounting
agreement;
(q) furnish advice and recommendations with respect to other
aspects of the business and affairs of the Portfolios as the
Trust and the Administrator shall determine desirable; and
(r) prepare and file with the SEC the semi-annual report for
the Trust on Form N-SAR and all required notices pursuant to
Rule 24f-2.
The Administrator shall perform such other services for the Trust that
are mutually agreed upon by the parties from time to time. Such services may
include performing internal
3
<PAGE> 4
audit examinations; mailing the annual reports of the Portfolios; preparing an
annual list of Shareholders; and mailing notices of Shareholders' meetings,
proxies and proxy statements, for all of which the Trust will pay the
Administrator's out-of-pocket expenses as agreed. Recognizing the desirability
of limiting the legal expenses charged to the Funds, the Administrator agrees to
make every reasonable effort to consult with the Investment Advisor to the Funds
prior to submitting questions which arise outside of the routine operations of
the Funds to legal counsel.
ARTICLE 3. ALLOCATION OF CHARGES AND EXPENSES.
(A) THE ADMINISTRATOR. The Administrator shall furnish at its own
expense the executive, supervisory and clerical personnel necessary to perform
its obligations under this Agreement. The Administrator shall also provide the
items which it is obligated to provide under this Agreement, and shall pay all
compensation, if any, of officers of the Trust as well as all Trustees of the
Trust who are affiliated persons of the Administrator or any affiliated
corporation of the Administrator; provided, however, that unless otherwise
specifically provided, the Administrator shall not be obligated to pay the
compensation of any employee of the Trust retained by the Trustees of the Trust
to perform services on behalf of the Trust.
(B) THE TRUST. The Trust assumes and shall pay or cause to be paid all
other expenses of the Trust not otherwise allocated herein, including, without
limitation, organization costs, taxes, expenses for legal and auditing services,
the expenses of preparing (including typesetting), printing and mailing reports,
prospectuses, statements of additional information, proxy solicitation material
and notices to existing Shareholders, all expenses incurred in connection with
issuing and redeeming Shares, the costs of custodial services, the cost of
initial and ongoing registration of the Shares under Federal and state
securities laws, fees and out-of-pocket expenses of Trustees who are not
affiliated persons of the Administrator or the Investment Adviser to the Trust
or any affiliated corporation of the Administrator or the Investment Adviser,
insurance, interest, brokerage costs, litigation and other extraordinary or
nonrecurring expenses, and all fees and charges of investment advisers to the
Trust.
ARTICLE 4. COMPENSATION OF THE ADMINISTRATOR.
(A) ADMINISTRATION FEE. For the services to be rendered, the facilities
furnished and the expenses assumed by the Administrator pursuant to this
Agreement, the Trust shall pay to the Administrator compensation at an annual
rate specified in Schedule A attached hereto. Such compensation shall be
calculated and accrued daily, and paid to the Administrator monthly. The Trust
shall also reimburse the Administrator for its reasonable out-of-pocket
expenses, including the travel and lodging expenses incurred by officers and
employees of the Administrator in connection with attendance at Board meetings.
If this Agreement becomes effective subsequent to the first
day of a month or terminates before the last day of a month, the Administrator's
compensation for that part of the month in which this Agreement is in effect
shall be prorated in a manner consistent with the
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<PAGE> 5
calculation of the fees as set forth above. Payment of the Administrator's
compensation for the preceding month shall be made promptly.
(B) SURVIVAL OF COMPENSATION RIGHTS. All rights of compensation under
this Agreement for services performed as of the termination date shall survive
the termination of this Agreement.
ARTICLE 5. LIMITATION OF LIABILITY OF THE ADMINISTRATOR. The duties of
the Administrator shall be confined to those expressly set forth herein, and no
implied duties are assumed by or may be asserted against the Administrator
hereunder. The Administrator shall not be liable for any error of judgment or
mistake of law or for any loss arising out of any act or omission in carrying
out its duties hereunder, except a loss resulting from willful misfeasance, bad
faith or negligence in the performance of its duties, or by reason of reckless
disregard of its obligations and duties hereunder, except as may otherwise be
provided under provisions of applicable law which cannot be waived or modified
hereby. (As used in this Article 5, the term "Administrator" shall include
partners, officers, employees and other agents of the Administrator as well as
the Administrator itself.)
So long as the Administrator acts in good faith and with due diligence
and without negligence, the Trust assumes full responsibility and shall
indemnify the Administrator and hold it harmless from and against any and all
actions, suits and claims, whether groundless or otherwise, and from and against
any and all losses, damages, costs, charges, reasonable counsel fees and
disbursements, payments, expenses and liabilities (including reasonable
investigation expenses) arising directly or indirectly out of the
Administrator's actions taken or nonactions with respect to the performance of
services hereunder. The indemnity and defense provisions set forth herein shall
indefinitely survive the termination of this Agreement.
The rights hereunder shall include the right to reasonable advances of
defense expenses in the event of any pending or threatened litigation with
respect to which indemnification hereunder may ultimately be merited. In order
that the indemnification provision contained herein shall apply, however, it is
understood that if in any case the Trust may be asked to indemnify or hold the
Administrator harmless, the Trust shall be fully and promptly advised of all
pertinent facts concerning the situation in question, and it is further
understood that the Administrator will use all reasonable care to identify and
notify the Trust promptly concerning any situation which presents or appears
likely to present the probability of such a claim for indemnification against
the Trust, but failure to do so in good faith shall not affect the rights
hereunder.
The Trust shall be entitled to participate at its own expense or, if it
so elects, to assume the defense of any suit brought to enforce any claims
subject to this indemnity provision. If the Trust elects to assume the defense
of any such claim, the defense shall be conducted by counsel chosen by the Trust
and satisfactory to the Administrator, whose approval shall not be unreasonably
withheld. In the event that the Trust elects to assume the defense of any suit
and retain counsel, the Administrator shall bear the fees and expenses of any
additional counsel retained by it. If the Trust does not elect to assume the
defense of a suit, it will reimburse the Administrator for the reasonable fees
and expenses of any counsel retained by the Administrator.
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<PAGE> 6
The Administrator may apply to the Trust at any time for instructions
and may consult counsel for the Trust or its own counsel and with accountants
and other experts with respect to any matter arising in connection with the
Administrator's duties, and the Administrator shall not be liable or accountable
for any action taken or omitted by it in good faith in accordance with such
instruction or with the opinion of such counsel, accountants or other experts.
Also, the Administrator shall be protected in acting upon any document
which it reasonably believes to be genuine and to have been signed or presented
by the proper person or persons. The Administrator will not be held to have
notice of any change of authority of any officers, employees or agents of the
Trust until receipt of written notice thereof from the Trust.
ARTICLE 6. ACTIVITIES OF THE ADMINISTRATOR. The services of the
Administrator rendered to the Trust are not to be deemed to be exclusive. The
Administrator is free to render such services to others and to have other
businesses and interests. It is understood that Trustees, officers, employees
and Shareholders of the Trust are or may be or become interested in the
Administrator, as officers, employees or otherwise and that partners, officers
and employees of the Administrator and its counsel are or may be or become
similarly interested in the Trust, and that the Administrator may be or become
interested in the Trust as a Shareholder or otherwise.
ARTICLE 7. DURATION OF THIS AGREEMENT. The Term of this Agreement shall
be as specified in Schedule A hereto.
ARTICLE 8. ASSIGNMENT. This Agreement shall not be assignable by either
party without the written consent of the other party; provided, however, that
the Administrator may, at its expense, subcontract with any entity or person
concerning the provision of the services contemplated hereunder. The
Administrator shall not, however, be relieved of any of its obligations under
this Agreement by the appointment of such subcontractor and provided further,
that the Administrator shall be responsible, to the extent provided in Article 5
hereof, for all acts of such subcontractor as if such acts were its own. This
Agreement shall be binding upon, and shall inure to the benefit of, the parties
hereto and their respective successors and permitted assigns.
ARTICLE 9. AMENDMENTS. This Agreement may be amended by the parties
hereto only if such amendment is specifically approved (i) by the vote of a
majority of the Trustees of the Trust, and (ii) by the vote of a majority of the
Trustees of the Trust who are not parties to this Agreement or interested
persons of any such party, cast in person at a Trustees meeting called for the
purpose of voting on such approval.
For special cases, the parties hereto may amend such procedures set
forth herein as may be appropriate or practical under the circumstances, and the
Administrator may conclusively assume that any special procedure which has been
approved by the Trust does not conflict with or violate any requirements of its
Declaration of Trust or then current prospectuses, or any rule, regulation or
requirement of any regulatory body.
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<PAGE> 7
ARTICLE 10. CERTAIN RECORDS. The Administrator shall maintain required
and customary records in connection with its duties as specified in this
Agreement. Any records required to be maintained and preserved pursuant to Rules
31a-1 and 31a-2 under the 1940 Act which are prepared or maintained by the
Administrator on behalf of the Trust shall be prepared and maintained at the
expense of the Administrator, but shall be the property of the Trust and will be
made available to or surrendered promptly to the Trust on request.
In case of any request or demand for the inspection of such records by
another party, the Administrator shall notify the Trust and follow the Trust's
instructions as to permitting or refusing such inspection; provided that the
Administrator may exhibit such records to any person in any case where it is
advised by its counsel that it may be held liable for failure to do so, unless
(in cases involving potential exposure only to civil liability) the Trust has
agreed to indemnify the Administrator against such liability.
ARTICLE 11. DEFINITIONS OF CERTAIN TERMS. The terms "interested person"
and "affiliated person," when used in this Agreement, shall have the respective
meanings specified in the 1940 Act and the rules and regulations thereunder,
subject to such exemptions as may be granted by the Securities and Exchange
Commission.
ARTICLE 12. NOTICE. Any notice required or permitted to be given by
either party to the other shall be deemed sufficient if sent by registered or
certified mail, postage prepaid, addressed by the party giving notice to the
other party at the following address: 3435 Stelzer Road, Columbus, Ohio 43219,
or at such other address as such party may from time to time specify in writing
to the other party pursuant to this Section.
ARTICLE 13. GOVERNING LAW. This Agreement shall be construed in
accordance with the laws of the State of Ohio and the applicable provisions of
the 1940 Act. To the extent that the applicable laws of the State of Ohio, or
any of the provisions herein, conflict with the applicable provisions of the
1940 Act, the latter shall control.
ARTICLE 14. MULTIPLE ORIGINALS. This Agreement may be executed in two
or more counterparts, each of which when so executed shall be deemed to be an
original, but such counterparts shall together constitute but one and the same
instrument.
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<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
THE COVENTRY GROUP
By:
------------------------------------
Title:
----------------------------------
BISYS FUND SERVICES OHIO, INC.
By:
------------------------------------
Title:
----------------------------------
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<PAGE> 9
SCHEDULE A
TO THE ADMINISTRATION AGREEMENT
DATED AS OF
BETWEEN
THE COVENTRY GROUP
AND
BISYS FUND SERVICES OHIO, INC.
Portfolios: This Agreement shall apply to all Boston Trust/Walden Fund
Portfolios of The Coventry Group advised by United States
Trust Company of Boston ("USTB"), either now or hereafter
created (individually, the "Portfolio", and collectively, the
"Portfolios"). The current Portfolios of the Trust advised by
Bank are set forth below:
Fees: Pursuant to Article 4, in consideration of services rendered
and expenses assumed pursuant to this Agreement and pursuant
to the Fund Accounting Agreement executed between the Trust
and BISYS FUND SERVICES OHIO, INC. with respect to fund
accounting services to be provided by BISYS FUND SERVICES
OHIO, INC. to portfolios of the Boston Trust Funds, the Trust
will pay the Administrator on the first business day of each
month, or at such time(s) as the Administrator shall request
and the parties hereto shall agree, a fee computed daily at
the annual rate of:
.20% of each
Portfolio's average daily net assets.
The fee for the period from the day of the month this
Agreement is entered into until the end of that month shall be
prorated according to the proportion which such period bears
to the full monthly period. Upon any termination of this
Agreement before the end of any month, the fee for such part
of a month shall be prorated according to the proportion which
such period bears to the full monthly period and shall be
payable upon the date of termination of this Agreement.
For purposes of determining the fees payable to the
Administrator, the value of the net assets of a particular
Portfolio shall be computed in the manner described in the
Trust's Declaration of Trust or Articles of Incorporation or
in the Prospectus or Statement of Additional Information
respecting that Portfolio as from time to time is in effect
for the computation of the value of such net
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<PAGE> 10
assets in connection with the determination of the liquidating
value of the shares of such Portfolio.
The parties hereby confirm that the fees payable hereunder
shall be applied to each Portfolio as a whole, and not to
separate classes of shares within the Portfolios.
The fee payable by the Trust hereunder shall be allocated to
each Portfolio based upon its pro rata share of the total fee
payable hereunder. Such fee as is attributable to each
Portfolio shall be a separate (and not joint or joint and
several) obligation of each such Portfolio. The Administrator
may agree, from time to time, to waive any fees payable under
this Agreement. Such waiver shall be at the Administrator's
sole discretion.
Term: Pursuant to Article 7, the term of this Agreement shall
commence on date of the contract and shall remain in effect
through June 1, 2001 ("Initial Term"). Thereafter, unless
otherwise terminated as provided herein, this Agreement shall
be renewed automatically for successive one-year periods
("Rollover Periods"). This Agreement may be terminated without
penalty (i) by provision of a notice of nonrenewal in the
manner set forth below, (ii) by mutual agreement of the
parties or (iii) for "cause," as defined below, upon the
provision of 60 days advance written notice by the party
alleging cause. Written notice of nonrenewal must be provided
at least 60 days prior to the end of the Initial Term or any
Rollover Period, as the case may be.
For purposes of this Agreement, "cause" shall mean (a) a
material breach of this Agreement that has not been remedied
for thirty (30) days following written notice of such breach
from the non-breaching party; (b) a final, unappealable
judicial, regulatory or administrative ruling or order in
which the party to be terminated has been found guilty of
criminal or unethical behavior in the conduct of its business,
a final, unappealable judicial, regulatory or administrative
ruling or order in which the party to be terminated has been
found guilty of some substantive shortcoming in its business
practices with respect to the Funds; or (c) financial
difficulties on the part of the party to be terminated which
are evidenced by the authorization or commencement of, or
involvement by way of pleading, answer, consent or
acquiescence in, a voluntary or involuntary case under Title
11 of the United States Code, as from time to time is in
effect, or any applicable law, other than said Title 11, of
any jurisdiction relating to the liquidation or reorganization
of debtors or to the modification or alteration of the rights
of creditors.
Notwithstanding the foregoing, after such termination for so
long as the Administrator, with the written consent of the
Trust, in fact continues to perform any one or more of the
services contemplated by this Agreement or any schedule or
exhibit hereto, the provisions of this Agreement, including
without limitation
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<PAGE> 11
the provisions dealing with indemnification, shall continue in
full force and effect. Compensation due the Administrator and
unpaid by the Trust upon such termination shall be immediately
due and payable upon and notwithstanding such termination. The
Administrator shall be entitled to collect from the Trust, in
addition to the compensation described in this Schedule A, the
amount of all of the Administrator's cash disbursements for
services in connection with the Administrator's activities in
effecting such termination, including without limitation, the
delivery to the Trust and/or its designees of the Trust's
property, records, instruments and documents.
If, for any reason other than (i) nonrenewal, (ii) mutual
agreement of the parties, (iii) "cause," as defined above, or
(iv) the termination of a Fund's operations for legitimate
economic reasons (e.g., diminished asset size), the
Administrator is replaced as administrator, or if a third
party is added to perform all or a part of the services
provided by the Administrator under this Agreement (excluding
any sub-administrator appointed by the Administrator as
provided in Article 7 hereof), then the Trust shall make a
one-time cash payment, in consideration of the fee structure
and services to be provided under this Agreement, and not as a
penalty, to the Administrator equal to the balance due the
Administrator for the lesser of: (i) the remainder of the
then-current term of this Agreement or (ii) the next twelve
(12) months of the then-current term of this Agreement,
assuming for purposes of calculation of the payment that such
balance shall be based upon the average amount of the Trust's
assets for the twelve months prior to the date the
Administrator is replaced or a third party is added.
In the event the Trust is merged into another legal entity in
part or in whole pursuant to any form of business
reorganization or is liquidated in part or in whole prior to
the expiration of the then-current term of this Agreement, the
parties acknowledge and agree that the liquidated damages
provision set forth above shall be applicable in those
instances in which the Administrator is not retained to
provide administration services consistent with this
Agreement. The one-time cash payment referenced above shall be
due and payable on the day prior to the first day in which the
Administrator is replaced or a third party is added.
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<PAGE> 1
Exhibit 99(h)(2)
FUND ACCOUNTING AGREEMENT
AGREEMENT made this March 23, 1999, between THE COVENTRY GROUP, a
Massachusetts business trust (the "Trust"), having its principal place of
business at 3435 Stelzer Road, Columbus, Ohio 43219, and BISYS FUND SERVICES
OHIO, INC. ("Fund Accountant"), a corporation organized under the laws of the
State of Ohio and having its principal place of business at 3435 Stelzer Road,
Columbus, Ohio 43219.
WHEREAS, the Trust is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), consisting of several series of shares of beneficial interest or common
stock ("Shares"); and
WHEREAS, the Trust desires Fund Accountant to perform, and Fund
Accountant is willing to perform, certain fund accounting services for each
currently existing Boston Trust/Walden Fund series of the Trust advised by
United States Trust Company of Boston ("USTB"), and such additional Boston
Trust/Walden Fund series advised by the USTB as the Trust and Fund Accountant
may agree on from time to time (individually referred to herein as a "Fund" and
collectively as the "Funds") and as listed on Schedule A attached hereto and
made a part of this Agreement, on the terms and conditions hereinafter set
forth;
NOW, THEREFORE, in consideration of the mutual premises and covenants
herein set forth, the parties agree as follows:
1. SERVICES AS FUND ACCOUNTANT.
(a) MAINTENANCE OF BOOKS AND RECORDS. Fund Accountant
will keep and maintain the following books and
records of each Fund pursuant to Rule 31a-1 under the
Investment Company Act of 1940 (the "Rule"):
(i) Journals containing an itemized daily record
in detail of all purchases and sales of
securities, all receipts and disbursements
of cash and all other debits and credits, as
required by subsection (b)(1) of the Rule;
(ii) General and auxiliary ledgers reflecting all
asset, liability, reserve, capital, income
and expense accounts, including interest
accrued and interest received, as required
by subsection (b)(2)(i) of the Rule;
(iii) Separate ledger accounts required by
subsection (b)(2)(ii) and (iii) of the Rule;
and
(iv) A monthly trial balance of all ledger
accounts (except shareholder accounts) as
required by subsection (b)(8) of the Rule.
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<PAGE> 2
(b) PERFORMANCE OF DAILY ACCOUNTING SERVICES. In addition
to the maintenance of the books and records specified
above, Fund Accountant shall perform the following
accounting services daily for each Fund:
(i) Calculate the net asset value per share
utilizing prices obtained from the sources
described in subsection 1(b)(ii) below;
(ii) Obtain security prices from independent
pricing services, or if such quotes are
unavailable, then obtain such prices from
each Fund's investment adviser or its
designee, as approved by the Trust's Board
of Trustees;
(iii) Verify and reconcile with the Funds'
custodian all daily trade activity;
(iv) Compute, as appropriate, each Fund's net
income and capital gains, dividend payables,
dividend factors, 7-day yields, 7-day
effective yields, 30-day yields, and
weighted average portfolio maturity;
(v) Review daily the net asset value calculation
and dividend factor (if any) for each Fund
prior to release to shareholders, check and
confirm the net asset values and dividend
factors for reasonableness and deviations,
and distribute net asset values and yields
to NASDAQ;
(vi) Report to the Trust the daily market pricing
of securities in any money market Funds,
with the comparison to the amortized cost
basis;
(vii) Determine unrealized appreciation and
depreciation on securities held in variable
net asset value Funds;
(viii) Amortize premiums and accrete discounts on
securities purchased at a price other than
face value, if requested by the Trust;
(ix) Update fund accounting system to reflect
rate changes, as received from a Fund's
investment adviser, on variable interest
rate instruments;
(x) Post Fund transactions to appropriate
categories;
(xi) Accrue expenses of each Fund according to
instructions received from the Trust's
Administrator;
(xii) Determine the outstanding receivables and
payables for all (1) security trades, (2)
Fund share transactions and (3) income and
expense accounts;
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<PAGE> 3
(xiii) Provide accounting reports in connection
with the Trust's regular annual audit and
other audits and examinations by regulatory
agencies; and
(xiv) Provide such periodic reports as the parties
shall agree upon, as set forth in a separate
schedule.
(c) SPECIAL REPORTS AND SERVICES.
(i) Fund Accountant may provide additional
special reports upon the request of the
Trust or a Fund's investment adviser, which
may result in an additional charge, the
amount of which shall be agreed upon between
the parties.
(ii) Fund Accountant may provide such other
similar services with respect to a Fund as
may be reasonably requested by the Trust,
which may result in an additional charge,
the amount of which shall be agreed upon
between the parties.
(d) ADDITIONAL ACCOUNTING SERVICES. Fund Accountant shall
also perform the following additional accounting
services for each Fund:
(i) Provide monthly a download (and hard copy
thereof) of the financial statements
described below, upon request of the Trust.
The download will include the following
items:
Statement of Assets and Liabilities,
Statement of Operations,
Statement of Changes in Net Assets, and
Condensed Financial Information;
(ii) Provide accounting information for the
following:
(A) federal and state income tax returns
and federal excise tax returns;
(B) the Trust's semi-annual reports with
the Securities and Exchange
Commission ("SEC") on Form N-SAR;
(C) the Trust's annual, semi-annual and
quarterly (if any) shareholder
reports;
(D) registration statements on Form N-1A
and other filings relating to the
registration of shares;
(E) the Administrator's monitoring of
the Trust's status as a regulated
investment company under Subchapter
M of the Internal Revenue Code, as
amended;
(F) annual audit by the Trust's
auditors; and
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<PAGE> 4
(G) examinations performed by the SEC or
other regulators.
2. SUBCONTRACTING.
Fund Accountant may, at its expense and with the approval of
the Trust, subcontract with any entity or person concerning the provision of the
services contemplated hereunder; provided, however, that Fund Accountant shall
not be relieved of any of its obligations under this Agreement by the
appointment of such subcontractor and provided further, that Fund Accountant
shall be responsible, to the extent provided in Section 7 hereof, for all acts
of such subcontractor as if such acts were its own.
3. COMPENSATION.
The Trust shall pay Fund Accountant for the services to be
provided by Fund Accountant under this Agreement in accordance with, and in the
manner set forth in, Schedule A hereto, as such Schedule may be amended from
time to time.
4. REIMBURSEMENT OF EXPENSES.
In addition to paying Fund Accountant the fees described in
Section 3 hereof, the Trust agrees to reimburse Fund Accountant for its
out-of-pocket expenses in providing services hereunder, including without
limitation the following:
(a) All freight and other delivery and bonding charges incurred by
Fund Accountant in delivering materials to and from the Trust;
(b) All direct telephone, telephone transmission and telecopy or
other electronic transmission expenses incurred by Fund
Accountant in communication with the Trust, the Trust's
investment adviser or custodian, dealers or others as required
for Fund Accountant to perform the services to be provided
hereunder;
(c) The cost of obtaining security market quotes pursuant to
Section l(b)(ii) above;
(d) The cost of microfilm or microfiche of records or other
materials;
(e) All systems-related expenses associated with the provision of
special reports and services pursuant to Section 1(c) herein;
(f) Any expenses Fund Accountant shall incur at the written
direction of an officer of the Trust thereunto duly
authorized; and
(g) Any additional expenses reasonably incurred by Fund Accountant
in the performance of its duties and obligations under this
Agreement.
5. EFFECTIVE DATE.
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<PAGE> 5
This Agreement shall become effective with respect to a Fund
as of the date first written above (or, if a particular Fund is not in existence
on that date, on the date such Fund commences operation) (the "Effective Date").
6. TERM.
This Agreement shall continue in effect with respect to a
Fund, unless earlier terminated by either party hereto as provided hereunder,
through June 1, 2001 (the "Initial Term"). Thereafter, unless otherwise
terminated as provided herein, this Agreement shall be renewed automatically for
successive one-year periods ("Rollover Periods"). This Agreement may be
terminated without penalty (i) by provision of a notice of nonrenewal in the
manner set forth below, (ii) by mutual agreement of the parties or (iii) for
"cause," as defined below, upon the provision of 60 days advance written notice
by the party alleging cause. Written notice of nonrenewal must be provided
within 60 days of the end of the Initial Term or any Rollover Period, as the
case may be.
For purposes of this Agreement, "cause" shall mean (a) a
material breach of this Agreement that has not been remedied for thirty (30)
days following written notice of such breach from the non-breaching party; (b) a
final, unappealable judicial, regulatory or administrative ruling or order in
which the party to be terminated has been found guilty of criminal or unethical
behavior in the conduct of its business; or (c) financial difficulties on the
part of the party to be terminated which are evidenced by the authorization or
commencement of, or involvement by way of pleading, answer, consent or
acquiescence in, a voluntary or involuntary case under Title 11 of the United
States Code, as from time to time is in effect, or any applicable law, other
than said Title 11, of any jurisdiction relating to the liquidation or
reorganization of debtors or to the modification or alteration of the rights of
creditors.
After such termination for so long as Fund Accountant, with
the written consent of the Trust, in fact continues to perform any one or more
of the services contemplated by this Agreement or any schedule or exhibit
hereto, the provisions of this Agreement, including without limitation the
provisions dealing with indemnification, shall continue in full force and
effect. Compensation due Fund Accountant and unpaid by the Trust upon such
termination shall be immediately due and payable upon and notwithstanding such
termination. Fund Accountant shall be entitled to collect from the Trust, in
addition to the compensation described under Section 3 hereof, the amount of all
of Fund Accountant's cash disbursements for services in connection with Fund
Accountant's activities in effecting such termination, including without
limitation, the delivery to the Trust and/or its designees of the Trust's
property, records, instruments and documents.
If, for any reason other than (i) nonrenewal, (ii) mutual
agreement of the parties, (iii) "cause," as defined above, or (iv) the
termination of a Fund's operations for legitimate economic reasons (e.g.,
diminished asset size), Fund Accountant is replaced as fund accountant, or if a
third party is added to perform all or a part of the services provided by Fund
Accountant under this Agreement (excluding any sub-accountant appointed by Fund
Accountant as provided in Section 2 hereof), then the Trust shall make a
one-time cash payment, in consideration of the fee structure and services to be
provided under this Agreement, and not as a penalty, to Fund Accountant equal to
the balance due Fund Accountant for the lesser of: (i) the remainder of the
then-current term of this
5
<PAGE> 6
Agreement or (ii) the next twelve (12) months of the then-current term of this
Agreement, assuming for purposes of calculation of the payment that such balance
shall be based upon the average amount of the Trust's assets for the twelve
months prior to the date Fund Accountant is replaced or a third party is added.
In the event the Trust is merged into another legal entity in
part or in whole pursuant to any form of business reorganization or is
liquidated in part or in whole prior to the expiration of the then-current term
of this Agreement, the parties acknowledge and agree that the liquidated damages
provision set forth above shall be applicable in those instances in which Fund
Accountant is not retained to provide fund accounting services consistent with
this Agreement. The one-time cash payment referenced above shall be due and
payable on the day prior to the first day in which Fund Accountant is replaced
or a third party is added.
7. STANDARD OF CARE; RELIANCE ON RECORDS AND INSTRUCTIONS;
INDEMNIFICATION.
Fund Accountant shall use its best efforts to insure the
accuracy of all services performed under this Agreement, but shall not be liable
to the Trust for any action taken or omitted by Fund Accountant in the absence
of bad faith, willful misfeasance, negligence or from reckless disregard by it
of its obligations and duties. A Fund agrees to indemnify and hold harmless Fund
Accountant, its employees, agents, Trustees, officers and nominees from and
against any and all claims, demands, actions and suits, whether groundless or
otherwise, and from and against any and all judgments, liabilities, losses,
damages, costs, charges, counsel fees and other expenses of every nature and
character arising out of or in any way relating to Fund Accountant's actions
taken or nonactions with respect to the performance of services under this
Agreement with respect to such Fund or based, if applicable, upon reasonable
reliance on information, records, instructions or requests with respect to such
Fund given or made to Fund Accountant by a duly authorized representative of the
Trust; provided that this indemnification shall not apply to actions or
omissions of Fund Accountant in cases of its own bad faith, willful misfeasance,
negligence or from reckless disregard by it of its obligations and duties, and
further provided that prior to confessing any claim against it which may be the
subject of this indemnification, Fund Accountant shall give the Trust written
notice of and reasonable opportunity to defend against said claim in its own
name or in the name of Fund Accountant.
8. RECORD RETENTION AND CONFIDENTIALITY.
Fund Accountant shall keep and maintain on behalf of the Trust
all books and records which the Trust and Fund Accountant is, or may be,
required to keep and maintain pursuant to any applicable statutes, rules and
regulations, including without limitation Rules 31a-1 and 31a-2 under the
Investment Company Act of 1940, as amended (the "1940 Act"), relating to the
maintenance of books and records in connection with the services to be provided
hereunder. Fund Accountant further agrees that all such books and records shall
be the property of the Trust and to make such books and records available for
inspection by the Trust or by the Securities and Exchange Commission or other
regulators at reasonable times and otherwise to keep confidential all books and
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records and other information relative to the Trust and its shareholders; except
when requested to divulge such information by duly-constituted authorities or
court process.
9. UNCONTROLLABLE EVENTS.
Fund Accountant assumes no responsibility hereunder, and shall
not be liable, for any damage, loss of data, delay or any other loss whatsoever
caused by events beyond its reasonable control.
10. REPORTS.
Fund Accountant will furnish to the Trust and to its properly
authorized auditors, investment advisers, examiners, distributors, dealers,
underwriters, salesmen, insurance companies and others designated by the Trust
in writing, such reports and at such times as are prescribed pursuant to the
terms and the conditions of this Agreement to be provided or completed by Fund
Accountant, or as subsequently agreed upon by the parties pursuant to an
amendment hereto. The Trust agrees to examine each such report or copy promptly
and will report or cause to be reported any errors or discrepancies therein.
11. RIGHTS OF OWNERSHIP.
All computer programs and procedures developed by Fund
Accountant to perform services required to be provided by Fund Accountant under
this Agreement are the property of Fund Accountant. All records and other data
except such computer programs and procedures are the exclusive property of the
Trust and all such other records and data will be furnished to the Trust in
appropriate form as soon as practicable after termination of this Agreement for
any reason.
12. RETURN OF RECORDS.
Fund Accountant may at its option at any time, and shall
promptly upon the Trust's demand, turn over to the Trust and cease to retain
Fund Accountant's files, records and documents created and maintained by Fund
Accountant pursuant to this Agreement which are no longer needed by Fund
Accountant in the performance of its services or for its legal protection. If
not so turned over to the Trust, such documents and records will be retained by
Fund Accountant for six years from the year of creation. At the end of such
six-year period, such records and documents will be turned over to the Trust
unless the Trust authorizes in writing the destruction of such records and
documents.
13. REPRESENTATIONS OF THE TRUST.
The Trust certifies to Fund Accountant that: (1) as of the
close of business on the Effective Date, each Fund that is in existence as of
the Effective Date has authorized unlimited shares, and (2) this Agreement has
been duly authorized by the Trust and, when executed and delivered by the Trust,
will constitute a legal, valid and binding obligation of the Trust, enforceable
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<PAGE> 8
against the Trust in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting the rights and remedies of creditors and secured parties.
14. REPRESENTATIONS OF FUND ACCOUNTANT.
Fund Accountant represents and warrants that: (1) the various
procedures and systems which Fund Accountant has implemented with regard to
safeguarding from loss or damage attributable to fire, theft, or any other cause
the records, and other data of the Trust and Fund Accountant's records, data,
equipment facilities and other property used in the performance of its
obligations hereunder are adequate and that it will make such changes therein
from time to time as are required for the secure performance of its obligations
hereunder, and (2) this Agreement has been duly authorized by Fund Accountant
and, when executed and delivered by Fund Accountant, will constitute a legal,
valid and binding obligation of Fund Accountant, enforceable against Fund
Accountant in accordance with its terms, subject to bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting the
rights and remedies of creditors and secured parties.
15. INSURANCE.
Fund Accountant shall notify the Trust should any of its
insurance coverage be canceled or reduced. Such notification shall include the
date of change and the reasons therefor. Fund Accountant shall notify the Trust
of any material claims against it with respect to services performed under this
Agreement, whether or not they may be covered by insurance, and shall notify the
Trust from time to time as may be appropriate of the total outstanding claims
made by Fund Accountant under its insurance coverage.
16. INFORMATION TO BE FURNISHED BY THE TRUST AND FUNDS.
The Trust has furnished to Fund Accountant the following:
(a) Copies of the Declaration of Trust or Articles of
Incorporation of the Trust and of any amendments
thereto, certified by the proper official of the
state in which such document has been filed.
(b) Copies of the following documents:
(i) The Trust's Bylaws and any amendments
thereto; and
(ii) Certified copies of resolutions of the
Trustees covering the approval of this
Agreement, authorization of a specified
officer of the Trust to execute and deliver
this Agreement and authorization for
specified officers of the Trust to instruct
Fund Accountant thereunder.
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(c) A list of all the officers of the Trust, together
with specimen signatures of those officers who are
authorized to instruct Fund Accountant in all
matters.
(d) Two copies of the Prospectuses and Statements of
Additional Information for each Fund.
17. INFORMATION FURNISHED BY FUND ACCOUNTANT.
(a) Fund Accountant has furnished to the Trust the
following:
(i) Fund Accountant's Articles of Incorporation;
and
(ii) Fund Accountant's Bylaws and any amendments
thereto.
(b) Fund Accountant shall, upon request, furnish
certified copies of corporate actions covering the
following matters:
(i) Approval of this Agreement, and
authorization of a specified officer of Fund
Accountant to execute and deliver this
Agreement; and
(ii) Authorization of Fund Accountant to act as
fund accountant for the Trust and to provide
accounting services for the Trust.
18. AMENDMENTS TO DOCUMENTS.
The Trust shall furnish Fund Accountant written copies of any
amendments to, or changes in, any of the items referred to in Section 16 hereof
forthwith upon such amendments or changes becoming effective. In addition, the
Trust agrees that no amendments will be made to the Prospectuses or Statements
of Additional Information of the Trust which might have the effect of changing
the procedures employed by Fund Accountant in providing the services agreed to
hereunder or which amendment might affect the duties of Fund Accountant
hereunder unless the Trust first obtains Fund Accountant's approval of such
amendments or changes.
19. COMPLIANCE WITH LAW.
Except for the obligations of Fund Accountant set forth in
Section 8 hereof, the Trust assumes full responsibility for the preparation,
contents and distribution of each prospectus of the Trust as to compliance with
all applicable requirements of the Securities Act of 1933, as amended (the
"Securities Act"), the 1940 Act and any other laws, rules and regulations of
governmental authorities having jurisdiction. Fund Accountant shall have no
obligation to take cognizance of any laws relating to the sale of the Trust's
shares. The Trust represents and warrants that no shares of the Trust will be
offered to the public until the Trust's registration statement under the
Securities Act and the 1940 Act has been declared or becomes effective.
20. NOTICES.
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Any notice provided hereunder shall be sufficiently given when
sent by registered or certified mail to the party required to be served with
such notice, at the following address: if to the Trust, at 3435 Stelzer Road,
Columbus, Ohio 43219; and if to Fund Accountant, at 3435 Stelzer Road, Columbus,
Ohio 43219, or at such other address as such party may from time to time specify
in writing to the other party pursuant to this Section.
21. HEADINGS.
Paragraph headings in this Agreement are included for
convenience only and are not to be used to construe or interpret this Agreement.
22. ASSIGNMENT.
This Agreement and the rights and duties hereunder shall not
be assignable with respect to a Fund by either of the parties hereto except by
the specific written consent of the other party. This Agreement shall be binding
upon, and shall inure to the benefit of, the parties hereto and their respective
successors and permitted assigns.
23. GOVERNING LAW.
This Agreement shall be governed by and provisions shall be
construed in accordance with the laws of the State of Ohio.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
THE COVENTRY GROUP
BY:
-----------------------------
TITLE:
--------------------------
BISYS FUND SERVICES OHIO, INC.
BY:
-----------------------------
TITLE:
--------------------------
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SCHEDULE A
TO THE FUND ACCOUNTING AGREEMENT
BETWEEN
THE COVENTRY GROUP
AND
BISYS FUND SERVICES OHIO, INC.
FEES
Fund Accountant shall be entitled to receive from each Fund a fee which shall be
such portion of the fee paid pursuant to Article 4 of the Administration
Agreement between the Funds and BISYS FUND SERVICES OHIO, INC. with respect to
management and administrative services to be provided to portfolios of Boston
Trust Funds as the parties hereto shall agree, which fee shall not be more than
.03% of each portfolio's average daily net assets nor less than .01% of each
portfolio's average daily net assets.
OUT-OF-POCKET EXPENSES:
Fund Accountant shall be entitled to be reimbursed for all reasonable
out-of-pocket expenses including, but not limited to, the expenses set
forth in Section 4 of the Fund Accounting Agreement to which this
Schedule A is attached.
A-1
<PAGE> 1
Exhibit 99(h)(3)
TRANSFER AGENCY AGREEMENT
-------------------------
AGREEMENT made this 23rd day of May, 1999, between THE COVENTRY GROUP,
a Massachusetts business trust (the "Trust"), having its principal place of
business at 3435 Stelzer Road, Columbus, Ohio 43219, and BISYS FUND SERVICES
OHIO, INC. an Ohio corporation ("BISYS"), having its principal place of business
at 3435 Stelzer Road, Columbus, Ohio 43219.
WHEREAS, the Trust is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), consisting of several series of shares of beneficial interest or common
stock ("Shares"); and
WHEREAS, the Trust desires BISYS to perform, and BISYS is willing to
perform, certain transfer agency services for the Walden/BBT Domestic Social
Index Fund and Walden/BBT International Social Index Fund portfolios of the
Trust (individually referred to herein as a "Fund" and collectively as the
"Funds"), on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual premises and covenants
herein set forth, the parties agree as follows:
1. SERVICES.
BISYS shall perform for the Trust the transfer agent services
set forth in Schedule A hereto. BISYS also agrees to perform for the Trust such
special services incidental to the performance of the services enumerated herein
as agreed to by the parties from time to time. BISYS shall perform such
additional services as are provided on an amendment to Schedule A hereof, in
consideration of such fees as the parties hereto may agree.
BISYS may, in its discretion, appoint in writing other parties
qualified to perform transfer agency services reasonably acceptable to the Trust
(individually, a "Sub-transfer Agent") to carry out some or all of its
responsibilities under this Agreement with respect to a Fund; provided, however,
that the Sub-transfer Agent shall be the agent of BISYS and not the agent of the
Trust or such Fund, and that BISYS shall be fully responsible for the acts of
such Sub-transfer Agent and shall not be relieved of any of its responsibilities
hereunder by the appointment of such Sub-transfer Agent.
2. FEES.
The Trust shall pay BISYS for the services to be provided by
BISYS under this Agreement in accordance with, and in the manner set forth in,
Schedule B hereto. Fees for any additional services to be provided by BISYS
pursuant to an amendment to Schedule A hereto shall be subject to mutual
agreement at the time such amendment to Schedule A is proposed.
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<PAGE> 2
3. REIMBURSEMENT OF EXPENSES.
In addition to paying BISYS the fees described in Section 2
hereof, the Trust agrees to reimburse BISYS for BISYS' out-of-pocket expenses in
providing services hereunder, including without limitation, the following:
(a) All freight and other delivery and bonding charges
incurred by BISYS in delivering materials to and from
the Trust and in delivering all materials to
shareholders;
(b) All direct telephone, telephone transmission and
telecopy or other electronic transmission expenses
incurred by BISYS in communication with the Trust,
the Trust's investment adviser or custodian, dealers,
shareholders or others as required for BISYS to
perform the services to be provided hereunder;
(c) Costs of postage, couriers, stock computer paper,
statements, labels, envelopes, checks, reports,
letters, tax forms, proxies, notices or other form of
printed material which shall be required by BISYS for
the performance of the services to be provided
hereunder;
(d) The cost of microfilm or microfiche of records or
other materials;
(e) Sales taxes paid on behalf of the Trust:
(f) Expenses associated with the tracking of "as-of"
trades;
(e) All systems-related expenses associated with the
provision of special reports and services pursuant to
Schedule C attached hereto; and
(f) Any expenses BISYS shall incur at the written
direction of an officer of the Trust thereunto duly
authorized.
4. EFFECTIVE DATE.
This Agreement shall become effective as of the date first
written above (the "Effective Date").
5. TERM.
This Agreement shall continue in effect with respect to a
Fund, unless earlier terminated by either party hereto as provided hereunder,
through June 1, 2001 (the "Initial Term"). Thereafter, unless otherwise
terminated as provided herein, this Agreement shall be renewed automatically for
successive one-year periods ("Rollover Periods"). This Agreement may be
terminated without penalty (i) by provision of a notice of nonrenewal in the
manner set
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<PAGE> 3
forth below, (ii) by mutual agreement of the parties or (iii) for "cause," as
defined below, upon the provision of 60 days advance written notice by the party
alleging cause. Written notice of nonrenewal must be provided within 60 days of
the end of the Initial Term or any Rollover Period, as the case may be.
For purposes of this Agreement, "cause" shall mean (a) a
material breach of this Agreement that has not been remedied for thirty (30)
days following written notice of such breach from the non-breaching party; (b) a
final, unappealable judicial, regulatory or administrative ruling or order in
which the party to be terminated has been found guilty of criminal or unethical
behavior in the conduct of its business; or (c) financial difficulties on the
part of the party to be terminated which are evidenced by the authorization or
commencement of, or involvement by way of pleading, answer, consent or
acquiescence in, a voluntary or involuntary case under Title 11 of the United
States Code, as from time to time is in effect, or any applicable law, other
than said Title 11, of any jurisdiction relating to the liquidation or
reorganization of debtors or to the modification or alteration of the rights of
creditors.
After such termination, for so long as BISYS, with the written
consent of the Trust, in fact continues to perform any one or more of the
services contemplated by this Agreement or any Schedule or exhibit hereto, the
provisions of this Agreement, including without limitation the provisions
dealing with indemnification, shall continue in full force and effect. Fees and
out-of-pocket expenses incurred by BISYS but unpaid by the Trust upon such
termination shall be immediately due and payable upon and notwithstanding such
termination. BISYS shall be entitled to collect from the Trust, in addition to
the fees and disbursements provided by Sections 2 and 3 hereof, the amount of
all of BISYS' cash disbursements in connection with BISYS' activities in
effecting such termination, including without limitation, the delivery to the
Trust and/or its distributor or investment adviser and/or other parties, of the
Trust's property, records, instruments and documents.
If, for any reason other than (i) nonrenewal, (ii) mutual
agreement of the parties, (iii) "cause," as defined above, or (iv) the
termination of a Fund's operations for legitimate economic reasons (e.g.,
diminished asset size), BISYS is replaced as transfer agent, or if a third party
is added to perform all or a part of the services provided by BISYS under this
Agreement (excluding any Sub-transfer Agent appointed by BISYS as provided in
Section 1 hereof), then the Trust shall make a one-time cash payment, in
consideration of the fee structure and services to be provided under this
Agreement, and not as a penalty, to BISYS equal to the balance due BISYS for the
lesser of: (i) the remainder of the then-current term of this Agreement or (ii)
the next twelve (12) months of the then-current term of this Agreement, assuming
for purposes of calculation of the payment that such balance shall be based upon
the average number of Trust shareholder accounts for the twelve months prior to
the date BISYS is replaced or a third party is added.
In the event the Trust is merged into another legal entity in
part or in whole pursuant to any form of business reorganization or is
liquidated in part or in whole prior to the expiration of the then-current term
of this Agreement, the parties acknowledge and agree that the liquidated damages
provision set forth above shall be applicable in those instances in which
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<PAGE> 4
BISYS is not retained to provide transfer agency services consistent with this
Agreement, including the level of assets subject to such services. The one-time
cash payment referenced above shall be due and payable on the day prior to the
first day in which BISYS is replaced or a third party is added.
6. UNCONTROLLABLE EVENTS.
BISYS assumes no responsibility hereunder, and shall not be
liable for any damage, loss of data, delay or any other loss whatsoever caused
by events beyond its reasonable control.
7. LEGAL ADVICE.
BISYS shall notify the Trust at any time BISYS believes that
it is in need of the advice of counsel (other than counsel in the regular employ
of BISYS or any affiliated companies) with regard to BISYS' responsibilities and
duties pursuant to this Agreement; and after so notifying the Trust, BISYS, at
its discretion, shall be entitled to seek, receive and act upon advice of legal
counsel of its choosing, such advice to be at the expense of the Trust or Funds
unless relating to a matter involving BISYS' willful misfeasance, bad faith,
gross negligence or reckless disregard with respect to BISYS' responsibilities
and duties hereunder and BISYS shall in no event be liable to the Trust or any
Fund or any shareholder or beneficial owner of the Trust for any action
reasonably taken pursuant to such advice.
8. INSTRUCTIONS.
Whenever BISYS is requested or authorized to take action
hereunder pursuant to instructions from a shareholder, or a properly authorized
agent of a shareholder ("shareholder's agent"), concerning an account in a Fund,
BISYS shall be entitled to rely upon any certificate, letter or other instrument
or communication, believed by BISYS to be genuine and to have been properly
made, signed or authorized by an officer or other authorized agent of the Trust
or by the shareholder or shareholder's agent, as the case may be, and shall be
entitled to receive as conclusive proof of any fact or matter required to be
ascertained by it hereunder a certificate signed by an officer of the Trust or
any other person authorized by the Trust's Board of Trustees or by the
shareholder or shareholder's agent, as the case may be.
As to the services to be provided hereunder, BISYS may rely
conclusively upon the terms of the Prospectuses and Statement of Additional
Information of the Trust relating to the Funds to the extent that such services
are described therein unless BISYS receives written instructions to the contrary
in a timely manner from the Trust.
9. STANDARD OF CARE; RELIANCE ON RECORDS AND INSTRUCTIONS;
INDEMNIFICATION.
BISYS shall use its best efforts to ensure the accuracy of all
services performed under this Agreement, but shall not be liable to the Trust
for any action taken or omitted by BISYS in the absence of bad faith, willful
misfeasance, negligence or from reckless disregard by it of its obligations and
duties. The Trust agrees to indemnify and hold harmless BISYS, its
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<PAGE> 5
employees, agents, Trustees, officers and nominees from and against any and all
claims, demands, actions and suits, whether groundless or otherwise, and from
and against any and all judgments, liabilities, losses, damages, costs, charges,
counsel fees and other expenses of every nature and character arising out of or
in any way relating to BISYS' actions taken or nonactions with respect to the
performance of services under this Agreement or based, if applicable, upon
reasonable reliance on information, records, instructions or requests given or
made to BISYS by the Trust, the investment adviser and on any records provided
by any fund accountant or custodian thereof; provided that this indemnification
shall not apply to actions or omissions of BISYS in cases of its own bad faith,
willful misfeasance, negligence or from reckless disregard by it of its
obligations and duties; and further provided that prior to confessing any claim
against it which may be the subject of this indemnification, BISYS shall give
the Trust written notice of and reasonable opportunity to defend against said
claim in its own name or in the name of BISYS.
10. RECORD RETENTION AND CONFIDENTIALITY.
BISYS shall keep and maintain on behalf of the Trust all books
and records which the Trust or BISYS is, or may be, required to keep and
maintain pursuant to any applicable statutes, rules and regulations, including
without limitation Rules 31a-1 and 31a-2 under the Investment Company Act of
1940, as amended (the "1940 Act"), relating to the maintenance of books and
records in connection with the services to be provided hereunder. BISYS further
agrees that all such books and records shall be the property of the Trust and to
make such books and records available for inspection by the Trust or by the
Securities and Exchange Commission (the "Commission") at reasonable times and
otherwise to keep confidential all books and records and other information
relative to the Trust and its shareholders, except when requested to divulge
such information by duly-constituted authorities or court process, or requested
by a shareholder or shareholder's agent with respect to information concerning
an account as to which such shareholder has either a legal or beneficial
interest or when requested by the Trust, the shareholder, or shareholder's
agent, or the dealer of record as to such account.
11. REPORTS.
BISYS will furnish to the Trust and to its properly-authorized
auditors, investment advisers, examiners, distributors, dealers, underwriters,
salesmen, insurance companies and others designated by the Trust in writing,
such reports at such times as are prescribed in Schedule C attached hereto, or
as subsequently agreed upon by the parties pursuant to an amendment to Schedule
C. The Trust agrees to examine each such report or copy promptly and will report
or cause to be reported any errors or discrepancies therein.
12. RIGHTS OF OWNERSHIP.
All computer programs and procedures developed to perform
services required to be provided by BISYS under this Agreement are the property
of BISYS. All records and other data except such computer programs and
procedures are the exclusive property of the Trust and all
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<PAGE> 6
such other records and data will be furnished to the Trust in appropriate form
as soon as practicable after termination of this Agreement for any reason.
13. RETURN OF RECORDS.
BISYS may at its option at any time, and shall promptly upon
the Trust's demand, turn over to the Trust and cease to retain BISYS' files,
records and documents created and maintained by BISYS pursuant to this Agreement
which are no longer needed by BISYS in the performance of its services or for
its legal protection. If not so turned over to the Trust, such documents and
records will be retained by BISYS for six years from the year of creation. At
the end of such six-year period, such records and documents will be turned over
to the Trust unless the Trust authorizes in writing the destruction of such
records and documents.
14. BANK ACCOUNTS.
The Trust and the Funds shall establish and maintain such bank
accounts with such bank or banks as are selected by the Trust, as are necessary
in order that BISYS may perform the services required to be performed hereunder.
To the extent that the performance of such services shall require BISYS directly
to disburse amounts for payment of dividends, redemption proceeds or other
purposes, the Trust and Funds shall provide such bank or banks with all
instructions and authorizations necessary for BISYS to effect such
disbursements.
15. REPRESENTATIONS OF THE TRUST.
The Trust certifies to BISYS that: (a) as of the close of
business on the Effective Date, each Fund which is in existence as of the
Effective Date has authorized unlimited shares, and (b) by virtue of its
Declaration of Trust or Articles of Incorporation, shares of each Fund which are
redeemed by the Trust may be sold by the Trust from its treasury, and (c) this
Agreement has been duly authorized by the Trust and, when executed and delivered
by the Trust, will constitute a legal, valid and binding obligation of the
Trust, enforceable against the Trust in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting the rights and remedies of creditors and secured parties.
16. REPRESENTATIONS OF BISYS.
BISYS represents and warrants that: (a) BISYS has been in, and
shall continue to be in, substantial compliance with all provisions of law,
including Section 17A(c) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), required in connection with the performance of its duties
under this Agreement; and (b) the various procedures and systems which BISYS has
implemented with regard to safekeeping from loss or damage attributable to fire,
theft or any other cause of the blank checks, records, and other data of the
Trust and BISYS' records, data, equipment, facilities and other property used in
the performance of its obligations hereunder are adequate and that it will make
such changes therein from time to time as are required for the secure
performance of its obligations hereunder.
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<PAGE> 7
17. INSURANCE.
BISYS shall notify the Trust should its insurance coverage
with respect to professional liability or errors and omissions coverage be
canceled or reduced. Such notification shall include the date of change and the
reasons therefor. BISYS shall notify the Trust of any material claims against it
with respect to services performed under this Agreement, whether or not they may
be covered by insurance, and shall notify the Trust from time to time as may be
appropriate of the total outstanding claims made by BISYS under its insurance
coverage.
18. INFORMATION TO BE FURNISHED BY THE TRUST AND FUNDS.
The Trust has furnished to BISYS the following:
(a) Copies of the Declaration of Trust of the Trust and
of any amendments thereto, certified by the proper
official of the state in which such Declaration has
been filed.
(b) Copies of the following documents:
1. The Trust's By-Laws and any amendments
thereto;
2. Certified copies of resolutions of the
Trustees covering the following matters:
A. Approval of this Agreement and
authorization of a specified
officer of the Trust to execute and
deliver this Agreement and
authorization for specified
officers of the Trust to instruct
BISYS hereunder; and
B. Authorization of BISYS to act as
Transfer Agent for the Trust on
behalf of the Funds.
(c) A list of all officers of the Trust, together with
specimen signatures of those officers, who are
authorized to instruct BISYS in all matters.
(d) Two copies of the following (if such documents are
employed by the Trust):
1. Prospectuses and Statement of Additional
Information;
2. Distribution Agreement; and
3. All other forms commonly used by the Trust
or its Distributor with regard to their
relationships and transactions with
shareholders of the Funds.
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<PAGE> 8
(e) A certificate as to shares of beneficial interest or
common stock of the Trust authorized, issued, and
outstanding as of the Effective Date of BISYS'
appointment as Transfer Agent (or as of the date on
which BISYS' services are commenced, whichever is the
later date) and as to receipt of full consideration
by the Trust for all shares outstanding, such
statement to be certified by the Treasurer of the
Trust.
19. INFORMATION FURNISHED BY BISYS.
BISYS has furnished to the Trust the following:
(a) BISYS' Articles of Incorporation.
(b) BISYS' Bylaws and any amendments thereto.
(c) Certified copies of actions of BISYS covering the
following matters:
1. Approval of this Agreement, and
authorization of a specified officer of
BISYS to execute and deliver this Agreement;
2. Authorization of BISYS to act as Transfer
Agent for the Trust.
(d) A copy of the most recent independent accountants'
report relating to internal accounting control
systems as filed with the Commission pursuant to Rule
17Ad-13 under the Exchange Act.
20. AMENDMENTS TO DOCUMENTS.
The Trust shall furnish BISYS written copies of any amendments
to, or changes in, any of the items referred to in Section 18 hereof forthwith
upon such amendments or changes becoming effective. In addition, the Trust
agrees that no amendments will be made to the Prospectuses or Statement of
Additional Information of the Trust which might have the effect of changing the
procedures employed by BISYS in providing the services agreed to hereunder or
which amendment might affect the duties of BISYS hereunder unless the Trust
first obtains BISYS' approval of such amendments or changes.
21. RELIANCE ON AMENDMENTS.
BISYS may rely on any amendments to or changes in any of the
documents and other items to be provided by the Trust pursuant to Sections 18
and 20 of this Agreement and the Trust hereby indemnifies and holds harmless
BISYS from and against any and all claims, demands, actions, suits, judgments,
liabilities, losses, damages, costs, charges, counsel fees and other expenses of
every nature and character which may result from actions or omissions on the
part of BISYS in reasonable reliance upon such amendments and/or changes.
Although BISYS
9
<PAGE> 9
is authorized to rely on the above-mentioned amendments to and changes in the
documents and other items to be provided pursuant to Sections 18 and 20 hereof,
BISYS shall be under no duty to comply with or take any action as a result of
any of such amendments or changes unless the Trust first obtains BISYS' written
consent to and approval of such amendments or changes.
22. COMPLIANCE WITH LAW.
Except for the obligations of BISYS set forth in Section 10
hereof, the Trust assumes full responsibility for the preparation, contents, and
distribution of each prospectus of the Trust as to compliance with all
applicable requirements of the Securities Act of 1933, as amended (the "1933
Act"), the 1940 Act, and any other laws, rules and regulations of governmental
authorities having jurisdiction. BISYS shall have no obligation to take
cognizance of any laws relating to the sale of the Trust's shares. The Trust
represents and warrants that no shares of the Trust will be offered to the
public until the Trust's registration statement under the 1933 Act and the 1940
Act has been declared or becomes effective.
23. NOTICES.
Any notice provided hereunder shall be sufficiently given when
sent by registered or certified mail to the party required to be served with
such notice at the following address: 3435 Stelzer Road, Columbus, Ohio 43219,
or at such other address as such party may from time to time specify in writing
to the other party pursuant to this Section.
24. HEADINGS.
Paragraph headings in this Agreement are included for
convenience only and are not to be used to construe or interpret this Agreement.
25. ASSIGNMENT.
This Agreement and the rights and duties hereunder shall not be
assignable by either of the parties hereto except by the specific written
consent of the other party. This Section 25 shall not limit or in any way affect
BISYS' right to appoint a Sub-transfer Agent pursuant to Section 1 hereof. This
Agreement shall be binding upon, and shall inure to the benefit of, the parties
hereto and their respective successors and permitted assigns.
26. GOVERNING LAW.
This Agreement shall be governed by and provisions shall be
construed in accordance with the laws of the State of Ohio.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed all as of the day and year first above written.
10
<PAGE> 10
THE COVENTRY GROUP
By:
-----------------------------------
Title:
--------------------------------
BISYS FUND SERVICES OHIO, INC.
By:
-----------------------------------
Title:
--------------------------------
11
<PAGE> 11
SCHEDULE A
TO THE TRANSFER AGENCY AGREEMENT
BETWEEN
THE COVENTRY GROUP
AND
BISYS FUND SERVICES OHIO, INC.
TRANSFER AGENCY SERVICES
------------------------
1. SHAREHOLDER TRANSACTIONS
a. Process shareholder purchase and redemption orders.
b. Set up account information, including address, dividend
option, taxpayer identification numbers and wire instructions.
c. Issue confirmations in compliance with Rule l0b-10 under the
Securities Exchange Act of 1934, as amended.
d. Issue periodic statements for shareholders.
e. Process transfers and exchanges.
f. Process dividend payments, including the purchase of new
shares, through dividend reimbursement.
2. SHAREHOLDER INFORMATION SERVICES
a. Make information available to shareholder servicing unit and
other remote access units regarding trade date, share price,
current holdings, yields, and dividend information.
b. Produce detailed history of transactions through duplicate or
special order statements upon request.
c. Provide mailing labels for distribution of financial reports,
prospectuses, proxy statements or marketing material to
current shareholders.
12
<PAGE> 12
3. COMPLIANCE REPORTING
a. Provide reports to the Securities and Exchange Commission, the
National Association of Securities Dealers and the States in
which the Fund is registered.
b. Prepare and distribute appropriate Internal Revenue Service
forms for corresponding Fund and shareholder income and
capital gains.
c. Issue tax withholding reports to the Internal Revenue Service.
4. DEALER/LOAD PROCESSING (IF APPLICABLE)
a. Provide reports for tracking rights of accumulation and
purchases made under a Letter of Intent.
b. Account for separation of shareholder investments from
transaction sale charges for purchase of Fund shares.
c. Calculate fees due under 12b-l plans for distribution and
marketing expenses.
d. Track sales and commission statistics by dealer and provide
for payment of commissions on direct shareholder purchases in
a load Fund.
5. SHAREHOLDER ACCOUNT MAINTENANCE
a. Maintain all shareholder records for each account in the
Trust.
b. Issue customer statements on scheduled cycle, providing
duplicate second and third party copies if required.
c. Record shareholder account information changes.
d. Maintain account documentation files for each shareholder.
13
<PAGE> 13
SCHEDULE B
TO THE TRANSFER AGENCY AGREEMENT
BETWEEN
THE COVENTRY GROUP
AND
BISYS FUND SERVICES OHIO, INC.
TRANSFER AGENT FEES
-------------------
ANNUAL FEES PER FUND:
$18,000
MULTIPLE CLASSES OF SHARES:
Classes of shares which have different net asset values or pay different daily
dividends will be treated as separate classes, and the fee schedule above,
including the appropriate minimums, will be charged for each separate class.
ADDITIONAL SERVICES:
Additional services such as IRA processing are subject to additional fees which
will be quoted upon request. Programming costs or data base management fees for
special reports or specialized processing will be quoted upon request.
OUT OF POCKET CHARGES:
Out-of-pocket costs, including postage, Tymnet charges, statement/confirm paper
and forms, and microfiche, will be added to the transfer agent fees.
14
<PAGE> 14
SCHEDULE C
TO THE TRANSFER AGENCY AGREEMENT
BETWEEN
THE COVENTRY GROUP
AND
BISYS FUND SERVICES OHIO, INC.
REPORTS
-------
1. Daily Shareholder Activity Journal
2. Daily Fund Activity Summary Report
a. Beginning Balance
b. Dealer Transactions
c. Shareholder Transactions
d. Reinvested Dividends
e. Exchanges
f. Adjustments
g. Ending Balance
3. Daily Wire and Check Registers
4. Monthly Dealer Processing Reports
5. Monthly Dividend Reports
6. Sales Data Reports for Blue Sky Registration
7. Annual report by independent public accountants concerning BISYS'
shareholder system and internal accounting control systems to be filed
with the Securities and Exchange Commission pursuant to Rule l7Ad-13
of the Securities Exchange Act of 1934, as amended.
8. Such special reports and additional information that the parties may
agree upon, from time to time.
15
<PAGE> 1
EXHIBIT 99(h)(4)
EXPENSE LIMITATION AGREEMENT
THIS AGREEMENT, dated as of July 31, 1999, is made and entered into by and
between The Coventry Group, a Massachusetts business trust (the "Trust"), on
behalf of each series set forth on Schedule A attached hereto (the "Funds"), and
United States Trust Company of Boston (the "Adviser").
WHEREAS, the Adviser has been appointed the investment adviser of each of
the Funds pursuant to an Investment Advisory Agreement dated March 23, 1999,
between the Trust, on behalf of the Funds, and the Adviser (the "Advisory
Agreement"); and
WHEREAS, the Trust and the Adviser desire to enter into the arrangements
described herein relating to certain expenses of the Funds;
NOW, THEREFORE, the Trust and the Adviser hereby agree as follows:
1. Until further notice from the Adviser to the Trust, the Adviser agrees,
subject to Section 2 hereof, to reduce the fees payable to it under the Advisory
Agreement (but not below zero) and/or reimburse other expenses of the Funds,
during the fiscal year ending March 31, 2000, to the extent necessary to limit
the total operating expenses of each Fund, exclusive of brokerage costs,
interest, taxes and dividend and extraordinary expenses, to the amount of the
"Maximum Operating Expense Limit" applicable to each Fund as set forth across
from the name of each respective Fund on the attached Schedule A.
2. Each Fund agrees to pay to the Adviser the amount of fees (including any
amounts foregone through limitation or reimbursed pursuant to Section 1 hereof)
that, but for Section 1 hereof, would have been payable by the Fund to the
Adviser pursuant to the Advisory Agreement (the "Deferred Fees"), subject to the
limitations provided in this Section. Such repayment shall be made monthly, but
only if the operating expenses of the Fund (exclusive of brokerage costs,
interest, taxes and dividend and extraordinary expenses), without regard to such
repayment, are at an annual rate (as a percentage of the average daily net
assets of the Fund) equal to or less than the "Maximum Operating Expense Limit"
for the Fund, as set forth on Schedule A. Furthermore, the amount of Deferred
Fees paid by a Fund in any month shall be limited so that the sum of (a) the
amount of such payment and (b) the other operating expenses of the Fund
(exclusive of brokerage costs, interest, taxes and extraordinary expenses) do
not exceed the above-referenced "Maximum Operating Expense Limit" for such Fund.
Deferred Fees with respect to any fiscal year of a Fund shall not be
payable by the Fund to the extent that the amounts payable by the Fund pursuant
to the preceding paragraph during the period ending three years after the end of
such fiscal year are not sufficient to pay such Deferred Fees. In no event will
a Fund be obligated to pay any fees waived or deferred by the Adviser with
respect to any other series of the Trust.
<PAGE> 2
3. The Adviser may by notice in writing to the Trust terminate, in whole or
in part, its obligation under Section 1 to reduce its fees with respect to a
Fund in any period following the date specified in such notice (or change the
percentage specified in Section 1), but no such change shall affect the
obligation (including the amount of the obligation) of a Fund to repay amounts
of Deferred Fees with respect to periods prior to the date specified in such
notice.
4. A copy of the Agreement and Declaration of Trust establishing the Trust
is on file with the Secretary of The Commonwealth of Massachusetts, and notice
is hereby given that this Agreement is executed by the Trust on behalf of the
Funds by an officer of the Trust as an officer and not individually and that the
obligations of or arising out of this Agreement are not binding upon any of the
Trustees, officers or shareholders individually but are binding only upon the
assets and property belonging to the Funds.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
THE COVENTRY GROUP UNITED STATES TRUST COMPANY OF
BOSTON
By:_______________________ By:___________________________
Name:_____________________ Name:_________________________
Title:____________________ Title:________________________
-2-
<PAGE> 3
SCHEDULE A
OPERATING EXPENSE LIMITS
Maximum Operating
Fund Name Expense Limit*
--------- -------------
Walden/BBT Domestic Social Index Fund 0.75%
Walden/BBT International Social Index Fund 1.00%
*Expressed as a percentage of a Fund's average daily net assets.
