WILLAMETTE VALUE FUND================================================================================
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12.
THE COVENTRY GROUP
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
XXXXXXXXXXXXXXXX
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies: .......
(2) Aggregate number of securities to which transaction applies: ..........
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined): ............
(4) Proposed maximum aggregate value of transaction: ......................
(5) Total fee paid: .......................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: ...............................................
(2) Form, Schedule or Registration Statement No.: .........................
(3) Filing Party: .........................................................
(4) Date Filed: ...........................................................
================================================================================
KENSINGTON INVESTMENT GROUP, INC.
4 ORINDA WAY, SUITE 220D
ORINDA, CALIFORNIA 94563
January 15, 2003
Dear Shareholder:
As the President of Kensington Investment Group, Inc. ("Kensington"),
the investment adviser to Kensington Strategic Realty Fund, Kensington Select
Income Fund and Kensington Real Estate Securities Fund (the "Funds"), I AM
WRITING TO YOU REGARDING THE ATTACHED PROXY THAT SEEKS YOUR APPROVAL FOR A
PROPOSED TAX-FREE REORGANIZATION TRANSACTION INVOLVING THE FUNDS
("REORGANIZATION").
While we encourage you to read the full proxy, please note the
following:
o THE REORGANIZATION WILL NOT RESULT IN ANY CHANGE IN THE NAME,
INVESTMENT OBJECTIVE, PRINCIPAL INVESTMENT STRATEGY,
INVESTMENT ADVISER, PORTFOLIO MANAGERS OR INDEPENDENT
ACCOUNTANTS OF ANY OF THE FUNDS.
o WE THINK THIS REORGANIZATION OFFERS THE FUNDS THE OPPORTUNITY
TO OBTAIN GREATER OPERATING EFFICIENCIES, WHICH SHOULD BENEFIT
ALL SHAREHOLDERS.
o KENSINGTON INVESTMENT GROUP WILL BEAR ALL EXPENSES ASSOCIATED
WITH THE REORGANIZATION, INCLUDING EXPENSES ASSOCIATED WITH
THE SOLICITATION OF PROXIES.
o THE BOARD OF TRUSTEES OF THE COVENTRY GROUP HAS UNANIMOUSLY
RECOMMENDED THE REORGANIZATION TO SHAREHOLDERS.
The Funds are currently each a series of The Coventry Group, ----------------an
investment company organized as a Massachusetts business trust. In addition to
Kensington's real estate mutual funds, The Coventry Group also includes several
other non-Kensington managed mutual funds. After the completion of the
Reorganization, Kensington's real estate mutual Funds would become the initial
three series of The Kensington Funds, a new Delaware statutory trust comprised
only of Kensington's real estate mutual Funds (the "New Trust").
PLEASE TAKE A FEW MINUTES TO REVIEW THIS PROXY STATEMENT AND SIGN AND
RETURN THE PROXY CARD TODAY.
WE ASK THAT YOU VOTE PROMPTLY IN ORDER TO AVOID THE ADDITIONAL EXPENSE OF
FURTHER SOLICITATION.
On behalf of my colleagues at Kensington, I would like to take this
opportunity to review for you the primary factors that influenced our decision
to recommend the Reorganization to the Board of Trustees of The Coventry Group.
In the three year period from September 1999, when the Strategic Realty Fund
first commenced investment operations, through September 2002, by which time the
Select Income Fund had also
commenced operations, the two Funds had grown, in the aggregate, to over $500
million in net assets. We concluded, therefore, that it would be in the best
interests of the Funds and their shareholders to reorganize the Funds as part of
an investment company that is focused solely on Kensington managed investment
funds, and the New Trust is intended to be just such an entity. Three members of
Kensington's senior management team are proposed to become Trustees of the New
Trust and will thus take on an active role in the affairs of the New Trust. Each
of these three Kensington Trustee candidates have extensive experience and
backgrounds rooted in real estate securities portfolio investment management.
It is proposed that they be joined on the Board of the New Trust by four
independent Trustees who possess complementary business expertise in order to
round out the overall effectiveness of the Board.
We believe that the approval of the Reorganization will result in
greater opportunities for operational efficiencies as a result of the focus on
Kensington managed investments by the New Trust, and, based in large part upon
our recommendation, the Board of Trustees of The Coventry Group has unanimously
recommended the Reorganization to shareholders as a result of their careful
consideration of our recommendation and the interests of the shareholders of the
Funds.
Accordingly, because your current Board of Trustees has unanimously
recommended that shareholders of each Fund vote "FOR" the proposal, we are
hopeful that you will indeed vote in favor of this important matter by returning
your proxy card in the enclosed postage-paid envelope. Should you have any
questions, regarding the proxy, please feel free to call Georgeson Shareholder
Communications, Inc., at (866) 609-2981 and they will be happy to answer any
questions you may have.
Should you prefer to vote your shares in person, a shareholder meeting
is scheduled to be held at 10 a.m. Eastern Time on March 14, 2003, at the office
of the Funds, 3435 Stelzer Road, Columbus, Ohio 43219.
PLEASE RESPOND -- WE ASK THAT YOU VOTE PROMPTLY IN ORDER TO AVOID THE ADDITIONAL
EXPENSE OF FURTHER SOLICITATION.
Sincerely,
John Kramer
President
Kensington Investment Group, Inc.
KENSINGTON STRATEGIC REALTY FUND
KENSINGTON SELECT INCOME FUND
KENSINGTON REAL ESTATE SECURITIES FUND
EACH A SERIES OF
THE COVENTRY GROUP
3435 STELZER ROAD
COLUMBUS, OHIO 43219
1 (877) 945-3863
------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
----------------
May 9, 2000TO BE HELD MARCH 14, 2003
------------
To the ShareholdersShareholders:
The Coventry Group, a Massachusetts business trust (the "Trust"), will
hold a special meeting of the Fund:
Notice is hereby given that a Special Meeting of Shareholders (the
"Meeting"shareholders ("Meeting") of Kensington Strategic
Realty Fund, Kensington Select Income Fund, and Kensington Real Estate
Securities Fund (collectively, the Fund will be held at 11:00 a.m., Eastern Time, on May 9,
2000,"Funds," and each individually, a "Fund") at
the officesoffice of BISYS Fund Services ("BISYS"),the Trust, 3435 Stelzer Road, Columbus, Ohio 43219 on March 14,
2003 at 10:00 a.m., Eastern Time, for the following purposes:
I.o To vote uponapprove a proposed Agreement and Plan of Reorganization, in
the approval of an amendmentform set forth in Exhibit A to the Investment Advisory
Agreement betweenattached Proxy
Statement, pursuant to which the Funds would be reorganized as
separate series of The Coventry Group, with respect to Willamette Value
Fund, and Willamette Asset Managers, Inc.
II. To vote upon the approval ofKensington Funds, a new sub-investment advisory agreement
among The Coventry Group, with respect to Willamette Value Fund, Willamette
Asset Managers, Inc.Delaware
statutory trust ("New Trust").
o To consider and The Bank of New York.
III. To transact suchact upon any other business as may properly
come properly before the Meeting and any adjournmentadjournments thereof.
ShareholdersYou are entitled to vote at the Meeting and any adjournment(s) if you
owned shares of recordany of the Funds at the close of business on December 31, 2002.
Whether or not you plan to attend the Meeting in person, please vote your
shares. In addition to voting by mail you may also vote by either telephone or
via the Internet, as follows:
TO VOTE BY TELEPHONE: TO VOTE BY INTERNET:
=========================================================== ====================================================
1) Read the Proxy Statement and have your Proxy card at 1) Read the Proxy Statement and have your Proxy
hand. card at hand.
2) Call the 1-800 number that appears on your Proxy card. 2) Go to the website, www.proxyvote.com
3) Enter the control number set forth on the 3) Enter the control number set forth on
Proxy card and follow the simple instructions. the Proxy card and follow the simple
instructions.
- -------------------------------------------------------------------------------------------------------------------
We encourage you to vote by telephone or via the Internet using the
control number that appears on your enclosed proxy card. Use of telephone or
Internet voting will reduce the time and costs associated with this proxy
solicitation. Whichever method you choose, please read the enclosed proxy
statement carefully before you vote.
PLEASE RESPOND -- WE ASK THAT YOU VOTE PROMPTLY IN
ORDER TO AVOID THE ADDITIONAL EXPENSE OF FURTHER
SOLICITATION.
YOUR VOTE IS IMPORTANT.
By Order of the Board of Trustees
of The Coventry Group,
George L. Stevens
Secretary
KENSINGTON STRATEGIC REALTY FUND
KENSINGTON SELECT INCOME FUND
KENSINGTON REAL ESTATE SECURITIES FUND
EACH A SERIES OF
THE COVENTRY GROUP
------------
PROXY STATEMENT
------------
MEETING OF SHAREHOLDERS
This proxy statement is being furnished in connection with the
solicitation by the Board of Trustees of The Coventry Group (the "Trust") of
proxies to be used at a special meeting of the shareholders ("Meeting") of the
Kensington Strategic Realty Fund, Kensington Select Income Fund, and Kensington
Real Estate Securities Fund (each a "Fund" and collectively, the "Funds") to be
held at 10 a.m. Eastern Time on March 10, 2000 are14, 2003 at the office of the Funds,
located at 3435 Stelzer Road, Columbus, OH 43219, and at any adjournment of the
Meeting, for the purposes set forth in the accompanying Notice of Special
Meeting of Shareholders ("Notice"). The primary purpose of the Meeting is for
shareholders of the Funds, as set forth in the attached Notice, to consider and
approve the following proposal:
TO APPROVE A PROPOSED AGREEMENT AND PLAN OF REORGANIZATION, IN
THE FORM SET FORTH IN EXHIBIT A TO THE PROXY STATEMENT,
PURSUANT TO WHICH THE FUNDS WOULD BE REORGANIZED AS SEPARATE
SERIES OF THE KENSINGTON FUNDS, A NEW DELAWARE STATUTORY TRUST
("NEW TRUST").
Shareholders of record of the Funds at the close of business on
December 31, 2002 (the "Record Date") will be entitled to vote at the Meeting or
at any postponements or adjournments thereof. The date of the first mailing of
this Proxy Statement and form of proxy will be on or about January 15, 2003.
Only shareholders of record of the Funds at the close of business on
the Record Date will be entitled to notice of and to vote at the Meeting. By OrderShares
represented by proxies, unless previously revoked, will be voted at the Meeting
in accordance with the instructions of the Board of Trustees
/s/ George L. Stevens
George L. Stevens
Secretary
PLEASE RESPOND--YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE
MEETING, PLEASE COMPLETE, SIGN, DATE AND MAIL THE ENCLOSED PROXY OR PROXIES IN
THE ENCLOSED ENVELOPE SO THAT YOU WILL BE REPRESENTED AT THE MEETING.
WILLAMETTE VALUE FUND
a series of The Coventry Group
3435 Stelzer Road
Columbus, Ohio 43219
----------------
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
----------------
INTRODUCTION
This Proxy Statement is being furnishedshareholders. If no instructions are
given, the proxies will be voted in connection with the solicitation
of proxies from shareholders of Willamette Value Fund ("Fund") in connection
with a Special Meeting of Shareholders to be held at 11:00 a.m., Eastern Time,
on May 9, 2000 and any adjournment thereof (the "Meeting"), at the offices of
BISYS Fund Services ("BISYS"), 3435 Stelzer Road, Columbus, Ohio 43219. The
costfavor of the solicitation (including printing and mailing this Proxy Statement,
Noticeproposals. To revoke a proxy,
the shareholder giving such proxy must either submit to the Trust a subsequently
dated proxy, deliver to the Trust a written notice of Meeting and Proxy, as well as any supplementary solicitation) will
be borne by Willamette Asset Managers, Inc.,revocation or otherwise
give notice of revocation in open meeting, in all cases prior to the Fund's investment adviser
("Adviser"). The Noticeexercise of
the Meeting, Proxy Statement and Proxies are being
mailed to shareholders on or about March 15, 2000.authority granted in the proxy.
The presence in person or by proxy of the holders of record of a
majority of the outstanding shares of each of the FundFunds shall constitute a
quorum at the Meeting, permitting action to be taken on matters relatedwith respect to that Fund.
In the Fund. If, however,
such quorum shallevent that sufficient votes are not be present or represented atreceived by the date of the Meeting,
a person named as proxy may propose one or if fewer
votes are present in person or by proxy than the minimum required to approve
any proposal presented atmore adjournments of the Meeting the holdersfor
a reasonable period or periods to permit further solicitation of a majority of the votes
attributable to the shares present in person or by proxy shall have the power
to adjourn the Meeting, from time to time, without notice other than
announcement at the Meeting, until the requisite number of votes shall be
present at the Meeting.proxies. The
persons named as proxies will vote in favor of such adjournment those proxies
which they are entitled to vote in favor of the Proposalproposal and will vote against
any such adjournment those proxies required to be voted against such Proposal. At any such adjourned Meeting, if the relevant
quorum is subsequently constituted, any business may be transacted which might
have been transacted atproposal.
If a shareholder wishes to participate in the Meeting, as originally called.
The Board of Trustees ofbut does not
wish to authorize the Fund has fixed the close of business on March
10, 2000 as the record date ("Record Date") for determining shareholders
entitled to notice of and to vote at the Meeting and at any adjournments
thereof. The number of outstanding shares of the Fund as of the Record Date
was 1,632,547,294.
Voting
Approval of each Proposal described herein requires the affirmative vote of
a majority of the Fund's outstanding shares which is defined in the 1940 Act
to mean the vote (i) of 67 percent or more of the voting securities present at
the meeting if the holders of more than 50 percent of the outstanding voting
securities of the Fund are present or represented by proxy, or (ii) of more
than 50 percent of the outstanding voting securities of the Fund, whichever is
less. All shares represented by the enclosed form of proxy will be voted in
accordance with the instructions indicated on the proxy if it is completed,
dated, signed and returned in time to be voted at the Meeting and is not
subsequently revoked. If the proxy is returned properly signed and dated, but
no instructions are given as to a Proposal, the shares represented will be
voted in favor of that Proposal. Any proxy
may be revoked by the timely submission of a properly executed, subsequently
dated proxy; by delivery to the Fund of a timely written revocation; or
otherwise by giving notice of revocation in open meeting prior to the
finalization of the vote on a Proposal. Execution and submissionexecution of a proxy does not affect a shareholder's right toby telephone or through the Internet,
the shareholder may still submit the proxy form included with this Proxy
Statement or attend the Meeting in person.
For
purposes of determining the presence of a quorum for transacting business at
the Meeting, abstentions and broker "non-votes" will be treated as shares that
are present but that have not been voted. Broker non-votes are proxies
received by the Fund from brokers or nominees who have neither received
instructions from the beneficial owner or other persons entitled to vote nor
have discretionary power to vote on a particular matter. Abstentions and
broker non-votes will have the effect of a "no" vote on Proposals 1 and 2.
In addition to the solicitation of proxies by use of the mail, proxies may
be solicited by officers of the Fund, or by officers and employees of the
Fund's investment adviser and administrator, personally or by telephone or
telegraph, without special compensation.
The annual report for the Fund's fiscal year ended March 31, 2000 will not
be available prior to the Meeting. The most recent available annual report forof the Funds (except of the Kensington
Real Estate Fund, which commenced operating on December 20, 2002), including
financial statements, for the fiscal year ended March 31, 1999, has2002, and the most recent
semi-annual report for the semi-annual period ended September 30, 2002, have
been mailed previously to its shareholders. You have also received a
report containing unaudited financial statements, for the fiscal half-year
period ended September 30, 1999. If you have not received either of these reports
or would like to receive additional copies free of charge, please contact the
FundFunds at the address set forth on the first page of this proxy statement or by
calling 1-877-945-38631 (877) 945-3863, and itthey will be sent within three business days by
first class mail.
SUMMARY OF PROPOSAL
I
APPROVAL OF AN AMENDMENT TO THE FUND'S
INVESTMENT ADVISORY AGREEMENT
The Board of TrusteesWhile you should read the full text of the FundProxy Statement, here is proposing that shareholders approve an
amendment to the Fund's Investment Advisory Agreement (the "Amended
Agreement") to be entered into between The Coventry Group, on behalfa
brief summary of the proposal and how it will affect each Fund and its
shareholders.
WHAT ARE SHAREHOLDERS BEING ASKED TO APPROVE?
Shareholders of the Adviser.Funds are asked to consider a proposed Agreement
and Plan of Reorganization, which includes: (a) the transfer of all assets of
each Fund to a corresponding series of the same name (the "New Funds") of The
Kensington Funds, a newly formed Delaware statutory trust (the "New Trust"), and
the assumption by each New Fund of the liabilities of the respective Fund, in
exchange for shares of the corresponding New Fund, and (b) the distribution to
shareholders of each Fund the shares of the corresponding New Fund (the
"Reorganization"). A form of the Amended Agreement and Plan of Reorganization is
attached heretoas Exhibit A (the "Reorganization Plan").
Because the Reorganization Plan calls for the Funds, as sole
shareholders of the New Trust prior to Shares of the New Funds being distributed
to the Funds' shareholders, to vote on certain issues regarding the organization
of the New Trust, shareholders of the Funds, in approving the proposed
Reorganization, will essentially be approving the Funds to vote in the
affirmative on the following issues: (i) the election of trustees for the New
Trust, (ii) approval of advisory agreements and service and distribution plans
for the New Funds that are essentially the same as the current advisory
agreements and service and distribution plans for the Funds, and (iii)
ratification of the independent auditors for the New Trust's upcoming fiscal
year. Shareholders of the Funds are not being asked to separately vote on these
issues. More information on each of these items is discussed below.
WHY HAS THE REORGANIZATION BEEN PROPOSED?
We think this Reorganization offers the Funds the opportunity to obtain
greater operating efficiencies, which should benefit all shareholders of the
Funds.
WHAT EFFECT WILL THE REORGANIZATION HAVE ON THE FUNDS AND THEIR SHAREHOLDERS?
Immediately after the Reorganization each shareholder will own the same
number of shares of the New Fund as the number of Fund shares owned by the
shareholder on the closing of the Reorganization. As a result of the
Reorganization, shareholders of the Funds, series of a Massachusetts business
trust, will become shareholders of the New Funds, series of a Delaware statutory
trust.
2
THE REORGANIZATION WILL NOT RESULT IN ANY CHANGE IN THE NAME,
INVESTMENT OBJECTIVE OR PRINCIPAL INVESTMENT STRATEGY, INVESTMENT ADVISER,
PORTFOLIO MANAGERS, OR INDEPENDENT ACCOUNTANTS OF ANY OF THE FUNDS. EACH NEW
FUND WILL OFFER THE SAME SHAREHOLDER SERVICES AS ITS CORRESPONDING FUND. SEE
"CERTAIN COMPARATIVE INFORMATION ABOUT THE TRUST AND THE NEW TRUST" ON PAGE __
FOR ADDITIONAL INFORMATION.
WHAT WILL BE THE FEDERAL INCOME TAX CONSEQUENCES OF THE REORGANIZATION?
As a condition to each Fund's obligation to consummate the
Reorganization, the Trust and New Trust will receive an opinion from legal
counsel to the Funds to the effect that, on the basis of the existing provisions
of the Internal Revenue Code of 1986, as amended, (the "Code"), current
administrative rules and court decisions, the transactions contemplated by the
Reorganization Plan constitute a tax-free reorganization for federal income tax
purposes.
WHO IS BEARING THE EXPENSES RELATED TO THE REORGANIZATION?
Kensington Investment Group will bear all expenses associated with the
Reorganization, including expenses associated with the solicitation of proxies.
PROPOSAL:
APPROVAL OF AN AGREEMENT AND PLAN OF REORGANIZATION
At a meeting of the Trustees of the Trust held on November 19, 2002,
the Trustees approved the Reorganization Plan substantially in the form attached
to this Proxy Statement as Exhibit A. The Adviser currently serves as investment adviserKensington Investment Group requested that
the Reorganization Plan be submitted to shareholders of the Funds. For the
reasons set forth below under "Reasons for the Fund
pursuant to the existing Investment Advisory Agreement between the Funds and
the Adviser (the "Current Agreement"). It is proposed that the Amended
Agreement be entered into as soon as practicable after the Meeting, if it is
approved by shareholders.
The only difference between the Amended Agreement and the Current Agreement
is that the Amended Agreement specifically permits the Adviser, at its own
expense, to delegate to a sub-adviser, such responsibilities and may be
specified in an agreement with such sub-adviser, subject to such approvals byReorganization," the Trustees and shareholders as are required by the Investment Company Act of
1940 (the "1940 Act"). In the event the Adviser does so delegate to a sub-
adviser, the Adviser is also responsible for supervising the sub-adviser's
activities and performance, and for taking reasonable steps to assure that the
sub-adviser complies with the Fund's investment policies and procedures and
applicable legal requirements. The Adviser also has responsibility for
reporting to the Trustees regarding these matters, and the Adviser is
responsible for paying the fees of any sub-adviser. Except for the sub-adviser
provisions described above, the Amended Agreement is substantially identical
to the Current Agreement except for its date and term. Management of
the Fund
made a proposal to the Trustees at a meeting held on February 17, 2000 for the
adoption of the Amended Agreement as well as for the adoption of the sub-
investment advisory agreement described under Proposal II. The Trustees at
this meeting,Trust, including all of the Trustees who are not "interested persons" of the Fund, as that term
is defined in the Investment Company Act of 1940federal securities laws ("Independent Trustees"), accepted the recommendation for the adoption of the
Amended Agreement (and the sub-investment advisory agreement) and the Trustees
are recommending that shareholders approve the Amended Agreement.
2
1. The Current Agreement and the Amended Agreement
Under the terms of the Current Agreement, the Adviser manages the Fund's
investments and Fund pays the Adviser an investment advisory fee at an annual
rate of 1.00% of the Fund's average daily net assets. Under the terms of the
Amended Agreement, the fees payable to the Adviser will remain the same. As
noted earlier, the Adviser will pay the fees of the sub-adviser. Other
provisions of the Current Agreement and the Amended Agreement describe the
Adviser's duties and responsibilities for the Fund, indicate those expenses
that will be borne by the Adviser in connection with these services, reserve
to the Adviser rights to the name "Willamette" and deal with other matters
typical of this type of contract. See Exhibit A.
Under a separate Expense Limitation agreement, the Adviser agreed to reduce
its fee and reimburse the Fund to the extent necessary to limit the Fund's
overall expense ratio to an annual rate of 2.90% for the period from February
1, 1999 to March 31, 1999 and to an annual rate of 2.75% for the period from
April 1, 1999 to March 31, 2000. For a period up to two years after the above
limitation periods, the Fund has agreed to pay the Adviser the amount of fees
and reimbursements that, if not for the above limitation, would have
been
payable or reimbursable to the Adviser, provided that the Fund's operating
expenses, without regard to such repayment or reimbursements, are at an annual
rate (as a percentage of the Fund's average daily net assets) of 2.75% or
less. Additionally, the Fund will not make repayments or reimbursements in an
amount that would cause the Fund's total operating expenses to exceed the
2.75% annual expense limitation. Under the advisory fee reduction and
reimbursement provisions of the Expense Limitation Agreement, the Adviser made
payments of $4,000 for the period ended March 31, 1999 and it is anticipated
that the Advisor will make payments of approximately $50,918 for the year
ended March 31, 2000. The Advisor has not been yet able to recoup any of this
amount.
As of the date hereof, the Adviser does not provide investment advisory
services to any investment companies other than the Fund.
Required Vote
The approval of the Amended Agreement requires the affirmative vote of a
majority of the Fund's outstanding voting securities, which, for these
purposes, means the vote (i) of 67 percent or more of the voting securities
present at the meeting, if the holders of more than 50 percent of the
outstanding voting securities of the Fund are present or represented by proxy,
or (ii) of more than 50 percent of the outstanding voting securities of the
Fund, whichever is less.
THE BOARD OF TRUSTEES OF THE TRUST,
INCLUDING THE INDEPENDENT TRUSTEES,
UNANIMOUSLY RECOMMEND APPROVAL
OF PROPOSAL I.
3
PROPOSAL II
APPROVAL OF SUB-INVESTMENT ADVISORY AGREEMENT
The Board of Trustees of the Fund is proposing that shareholders approve a
new Sub-Investment Advisory Agreement ("Sub-Advisory Agreement") to be entered
into among The Coventry Group, on behalf of the Fund, the Adviser and The Bank
of New York ("Sub-Adviser"). A form of the Sub-Advisory Agreement is attached
hereto as Exhibit B.
The Sub-Advisory Agreement provides that the Adviser will pay to the Sub-
Adviser, out of the Adviser's own resources and at no additional cost to the
Fund, a sub-advisory fee at the following annual rates: (a) for that portion
of the Fund's portfolio, generally 50% of the Fund's assets, that is invested
in the ten highest dividend yielding stocks in the Dow Jones Industrial
Average, the annual fee rate is equal to the following percentages of the
Fund's average daily net assets--0.10% on assets up to $50,000,000; 0.07% on
assets from $50,000,001 to $100,000,000; 0.05% on assets in excess of
$100,000,000, with a minimum annual fee of $10,000 for this portion of the
Fund's portfolio; (b) for that portion of the Fund's portfolio, generally 50%
of the Fund's assets, that is actively managed, the annual fee rate is equal
to 0.45%, with a minimum annual fee of $10,000. More information about the two
portions of the Fund's portfolio is provided below under "Changes in the
Fund's Investment Policies:"
The Sub-Advisory Agreement provides that the Sub-Adviser will, subject to
the supervision of the Adviser and the Trustees, provide a program of
continuous investment management for the Fund in accordance with the Fund's
investment objective, policies and limitations, as they may be amended from
time to time. The Sub-Adviser will make investment decisions for the Fund and
place orders for the Fund's portfolio transactions. The Sub-Advisory Agreement
also contains an acknowledgment by the Sub-Adviser of the Adviser's
supervisory responsibilities and obligations to report to the Trustees
regarding the Sub-Adviser's activities and an agreement that the Sub-Adviser
will facilitate the Adviser's supervisory activities. In other respects, the
provisions of the Sub-Advisory Agreement are generally comparable to those of
the amended investment advisory agreement. See Proposal I and Exhibits A and
B.
2. The Trustees' Considerations and Recommendations
In approving the Amended Agreement and the Sub-Advisory Agreement and
determining to submit them to shareholders for approval, the Trustees,
including all the Independent Trustees, concluded that the compensation to be
paid by the Fund to the Adviser under the Amended Agreement is fair and
reasonable. They alsounanimously determined that the compensation to be paid by the
Adviser to the Sub-Adviser under the Sub-Advisory Agreement was fair and
reasonable. In making this determination, the Trustees considered several
factors, including: (1) the investment management fees payable under the
Current Agreement and those payable under the Amended Agreement and the fact
that these fees would not change; (2) the fact that the fees to the Sub-
Adviser under the Sub-Advisory Agreement would be paid by the Adviser at no
additional cost to the Fund; (3) the efforts and expenses of the Adviser and
the Sub-AdviserReorganization is in rendering their services to the Fund; (4) the nature,
quality and extent of the services as currently provided by the Adviser to the
Funds and as to be provided by the Adviser under the Amended Agreement; (5)
the nature and quality of the services to be provided by the Sub-Adviser to
the Fund under the Sub-Advisory Agreement; (6) the experience, background,
capabilities and general reputation of the Adviser and Sub-Adviser, including
the Sub-Adviser's services to Willamette Small Cap Growth Fund; and (7) the
fees charged by investment managers operating funds with similar investment
objectives.
4
In the event that the Amended Agreement and/or the Sub-Advisory Agreement
are not approved by the shareholders, the Adviser will continue to provide
portfolio management services for the Fund under the current agreement and
Trustees will consider what other action is appropriate based upon their
determination of the best interests of the
shareholders.
Changes inshareholders of each of the Fund's Investment Policies
TheFunds and that the interests of those shareholders
will not be diluted as a result of the Reorganization.
We now submit to shareholders of each Fund a proposal to approve the
Reorganization Plan. If shareholders approve the proposal, the Trustees haveand
officers of the Trust will execute and implement the Reorganization Plan. If
approved, andwe expect the Fund expects to implement, certain
changes to the Fund's investment policies. These changes will begin to be put
in place after the Sub-Adviser begins its portfolio management activities for
the Fund, although full implementation is expectedReorganization to take at least two
months. These changes are currently not expected to materially increase the
Fund's transaction costs above thoseeffect on or about April 1, 2003,
although that would otherwisedate may be incurred in the
regular rebalancing of the Fund's portfolio. In the event Proposals described
in this Proxy Statement are not approved, the Trustees will determine whether
the changes will be implemented or whether some alternative policies should be
considered.
Under the Fund's current investment policies, about one-half of the Fund's
total assets, under normal conditions, are invested in the ten highest
dividend-yielding stocks in the Dow Jones Industrial Average ("DJIA"). The
other half of the Fund's total assets are normally allocated to certain New
York Stock Exchange ("NYSE") listed issuers that are not included in the DJIA.
Stocks in this NYSE group are selected by identifying the 400 largest
capitalized NYSE stocks that are not included in the DJIA, removing the 50
highest dividend yielding stocks from that group and purchasing the next 25
highest dividend yielding stocks. Each of these two components of the Fund's
portfolio is rebalanced annually, using the same criteria.
Under the proposed new policies, the DJIA component of the portfolio would
continue to be managed as it is under the current policies. However, the other
component of the portfolio would be actively managed in accordance with a
"value" investment strategy. Thus, under normal market conditions, this
component of the portfolio will be invested primarily in equity securities
that the Sub-Adviser believes have certain characteristics of "value" stocks.
These characteristics include: low price to normalized earnings ratio, above-
average dividend yield, low price relative to net asset value, low valuation
relative to the security's historic average, and other factors. The Adviser
and Sub-Adviser believe that this change will better enable the Fund to
achieve its investment objective, although there can be no assurance that this
change will be successful or that the Fund's performance will improve.
Required Vote
The approval of the Sub-Advisory Agreement requires the affirmative vote of
a majority of the Fund's outstanding voting securities, which, for these
purposes, means the vote (i) of 67 percent or more of the voting securities
present at the meeting, if the holders of more than 50 percent of the
outstanding voting securities of the Fund are present or represented by proxy,
or (ii) of more than 50 percent of the outstanding voting securities of the
Fund, whichever is less.
THE BOARD OF TRUSTEES OF THE TRUST,
INCLUDING THE INDEPENDENT TRUSTEES,
UNANIMOUSLY RECOMMEND APPROVAL
OF PROPOSAL II.
5
PRINCIPAL HOLDERS OF VOTING SECURITIES
There was no person or group known to the Fund to be the beneficial owner of
more than 5% of the Fund's outstanding voting securities as of March 10, 2000.
Other Matters
The Board does not currently know of any matters to be presented at the
Meeting other than those mentioned in this Proxy Statement. If any other
matters come properly before the Meeting, the shares represented by proxies
will be voted with respect theretoadjusted in accordance with the best judgementReorganization Plan.
SUMMARY OF THE REORGANIZATION PLAN AND AGREEMENT
We summarize below the important terms of the person or persons votingReorganization Plan. This
summary is qualified in its entirety by reference to the proxies.
The Fund does not hold annual or regular meetingsReorganization Plan
itself, which is set forth in Exhibit A to this Proxy Statement. All information
regarding the New Trust, its operations and the various agreements between the
New Trust and its several service providers have been supplied by Kensington
Investment Group, and neither the current Trust nor any of its shareholders.
ProposalsTrustees or
officers has independently verified the accuracy of shareholders which are intended to be presented at a future
shareholders' meeting must be received bysuch information.
GENERAL PLAN OF REORGANIZATION. The Reorganization Plan consists of
several steps that will occur on the Closing Date following shareholder
approval. First, each Fund by a reasonable time prior
to the solicitation of proxies relating to such future meeting. Shareholder
proposals must meet certain requirements and there is no guarantee that any
proposal will be presented at a shareholders' meeting.
Respectfully submitted,
George L. Stevens
Secretary of the Trust 6
EXHIBIT A
THE COVENTRY GROUP
on behalfwill transfer all of WILLAMETTE VALUE FUND
INVESTMENT ADVISORY AGREEMENT
AGREEMENT, effective commencing on , 2000 between Willamette Asset
Managers, Inc. (the "Adviser") and The Coventry Group (the "Trust") on behalf
of Willamette Valueits assets to a
corresponding New Fund (the "Fund").
WHEREAS, the Trust is a Massachusetts business trust of the series type
organized under a Declaration of Trust dated January 8, 1992, (the
"Declaration") and is registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), as an open-end, diversified management investment
company, and the Fund is a new series of the Trust;
WHEREAS, the Trust wishes to retain the Adviser to render investment
advisory services to the Fund, and the Adviser is willing to furnish such
services to the Fund;
WHEREAS, the Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended ("Advisers Act");
NOW THEREFORE, in consideration of the promises and mutual covenants herein
contained, it is agreed between the Trust and the Adviser as follows:
3. Appointment. The Trust hereby appoints the Adviser to act as investment
adviser to the Fund for the periods and on the terms set forth in this
Agreement. The Adviser accepts such appointment and agrees to furnish the
services herein set forth, for the compensation herein provided.
4. Investment Advisory Duties; Authority to Delegate to Sub-Adviser. Subject
to the supervision of the Trustees of the Trust, the Adviser will (a) provide
a program of continuous investment management for the Fund in accordance with
the Fund's investment objectives, policies and limitations as stated in the
Fund's prospectus and Statement of Additional Information included as part of
the Trust's Registration Statement filed with the Securities and Exchange
Commission, as they may be amended from time to time, copies of which shall be
provided to the Adviser by the Trust; (b) make investment decisions for the
Fund; and (c) place orders to purchase and sell securities for the Fund. The
Adviser is authorized, at its own expense, to delegate to a sub-adviser such
of its responsibilities hereunder as may be specified in an agreement with
such sub-adviser, subject to such approvals by the Trustees and shareholders
of the Fund as are required by the 1940 Act. In the event the Adviser does so
delegate to a sub-adviser, the Adviser is further responsible for supervising
the activities and performance of the sub-adviser, for taking reasonable steps
to assure that the sub-adviser complies with the Fund's investment policies
and procedures and with applicable legal requirements, and for reporting to
the Trustees regarding these matters.
In performing its investment management services to the Fund hereunder, the
Adviser will provide the Fund with ongoing investment guidance and policy
direction, including oral and written research, analysis, advice, statistical
and economic data and judgments regarding individual investments, general
economic conditions and trends and long-range investment policy. The Adviser
will determine the securities, instruments, repurchase
A-1
agreements, options and other investments and techniques that the Fund will
purchase, sell, enter into or use, and will provide an ongoing evaluation of
the Fund's portfolio. The Adviser will determine what portion of the Fund's
portfolio shall be invested in securities and other assets, and what portion
if any, should be held uninvested.
The Adviser further agrees that, in performing its duties hereunder, it
will:
(a) comply with the 1940 Act and all rules and regulations thereunder,
the Advisers Act, the Internal Revenue Code (the "Code") and all other
applicable federal and state laws and regulations, and with any applicable
procedures adopted by the Trustees;
(b) use reasonable efforts to manage the Fund so that it will qualify,
and continue to qualify, as a regulated investment company under Subchapter
M of the Code and regulations issued thereunder;
(c) place orders pursuant to its investment determinations for the Fund
directly with the issuer, or with any broker or dealer, in accordance with
applicable policies expressed in the Fund's prospectus and/or Statement of
Additional Information and in accordance with applicable legal
requirements;
(d) furnish to the Trust, or to the Fund's administrator, BISYS Fund
Services, ("Administrator") if so directed, whatever statistical
information the Trust may reasonably request with respect to the Fund's
assets or contemplated investments. In addition, the Adviser will keep the
Trust and the Trustees informed of developments materially affecting the
Fund's portfolio and shall, on the Adviser's own initiative, furnish to the
Trust from time to time whatever information the Adviser believes
appropriate for this purpose;
(e) make available to the Administrator, and the Trust, promptly upon
their request, such copies of its investment records and ledgers with
respect to the Fund as may be required to assist the Administrator and theNew Trust in their compliance with applicable laws and regulations. The Adviser
will furnish the Trustees with such periodic and special reports regarding
the Fund as they may reasonably request;
(f) immediately notify the Trust in the event that the Adviser or any of
its affiliates: (1) becomes aware that it is subject to a statutory
disqualification that prevents the Adviser from serving as investment
adviser pursuant to this Agreement; or (2) becomes aware that it is the
subject of an administrative proceeding or enforcement action by the
Securities and Exchange Commission ("SEC") or other regulatory authority.
The Adviser further agrees to notify the Trust immediately of any material
fact known to the Adviser respecting or relating to the Adviser that is not
contained in the Trust's Registration Statement regarding the Fund, or any
amendment or supplement thereto, but that is required to be disclosed
therein, and of any statement contained therein that becomes untrue in any
material respect;
(g) in making investment decisionsexchange solely for the Fund, use no inside
information that may be in its possession or in the possession of any of
its affiliates, nor will the Adviser seek to obtain any such information.
5. Allocation of Charges and Expenses. Except as otherwise specifically
provided in this section 3, the Adviser shall pay the compensation and
expenses of all its directors, officers and employees who serve as officers
and executive employees of the Trust or Fund (including the Trust's or Fund's
share of payroll taxes), and the Adviser shall make available, without expense
to the Fund, the service of its directors, officers and employees who may be
duly elected officers of the Trust, subject to their individual consent to
serve and to any limitations imposed by law. The Adviser shall also pay the
fees of any sub-adviser.
The Adviser shall not be required to pay any expenses of the Fund or Trust
other than those specifically allocated to the Adviser in this section 3. In
particular, but without limiting the generality of the foregoing, the Adviser
shall not be responsible, except to the extent of the reasonable compensation
of such of the Trust's or
A-2
Fund's employees as are officers or employees of the Adviser whose services
may be involved, for any expenses of other series of the Trust or for the
following expenses of the Fund or Trust: organization and certain offering
expenses of the Fund (including out-of-pocket expenses, but not including the
Adviser's overhead and employee costs); fees payable to the Adviser and to any
other Fund advisers or consultants; legal expenses; auditing and accounting
expenses; interest expenses; telephone, telex, facsimile, postage and other
communications expenses; taxes and governmental fees; fees, dues and expenses
incurred by or with respect to the Fund in connection with membership in
investment company trade organizations; cost of insurance relating to fidelity
coverage for the Trust's officers and employees; fees and expenses of the
Fund's Administrator or of any custodian, subcustodian, transfer agent, fund
accounting agent, registrar, or dividend disbursing agent of the Fund;
payments for portfolio pricing or valuation services to pricing agents,
accountants, bankers and other specialists, if any; expenses of preparing
share certificates, if any; other expenses in connection with the issuance,
offering, distribution or sale of securities issued by the Fund; expenses
relating to investor and public relations; expenses of registering shares
of the corresponding New Fund for sale and of compliance with applicable state notice filing
requirements; freight, insurance and other charges in connection with the
shipment of the Fund's portfolio securities; brokerage commissions or other
costs of acquiring or disposing of any portfolio securities or other assets of
the Fund, or of entering into other transactions or engaging in any investment
practices with respect to the Fund; expenses of printing and distributing
prospectuses, Statements of Additional Information, reports, notices and
dividends to shareholders; costs of stationery or other office supplies; any
litigation expenses; costs of shareholders' and other meetings; the
compensation and all expenses (specifically including travel expenses relating
to the Fund's business) of officers, Trustees and employees of the Trust who
are not interested persons of the Adviser; and travel expenses (orhaving an appropriate portion thereof) of officers or Trustees of the Trust who are
officers, Trustees or employees of the Adviser to the extent that such
expenses relate to attendance at meetings of the Board of Trustees of the
Trust with respect to matters concerning the Fund, or any committees thereof
or advisers thereto.
6. Compensation. As compensation for the services provided and expenses
assumed by the Adviser under this Agreement, the Trust will arrange for the
Fund to pay the Adviser at the end of each calendar month an advisory fee
computed daily at an annual rateaggregate net asset value equal to 1.00% of the Fund's average daily
net assets. The "average daily net assets" of the Fund shall mean the average
of the values placed on the Fund's net assets as of 4:00 p.m. (New York time)
on each day on which the
net asset value of the
3
Fund. Each New Fund is determined consistent
withwill also assume all of the provisionsliabilities of Rule 22c-1 under the 1940 Act or, ifcorresponding
Fund. The Funds, as sole shareholders of the New Funds, will make certain
elections, approvals and ratifications as set forth below. Immediately
thereafter, each Fund lawfully
determineswill liquidate and distribute shares of the valuecorresponding
New Fund to its shareholders in exchange for their shares of its net assets asthat Fund. This
will be accomplished by opening an account on the books of some other time onthe corresponding New
Fund in the name of each business
day, asshareholder of such other time. The value of net assetsrecord of the Fund shall always
be determined pursuantand by crediting to
each account the applicable provisionsshares due in the Reorganization. Every shareholder will own
the same number of shares of the Declaration andcorresponding New Fund as the Registration Statement. If, pursuant to such provisions,number of shares
held by the determination of
net asset value is suspended for any particular business day, then forshareholder in each Fund immediately before the purposes of this section 4, the valueReorganization. For
example, if you held 100 shares of the net assets of theKensington Strategic Realty Fund
as last
determined shall be deemedimmediately prior to be the value of its net assets as of the close of the New York Stock Exchange oron the Closing
Date, those shares would be canceled and you would receive 100 shares of the
corresponding New Fund of the same name and representing the same net asset
value. All of these transactions would occur as of such other timethe Closing Date. The net
asset value of your investment immediately after the Reorganization will be the
same as it was immediately prior to the Reorganization.
ELECTIONS, APPROVALS AND RATIFICATIONS. The Investment Company Act of
1940, as amended ("1940 Act"), generally requires that shareholders of a mutual
fund elect the fund's trustees, approve the fund's investment advisory
agreements, approve the distribution plan administered pursuant to Rule 12b-1
under the 1940 Act and ratify the trustees' selection of the independent
accountant for the fund. These requirements apply to new mutual funds, including
the New Funds. If shareholders approve the proposed Reorganization, they will
also be:
o authorizing the approval of new Investment Advisory Agreements
with Kensington Investment Group;
o approving the Service and Distribution Plans administered
pursuant to Rule 12b-1 under the 1940 Act;
o authorizing election of Trustees of the New Trust; and
o ratifying the selection of Ernst & Young, LLP as the
valueindependent accountants for the New Funds.
Technically, these elections, approvals and ratifications will be
accomplished by a vote of the net assetsFunds, as sole shareholders of the New Funds prior
to the effective date of the Reorganization. In general, there will be no
substantive changes in those areas noted above from the Funds to the New Funds
except that the Trustees will not be the same for the New Funds.
Information regarding each of these matters is included in this Proxy
Statement, including information about the individuals proposed to serve as
Trustees of the New Funds, which may be found in the section entitled,
"Information About the Proposed Trustees."
CLOSING DATE. It is currently anticipated that the closing of the
Reorganization will occur on or about April 1, 2003.
OTHER PROVISIONS. The Reorganization is subject to a number of
conditions set forth in the Reorganization Plan. Certain of these conditions may
be waived by the Board of Trustees. The significant conditions that may not be
waived include: (a) the receipt by the Trust and the New Trust of an opinion of
counsel as to certain federal income tax aspects of the Reorganization and (b)
the approval
4
of the Reorganization Plan by the shareholders of each of the Funds. The
Reorganization Plan may be terminated and the Reorganization abandoned at any
time, before or after approval by the shareholders of the Funds prior to the
Closing Date, by the Board of Trustees. In addition, the Reorganization Plan may
be amended by the Board of Trustees. However, the Reorganization Plan may not be
amended subsequent to the shareholder meeting in a manner that would change the
method for determining the number of shares to be issued to shareholders of the
existing Funds without shareholder approval.
REASONS FOR THE PROPOSED REORGANIZATION
The Board of Trustees of the Trust, including the Independent Trustees,
unanimously approved the Reorganization Plan at a meeting held on November 19,
2002. In approving the Reorganization, the Trustees of the Trust determined that
the proposed Reorganization would be in the best interests of each Fund, and
that the interests of each Fund's portfolioshareholders would not be diluted as a result
of effecting the Reorganization. We summarize below the key factors considered
by the Trustees:
o Kensington Investment Group informed the Trustees that it
believes that by establishing the New Trust, the New Funds
should be able to realize greater operating efficiencies.
o The Trustees considered that the investment objective,
policies and restrictions of each Fund are identical to those
of the corresponding New Fund, and the Fund would be managed
by the same personnel and in accordance with the same
investment strategies and techniques utilized in the
management of each Fund immediately prior to the
Reorganization.
o In recent years, many mutual funds have reorganized as
Delaware statutory trusts. Kensington Investment Group has
informed the Trustees that it believes that the proposed
Delaware statutory trust form provides the most flexible and
cost efficient method of providing different investment
vehicles to present and prospective shareholders.
CERTAIN COMPARATIVE INFORMATION ABOUT THE TRUST AND THE NEW TRUST
CONTINUATION OF SHAREHOLDER ACCOUNTS AND PLANS. BISYS Fund Services,
Inc., as the Trust's and New Trust's transfer agent, will establish accounts for
all current Fund shareholders containing the appropriate number of New Fund
shares to be received by that shareholder in accordance with the terms and
provisions of the Reorganization Plan. These accounts will be identical in all
material respects to the accounts currently maintained by each Fund on behalf of
its shareholders.
COMPARATIVE INFORMATION ON SHAREHOLDER SERVICES. The New Funds will
offer the same shareholder services as the Funds, including the Automatic
Withdrawal Program, Automatic Investment Plan, telephone exchanges, telephone
redemptions and exchanges between Funds.
Shares of the New Funds may lawfully be determined, on that day. If
the determination ofredeemed at a redemption price equal to
the net asset value of the shares as next determined following the receipt of a
redemption order and any other required documentation in proper form, less any
applicable redemption fee. Payment of redemption proceeds for redeemed New Fund
shares will generally be made within seven days after receipt of a redemption
request in proper form and documentation.
DIVIDENDS AND DISTRIBUTIONS. Each New Fund will have the same dividend
and distribution policy as the corresponding Fund. After the closing of the
Reorganization, Fund has been so
suspendedshareholders who
5
currently have dividends reinvested will continue to have dividends reinvested
in the New Fund. Shareholders who currently have capital gains reinvested will
continue to have capital gains reinvested in the New Fund.
FISCAL YEAR. Each of the Funds currently operates on a fiscal year
ending March 31. Following the Reorganization, the New Funds will operate on a
fiscal year ending December 31.
DECLARATION OF TRUST AND BY-LAWS OF THE TRUST AND THE NEW TRUST
The following is a summary of certain differences between and among the
Declaration of Trust and By-laws of the Trust and the Declaration of Trust and
By-laws of the New Trust. It is not a complete list of the differences.
Shareholders should refer to the provisions of these documents and state law
directly for a period including any month end when the Adviser's compensation
is payable pursuant to this section, then the Adviser's compensation payable
at the end of such month shall be computed on the basismore thorough comparison. Copies of the valueDeclaration of Trust and
By-laws of the net assetsTrust and of the Fund as last determined (whether during or prior to such
month). If the Fund determines the valueDeclaration of Trust and By-laws of the net assetsNew
Trust are available to shareholders without charge upon written request.
GENERAL. The Trust was organized as a Massachusetts business trust on
January 8, 1992. As a Massachusetts business trust, the Trust's operations are
currently governed by its Declaration of its portfolioTrust ("Massachusetts Trust
Instrument"), By-Laws and applicable Federal and Massachusetts law. The New
Trust was organized as a Delaware statutory trust on January 10, 2003. As a
Delaware statutory trust, the New Trust's operations will be governed by a
Declaration of Trust (the "Delaware Trust Instrument"), By-Laws and applicable
Federal and Delaware law.
Under the Delaware Trust Instrument and By-Laws, the Trustees of the
New Trust will have more flexibility than once on any day, thenTrustees of the last such determination thereof on that
day shall be deemedTrust and, subject to
be the sole determination thereof on that day for the
purposesapplicable requirements of this section 4.
7. Books and Records. The Adviser agrees to maintain such books and records
with respect to its services to the Fund as are required by Section 31 under the 1940 Act and rules adopted thereunder,Delaware law, broader authority to
act. The increased flexibility may allow the Trustees to react more quickly to
changes in competitive and by other applicable legal
provisions,regulatory conditions and, as a consequence, may
allow the Trust to preserve such records for the periodsoperate in a more efficient and economical manner. The
Trustees' existing fiduciary obligations to act with due care and in the
manner
requiredinterest of shareholders will not be affected by that
A-3
Section,the Reorganization.
TERM OF TRUSTEES. The term of office of a Trustee of both the Trust and
those rules and legal provisions. The Adviser also agrees that
records it maintains and preserves pursuant to Rules 31a-1 and Rule 31a-2the New Trust is unlimited in duration unless the Trustees themselves adopt a
limited term. A person serving as Trustee will continue as Trustee under the
1940 ActMassachusetts Trust Instrument until the person resigns, dies, is declared
incompetent or is removed from office. Under the Delaware Trust Instrument a
Trustee will continue to serve for an indefinite period of time or until his
successor is elected and otherwisequalified, the Trust terminates or the person dies,
resigns, or is removed. The Delaware Trust Instrument also provides that a
Trustee may be removed at any meeting of shareholders by a vote of two-thirds
of the outstanding shares of the New Trust or by the unanimous vote of the
Trustees. The Massachusetts Trust Instrument also provides that any Trustee may
be removed by the affirmative vote of the holders of two-thirds of the
outstanding shares. However, a Trustee may be removed by two-thirds of the
remaining Trustees only for cause.
LIABILITY OF TRUSTEES AND OFFICERS. A Trustee of both the Trust and the
New Trust will be personally liable only for his or her own willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in connectionthe
conduct of the office of Trustee. Under the Massachusetts Trust Instrument,
Trustees and officers of the Trust are indemnified by the Trust for the expenses
of litigation against them unless it is determined that his or her conduct
constitutes willful misfeasance, bad faith, gross negligence or reckless
disregard of his or her duties. Under the Delaware Trust
6
Instrument, Trustees are indemnified by the New Trust for expenses of
litigation against them unless it is determined that his or her conduct
constitutes willful misfeasance, bad faith, gross negligence or reckless
disregard of his or her duties. Further, such indemnification extends to any
person who is or was an employee or other agent of the New Trust or who is or
was serving at the request of the New Trust as a trustee, director, officer,
employee or agent of another organization in which the New Trust has any
interest as a shareholder, creditor or otherwise.
SHAREHOLDER LIABILITY. Delaware law provides that shareholders are not
liable for the obligations of a Delaware statutory trust. Under Massachusetts
law, there is no equivalent statutory limitation of shareholder liability.
However, the Delaware Trust Instrument and the Massachusetts Trust Instrument
contain disclaimers of shareholder liability for acts or obligations of the
respective trust, and provide for indemnification for any shareholder who is
exposed to liability by reason of a claim or demand relating to such person
being or having been a shareholder.
SHAREHOLDER VOTING. The voting rights of shareholders of the Trust are
based on the number of shares the shareholder owns. Each holder of a share of a
Fund is entitled to one vote for each whole share and a proportionate fractional
vote for each fractional share.
SHAREHOLDER MEETINGS. The New Trust and the Trust are not required to
hold annual shareholder meetings. Under both trust instruments, shareholders
owning at least 10% of the outstanding shares of a Fund may call a special
meeting for any purpose.
REORGANIZATION/COMBINATION TRANSACTIONS. Under the Delaware Trust
Instrument, the Trustees may generally authorize mergers, consolidations, share
exchanges and reorganizations of a New Fund or the New Trust with its services hereunder areanother trust,
series or other business organization without shareholder approval, although
such approval may be separately required under the federal securities laws and
rules thereunder. Under the Massachusetts Trust Instrument, a majority of the
outstanding shares of a Fund must approve a merger of the Fund with another
business organization, or the sale or exchange of all or substantially all of
the property of the Fund.
AMENDMENT OF CHARTER DOCUMENT. Under the Delaware Trust Instrument, the
Trustees may generally restate, amend or otherwise supplement the Delaware Trust
Instrument without the approval of shareholders, subject to limited exceptions
(such as amendments affecting shareholders' voting rights). The Massachusetts
Trust Instrument may generally only be amended by the affirmative vote of the
majority of shareholders. The Trustees may amend the Massachusetts Trust
Instrument without shareholder approval to conform the Massachusetts Trust
Instrument to the requirements of applicable federal laws or regulations, the
requirements of the regulated investment company provisions of the Internal
Revenue Code, to change the name of the Trust and will be surrendered promptlyto make any other changes
which do not materially adversely affect the rights of shareholders.
DERIVATIVE AND CLASS ACTIONS. Under the Massachusetts Trust Instrument,
shareholders have the power to vote to the same extent as the shareholders of a
Massachusetts business corporation as to whether or not a court action,
proceeding or claim should be brought or maintained derivatively or as a class
action on behalf of the Trust uponor its request. Andshareholders. The Delaware Trust Instrument
does not provide shareholders a similar right.
7
THE INVESTMENT ADVISORY AGREEMENTS
The Reorganization Plan authorizes each Fund, while it is the sole
shareholder of the corresponding New Fund, to approve new advisory agreements
with Kensington Investment Group ("Adviser") for each New Fund (each a "New
Advisory Agreement") that are substantially identical to the current advisory
agreements between the Trust, on behalf of each Fund, and the Adviser (each a
"Current Advisory Agreement"), as further agrees that it will furnishdetailed below.
Unless sooner terminated, each Fund's Current Advisory Agreement, and
each proposed New Advisory Agreement, continues in effect for an initial period
of two years and from year to regulatory
authorities havingyear thereafter if such continuance is approved at
least annually by the requisite authority any informationBoard of Trustees or reports in
connection with its services hereunder which may be requested in order to
determine whetherby vote of a majority of the
operationsoutstanding shares of the Fund, or the New Fund, as applicable, and a majority
of the Trustees who are being conductednot parties to the Agreement or interested persons (as
defined in accordance
withthe 1940 Act) of any party to the Agreement by votes cast in person
at a meeting called for such purpose. Each Current Advisory Agreement and each
New Advisory Agreement is terminable at any time on 60 days' written notice
without penalty by the Trustees, by vote of a majority of the outstanding Shares
of the Fund, or the New Fund, as applicable, lawsor by the Adviser. Each Agreement
also terminates automatically in the event of any assignment, as defined in the
1940 Act.
Both the Current Advisory Agreements and regulations.
8. Standard of Care and Limitation of Liability. The Adviser shall exercise
its best judgment in rendering the services provided by it under this
Agreement. TheNew Advisory Agreements
provide that the Adviser shall not be liable for any error of judgment or
mistake of law or for any loss suffered by thea Fund or the holders of the
Fund's shares in connection with the
matters to which thisperformance of the Agreement, relates,
provided that nothing in this Agreement shall be deemed to protect or purport
to protect the Adviser against any liabilityexcept a loss resulting from a breach of fiduciary
duty with respect to the Trust, the Fundreceipt of compensation for services or to
holders of the Fund's shares to which the Adviser would otherwise be subject
by reason ofa loss
resulting from willful misfeasance, bad faith, or gross negligence on itsthe part
of the Adviser in the performance of its duties, or from reckless disregard by
reasonthe Adviser of its duties and obligations thereunder.
The Adviser currently acts as investment adviser to the Funds pursuant
to Current Advisory Agreements dated September 15, 1999 for the Kensington
Strategic Realty Fund ("Strategic Realty Fund"), March 30, 2001 for the
Kensington Select Income Fund ("Select Income Fund"), and December 20, 2002 for
the Kensington Real Estate Securities Fund ("Real Estate Securities Fund").
Under the Current Advisory Agreements, the Funds pay the Adviser fees
for its services performed pursuant to these agreements. The fees, which are
computed daily and paid monthly, are at the following annual rates for each
Fund, calculated as a percentage of the Adviser's reckless disregardparticular Fund's average daily net
assets: Strategic Realty Fund, 1.50% (subject to performance adjustments);
Select Income Fund, 1.00%; and Real Estate Securities Fund, 0.85%. The rate of
its obligations and duties under this Agreement. As used in this Section 6,
the term "Adviser" shall include any officers, directors, employees or other
affiliates ofadvisory fees to be paid to the Adviser performing servicesunder the New Advisory Agreements with
respect to the New Funds will be the same as under the Current Advisory
Agreements for each corresponding Fund.
9. Services Not Exclusive. It is understood thatThe Adviser may periodically waive all or a portion of its advisory fee
to increase the servicesnet income of a Fund available for distribution as dividends or
to limit a Fund's total operating expenses. Should the Reorganization be
approved, the Adviser would continue to be subject to its current agreements to
waive fees and/or reimburse its fees with respect to each of the Adviser
are not exclusive, and that nothing in this Agreement shall preventFunds. With
respect to the Strategic Realty Fund, the Adviser from providing similarhas contractually agreed,
until October 31, 2003, to waive fees and/or reimburse that Fund to the extent
necessary to maintain the Fund's Total Fund Operating Expenses for Class A, B,
and C shares at 2.25%, 3.00% and 3.00%, respectively. The Adviser has also
contractually agreed, until March 30, 2004, to waive fees and/or reimburse the
Select Income Fund to the extent necessary to maintain that Fund's Total Fund
Operating Expenses for Class A, B, and C shares at 1.60%, 2.35% and 2.35%,
respectively. The Adviser has also contractually agreed, until
8
December 31, 2005, to waive fees and/or reimburse the Real Estate Securities
Fund to the extent necessary to maintain that Fund's Total Fund Operating
Expenses for Class A, B, and C shares at 1.45%, 2.20% and 2.20%, respectively.
In each case, these limits do not apply to increases due to brokerage costs,
interest, taxes and dividends and extraordinary expenses (and, in the case of
the Strategic Realty Fund, performance fee adjustments). In addition, each Fund
has agreed to pay or repay fees that were waived or reimbursed for a period up
to three years after such waiver or reimbursement was made to the extent such
payments or repayments would not cause the expenses of a Class to exceed the
above limits.
Investment advisory fees earned by the Adviser for services to other investment companies orthe
Strategic Realty Fund for the fiscal year ended March 31, 2002 totaled
$4,258,363; the Adviser waived advisory fees in the amount of $74,662 in
accordance with applicable fee waiver adjustments. Investment advisory fees
earned by the Adviser for services to other seriesthe Select Income Fund for the period from
April 3, 2001 (commencement of investment companies, includingoperations) through the fiscal year ended March
31, 2002 totaled $404,571, and the Adviser waived advisory fees in the amount of
$207,905. As of March 31, 2002, the Real Estate Securities Fund had not yet
commenced operations.
THE SERVICE AND DISTRIBUTION PLANS
The Reorganization Plan also authorizes each Fund, while it is the sole
shareholder of the corresponding New Fund, to approve new service and
distribution plans for each New Fund (each a "New Plan") that are substantially
identical to the service and distribution plans adopted by the Trust (whether or not
their investment objectivesfor each
Fund (each a "Current Plan"), as further detailed below.
The Current Plans for the Strategic Realty Fund, Select Income Fund,
and policies are similar to thoseReal Estate Securities Fund were initially approved by the Board of the
Fund)Trust at meetings held on August 31, 1999, February 22, 2001, and November 19,
2002, respectively. The Trust has adopted a Current Plan for each class of
shares of the Funds pursuant to Rule 12b-1 under the 1940 Act under which each
Fund is authorized to compensate BISYS Fund Services Limited Partnership, the
Funds' distributor ("Distributor"), for payments it makes to banks, other
institutions and broker-dealers, and for expenses the Distributor and any of its
affiliates or from engaging in other activities, providedsubsidiaries incur (with all of the foregoing organizations being
referred to as "Participating Organizations") for providing administration,
distribution or shareholder service assistance. Payments to such other services and activities
do not, during the term of this Agreement, interfere in a material mannerParticipating
Organizations may be made pursuant to agreements entered into with the
Adviser's abilityDistributor. The Current Plans authorize each Fund to meet its obligationsmake payments to the
Fund hereunder. When the
Adviser recommends the purchase or sale of a security for other investment
companies and other clients, and at the same time the Adviser recommends the
purchase or saleDistributor in amounts not to exceed, on an annual basis, 0.25% of the same security for the Fund, it is understood that in
lightaverage
daily net assets of its fiduciary duty to the Fund, such transactions will be executed on
a basis that is fair and equitable to the Fund. In connection with purchases
or sales of portfolio securities for the accountClass A Shares of the Fund neither the
Adviser nor anyand 1.00% of Class B and Class C
Shares. Each Class is authorized to pay a Shareholder Service Fee of up to 0.25%
of its Trustees, officers or employees shall act as a
principal or agent or receive any commission. If the Adviser provides any
advice to its clients concerning the shares of the Fund, the Adviser shall act
solely as investment counsel for such clients and not in any way on behalf of
the Trust or the Fund.
10. Duration and Termination. This Agreement shall continue until ,
2002, and thereafter shall continue automatically for successive annual
periods, provided such continuance is specifically approved at least annuallyaverage daily net assets.
As required by (i) the Trustees or (ii) a vote of a "majority" (as defined in the 1940
Act) of the Fund's outstanding voting securities (as defined in the 1940 Act),
provided that in either event the continuance is alsoRule 12b-1, each Current Plan was initially approved by
the Board of Trustees, including a majority of the Independent Trustees who are not parties to this Agreementhave
no direct or "interested persons"
(as definedindirect financial interest in the 1940 Act)operation of any partythe Current Plan. A
Current Plan may be terminated with respect to this Agreement,a Class by vote of a majority of
the Independent Trustees or by vote of a majority of the outstanding Shares of
the Class. The Trustees review quarterly a written report of such costs and the
purposes for which such costs have been incurred. A Current Plan may be amended
by vote of the Trustees, including a majority of the Independent Trustees, cast
in person at a meeting called for that purpose. However, any change in a Current
Plan that would materially increase the purposedistribution cost to a Class requires
approval by a majority of voting onthe Shareholders of that Class. For so long as a
Current Plan is in effect, selection and nomination of the Independent Trustees
shall be committed to the discretion of such approval.
NotwithstandingIndependent Trustees. All
agreements with any person relating to the foregoing, this Agreementimplementation of the Plan may be
terminated: (a)terminated
9
at any time on 60 days' written notice without payment of any penalty, by vote
of a majority of the Fund uponIndependent Trustees or, with respect to a Class, by vote
of a majority of the outstanding Shares of that Class. A Current Plan will
continue in effect with respect to a Class for successive one-year periods,
provided that each such continuance is specifically approved (i) by the vote of
a majority of the Independent Trustees, orand (ii) by the vote of the majority of the Fund's outstanding voting securities, upon
sixty (60) days' written notice to the adviser or (b) by the Adviser at any
time without penalty, upon sixty (60) days' written notice to the Trust. This
Agreement will also terminate automatically in the event of its assignment (as
defined in the 1940 Act).
11. Amendments. No provision of this Agreement may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed
by the party against which enforcement of the change, waiver, discharge or
termination is sought, and no amendment of this Agreement shall be effective
until approved by an
A-4
affirmative vote of (i) a majority of
the outstanding voting securitiesentire Board of the
Fund, and (ii) a majority of the Trustees including a majority of Trustees
who are not interested persons of any party to this Agreement, cast in person at a meeting called for that
purpose. The Board of Trustees has a duty to request and evaluate such
information as may be reasonably necessary for it to make an informed
determination of whether a Current Plan should be implemented or continued. In
addition, for each Class, the purposeTrustees, in approving a Current Plan, must
determine that there is a reasonable likelihood that the Current Plan will
benefit the Class and its Shareholders.
For the fiscal year ended March 31, 2002, the Distributor earned
$313,788, $174,439 and $324,364 pursuant to the Current Plan for Strategic
Realty Fund's Class A, Class B, and Class C Shares, respectively. For the period
April 3, 2001 (commencement of voting on such approval, if such
approval is required by applicable law.
12. Proxies. Unlessoperations of the Select Income Fund) through the
fiscal year ended March 31, 2002, the Distributor earned $66,055, $44,416 and
$95,933 pursuant to the Current Plan for Select Income Fund's Class A, Class B,
and Class C Shares, respectively. As of March 31, 2002, the Real Estate
Securities Fund had not yet commenced operations.
INFORMATION REGARDING THE PROPOSED TRUSTEES
In relation to the Reorganization, Kensington Investment Group has
proposed new Trustees to oversee the operations of the New Trust. Federal
securities laws require that at least a majority of the Trustees of the Trust
gives written instructionsand, following the Reorganization, the New Trust, be elected by shareholders.
Rather than call another shareholder meeting to vote on Trustees after the
Reorganization, the Reorganization Plan authorizes each Fund, while it is the
sole shareholder of the corresponding New Fund, to elect the Trustees of the New
Trust.
Information on the individuals proposed to serve as the Trustees of the
New Trust ("Nominees") and officers of the New Trust, to the contrary,extent determined
to date, their business affiliations for the Adviser shall votepast five years and other relevant
information is set forth below.
PROPOSED POSITION PRINCIPAL OCCUPATION NUMBER OF PORTFOLIOS IN OTHER
WITH THE NEW TRUST DURING THE FUND COMPLEX** TO BE DIRECTORSHIPS
NAME, AGE, AND ADDRESS AND TERM OF OFFICE* PAST FIVE YEARS OVERSEEN BY NOMINEE HELD BY NOMINEE
======================== =================== ========================= ========================== ===================
INDEPENDENT TRUSTEE NOMINEES
ROBERT M. BROWN Trustee Partner, VxCapital 3 Portfolios None
Age: 44 Partners (Aircraft
4 Orinda Way, Suite leasing) (since March
220D 2002); Senior Vice
Orinda, CA 94563 President, Pegusus
Aviation, Inc.
(Aircraft leasing)
(1988-2001)
10
PROPOSED POSITION PRINCIPAL OCCUPATION NUMBER OF PORTFOLIOS IN OTHER
WITH THE NEW TRUST DURING THE FUND COMPLEX** TO BE DIRECTORSHIPS
NAME, AGE, AND ADDRESS AND TERM OF OFFICE* PAST FIVE YEARS OVERSEEN BY NOMINEE HELD BY NOMINEE
======================== =================== ========================= ========================== ===================
FRANK C. MARINARO Trustee Portfolio Manager, 3 Portfolios None
Age: 41 Emery and Howard
4 Orinda Way, Suite Portfolio Management
220D (since 1993)
Orinda, CA 94563
DAVID R. PEARCE Trustee Vice President, Chief 3 Portfolios None
Age: 44 Financial Officer, and
4 Orinda Way, Suite Treasurer, Geerlings &
220D Wade (wine retailer)
Orinda, CA 94563 (since 1996)
DAVID REICHENBAUM Trustee David Reichenbaum & 3 Portfolios None
Age: 45 Associates (family
4 Orinda Way, Suite office) (since March
220D 1998); Executive Vice
Orinda, CA 94563 President, MEDO
Industries, Inc.
(manufacturer)
(1978-1998)
INTERESTED TRUSTEE NOMINEES+
JOHN P. KRAMER Trustee and Principal, Kensington 3 Portfolios Malan Realty
Age: 45 President Investment Group, Inc. Investors,
4 Orinda Way, Suite (since August 1993) Inc.
220D
Orinda, CA 94563
PAUL GRAY Trustee and Vice Principal, Kensington 3 Portfolios Malan Realty
Age: 37 President Investment Group, Inc. Investors,
4 Orinda Way, Suite (since August 1993) Inc.
220D
Orinda, CA 94563
CRAIG M. KIRKPATRICK Trustee and Vice Principal, Kensington 3 Portfolios None
Age: 40 President Investment Group, Inc.
4 Orinda Way, Suite (since August 1993)
220D
Orinda, CA 94563
PROPOSED POSITION WITH THE NEW TRUST PRINCIPAL OCCUPATION DURING THE
NAME, AGE, AND ADDRESS AND TERM OF OFFICE* PAST FIVE YEARS
======================== ========================================= =====================================================
OTHER OFFICERS WHO ARE NOT ALSO TRUSTEE NOMINEES
CYNTHIA M. YEE Secretary and Treasurer Vice President and Chief Financial Officer,
Age: 37 Kensington Investment Group, Inc. (since January
4 Orinda Way, Suite 1994)
220D
Orinda, CA 94563
---------
* Trustees and Officers serve until his or her successor is elected and
qualified or their resignation, removal or death.
** As used in this Proxy Statement, "Fund Complex" includes the three New
Funds of the New Trust.
11
+ Messrs. Kramer, Gray and Kirkpatrick are each considered to be an
"interested person" of the New Trust as defined in the 1940 Act due to
their positions with Kensington Investment Group, the New Funds'
investment adviser.
The foregoing individuals proposed to serve as Trustees of the New
Trust are subject to change. However, at all proxies solicitedtimes a majority of the Board of
Trustees will be Independent Trustees, and the nomination of new or additional
Independent Trustees will be placed within the discretion of the then existing
Independent Trustees.
OWNERSHIP OF SECURITIES
Because the New Funds have not yet commenced operations, there are no
outstanding New Fund shares. However, should the Reorganization be approved, the
Nominees and officers of the New Trust who own shares of the Funds will own
shares of the New Funds having the same net asset value on the Closing Date. For
the year ended December 31, 2002, the dollar range of equity securities owned
beneficially by each Nominee in the Funds and in any registered investment
companies overseen by the Trustee within the same family of investment companies
as the Funds is as follows:
AGGREGATE DOLLAR RANGE OF EQUITY
SECURITIES IN ALL REGISTERED INVESTMENT
DOLLAR RANGE OF EQUITY COMPANIES OVERSEEN BY TRUSTEE IN FAMILY
NAME OF TRUSTEE NOMINEE SECURITIES IN THE FUNDS OF INVESTMENT COMPANIES
================================= ================================ ===========================================
INDEPENDENT TRUSTEE NOMINEES
ROBERT M. BROWN $0 $0
FRANK C. MARINARO Kensington Strategic Realty $10,001 - 50,000
Fund - $10,001 - 50,000
DAVID R. PEARCE $0 $0
DAVID REICHENBAUM Kensington Strategic Realty Over $100,001
Fund - over $100,001
Kensington Select Income Fund
- over $100,001
INTERESTED TRUSTEE NOMINEES*
JOHN P. KRAMER Kensington Strategic Realty Over $100,001
Fund - over $100,001
Kensington Select Income Fund
- over $100,001
Kensington Real Securities
Fund - over $100,001
PAUL GRAY Kensington Strategic Realty Over $100,001
Fund - over $100,001
Kensington Select Income Fund
- over $100,001
Kensington Real Securities
Fund - over $100,001
CRAIG M. KIRKPATRICK Kensington Strategic Realty Over $100,001
Fund - over $100,001
12
AGGREGATE DOLLAR RANGE OF EQUITY
SECURITIES IN ALL REGISTERED INVESTMENT
DOLLAR RANGE OF EQUITY COMPANIES OVERSEEN BY TRUSTEE IN FAMILY
NAME OF TRUSTEE NOMINEE SECURITIES IN THE FUNDS OF INVESTMENT COMPANIES
================================= ================================ ===========================================
Kensington Select Income Fund
- over $100,001
Kensington Real Securities
Fund - over $100,001
* Shares of each of the Funds deemed to be owned by each of the
Interested Trustee Nominees include Fund shares owned by
Kensington Investment Group, Inc., of which each Interested
Trustee Nominee is a "control person."
TRUSTEE COMPENSATION
Trustees of the Trust not affiliated with BISYS or BISYS Fund Services
currently receive from the Trust an annual fee of $3,000, plus $2,250 for each
regular meeting of the Board of Trustees attended, $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 also reimbursed for all out-of-pocket
expenses relating to attendance at such meetings. Trustees who are affiliated
with BISYS or BISYS Fund Services do not receive compensation from the Group.
After the Reorganization, the Trustees for the New Trust will be
compensated as follows: for services on the Board of Trustees of the New Trust,
each Trustee who is not an officer or employee of Kensington Investment Group or
any of its affiliates will receive a fee of $2,000 per meeting of the Board
attended in person and $500 for each meeting of the Board attended by telephone.
Costs will be allocated equally among the New Funds within the fund complex. The
foregoing fees do not include the reimbursement of expenses incurred in
connection with meeting attendance. Trustees who are affiliated with Kensington
Investment Group will receive no compensation from the Trust.
RATIFICATION OF THE SELECTION OF INDEPENDENT AUDITORS
The Reorganization Plan also authorizes each Fund, while it is the sole
shareholder of the corresponding New Fund, to ratify the selection of Ernst &
Young LLP as the independent public auditors for the New Trust for the fiscal
year ending December 31, 2003. Ernst & Young LLP, 10 West Broad Street, Suite
2300, Columbus, Ohio 43215, currently serves as independent auditors for
the Trust.
Neither Ernst & Young LLP nor any of its members have any material
direct or indirect financial interest in the Trust or in the New Trust. Ernst &
Young LLP, in accordance with Independence Standards Board Standard No. 1, has
confirmed to the New Trust that they are independent auditors with respect to
the issuersNew Funds. Since the New Trust has not yet commenced operations, the New
Trust has paid no fees to Ernst & Young LLP. The fees paid to Ernst & Young LLP
by the Funds for most recent fiscal year are detailed below.
13
Audit Fees. For the fiscal year ended March 31, 2002, the approximate
fee for professional services rendered for the audit of annual financial
statements for each Fund then in existence was as follows:
Strategic Realty Fund $11,000
Select Income Fund $7,300
Financial Information Systems Design and Implementation Fees. For the
fiscal year ended March 31, 2002, Ernst & Young LLP rendered no services for the
design or implementation of any financial information system for the Trust, the
Funds, the Adviser, or the Distributor.
All Other Fees. For the fiscal year ended March 31, 2002, Ernst & Young
LLP was also paid approximately $4,000 for tax-related services rendered to the
Funds, as well as for auditing and other services rendered to the Adviser and
Distributor.
Representatives of Ernst & Young LLP are not expected to be present at
the Meeting but will be available by telephone to respond to questions in the
event the need arises.
MANAGEMENT AND OTHER SERVICE PROVIDERS
Set forth below is a description of the current service providers of
the Trust and the proposed service providers of the New Trust.
THE ADVISER
The Funds' investment adviser, Kensington Investment Group ("Adviser"),
is an investment adviser registered with the SEC that specializes in traded and
non-traded real estate securities portfolio management. It was founded in which1993
by principals who have been active in real estate securities research, trading
and investment since 1985. The Adviser provides discretionary investment
management services for assets of approximately $600 million as of December 31,
2002 for private limited partnerships, separate accounts and registered
investment company clients.
The following table sets forth certain information with respect to the
Adviser's executive officers and directors:
NAME AND ADDRESS* PRINCIPAL OCCUPATION
=============================== ====================================================
JOHN P. KRAMER President of the Adviser
CRAIG M. KIRKPATRICK Executive Vice President of the Adviser
PAUL GRAY Executive Vice President of the Adviser
CYNTHIA M. YEE Vice President and Chief Financial Officer of the
Adviser
JOEL S. BEAM Vice President of the Adviser
IAN R. GOLTRA Vice President of the Adviser
LOUISE MODEL Vice President of the Adviser
14
NAME AND ADDRESS* PRINCIPAL OCCUPATION
=============================== ====================================================
BRIAN PAWLOWICZ Vice President of the Adviser
- --------
* The address for each officer and director is 4 Orinda Way,
Suite 220D, Orinda, CA 94563.
DISTRIBUTOR, ADMINISTRATOR, FUND ACCOUNTING AND TRANSFER AGENCY SERVICES
Following the Reorganization, BISYS Fund Services Limited Partnership
will continue to serve as the New Funds' Distributor. BISYS Fund Services Ohio,
Inc. will continue to serve as the New Funds' Administrator and Fund Accountant,
and BISYS Fund Services, Inc. will continue to serve as the New Funds' Transfer
Agent and Dividend Disbursing Agent. The address of each of these entities is
3435 Stelzer Road, Columbus, Ohio 43219.
CUSTODIAN
Custodial Trust Company, 101 Carnegie Center, Princeton, New Jersey
08540, will continue to serve as the New Funds' custodian.
FUND SHARES OWNED BY CERTAIN BENEFICIAL OWNERS
As of December 31, 2002, the following persons or entities owned
beneficially or of record 5% or more of the outstanding shares of the indicated
class of each of the Funds:
NAME AND ADDRESS AMOUNT OF RECORD OR PERCENT OF
FUND NAME AND CLASS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
-------------------------------------- -------------------------------- ------------------------- ---------------
Strategic Realty Fund Charles Schwab & Co., Inc. 230,136 5.31%
Class A 101 Montgomery Street
San Francisco, CA 94104
Select Income Fund Charles Schwab & Co., Inc. 861,059 13.19%
Class A 101 Montgomery Street
San Francisco, CA 94101
FTC & Co. 630,970 9.67%
P.O. Box 173736
Denver, CO 80217-3736
Real Estate Securities Fund
Class A Kensington Investment Group 3,200 100%
4 Orinda Way, Suite 220D
Orinda, CA 94563
Class B Kensington Investment Group 400 100%
4 Oridna Way, Suite 220D
Orinda CA 94563
Class C Kensington Investment Group 400 100%
4 Orinda Way, Suite 220D
Orinda, CA 94563
As of the same date, the officers and Trustees of the Trust in the aggregate
owned less than 1% of each of the Fund's outstanding shares.
VOTING INFORMATION
Shareholders of the Funds are entitled to one vote for each share held
and a proportionate vote for each fractional share held. Shareholders of each
Fund will vote separately on each proposal. The holders of a majority of the
outstanding shares of each Fund entitled to vote shall constitute a quorum for
the meeting for that Fund. A quorum being present, the Trust will adopt the
proposal if a majority of the shares of each Fund vote to approve the proposal.
For purposes of each proposal, majority means the lesser of: (a) 67% or more of
the voting securities of that Fund present at the meeting, if 50% or more of the
outstanding voting securities of such Fund are represented in person or by
proxy; or (b) 50% or more of the outstanding voting securities of such Fund.
As of the Record Date, there were issued and outstanding the following
number of shares for each Fund:
Kensington Strategic Realty Fund 6,490,434 shares
Kensington Select Income Fund 10,008,703 shares
Kensington Real Estate Securities Fund 4,000 shares
15
For purposes of determining the presence of a quorum for transacting
business at the Meeting and for determining whether sufficient votes have been
received for approval of the proposal to be acted upon at the Meeting,
abstentions and broker "non-votes" (that is, proxies from brokers or nominees
indicating that such persons have not received instructions from the beneficial
owner or other persons entitled to vote shares on a particular matter with
respect to which the brokers or nominees do not have discretionary power) will
be treated as shares that are present at the Meeting, but which have not been
voted. For this reason, abstentions and broker non-votes will assist a Fund in
obtaining a quorum, but both have the practical effect of a "no" vote for
purposes of obtaining the requisite vote for approval of the proposal.
If either (a) a quorum is not present at the Meeting or (b) a quorum is
present but sufficient votes in favor of the proposal have not been obtained,
then the persons named as proxies may propose one or more adjournments of the
Meeting without further notice to shareholders to permit further solicitation of
proxies provided such persons determine, after consideration of all relevant
factors, including the nature of the proposal, the percentage of votes then
cast, the percentage of negative votes then cast, the nature of the proposed
solicitation activities and the nature of the reasons for such further
solicitation, that an adjournment and additional solicitation is reasonable and
in the interests of shareholders. The persons named as proxies will vote those
proxies that such persons are required to vote FOR the proposal in favor of such
an adjournment and will vote those proxies required to be voted AGAINST such
proposal against such adjournment.
The Meeting may be invested.adjourned from time to time by the vote of a
majority of the shares represented at the Meeting, whether or not a quorum is
present. If the Meeting is adjourned to another time or place, notice need not
be given of the adjourned meeting at which the adjournment is taken, unless a
new record date of the adjourned meeting is fixed. At any adjourned meeting, the
Trust may transact any business which might have been transacted at the original
meeting.
The Adviser shall
use its best good faith judgmentindividuals named as proxies on the enclosed proxy card will vote
in accordance with the shareholder's direction, as indicated thereon, if the
proxy card is received and is properly executed. If the shareholder properly
executes a proxy and gives no voting instructions with respect to votea proposal,
the shares will be voted in favor of such proposal. The proxies, in their
discretion, may vote upon such other matters as may properly come before the
Meeting. The Board of Trustees of the Trust is not aware of any other matters to
come before the Meeting.
REVOCATION OF PROXIES
If you return a manner whichproperly executed proxy card, but later wish to revoke
it, you may do so at any time before it is voted by doing any of the following:
o delivering written notice of the proxy's revocation to the
Secretary of the Trust at the above address prior to the
Meeting;
o submitting a properly-executed proxy bearing a later date, but
prior to the Meeting;
o submitting a subsequent telephone vote; or
o attending and voting in person at the Meeting and giving oral
notice of revocation to the Chairman of the Meeting.
16
SOLICITATION OF PROXIES
We are soliciting these proxies by U.S. mail and may also solicit them
in person, by telephone, by facsimile, or by any other electronic means.
Kensington Investment Group, Inc., the investment adviser for the Funds and
proposed investment adviser for the New Funds, is paying for the costs of this
proposed Reorganization, and is paying for the expense of the preparation,
printing, and mailing of the enclosed proxy card, this proxy statement, and
other expenses relating to the Meeting. Kensington Investment Group has engaged
Georgeson Shareholder Communications, Inc. to assist in proxy solicitation at a
cost to Kensington Investment Group of approximately $30,000. Employees of
Kensington Investment Group or BISYS Fund Services Ohio, Inc. ("BISYS"), the
transfer agent for the Funds, may make additional solicitations to obtain the
necessary representation at the Meeting, but will receive no additional
compensation for doing so. We may count proxies authorized by telephone or
electronically-transmitted instruments if we follow procedures designed to
verify that you have authorized us to accept your proxy in that manner.
OTHER BUSINESS
The Board of Trustees of the Trust knows of no business to be brought
before the Meeting other than the matters set forth in this Proxy Statement.
Should any other matter requiring a vote of the shareholders of the Funds arise,
however, the proxies will vote thereon according to their best servesjudgment in the
interests of the Fund's shareholders.
13. Name Reservation.Funds and the shareholders of the Funds.
The Trust acknowledgesdoes not hold annual meetings of shareholders. There will
normally be no meeting of shareholders for the purpose of electing Trustees of
the Trust unless and agrees thatuntil such time as fewer than a majority of the Adviser has
property rights relatingTrustees
holding office have been elected by the shareholders, at which time the Trustees
then in office will call a shareholder meeting for the election of Trustees.
Shareholders wishing to submit proposals for inclusion in the Proxy Statement
for any subsequent shareholder meeting of their Fund (or the corresponding New
Fund post-Reorganization) should send their written submissions to the useprincipal
executive offices of the term "Willamette"Funds at 3435 Stelzer Road, Columbus, Ohio 43219.
Shareholder proposals must meet certain requirements and has permittedthere is no guarantee
that any proposal will be presented at a shareholder meeting.
THE BOARD OF TRUSTEES, INCLUDING THE INDEPENDENT TRUSTEES,
UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS APPROVE THE
REORGANIZATION PLAN.
17
EXHIBIT A
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as
of this __ day of _______, 2003, by and between The Coventry Group, a
Massachusetts business trust (the "Predecessor Trust"), on behalf of the
useKensington Strategic Realty Fund, Kensington Select Income Fund, and Kensington
Real Estate Securities Fund (collectively, the "Predecessor Funds" and each
individually, a "Predecessor Fund"), and The Kensington Funds, a Delaware
statutory trust (the "Successor Trust" or "Trust"), on behalf of such termthe Kensington
Strategic Realty Fund, Kensington Select Income Fund, and Kensington Real Estate
Securities Fund (collectively, the "Successor Funds" and each individually, a
"Successor Fund").
All references in this Agreement to action taken by the Trust andPredecessor
Funds or the Fund. The Trust agrees that, unless
otherwise authorized by the Adviser: (i) it will use the term "Willamette"
only as a component of the name of the Fund and for no other purposes; (ii) it
will not purport to grant to any third party any rights in such name; (iii) at
the request of the Adviser, the Trust will take such action as may be required
to provide its consent to use of the term by the Adviser, or any affiliate of
the Adviser to whom the Adviser shall have granted the right to such use; and
(iv) the Adviser may use or grant to others the right to use the term, or any
abbreviation thereof, as all or a portion of a corporate or business name or
for any commercial purpose, including a grant of such right to any other
investment company. Upon termination of this Agreement, the Trust shall, upon
request of the Adviser, cease to use the term "Willamette" as part of the name
of the Fund, or in connection with the Trust or any series of the Trust. In
the event of any such request by the Adviser that use of the term "Willamette"
shall cease, the Trust shall cause its officers, directors and shareholders to
take any and all such actions which the Adviser may request to effect such
request and to reconvey to the Adviser any and all rights to the term
"Willamette."
14. Miscellaneous.
(a) This Agreement shall be governed by the laws of the Commonwealth of
Massachusetts, provided that nothing herein shall be construed in a manner
inconsistent with the 1940 Act, the Advisers Act, or rules or orders of the
SEC thereunder.
(b) The captions of this Agreement are included for convenience only and in
no way define or limit any of the provisions hereof or otherwise affect their
construction or effect.
(c) If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected hereby and, to this extent, the provisions of this
AgreementSuccessor Funds shall be deemed to be severable.
(d) Nothing herein shall be construed as constitutingrefer to action taken by the
Adviser as an
agent of thePredecessor Trust or the Fund.
(e) The names "The Coventry Group" and "TrusteesSuccessor Trust, respectively, on behalf of the
Coventry Group"
refer respectivelyrespective portfolio series.
This Agreement is intended to be and is adopted as plans of
reorganization within the meaning of Section 368(a) of the United States
Internal Revenue Code of 1986, as amended (the "Code"). The reorganization (the
"Reorganization") will consist of the transfer by each Predecessor Fund of all
of its assets to the Trust createdcorresponding Successor Fund, in exchange solely for shares
of beneficial interest in such Successor Fund ("New Shares") having a net asset
value equal to the net asset value of the corresponding Predecessor Fund, the
assumption by each Successor Fund of all the liabilities of the corresponding
Predecessor Fund, and the distribution of the New Shares to the shareholders of
each Predecessor Fund in complete liquidation of such Predecessor Fund as
provided herein, all upon the terms and conditions hereinafter set forth in this
Agreement.
WHEREAS, the Predecessor Trust and the Successor Trust are each
open-end, registered investment companies of the management type; and
WHEREAS, the Board of Trustees as trustees but not
individually or personally, acting from timeof the Predecessor Trust and the Board
of Trustees of the Successor Trust have determined that it is in the best
interest of the Predecessor Funds and the Successor Funds, respectively, that
the assets of the Predecessor Funds be acquired by the Successor Funds pursuant
to time under anthis Agreement and Declaration of Trust dated as of January 8, 1992 to which reference is hereby
made and a copy of which is on file atin accordance with the office of the Secretary of Stateapplicable statutes of the
Commonwealth of Massachusetts and elsewherethe State of Delaware and that the interests
of existing shareholders will not be diluted as required by law,a result of this transaction;
NOW, THEREFORE, in consideration of the premises and of the covenants
and agreements hereinafter set forth, the parties hereto covenant and agree as
follows:
1. PLAN OF REORGANIZATION
1.1 Subject to anythe terms and conditions herein set forth and on
the basis of the representations and warranties contained
herein, the Predecessor Trust agrees to transfer all amendments thereto so filed or hereafter filed. The obligations of "The Coventry Group" entered intothe
assets of each Predecessor Fund, as set forth in paragraph
1.2, to the name or on behalf thereof, orcorresponding Successor Fund and the Successor
Trust agrees in exchange therefor: (i) to deliver to the
name or on behalfPredecessor Trust a number of any series or classfull and fractional New Shares
of each Successor Fund equal to the number of shares of the
Trust, by anycorresponding Predecessor Fund as of the Trustees, representatives or agents are made not individually, buttime and date set
forth in A-5Article 2,
A-1
such capacities, and are not binding upon any(ii) to assume all the liabilities of each Predecessor Fund,
as set forth in paragraph 1.2. Such transactions shall take place
at the closing provided for in paragraph 2.1 (the "Closing").
1.2 The assets of the Trustees,Predecessor Funds to be acquired by the
corresponding Successor Funds shall consist of all property,
including, without limitation, all cash, securities, commodities
and futures interests, and dividends or interest receivable which
are owned by the Predecessor Funds and any deferred or prepaid
expenses shown as an asset on the books of the Predecessor Funds
on the closing date provided in paragraph 2.1 (the "Closing
Date"). All liabilities, expenses, costs, charges and reserves of
the Predecessor Funds, to the extent that they exist at or after
the Closing, shall after the Closing attach to the corresponding
Successor Funds and may be enforced against the Successor Funds to
the same extent as if the same had been incurred by the Successor
Fund.
1.3 Immediately upon delivery to the Predecessor Funds of the New
Shares, the Predecessor Funds, as the then sole shareholders or
representativesof
the Successor Funds, shall (i) elect trustees of the Trust, personally, but bind only(ii)
approve an Investment Advisory Agreement(s) between the assets of the
Trust, and all persons dealing with any series or class of shares of the Trust
must look solely to the assets of the Trust belonging to such series or class
for the enforcement of any claims against the Trust.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of , 2000.
THE COVENTRY GROUP
By: _________________________________
President
WILLAMETTE ASSET MANAGERS, Inc.
By: _________________________________
President
A-6
EXHIBIT B
THE COVENTRY GROUP on
behalf of WILLAMETTE VALUE FUND
SUB-INVESTMENT ADVISORY AGREEMENT
AGREEMENT, effective commencing on , 2000 among Willamette Asset
Managers,the Successor Funds and Kensington Investment Group,
Inc. (the "Adviser""Investment Manager"), The Bank of New York ("Sub-Adviser"), and The
Coventry Group (the "Trust") on behalf of Willamette Value Fund (the "Fund").
WHEREAS,(iii) approve the Trust is a Massachusetts business trust of the series type
organized under a Declaration of Trust dated January 8, 1992, (the
"Declaration") and is registereddistribution
plan(s) administered pursuant to Rule 12b-1 under the Investment
Company Act of 1940, as amended ("1940 Act") with respect to each
Successor Fund, and (iv) ratify the selection of Ernst & Young LLP
as the independent accountants of the Successor Funds.
1.4 Immediately following the action contemplated by paragraph 1.3,
the Predecessor Funds will distribute pro rata to their respective
shareholders of record, determined as of immediately after the
close of business on the Closing Date (the "1940 Act""Current
Shareholders"), the corresponding New Shares received by the
Predecessor Trust pursuant to paragraph 1.1. Such distribution and
liquidation will be accomplished by the transfer of the New Shares
then credited to the accounts of the Predecessor Funds on the
books of the Successor Funds to open accounts on the share records
of the Successor Funds in the names of the Current Shareholders
and representing the respective pro rata number of the New Shares
due such shareholders. All issued and outstanding shares of the
Predecessor Funds will simultaneously be canceled on the books of
the Predecessor Trust, although share certificates representing
interests in the Predecessor Trust will represent a number of
Successor Shares after the Closing Date as determined in
accordance with paragraph 2.2. The Successor Funds shall not issue
certificates representing the New Shares in connection with such
exchange. Ownership of New Shares will be shown on the books of
the Successor Trust's transfer agent. As soon as practicable after
the Closing, the Predecessor Trust shall take all steps necessary
to effect a complete liquidation of the Predecessor Funds and
shall file such instruments, if any, as are necessary to effect
the dissolution of the Predecessor Funds and shall take all other
steps necessary to effect such dissolution.
2. CLOSING AND CLOSING DATE
2.1 The Closing Date shall be the next full business day following
satisfaction (or waiver as provided herein) of all of the
conditions set forth in Article 4 of this Agreement (other than
those conditions which may by their terms be satisfied only at the
Closing), or such other date as the parties may agree to in
writing. All acts taking place at the Closing shall be deemed to
take place simultaneously as of immediately after the close of
business on the
A-2
Closing Date unless otherwise agreed to by the parties. The close
of business on the Closing Date shall be as of 4:00 p.m. New York
Time. The Closing shall be held at the offices of the Successor
Trust, 3435 Stelzer Road, Columbus, Ohio 43219, or at such other
time and/or place as the parties may agree.
2.2 The Predecessor Trust shall cause BISYS Fund Services (the
"Transfer Agent"), transfer agent of the Predecessor Funds, to
deliver at the Closing a certificate of an authorized officer
stating that its records contain the names and addresses of the
Current Shareholders and the number and percentage ownership of
outstanding shares of the Predecessor Funds owned by each such
shareholder immediately prior to the Closing. The Successor Funds
shall issue and deliver a confirmation evidencing the New Shares
to be credited on the Closing Date to the Secretary of the
Predecessor Trust or provide evidence satisfactory to the
Predecessor Trust that such New Shares have been credited to the
accounts of the Predecessor Funds on the books of the Successor
Funds. At the Closing, each party shall deliver to the other such
bills of sales, checks, assignments, share certificates, if any,
receipts or other documents as such other party or its counsel may
reasonably request.
3. REPRESENTATIONS AND WARRANTIES
3.1 The Predecessor Trust, on behalf of each Predecessor Fund, hereby
represents and warrants to the Successor Funds as follows:
(i) the Predecessor Trust is duly organized, validly existing and
in good standing under the laws of the Commonwealth of
Massachusetts and has full power and authority to conduct its
business as presently conducted;
(ii) the Predecessor Trust has full power and authority to execute,
deliver and carry out the terms of this Agreement on behalf of
each Predecessor Fund;
(iii) the execution and delivery of this Agreement on behalf of each
Predecessor Fund and the consummation of the transactions
contemplated hereby are duly authorized and no other
proceedings on the part of the Predecessor Trust or the
shareholders of the Predecessor Fund (other than as
contemplated in paragraph 4.1(vi) are necessary to authorize
this Agreement and the transactions contemplated hereby;
(iv) the Predecessor Trust is registered under the 1940 Act as an
open-end diversified management investment company,company; such registration has
not been revoked or rescinded and the Fund is in full force and effect.
The Predecessor Funds are each a newseparate series of the
Predecessor Trust;
WHEREAS,(v) there are no material liabilities of the TrustPredecessor Funds
whether or not determined or determinable, other than
liabilities disclosed or provided for in the Funds' Financial
Statements and liabilities incurred in the Adviser wish to retainordinary course of
business after the Sub-Adviser to render
sub-investment advisory servicesdate of such Financial Statements;
(vi) there are no claims, actions, suits or proceedings pending or,
to the Fund,knowledge of the Predecessor Trust, threatened which
would adversely affect the Predecessor Funds or its assets or
business or which would prevent or hinder consummation of the
transactions contemplated hereby or which upon such
consummation would adversely affect the Successor Fund;
A-3
(vii) this Agreement has been duly executed by the Predecessor Trust
on behalf of the Predecessor Funds and constitutes its valid
and binding obligation, enforceable in accordance with its
terms, subject to applicable bankruptcy, reorganization,
insolvency, moratorium and other rights affecting creditors'
rights generally, and general equitable principles;
(viii) neither the Sub-Adviserexecution and delivery of this Agreement by the
Predecessor Trust on behalf of the Predecessor Funds, nor the
consummation by the Predecessor Trust on behalf of the
Predecessor Funds of the transactions contemplated hereby will
conflict with, result in a breach or violation of or
constitute (or with notice, lapse of time or both) a breach of
or default under, the Declaration of Trust or By-Laws of the
Predecessor Trust, as each may be amended, or any statute,
regulation, order, judgment or decree, or any instrument,
contract or other agreement to which the Predecessor Trust is
willinga party or by which the Predecessor Trust or any of its assets
is subject or bound;
(ix) as of the Effective Time of the Reorganization, all federal
and other tax returns and reports of the Predecessor Funds
required by law to furnish such serviceshave been filed shall have been filed, and
all taxes of the Predecessor Funds shall have been paid so far
as due, or provision shall have been made for the payment
thereof, and to the Fund;
WHEREAS,best of the Sub-AdviserPredecessor Trust's knowledge,
no such return is a bankcurrently under audit and no assessment has
been asserted with respect to any of such returns. The Funds
have qualified and elected, and continue to qualify, to be
treated as regulated investment companies under the provisions
of Subchapter M of the Code; and
(x) no authorization, consent or approval of any governmental or
other public body or authority or any other party is necessary
for the execution and delivery of this Agreement by the
Predecessor Trust on behalf of the Predecessor Funds or the
consummation of any transactions contemplated hereby by the
Predecessor Trust, other than as shall be obtained at or prior
to the Closing.
3.2 The Successor Trust, on behalf of each of the Successor Funds,
hereby represents and warrants to the Predecessor Funds as
follows:
(i) the Successor Trust is duly organized, validly existing and in
good standing under the laws of the State of New York,Delaware and has
full power and authority to conduct its business as defined in Section 202(a)(2)presently
conducted;
(ii) the Successor Trust has full power and authority to execute,
deliver and carry out the terms of this Agreement on behalf of
the Investment Advisers ActSuccessor Funds;
(iii) the execution and delivery of 1940, as
amended ("Advisers Act");
NOW THEREFORE, in considerationthis Agreement on behalf of the
promises and mutual covenants herein
contained, it is agreed among the Adviser, the TrustSuccessor Funds and the Sub-Adviser as
follows:
1. Appointment. Theconsummation of the transactions
contemplated hereby are duly authorized and no other
proceedings on the part of the Successor Trust or the
shareholders of the Successor Funds are necessary to authorize
this Agreement and the Adviser hereby appointtransactions contemplated hereby;
(iv) the Sub-AdviserSuccessor Trust is (or will be before the Effective Time
of the Reorganization) registered under the 1940 Act as an
open-end management investment company; such registration has
not been revoked or rescinded and is in full force and effect;
A-4
(v) the Successor Trust's New Shares to act as sub-investment adviserbe issued in connection
with the Reorganization have been duly authorized and upon
consummation of the Reorganization will be validly issued,
fully paid and non assessable. Except for the share issued
pursuant to Article 1 above, there shall be no issued and
outstanding New Shares or any other securities issued by the
Successor Fund before the Effective Time of the
Reorganization;
(vi) there are no liabilities of the Successor Trust, whether or
not determined or determinable, other than liabilities
incurred in the ordinary course of business or otherwise
previously disclosed to the FundPredecessor Funds in writing.
There are no liabilities of the Successor Trust of any kind
for which the periods and onholders of the terms set
forth inOld Shares shall become
responsible as the result of this Agreement. The Sub-Adviser accepts such appointment and agrees
to furnishAgreement or the
services herein set forth, forconsummation of the compensation herein
provided.
2. Sub-Investment Advisory Duties. Subjecttransactions contemplated hereby or
otherwise;
(vii) there are no claims, actions, suits or proceedings pending
or, to the supervisionknowledge of the Adviser
andSuccessor Trust, threatened
which would adversely affect the TrusteesSuccessor Trust or its
assets or business or which would prevent or hinder
consummation of the transactions contemplated hereby or
which upon such consummation would adversely affect the
Successor Fund;
(viii) this Agreement has been duly executed by the Successor Trust
on behalf of the Sub-Adviser will (a) provide a program of
continuous investment management for the FundSuccessor Funds and constitutes its valid and
binding obligation, enforceable in accordance with its terms,
subject to applicable bankruptcy, reorganization, insolvency,
moratorium and other rights affecting creditors' rights
generally, and general equitable principles;
(ix) neither the Fund'sexecution and delivery of this Agreement by the
Successor Trust on behalf of the Successor Funds, nor the
consummation by the Successor Trust on behalf of the Successor
Funds of the transactions contemplated hereby will conflict
with, result in a breach or violation of or constitute (or
with notice, lapse of time or both constitute) a breach of or
default under, the Declaration of Trust or By-Laws of the
Successor Trust, as each may be amended, or any statute,
regulation, order, judgment or decree, or any instrument,
contract or other agreement to which the Successor Trust is a
party or by which the Successor Trust or any of its assets is
subject or bound;
(x) as of the Effective Time of the Reorganization, all federal
and other tax returns and reports of the Successor Trust
required by law to have been filed shall have been filed, and
all taxes shall have been paid so far as due, or provision
shall have been made for the payment thereof, and to the best
of the Successor Trust's knowledge, no such return is
currently under audit and no assessment has been asserted with
respect to any of such returns;
(xi) no authorization, consent or approval of any governmental or
other public body or authority or any other party is necessary
for the execution and delivery of this Agreement by the
Successor Trust on behalf of the Successor Funds or the
consummation of any transactions contemplated hereby by the
Successor Trust, other than as shall be obtained at or prior
to the Closing.
A-5
(xii) before the Effective Time of the Reorganization, the Successor
Trust will take all steps necessary to cause the formation of
the three (3) Successor Funds. The Successor Funds will have
the same investment objectives,objective and policies, and limitationsthe same
investment adviser as statedthe Predecessor Funds.
(xiii) All information contained in the Fund's
prospectus and Statement of Additional Information included as partproxy statement to be
supplied to shareholders of the Trust's Registration Statement filedPredecessor Funds in
connection with the Reorganization that relates to the
Predecessor Trust, the New Funds, Investment Manager, the
agreements between the Successor Trust and other service
providers, the effects, tax and otherwise, of the
Reorganization on Fund shareholders and other matters known
primarily to Successor Trust or the Investment Manager (i) is
true and correct in all material respects and (ii) does not
contain (and will not contain at the time the proxy statement
is mailed to Fund shareholders) any untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading.
4. CONDITIONS PRECEDENT
4.1 The obligations of the Predecessor Trust on behalf of the
Predecessor Funds and the Successor Trust on behalf of the
Successor Funds to effectuate the Reorganization shall be subject
to the satisfaction of the following conditions:
(i) Such authority from the Securities and Exchange Commission
(the "SEC") and state securities commissions as they may be
amended from timenecessary to time, copies of whichpermit the parties to carry out the transactions
contemplated by this Agreement shall be
provided to the Adviser and to the Sub-Adviser by the Trust; (b) make
investment decisions for the Fund; and (c) place orders to purchase and sell
securities for the Fund.
In performing its investment management services to the Fund hereunder, the
Sub-Adviser, in accordance with the directionshave been received.
(ii) The Registration Statement of the Adviser, will provide
the Fund with ongoing investment guidance and policy direction, including oral
and written research, analysis, advice, statistical and economic data and
judgments regarding individual investments, general economic conditions and
trends and long-range investment policy. Subject to the Fund's investment
objective and policies, the Sub-Adviser will determine the securities,
instruments, repurchase agreements, options and other investments and
techniques that the Fund will purchase, sell, enter into or use, and will
provide an ongoing evaluation of the Fund's portfolio. The Sub-Adviser will
determine what portion of the Fund's portfolio shall be invested in securities
and other assets, and what portion if any, should be held uninvested.
B-1
The Sub-Adviser acknowledges that, pursuant to the Investment Advisory
Agreement between the Adviser and theSuccessor Trust with respect
to the Fund,Successor Funds shall have been filed with the Adviser is responsible for supervisingSEC and
shall have become effective, and no stop-order suspending the
activities and performanceeffectiveness of the Sub-Adviser,Registration Statement or amendment
thereto shall have been issued, and no proceeding for taking reasonable steps to assure that
purpose shall have been initiated or threatened by the Sub-Adviser
complies with the Fund's investment policies and procedures and withSEC
(and not withdrawn or terminated).
(iii) The applicable legal requirements, andNew Shares shall have been duly qualified for
reportingoffering to the Trusteespublic in all states in which such
qualification is required for consummation of the Trust
regarding these matters. In this regard, the Sub-Adviser agrees to facilitate
the Adviser's implementation of its "Supervisory Procedures for Sub-Advisors"
attached hereto as Exhibit A [not included with this Proxy Statement].
The Sub-Adviser further agrees that, in performing its duties hereunder, it
will:
(a) comply with the 1940 Acttransactions
contemplated hereunder;
(iv) All representations and all rules and regulations thereunder,
the Internal Revenue Code (the "Code") and all other applicable federal and
state laws and regulations, and with any applicable procedures adopted by
the Trustees;
(b) use reasonable efforts to manage the Fund so that it will qualify,
and continue to qualify, as a regulated investment company under Subchapter
Mwarranties of the Code and regulations issued thereunder;
(c) place orders pursuant to its investment determinations for the Fund
directly with the issuer, or with any broker or dealer, in accordance with
applicable policies expressed in the Fund's prospectus and/or Statement of
Additional Information and in accordance with applicable legal
requirements;
(d) furnish to thePredecessor Trust the Adviser, or to the Fund's administrator,
BISYS Fund Services, ("Administrator") if so directed, whatever statistical
information the Trust, Adviser or Administrator may reasonably request with
respect to the Fund's assets or contemplated investments. In addition, the
Sub-Adviser will keep the Adviser, the Trust and the Trustees informed of
developments materially affecting the Fund's portfolio and shall, on
the
Sub-Adviser's own initiative, furnish to the Adviser and the Trust from
time to time whatever information the Sub-Adviser believes appropriate for
this purpose;
(e) make available to the Adviser, the Administrator, and the Trust,
promptly upon their request, such copies of its investment records and
ledgers with respect to the Fund as may be required to assist the Adviser,
the Administrator and the Trust in their compliance with applicable laws
and regulations. The Sub-Adviser will furnish the Adviser and the Trustees
with such periodic and special reports regarding the Fund as they may
reasonably request.
(f) immediately notify the Adviser and the Trust in the event that the
Sub-Adviser or any of its affiliates: (1) becomes aware that it is subject
to a statutory disqualification that prevents the Sub-Adviser from serving
as sub-investment adviser pursuant to this Agreement; or (2) becomes aware
that it is the subject of an administrative proceeding or enforcement
action by the Securities and Exchange Commission ("SEC") or other
regulatory authority. The Sub-Adviser further agrees to notify the Trust
immediately of any material fact known to the Sub-Adviser respecting or
relating to the Sub-Adviser that is not contained in the Trust's
Registration Statement regarding the Fund, or any amendment or supplement
thereto, but that is required to be disclosed therein, and of any statement
contained therein that becomes untrue in any material respect; and
(g) in making investment decisions for the Fund, use no inside
information that may be in its possession, nor will the Sub-Adviser seek to
obtain any such information.
3. Allocation of Charges and Expenses. Except as otherwise specifically
provided in this section 3, the Sub-Adviser shall pay the compensation and
expenses of all its directors, officers and employees who serve as officers
and executive employeesbehalf of the Trust or Fund (including the Trust's or Fund's
share of payroll taxes), and the Sub-Adviser shall make available, without
expense to the Fund, the service of its directors, officers and employees who
may be duly elected officers of the Trust, subject to their individual consent
to serve and to any limitations imposed by law.
B-2
The Sub-Adviser shall not be required to pay any expenses of the Fund or
Trust other than those specifically allocated to the Sub-Adviser in this
section 3. In particular, but without limiting the generality of the
foregoing, the Sub-Adviser shall not be responsible, except to the extent of
the reasonable compensation of such of the Trust's or Fund's employees as are
officers or employees of the Sub-Adviser whose services may be involved, for
any expenses of other series of the Trust or for the following expenses of the
Fund or Trust: organization and certain offering expenses of the Fund
(including out-of-pocket expenses, but not including the Sub-Adviser's
overhead and employee costs); fees payable to the Adviser and Sub-Adviser and
to any other Fund advisers or consultants; legal expenses; auditing and
accounting expenses; interest expenses; telephone, telex, facsimile, postage
and other communications expenses; taxes and governmental fees; fees, dues and
expenses incurred by or with respect to the Fund in connection with membership
in investment company trade organizations; cost of insurance relating to
fidelity coverage for the Trust's officers and employees; fees and expenses of
the Fund's Administrator or of any custodian, subcustodian, transfer agent,
fund accounting agent, registrar, or dividend disbursing agent of the Fund;
payments for portfolio pricing or valuation services to pricing agents,
accountants, bankers and other specialists, if any; expenses of preparing
share certificates, if any; other expenses in connection with the issuance,
offering, distribution or sale of securities issued by the Fund; expenses
relating to investor and public relations; expenses of registering shares of
the Fund for sale and of compliance with applicable state notice filing
requirements; freight, insurance and other charges in connection with the
shipment of the Fund's portfolio securities; brokerage commissions or other
costs of acquiring or disposing of any portfolio securities or other assets of
the Fund, or of entering into other transactions or engaging in any investment
practices with respect to the Fund; expenses of printing and distributing
prospectuses, Statements of Additional Information, reports, notices and
dividends to shareholders; costs of stationery or other office supplies; any
litigation expenses; costs of shareholders' and other meetings; the
compensation and all expenses (specifically including travel expenses relating
to the Fund's business) of officers, Trustees and employees of the Trust who
are not "interested persons," as defined in Section 2(a)(19) of the 1940 Act,
of the Sub-Adviser; and travel expenses (or an appropriate portion thereof) of
officers or Trustees of the Trust who are officers, Trustees or employees of
the Sub-Adviser to the extent that such expenses relate to attendance at
meetings of the Board of Trustees of the Trust with respect to matters
concerning the Fund, or any committees thereof or advisers thereto.
4. Compensation. As compensation for the services provided and expenses
assumed by the Sub-Adviser under this Agreement, the Adviser will pay to the
Sub-Adviser, out of the Adviser's own resources at no additional cost to the
Fund, at the end of each calendar month a sub-advisory fee computed daily at
an annual rate equal to the following amounts based on the Fund's average
daily net assets: (a) for that portion of the Fund's portfolio, generally 50%
of the Fund's assets, that is invested in the ten highest dividend yielding
stocks in the Dow Jones Industrial Average, the annual fee rate is equal to
the following percentages of the Fund's average daily net assets--0.10% on
assets up to $50,000,000; 0.07% on assets from $50,000,001 to $100,000,000;
0.05% on assets in excess of $100,000,000, with a minimum annual fee of
$10,000 for this portion of the Fund's portfolio; (b) for that portion of the
Fund's portfolio, generally 50% of the Fund's assets, that is actively
managed, the annual fee rate is equal to 0.45%, with a minimum annual fee of
$10,000. The "average daily net assets" of the Fund shall mean the average of
the values placed on the Fund's net assets as of 4:00 p.m. (New York time) on
each day on which the net asset value of the Fund is determined consistent
with the provisions of Rule 22c-1 under the 1940 Act or, if the Fund lawfully
determines the value of its net assets as of some other time on each business
day, as of such other time. The value of net assets of the Fund shall always
be determined pursuant to the applicable provisions of the Declaration and the
Registration Statement. If, pursuant to such provisions, the determination of
net asset value is suspended for any particular business day, then for the
purposes of this section 4, the value of the net assets of the Fund as last
determined shall be deemed to be the value of its net assets as of the close
of the New York Stock Exchange, or as of such other time as the value of the
net assets
B-3
of the Fund's portfolio may lawfully be determined, on that day. If the
determination of the net asset value of the shares of the Fund has been so
suspended for a period including any month end when the Sub-Adviser's
compensation is payable pursuant to this section, then the Sub-Adviser's
compensation payable at the end of such month shall be computed on the basis
of the value of the net assets of the Fund as last determined (whether during
or prior to such month). If the Fund determines the value of the net assets of
its portfolio more than once on any day, then the last such determination
thereof on that day shall be deemed to be the sole determination thereof on
that day for the purposes of this section 4.
5. Books and Records. The Sub-Adviser agrees to maintain such books and
records with respect to its services to the Fund as are required by Section 31
under the 1940 Act, and rules adopted thereunder, and by other applicable
legal provisions, and to preserve such records for the periods and in the
manner required by that Section, and those rules and legal provisions. The
Sub-Adviser also agrees that records it maintains and preserves pursuant to
Rules 31a-1 and Rule 31a-2 under the 1940 Act and otherwise in connection with
its services hereunder are the property of the Trust and will be surrendered
promptly to the Trust upon its request. And the Sub-Adviser further agrees
that it will furnish to regulatory authorities having the requisite authority
any information or reports in connection with its services hereunder which may
be requested in order to determine whether the operations of the Fund are
being conducted in accordance with applicable laws and regulations.
6. Standard of Care and Limitation of Liability. The Sub-Adviser shall
exercise its best judgment in rendering the services provided by it under this
Agreement. The Sub-Adviser shall not be liable to the Adviser, the Trust, the
Fund or to any holder of the Fund's shares, for any error of judgment or
mistake of law or for any loss suffered by the Fund or the holders of the
Fund's shares in connection with the matters to which this Agreement relates,
provided that nothingPredecessor Funds contained in this Agreement
shall be deemedtrue and correct in all material respects as of the
date hereof and as of the Closing, with the same force and
effect as if then made, and the Successor Trust on behalf of
the Successor Funds shall have received a certificate of an
officer of the Predecessor Trust acting on behalf of the
Predecessor Funds to protect or purport
to protect the Sub-Adviser against any liabilitythat effect in form and substance
reasonably satisfactory to the Adviser, theSuccessor Trust the Fund or to holderson behalf of
the Fund's shares to which the Sub-Adviser would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence on its part in the performance of its duties or by reasonSuccessor Funds;
(v) All representations and warranties of the Sub-Adviser's reckless disregard of its obligations and duties under this
Agreement. As used in this Section 6, the term "Sub-Adviser" shall include any
officers, directors, employees or other affiliatesSuccessor Trust on
behalf of the Sub-Adviser
performing services with respect to the Fund.
7. Services Not Exclusive. It is understood that the services of the Sub-
Adviser are not exclusive, and that nothingSuccessor Funds contained in this Agreement
shall prevent
the Sub-Adviser from providing similar services to other investment companies
or to other series of investment companies, including the Trust (whether or
not their investment objectivesbe true and policies are similar to thosecorrect in all material respects as of the
Fund)
or from engaging in other activities, provided such other servicesdate hereof and activities do not, duringas of the term of this Agreement, interfere in a material
mannerClosing, with the Sub-Adviser's ability to meet its obligations tosame force and
effect as if then made, and the Fund
hereunder. When the Sub-Adviser recommends the purchase or sale of a security
for other investment companies and other clients, and at the same time the
Sub-Adviser recommends the purchase or sale of the same security for the Fund,
it is understood that in light of its fiduciary duty to the Fund, such
transactions will be executed on a basis that is fair and equitable to the
Fund. In connection with purchases or sales of portfolio securities for the
account of the Fund, neither the Sub-Adviser nor any of its directors or
officers (or persons acting in similar capacities) or employees shall act as a
principal or agent or receive any commission. If the Sub-Adviser provides any
advice to its clients concerning the shares of the Fund, the Sub-Adviser shall
act solely as investment counsel for such clients and not in any wayPredecessor Trust on behalf of
the Trust or the Fund.
8. Duration and Termination. This AgreementPredecessor Funds shall continue until ,
2002, and thereafter shall continue automatically for successive annual
periods, provided such continuance is specifically approved at
B-4
least annually by (i) the Trustees or (ii)have received a votecertificate of a "majorityan
officer of the Fund's
outstanding voting securities" (as defined in the 1940 Act), provided that in
either event the continuance is also approved by a majoritySuccessor Trust acting on behalf of the
Trustees
who are not partiesSuccessor Funds to this Agreement or "interested persons" (as definedthat effect in form and substance
reasonably satisfactory to the 1940 Act) of any party to this Agreement, by vote cast in person at a
meeting called for the purpose of votingPredecessor Trust on such approval. Notwithstanding the
foregoing, this Agreement may be terminated: (a) at any time without penalty
by the Adviser or by the Fund upon the vote of a majoritybehalf of
the Trustees or
by votePredecessor Funds;
A-6
(vi) The Predecessor Trust on behalf of the majorityPredecessor Funds and
the Successor Trust on behalf of the Fund's outstanding voting securities, upon
sixty (60) days' written notice toSuccessor Funds shall
have received opinions from counsel, Dechert, regarding
certain tax matters in connection with the adviser or (b) by the Sub-Adviser at
any time without penalty, upon sixty (60) days' written notice to the Trust.
This Agreement will also terminate automatically in the event of its
assignment (as defined in the 1940 Act).
9. Amendments. No provision of this Agreement may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed
by the party against which enforcement of the change, waiver, discharge or
termination is sought,Reorganization; and
no amendment of(vii) A vote approving this Agreement shall be effective
until approvedhave been adopted by an affirmative vote of (i)at
least a majority of the outstanding voting securitiesshares of each Predecessor
Fund entitled to vote at a special meeting of shareholders of
each such Predecessor Fund duly called for such purpose (the
"Special Meeting").
5. BROKERAGE FEES AND EXPENSES
5.1 The Successor Trust and the Predecessor Trust each represents and
warrants to the other that there are no brokers or finders
entitled to receive any payments in connection with the
transactions provided for herein.
5.2 All of the Fund,expenses and (ii) a majoritycosts of the Trustees, including
a majorityReorganization and the
transactions contemplated thereby shall be borne by the
Investment Manager.
6. ENTIRE AGREEMENT
The Successor Trust and the Predecessor Trust agree that neither party
has made any representation, warranty or covenant not set forth herein and that
this Agreement constitutes the entire agreement between the parties.
7. TERMINATION
This Agreement and the transactions contemplated hereby may be
terminated and abandoned by either party by resolution of the party's Board of
Trustees, who are not interested persons ofat any party to this
Agreement, cast in person at a meeting called for the purpose of voting on
such approval, if such approval is required by applicable law.
10. Proxies. Unless the Trust or the Adviser gives written instructionstime prior to the contrary,Closing Date, if circumstances should develop
that, in the Sub-Adviser shall vote all proxies solicited by or with
respect to the issuers of securities in which assets of the Fund may be
invested. The Sub-Adviser shall use its best good faith judgment to vote such
proxies in a manner which best serves the interests of the Fund's
shareholders.
11. Name Reservation. The Sub-Adviser acknowledges and agrees that the
Adviser has property rights relating to the use of the terms "Willamette,"
"Willamette Family of Funds," "Willamette Value Fund," "Willamette Small Cap
Growth Fund," "Willamette Technology Fund" and "Willamette Pharmaceutical and
Bio-Technology Fund" ("Willamette Names") and has permitted the use of the
Willamette Names by the Trust and its series. The Sub-Adviser agrees that,
unless otherwise authorized by the Adviser: (i) it will use the term
"Willamette" only as a component of the name of the Fund and for no other
purposes; (ii) it will not purport to grant to any third party any rights in
any Willamette Name; and (iii) the Adviser may use or grant to others the
right to use a Willamette Name, or any abbreviation thereof, as all or a
portion of a corporate or business name or for any commercial purpose,
including a grantopinion of such right to any other investment company. Upon
termination of this Agreement, the Sub-Adviser shall, at the request of the
Adviser, cease to use all Willamette Names in any of its materials or in any
manner exceptBoard, make proceeding with the consent of the Adviser, which shall not be unreasonably
withheld.Agreement
inadvisable. In the event of any such requesttermination, there shall be no liability
for damages on the part of either the Successor Trust or the Predecessor Trust,
or their respective Trustees or officers, to the other party.
8. AMENDMENTS
This Agreement may be amended, modified or supplemented in such manner
as may be mutually agreed upon in writing by the Adviserauthorized officers of the
Predecessor Trust and the Successor Trust; provided, however, that usefollowing the
meeting of the Current Shareholders called by the Sub-
AdviserPredecessor Trust pursuant to
paragraph 4.1(vi) of a Willamette Namethis Agreement, no such amendment may have the effect of
changing the provisions for determining the number of New Shares to be issued to
the Current Shareholders under this Agreement to the detriment of such
shareholders without their further approval.
9. NOTICES
Any notice, report, statement or demand required or permitted by any
provisions of this Agreement shall ceasebe in writing and shall be given by prepaid
telegraph, telecopy or certified mail addressed to the parties hereto at their
principal place of business.
A-7
10. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT; LIMITATION OF
LIABILITY
10.1 The Article and paragraph headings contained in this Agreement are
for reference purposes only and shall not affect in any way the
absencemeaning or interpretation of this Agreement.
10.2 This Agreement may be executed in any such
consent, the Sub-Advisernumber of counterparts
each of which shall cause its officers, directors and employees to
take any and all such actions which the Adviser may reasonably request to
effect such request.
12. Miscellaneous.
(a)be deemed an original.
10.3 This Agreement shall be governed by and construed in accordance
with the laws of the StateCommonwealth of New York,
provided that nothingMassachusetts.
10.4 This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but no
assignment or transfer hereof or of any rights or obligations
hereunder shall be made by any party without the written consent
of the other party. Nothing herein expressed or implied is
intended or shall be construed in a manner inconsistent withto confer upon or give any person,
firm or corporation, other than the 1940 Act,parties hereto and their
respective successors and assigns, any rights or rulesremedies under or
ordersby reason of this Agreement.
10.5 It is expressly agreed that the obligations of the SEC thereunder.
(b) The captions of this Agreement are included for convenience only and in
no way define or limit any of the provisions hereof or otherwise affect their
construction or effect.
B-5
(c) If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of this AgreementPredecessor
Trust hereunder shall not be affected hereby and, to this extent, the provisions of this
Agreement shall be deemed to be severable.
(d) Nothing herein shall be construed as constituting the Sub-Adviser as an
agent of the Adviser, the Trust or the Fund.
(e) The names "The Coventry Group" and "Trustees of the Coventry Group"
refer respectively to the Trust created and the Trustees, as trustees but not
individually or personally, acting from time to time under an Agreement and
Declaration of Trust dated as of January 8, 1992 to which reference is hereby
made and a copy of which is on file at the office of the Secretary of State of
the Commonwealth of Massachusetts and elsewhere as required by law, and to any
and all amendments thereto so filed or hereafter filed. The obligations of
"The Coventry Group" entered into in the name or on behalf thereof, or in the
name or on behalf of any series or class of shares of the Trust, by any of the
Trustees, representatives or agents are made not individually, but in such
capacities, and are not binding upon any of the Trustees,trustees,
shareholders, nominees, officers, agents, or representativesemployees of the
Predecessor Trust personally, but shall bind only the assetstrust
property of the Predecessor Trust, as provided in the Declaration
of Trust of the Predecessor Trust. The execution and delivery by
such officers of the Predecessor Trust shall not be deemed to have
been made by any of them individually or to impose any liability
on any of them personally, but shall bind only the trust property
of the Predecessor Trust as provided in the Declaration of Trust
of the Predecessor Trust. The Predecessor Trust is a series
company with multiple series, including Kensington Strategic
Realty Fund, Kensington Select Income Fund, and Kensington Real
Estate Securities Fund and has entered into this Agreement on
behalf of the Predecessor Funds. With respect to any obligation of
the Predecessor Trust arising hereunder, the Successor Trust and
all persons dealing with any seriesthe Successor Funds shall look for payment or classsatisfaction of shares of the Trust
must looksuch
obligations solely to the assets and property of the corresponding
Predecessor Funds.
10.6 It is expressly agreed that the obligations of the Successor Trust
belonginghereunder shall not be binding upon any of the trustees,
shareholders, nominees, officers, agents or employees of the
Successor Trust personally, but shall bind only the trust property
of the Successor Trust, as provided in the Declaration of Trust of
the Successor Trust. The execution and delivery by such officers
of the Successor Trust shall not be deemed to have been made by
any of them individually or to impose any liability on any of them
personally, but shall bind only the trust property of the
Successor Trust as provided in the Declaration of Trust of the
Successor Trust. The Successor Trust is a series company with
multiple series, Kensington Strategic Realty Fund, Kensington
Select Income Fund, and Kensington Real Estate Securities Fund and
has entered into this Agreement on behalf of the Successor Funds.
With respect to any obligation of the Successor Trust arising
hereunder, the Predecessor Funds and the Predecessor Trust shall
look for payment or satisfaction of such series or class
forobligations solely to the
enforcementassets and property of any claims against the Trust.corresponding Successor Funds.
A-8
IN WITNESS WHEREOF, each of the parties hereto havehas caused this
instrumentAgreement to be executed by their officers designated below as of , 2000.its duly authorized representatives.
Attest: THE COVENTRY GROUP, a Massachusetts
Business Trust
By: _________________________________
President
WILLAMETTE ASSET MANAGERS, Inc.
By:
_________________________________
President---------------------------------- -----------------------------------
Name: Name:
-------------------------------- ----------------------------------
Title: Title:
------------------------------- ---------------------------------
Attest: THE BANK OF NEW YORKKENSINGTON FUNDS, a Delaware
Statutory Trust
By: _________________________________By:
---------------------------------- -----------------------------------
Name: Name:
---------------------------------- -----------------------------------
Title: B-6Title:
---------------------------------- -----------------------------------
A-9
THE COVENTRY GROUP
3435 STELZER ROAD
COLUMBUS, OHIO 43219
PROXY WILLAMETTE VALUE FUNDFOR THE SPECIAL MEETING OF SHAREHOLDERS
May 9, 2000MARCH 14, 2003
KENSINGTON STRATEGIC REALTY FUND
PROXY
The undersigned hereby appoints R. Jeffrey Young Jennifer J. Brooks and Sue A. Walters, orGeorge L. Stevens,
and any one of them, his attorney and proxy with full power of substitution to vote
and act with respect to all shares of Willamette ValueKensington Strategic Realty Fund ("Fund"),
a series of The Coventry Group (the "Trust") held by the undersigned at the
Special Meeting of Shareholders of the Fund to be held at 11:10:00 a.m., Eastern
Time, on May 9, 2000,March 14, 2003, at the offices of BISYSthe Fund, Services, 3435 Stelzer Road,
Columbus, Ohio 43219 and at any adjournmentadjournments thereof ("Meeting"), and instructs
each of them to vote as indicated on the matters referred to in the Proxy
Statement for the Meeting, receipt of which is hereby acknowledged, with
discretionary power to vote upon such other business as may properly come before
the Meeting.
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES OF THE FUND. The Board
of Trustees recommends that you vote FOR the following proposals:
I.I. Approvalproposal:
VOTE ON PROPOSAL:
PROPOSAL 1:
1. To approve a proposed Agreement and Plan of an amended Investment Advisory AgreementReorganization and the
transactions contemplated thereby, which include: (a) the transfer of
all assets of the Fund to a newly formed series also called Kensington
Strategic Realty Fund (the "New Fund") of The Kensington Funds, a
Delaware statutory trust (the "New Trust"), in exchange for shares of
the Fund.
[ ]New Fund, and the assumption by the New Fund of liabilities of the
Fund; and (b) the distribution to Fund shareholders of such New Fund's
shares.
FOR [ ] AGAINST [ ] ABSTAIN II. Approval of a new Sub-Investment Advisory Agreement for the Fund.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
This proxy will be voted as specified. IF NO SPECIFICATION IS MADE FOR A
PROPOSAL, THIS PROXY WILL BE VOTED FOR THAT PROPOSAL.
---
Receipt of the Notice of Special Meeting and Proxy Statement is hereby
acknowledged.
Dated _________________________, 2000
______________________________________________
Name of Shareholder(s) --Date:__________________, 2003
Please printdate and sign exactly as the name or type
______________________________________________
Signature(s) of Shareholder(s)
______________________________________________
Signature(s) of Shareholder(s)
This proxy must be signed by the beneficial owner of Fund shares. Ifnames appear on your shareholder
account statement. When signing as attorney, trustee, executor, administrator,
custodian, guardian or corporate officer, please give full title. If shares are
held jointly, each shareholder must sign.
- ------------------------------ ----------------------------
Signature Signature (if held jointly)
- ------------------------------ ----------------------------
Title (If applicable) Title (If applicable)
PLEASE SIGN, DATE, AND RETURN PROMPTLY IN ENCLOSED ENVELOPE IF YOU ARE NOT
VOTING BY PHONE
THE COVENTRY GROUP
3435 STELZER ROAD
COLUMBUS, OHIO 43219
PROXY FOR THE SPECIAL MEETING OF SHAREHOLDERS
MARCH 14, 2003
KENSINGTON SELECT INCOME FUND
PROXY
The undersigned hereby appoints R. Jeffrey Young and George L. Stevens,
and any one of them, attorney and proxy with full power of substitution to vote
and act with respect to all shares of Kensington Select Income Fund ("Fund"), a
series of The Coventry Group (the "Trust") held by the undersigned at the
Special Meeting of Shareholders of the Fund to be held at 10:00 a.m., Eastern
Time, on March 14, 2003, at the offices of the Fund, 3435 Stelzer Road,
Columbus, Ohio 43219 and at any adjournments thereof ("Meeting"), and instructs
each of them to vote as indicated on the matters referred to in some representative capacity orthe Proxy
Statement for the Meeting, receipt of which is hereby acknowledged, with
discretionary power to vote upon such other business as an officer
of a corporation, please add title as such.
PLEASE VOTE, SIGN AND DATEmay properly come before
the Meeting.
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES OF THE FUND. The Board
of Trustees recommends that you vote FOR the following proposal:
VOTE ON PROPOSAL:
PROPOSAL 1:
1. To approve a proposed Agreement and Plan of Reorganization and the
transactions contemplated thereby, which include: (a) the transfer of
all assets of the Fund to a newly formed series also called Kensington
Select Income Fund (the "New Fund") of The Kensington Funds, a Delaware
statutory trust (the "New Trust"), in exchange for shares of the New
Fund, and the assumption by the New Fund of liabilities of the Fund;
and (b) the distribution to Fund shareholders of such New Fund's
shares.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
This proxy will be voted as specified. IF NO SPECIFICATION IS MADE FOR A
PROPOSAL, THIS PROXY WILL BE VOTED FOR THAT PROPOSAL.
Receipt of the Notice of Special Meeting and Proxy Statement is hereby
acknowledged.
Date: __________________, 2003
Please date and sign exactly as the name or names appear on your shareholder
account statement. When signing as attorney, trustee, executor, administrator,
custodian, guardian or corporate officer, please give full title. If shares are
held jointly, each shareholder must sign.
- ------------------------------ ----------------------------
Signature Signature (if held jointly)
- ------------------------------ ----------------------------
Title (If applicable) Title (If applicable)
PLEASE SIGN, DATE, AND RETURN ITPROMPTLY IN ENCLOSED ENVELOPE IF YOU ARE NOT
VOTING BY PHONE
THE COVENTRY GROUP
3435 STELZER ROAD
COLUMBUS, OHIO 43219
PROXY FOR THE SPECIAL MEETING OF SHAREHOLDERS
MARCH 14, 2003
KENSINGTON REAL ESTATE SECURITIES FUND
PROXY
The undersigned hereby appoints R. Jeffrey Young and George L. Stevens,
and any one of them, attorney and proxy with full power of substitution to vote
and act with respect to all shares of Kensington Real Estate Securities Fund
("Fund"), a series of The Coventry Group (the "Trust") held by the undersigned
at the Special Meeting of Shareholders of the Fund to be held at 10:00 a.m.,
Eastern Time, on March 14, 2003, at the offices of the Fund, 3435 Stelzer Road,
Columbus, Ohio 43219 and at any adjournments thereof ("Meeting"), and instructs
each of them to vote as indicated on the matters referred to in the Proxy
Statement for the Meeting, receipt of which is hereby acknowledged, with
discretionary power to vote upon such other business as may properly come before
the Meeting.
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES OF THE FUND. The Board
of Trustees recommends that you vote FOR the following proposal:
VOTE ON PROPOSAL:
PROPOSAL 1:
1. To approve a proposed Agreement and Plan of Reorganization and the
transactions contemplated thereby, which include: (a) the transfer of
all assets of the Fund to a newly formed series also called Kensington
Real Estate Securities Fund (the "New Fund") of The Kensington Funds, a
Delaware statutory trust (the "New Trust"), in exchange for shares of
the New Fund, and the assumption by the New Fund of liabilities of the
Fund; and (b) the distribution to Fund shareholders of such New Fund's
shares.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
This proxy will be voted as specified. IF NO SPECIFICATION IS MADE FOR A
PROPOSAL, THIS PROXY WILL BE VOTED FOR THAT PROPOSAL.
Receipt of the Notice of Special Meeting and Proxy Statement is hereby
acknowledged.
Date:__________________, 2003
Please date and sign exactly as the name or names appear on your shareholder
account statement. When signing as attorney, trustee, executor, administrator,
custodian, guardian or corporate officer, please give full title. If shares are
held jointly, each shareholder must sign.
- ------------------------------ ----------------------------
Signature Signature (if held jointly)
- ------------------------------ ----------------------------
Title (If applicable) Title (If applicable)
PLEASE SIGN, DATE, AND RETURN PROMPTLY IN ENCLOSED POSTAGE-PAID
ENVELOPE.ENVELOPE IF YOU ARE NOT
VOTING BY PHONE.