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EXHIBIT (d)(3)
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this 1st day of August, 2001, between The Coventry
Group (the "Trust"), a Massachusetts business trust having its principal place
of business in Columbus, Ohio, and SMC Capital, Inc. (the "Investment Adviser"),
an investment adviser having its principal place of business in Louisville,
Kentucky.
WHEREAS, the Trust is registered as an open-end, management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, the Trust desires to retain the Investment Adviser to furnish
investment advisory and administrative services to a newly created investment
portfolio of the Trust and may retain the Investment Adviser to serve in such
capacity with respect to certain additional investment portfolios of the Trust,
all as now or hereafter may be identified in Schedule A hereto as such Schedule
may be amended from time to time (individually referred to herein as a "Fund"
and collectively referred to herein as the "Funds") and the Investment Adviser
represents that it is willing and possesses legal authority to so furnish such
services without violation of applicable laws and regulations;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. APPOINTMENT. The Trust hereby appoints the Investment Adviser to act as
investment adviser to the Funds for the period and on the terms set
forth in this Agreement. The Investment Adviser accepts such
appointment and agrees to furnish the services herein set forth for the
compensation herein provided. Additional investment portfolios may from
time to time be added to those covered by this Agreement by the parties
executing a new Schedule A which shall become effective upon its
execution and shall supersede any Schedule A having an earlier date.
2. DELIVERY OF DOCUMENTS. The Trust has furnished the Investment Adviser
with copies properly certified or authenticated of each of the
following:
(a) the Trust's Declaration of Trust, dated January 8, 1992, and
filed with the Secretary of State of Massachusetts on January
8, 1992, and any and all amendments thereto or restatements
thereof (such Declaration, as presently in effect and as it
shall from time to time be amended or restated, is herein
called the "Declaration of Trust");
(b) the Trust's By-Laws and any amendments thereto;
(c) resolutions of the Trust's Board of Trustees authorizing the
appointment of the Investment Adviser and approving this
Agreement;
(d) the Trust's Notification of Registration on Form N-8A under
the 1940 Act as filed with the Securities and Exchange
Commission (the "Commission") on January 8, 1992, and all
amendments thereto;
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(e) the Trust's Registration Statement on Form N-1A under the
Securities Act of 1933, as amended (the "1933 Act"), and under
the 1940 Act as filed with the Commission and all amendments
thereto; and
(f) the most recent Prospectus and Statement of Additional
Information of each of the Funds (such Prospectus and
Statement of Additional Information, as presently in effect,
and all amendments and supplements thereto, are herein
collectively called the "Prospectus").
The Trust will furnish the Investment Adviser from time to time with copies of
all amendments of or supplements to the foregoing.
3. MANAGEMENT. Subject to the supervision of the Trust's Board of
Trustees, the Investment Adviser will provide a continuous investment
program for the Funds, including investment research and management
with respect to all securities and investments and cash equivalents in
the Funds. The Investment Adviser will determine from time to time what
securities and other investments will be purchased, retained or sold by
the Trust with respect to the Funds. The Investment Adviser will
provide the services under this Agreement in accordance with each of
the Fund's investment objectives, policies, and restrictions as stated
in the Prospectus and resolutions of the Trust's Board of Trustees. The
Investment Adviser further agrees that it:
(a) will use the same skill and care in providing such services as
it uses in providing services to its other accounts for which
it has investment responsibilities;
(b) will conform with all applicable Rules and Regulations of the
Commission under the 1940 Act and in addition will conduct its
activities under this Agreement in accordance with any
applicable regulations of any governmental authority
pertaining to the investment advisory activities of the
Investment Adviser;
(c) will not make loans to any person to purchase or carry units
of beneficial interest ("shares") in the Trust or make loans
to the Trust;
(d) will place or cause to be placed orders for the Funds either
directly with the issuer or with any broker or dealer. In
placing orders with brokers and dealers, the Investment
Adviser will attempt to obtain prompt execution of orders in
an effective manner at the most favorable price. Consistent
with this obligation and to the extent permitted by the 1940
Act, when the execution and price offered by two or more
brokers or dealers are comparable, the Investment Adviser may,
in its discretion, purchase and sell portfolio securities to
and from brokers and dealers who provide the Investment
Adviser with research advice and other services. In no
instance will portfolio securities be purchased from or sold
to BISYS, Inc., the Investment Adviser, or any affiliated
person of the Trust, BISYS Inc. or the Investment Adviser,
except to the extent permitted by the 1940 Act and the
Commission;
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(e) will maintain all books and records with respect to the
securities transactions of the Funds and will furnish the
Trust's Board of Trustees with such periodic and special
reports as the Board may request;
(f) will treat confidentially and as proprietary information of
the Trust all records and other information relative to the
Trust and the Funds and prior, present, or potential
shareholders, and will not use such records and information
for any purpose other than performance of its responsibilities
and duties hereunder, except after prior notification to and
approval in writing by the Trust, which approval shall not be
unreasonably withheld and may not be withheld where the
Investment Adviser may be exposed to civil or criminal
contempt proceedings for failure to comply, when requested to
divulge such information by duly constituted authorities, or
when so requested by the Trust; and
(g) will maintain its policy and practice of conducting its
affiliates' fiduciary functions independently. In making
investment recommendations for the Funds, the Investment
Adviser's personnel will not inquire or take into
consideration whether the issuers of securities proposed for
purchase or sale for the Trust's account are customers of the
Investment Adviser or of its parent or its subsidiaries or
affiliates. In dealing with such customers, the Investment
Adviser and its parent, subsidiaries, and affiliates will not
inquire or take into consideration whether securities of those
customers are held by the Trust.
(h) will promptly review all (1) current security reports, (2)
summary reports of transactions and pending maturities
(including the principal, cost and accrued interest on each
portfolio security in maturity date order) and (3) current
cash position reports (including cash available from portfolio
sales and maturities and sales of a Fund's shares less cash
needed for redemptions and settlement of portfolio purchases)
upon receipt thereof from the Trust and will report any errors
or discrepancies in such reports to the Trust or its designee
within three (3) business days.
The Investment Adviser may, subject to the approval of the Trust's
Board of Trustees, appoint a sub-adviser to provide the services
contemplated hereunder, provided, however, that the Investment Adviser
shall not be relieved of any of its obligations under this Agreement by
the appointment of such sub-adviser and provided further, that the
Investment Adviser shall be responsible, to the extent provided in
Section 8 hereof for all acts of such sub-adviser as if such acts were
its own.
4. SERVICES NOT EXCLUSIVE. The investment management services furnished by
the Investment Adviser hereunder are not to be deemed exclusive, and
the Investment Adviser shall be free to furnish similar services to
others so long as its services under this Agreement are not impaired
thereby.
5. BOOKS AND RECORDS. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Investment Adviser hereby agrees that all
records which it maintains for the Funds are the property of the Trust
and further agrees to surrender promptly to the Trust
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any of such records upon the Trust's request. The Investment Adviser
further agrees to preserve for the periods prescribed by Rule 31a-2
under the 1940 Act the records required to be maintained by Rule 31 a-1
under the 1940 Act.
6. EXPENSES. During the term of this Agreement, the Investment Adviser
will pay all expenses incurred by it in connection with its activities
under this Agreement other than the cost of securities (including
brokerage commissions, if any) purchased for the Funds.
7. COMPENSATION. For the services provided and the expenses assumed
pursuant to this Agreement, each of the Funds will pay the Investment
Adviser and the Investment Adviser will accept as full compensation
therefor a fee as set forth on Schedule A hereto. The obligation of
each Fund to pay the above-described fee to the Investment Adviser will
begin as of the date of the initial public sale of shares in such Fund.
The fee attributable to each Fund shall be the obligation of that Fund
and not of any other Fund.
8. LIMITATION OF LIABILITY. The Investment Adviser shall not be liable for
any error of judgment or mistake of law or for any loss suffered by the
Funds in connection with the performance of this Agreement, except a
loss resulting from a breach of fiduciary duty with respect to the
receipt of compensation for services or a loss resulting from willful
misfeasance, bad faith or gross negligence on the part of the
Investment Adviser in the performance of its duties or from reckless
disregard by it of its obligations and duties under this Agreement.
9. DURATION AND TERMINATION. This Agreement will become effective with
respect to each Fund listed on Schedule A as of the date first written
above (or, if a particular Fund is not in existence on that date, on
the date a registration statement relating to that Fund becomes
effective with the Commission), provided that it shall have been
approved by vote of a majority of the outstanding voting securities of
such Fund, in accordance with the requirements under the 1940 Act, and,
unless sooner terminated as provided herein, shall continue in effect
until February 28, 2003. Thereafter, if not terminated, this Agreement
shall continue in effect as to a particular Fund for successive
one-year terms, provided that such continuance is specifically approved
at least annually (a) by the vote of a majority of those members of the
Trust's Board of Trustees who are not parties to this Agreement or
interested persons of any party to this Agreement, cast in person at a
meeting called for the purpose of voting on such approval, and (b) by
the vote of a majority of the Trust's Board of Trustees or by the vote
of a majority of all votes attributable to the outstanding shares of
such Fund. Notwithstanding the foregoing, this Agreement may be
terminated as to a particular Fund at any time on sixty days' written
notice, without the payment of any penalty, by the Trust (by vote of
the Trust's Board of Trustees or by vote of a majority of the
outstanding voting securities of such Fund) or by the Investment
Adviser. This Agreement will immediately terminate in the event of its
assignment. (As used in this Agreement, the terms "majority of the
outstanding voting securities", "interested persons" and "assignment"
shall have the same meanings as ascribed to such terms in the 1940
Act.)
10. INVESTMENT ADVISER'S REPRESENTATIONS. The Investment Adviser hereby
represents and warrants that it is willing and possesses all requisite
legal authority to provide the
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services contemplated by this Agreement without violation of applicable
law and regulations.
11. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against which enforcement of
the change, waiver, discharge or termination is sought.
12. GOVERNING LAW. This Agreement shall be governed by and its provisions
shall be construed in accordance with the laws of the Commonwealth of
Massachusetts.
13. MISCELLANEOUS. 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 by any of
the Trustees, representatives or agents are made not individually, but
in such capacities, and are not binding upon any of the Trustees,
shareholders or representatives of the Trust personally, but bind only
the assets of the Trust and all persons dealing with any series of
shares of the Trust must look solely to the assets of the Trust
belonging to such series for the enforcement of any claims against the
Trust.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first
above written.
THE COVENTRY GROUP
By:
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Name:
------------------------------
Title:
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SMC CAPITAL, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
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Dated: August 1, 2001
Schedule A
to the
Investment Advisory Agreement
between The Coventry Group and
SMC Capital, Inc.
NAME OF FUND COMPENSATION*
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The Shelby Large Cap Fund Annual rate of eighty five-one
hundredths of one percent (0.85%)
of the average daily net assets of
such Fund.
THE COVENTRY GROUP
By:
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Name:
-----------------------------------
Title:
----------------------------------
SMC CAPITAL, INC.
By:
------------------------------------
Name:
----------------------------------
Title:
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* All fees are computed daily and paid monthly.
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