<PAGE> 1
As filed with the Securities and Exchange Commission on June 30, 2000
Securities Act No. 33-44964
Investment Company Act File No. 811-6526
--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
--
Post-Effective Amendment No. 71 [X]
--
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 73 [X]
--
THE COVENTRY GROUP
------------------
(Exact Name of Registrant as Specified in Charter)
3435 Stelzer Road, Columbus, Ohio 43219
---------------------------------------
(Address of Principal Executive Offices)
Registrant's Telephone Number: (614) 470-8000
-----------------
Patrick W.D. Turley, Esq.
Dechert Price & Rhoads
1775 Eye Street, NW
Washington, D.C. 20006
----------------------
(Name and Address of Agent for Service)
With Copies to:
---------------
R. Jeffrey Young
BISYS Fund Services
3435 Stelzer Road
Columbus, Ohio 43219
It is proposed that this filing will become effective immediately upon filing
pursuant to paragraph (b) of Rule 485.
<PAGE> 2
UNITED STATES TRUST COMPANY OF BOSTON
BOSTON LOGO
PROSPECTUS FOR THE FOLLOWING BOSTON TRUST PORTFOLIOS:
BOSTON BALANCED FUND
June 30, 2000
INVESTMENT ADVISER
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.
<PAGE> 3
BOSTON TRUST TABLE OF CONTENTS
<TABLE>
<S> <C> <C> <C>
RISK/RETURN SUMMARY AND FUND EXPENSES
[ICON]
Carefully review this 3 Boston Balanced Fund
important section for a
summary of the Fund's
investments, risks and fees.
INVESTMENT OBJECTIVES, STRATEGIES AND RISKS
[ICON]
This section contains 6 Boston Balanced Fund
details on the Fund's 7 Investment Risks
investment strategies and
risks.
SHAREHOLDER INFORMATION
[ICON]
Consult this section to 8 Pricing of Fund Shares
obtain details on how shares 8 Purchasing and Adding to Your Shares
are valued, how to purchase, 10 Selling Your Shares
sell and exchange shares, 12 Exchanging Your Shares
related charges and payments 13 Dividends, Distributions and Taxes
of dividends.
FUND MANAGEMENT
[ICON]
Review this section for 14 The Investment Adviser
details on the people and 14 Portfolio Manager
organizations who oversee
the Fund and its
investments.
FINANCIAL HIGHLIGHTS
[ICON]
Review this section for 15 Boston Balanced Fund
details on the selected
financial statements of the
Fund.
</TABLE>
2
<PAGE> 4
RISK/RETURN SUMMARY AND FUND EXPENSES
[ICON]
BOSTON BALANCED FUND
<TABLE>
<S> <C>
INVESTMENT OBJECTIVES The Boston Balanced Fund seeks long-term capital growth
and income through an actively managed portfolio of
stocks, bonds and money market instruments.
PRINCIPAL INVESTMENT STRATEGIES The Fund invests in stocks, bonds and money market
instruments, with at least 25% of assets in fixed-income
senior securities.
PRINCIPAL INVESTMENT RISKS The Fund is subject to both stock market risk and
interest rate risk. Therefore, the value of the Fund's
investments will fluctuate with market conditions and
interest rates 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.
WHO MAY WANT TO INVEST? Consider investing in the Fund if you are:
- investing for a period of time in excess of 3 to 5
years
- able to bear the risk of market value fluctuations in
the short-term
- looking for a combination of exposure to stock
investments for growth, and bond investments for greater
stability of income and principal
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
</TABLE>
3
<PAGE> 5
RISK/RETURN SUMMARY AND FUND EXPENSES
[ICON]
The chart and table on this page show how the Balanced Fund has performed and
how its performance has varied from year to year. The bar chart shows changes in
the Fund's yearly performance since its inception on December 1, 1995, to
demonstrate that the Fund has both gained and lost value during its four year
history. The table below it compares the Fund's performance over time to that of
a blended benchmark index consisting of the S&P 500 Index (50%),(2) the Lehman
Government/Corporate Index (40%)(3) and the 90 day U.S. Treasury Bill (10%).
PERFORMANCE BAR
CHART AND TABLE(1)
YEAR-BY-YEAR TOTAL RETURNS AS OF 12/31/99
<TABLE>
<S> <C> <C> <C>
1996 1997 1998 1999
14.39 27.08 19.27 4.57
</TABLE>
The bar chart above does not
reflect the impact of any
applicable sales charges or
account fees which would reduce
returns. Of course, past
performance does not indicate how
the Fund will perform in the
future.
Best quarter: Q4
1999 +17.55%
Worst quarter: Q3
1999 - 7.89%
AVERAGE ANNUAL TOTAL
RETURNS
(for the periods ending
December 31, 1999)
<TABLE>
<CAPTION>
PAST SINCE
FUND INCEPTION YEAR INCEPTION
<S> <C> <C> <C>
----------------------------------
BALANCED FUND 12/1/95 4.57% 16.04%
----------------------------------
BLENDED COMPOSITE INDEX 12/1/95 13.05% 17.22%
--------------------------------------------------------------------------------
</TABLE>
The table assumes that shareholders redeem all their fund shares at the end of
the period indicated.
(1) Both charts assume reinvestment of dividends and distributions.
(2) A widely recognized, unmanaged index of common stocks.
(3) A widely recognized, unmanaged index generally representative of the bond
market as a whole.
4
<PAGE> 6
RISK/RETURN SUMMARY AND FUND EXPENSES
[ICON]
ANNUAL FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Balanced Fund.
<TABLE>
<S> <C>
SHAREHOLDER FEES
(FEES PAID DIRECTLY FROM YOUR INVESTMENT)
Maximum Sales Charge (load) on Purchases n/a
--------------------------------------------------------
Maximum Deferred Sales Charge (load) n/a
ANNUAL FUND OPERATING EXPENSES
(EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
Management Fees 0.75%
--------------------------------------------------------
Distribution and Service (12b-1) Fees n/a
--------------------------------------------------------
Other Expenses 0.34%*
--------------------------------------------------------
Total Fund Operating Expenses 1.09%*
--------------------------------------------------------
Fee waiver and/or Expense Reimbursement 0.09%*
--------------------------------------------------------
Net Expenses 1.00%*
</TABLE>
* The Investment Adviser has entered into an expense limitation agreement with
the Trust to limit the Total Fund Operating Expenses of the Balanced Fund to
1.00% of its average daily net assets for its current fiscal year. Without
this expense limitation agreement, the Total Fund Operating Expenses for the
Balanced Fund would have been 1.09%. 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. 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.
<TABLE>
<S> <C> <C> <C> <C>
1 3 5 10
BALANCED FUND YEAR YEARS YEARS YEARS
$102 $338 $592 $1,321
</TABLE>
5
<PAGE> 7
INVESTMENT OBJECTIVES, STRATEGIES AND RISKS
ICON
BOSTON BALANCED FUND
TICKER SYMBOL: BMGFX
INVESTMENT OBJECTIVE
The investment objective of the Balanced Fund is to seek long-term capital
growth and income through an actively managed portfolio of stocks, bonds and
money market instruments.
POLICIES AND STRATEGIES
Consistent with the Balanced Fund's investment objective, the Fund:
- maintains an actively managed portfolio of stocks, bonds and money market
instruments
- will generally invest at least 25% of its total assets in fixed-income
senior securities
- may purchase both common stock and preferred stock
- will purchase bonds that are primarily investment grade
- may invest up to 20% of its total assets in fixed-income securities that
are considered non-investment grade
PORTFOLIO TURNOVER. The annual rate of portfolio turnover is not expected to
exceed 100%. In general, the Adviser will not consider the rate of portfolio
turnover to be a limiting factor in determining when or whether to purchase
or sell securities in order to achieve the Fund's objective.
In the event that the Adviser determines that market conditions are not
suitable for the Fund's typical investments, the Adviser may, for temporary
defensive purposes during such unusual market conditions, invest all or any
portion of the Fund's assets in money market instruments.
6
<PAGE> 8
INVESTMENT OBJECTIVES, STRATEGIES AND RISKS
[ICON]
INVESTMENT RISKS
Any investment in the Fund is subject to investment risks, including the
possible loss of the principal amount invested.
Generally, the Fund will be subject to the following risks:
- MARKET RISK: Market risk refers to the risk related to investments in
securities in general and the daily fluctuations in the securities
markets. The Fund's performance per share will change daily based on many
factors, including fluctuation in interest rates, the quality of the
instruments in the Fund's investment portfolio, national and
international economic conditions and general market conditions.
- INTEREST RATE RISK: Interest rate risk refers to the risk that the value
of the 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 the Fund's portfolio. The Fund could
lose money if the issuer of a security is unable to meet its financial
obligations.
Investments in the Fund 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.
7
<PAGE> 9
SHAREHOLDER INFORMATION
[ICON]
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 the Fund's NAV daily in The Wall Street Journal and other financial
newspapers.
-------------------------------------
The net asset value per share of the 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 Fund. This is known as the
offering price.
The Fund's securities are valued generally at current market prices. If market
quotations are not available, prices will be based on fair value as determined
by the Fund's Trustees.
PURCHASING AND ADDING TO YOUR SHARES
You may purchase the Fund through the Distributor or through investment
representatives, who may charge additional fees and may require higher
minimum investments or impose other limitations on buying and selling shares.
If you purchase shares through an investment representative, that party is
responsible for transmitting orders by close of business and may have an
earlier cut-off time for purchase and sale requests. Consult your investment
representative for specific information.
The minimum initial investment in the Fund is $2,000. Subsequent investments
must be at least $500. BISYS Fund Services (the "Distributor") acts as
Distributor of the Fund's shares. Shares of the Fund are offered continuously
for purchase at the NAV per share of the Fund next determined after a
purchase order is received. Investors may purchase shares of the Fund by
check or wire, as described below.
All purchases must be in U.S. dollars. A fee will be charged for any checks
that do not clear. Third-party checks are not accepted.
The Fund or the Adviser may waive its minimum purchase requirement, or the
Distributor may reject a purchase order, if it is deemed to be in the best
interest of the Fund and/or its shareholders.
8
<PAGE> 10
SHAREHOLDER INFORMATION
[ICON]
PURCHASING AND ADDING TO YOUR SHARES
CONTINUED
INSTRUCTIONS FOR OPENING OR ADDING TO AN ACCOUNT
[ICON] BY REGULAR MAIL OR OVERNIGHT SERVICE
INITIAL INVESTMENT:
1. Carefully read and complete the application. Establishing your account
privileges now saves you the inconvenience of having to add them later.
2. Make check, certified check or money order payable to the "Boston Balanced
Fund."
3. Mail to: Boston Trust Mutual Funds, c/o United States Trust Company of
Boston, 40 Court Street, Boston, MA 02108.
SUBSEQUENT INVESTMENTS:
1. Subsequent investments should be made by check, certified check or money
order payable to the Fund and mailed to the address indicated above. Your
account number should be written on the check.
[ICON] BY WIRE TRANSFER
Note: Your bank may charge a wire transfer fee.
For initial investment: Before wiring funds, you should call 1-800-441-8782,
ext. 4050, or 1-617-695-4050 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:
United States Trust Company of Boston
Routing Number: ABA #0110-0133-1
DDA# 1133195811
Include:
Your name
Your account number
Fund name
9
<PAGE> 11
SHAREHOLDER INFORMATION
[ICON]
SELLING YOUR SHARES
INSTRUCTIONS FOR SELLING SHARES
You may sell your shares
at any time. Your sales
price will be the next NAV
after your sell order is
received by the Fund, its
transfer agent, or your
investment representative.
Normally you will receive
your proceeds within a
week after your request is
received. See section on
"General Policies on
Selling Shares" below.
WITHDRAWING MONEY FROM YOUR FUND
INVESTMENT
A request for a withdrawal in cash from
the Fund constitutes a redemption or
sale of shares for a mutual fund
shareholder.
[ICON] BY TELEPHONE
(unless you have declined telephone sales privileges)
1. Call 1-800-441-8782, ext. 4050 with instructions as to how you wish to
receive your funds (mail, wire, electronic transfer).
[ICON] BY MAIL
2(a). Call 1-800-441-8782, ext. 4050 to request redemption forms or write a
letter of instruction indicating:
- your Fund and account number
- amount you wish to redeem
- address to which your check should be sent
- account owner signature
2(b). Mail to: Boston Trust Mutual Funds, c/o United States Trust Company
of Boston, 40 Court Street, Boston, MA 02108
[ICON] BY OVERNIGHT SERVICE
SEE INSTRUCTION 2 ABOVE.
Send to: Boston Trust Mutual Funds, c/o United States Trust Company of Boston,
40 Court Street, Boston, MA 02108
[ICON] BY WIRE TRANSFER
You must indicate this option on your application.
The Fund may charge a wire transfer fee.
Note: Your financial institution may also charge a separate fee.
Call 1-800-441-8782, ext. 4050 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.
10
<PAGE> 12
SHAREHOLDER INFORMATION
[ICON]
GENERAL POLICIES ON SELLING SHARES
REDEMPTIONS IN WRITING REQUIRED
You must request redemption in writing in the following situations:
1. Redemptions from Individual Retirement Accounts ("IRAs").
2. Circumstances under which redemption requests require a signature
guarantee include, but may not be limited to, each of the following.
- 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 Fund makes 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 15 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 15 business days). You can avoid this delay
by purchasing shares with a certified check.
REFUSAL OF REDEMPTION REQUEST
Payment for shares may be delayed under extraordinary circumstances or as
permitted by the Securities and Exchange Commission in order to protect
remaining shareholders.
REDEMPTION IN KIND
The Fund reserves the right to make payment in securities rather than cash,
known as "redemption in kind." This could occur under extraordinary
circumstances, such as a very large redemption that could affect Fund
operations (a redemption of more than 1% of the Fund's net assets). If the
Fund deems it advisable for the benefit of all shareholders, redemption in
kind will consist of securities equal in market value to your shares. When
you convert these securities to cash, you will pay brokerage charges.
11
<PAGE> 13
SHAREHOLDER INFORMATION
[ICON]
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 the Fund for shares of another Boston Trust
Mutual Fund. 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 Boston Trust Mutual
Funds, c/o United States Trust Company of Boston, 40 Court Street, Boston, MA
02108, or by calling 1-800-441-8782, ext. 4050. 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.
12
<PAGE> 14
SHAREHOLDER INFORMATION
[ICON]
DIVIDENDS, DISTRIBUTIONS AND TAXES
Any income the Fund receives in the form of dividends is paid out, less
expenses, to its shareholders. Income dividends and capital gains
distributions on the Fund usually are paid annually.
Dividends and distributions are treated in the same manner for federal income
tax purposes whether you receive them in cash or in additional shares.
An exchange of shares is considered a sale, and gains from any sale or
exchange may be subject to applicable taxes.
Dividends are taxable as ordinary income. Distributions designated by the
Fund as long-term capital gain distributions will be taxable to you at your
long-term capital gains rate, regardless of how long you have held your
shares.
Dividends are taxable in the year in which they are paid, even if they appear
on your account statement the following year.
You will be notified in January each year about the federal tax status of
distributions made by the Fund. Depending on your state of residence,
distributions also may be subject to state and local taxes, including
withholding taxes. There is a penalty on certain pre-retirement distributions
from retirement accounts. Consult your tax adviser about the federal, state
and local tax consequences in your particular circumstances.
Foreign shareholders may be subject to special withholding requirements.
The Fund is required to withhold 31% of taxable dividends, capital gains
distributions and redemptions paid to shareholders who have not provided the
Fund with their certified taxpayer identification number in compliance with
IRS rules. To avoid this, make sure you provide your correct Tax
Identification Number (social security number for most investors) on your
account application.
This tax discussion is meant only as a general summary. Because each
investor's tax situation is unique, you should consult your tax adviser about
the particular consequences to you of investing in the Fund.
13
<PAGE> 15
FUND MANAGEMENT
ICON
THE INVESTMENT ADVISER
United States Trust Company of Boston, (the "Adviser"), 40 Court Street,
Boston, Massachusetts 02108, is the investment adviser for the Fund. The
Adviser is a Massachusetts-chartered banking and trust company established in
1895 and is a wholly-owned subsidiary of Citizens Financial Group, Inc.,
Providence, Rhode Island ("CFG"), a Delaware corporation, which in turn is a
wholly-owned subsidiary of The Royal Bank of Scotland plc, a banking company
organized under the laws of Scotland. The Trust Department of the Adviser has
managed assets as a fiduciary for over 50 years. The Adviser began offering
professional investment management services in 1974 with the establishment of
its Asset Management Division. The Adviser is not affiliated with United
States Trust Company of New York.
The Adviser makes the day-to-day investment decisions for the Fund. In
addition, the Adviser continuously reviews, supervises and administers the
Fund's investment program. For these advisory services, the Fund paid the
Adviser investment advisory fees equaling 0.75% of its average daily net
assets during the fiscal year ended March 31, 2000. In accordance with an
expense limitation agreement in effect with respect to the Fund, the Adviser
reimbursed the Fund 0.04% resulting in a net investment advisory fee, after
reimbursement, of 0.71% for the Fund.
PORTFOLIO MANAGER
The following individual serves as portfolio manager for the Fund and is
primarily responsible for the day-to-day management of the Fund's portfolio:
<TABLE>
<S> <C>
Mr. Domenic Colasacco, President of United States Trust
Company, is the Fund's portfolio manager. He has been United
States Trust Company's Chief Investment Officer since 1980.
Mr. Colasacco is a Chartered Financial Analyst and a member
of the Boston Security Analyst's Society.
</TABLE>
The Statement of Additional Information has more detailed information about
the Adviser.
THE DISTRIBUTOR AND ADMINISTRATOR
BISYS Fund Services is the Fund's 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 Fund 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 Investment Company Act of 1940 or other authority,
except under certain circumstances. Absent such circumstances, the Coventry
Group does not intend to hold annual or special meetings.
14
<PAGE> 16
FINANCIAL HIGHLIGHTS
[ICON]
The financial highlights table is intended to help you understand the Fund's
financial performance since its inception on December 1, 1995. Certain
information reflects financial results for a single Fund share. The total
returns in the table represent the rate that an investor would have earned on
an investment in the Fund (assuming reinvestment of all dividends and
distributions). This information for the year ended June 30, 1999 and the
period ended March 31, 2000 has been audited by Arthur Andersen LLP, whose
report, along with the Fund's financial statements, are included in the
annual report of the Fund, which is available upon request. Information for
periods ended June 30, 1998 and prior were audited by the Fund's previous
auditors.
<TABLE>
<CAPTION>
DECEMBER 1,
FOR THE PERIOD ENDED FOR THE YEARS ENDED JUNE 30, 1995(c) THROUGH
MARCH 31, 2000(a) 1999 1998(b) 1997(b) JUNE 30, 1996(b)
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $30.22 $29.21 $23.70 $19.31 $18.41
------------------------------------------------------------------------------------------------------------------
INVESTMENT ACTIVITIES:
Net investment income 0.40 0.52 0.46 0.47 0.25
Net realized and unrealized gains/
(losses) from investment
transactions (0.43) 2.07 5.94 4.36 0.69
------------------------------------------------------------------------------------------------------------------
Total from investment activities (0.03) 2.59 6.40 4.83 0.94
------------------------------------------------------------------------------------------------------------------
DIVIDENDS:
Net investment income (0.54) (0.49) (0.45) (0.44) (0.04)
Net realized gains from investment
transactions (0.76) (1.09) (0.44) -- --
------------------------------------------------------------------------------------------------------------------
Total dividends (1.30) (1.58) (0.89) (0.44) (0.04)
------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $28.89 $30.22 $29.21 $23.70 $19.31
------------------------------------------------------------------------------------------------------------------
Total Return (0.63)%(e) 9.34% 27.55% 25.40% 5.14%(e)
RATIOS/SUPPLEMENTARY DATA:
Net assets at end of period
(millions) $136.5 $147.0 $121.9 $ 82.0 $ 61.8
Ratio of expenses to average net
assets 1.00%(f) 0.95% 1.00% 1.00% 1.00%(f)
Ratio of net investment income to
average net assets 1.75%(f) 1.87% 1.85% 2.25% 2.43%(f)
Ratio of expenses to average net
assets 1.09%(f)(d) 0.95% 1.00% 1.02%(d) 1.00%(f)
Portfolio turnover 28.72% 23.61% 22.71% 30.78% 17.69%
</TABLE>
(a) For the period from July 1, 1999 through March 31, 2000. Subsequent to
the annual report at June 30, 1999, the Fund changed its fiscal year end
to March 31.
(b) Per share data has been restated to give effect to a 4-for-1 stock split
to shareholders of record as of the close on January 9, 1998.
(c) Commencement of operations.
(d) During the period, certain fees were reduced. If such fee reductions had
not occurred, the ratio would have been as indicated.
(e) Not annualized.
(f) Annualized.
15
<PAGE> 17
For more information about the Fund, the following documents are available free
upon request:
ANNUAL/SEMI-ANNUAL REPORTS:
The Fund's annual and semi-annual reports to shareholders contain additional
investment information. In the annual report, you will find a discussion of the
market conditions and investment strategies that significantly affected the
Fund's performance during its last fiscal year.
STATEMENT OF ADDITIONAL INFORMATION (SAI):
The SAI provides more detailed information about the Fund, including its
operations and investment policies. It is incorporated by reference and is
legally considered a part of this prospectus.
YOU CAN GET FREE COPIES OF REPORTS AND THE SAI, OR REQUEST OTHER INFORMATION AND
DISCUSS YOUR QUESTIONS ABOUT THE FUND BY CONTACTING THE FUND AT:
BOSTON TRUST MUTUAL FUNDS
C/O UNITED STATES TRUST COMPANY OF BOSTON
40 COURT STREET
BOSTON, MASSACHUSETTS 02108
TELEPHONE: 1-800-441-8782 X 4050
You can also review the 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 1-202-942-8090, or by
electronic request by e-mailing the SEC at the following address:
[email protected].
- Free from the EDGAR Database on the Commission's Website at
http://www.sec.gov.
Investment Company Act File no. 811-6526
<PAGE> 18
UNITED STATES TRUST COMPANY OF BOSTON
WALDEN LOGO
WALDEN ASSET MANAGEMENT
A Division of United States Trust Company of Boston
PROSPECTUS FOR THE FOLLOWING BOSTON TRUST PORTFOLIOS:
WALDEN SOCIAL BALANCED FUND
WALDEN SOCIAL EQUITY FUND
June 30, 2000
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.
<PAGE> 19
WALDEN MUTUAL FUNDS TABLE OF
CONTENTS
<TABLE>
<S> <C> <C> <C>
RISK/RETURN SUMMARY AND FUND EXPENSES
ICON
Carefully review this 3 Walden Social Balanced Fund
important section for a 5 Walden Social Equity Fund
summary of each Fund's
investments, risks and fees.
INVESTMENT OBJECTIVES, STRATEGIES AND RISKS
ICON
This section contains 7 Walden Social Balanced Fund
details on each Fund's 8 Walden Social Equity Fund
investment strategies and 9 Investment Risks
risks.
SHAREHOLDER INFORMATION
ICON
Consult this section to 10 Pricing of Fund Shares
obtain details on how shares 10 Purchasing and Adding to Your Shares
are valued, how to purchase, 12 Selling Your Shares
sell and exchange shares, 14 Exchanging Your Shares
related charges and payments 15 Dividends, Distributions and Taxes
of dividends.
FUND MANAGEMENT
ICON
Review this section for 16 The Investment Adviser
details on the people and 17 Portfolio Managers
organizations who oversee
the Funds and their
investments.
FINANCIAL HIGHLIGHTS
ICON
Review this section for 19 Walden Social Balanced Fund
details on the selected 19 Walden Social Equity Fund
financial statements of the
Funds.
</TABLE>
2
<PAGE> 20
RISK/RETURN SUMMARY AND FUND EXPENSES
ICON
WALDEN SOCIAL BALANCED FUND
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE The Balanced Fund seeks long-term capital growth and
income through an actively managed portfolio of stocks,
bonds and money market instruments.
PRINCIPAL INVESTMENT STRATEGIES The Fund invests in stocks, bonds and money market
instruments, with at least 25% of assets in fixed-income
senior securities.
PRINCIPAL INVESTMENT RISKS The Fund is subject to both stock market risk and
interest rate risk. Therefore, the value of the Fund's
investments will fluctuate with market conditions and
interest rates 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.
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 a combination of exposure to stock
investments for growth, and bond investments for greater
stability of income and principal
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
PERFORMANCE HISTORY Because the Fund commenced operations on June 20, 1999
and does not yet have investment returns for a full
calendar year, performance information for the Fund is
not presented.
</TABLE>
3
<PAGE> 21
RISK/RETURN SUMMARY AND FUND EXPENSES
ICON
ANNUAL FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Balanced Fund.
<TABLE>
<S> <C>
SHAREHOLDER FEES
(FEES PAID DIRECTLY FROM YOUR INVESTMENT)
Maximum Sales Charge (load) on Purchases n/a
Maximum Deferred Sales Charge (load) n/a
ANNUAL FUND OPERATING EXPENSES
(EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
Management Fees 0.75%
Distribution and Service (12b-1) Fees n/a
Other Expenses 0.59%*
Total Fund Operating Expenses 1.34%*
Fee Waiver and/or Expense Reimbursement 0.34%*
Net Expenses 1.00%*
</TABLE>
* The Adviser has entered into an expense limitation agreement with the Trust to
limit the Total Fund Operating Expenses of the Balanced Fund to 1.00% of its
average daily net assets for its current fiscal year. Without this expense
limitation agreement, the Total Fund Operating Expenses for the Balanced Fund
would have been 1.34%. 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. 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.
<TABLE>
<S> <C> <C> <C> <C>
1 3 5 10
BALANCED FUND YEAR YEARS YEARS YEARS
$102 $391 $702 $1,583
</TABLE>
4
<PAGE> 22
RISK/RETURN SUMMARY AND FUND EXPENSES
ICON
WALDEN SOCIAL EQUITY FUND
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE The Equity Fund seeks long-term capital growth through an
actively managed portfolio of stocks.
PRINCIPAL INVESTMENT STRATEGIES The Fund invests primarily in equity securities.
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.
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
- looking for current income
PERFORMANCE HISTORY Because the Fund commenced operations on June 20, 1999
and does not yet have investment returns for a full
calendar year, performance information for the Fund is
not presented.
</TABLE>
5
<PAGE> 23
RISK/RETURN SUMMARY AND FUND EXPENSES
ICON
ANNUAL FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Equity Fund.
<TABLE>
<S> <C>
SHAREHOLDER FEES
(FEES PAID DIRECTLY FROM YOUR INVESTMENT)
Maximum Sales Charge (load) on Purchases n/a
Maximum Deferred Sales Charge (load) n/a
ANNUAL FUND OPERATING EXPENSES
(EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
Management Fees 0.75%
Distribution and Service (12b-1) Fees n/a
Other Expenses 0.43%*
Total Fund Operating Expenses 1.18%*
Fee Waiver and/or Expense Reimbursement 0.18%*
Net Expenses 1.00%*
</TABLE>
* The Adviser has entered into an expense limitation agreement with the Trust to
limit the Total Fund Operating Expenses of the Equity Fund to 1.00% of its
average daily net assets for its current fiscal year. Without this expense
limitation agreement, the Total Fund Operating Expenses for the Equity Fund
would have been 1.18%. 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
EQUITY FUND YEAR YEARS YEARS YEARS
$102 $357 $632 $1,416
</TABLE>
6
<PAGE> 24
INVESTMENT OBJECTIVES, STRATEGIES AND RISKS
ICON
SOCIAL RESPONSIBILITY CRITERIA
Investments of the Funds will satisfy certain social responsibility criteria.
Among the criteria on which the Adviser evaluates companies are:
- PRODUCT SAFETY AND DESIRABILITY: Do companies produce tobacco or alcohol?
Are they honest with consumers?
- WORKPLACE ISSUES: Do companies engage in equal employment and fair labor
practices? Do they provide safe working conditions?
- ENVIRONMENTAL IMPACT: Are companies curbing emissions and waste? Are they
complying with environmental regulations? Do they own or operate nuclear
power plants?
- INTERNATIONAL OPERATIONS: Are companies upholding human rights and
environmental standards abroad?
- WEAPONS CONTRACTING: Are companies directly involved in the production of
weapons systems?
WALDEN SOCIAL BALANCED FUND
TICKER SYMBOL: WSBFX
INVESTMENT OBJECTIVE
The investment objective of the Social Balanced Fund is to seek long-term
capital growth and income through an actively managed portfolio of stocks,
bonds and money market instruments.
POLICIES AND STRATEGIES
Consistent with the Social Balanced Fund's investment objective, the Fund:
- maintains an actively managed portfolio of stocks, bonds and money market
instruments
- will generally invest at least 25% of its total assets in fixed-income
senior securities
- may purchase both common stock and preferred stock
- will purchase primarily investment grade bonds
- may invest up to 20% of its total assets in fixed-income securities that
are considered non-investment grade
PORTFOLIO TURNOVER. The annual rate of portfolio turnover is not expected to
exceed 100%. In general, the Adviser will not consider the rate of portfolio
turnover to be a limiting factor in determining when or whether to purchase
or sell securities in order to achieve the Fund's objective.
In the event that the Adviser determines that market conditions are not
suitable for the Fund's typical investments, the Adviser may, for temporary
defensive purposes during such unusual market conditions, invest all or any
portion of the Fund's assets in money market instruments.
7
<PAGE> 25
INVESTMENT OBJECTIVES, STRATEGIES AND RISKS
ICON
WALDEN SOCIAL EQUITY FUND
TICKER SYMBOL: WSEFX
INVESTMENT OBJECTIVE
The investment objective of the Social Equity Fund is to seek long-term
growth of capital.
POLICIES AND STRATEGIES
Consistent with the Social Equity Fund's investment objective, the Fund:
- will invest substantially all, but in no event less than 65%, of the
value of its total assets in equity securities
- will invest in the following types of equity securities: common stocks,
preferred stocks, securities convertible or exchangeable into common
stocks, warrants and any rights to purchase common stocks
- may invest in fixed income securities consisting of corporate notes,
bonds and debentures that are rated investment grade at the time of
purchase
- may invest in obligations issued or guaranteed by agencies or
instrumentalities of the U.S. Government (excluding U.S. Treasury
instruments)
- may invest in the securities of foreign issuers and may acquire sponsored
and unsponsored American Depositary Receipts and European Depositary
Receipts
- may engage in repurchase transactions pursuant to which the Fund
purchases a security and simultaneously commits to resell that security
to the seller (either a bank or a securities dealer) at an agreed upon
price on an agreed upon date (usually within seven days of purchase)
- may lend securities to qualified brokers, dealers, banks and other
financial institutions for the purpose of realizing additional income
- may invest in other investment companies
In the event that the Adviser determines that current market conditions are
not suitable for the Fund's typical investments, the Adviser may, for
temporary defensive purposes, invest all or any portion of the Fund's assets
in money market instruments and U.S. Government securities.
8
<PAGE> 26
INVESTMENT OBJECTIVES, STRATEGIES AND RISKS
ICON
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.
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.
9
<PAGE> 27
SHAREHOLDER INFORMATION
ICON
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 the Fund's NAV daily in The Wall Street Journal and other financial
newspapers.
--------------------------------------------------------------------------------
The net asset value 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 generally valued 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 Funds is $2,000. 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 Fund next
determined after a purchase order is received. Investors may purchase shares
of the Funds by check or wire, as described below.
All purchases must be in U.S. dollars. A fee will be charged for any checks
that do not clear. Third-party checks 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.
10
<PAGE> 28
SHAREHOLDER INFORMATION
ICON
PURCHASING AND ADDING TO YOUR SHARES
CONTINUED
INSTRUCTIONS FOR OPENING OR ADDING TO AN ACCOUNT
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
Social Balanced Fund" or "Walden Social Equity Fund", as applicable.
3. Mail to: Walden Mutual Funds, c/o United States Trust Company of Boston,
40 Court Street, Boston, MA 02108.
SUBSEQUENT INVESTMENTS:
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.
BY WIRE TRANSFER
Note: Your bank may charge a wire transfer fee.
For initial investment: Before wiring funds, you should call 1-800-441-8782,
ext. 4050, or 1-617-695-4050 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:
United States Trust Company of Boston
Routing Number: ABA #0110-0133-1
DDA# 0003004512
Include:
Your name
Your account number
Fund name
11
<PAGE> 29
SHAREHOLDER INFORMATION
ICON
SELLING YOUR SHARES
INSTRUCTIONS FOR SELLING SHARES
You may sell your shares at any time. Your sales price will be the next NAV
after your sell order is received by the Fund, its transfer agent, or your
investment representative. Normally you will receive your proceeds within a
week after your request is received. See section on "General Policies on
Selling Shares" below.
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.
BY TELEPHONE
(unless you have declined telephone sales privileges)
1. Call 1-800-441-8782, ext. 4050 with instructions as to how you wish to
receive your funds (mail, wire, electronic transfer).
BY MAIL
2(a). Call 1-800-441-8782, ext. 4050 to request redemption forms or write a
letter of instruction indicating:
- your Fund and account number
- amount you wish to redeem
- address to which your check should be sent
- account owner signature
2(b). Mail to: Walden Mutual Funds, c/o United States Trust Company of
Boston, 40 Court Street, Boston, MA 02108
BY OVERNIGHT SERVICE
SEE INSTRUCTION 2 ABOVE.
Send to: Walden Mutual Funds, c/o United States Trust Company of Boston, 40
Court Street, Boston, MA 02108
BY WIRE TRANSFER
You must indicate this option on your application.
If you call by 4 p.m. Eastern Standard Time, your payment will normally be
wired to your bank on the next business day.
The Fund may charge a wire transfer fee.
Note: Your financial institution may also charge a separate fee.
12
<PAGE> 30
SHAREHOLDER INFORMATION
ICON
GENERAL POLICIES ON SELLING SHARES
REDEMPTIONS IN WRITING REQUIRED
You must request redemption in writing in the following situations:
1. Redemptions from Individual Retirement Accounts ("IRAs").
2. Circumstances under which redemption requests require a signature
guarantee include, but may not be limited to, each of the following:
- 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 only
made 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 15 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 15 business days). You can avoid this delay
by purchasing shares with a certified check.
REFUSAL OF REDEMPTION REQUEST
Payment for shares may be delayed under extraordinary circumstances or as
permitted by the Securities and Exchange Commission in order to protect
remaining shareholders.
REDEMPTION IN KIND
The 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.
13
<PAGE> 31
SHAREHOLDER INFORMATION
ICON
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
or Walden Mutual Fund. 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 Mutual Funds,
c/o United States Trust Company of Boston, 40 Court Street, Boston, MA 02108,
or by calling 1-800-441-8782, ext. 4050. 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.
14
<PAGE> 32
SHAREHOLDER INFORMATION
ICON
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. Consult your tax adviser about the federal, state
and local tax consequences in your particular circumstances.
Foreign shareholders may be subject to special withholding requirements.
The 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.
15
<PAGE> 33
FUND MANAGEMENT
ICON
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 Citizens Financial
Group, Inc., Providence, Rhode Island ("CFG"), a Delaware corporation, which
in turn is a wholly-owned subsidiary of The Royal Bank of Scotland plc, a
banking company organized under the laws of Scotland. The Trust Department of
the Adviser has managed assets as a fiduciary for over 50 years. The Adviser
began offering professional investment management services in 1974 with the
establishment of its Asset Management Division. The Adviser is not affiliated
with United States Trust Company of New York.
The Adviser makes the day-to-day investment decisions for the Funds. In
addition, the Adviser continuously reviews, supervises and administers each
Fund's investment program. For these advisory services, each of the Funds
paid the Adviser investment advisory fees equaling 0.75% of its average daily
net assets during the fiscal year ended March 31, 2000. In accordance with an
expense limitation agreement in effect with respect to each of the Funds, the
Adviser reimbursed the Balanced Fund 0.28% resulting in a net investment
advisory fee, after reimbursement, of 0.47% for the Fund, and it reimbursed
the Equity Fund 0.13% resulting in a net investment advisory fee, after
reimbursement, of 0.62% for the Fund.
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 in 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 to achieve its financial and social objectives.
Walden is engaged actively in promoting positive corporate change through
company dialogue and shareholder resolutions, social screening, public policy
testimony and technical assistance to nonprofits.
Walden is committed to making socially responsive investing an effective
instrument of social change at home and abroad. Walden has an in-house social
research process that fully harnesses the power of shareholder activism.
Through dialogue with management and in partnership with other agents of
change, Walden uses its leverage as a shareholder to foster progressive
corporate practices.
Walden is working 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.
For a quarter century, Walden Asset Management has been at the forefront of
building relationships and developing tools to effect social change. Walden
strives to be responsive to evolving social concerns and to stay at the
forefront of research and activism on emerging social issues.
Consistent with these social investing principles, each Fund seeks to invest
in companies that:
- Are above average in their industry for environmental performance and
management, have innovative programs for pollution prevention and
resource conservation, comply with environmental regulations, conduct
comprehensive environmental auditing, and develop products that help the
environment.
16
<PAGE> 34
FUND MANAGEMENT
ICON
- Are above average in their industry for labor relations, worker safety
programs, employee benefits, equal employment opportunity and affirmative
action, encourage employee ownership and participation, and support
families and communities.
- Adhere to policies and practices that respect fundamental human rights.
- Strive to be responsible corporate citizens, and respond openly to social
concerns through public disclosure of information.
The Funds avoid investing in companies that, to the Adviser's knowledge:
- Have below average performance in the area of pollution control and poor
compliance records for environmental regulations; have equity ownership
in nuclear power plants, or significant involvement in the nuclear power
fuel cycle.
- Have substandard performance in the hiring and promotion of women and
minorities, or have a pattern of violating fair labor standards or health
and safety regulations.
- Derive significant revenues from the manufacture of weapons systems or
hand guns, tobacco products and alcoholic beverages, or from gaming
activities.
- Significantly support human rights abuses.
Each Fund's social guidelines are subject to change without shareholder
approval.
PORTFOLIO MANAGERS
The following individuals serve as portfolio managers for the Funds and are
primarily responsible for the day-to-day management of the Funds' portfolios:
<TABLE>
<S> <C>
Balanced Fund: Mr. Stephen Moody, Senior Vice President and Chairman of the
Adviser's Social Investment Policy Committee, is the
portfolio manager of the Balanced Fund. Prior to joining the
Adviser in 1980, Mr. Moody served as research director of
the Council on Economic Priorities, and economic consultant
to the Shalan Foundation and Natural Resources Defense
Council. Mr. Moody earned his B.A. from the University of
California at Berkeley and an MA in Economics from the
Graduate Faculty of the New School for Social Research. He
is a member of the American Economic Association and the
Boston Security Analysts Society.
Equity Fund: Mr. Robert Lincoln, Senior Vice President and Chief Economic
Strategist of the Adviser, is the portfolio manager of the
Equity Fund. Mr. Lincoln joined the Adviser in 1984 after
serving as a Group Vice President at Charles River
Associates, a Boston-based economic and financial consulting
firm. Mr. Lincoln earned his B.A. degree (magna cum laude)
in Economics and his M.A. in Economics from Harvard
University.
</TABLE>
The Statement of Additional Information has more detailed information about
the Adviser.
17
<PAGE> 35
FUND MANAGEMENT
ICON
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 Investment Company Act of 1940 or other authority,
except under certain circumstances. Absent such circumstances, the Coventry
Group does not intend to hold annual or special meetings.
18
<PAGE> 36
FINANCIAL HIGHLIGHTS
ICON
The financial highlights table is intended to help you understand each Fund's
performance since its inception. Certain information reflects financial
results for a single Fund share. The total returns in the table represent the
rate that an investor would have earned on an investment in each Fund
(assuming the reinvestment of all dividends and distributions). This
information has been audited by Arthur Andersen LLP, whose report, along with
each Fund's financial statements, are included in the annual report to
shareholders of each Fund, which is available upon request.
<TABLE>
<CAPTION>
WALDEN SOCIAL WALDEN SOCIAL
BALANCED FUND EQUITY FUND
FOR THE FOR THE
PERIOD ENDING PERIOD ENDING
MARCH 31, 2000(A) MARCH 31, 2000(A)
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.00 $10.00
----------------------------------------------------------------------------------------------------
INVESTMENT ACTIVITIES:
Net investment income 0.13 0.02
Net realized and unrealized gains from investment
transactions 0.65 0.67
----------------------------------------------------------------------------------------------------
Total from investment activities 0.78 0.69
----------------------------------------------------------------------------------------------------
DIVIDENDS:
Net investment income (0.09) (0.01)
In excess of net realized gains from investment
transactions -- (0.08)
----------------------------------------------------------------------------------------------------
Total dividends (0.09) (0.09)
----------------------------------------------------------------------------------------------------
Net asset value, end of period $10.69 $10.60
----------------------------------------------------------------------------------------------------
Total return 7.83%(c) 6.94%(c)
RATIOS/SUPPLEMENTARY DATA:
Net assets at end of period (millions) $ 13.1 $ 25.1
Ratio of expenses to average net assets 1.01%(d) 1.00%(d)
Ratio of net investment income to average net assets 1.70%(d) 0.28%(d)
Ratio of expenses to average net assets(b) 1.34%(d) 1.18%(d)
Portfolio turnover 28.80% 28.57%
</TABLE>
(a) Commenced operations on June 20, 1999.
(b) During the period, certain fees were reduced. If such fee reductions had
not occurred, the ratio would have been as indicated.
(c) Not annualized.
(d) Annualized.
19
<PAGE> 37
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 GET 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
C/O UNITED STATES TRUST COMPANY OF BOSTON
40 COURT STREET
BOSTON, MASSACHUSETTS 02108
TELEPHONE: 1-800-441-8782 X 4050
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 1-202-942-8090, or by electronic request, by e-mailing
the SEC at the following address: [email protected].
- Free on the EDGAR Database from the Commission's Website at
http://www.sec.gov.
Investment Company Act file no. 811-6526.
<PAGE> 38
BOSTON BALANCED FUND
WALDEN SOCIAL BALANCED FUND
WALDEN SOCIAL EQUITY FUND
Each an Investment Portfolio of
The Coventry Group
Statement of Additional Information
June 30, 2000
This Statement of Additional Information is not a prospectus but should
be read in conjunction with the prospectuses for (1) Boston Balanced Fund and
(2) Walden Social Balanced Fund and Walden Social Equity Fund (collectively, the
"Funds"), each dated the same date as the date hereof (the "Prospectuses"). 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 each of the Prospectuses. Copies of the
Prospectuses may be obtained by writing the Boston Trust Mutual Funds c/o United
States Trust Company of Boston at 40 Court Street, Boston, Massachusetts 02108,
or by telephoning toll free (800) 441-8782, ext. 4050.
<PAGE> 39
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 three such portfolios: Boston
Balanced Fund, Walden Social Balanced Fund and Walden Social Equity Fund (the
"Funds"). Much of the information contained in this Statement of Additional
Information expands upon subjects discussed in the Prospectuses. Capitalized
terms not defined herein are defined in the Prospectuses. No investment in
shares of a Fund should be made without first reading the applicable 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 Prospectuses.
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 Funds, or the purchase and repurchase
prices may be the same, with interest at a stated rate due to the Funds together
with the repurchase price on repurchase. In either case, the income to the Funds
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
-2-
<PAGE> 40
maturities. The Funds may not enter into a repurchase agreement with more than
seven days to maturity if, as a result, more than 5% of the value of the Funds'
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 Funds 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 Funds could encounter
delays and incur costs before being able to sell the security. Delays may
involve loss of interest or a decline in price of the U.S. Government security.
As with any unsecured debt instrument purchased for the Funds, the Investment
Adviser seeks to minimize the risk of loss through repurchase agreements by
analyzing the creditworthiness of the obligor, in this case the seller of the
U.S. Government security.
There is also the risk that the seller may fail to repurchase
the security. However, the Funds 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
Funds plus accrued interest, and the Funds 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 Funds will direct the seller of the U.S. Government
security to deliver additional securities so that the market value of all
securities subject to the repurchase agreement will equal or exceed the
repurchase price. It is possible that the Funds 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 Funds to
the issuer and no interest accrues to the Funds. To the extent that assets of
the Funds are held in cash pending the settlement of a purchase of securities,
the Funds would earn no income; however, it is the Funds' 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 Funds do not believe that its net asset value
or income will be affected adversely by its purchase of securities on a
when-issued basis. The Funds 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.
-3-
<PAGE> 41
Foreign Securities
Each Fund may invest up to 15% of its assets in foreign
securities. Foreign investments can involve significant risks in addition to the
risks inherent in U.S. investments. The value of securities denominated in or
indexed to foreign currencies, and of dividends and interest from such
securities, can change significantly when foreign currencies strengthen or
weaken relative to the U.S. dollar. Foreign securities markets generally have
less trading volume and less liquidity than U.S. markets, and prices on some
foreign markets can be highly volatile. Many foreign countries lack uniform
accounting and disclosure standards comparable to those applicable to U.S.
companies, and it may be more difficult to obtain reliable information regarding
an issuer's financial condition and operations. In addition, the costs of
foreign investing, including withholding taxes, brokerage commissions, and
custodial costs, generally are higher than for U.S. investments.
Foreign markets may offer less protection to investors than
U.S. markets. Foreign issuers, brokers, and securities markets may be subject to
less government supervision. Foreign securities trading practices, including
those involving the release of assets in advance of payment, may involve
increased risks in the event of a failed trade or the insolvency of a
broker-dealer, and may involve substantial delays. It also may be difficult to
enforce legal rights in foreign countries.
Investing abroad also involves different political and
economic risks. Foreign investments may be affected by actions of foreign
governments adverse to the interests of U.S. investors, including the
possibility of expropriation or nationalization of assets, confiscatory
taxation, restrictions on U.S. investment or on the ability to repatriate assets
or convert currency into U.S. dollars, or other government intervention. There
may be a greater possibility of default by foreign governments or foreign
government-sponsored enterprises. Investments in foreign countries also involve
a risk of local political, economic, or social instability, military action or
unrest, or adverse diplomatic developments. There can be no assurance that the
Adviser will be able to anticipate these potential events and/or counter their
impacts on a Fund's share price.
Securities of foreign issuers may be held by the Funds 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.
Each Fund may invest without regard to the 15% limitation
in securities of foreign issuers which are listed and traded on a domestic
national securities exchange.
Debt Securities and Ratings
Ratings of debt securities represent the rating agencies'
opinions regarding their quality, are not a guarantee of quality and may be
reduced after a Fund has acquired the security.
-4-
<PAGE> 42
If a security's rating is reduced while it is held by the Funds, the Adviser
will consider whether the Funds should continue to hold the security, but the
Funds are not required to dispose of it. Credit ratings attempt to evaluate the
safety of principal and interest payments and do not evaluate the risks of
fluctuations in market value. Also, rating agencies may fail to make timely
changes in credit ratings in response to subsequent events, so that an issuer's
current financial conditions may be better or worse than the rating indicates.
The Funds reserves the right to invest up to 20% of its assets
in securities rated lower than BBB by Standard & Poor's Ratings Group ("S&P") or
lower than Baa by Moody's Investors Service, Inc. ("Moody's"), but rated at
least B by S&P or Moody's (or, in either case, if unrated, deemed by the Adviser
to be of comparable quality). Lower-rated securities generally offer a higher
current yield than that available for higher grade issues. However, lower-rated
securities involve higher risks, in that they are especially subject to adverse
changes in general economic conditions and in the industries in which the
issuers are engaged, to changes in the financial condition of the issuers and to
price fluctuations in response to changes in interest rates. During periods of
economic downturn or rising interest rates, highly leveraged issuers may
experience financial stress which could affect adversely their ability to make
payments of interest and principal and increase the possibility of default. In
addition, the market for lower-rated debt securities has expanded rapidly in
recent years, and its growth paralleled a long economic expansion. At times in
recent years, the prices of many lower-rated debt securities declined
substantially, reflecting an expectation that many issuers of such securities
might experience financial difficulties. As a result, the yields on lower-rated
debt securities rose dramatically, but such higher yields did not reflect the
value of the income stream that holders of such securities expected, but rather,
the risk that holders of such securities could lose a substantial portion of
their value as a result of the issuers' financial restructuring or default.
There can be no assurance that such declines will not recur. The market for
lower-rated debt issues generally is smaller and less active than that for
higher quality securities, which may limit the Funds' ability to sell such
securities at fair value in response to changes in the economy or financial
markets. Adverse publicity and investor perceptions, whether or not based on
fundamental analysis, may also decrease the values and liquidity of lower-rated
securities, especially in a smaller and less actively traded market.
Lower-rated debt obligations also present risks based on
payment expectations. If an issuer calls the obligation for redemption, the
Funds may have to replace the security with a lower-yielding security, resulting
in a decreased return to investors. Also, because the principal value of bonds
moves inversely with movements in interest rates, in the event of rising
interest rates, the value of the securities held by the Funds may decline
proportionately more than funds consisting of higher-rated securities. If the
Funds experience unexpected net redemptions, they may be forced to sell their
higher-rated bonds, resulting in a decline in the overall credit quality of the
securities held by the Funds and increasing the exposure of the Funds to the
risks of lower-rated securities. Investments in zero-coupon bonds may be more
speculative and subject to greater fluctuations in value due to changes in
interest rates than bonds that pay interest currently.
-5-
<PAGE> 43
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 Funds seek to close out an option position. If the Funds 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 Funds 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 Funds 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 Funds,
the Funds would not be able to close out the option. If restrictions on exercise
were imposed, the Funds might be unable to exercise an option it had purchased.
Except to the extent that a call option on an index written by the Funds is
covered by an option on the same index purchased by the Funds, movements in the
index may result in a loss to the Funds; such losses might be mitigated or
exacerbated by changes in the value of the Funds' securities during the period
the option was outstanding.
Use of futures contracts and options thereon also involves
certain risks. The variable degree of correlation between price movements of
futures contracts and price movements in the related portfolio positions of the
Funds 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 Funds
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
Funds may use these techniques to hedge against changes in interest rates or
securities prices or as part of its overall investment strategy. The Funds will
segregate liquid assets (or, as permitted by applicable
-6-
<PAGE> 44
regulation, enter into certain offsetting positions) to cover its obligations
under options and futures contracts to avoid leveraging of the Funds.
Illiquid and Restricted Securities.
The Funds may not invest more than 5% of its net assets in
illiquid securities, including (i) securities for which there is no readily
available market; (ii) securities the disposition of which would be subject to
legal restrictions (so-called "restricted securities"); and (iii) repurchase
agreements having more than seven days to maturity. A considerable period of
time may elapse between the Funds' decision to dispose of such securities and
the time when the Funds are able to dispose of them, during which time the value
of the securities could decline. Securities which meet the requirements of
Securities Act Rule 144A are restricted, but may be determined to be liquid by
the Trustees, based on an evaluation of the applicable trading markets.
INVESTMENT RESTRICTIONS
The following policies and investment restrictions have been
adopted by each Fund and (unless otherwise noted) are fundamental and cannot be
changed without the affirmative vote of a majority of the Funds' 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. (The Funds are not precluded from obtaining such short-term credit
as may be necessary for the clearance of purchases and sales of its portfolio
securities.)
4. Purchase or sell real estate, commodities or commodity
contracts (other than futures transactions for the purposes and under the
conditions described in the prospectus and in this SAI).
5. Invest 25% or more of the market value of its assets in the
securities of companies engaged in any one industry. (This restriction does not
apply to investment in the securities of the U.S. Government, its agencies or
instrumentalities.)
-7-
<PAGE> 45
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 the Funds would be invested in the securities of
that issuer, other than obligations of the U.S. Government, its agencies or
instrumentalities, provided that up to 25% of the value of the Funds' 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 the Funds would then
hold more than 10% of any class of securities of an issuer (taking all common
stock issues of an issuer as a single class, all preferred stock issues as a
single class, and all debt issues as a single class) or more than 10% of the
outstanding voting securities of a single issuer.
2. Invest in any issuer for purposes of exercising control or
management.
3. Invest in securities of other investment companies which
would result in the Funds owning more than 3% of the outstanding voting
securities of any one such investment company, Funds owning securities of
another investment company having an aggregate value in excess of 5% of the
value of the Fund's total assets, or Funds owning securities of investment
companies in the aggregate which would exceed 10% of the value of the Funds'
total assets.
4. Invest, in the aggregate, more than 5% of its net assets in
securities with legal or contractual restrictions on resale, securities which
are not readily marketable and repurchase agreements with more than seven days
to maturity.
5. Invest more than 15% of its assets in securities of foreign
issuers (including American Depositary Receipts with respect to foreign issuers,
but excluding securities of foreign issuers listed and traded on a domestic
national securities exchange).
6. Invest in securities issued by any affiliate of the
Adviser.
If a percentage restriction described in the Prospectuses 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.
-8-
<PAGE> 46
PORTFOLIO TURNOVER
The portfolio turnover rate for the Funds is calculated by
dividing the lesser of the Funds' purchases or sales of portfolio securities for
the year by the monthly average value of the portfolio securities. The
calculation excludes all securities whose remaining maturities at the time of
acquisition were one year or less.
The portfolio turnover rate may vary greatly from year to
year, as well as within a particular year, and may also be affected by cash
requirements for redemptions of Shares. High portfolio turnover rates generally
will result in higher transaction costs, including brokerage commissions, to the
Funds and may result in additional tax consequences to the Funds' Shareholders.
Portfolio turnover will not be a limiting factor in making investment decisions.
NET ASSET VALUE
As indicated in the Prospectuses, the net asset value of the
Funds is determined once daily as of the close of public trading on the New York
Stock Exchange (currently 4:00 p.m. Eastern Standard Time) on each day that the
Exchange is open for trading. The New York Stock Exchange will not open in
observance of the following holidays: New Year's Day, Martin Luther King, Jr.'s
Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving, and Christmas. The 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-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.
-9-
<PAGE> 47
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* President and Trustee From June 1992 to present, employee of
3435 Stelzer Road BISYS Fund Services
Columbus, Ohio 43219
Age: 54
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
Age: 64 and 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
Age: 52 President-Communications, TRW Information
Systems Group (electronic and space
engineering).
John H. Ferring IV Trustee From 1979 to present, President and Owner
105 Bolte Lane of Plaze, Incorporated, St. Clair, Missouri
St. Clair, Missouri
Age: 47
R. Jeffrey Young* Chairman and Trustee From 1993 to present, employee of BISYS Fund
3435 Stelzer Road Services
Columbus, Ohio 43219
Age: 35
Sue A. Walters Vice President From July 1990 to present, employee of
3435 Stelzer Road BISYS Fund Services
Columbus, Ohio 43219
Age: 49
</TABLE>
-10-
<PAGE> 48
<TABLE>
<CAPTION>
Position(s) Held With the Principal Occupation During Past 5 Years
Name, Address and Age Group
--------------------------------------- -------------------------------- --------------------------------------------
<S> <C> <C>
Jennifer R. Brooks Vice President From October, 1988 to present, employee of
3435 Stelzer Road BISYS Fund Services.
Columbus, Ohio 43219
Age: 34
Nadeem Yousaf Treasurer From August 1999 to present, employee of
3435 Stelzer Road BISYS Fund Services; from March 1997 to
Columbus, Ohio 43219 June 1999, employee of Investors Bank and
Age: 31 Trust; from October 1994 to March 1997,
employee of PricewaterhouseCoopers LLP;
from September 1990 to February 1992,
employee of KPMG Peat Marwick.
George L. Stevens Secretary From September 1996 to present, employee
3435 Stelzer Road of BISYS Fund Services; from September
Columbus, Ohio 43219 1995 to September 1996, Independent
Age: 49 Consultant; 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
3435 Stelzer Road BISYS Fund Services; from May 1989 to June
Columbus, Ohio 43219 1995, employee of Alliance Capital
Age: 32 Management.
</TABLE>
------------
* Mr. Grimm and Mr. Young are each 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. Young, Yousaf, Stevens and Grimm, and Ms. Metz, Ms. Brooks and Ms.
Walters are employees of BISYS Fund Services.
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.
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<PAGE> 49
For the twelve-month period ended March 31, 2000, 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 to
Name of Trustee the Funds Fund Expenses Upon Retirement Trustee
------------------------ ---------------------- ---------------------- ----------------------- ----------------------
<S> <C> <C> <C> <C>
Walter B. Grimm $0 $0 $0 $0
Maurice G. Stark $2,088.95 $0 $0 $10,000
Michael Van Buskirk $2,088.95 $0 $0 $10,000
John H. Ferring IV $2,088.95 $0 $0 $10,000
R. Jeffrey Young $0 $0 $0 $0
</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 January 11, 2000. 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: Boston Balanced Fund 0.75% of average daily net
assets; Walden Social Balanced Fund 0.75% of average daily net assets; and
Walden Social Equity Fund 0.75% of average daily net assets. The Adviser may
from time to time voluntarily reduce all or a portion of its advisory fee with
respect to the Funds to increase the net income of the Funds available for
distribution as dividends.
Unless sooner terminated, the Investment Advisory Agreement
will continue in effect until January 11, 2002, 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
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<PAGE> 50
Investment Advisory Agreement is terminable as to the Funds 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 the Funds 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.
For the fiscal year ended March 31, 2000, the Funds paid the Adviser
investment advisory fees pursuant to the terms of the Investment Advisory
Agreement, and the Adviser reimbursed investment advisory fees pursuant to the
terms of an expense limitation agreement in effect with respect to each of the
Funds, as follows: the Boston Balanced Fund paid the Adviser investment advisory
fees of $791,071 and the Adviser reimbursed the Fund $37,314 in advisory fees;
the Walden Social Balanced Fund paid the Adviser investment advisory fees of
$68,212 and the Adviser reimbursed the Fund $25,565 in advisory fees; and the
Walden Social Equity Fund paid the Adviser investment advisory fees of $137,884
and the Adviser reimbursed the Fund $24,222 in advisory fees.
CODE OF ETHICS
The Coventry Group, the Adviser and the Distributor have each
adopted a Code of Ethics, pursuant to Rule 17j-1 under the Investment Company
Act of 1940, applicable to securities trading practices of its personnel. Each
Code permits covered personnel to trade in securities in which a Fund may
invest, subject to certain restrictions and reporting requirements.
PORTFOLIO TRANSACTIONS
Pursuant to the Investment Advisory Agreement with respect to
the Funds, the Adviser determines, subject to the general supervision of the
Board of Trustees of the Group and in accordance with the Funds' investment
objectives and restrictions, which securities are to be purchased and sold by
the Funds, and which brokers are to be eligible to execute such Funds' 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 the Funds' brokerage transactions which are in excess of the amount of
commission another broker would have charged for effecting that transaction if,
but only if, the Adviser determines in good faith that such commission was
reasonable in relation to the value of the brokerage and research services
provided by such broker viewed in terms of that particular transaction or in
terms of all of the accounts over which it exercises investment discretion. Any
such research and other statistical and factual information provided by brokers
to the Funds 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 Funds. The cost, value and specific
-13-
<PAGE> 51
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 inquire or take
into consideration whether securities of such customers are held by the Funds or
any other fund of the Group.
For the fiscal year ended March 31, 2000, Boston Balanced
Fund, Walden Social Balanced Fund and Walden Social Equity Fund paid brokerage
commissions of $65,827.60, $6,238.24 and $14,245.00, respectively.
ADMINISTRATOR AND FUND ACCOUNTING SERVICES
BISYS serves as administrator (the "Administrator") to the
Funds pursuant to a Management and Administration Agreement dated as of March
23, 1999 (the "Administration Agreement"). The Administrator assists in
supervising all operations of the Funds. The
-14-
<PAGE> 52
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.
For the fiscal year ended March 31, 2000, the Boston Balanced
Fund, Walden Social Balanced Fund and Walden Social Equity Fund paid the
Administrator administrative fees of $213,923, $18,206 and $36,807, respectively
and the Administrator voluntarily waived administrative fees of $55,735, $4,595
and $9,294, respectively.
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 misfeasance, bad faith,
or negligence in the performance of its duties, or from the reckless disregard
by the Administrator of its obligations and duties thereunder.
In addition, BISYS Fund Services, Inc. provides certain fund
accounting services to the Funds pursuant to a Fund Accounting Agreement dated
as of March 23, 1999. Under such Agreement, BISYS Fund
-15-
<PAGE> 53
Services, Inc. maintains the accounting books and records for the Funds,
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 Funds, 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 Funds' custodian,
affirmation to the Funds' custodian of all portfolio trades and cash
settlements, verification and reconciliation with the Funds' 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.
For the fiscal year ended March 31, 2000, the Boston Balanced
Fund, Walden Social Balanced Fund and Walden Social Equity Fund paid fund
accounting fees to BISYS Fund Services of $9,795, $5,298 and $3,025,
respectively.
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
United States Trust Company of Boston, 40 Court Street,
Boston, Massachusetts 02108 (the "Custodian"), serves as the Funds' custodian
pursuant to the Custody Agreement dated as of March 23, 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.
For the fiscal year ended March 31, 2000, the Boston Balanced
Fund, Walden Social Balanced Fund and Walden Social Equity Fund paid custodial
fees of $22,032, $3,737 and $4,284 respectively.
TRANSFER AGENCY SERVICES
United States Trust Company of Boston serves as transfer agent
and dividend disbursing agent (the "Transfer Agent") for all of the Funds
pursuant to the Transfer Agency Agreement dated as of March 23, 1999. Pursuant
to such Transfer Agency Agreement, the Transfer Agent, among other things,
performs the following services in connection with each
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<PAGE> 54
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.
For the fiscal year ended March 31, 2000, the Boston Balanced
Fund, Walden Social Balanced Fund and Walden Social Equity Fund paid transfer
agency fees to the Transfer Agent of $12,829, $14,095 and $14,125, respectively.
AUDITORS
Arthur Andersen LLP, Columbus, Ohio, 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 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
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<PAGE> 55
determining whether the approval of a majority of the outstanding shares of the
Fund will be required in connection with a matter, the Funds will be deemed to
be affected by a matter unless it is clear that the interests of each Fund in
the matter are identical, or that the matter does not affect any interest of the
Funds. Under Rule 18f-2, the approval of an investment advisory agreement or any
change in investment policy would be acted effectively upon with respect to the
Funds only if approved by a majority of the outstanding shares of the Funds.
However, Rule 18f-2 also provides that the approval of principal underwriting
contracts and the election of Trustees may be effectively acted upon by
shareholders of the Group voting without regard to series.
Under Massachusetts law, shareholders, under certain
circumstances, could be held personally liable for the obligations of the Group.
However, the Declaration of Trust disclaims liability of the Shareholders,
Trustees or officers of the Group for acts or obligations of the Group, which
are binding only on the assets and property of the Group, and requires that
notice of the disclaimer be given in each contract or obligation entered into or
executed by the Group or the Trustees. The Declaration of Trust provides for
indemnification out of Group property for all loss and expense of any
shareholder held personally liable for the obligations of the Group. The risk of
a shareholder incurring financial loss on account of shareholder liability is
limited to circumstances in which the Group itself would be unable to meet its
obligations, and thus should be considered remote.
As of May 31, 2000, the following persons or entities owned
beneficially or of record 5% or more of the outstanding shares of the indicated
Funds,: (1) in the case of the Boston Balanced Fund - United States Trust
Company of Boston, 40 Court Street, Boston, MA 02108, owned of record 96.4% of
the Fund's shares; (2) in the case of Walden Social Equity Fund - Fidelity
Investments, 100 Magellan Way, Mail Code KW1C, Covington, KY 41015, owned of
record 96.4% of the Fund's shares; and (3) with respect to the Walden Social
Balanced Fund - United States Trust Company of Boston, 40 Court Street, Boston,
MA 02108, owned of record 39.9% of the Fund's shares and Fidelity Investments,
100 Magellan Way, Mail Code KW1C, Covington, KY 41015, owned of record 60.1% of
the Fund's shares.
VOTE OF A MAJORITY OF THE OUTSTANDING SHARES
As used in the Prospectus and this Statement of Additional
Information, a "vote of a majority of the outstanding Shares" of the Funds 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.
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,
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<PAGE> 56
ownership, or disposition of the Funds' 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, the
Funds' investment company taxable income will be its taxable income subject to
certain adjustments and excluding the excess of any net mid-term or net
long-term capital gain for the taxable year over the net short-term capital
loss, if any, for such year.
A non-deductible 4% excise tax is imposed on regulated
investment companies that do not distribute in each calendar year (regardless of
whether they otherwise have a non-calendar taxable year) an amount equal to 98%
of their ordinary income for the calendar year plus 98% of their capital gain
net income for the one-year period ending on October 31 of such calendar year.
The balance of such income must be distributed during the next calendar year. If
distributions during a calendar year were less than the required amount, the
Funds would be subject to a non-deductible excise tax equal to 4% of the
deficiency.
Although the Funds expect to qualify as a "regulated
investment company" and thus to be relieved of all or substantially all of their
federal income tax liability, depending upon the extent of their activities in
states and localities in which their offices are maintained, in which their
agents or independent contractors are located, or in which they are otherwise
deemed to be conducting business, the Funds may be subject to the tax laws of
such states or localities. In addition, if for any taxable year the Funds do not
qualify for the special tax treatment afforded regulated investment companies,
all of their taxable income will be subject to federal tax at regular corporate
rates (without any deduction for distributions to their Shareholders). In such
event, dividend distributions would be taxable to Shareholders to the extent of
earnings and profits, and would be eligible for the dividends received deduction
for corporations.
It is expected that 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 the Funds 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 the Shareholder
has held a Fund's Shares.
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<PAGE> 57
Foreign taxes may be imposed on the Funds by foreign countries
with respect to its income from foreign securities, if any. It is expected that,
because less than 50% in value of each Fund's total assets at the end of its
fiscal year will be invested in stocks or securities of foreign corporations,
none of the Funds will be entitled under the Code to pass through to its
Shareholders their pro rata share of the foreign taxes paid by the Funds. Any
such taxes will be taken as a deduction by the Funds.
The Funds 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 the Funds by the Shareholder, if such Shareholder
(1) fails to furnish the Group with a correct taxpayer identification number,
(2) under-reports dividend or interest income, or (3) fails to certify to the
Group that he or she is not subject to such withholding. An individual's
taxpayer identification number is his or her Social Security number.
Information as to the Federal income tax status of all
distributions will be mailed annually to each Shareholder.
MARKET DISCOUNT. If the Funds 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 Funds in each taxable year in which the Funds owns an interest in such debt
security and receives a principal payment on it. In particular, the Fund will be
required to allocate that principal payment first to the portion of the market
discount on the debt security that has accrued but has not previously been
includable in income. In general, the amount of market discount that must be
included for each period is equal to the lesser of (i) the amount of market
discount accruing during such period (plus any accrued market discount for prior
periods not previously taken into account) or (ii) the amount of the principal
payment with respect to such period. Generally, market discount accrues on a
daily basis for each day the debt security is held by the Funds at a constant
rate over the time remaining to the debt security's maturity or, at the election
of the Funds, 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."
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ORIGINAL ISSUE DISCOUNT. Certain debt securities acquired by
the Funds 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 Funds, 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 Funds at a discount that exceeds the original issue discount on
such debt securities, if any. This additional discount represents market
discount for federal income tax purposes (see above).
OPTIONS, FUTURES AND FORWARD CONTRACTS. Any regulated futures
contracts and certain options (namely, nonequity options and dealer equity
options) in which the Funds 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
Funds at the end of each taxable year (and on certain other dates prescribed in
the Code) are "marked to market" with the result that unrealized gains or losses
are treated as though they were realized.
Transactions in options, futures and forward contracts
undertaken by the Funds may result in "straddles" for federal income tax
purposes. The straddle rules may affect the character of gains (or losses)
realized by the Funds, and losses realized by the Funds on positions that are
part of a straddle may be deferred under the straddle rules, rather than being
taken into account in calculating the taxable income for the taxable year in
which the losses are realized. In addition, certain carrying charges (including
interest expense) associated with positions in a straddle may be required to be
capitalized rather than deducted currently. Certain elections that the Funds may
make with respect to its straddle positions may also affect the amount,
character and timing of the recognition of gains or losses from the affected
positions.
Because only a few regulations implementing the straddle rules
have been promulgated, the consequences of such transactions to the Funds are
not entirely clear. The straddle rules may increase the amount of short-term
capital gain realized by the Funds, which is taxed as ordinary income when
distributed to Shareholders. Because application of the straddle rules may
affect the character of gains or losses, defer losses and/or accelerate the
recognition of gains or losses from the affected straddle positions, the amount
which must be distributed to Shareholders as ordinary income or long-term
capital gain may be increased or decreased substantially as compared to a fund
that did not engage in such transactions.
CONSTRUCTIVE SALES. Under certain circumstance, the Funds may
recognize gain from the constructive sale of an appreciated financial position.
If the Funds enter into certain transactions in property while holding
substantially identical property, the Funds 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 Funds'
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holding period in the property. Loss from a constructive sale would be
recognized when the property was subsequently disposed of, and its character
would depend on the Fund's holding period and the application of various loss
deferral provisions of the Code. Constructive sale treatment does not apply to
transactions closed in the 90-day period ending with the 30th day after the
close of the taxable year, if certain conditions are met.
SECTION 988 GAINS OR LOSSES. Gains or losses attributable to
fluctuations in exchange rates which occur between the time the Funds accrue
income or other receivables or accrue expenses or other liabilities denominated
in a foreign currency and the time the Funds 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 Funds' 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 Funds would not be able to make any ordinary dividend
distributions, or distributions made before the losses were realized would be
recharacterized as a return of capital to Shareholders, rather than as an
ordinary dividend, reducing each Shareholder's basis in his or her Fund shares.
PASSIVE FOREIGN INVESTMENT COMPANIES. The Funds may invest in
shares of foreign corporations that may be classified under the Code as passive
foreign investment companies ("PFICs"). In general, a foreign corporation is
classified as a PFIC if at least one-half of its assets constitute
investment-type assets, or 75% or more of its gross income is investment-type
income. If the Funds receive a so-called "excess distribution" with respect to
PFIC stock, the Funds themselves may be subject to a tax on a portion of the
excess distribution, whether or not the corresponding income is distributed by
the Funds to Shareholders. In general, under the PFIC rules, an excess
distribution is treated as having been realized ratably over the period during
which the Funds held the PFIC shares. The Funds will themselves be subject to
tax on the portion, if any, of an excess distribution that is so allocated to
prior Fund taxable years and an interest factor will be added to the tax, as if
the tax had been payable in such prior taxable years. Certain distributions from
a PFIC as well as gain from the sale of PFIC shares are treated as excess
distributions. Excess distributions are characterized as ordinary income even
though, absent application of the PFIC rules, certain excess distributions might
have been classified as capital gain.
The Funds may be eligible to elect alternative tax treatment
with respect to PFIC shares. Under an election that currently is available in
some circumstances, the Funds would be required to include in their gross income
their 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 Funds' 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
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<PAGE> 60
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 the Funds over the period covered, which assumes any
dividends or capital gains distributions are reinvested in the Funds 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.
With respect to the Boston Balanced Fund, for the fiscal year
ended March 31, 2000, the total return for the Fund was 4.57%. For the period
from the commencement of the Fund's operations on December 1, 1995, through the
fiscal year ended March 31, 2000 the Fund's average annual total return was
15.07% and the Fund's aggregate total return for this same period was 83.70%.
With respect to the Walden Social Balanced Fund, the total
return for the Fund for the period from the Fund's commencement of operations on
June 20, 1999, through the fiscal year ended March 31, 2000, was 7.83%
(unannualized).
With respect to the Walden Social Equity Fund, the total
return for the Fund for the period from the Fund's commencement of operations on
June 20, 1999, through the fiscal year ended March 31, 2000, was 6.94%
(unannualized).
PERFORMANCE COMPARISONS
Investors may analyze 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
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<PAGE> 61
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.
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 Prospectuses 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.
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<PAGE> 62
FINANCIAL STATEMENTS
The financial statements of each Fund appearing in each Fund's
Annual Report to Shareholders for the fiscal year ended March 31, 2000 have been
audited by Arthur Andersen LLP, and are incorporated by reference herein.
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PART C
-----------
OTHER INFORMATION
-----------------
ITEM 23. EXHIBITS
(a)(1) Declaration of Trust(1)
(a)(2) Establishment and Designation of Three Series of
Shares (Boston Balanced Fund, Walden Social Balanced
Fund, and Walden Social Equity Fund)(3)
(b)(1) By-Laws(2)
(c) Certificates for Shares are not issued. Articles IV,
V, VI and VII of the Declaration of Trust, previously
filed as Exhibit (a) hereto, define rights of holders
of Shares(1)
(d) Amended and Restated Investment Advisory Agreement
between Registrant and United States Trust Company of
Boston
(e) Distribution Agreement between Registrant and BISYS
Fund Services(3)
(f) Not Applicable
(g) Custody Agreement between Registrant and United
States Trust Company of Boston(3)
(h)(1) Administration Agreement between the Registrant and
BISYS Fund Services(3)
(h)(2) Fund Accounting Agreement between the Registrant and
BISYS Fund Services(3)
(h)(3) Transfer Agency Agreement between the Registrant and
United States Trust Company of Boston(3)
(h)(4) Expense Limitation Agreement between the Registrant
and United States Trust Company of Boston(3)
(i) Not Applicable
(j) Consent of Independent Public Accountants
(k) Not Applicable
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(l) Not Applicable
(m) Not Applicable
(n) Not Applicable
(o) Not Applicable
(p) Codes of Ethics(4)
__________________
1. Filed with initial Registration Statement on January 8, 1992 and
incorporated by reference herein.
2. Filed with Post-Effective Amendment No. 2 on September 4, 1992 and
incorporated by reference herein.
3. Filed with Post-Effective Amendment No. 51 on June 18, 1999 and
incorporated by reference herein.
4. To be filed by amendment.
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
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<PAGE> 65
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
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<PAGE> 66
(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 Independence Funds
Trust, American Performance Funds, the AmSouth Mutual
Funds, The BB&T Mutual Funds Group, The Eureka Funds,
Governor Funds, Fifth Third 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, The Infinity Mutual Funds, Inc.,
Magna Funds, MMA Praxis Mutual Funds, Mercantile
Mutual Funds, Inc., Metamarkets.com, Meyers
Investment Trust, M.S.D.&T Funds, Pacific Capital
Funds, Puget Sound Alternative Investment Series
Trust, The Republic Funds Trust, The Republic
Advisors Funds
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<PAGE> 67
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 June 1, 2000,
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>
Other BISYS Distributors
------------------------
In addition to the following officers of the BISYS related distributors listed
below, each distributor has additional officers listed to the right ( business
address for each person and distributor unless noted otherwise is 3435 Stelzer
Road, Columbus, OH 43219 and unless noted otherwise each person holds no
position with the Fund):
Lynn Mangum Director
Dennis Sheehan Director
Kevin Dell Vice President/Secretary
William Tomko Sr Vice President
Robert Tuch Assistant Secretary
*Barr Rosenberg Funds Distributor, Inc. Irimga McKay- President
Barr Rosenberg Funds Greg Maddox -Vice President(1)
BNY Hamilton Distributors, Inc. William J. Tomko- President(2)
BNY Hamilton Funds, Inc. Richard Baxt -Sr Vice President(3)
*Centura Funds Distributor, Inc. Walter B. Grimm- President
Centura Funds William J. Tomko- Sr Vice President
CFD Fund Distributors, Inc. Richard Baxt- President
Chase Funds
Concord Financial Group, Inc. Walter B. Grimm- President
ProFunds-
*Evergreen Distributor, Inc. D'Ray Moore- President
Evergreen Funds
*Performance Funds Distributor, Inc. Walter B. Grimm-President(4)
Performance Funds William J. Tomko- Sr Vice President
The One Group Services Company Mark Redman- President(5)
The One Group of Funds William Tomko-Sr Vice President (2)
Vista Funds Distributors, Inc. Richard Baxt- President
Chase Vista Funds Lee Schultheis-Sr Vice President
William J. Tomko- Sr Vice President
Kent Funds Distributors, Inc.
Mentor Distributors, LLC D'Ray Moore, President
*IBJ Funds Distributor, Inc. Walter B. Grimm, SVP
* address is 90 Park Avenue, NY, NY
(1) Serves as Assistant Treasurer to Centura Funds
(2) Serves as President to BNY Hamilton Funds and Treasurer to One Group
of Funds
(3) Serves as Vice President to BNY Hamilton Funds (4) Serves as President of
Performance Funds (5) Serves as president to One Group of Funds
Non-BISYS Distributors
----------------------
(see Part C of post-effective amendments for indicated funds for directors and
officers of distributors listed below.)
Glickenhaus & Company
The Empire Builder Tax-Free Bond Fund
Integrity Investments
Valiant Funds
Shay Financial Services, Inc.
MSB Fund. Inc.
Asset Management Fund, Inc.
Institutional Investors Capital Appreciation Fund, Inc.
(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,
transfer agent and custodian for the Funds); BISYS
Fund Services, 3435 Stelzer Road, Columbus, Ohio
43219 (records relating to its functions as
administrator and distributor).
ITEM 29. MANAGEMENT SERVICES
Not Applicable.
ITEM 30. UNDERTAKINGS.
None
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<PAGE> 68
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. 71 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 June, 2000.
THE COVENTRY GROUP
By: /s/ Walter B. Grimm
---------------------
Walter B. Grimm
By: /s/ Patrick W.D. Turley
--------------------------
Patrick W.D. Turley, as attorney-in-fact
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated:
<TABLE>
<CAPTION>
Signature Title Date
----------- ------ ------
<S> <C> <C>
/s/Walter B. Grimm President and Trustee June 30, 2000
------------------------
Walter B. Grimm** (Principal Executive Officer)
/s/ John H. Ferring IV Trustee June 30, 2000
------------------------
John H. Ferring IV***
/s/ Maurice G. Stark Trustee June 30, 2000
------------------------
Maurice G. Stark*
/s/ Michael M. Van Buskirk Trustee June 30, 2000
------------------------
Michael M. Van Buskirk*
/s/ R. Jeffrey Young Chairman and Trustee June 30, 2000
------------------------
R. Jeffrey Young****
/s/ Nadeem Yousaf Treasurer (Principal June 30, 2000
------------------------
Nadeem Yousaf**** Financial and Accounting Officer)
</TABLE>
By: /s/ Patrick W.D. Turley
----------------------------------------
Patrick W.D. Turley, as attorney-in-fact
* Pursuant to power of attorney filed with Pre-Effective Amendment
No. 3 on April 6, 1992.
** Pursuant to power of attorney filed with Post-Effective Amendment
No. 26 on May 1, 1996.
*** Pursuant to power of attorney filed with Post-Effective Amendment
No. 39 on July 31, 1998.
**** Pursuant to power of attorney filed with Post-Effective Amendment
No. 63 on November 30, 1999.
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