U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /x/
Pre-Effective Amendment No.
Post-Effective Amendment No.
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /x/
Amendment No.
(Check appropriate box or boxes)
GANNETT WELSH & KOTLER INVESTMENT TRUST
(Exact Name of Registrant as Specified in Charter)
222 Berkeley Street
Boston, Massachusetts 02116
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: (617) 236-8900
T. Williams Roberts
Gannett Welsh & Kotler Investment Trust
222 Berkeley Street
Boston, Massachusetts 02116
(Name and Address of Agent for Service)
Copies to:
Tina D. Hosking
MGF Service Corp.
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202
Approximate Date of Proposed Public Offering: As soon as practicable
after this Registration Statement becomes effective.
Registrant hereby declares its intention to register an
indefinite number of shares of beneficial interest pursuant to Rule
24f-2 under the Investment Company Act of 1940.
The Registrant hereby amends this Registration Statement on such
date or dates as may be necessary to delay its effective date until
the Registrant shall file a further amendment which specifically
states that this Registration Statement shall thereafter become
effective in accordance with Section 8(a) of the Securities Act of
1933 or until the Registration Statement shall become effective on
such date as the Commission acting pursuant to said Section 8(a) may
determine.
<PAGE>
GANNETT WELSH & KOTLER INVESTMENT TRUST
Cross Reference Sheet
Pursuant to Rule 481(a)
Under the Securities Act of 1933
PART A
Item No. Registration Statement Caption Caption in Prospectus
1. Cover Page Cover Page
2. Synopsis Expense Information
3. Condensed Financial Information Performance Information
4. General Description of Registrant Investment Objective,
Investment Policies and Risk
Considerations; Operation of
the Fund
5. Management of the Fund Operation of the Fund
6. Capital Stock and Other Securities Cover Page; Operation of the
Fund; Dividends and
Distributions; Taxes
7. Purchase of Securities Being Offered How to Purchase Shares;
Shareholder Services;
Exchange Privilege;
Distribution Plan;
Calculation of Share Price;
Application
8. Redemption or Repurchase How to Redeem Shares;
Shareholder Services;
Exchange Privilege
9. Pending Legal Proceedings Inapplicable
PART B
Caption in Statement
of Additional
Item No. Registration Statement Caption Information
10. Cover Page Cover Page
11. Table of Contents Table of Contents
(i)
<PAGE>
12. General Information and History The Trust
13. Investment Objectives and Policies Definitions, Policies and
Risk Considerations; Quality
Ratings of Corporate Bonds
and Preferred Stocks;
Investment Limitations;
Securities Transactions;
Portfolio Turnover
14. Management of the Fund Trustees and Officers
15. Control Persons and Principal Holders Inapplicable
of Securities
16. Investment Advisory and Other Services The Investment Adviser;
Distribution Plan;
Custodian; Auditors; MGF
Service Corp.
17. Brokerage Allocation and Other Securities Transactions
Practices
18. Capital Stock and Other Securities The Trust
19. Purchase, Redemption and Pricing of Calculation of Share
Securities Being Offered Price; Redemption in Kind
20. Tax Status Taxes
21. Underwriters Inapplicable
22. Calculation of Performance Data Historical Performance
Information
23. Financial Statements Statements of Assets and
Liabilities
PART C
The information required to be included in Part C is set forth under
the appropriate Item, so numbered, in Part C to this Registration Statement.
(ii)
PROSPECTUS
_______, 1996
GANNETT WELSH & KOTLER INVESTMENT TRUST
222 Berkeley Street
Boston, Massachusetts 02116
(617) 236-8900
GW&K EQUITY FUND
-----------------------------------------------------------------
The GW&K Equity Fund (the "Fund"), a separate series of
Gannett Welsh & Kotler Investment Trust, seeks long-term total
return from a combination of capital growth and growth of income,
by investing in a diversified portfolio of equity securities.
Gannett Welsh & Kotler, Inc. (the "Adviser"), 222 Berkeley
Street, Boston, Massachusetts 02116, manages the Fund's
investments. The Adviser is an independent investment counsel
firm that has advised individual and institutional clients since
1974.
Prior to the offering of Fund shares to the public, the Fund
will exchange its shares for portfolio securities of GW&K Equity
Fund, L.P. and, as a result, such exchange may result in adverse
tax consequences to future shareholders of the Fund (see
"Taxes").
This Prospectus sets forth concisely the information about
the Fund that you should know before investing. Please retain
this Prospectus for future reference. A Statement of Additional
Information dated _______, 1996 has been filed with the
Securities and Exchange Commission and is hereby incorporated by
reference in its entirety. A copy of the Statement of Additional
Information can be obtained at no charge by calling the number
listed below.
- -----------------------------------------------------------------
For Information or Assistance in Opening An Account, Please Call:
Nationwide (Toll-Free) . . . . . . . . . . . . . . . 800-___-____
- -----------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
- 1 -
<PAGE>
EXPENSE INFORMATION
Shareholder Transaction Expenses
Sales Load Imposed on Purchases . . . . . . . . . . . . . . . None
Sales Load Imposed on Reinvested Dividends. . . . . . . . . . None
Exchange Fee. . . . . . . . . . . . . . . . . . . . . . . . . None
Redemption Fees . . . . . . . . . . . . . . . . . . . . . . . None*
* A wire transfer fee is charged by the Fund's Custodian in the case
of redemptions made by wire. Such fee is subject to change and is
currently $8. See "How to Redeem Shares."
Annual Fund Operating Expenses (as a percentage of average net assets)
Management Fees . . . . . . . . . . . . . . . . . . .75%(A)
12b-1 Fees. . . . . . . . . . . . . . . . . . . . . None(B)
Other Expenses. . . . . . . . . . . . . . . . . . . .50%
Total Fund Operating Expenses . . . . . . . . . . . 1.25%(C)
(A) Absent waivers of management fees, such fees would be 1.00%.
(B) The Fund may incur 12b-1 fees of up to .25% per annum. Long-term
shareholders may pay more than the economic equivalent of the
maximum front-end sales loads permitted by the National Association
of Securities Dealers.
(C) Absent waivers of management fees, total Fund operating expenses
would be 1.50%.
The purpose of this table is to assist the investor in understanding
the various costs and expenses that an investor in the Fund will bear
directly or indirectly. The percentages expressing annual fund
operating expenses are based on estimated amounts for the current
fiscal year. THE EXAMPLE BELOW SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE
GREATER OR LESS THAN THOSE SHOWN.
Example
You would pay the following
expenses on a $1,000
investment, assuming
(1) 5% annual return and
(2) redemption at the end
of each time period:
1 Year $13
3 Years 40
- 2 -
<PAGE>
INVESTMENT OBJECTIVE, INVESTMENT POLICIES AND RISK CONSIDERATIONS
The Fund is a series of Gannett Welsh & Kotler Investment
Trust (the "Trust"). The investment objective of the Fund is to
seek long-term total return from a combination of capital growth
and growth of income, by investing in a diversified portfolio of
equity securities. Equity securities include common stocks and
securities convertible into common stock (such as convertible
bonds, convertible preferred stocks and warrants). The Fund is
not intended to be a complete investment program, and there is no
assurance that its investment objective can be achieved. The
Fund's investment objective may be changed by the Board of
Trustees without shareholder approval, but only after
notification has been given to shareholders and after this
Prospectus has been revised accordingly. If there is a change in
the Fund's investment objective, shareholders should consider
whether the Fund remains an appropriate investment in light of
their then current financial position and needs. Unless
otherwise indicated, all investment practices and limitations of
the Fund are nonfundamental policies which may be changed by the
Board of Trustees without shareholder approval.
The Fund pursues its investment objective by following
flexible long-term investment policies emphasizing companies with
strong balance sheets and growth potential. Securities will be
purchased for the Fund's portfolio if, in the Adviser's opinion,
their prices are undervalued or attractively valued. Measures
such as price-to-earnings ratios and ratios of market price to
book value in comparison with similar measures for companies
included in the Standard & Poor's Index of 500 Common Stocks will
be used to determine value. The Fund will also seek out
companies which have experienced earnings and dividend growth at,
or above, market norms. While the Fund intends to invest
primarily in companies which are leaders in their respective
industries, the Fund will also invest in less well known
companies.
The Adviser intends to assemble a portfolio of securities
diversified as to company and industry. The Adviser will
consider the desirability of increasing or reducing the Fund's
investment in the particular industry to which the issuer of a
security belongs in view of the Fund's goal of achieving industry
diversification. The Adviser expects that each economic sector
within the Standard & Poor's Index of 500 Common Stocks will be
represented in the Fund's portfolio.
Investments in equity securities are subject to inherent
market risks and fluctuations in value due to earnings, economic
conditions and other factors beyond the control of the Adviser.
As a result, the return and net asset value of the Fund will
fluctuate.
- 3 -
<PAGE>
The Fund will invest primarily in domestic equity
securities, although it may invest in foreign companies through
the purchase of sponsored American Depository Receipts
(certificates of ownership issued by an American bank or trust
company as a convenience to investors in lieu of the underlying
shares which it holds in custody) or other securities of foreign
issuers that are publicly traded in the United States. When
selecting foreign investments, the Adviser will seek to invest in
securities that have investment characteristics and qualities
comparable to the kinds of domestic securities in which the Fund
invests. Investment in securities of foreign issuers and in
foreign branches of domestic banks involves somewhat different
investment risks from those affecting securities of domestic
issuers. In addition to credit and market risks, investments in
foreign securities involve sovereign risk, which includes local
political and economic developments, potential nationalization,
withholding taxes on dividend or interest payments and currency
blockage. Foreign companies may have less public or less
reliable information available about them and may be subject to
less governmental regulation than U.S. companies. Securities of
foreign companies may be less liquid or more volatile than
securities of U.S. companies.
The Fund expects to invest primarily in securities currently
paying dividends, although it may buy securities that are not
paying dividends but offer prospects for growth of capital or
future income. Under normal circumstances, at least 65% of the
Fund's total assets will be invested in common stocks and
securities convertible into common stock (such as convertible
bonds, convertible preferred stocks and warrants). The Fund may
invest in convertible preferred stocks and bonds which are rated
at the time of purchase in the four highest grades assigned by
Moody's Investors Service, Inc. (Aaa, Aa, A or Baa) or Standard &
Poor's Ratings Group (AAA, AA, A or BBB) or unrated securities
determined by the Adviser to be of comparable quality. Preferred
stocks and bonds rated Baa or BBB have speculative
characteristics, and changes in economic conditions or other
circumstances are more likely to lead to a weakened capacity to
pay principal and interest or to pay the preferred stock
obligations than is the case with higher grade securities.
Subsequent to its purchase by the Fund, a security's rating may
be reduced below Baa or BBB; if so, the Adviser may sell such
security, subject to market conditions and the Adviser's
assessment of the most opportune time for sale.
When the Adviser believes substantial price risks exist for
common stocks and securities convertible into common stocks
because of uncertainties in the investment outlook or when in the
judgment of the Adviser it is otherwise warranted in selling to
manage the Fund's portfolio, the Fund may temporarily hold for
defensive purposes all or a portion of its assets in short-term
- 4 -
<PAGE>
obligations such as bank debt instruments (certificates of
deposit, bankers' acceptances and time deposits), commercial
paper, shares of money market investment companies, U.S.
Government obligations having a maturity of less than one year or
repurchase agreements. The Fund may invest up to 10% of its
total assets in shares of money market investment companies.
Investments by the Fund in shares of money market investment
companies may result in duplication of advisory, administrative
and distribution fees. The Fund will not invest more than 5% of
its total assets in securities of any single investment company
and will not purchase more than 3% of the outstanding voting
securities of any investment company.
If, in addition to believing that substantial price risks
exist for common stocks and securities convertible into common
stocks, the Adviser believes that market indicators point to
lower interest rates, the Fund may, in seeking to achieve its
investment objective, invest up to 35% of its net assets in U.S.
Government obligations of any maturity. "U.S. Government
obligations" include securities which are issued or guaranteed by
the United States Treasury, by various agencies of the United
States Government, and by various instrumentalities which have
been established or sponsored by the United States Government.
U.S. Treasury obligations are backed by the "full faith and
credit" of the United States Government. U.S. Treasury
obligations include Treasury bills, Treasury notes and Treasury
bonds.
The Fund may also invest in U.S. Treasury obligations traded
under the Separate Trading of Registered Interest and Principal
of Securities ("STRIPS") program. STRIPS are U.S. Treasury
bills, notes, and bonds that have been issued without interest
coupons or stripped of their unmatured interest coupons, interest
coupons that have been stripped from such U.S. Treasury
securities, and receipts or certificates representing interests
in such stripped U.S. Treasury securities and coupons. A STRIPS
security pays no interest in cash to its holder during its life
although interest is accrued for federal income tax purposes.
Its value to an investor consists of the difference between its
face value at the time of maturity and the price for which it was
acquired, which is generally an amount significantly less than
its face value. Investing in STRIPS may help to preserve capital
during periods of declining interest rates. For example, if
interest rates decline, GNMA Certificates owned by a Fund which
were purchased at greater than par are more likely to be prepaid,
which would cause a loss of principal. In anticipation of this,
a Fund might purchase STRIPS, the value of which would be
expected to increase when interest rates decline.
STRIPS do not entitle the holder to any periodic payments of
interest prior to maturity. Accordingly, such securities usually
- 5 -
<PAGE>
trade at a deep discount from their face or par value and will be
subject to greater fluctuations of market value in response to
changing interest rates than debt obligations of comparable
maturities which make periodic distributions of interest. On the
other hand, because there are no periodic interest payments to be
reinvested prior to maturity, STRIPS eliminate the reinvestment
risk and lock in a rate of return to maturity.
Agencies and instrumentalities established by the United
States Government include the Federal Home Loan Banks, the
Federal Land Bank, the Government National Mortgage Association,
the Federal National Mortgage Association, the Federal Home Loan
Mortgage Corporation, the Student Loan Marketing Association, the
Small Business Administration, the Bank for Cooperatives, the
Federal Intermediate Credit Bank, the Federal Financing Bank, the
Federal Farm Credit Banks, the Federal Agricultural Mortgage
Corporation, the Financing Corporation of America and the
Tennessee Valley Authority. Some of these securities are
supported by the full faith and credit of the United States
Government while others are supported only by the credit of the
agency or instrumentality, which may include the right of the
issuer to borrow from the United States Treasury. U.S.
Government obligations are subject to price fluctuations based
upon changes in the level of interest rates, which will generally
result in all those securities changing in price in the same way,
i.e. all those securities experiencing appreciation when interest
rates decline and depreciation when interest rates rise.
The Fund may also engage in the following investment
techniques, each of which may involve certain risks:
Repurchase Agreements. Repurchase agreements are
transactions by which the Fund purchases a security and
simultaneously commits to resell that security to the seller at
an agreed upon time and price, thereby determining the yield
during the term of the agreement. In the event of a bankruptcy
or other default of the seller of a repurchase agreement, the
Fund could experience both delays in liquidating the underlying
security and losses. To minimize these possibilities, the Fund
intends to enter into repurchase agreements only with its
Custodian, banks having assets in excess of $10 billion and the
largest and, in the Adviser's judgment, most creditworthy primary
U.S. Government securities dealers. The Fund will enter into
repurchase agreements which are collateralized by U.S. Government
obligations or other liquid high-grade debt obligations.
Collateral for repurchase agreements is held in safekeeping in
the customer-only account of the Fund's Custodian at the Federal
Reserve Bank. At the time the Fund enters into a repurchase
agreement, the value of the collateral, including accrued
interest, will equal or exceed the value of the repurchase
agreement and, in the case of a repurchase agreement exceeding
- 6 -
<PAGE>
one day, the seller agrees to maintain sufficient collateral so
that the value of the underlying collateral, including accrued
interest, will at all times equal or exceed the value of the
repurchase agreement. The Fund will not enter into a repurchase
agreement not terminable within seven days if, as a result
thereof, more than 15% of the value of the net assets of the Fund
would be invested in such securities and other illiquid
securities.
Lending Portfolio Securities. The Fund may, from time to
time, lend securities on a short-term basis (i.e., for up to
seven days) to banks, brokers and dealers and receive as
collateral cash, U.S. Government obligations or irrevocable bank
letters of credit (or any combination thereof), which collateral
will be required to be maintained at all times in an amount equal
to at least 100% of the current value of the loaned securities
plus accrued interest. Although the Fund does have the ability
to make loans of all of its portfolio securities, it is the
present intention of the Trust, which may be changed without
shareholder approval, that such loans will not be made with
respect to the Fund if as a result the aggregate of all
outstanding loans exceeds one-third of the value of the Fund's
total assets. Securities lending will afford the Fund the
opportunity to earn additional income because the Fund will
continue to be entitled to the interest payable on the loaned
securities and also will either receive as income all or a
portion of the interest on the investment of any cash loan
collateral or, in the case of collateral other than cash, a fee
negotiated with the borrower. Such loans will be terminable at
any time. Loans of securities involve risks of delay in
receiving additional collateral or in recovering the securities
lent or even loss of rights in the collateral in the event of the
insolvency of the borrower of the securities. The Fund will have
the right to regain record ownership of loaned securities in
order to exercise beneficial rights. The Fund may pay reasonable
fees in connection with arranging such loans.
Borrowing and Pledging. The Fund may borrow money from
banks (provided there is 300% asset coverage) or from banks or
other persons for temporary purposes (in an amount not exceeding
5% of the Fund's total assets). The Fund will not make any
borrowing which would cause its outstanding borrowings to exceed
one-third of its total assets. The Fund may pledge assets in
connection with borrowings but will not pledge more than one-
third of its total assets. Borrowing magnifies the potential for
gain or loss on the portfolio securities of the Fund and,
therefore, if employed, increases the possibility of fluctuation
in the Fund's net asset value. This is the speculative factor
known as leverage. The Fund's policies on borrowing and pledging
are fundamental policies which may not be changed without the
affirmative vote of a majority of its outstanding shares. It is
- 7 -
<PAGE>
the Fund's present intention, which may be changed by the Board
of Trustees without shareholder approval, to borrow only for
emergency or extraordinary purposes and not for leverage.
Portfolio Turnover. The Fund does not intend to use short-
term trading as a primary means of achieving its investment
objective. However, the Fund's rate of portfolio turnover will
depend upon market and other conditions, and it will not be a
limiting factor when portfolio changes are deemed necessary or
appropriate by the Adviser. Although the annual portfolio
turnover rate of the Fund cannot be accurately predicted, it is
not expected to exceed 100%, but may be either higher or lower.
A 100% turnover rate would occur, for example, if all the
securities of the Fund were replaced once in a one-year period.
High turnover involves correspondingly greater commission
expenses and transaction costs. High turnover may result in the Fund
recognizing greater amounts of income and capital gains, which
would increase the amount of income and capital gains which the
Fund must distribute to shareholders in order to maintain its
status as a regulated investment company and to avoid the
imposition of federal income or excise taxes (see "Taxes").
HOW TO PURCHASE SHARES
Your initial investment in the Fund ordinarily must be at
least $2,000 ($1,000 for tax-deferred retirement plans). The
Fund may, in the Adviser's sole discretion, accept certain
accounts with less than the stated minimum initial investment.
Shares of the Fund are sold on a continuous basis at the net
asset value next determined after receipt of a purchase order by
the Trust. Purchase orders received by dealers prior to 4:00
p.m., Eastern time, on any business day and transmitted to the
Trust's transfer agent, MGF Service Corp., by 5:00 p.m., Eastern
time, that day are confirmed at the net asset value determined as
of the close of the regular session of trading on the New York
Stock Exchange on that day. It is the responsibility of dealers
to transmit properly completed orders so that they will be
received by MGF Service Corp. by 5:00 p.m., Eastern time.
Dealers may charge a fee for effecting purchase orders. Direct
purchase orders received by MGF Service Corp. by 4:00 p.m.,
Eastern time, are confirmed at that day's net asset value.
Direct investments received by MGF Service Corp. after 4:00 p.m.,
Eastern time, and orders received from dealers after 5:00 p.m.,
Eastern time, are confirmed at the net asset value next
determined on the following business day.
- 8 -
<PAGE>
You may open an account and make an initial investment in
the Fund by sending a check and a completed account application
form to MGF Service Corp., P.O. Box 5354, Cincinnati, Ohio 45201-
5354. Checks should be made payable to the "GW&K Equity Fund."
An account application is included in this Prospectus.
The Trust mails you confirmations of all purchases or
redemptions of Fund shares. Certificates representing shares are
not issued. The Trust reserves the rights to limit the amount of
investments and to refuse to sell to any person.
Investors should be aware that the Fund's account
application contains provisions in favor of the Trust, MGF
Service Corp. and certain of their affiliates, excluding such
entities from certain liabilities (including, among others,
losses resulting from unauthorized shareholder transactions)
relating to the various services (for example, telephone
exchanges) made available to investors.
Should an order to purchase shares be canceled because your
check does not clear, you will be responsible for any resulting
losses or fees incurred by the Trust or MGF Service Corp. in the
transaction.
You may also purchase shares of the Fund by wire. Please
telephone MGF Service Corp. (Nationwide call toll-free 800-___-
____) for instructions. You should be prepared to give the name
in which the account is to be established, the address, telephone
number and taxpayer identification number for the account, and
the name of the bank which will wire the money.
Your investment will be made at the net asset value next
determined after your wire is received together with the account
information indicated above. If the Trust does not receive
timely and complete account information, there may be a delay in
the investment of your money and any accrual of dividends. To
make your initial wire purchase, you are required to mail a
completed account application to MGF Service Corp. Your bank may
impose a charge for sending your wire. There is presently no fee
for receipt of wired funds, but MGF Service Corp. reserves the
right to charge shareholders for this service upon thirty days'
prior notice to shareholders.
You may purchase and add shares to your account by mail or
by bank wire. Checks should be sent to MGF Service Corp., P.O.
Box 5354, Cincinnati, Ohio 45201-5354. Checks should be made
payable or endorsed to the "GW&K Equity Fund." Bank wires should
be sent as outlined above. You may also make additional
investments at the Trust's offices at 312 Walnut Street, 21st
Floor, Cincinnati, Ohio 45202. Each additional purchase request
must contain the name of your account and your account number to
permit proper crediting to your account. While there is no
minimum amount required for subsequent investments, the Trust
reserves the right to impose such a requirement.
- 9 -
<PAGE>
SHAREHOLDER SERVICES
Contact MGF Service Corp. (Nationwide call toll-free
800-___-____) for additional information about the shareholder
services described below.
- 10 -
Automatic Withdrawal Plan
If the shares in your account have a value of at least
$5,000, you may elect to receive, or may designate another person
to receive, monthly or quarterly payments in a specified amount
of not less than $50 each. There is no charge for this service.
Tax-Deferred Retirement Plans
Shares of the Fund are available for purchase in connection
with the following tax-deferred retirement plans:
-- Keogh Plans for self-employed individuals
-- Individual retirement account (IRA) plans for
individuals and their non-employed spouses
-- Qualified pension and profit-sharing plans for
employees, including those profit-sharing plans with a
401(k) provision
-- 403(b)(7) custodial accounts for employees of public
school systems, hospitals, colleges and other non-
profit organizations meeting certain requirements of
the Internal Revenue Code
Direct Deposit Plans
Shares of the Fund may be purchased through direct deposit
plans offered by certain employers and government agencies.
These plans enable a shareholder to have all or a portion of his
or her payroll or social security checks transferred
automatically to purchase shares of the Fund.
Automatic Investment Plan
You may make automatic monthly investments in the Fund from
your bank, savings and loan or other depository institution
account. The minimum initial and subsequent investments must be
$50 under the plan. MGF Service Corp. pays the costs associated
with these transfers, but reserves the right, upon thirty days'
written notice, to make reasonable charges for this service.
Your depository institution may impose its own charge for
debiting your account which would reduce your return from an
investment in the Fund.
HOW TO REDEEM SHARES
You may redeem shares of the Fund on each day that the Trust
is open for business by sending a written request to the Fund.
The request must state the number of shares or the dollar amount
to be redeemed and your account number. The request must be
signed exactly as your name appears on the Trust's account
records. If the shares to be redeemed have a value of $25,000 or
- 11 -
<PAGE>
more, your signature must be guaranteed by any eligible guarantor
institution, including banks, brokers and dealers, municipal
securities brokers and dealers, government securities brokers and
dealers, credit unions, national securities exchanges, registered
securities associations, clearing agencies and savings
associations.
Redemption requests may direct that the proceeds be wired
directly to your existing account in any commercial bank or
brokerage firm in the United States. If your instructions
request a redemption by wire, you will be charged an $8
processing fee by the Trust's Custodian. The Trust reserves the
right, upon thirty days' written notice, to change the processing
fee. All charges will be deducted from your account by
redemption of shares in your account. Your bank or brokerage
firm may also impose a charge for processing the wire. In the
event that wire transfer of funds is impossible or impractical,
the redemption proceeds will be sent by mail to the designated
account.
You may also redeem shares by placing a wire redemption
request through a securities broker or dealer. Unaffiliated
broker-dealers may impose a fee on the shareholder for this
service. You will receive the net asset value per share next
determined after receipt by the Trust or its agent of your wire
redemption request. It is the responsibility of broker-dealers
to properly transmit wire redemption orders.
You will receive the net asset value per share next
determined after receipt by MGF Service Corp. of your redemption
request in the form described above. Payment is made within
three business days after tender in such form, provided that
payment in redemption of shares purchased by check will be
effected only after the check has been collected, which may take
up to fifteen days from the purchase date. To eliminate this
delay, you may purchase shares of the Fund by certified check or
wire. At the discretion of the Trust or MGF Service Corp.,
corporate investors and other associations may be required to
furnish an appropriate certification authorizing redemptions to
ensure proper authorization.
The Trust reserves the right to suspend the right of
redemption or to postpone the date of payment for more than three
business days under unusual circumstances as determined by the
Securities and Exchange Commission.
EXCHANGE PRIVILEGE
Shares of the Fund may be exchanged for shares of the other
series of the Trust, the GW&K Government Securities Fund, at net
asset value. Shares of the Fund may also be exchanged for shares
- 12 -
<PAGE>
at net asset value of the Short Term Government Income Fund (a
series of Midwest Trust), which invests in short-term U.S.
Government obligations backed by the "full faith and credit" of
the United States and seeks high current income consistent with
protection of capital. Shares of the Short Term Government
Income Fund acquired via exchange may be re-exchanged for shares
of the Fund at net asset value.
You may request an exchange by sending a written request to
MGF Service Corp. The request must be signed exactly as your
name appears on the Trust's account records. Exchanges may also
be requested by telephone. If you are unable to execute your
transaction by telephone (for example, during times of unusual
market activity), consider requesting your exchange by mail or by
visiting the Trust's offices at 222 Berkeley Street, Boston,
Massachusetts 02116. An exchange will be effected at the next
determined net asset value after receipt of a request by MGF
Service Corp.
Exchanges may only be made for shares of funds then offered
for sale in your state of residence and are subject to the
applicable minimum initial investment requirements. The exchange
privilege may be modified or terminated by the Board of Trustees
upon 60 days' prior notice to shareholders. An exchange results
in a sale of fund shares, which may cause you to recognize a
capital gain or loss. Before making an exchange, contact MGF
Service Corp. to obtain a current prospectus and more information
about exchanges among the funds.
DIVIDENDS AND DISTRIBUTIONS
The Fund expects to distribute substantially all of its net
investment income, if any, on an annual basis. The Fund expects
to distribute any net realized long-term capital gains at least
once each year. Management will determine the timing and
frequency of the distributions of any net realized short-term
capital gains.
Distributions are paid according to one of the following
options:
Share Option - income distributions and capital gains
distributions reinvested in additional
shares.
Income Option - income distributions and short-term
capital gains distributions paid in
cash; long-term capital gains
distributions reinvested in additional
shares.
Cash Option - income distributions and capital gains
distributions paid in cash.
- 13 -
<PAGE>
You should indicate your choice of option on your
application. If no option is specified on your application,
distributions will automatically be reinvested in additional
shares. All distributions will be based on the net asset value
in effect on the payable date.
If you select the Income Option or the Cash Option and the
U.S. Postal Service cannot deliver your checks or if your checks
remain uncashed for six months, your dividends may be reinvested
in your account at the then current net asset value and your
account will be converted to the Share Option.
TAXES
The Fund intends to qualify for the special tax treatment
afforded a "regulated investment company" under Subchapter M of
the Internal Revenue Code so that it does not pay federal taxes
on income and capital gains distributed to shareholders. The
Fund intends to distribute substantially all of its net
investment income and any realized capital gains to its
shareholders. Distributions of net investment income and net
realized short-term capital gains, if any, are taxable to
investors as ordinary income. Dividends distributed by the Fund
from net investment income may be eligible, in whole or in part,
for the dividends received deduction available to corporations.
Distributions of net realized long-term capital gains are taxable
as long-term capital gains regardless of how long you have held
your Fund shares. Redemptions of shares of the Fund are taxable
events on which a shareholder may realize a gain or loss.
It is anticipated that, prior to the offering of shares of
the Fund to the public, the Fund will exchange its shares for
portfolio securities of GW&K Equity Fund, L.P. (the
"Partnership"), a Delaware limited partnership, after which the
Partnership would dissolve and distribute Fund shares received
pro rata to its partners. Following this exchange transaction
(the "Exchange"), partners of the Partnership will constitute all
of the shareholders of the Fund, except for shares representing
seed capital contributed to the Fund by the Adviser. The
Exchange is intended to qualify as a tax-free reorganization,
with no gain or loss to be recognized by the Partnership or its
partners. The Exchange may result in adverse tax consequences to
future shareholders of the Fund. As a result of this Exchange,
the Fund may acquire securities that have appreciated in value
from the date they were originally acquired by the Partnership.
If these appreciated securities were to be sold by the Fund after
the Exchange, the amount of the gain would be taxable to future
shareholders as well as to shareholders who received Fund shares
in the Exchange. The effect of this for future shareholders
would be to immediately tax them on a distribution that
represents a return of the purchase price of their shares rather
- 14 -
<PAGE>
than an increase in the value of their investment. The effect on
shareholders who received Fund shares in the Exchange would be to
reduce their potential liability for tax on capital gains by
spreading such liability over a larger asset base. As of the
date of this Prospectus, the amount of unrealized capital gains
of the Partnership is approximately $____ (or ___% of the
Partnership's net assets as of that date).
The Fund will mail to each of its shareholders a statement
indicating the amount and federal income tax status of all
distributions made during the year. In addition to federal
taxes, shareholders of the Fund may be subject to state and local
taxes on distributions. Shareholders should consult their tax
advisors about the tax effect of distributions and withdrawals
from the Fund and the use of the Automatic Withdrawal Plan and
the Exchange Privilege. The tax consequences described in this
section apply whether distributions are taken in cash or
reinvested in additional shares. See "Taxes" in the Statement of
Additional Information for further information.
OPERATION OF THE FUND
The Fund is a diversified series of Gannett Welsh & Kotler
Investment Trust, an open-end management investment company
organized as a Massachusetts business trust on April 30, 1996.
The Board of Trustees supervises the business activities of the
Trust. Like other mutual funds, the Trust retains various
organizations to perform specialized services for the Fund.
The Trust retains Gannett Welsh & Kotler, Inc., 222 Berkeley
Street, Boston, Massachusetts (the "Adviser"), to manage the
Fund's investments. The Adviser is an independent investment
counsel firm that has advised individual and institutional
clients since 1974. The Fund pays the Adviser a fee, payable
monthly, at the annual rate of 1.00% of the average value of its
daily net assets.
As of the date of this Prospectus, the Adviser is the sole
shareholder of the Fund.
Edward B. White, a principal and Senior Vice President of
the Adviser, is primarily responsible for managing the Fund's
portfolio. Mr. White has been employed by the Adviser since
1989.
In addition to the advisory fee, the Fund is responsible for
the payment of all operating expenses, including fees and
expenses in connection with membership in investment company
organizations, brokerage fees and commissions, legal, auditing
and accounting expenses, expenses of registering shares under
federal and state securities laws, expenses related to the
- 15 -
<PAGE>
distribution of the Fund's shares (see "Distribution Plan"),
insurance expenses, taxes or governmental fees, fees and expenses
of the custodian, transfer agent, administrator, and accounting
and pricing agent of the Fund, fees and expenses of members of
the Board of Trustees who are not interested persons of the
Trust, the cost of preparing and distributing prospectuses,
statements, reports and other documents to shareholders, expenses
of shareholders' meetings and proxy solicitations, and such
extraordinary or non-recurring expenses as may arise, including
litigation to which the Fund may be a party and indemnification
of the Trust's officers and Trustees with respect thereto.
The Trust has retained MGF Service Corp., P.O. Box 5354,
Cincinnati, Ohio, to serve as the Fund's transfer agent, dividend
paying agent and shareholder service agent. MGF Service Corp. is
a subsidiary of Leshner Financial, Inc., of which Robert H.
Leshner is the controlling shareholder.
MGF Service Corp. also provides accounting and pricing
services to the Fund. MGF Service Corp. receives a monthly fee
from the Fund for calculating daily net asset value per share and
maintaining such books and records as are necessary to enable it
to perform its duties.
In addition, MGF Service Corp. has been retained to provide
administrative services to the Fund. In this capacity, MGF
Service Corp. supplies executive, administrative and regulatory
services, supervises the preparation of tax returns, and
coordinates the preparation of reports to shareholders and
reports to and filings with the Securities and Exchange
Commission and state securities authorities. The Fund pays MGF
Service Corp. a fee, payable monthly, for these administrative
services at the annual rate of .15% of the average value of its
daily net assets up to $50,000,000, .125% of such assets from
$50,000,000 to $100,000,000 and .10% of such assets in excess of
$100,000,000; provided, however, that the minimum fee is $1,000
per month.
Consistent with the Rules of Fair Practice of the National
Association of Securities Dealers, Inc., and subject to its
objective of seeking best execution of portfolio transactions,
the Adviser may consider sales of shares of the Fund as a factor
in the selection of brokers and dealers to execute portfolio
transactions of the Fund.
Shares of the Fund have equal voting rights and liquidation
rights, and are voted in the aggregate and not by Fund except in
matters where a separate vote is required by the Investment
Company Act of 1940 or when the matter affects only the interest
of a particular Fund. When matters are submitted to shareholders
for a vote, each shareholder is entitled to one vote for each
- 16 -
<PAGE>
full share owned and fractional votes for fractional shares
owned. The Trust does not normally hold annual meetings of
shareholders. The Trustees shall promptly call and give notice
of a meeting of shareholders for the purpose of voting upon
removal of any Trustee when requested to do so in writing by
shareholders holding 10% or more of the Trust's outstanding
shares. The Trust will comply with the provisions of Section
16(c) of the Investment Company Act of 1940 in order to
facilitate communications among shareholders.
DISTRIBUTION PLAN
Pursuant to Rule 12b-1 under the Investment Company Act of
1940, the Fund has adopted a plan of distribution (the "Plan")
under which the Fund may directly incur or reimburse the Adviser
for certain distribution-related expenses, including: payments to
securities dealers and others who are engaged in the sale of
shares of the Fund and who may be advising investors regarding
the purchase, sale or retention of such shares; expenses of
maintaining personnel who engage in or support distribution of
shares or who render shareholder support services not otherwise
provided by MGF Service Corp.; expenses of formulating and
implementing marketing and promotional activities, including
direct mail promotions and mass media advertising; expenses of
preparing, printing and distributing sales literature and
prospectuses and statements of additional information and reports
for recipients other than existing shareholders of the Fund;
expenses of obtaining such information, analyses and reports with
respect to marketing and promotional activities as the Trust may,
from time to time, deem advisable; and, any other expenses
related to the distribution of the Fund's shares.
The annual limitation for payment of expenses pursuant to
the Plan is .25% of the Fund's average daily net assets.
Unreimbursed expenditures will not be carried over from year to
year. In the event the Plan is terminated by the Fund in
accordance with its terms, the Fund will not be required to make
any payments for expenses incurred by the Adviser after the date
the Plan terminates.
Pursuant to the Plan, the Fund may also make payments to
banks or other financial institutions that provide shareholder
services and administer shareholder accounts. The Glass-Steagall
Act prohibits banks from engaging in the business of
underwriting, selling or distributing securities. Although the
scope of this prohibition under the Glass-Steagall Act has not
been clearly defined by the courts or appropriate regulatory
agencies, management of the Trust believes that the Glass-
Steagall Act should not preclude a bank from providing such
services. However, state securities laws on this issue may
differ from the interpretations of federal law expressed herein
- 17 -
<PAGE>
and banks and financial institutions may be required to register
as dealers pursuant to state law. If a bank were prohibited from
continuing to perform all or a part of such services, management
of the Trust believes that there would be no material impact on
the Fund or its shareholders. Banks may charge their customers
fees for offering these services to the extent permitted by
regulatory authorities, and the overall return to those
shareholders availing themselves of the bank services will be
lower than to those shareholders who do not. The Fund may from
time to time purchase securities issued by banks which provide
such services; however, in selecting investments for the Funds,
no preference will be shown for such securities.
CALCULATION OF SHARE PRICE
On each day that the Trust is open for business, the share
price (net asset value) of the shares of the Fund is determined
as of the close of the regular session of trading on the New York
Stock Exchange, currently 4:00 p.m., Eastern time. The Trust is
open for business on each day the New York Stock Exchange is open
for business and on any other day when there is sufficient
trading in the Fund's investments that its net asset value might
be materially affected. The net asset value per share of the
Fund is calculated by dividing the sum of the value of the
securities held by the Fund plus cash or other assets minus all
liabilities (including estimated accrued expenses) by the total
number of shares outstanding of the Fund, rounded to the nearest
cent.
Portfolio securities are valued as follows: (i) securities
which are traded on stock exchanges or are quoted by NASDAQ are
valued at the last reported sale price as of the close of the
regular session of trading on the New York Stock Exchange on the
day the securities are being valued, or, if not traded on a
particular day, at the closing bid price, (ii) securities traded
in the over-the-counter market, and which are not quoted by
NASDAQ, are valued at the last sale price (or, if the last sale
price is not readily available, at the last bid price as quoted
by brokers that make markets in the securities) as of the close
of the regular session of trading on the New York Stock Exchange
on the day the securities are being valued, (iii) securities
which are traded both in the over-the-counter market and on a
stock exchange are valued according to the broadest and most
representative market, and (iv) securities (and other assets) for
which market quotations are not readily available are valued at
their fair value as determined in good faith in accordance with
consistently applied procedures established by and under the
general supervision of the Board of Trustees. The net asset
value per share of the Fund will fluctuate with the value of the
securities it holds.
- 18 -
<PAGE>
PERFORMANCE INFORMATION
From time to time, the Fund may advertise its "average
annual total return." Average annual total return figures are based on
historical earnings and are not intended to indicate future
performance.
The "average annual total return" of the Fund refers to the
average annual compounded rates of return over the most recent 1,
5 and 10 year periods or, where the Fund has not been in
operation for such period, over the life of the Fund (which
periods will be stated in the advertisement) that would equate an
initial amount invested at the beginning of a stated period to
the ending redeemable value of the investment. The calculation
of "average annual total return" assumes the reinvestment of all
dividends and distributions. The Fund may also advertise total
return (a "nonstandardized quotation") which is calculated
differently from "average annual total return". A
nonstandardized quotation of total return may be a cumulative
return which measures the percentage change in the value of an
account between the beginning and end of a period, assuming no
activity in the account other than reinvestment of dividends and
capital gains distributions. A nonstandardized quotation of
total return may also indicate average annual compounded rates of
return over periods other than those specified for "average
annual total return." A nonstandardized quotation of total
return will always be accompanied by the Fund's "average annual
total return" as described above.
From time to time the Fund may advertise its performance
rankings as published by recognized independent mutual fund
statistical services such as Lipper Analytical Services,
Inc.("Lipper"), or by publications of general interest such as
Forbes, Money, The Wall Street Journal, Business Week, Barron's,
Fortune or Morningstar Mutual Fund Values. The Fund may also
compare its performance to that of other selected mutual funds,
averages of the other mutual funds within its category as
determined by Lipper, or recognized indicators such as the Dow
Jones Industrial Average, the Standard & Poor's 500 Stock Index,
the Value Line Composite Index, the NASDAQ Composite Index and
the Russell 2000 Index. In connection with a ranking, the Fund
may provide additional information, such as the particular
category of funds to which the ranking relates, the number of
funds in the category, the criteria upon which the ranking is
based, and the effect of fee waivers and/or expense
reimbursements, if any. The Fund may also present its
performance and other investment characteristics, such as
volatility or a temporary defensive posture, in light of the
Adviser's view of current or past market conditions or historical
trends.
- 19 -
<PAGE>
Prior Performance of GW&K Equity Fund, L.P. The investment
performance of the Adviser illustrated below represents, from
August 1, 1991 forward, the performance for the GW&K Equity Fund,
L.P. (the "Partnership"), which was managed with investment
objectives, policies and strategies substantially similar to
those to be employed by the Adviser in managing the Fund.
While the Fund will employ investment objectives and
strategies that are substantially similar to those that were
employed by the Adviser in managing the Partnership, the Fund may
be subject to certain restrictions on its investment activities
to which the Adviser, as investment adviser to the Partnership,
was not previously subject. Examples include limits on the
percentage of assets invested in securities of issuers in a
single industry, and requirements on distributing income to
shareholders. Operating expenses will be incurred by the Fund
which were not incurred by the Adviser in managing the
Partnership. It is not intended that the following performance
data be relied upon by investors as an indication of future
performance of the Fund.
Periodic Rates of Return
GW&K S&P Russell
Equity 500 2000
Period Fund, L.P. Index Index
August 1 -
December 31, 1991 10.86%* 9.09%* 10.47%*
Year Ended
December 31, 1992 6.19% 7.61% 18.40%
Year Ended
December 31, 1993 18.34% 10.12% 18.90%
Year Ended
December 31, 1994 -4.07% 1.31% -3.20%
Year Ended
December 31, 1995 40.21% 37.50% 26.20%
January 1 -
May 31, 1996 * * *
August 1, 1991
through December 31,1995
Annualized Return 15.61% 14.55% 15.98%
Cumulative Return 87.38% 80.07% 90.03%
* Not Annualized
- 20 -
<PAGE>
GANNETT WELSH & KOTLER INVESTMENT TRUST
222 Berkeley Street
Boston, Massachusetts 02116
Nationwide: (Toll-Free) 800-___-____
BOARD OF TRUSTEES
Harold G. Kotler
Benjamin H. Gannett
- -------------------
- -------------------
- -------------------
INVESTMENT ADVISER
GANNETT WELSH & KOTLER, INC.
222 Berkeley Street
Boston, Massachusetts 02116
(617) 236-8900
TRANSFER AGENT
MGF SERVICE CORP.
P.O. Box 5354
Cincinnati, Ohio 45201-5354
Shareholder Service
Nationwide: (Toll-Free) 800-___-____
Rate Line
Nationwide: (Toll-Free) 800-852-4052
TABLE OF CONTENTS
Expense Information.............................................
Investment Objective, Investment Policies and
Risk Considerations...........................................
How to Purchase Shares..........................................
Shareholder Services............................................
How to Redeem Shares............................................
Exchange Privilege..............................................
Dividends and Distributions.....................................
Taxes...........................................................
Operation of the Fund...........................................
Distribution Plan...............................................
Calculation of Share Price......................................
Performance Information.........................................
- -----------------------------------------------------------------
- 21 -
<PAGE>
No person has been authorized to give any information or to
make any representations, other than those contained in this
Prospectus, in connection with the offering contained in this
Prospectus, and if given or made, such information or
representations must not be relied upon as being authorized by
the Trust. This Prospectus does not constitute an offer by the
Trust to sell shares in any State to any person to whom it is
unlawful for the Trust to make such offer in such State.
- 22 -
<PAGE>
PROSPECTUS
_______, 1996
GANNETT WELSH & KOTLER INVESTMENT TRUST
222 BERKELEY STREET
BOSTON, MASSACHUSETTS 02116
(617) 236-8900
GW&K GOVERNMENT SECURITIES FUND
-----------------------------------------------------------------
The GW&K Government Securities Fund (the "Fund"), a separate
series of Gannett Welsh & Kotler Investment Trust, seeks a high
total return, through both income and capital appreciation. The
Fund will invest primarily in obligations issued or guaranteed as
to principal and interest by the United States Government, its
agencies or instrumentalities.
Gannett Welsh & Kotler, Inc. (the "Adviser"), 222 Berkeley
Street, Boston, Massachusetts 02116, manages the Fund's
investments. The Adviser is an independent investment counsel
firm that has advised individual and institutional clients since
1974.
This Prospectus sets forth concisely the information about
the Fund that you should know before investing. Please retain
this Prospectus for future reference. A Statement of Additional
Information dated _______, 1996 has been filed with the
Securities and Exchange Commission and is hereby incorporated by
reference in its entirety. A copy of the Statement of Additional
Information can be obtained at no charge by calling the number
listed below.
- -----------------------------------------------------------------
For Information or Assistance in Opening An Account, Please Call:
Nationwide (Toll-Free) . . . . . . . . . . . . . . . 800-___-____
- -----------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
- 1 -
<PAGE>
EXPENSE INFORMATION
Shareholder Transaction Expenses
Sales Load Imposed on Purchases . . . . . . . . . . . . . . . None
Sales Load Imposed on Reinvested Dividends. . . . . . . . . . None
Exchange Fee. . . . . . . . . . . . . . . . . . . . . . . . . None
Redemption Fees . . . . . . . . . . . . . . . . . . . . . . . None*
* A wire transfer fee is charged by the Fund's Custodian in the case
of redemptions made by wire. Such fee is subject to change and is
currently $8. See "How to Redeem Shares."
Annual Fund Operating Expenses (as a percentage of average net assets)
Management Fees . . . . . . . . . . . . . . . . . . .50%(A)
12b-1 Fees. . . . . . . . . . . . . . . . . . . . . None(B)
Other Expenses. . . . . . . . . . . . . . . . . . . .50%
Total Fund Operating Expenses . . . . . . . . . . . 1.00%(C)
(A) Absent waivers of management fees, such fees would be .75%.
(B) The Fund may incur 12b-1 fees of up to .25% per annum. Long-term
shareholders may pay more than the economic equivalent of the
maximum front-end sales loads permitted by the National Association
of Securities Dealers.
(C) Absent waivers of management fees, total Fund operating expenses
would be 1.25%.
The purpose of this table is to assist the investor in understanding
the various costs and expenses that an investor in the Fund will bear
directly or indirectly. The percentages expressing annual fund
operating expenses are based on estimated amounts for the current
fiscal year. THE EXAMPLE BELOW SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE
GREATER OR LESS THAN THOSE SHOWN.
Example
You would pay the following
expenses on a $1,000
investment, assuming
(1) 5% annual return and
(2) redemption at the end
of each time period: 1 Year $13
3 Years 40
- 2 -
<PAGE>
INVESTMENT OBJECTIVE, INVESTMENT POLICIES AND RISK CONSIDERATIONS
The Fund is a series of Gannett Welsh & Kotler Investment
Trust (the "Trust"). The investment objective of the Fund is to
seek a high total return, through both income and capital
appreciation. The Fund is not intended to be a complete
investment program, and there is no assurance that its investment
objective can be achieved. The Fund's investment objective may
be changed by the Board of Trustees without shareholder approval,
but only after notification has been given to shareholders and
after this Prospectus has been revised accordingly. If there is
a change in the Fund's investment objective, shareholders should
consider whether the Fund remains an appropriate investment in
light of their then current financial position and needs. Unless
otherwise indicated, all investment practices and limitations of
the Fund are nonfundamental policies which may be changed by the
Board of Trustees without shareholder approval.
Under normal market conditions, at least 65% of the Fund's
net assets will be invested in U.S. Government obligations.
"U.S. Government obligations" include securities which are issued
or guaranteed by the United States Treasury, by various agencies
of the United States Government, and by various instrumentalities
which have been established or sponsored by the United States
Government. U.S. Treasury obligations are backed by the "full
faith and credit" of the United States Government. U.S. Treasury
obligations include Treasury bills, Treasury notes and Treasury
bonds. U.S. Treasury obligations also include the separate
principal and interest components of U.S. Treasury obligations
which are traded under the Separate Trading of Registered
Interest and Principal of Securities ("STRIPS") program.
Agencies and instrumentalities established by the United States
Government include the Federal Home Loan Banks, the Federal Land
Bank, the Government National Mortgage Association, the Federal
National Mortgage Association, the Federal Home Loan Mortgage
Corporation, the Student Loan Marketing Association, the Small
Business Administration, the Bank for Cooperatives, the Federal
Intermediate Credit Bank, the Federal Financing Bank, the Federal
Farm Credit Banks, the Federal Agricultural Mortgage Corporation,
the Financing Corporation of America and the Tennessee Valley
Authority. Some of these securities are supported by the full
faith and credit of the United States Government while others are
supported only by the credit of the agency or instrumentality,
which may include the right of the issuer to borrow from the
United States Treasury.
The Fund may invest up to 35% of its net assets in other
fixed-income securities (including corporate debt securities,
bank debt instruments, mortgage-backed and asset-backed
securities and U.S. dollar-denominated fixed-income securities
issued by foreign issuers, foreign branches of U.S. banks and
- 3 -
<PAGE>
U.S. branches of foreign banks) without regard to quality ratings
assigned by rating organizations such as Moody's Investors
Service, Inc. ("Moody's") and Standard & Poor's Ratings Group
("S&P"). Lower-rated debt securities (commonly called "junk
bonds"), i.e. securities rated Baa or below by Moody's or BBB or
below by S&P, or the equivalent, will have speculative
characteristics (including the possibility of default or
bankruptcy of the issuers of such securities, market price
volatility based upon interest rate sensitivity, questionable
creditworthiness and relative liquidity of the secondary trading
market). Because lower-rated securities have been found to be
more sensitive to adverse economic changes or individual
corporate developments and less sensitive to interest rate
changes than higher-rated investments, an economic downturn could
disrupt the market for such securities and adversely affect the
value of outstanding bonds and the ability of issuers to repay
principal and interest. In addition, in a declining interest
rate market, issuers of lower-rated securities may exercise
redemption or call provisions, which may force the Fund, to the
extent it owns such securities, to replace those securities with
lower yielding securities. This could result in a decreased
return for investors.
Investments in debt securities are subject to inherent
market risks and fluctuations in value due to changes in
earnings, economic conditions, quality ratings and other factors
beyond the control of the Adviser. Debt securities are subject
to price fluctuations based upon changes in the level of interest
rates, which will generally result in all those securities
changing in price in the same way, i.e., the securities
experiencing appreciation when interest rates decline and
depreciation when interest rates rise. As a result, the return
and net asset value of the Fund will fluctuate.
There is no limit on the maturity of the securities in which
the Fund may invest. The average maturity of the Fund may be as
high as 20 years or may be shorter depending on the Adviser's
assessment of the current and future interest rate environment.
Securities with longer maturities generally offer both higher
yields and greater exposure to market fluctuation from changes in
interest rates. Consequently, to the extent the Fund is
significantly invested in securities with longer maturities,
investors in the Fund should be aware that there is a possibility
of greater fluctuation in the Fund's net asset value.
For defensive purposes, the Fund may temporarily hold all or
a portion of its assets in money market instruments. The money
market instruments which the Fund may own from time to time
include U.S. Government obligations having a maturity of less
than one year, shares of money market investment companies,
commercial paper, repurchase agreements, bank debt instruments
- 4 -
<PAGE>
(certificates of deposit, time deposits and bankers' acceptances)
and other short-term instruments issued by domestic branches of
U.S. financial institutions that are insured by the Federal
Deposit Insurance Corporation and have assets exceeding $10
billion. The Fund is limited to investing up to 10% of its total
assets in shares of money market investment companies.
Investments by the Fund in shares of money market investment
companies may result in duplication of advisory, administrative
and distribution fees. The Fund will not invest more than 5% of
its total assets in securities of any single investment company
and will not purchase more than 3% of the outstanding voting
securities of any investment company.
MORTGAGE-BACKED AND ASSET-BACKED SECURITIES. The Fund may
invest in mortgage-backed securities, which are mortgage loans
made by banks, savings and loan institutions, and other lenders
which are assembled into pools. Often these securities are
issued and guaranteed by an agency or instrumentality of the
United States Government, though not necessarily backed by the
full faith and credit of the United States Government, or are
collateralized by U.S. Government obligations. The Fund invests
in mortgage-backed securities representing undivided ownership
interests in pools of mortgage loans, including Government
National Mortgage Association (GNMA), Federal National Mortgage
Association (FNMA) and Federal Home Loan Mortgage Corporation
(FHLMC) Certificates and so-called "CMOs" -- i.e., collateralized
mortgage obligations which are issued by non-governmental
entities.
The rate of return on mortgage-backed securities such as
GNMA, FNMA and FHLMC Certificates and CMOs may be affected by
early prepayment of principal on the underlying loans.
Prepayment rates vary widely and may be affected by changes in
market interest rates. It is not possible to accurately predict
the average life of a particular pool. Reinvestment of principal
may occur at higher or lower rates than the original yield.
Therefore, the actual maturity and realized yield on mortgage-
backed securities will vary based upon the prepayment experience
of the underlying pool of mortgages.
The Fund may also invest in stripped mortgage-backed
securities, which are derivative multiclass mortgage securities
issued by agencies or instrumentalities of the United States
Government, or by private originators of, or investors in,
mortgage loans, including savings and loan associations, mortgage
banks, commercial banks, investment banks and special purpose
subsidiaries of the foregoing. Stripped mortgage-backed
securities are usually structured with two classes that receive
different proportions of the interest and principal distributions
on a pool of mortgage assets. A common type of stripped
mortgage-backed security will have one class receiving all of the
- 5 -
<PAGE>
interest from the mortgage assets (the interest-only or "IO"
class), while the other class will receive all of the principal
(the principal-only or "PO" class). The yield to maturity on an
IO class is extremely sensitive to the rate of principal payments
(including prepayments) on the related underlying mortgage
assets, and a rapid rate of principal payments may have a
material adverse effect on the securities' yield to maturity. If
the underlying mortgage assets experience greater than
anticipated prepayments of principal, the Fund may fail to fully
recoup its initial investment in these securities even if the
security is rated AAA or Aaa, and could even lose its entire
investment. Although stripped mortgage-backed securities are
purchased and sold by institutional investors through several
investment banking firms acting as brokers or dealers, these
securities were only recently developed. As a result,
established trading markets have not developed for certain
stripped mortgage-backed securities. The Fund will not invest
more than 15% of its net assets in stripped mortgage-backed
securities and CMOs for which there is no established market and
other illiquid securities. The Fund may invest more than 15% of
its net assets in stripped mortgage-backed securities and CMOs
deemed to be liquid if the Adviser determines, under the
direction of the Board of Trustees, that the security can be
disposed of promptly in the ordinary course of business at a
value reasonably close to that used in the calculation of the
Fund's net asset value per share. In addition, pursuant to the
position of the staff of the Securities and Exchange Commission,
the Fund will not invest more than 5% of its total assets in any
CMO which is an investment company under the Investment Company
Act of 1940 and will not invest more than 10% of its total assets
in all such CMOs and securities of other investment companies.
Asset-backed securities may include such securities as
Certificates for Automobile Receivables and Credit Card
Receivable Securities. Certificates for Automobile Receivables
represent undivided fractional interests in a pool of motor
vehicle retail installment sales contracts. Underlying sales
contracts are subject to prepayment, which may reduce the overall
return to certificate holders. Certificate holders may also
experience delays in payment or losses if the full amounts due on
underlying sales contracts are not realized because of
unanticipated costs of enforcing the contracts or because of
depreciation, damage or loss of the vehicles securing the
contracts, or other factors. Credit Card Receivable Securities
are backed by receivables from revolving credit card agreements.
An acceleration in cardholders' payment rates may adversely
affect the overall return to holders of such certificates.
Unlike most other asset-backed securities, Credit Card Receivable
Securities are unsecured obligations of the credit cardholders.
The Fund may also invest in other asset-backed securities that
may be developed in the future, provided that this Prospectus is
- 6 -
<PAGE>
revised before the Fund does so. The Fund will not invest more
than 15% of its net assets in asset-backed securities for which
there is no established market and other illiquid securities.
Mortgage-backed securities, when they are issued, have
stated maturities of up to forty years, depending on the length
of the mortgages underlying the securities. In practice,
unscheduled or early payments of principal on the underlying
mortgages may make the securities' effective maturity shorter
than this. A security based on a pool of forty-year mortgages
may have an average life of as short as two years. The average
life of asset-backed securities may also be substantially less
than the stated maturity of the contracts or receivables
underlying such securities. It is common industry practice to
estimate the average life of mortgage-backed and asset-backed
securities based on assumptions regarding prepayments. The Fund
will assume an average life based on the prepayment
characteristics of the underlying mortgages or other assets.
BANK DEBT INSTRUMENTS. The Fund may invest in certificates
of deposit, time deposits and bankers' acceptances issued by
commercial banks. Certificates of deposit are receipts from a
bank for funds deposited for a specified period of time at a
specified rate of return. Bankers' acceptances are time drafts
drawn on commercial banks by borrowers, usually in connection
with international commercial transactions. Time deposits are
generally similar to certificates of deposit, but are
uncertificated. The Fund will not invest more than 15% of its
net assets in time deposits maturing in greater than seven days
and other illiquid securities.
The Fund will not invest in any security issued by a
commercial bank unless (i) the bank has total assets of at least
$1 billion, or the equivalent in other currencies, or, in the
case of domestic banks which do not have total assets of at least
$1 billion, the aggregate investment made in any one such bank is
limited to $100,000 and the principal amount of such investment
is insured in full by the Federal Deposit Insurance Corporation,
(ii) in the case of U.S. banks, it is a member of the Federal
Deposit Insurance Corporation, and (iii) in the case of foreign
banks, the security is, in the opinion of the Adviser, of an
investment quality comparable with other debt securities which
may be purchased by the Fund. These limitations do not prohibit
investments in securities issued by foreign branches of U.S.
banks, provided such U.S. banks meet the foregoing requirements.
FOREIGN SECURITIES. The Fund may invest in U.S. dollar-
denominated fixed-income securities issued by foreign issuers,
foreign branches of U.S. banks and U.S. branches of foreign
banks. Investment in securities of foreign issuers and in
foreign branches of domestic banks involves somewhat different
- 7 -
<PAGE>
investment risks from those affecting securities of domestic
issuers. In addition to credit and market risks, investments in
foreign securities involve sovereign risk, which includes local
political and economic developments, potential nationalization,
withholding taxes on dividend or interest payments and currency
blockage. Foreign companies may have less public or less
reliable information available about them and may be subject to
less governmental regulation than U.S. companies. Securities of
foreign companies may be less liquid or more volatile than
securities of U.S. companies. The Fund will not invest more than
15% of its net assets in foreign securities which, in the opinion
of the Adviser, are not readily marketable and other illiquid
securities.
WHEN-ISSUED SECURITIES. The Fund may purchase securities on
a when-issued basis. Delivery of and payment for these
securities may occur a month or more after the date of the
purchase commitment. The securities are subject to market
fluctuations during this period and no interest accrues to the
Fund until settlement. The Fund maintains with the Custodian a
segregated account of cash, U.S. Government obligations or other
liquid high-grade debt obligations in an amount at least equal to
these commitments.
The Fund may also engage in the following investment
techniques, each of which may involve certain risks:
REPURCHASE AGREEMENTS. Repurchase agreements are
transactions by which the Fund purchases a security and
simultaneously commits to resell that security to the seller at
an agreed upon time and price, thereby determining the yield
during the term of the agreement. In the event of a bankruptcy
or other default of the seller of a repurchase agreement, the
Fund could experience both delays in liquidating the underlying
security and losses. To minimize these possibilities, the Fund
intends to enter into repurchase agreements only with its
Custodian, banks having assets in excess of $10 billion and the
largest and, in the Adviser's judgment, most creditworthy primary
U.S. Government securities dealers. The Fund will enter into
repurchase agreements which are collateralized by U.S. Government
obligations or other liquid high-grade debt obligations.
Collateral for repurchase agreements is held in safekeeping in
the customer-only account of the Fund's Custodian at the Federal
Reserve Bank. At the time the Fund enters into a repurchase
agreement, the value of the collateral, including accrued
interest, will equal or exceed the value of the repurchase
agreement and, in the case of a repurchase agreement exceeding
one day, the seller agrees to maintain sufficient collateral so
that the value of the underlying collateral, including accrued
interest, will at all times equal or exceed the value of the
repurchase agreement. The Fund will not enter into a repurchase
- 8 -
<PAGE>
agreement not terminable within seven days if, as a result
thereof, more than 15% of the value of the net assets of the Fund
would be invested in such securities and other illiquid
securities.
LENDING PORTFOLIO SECURITIES. The Fund may, from time to
time, lend securities on a short-term basis (i.e., for up to
seven days) to banks, brokers and dealers and receive as
collateral cash, U.S. Government obligations or irrevocable bank
letters of credit (or any combination thereof), which collateral
will be required to be maintained at all times in an amount equal
to at least 100% of the current value of the loaned securities
plus accrued interest. Although the Fund does have the ability
to make loans of all of its portfolio securities, it is the
present intention of the Trust, which may be changed without
shareholder approval, that such loans will not be made with
respect to the Fund if as a result the aggregate of all
outstanding loans exceeds one-third of the value of the Fund's
total assets. Securities lending will afford the Fund the
opportunity to earn additional income because the Fund will
continue to be entitled to the interest payable on the loaned
securities and also will either receive as income all or a
portion of the interest on the investment of any cash loan
collateral or, in the case of collateral other than cash, a fee
negotiated with the borrower. Such loans will be terminable at
any time. Loans of securities involve risks of delay in
receiving additional collateral or in recovering the securities
lent or even loss of rights in the collateral in the event of the
insolvency of the borrower of the securities. The Fund will have
the right to regain record ownership of loaned securities in
order to exercise beneficial rights. The Fund may pay reasonable
fees in connection with arranging such loans.
BORROWING AND PLEDGING. The Fund may borrow money from
banks (provided there is 300% asset coverage) or from banks or
other persons for temporary purposes (in an amount not exceeding
5% of the Fund's total assets). The Fund will not make any
borrowing which would cause its outstanding borrowings to exceed
one-third of its total assets. The Fund may pledge assets in
connection with borrowings but will not pledge more than one-
third of its total assets. Borrowing magnifies the potential for
gain or loss on the portfolio securities of the Fund and,
therefore, if employed, increases the possibility of fluctuation
in the Fund's net asset value. This is the speculative factor
known as leverage. The Fund's policies on borrowing and pledging
are fundamental policies which may not be changed without the
affirmative vote of a majority of its outstanding shares. It is
the Fund's present intention, which may be changed by the Board
of Trustees without shareholder approval, to borrow only for
emergency or extraordinary purposes and not for leverage.
- 9 -
<PAGE>
PORTFOLIO TURNOVER. The Fund does not intend to use short-
term trading as a primary means of achieving its investment
objective. However, the Fund's rate of portfolio turnover will
depend upon market and other conditions, and it will not be a
limiting factor when portfolio changes are deemed necessary or
appropriate by the Adviser. Although the annual portfolio
turnover rate of the Fund cannot be accurately predicted, it is
not expected to exceed 100%, but may be either higher or lower.
A 100% turnover rate would occur, for example, if all the
securities of the Fund were replaced once in a one-year period.
High turnover involves correspondingly greater commission
expenses and transaction costs and increases the possibility that
the Fund will not qualify as a regulated investment company under
Subchapter M of the Internal Revenue Code. The Fund will not
qualify as a regulated investment company if it derives 30% or
more of its gross income from gains (without offset for losses)
from the sale or other disposition of securities held for less
than three months. High turnover may result in the Fund
recognizing greater amounts of income and capital gains, which
would increase the amount of income and capital gains which the
Fund must distribute to shareholders in order to maintain its
status as a regulated investment company and to avoid the
imposition of federal income or excise taxes (see "Taxes").
HOW TO PURCHASE SHARES
Your initial investment in the Fund ordinarily must be at
least $2,000 ($1,000 for tax-deferred retirement plans). The
Fund may, in the Adviser's sole discretion, accept certain
accounts with less than the stated minimum initial investment.
Shares of the Fund are sold on a continuous basis at the net
asset value next determined after receipt of a purchase order by
the Trust. Purchase orders received by dealers prior to 4:00
p.m., Eastern time, on any business day and transmitted to the
Trust's transfer agent, MGF Service Corp., by 5:00 p.m., Eastern
time, that day are confirmed at the net asset value determined as
of the close of the regular session of trading on the New York
Stock Exchange on that day. It is the responsibility of dealers
to transmit properly completed orders so that they will be
received by MGF Service Corp. by 5:00 p.m., Eastern time.
Dealers may charge a fee for effecting purchase orders. Direct
purchase orders received by MGF Service Corp. by 4:00 p.m.,
Eastern time, are confirmed at that day's net asset value.
Direct investments received by MGF Service Corp. after 4:00 p.m.,
Eastern time, and orders received from dealers after 5:00 p.m.,
Eastern time, are confirmed at the net asset value next
determined on the following business day.
You may open an account and make an initial investment in
the Fund by sending a check and a completed account application
form to MGF Service Corp., P.O. Box 5354, Cincinnati, Ohio 45201-
5354. Checks should be made payable to the "GW&K Government
Securities Fund". An account application is included in this
Prospectus.
- 10 -
<PAGE>
The Trust mails you confirmations of all purchases or
redemptions of Fund shares. Certificates representing shares are
not issued. The Trust reserves the rights to limit the amount of
investments and to refuse to sell to any person.
Investors should be aware that the Fund's account
application contains provisions in favor of the Trust, MGF
Service Corp. and certain of their affiliates, excluding such
entities from certain liabilities (including, among others,
losses resulting from unauthorized shareholder transactions)
relating to the various services (for example, telephone
exchanges) made available to investors.
Should an order to purchase shares be canceled because your
check does not clear, you will be responsible for any resulting
losses or fees incurred by the Trust or MGF Service Corp. in the
transaction.
You may also purchase shares of the Fund by wire. Please
telephone MGF Service Corp. (Nationwide call toll-free 800-___-
____) for instructions. You should be prepared to give the name
in which the account is to be established, the address, telephone
number and taxpayer identification number for the account, and
the name of the bank which will wire the money.
Your investment will be made at the net asset value next
determined after your wire is received together with the account
information indicated above. If the Trust does not receive
timely and complete account information, there may be a delay in
the investment of your money and any accrual of dividends. To
make your initial wire purchase, you are required to mail a
completed account application to MGF Service Corp. Your bank may
impose a charge for sending your wire. There is presently no fee
for receipt of wired funds, but MGF Service Corp. reserves the
right to charge shareholders for this service upon thirty days'
prior notice to shareholders.
You may purchase and add shares to your account by mail or
by bank wire. Checks should be sent to MGF Service Corp., P.O.
Box 5354, Cincinnati, Ohio 45201-5354. Checks should be made
payable or endorsed to the "GW&K Government Securities Fund".
Bank wires should be sent as outlined above. You may also make
additional investments at the Trust's offices at 312 Walnut
Street, 21st Floor, Cincinnati, Ohio 45202. Each additional
purchase request must contain the name of your account and your
account number to permit proper crediting to your account. While
there is no minimum amount required for subsequent investments,
the Trust reserves the right to impose such a requirement.
- 11 -
<PAGE>
SHAREHOLDER SERVICES
Contact MGF Service Corp. (Nationwide call toll-free
800-___-____) for additional information about the shareholder
services described below.
Automatic Withdrawal Plan
If the shares in your account have a value of at least
$5,000, you may elect to receive, or may designate another person
to receive, monthly or quarterly payments in a specified amount
of not less than $50 each. There is no charge for this service.
Tax-Deferred Retirement Plans
Shares of the Fund are available for purchase in connection
with the following tax-deferred retirement plans:
-- Keogh Plans for self-employed individuals
-- Individual retirement account (IRA) plans for
individuals and their non-employed spouses
-- Qualified pension and profit-sharing plans for
employees, including those profit-sharing plans with a
401(k) provision
-- 403(b)(7) custodial accounts for employees of public
school systems, hospitals, colleges and other non-
profit organizations meeting certain requirements of
the Internal Revenue Code
Direct Deposit Plans
Shares of the Fund may be purchased through direct deposit
plans offered by certain employers and government agencies.
These plans enable a shareholder to have all or a portion of his
or her payroll or social security checks transferred
automatically to purchase shares of the Fund.
Automatic Investment Plan
You may make automatic monthly investments in the Fund from
your bank, savings and loan or other depository institution
account. The minimum initial and subsequent investments must be
$50 under the plan. MGF Service Corp. pays the costs associated
with these transfers, but reserves the right, upon thirty days'
written notice, to make reasonable charges for this service.
Your depository institution may impose its own charge for
debiting your account which would reduce your return from an
investment in the Fund.
- 12 -
<PAGE>
HOW TO REDEEM SHARES
You may redeem shares of the Fund on each day that the Trust
is open for business by sending a written request to the Fund.
The request must state the number of shares or the dollar amount
to be redeemed and your account number. The request must be
signed exactly as your name appears on the Trust's account
records. If the shares to be redeemed have a value of $25,000 or
more, your signature must be guaranteed by any eligible guarantor
institution, including banks, brokers and dealers, municipal
securities brokers and dealers, government securities brokers and
dealers, credit unions, national securities exchanges, registered
securities associations, clearing agencies and savings
associations.
Redemption requests may direct that the proceeds be wired
directly to your existing account in any commercial bank or
brokerage firm in the United States. If your instructions
request a redemption by wire, you will be charged an $8
processing fee by the Trust's Custodian. The Trust reserves the
right, upon thirty days' written notice, to change the processing
fee. All charges will be deducted from your account by
redemption of shares in your account. Your bank or brokerage
firm may also impose a charge for processing the wire. In the
event that wire transfer of funds is impossible or impractical,
the redemption proceeds will be sent by mail to the designated
account.
You may also redeem shares by placing a wire redemption
request through a securities broker or dealer. Unaffiliated
broker-dealers may impose a fee on the shareholder for this
service. You will receive the net asset value per share next
determined after receipt by the Trust or its agent of your wire
redemption request. It is the responsibility of broker-dealers
to properly transmit wire redemption orders.
You will receive the net asset value per share next
determined after receipt by MGF Service Corp. of your redemption
request in the form described above. Payment is made within
three business days after tender in such form, provided that
payment in redemption of shares purchased by check will be
effected only after the check has been collected, which may take
up to fifteen days from the purchase date. To eliminate this
delay, you may purchase shares of the Fund by certified check or
wire. At the discretion of the Trust or MGF Service Corp.,
corporate investors and other associations may be required to
furnish an appropriate certification authorizing redemptions to
ensure proper authorization.
The Trust reserves the right to suspend the right of
redemption or to postpone the date of payment for more than three
business days under unusual circumstances as determined by the
Securities and Exchange Commission.
- 13 -
<PAGE>
EXCHANGE PRIVILEGE
Shares of the Fund may be exchanged for shares of the other
series of the Trust, the GW&K Equity Fund, at net asset value.
Shares of the Fund may also be exchanged for shares at net asset
value of the Short Term Government Income Fund (a series of
Midwest Trust), which invests in short-term U.S. Government
obligations backed by the "full faith and credit" of the United
States and seeks high current income consistent with protection
of capital. Shares of the Short Term Government Income Fund
acquired via exchange may be re-exchanged for shares of the Fund
at net asset value.
You may request an exchange by sending a written request to
MGF Service Corp. The request must be signed exactly as your
name appears on the Trust's account records. Exchanges may also
be requested by telephone. If you are unable to execute your
transaction by telephone (for example, during times of unusual
market activity), consider requesting your exchange by mail or by
visiting the Trust's offices at 222 Berkeley Street, Boston,
Massachusetts 02116. An exchange will be effected at the next
determined net asset value after receipt of a request by MGF
Service Corp.
Exchanges may only be made for shares of funds then offered
for sale in your state of residence and are subject to the
applicable minimum initial investment requirements. The exchange
privilege may be modified or terminated by the Board of Trustees
upon 60 days' prior notice to shareholders. An exchange results
in a sale of fund shares, which may cause you to recognize a
capital gain or loss. Before making an exchange, contact MGF
Service Corp. to obtain a current prospectus and more information
about exchanges among the funds.
DIVIDENDS AND DISTRIBUTIONS
All of the net investment income of the Government
Securities Fund is expected to be declared as a dividend to
shareholders of record on each business day of the Trust and paid
monthly. The Fund expects to distribute any net realized long-
term capital gains at least once each year. Management will
determine the timing and frequency of the distributions of any
net realized short-term capital gains.
Distributions are paid according to one of the following
options:
Share Option - income distributions and capital gains
distributions reinvested in additional
shares.
- 14 -
<PAGE>
Income Option - income distributions and short-term
capital gains distributions paid in
cash; long-term capital gains
distributions reinvested in additional
shares.
Cash Option - income distributions and capital gains
distributions paid in cash.
You should indicate your choice of option on your
application. If no option is specified on your application,
distributions will automatically be reinvested in additional
shares. All distributions will be based on the net asset value
in effect on the payable date.
If you select the Income Option or the Cash Option and the
U.S. Postal Service cannot deliver your checks or if your checks
remain uncashed for six months, your dividends may be reinvested
in your account at the then current net asset value and your
account will be converted to the Share Option.
TAXES
The Fund intends to qualify for the special tax treatment
afforded a "regulated investment company" under Subchapter M of
the Internal Revenue Code so that it does not pay federal taxes
on income and capital gains distributed to shareholders. The
Fund intends to distribute substantially all of its net
investment income and any realized capital gains to its
shareholders. Distributions of net investment income and net
realized short-term capital gains, if any, are taxable to
investors as ordinary income. Since the investment income of the
Fund is derived from interest rather than dividends, no portion
of such distributions is eligible for the dividends received
deduction available to corporations. Distributions of net
realized long-term capital gains are taxable as long-term capital
gains regardless of how long you have held your Fund shares.
Redemptions of shares of the Fund are taxable events on which a
shareholder may realize a gain or loss.
The Fund will mail to each of its shareholders a statement
indicating the amount and federal income tax status of all
distributions made during the year. In addition to federal
taxes, shareholders of the Fund may be subject to state and local
taxes on distributions. Shareholders should consult their tax
advisors about the tax effect of distributions and withdrawals
from the Fund and the use of the Automatic Withdrawal Plan and
the Exchange Privilege. The tax consequences described in this
section apply whether distributions are taken in cash or
reinvested in additional shares. See "Taxes" in the Statement of
Additional Information for further information.
- 15 -
<PAGE>
OPERATION OF THE FUND
The Fund is a diversified series of Gannett Welsh & Kotler
Investment Trust, an open-end management investment company
organized as a Massachusetts business trust on April 30, 1996.
The Board of Trustees supervises the business activities of the
Trust. Like other mutual funds, the Trust retains various
organizations to perform specialized services for the Fund.
The Trust retains Gannett Welsh & Kotler, Inc., 222 Berkeley
Street, Boston, Massachusetts (the "Adviser"), to manage the
Fund's investments. The Adviser is an independent investment
counsel firm that has advised individual and institutional
clients since 1974. The Fund pays the Adviser a fee at the
annual rate of .75% of the average value of its daily net assets.
The rate of the advisory fee paid by the Fund is higher than that
paid by most other mutual funds.
As of the date of this Prospectus, the Adviser is the sole
shareholder of the Fund.
Jeanne M. Skettino, a Principal and Senior Vice President of
the Adviser, is primarily responsible for managing the portfolio
of the Fund. Ms. Skettino has been employed by the Adviser since
1992. Previously, she was a managing consultant in the Financial
Consulting division and a product manager at Logica North
America, a software products and consulting firm.
In addition to the advisory fee, the Fund is responsible for
the payment of all operating expenses, including fees and
expenses in connection with membership in investment company
organizations, brokerage fees and commissions, legal, auditing
and accounting expenses, expenses of registering shares under
federal and state securities laws, expenses related to the
distribution of the Fund's shares (see "Distribution Plan"),
insurance expenses, taxes or governmental fees, fees and expenses
of the custodian, transfer agent, administrator, and accounting
and pricing agent of the Fund, fees and expenses of members of
the Board of Trustees who are not interested persons of the
Trust, the cost of preparing and distributing prospectuses,
statements, reports and other documents to shareholders, expenses
of shareholders' meetings and proxy solicitations, and such
extraordinary or non-recurring expenses as may arise, including
litigation to which the Fund may be a party and indemnification
of the Trust's officers and Trustees with respect thereto.
The Trust has retained MGF Service Corp., P.O. Box 5354,
Cincinnati, Ohio, to serve as the Fund's transfer agent, dividend
paying agent and shareholder service agent. MGF Service Corp. is
a subsidiary of Leshner Financial, Inc., of which Robert H.
Leshner is the controlling shareholder.
- 16 -
<PAGE>
MGF Service Corp. also provides accounting and pricing
services to the Fund. MGF Service Corp. receives a monthly fee
from the Fund for calculating daily net asset value per share and
maintaining such books and records as are necessary to enable it
to perform its duties.
In addition, MGF Service Corp. has been retained to provide
administrative services to the Fund. In this capacity, MGF
Service Corp. supplies executive, administrative and regulatory
services, supervises the preparation of tax returns, and
coordinates the preparation of reports to shareholders and
reports to and filings with the Securities and Exchange
Commission and state securities authorities. The Fund pays MGF
Service Corp. a fee, payable monthly, for these administrative
services at the annual rate of .15% of the average value of its
daily net assets up to $50,000,000, .125% of such assets from
$50,000,000 to $100,000,000 and .10% of such assets in excess of
$100,000,000; provided, however, that the minimum fee is $1,000
per month.
Consistent with the Rules of Fair Practice of the National
Association of Securities Dealers, Inc., and subject to its
objective of seeking best execution of portfolio transactions,
the Adviser may consider sales of shares of the Fund as a factor
in the selection of brokers and dealers to execute portfolio
transactions of the Fund.
Shares of the Fund have equal voting rights and liquidation
rights, and are voted in the aggregate and not by Fund except in
matters where a separate vote is required by the Investment
Company Act of 1940 or when the matter affects only the interest
of a particular Fund. When matters are submitted to shareholders
for a vote, each shareholder is entitled to one vote for each
full share owned and fractional votes for fractional shares
owned. The Trust does not normally hold annual meetings of
shareholders. The Trustees shall promptly call and give notice
of a meeting of shareholders for the purpose of voting upon
removal of any Trustee when requested to do so in writing by
shareholders holding 10% or more of the Trust's outstanding
shares. The Trust will comply with the provisions of Section
16(c) of the Investment Company Act of 1940 in order to
facilitate communications among shareholders.
DISTRIBUTION PLAN
Pursuant to Rule 12b-1 under the Investment Company Act of
1940, the Fund has adopted a plan of distribution (the "Plan")
under which the Fund may directly incur or reimburse the Adviser
for certain distribution-related expenses, including: payments to
securities dealers and others who are engaged in the sale of
shares of the Fund and who may be advising investors regarding
- 17 -
<PAGE>
the purchase, sale or retention of such shares; expenses of
maintaining personnel who engage in or support distribution of
shares or who render shareholder support services not otherwise
provided by MGF Service Corp.; expenses of formulating and
implementing marketing and promotional activities, including
direct mail promotions and mass media advertising; expenses of
preparing, printing and distributing sales literature and
prospectuses and statements of additional information and reports
for recipients other than existing shareholders of the Fund;
expenses of obtaining such information, analyses and reports with
respect to marketing and promotional activities as the Trust may,
from time to time, deem advisable; and, any other expenses
related to the distribution of the Fund's shares.
The annual limitation for payment of expenses pursuant to
the Plan is .25% of the Fund's average daily net assets.
Unreimbursed expenditures will not be carried over from year to
year. In the event the Plan is terminated by the Fund in
accordance with its terms, the Fund will not be required to make
any payments for expenses incurred by the Adviser after the date
the Plan terminates.
Pursuant to the Plan, the Fund may also make payments to
banks or other financial institutions that provide shareholder
services and administer shareholder accounts. The Glass-Steagall
Act prohibits banks from engaging in the business of
underwriting, selling or distributing securities. Although the
scope of this prohibition under the Glass-Steagall Act has not
been clearly defined by the courts or appropriate regulatory
agencies, management of the Trust believes that the Glass-
Steagall Act should not preclude a bank from providing such
services. However, state securities laws on this issue may
differ from the interpretations of federal law expressed herein
and banks and financial institutions may be required to register
as dealers pursuant to state law. If a bank were prohibited from
continuing to perform all or a part of such services, management
of the Trust believes that there would be no material impact on
the Fund or its shareholders. Banks may charge their customers
fees for offering these services to the extent permitted by
regulatory authorities, and the overall return to those
shareholders availing themselves of the bank services will be
lower than to those shareholders who do not. The Fund may from
time to time purchase securities issued by banks which provide
such services; however, in selecting investments for the Funds,
no preference will be shown for such securities.
CALCULATION OF SHARE PRICE
On each day that the Trust is open for business, the share
price (net asset value) of the shares of the Fund is determined
as of the close of the regular session of trading on the New York
- 18 -
<PAGE>
Stock Exchange, currently 4:00 p.m., Eastern time. The Trust is
open for business on each day the New York Stock Exchange is open
for business and on any other day when there is sufficient
trading in the Fund's investments that its net asset value might
be materially affected. The net asset value per share of the
Fund is calculated by dividing the sum of the value of the
securities held by the Fund plus cash or other assets minus all
liabilities (including estimated accrued expenses) by the total
number of shares outstanding of the Fund, rounded to the nearest
cent.
The Fund's portfolio securities for which market quotations
are readily available are valued at their most recent bid price
as obtained from one or more of the major market makers for such
securities. Securities (and other assets) for which market
quotations are not readily available are valued at their fair
value as determined in good faith in accordance with consistently
applied procedures established by and under the general
supervision of the Board of Trustees. The net asset value per
share of the Fund will fluctuate with the value of the securities
it holds.
PERFORMANCE INFORMATION
From time to time, the Fund may advertise its "average
annual total return." The Fund may also advertise "yield." Both
yield and average annual total return figures are based on
historical earnings and are not intended to indicate future
performance.
The "average annual total return" of the Fund refers to the
average annual compounded rates of return over the most recent 1,
5 and 10 year periods or, where the Fund has not been in
operation for such period, over the life of the Fund (which
periods will be stated in the advertisement) that would equate an
initial amount invested at the beginning of a stated period to
the ending redeemable value of the investment. The calculation
of "average annual total return" assumes the reinvestment of all
dividends and distributions. The Fund may also advertise total
return (a "nonstandardized quotation") which is calculated
differently from "average annual total return." A
nonstandardized quotation of total return may be a cumulative
return which measures the percentage change in the value of an
account between the beginning and end of a period, assuming no
activity in the account other than reinvestment of dividends and
capital gains distributions. A nonstandardized quotation of
total return may also indicate average annual compounded rates of
return over periods other than those specified for "average
annual total return." A nonstandardized quotation of total
return will always be accompanied by the Fund's "average annual
total return" as described above.
- 19 -
<PAGE>
The "yield" of the Fund is computed by dividing the net
investment income per share earned during a thirty-day (or one
month) period stated in the advertisement by the net asset value
per share on the last day of the period (using the average number
of shares entitled to receive dividends). The yield formula
assumes that net investment income is earned and reinvested at a
constant rate and annualized at the end of a six-month period.
From time to time the Fund may advertise its performance
rankings as published by recognized independent mutual fund
statistical services such as Lipper Analytical Services,
Inc.("Lipper"), or by publications of general interest such as
Forbes, Money, The Wall Street Journal, Business Week, Barron's,
Fortune or Morningstar Mutual Fund Values. The Fund may also
compare its performance to that of other selected mutual funds,
averages of the other mutual funds within its category as
determined by Lipper, or recognized indicators. In connection
with a ranking, the Fund may provide additional information, such
as the particular category of funds to which the ranking relates,
the number of funds in the category, the criteria upon which the
ranking is based, and the effect of fee waivers and/or expense
reimbursements, if any. The Fund may also present its
performance and other investment characteristics, such as
volatility or a temporary defensive posture, in light of the
Adviser's view of current or past market conditions or historical
trends.
- 20 -
<PAGE>
GANNETT WELSH & KOTLER INVESTMENT TRUST
222 Berkeley Street
Boston, Massachusetts 02116
Nationwide: (Toll-Free) 800-___-____
BOARD OF TRUSTEES
Harold G. Kotler
Benjamin H. Gannett
- -------------------
- -------------------
- -------------------
INVESTMENT ADVISER
GANNETT WELSH & KOTLER, INC.
222 Berkeley Street
Boston, Massachusetts 02116
(617) 236-8900
TRANSFER AGENT
MGF SERVICE CORP.
P.O. Box 5354
Cincinnati, Ohio 45201-5354
Shareholder Service
Nationwide: (Toll-Free) 800-___-____
Rate Line
Nationwide: (Toll-Free) 800-852-4052
TABLE OF CONTENTS
Expense Information.....................................................
Investment Objective, Investment Policies and
Risk Considerations...................................................
How to Purchase Shares..................................................
Shareholder Services....................................................
How to Redeem Shares....................................................
Exchange Privilege......................................................
Dividends and Distributions.............................................
Taxes...................................................................
Operation of the Fund...................................................
Distribution Plan.......................................................
Calculation of Share Price..............................................
Performance Information.................................................
- -----------------------------------------------------------------
- 21 -
<PAGE>
No person has been authorized to give any information or to
make any representations, other than those contained in this
Prospectus, in connection with the offering contained in this
Prospectus, and if given or made, such information or
representations must not be relied upon as being authorized by
the Trust. This Prospectus does not constitute an offer by the
Trust to sell shares in any State to any person to whom it is
unlawful for the Trust to make such offer in such State.
- 22 -
<PAGE>
<PAGE>
GANNETT WELSH & KOTLER INVESTMENT TRUST
STATEMENT OF ADDITIONAL INFORMATION
_______, 1996
GW&K Equity Fund
GW&K Government Securities Fund
This Statement of Additional Information is not a
prospectus. It should be read in conjunction with the Prospectus
of the applicable Fund of Gannett Welsh & Kotler Investment Trust
dated _______, 1996. A copy of a Fund's Prospectus can be
obtained by writing the Trust at 222 Berkeley Street, Boston,
Massachusetts 02116, or by calling the Trust nationwide toll-free
800-___-____.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
Gannett Welsh & Kotler Investment Trust
222 Berkeley Street
Boston, Massachusetts 02116
TABLE OF CONTENTS
PAGE
THE TRUST. . . . . . . . . . . . . . . . . . . . . . . . . .
DEFINITIONS, POLICIES AND RISK CONSIDERATIONS. . . . . . . .
QUALITY RATINGS OF CORPORATE BONDS AND PREFERRED STOCKS. . .
INVESTMENT LIMITATIONS . . . . . . . . . . . . . . . . . . .
TRUSTEES AND OFFICERS. . . . . . . . . . . . . . . . . . . .
THE INVESTMENT ADVISER . . . . . . . . . . . . . . . . . . .
DISTRIBUTION PLAN. . . . . . . . . . . . . . . . . . . . . .
SECURITIES TRANSACTIONS. . . . . . . . . . . . . . . . . . .
PORTFOLIO TURNOVER . . . . . . . . . . . . . . . . . . . . .
CALCULATION OF SHARE PRICE . . . . . . . . . . . . . . . . .
TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . .
REDEMPTION IN KIND . . . . . . . . . . . . . . . . . . . . .
HISTORICAL PERFORMANCE INFORMATION . . . . . . . . . . . . .
CUSTODIAN. . . . . . . . . . . . . . . . . . . . . . . . . .
AUDITORS . . . . . . . . . . . . . . . . . . . . . . . . . .
MGF SERVICE CORP . . . . . . . . . . . . . . . . . . . . . .
STATEMENTS OF ASSETS AND LIABILITIES . . . . . . . . . . . .
- 2 -
<PAGE>
THE TRUST
Gannett Welsh & Kotler Investment Trust (the "Trust") was
organized as a Massachusetts business trust on April 30, 1996.
The Trust currently offers two series of shares to investors: the
GW&K Equity Fund and the GW&K Government Securities Fund
(referred to individually as a "Fund" and collectively as the
"Funds"). Each Fund has its own investment objective and
policies.
Each share of a Fund represents an equal proportionate
interest in the assets and liabilities belonging to that Fund
with each other share of that Fund and is entitled to such
dividends and distributions out of the income belonging to the
Fund as are declared by the Trustees. The shares do not have
cumulative voting rights or any preemptive or conversion rights,
and the Trustees have the authority from time to time to divide
or combine the shares of any Fund into a greater or lesser number
of shares of that Fund so long as the proportionate beneficial
interest in the assets belonging to that Fund and the rights of
shares of any other Fund are in no way affected. In case of any
liquidation of a Fund, the holders of shares of the Fund being
liquidated will be entitled to receive as a class a distribution
out of the assets, net of the liabilities, belonging to that
Fund. Expenses attributable to any Fund are borne by that Fund.
Any general expenses of the Trust not readily identifiable as
belonging to a particular Fund are allocated by or under the
direction of the Trustees in such manner as the Trustees
determine to be fair and equitable. Generally, the Trustees
allocate such expenses on the basis of relative net assets or
number of shareholders. No shareholder is liable to further
calls or to assessment by the Trust without his express consent.
Under Massachusetts law, under certain circumstances,
shareholders of a Massachusetts business trust could be deemed to
have the same type of personal liability for the obligations of
the Trust as does a partner of a partnership. However, numerous
investment companies registered under the Investment Company Act
of 1940 have been formed as Massachusetts business trusts and the
Trust is not aware of any instance where such result has
occurred. In addition, the Agreement and Declaration of Trust
disclaims shareholder liability for acts or obligations of the
Trust and requires that notice of such disclaimer be given in
each agreement, obligation or instrument entered into or executed
by the Trust or the Trustees. The Agreement and Declaration of
Trust also provides for the indemnification out of the Trust
property for all losses and expenses of any shareholder held
personally liable for the obligations of the Trust. Moreover, it
provides that the Trust will, upon request, assume the defense of
any claim made against any shareholder for any act or obligation
of the Trust and satisfy any judgment thereon. As a result, and
- 3 -
<PAGE>
particularly because the Trust assets are readily marketable and
ordinarily substantially exceed liabilities, management believes
that the risk of shareholder liability is slight and limited to
circumstances in which the Trust itself would be unable to meet
its obligations. Management believes that, in view of the above,
the risk of personal liability is remote.
It is anticipated that, prior to the offering of shares of
the GW&K Equity Fund to the public, the Fund will exchange its
shares for portfolio securities of GW&K Equity Fund, L.P., a
Delaware limited partnership (the "Partnership"), after which the
Partnership would dissolve and distribute the Fund shares
received pro rata to its partners, along with cash received from
the sale of portfolio securities, if any, of the Partnership not
acquired by the Fund. Following the exchange transaction, the
partners of the Partnership will constitute all of the holders of
Fund shares, except for shares representing seed capital
contributed to the Fund by the Adviser.
DEFINITIONS, POLICIES AND RISK CONSIDERATIONS
A more detailed discussion of some of the terms used and
investment policies described in the Prospectuses (see
"Investment Objectives, Investment Policies and Risk
Considerations") appears below:
Majority. As used in the Prospectuses and this Statement of
Additional Information, the term "majority" of the outstanding
shares of the Trust (or of either Fund) means the lesser of (1)
67% or more of the outstanding shares of the Trust (or the
applicable Fund) present at a meeting, if the holders of more
than 50% of the outstanding shares of the Trust (or the
applicable Fund) are present or represented at such meeting or
(2) more than 50% of the outstanding shares of the Trust (or the
applicable Fund).
Commercial Paper. Commercial paper consists of short-term
(usually from one to two hundred seventy days) unsecured
promissory notes issued by corporations in order to finance their
current operations. Each Fund will only invest in commercial
paper rated in one of the three highest categories by either
Moody's Investors Service, Inc. (Prime-1, Prime-2 or Prime-3) or
Standard & Poor's Ratings Group (A-1, A-2 or A-3), or which, in
the opinion of the Adviser, is of equivalent investment quality.
Certain notes may have floating or variable rates. Variable and
floating rate notes with a demand notice period exceeding seven
days will be subject to each Fund's restriction on illiquid
investments (see "Investment Limitations") unless, in the
judgment of the Adviser, such note is liquid.
- 4 -
<PAGE>
The rating of Prime-1 is the highest commercial paper rating
assigned by Moody's Investors Service, Inc. Among the factors
considered by Moody's in assigning ratings are the following:
valuation of the management of the issuer; economic evaluation of
the issuer's industry or industries and an appraisal of
speculative-type risks which may be inherent in certain areas;
evaluation of the issuer's products in relation to competition
and customer acceptance; liquidity; amount and quality of long-
term debt; trend of earnings over a period of 10 years; financial
strength of the parent company and the relationships which exist
with the issuer; and, recognition by the management of
obligations which may be present or may arise as a result of
public interest questions and preparations to meet such
obligations. These factors are all considered in determining
whether the commercial paper is rated Prime-1, Prime-2 or Prime-
3. Commercial paper rated A-1 (highest quality) by Standard &
Poor's Ratings Group has the following characteristics: liquidity
ratios are adequate to meet cash requirements; long-term senior
debt is rated "A" or better, although in some cases "BBB" credits
may be allowed; the issuer has access to at least two additional
channels of borrowing; basic earnings and cash flow have an
upward trend with allowance made for unusual circumstances;
typically, the issuer's industry is well established and the
issuer has a strong position within the industry; and, the
reliability and quality of management are unquestioned. The
relative strength or weakness of the above factors determines
whether the issuer's commercial paper is rated A-1, A-2, or A-3.
Bank Debt Instruments. Bank debt instruments in which the
Funds may invest consist of certificates of deposit, bankers'
acceptances and time deposits issued by national banks and state
banks, trust companies and mutual savings banks, or banks or
institutions the accounts of which are insured by the Federal
Deposit Insurance Corporation or the Federal Savings and Loan
Insurance Corporation. Certificates of deposit are negotiable
certificates evidencing the indebtedness of a commercial bank to
repay funds deposited with it for a definite period of time
(usually from fourteen days to one year) at a stated or variable
interest rate. Bankers' acceptances are credit instruments
evidencing the obligation of a bank to pay a draft which has been
drawn on it by a customer, which instruments reflect the
obligation both of the bank and of the drawer to pay the face
amount of the instrument upon maturity. Time deposits are non-
negotiable deposits maintained in a banking institution for a
specified period of time at a stated interest rate. Each Fund
will not invest in time deposits maturing in more than seven days
if, as a result thereof, more than 15% of the value of its net
assets would be invested in such securities and other illiquid
securities.
- 5 -
<PAGE>
Mortgage-Backed and Asset-Backed Securities. The average
life of mortgage-backed securities varies with the maturities of
the underlying mortgage instruments (generally up to 30 years)
and with the extent of prepayments of the mortgages themselves.
Any such prepayments are passed through to the certificate
holder, reducing the stream of future payments. Prepayments tend
to rise in periods of falling interest rates, decreasing the
average life of the certificate and generating cash which must be
invested in a lower interest rate environment. This could limit
the appreciation potential of the certificates when compared to
similar debt obligations which may not be paid down at will. The
coupon rates of mortgage-backed securities are lower than the
interest rate on the underlying mortgages by the amount of fees
paid to the issuing agencies, usually approximately 1/2 of 1%.
When prevailing interest rates increase, the value of the
mortgage-backed securities may decrease, as do other non-
redeemable debt securities. However, when interest rates
decline, the value of mortgage-backed securities may not rise on
a comparable basis with other non-redeemable debt securities.
Mortgage-backed securities include certificates issued by
the Federal National Mortgage Association, the Federal Home Loan
Mortgage Corporation and the Government National Mortgage
Association. The Federal National Mortgage Association ("FNMA")
is a government sponsored corporation owned entirely by private
stockholders. The guarantee of payments under these instruments
is that of FNMA only. They are not backed by the full faith and
credit of the U.S. Treasury but the U.S. Treasury may extend
credit to FNMA through discretionary purchases of its securities.
The average life of the mortgages backing newly issued FNMA
Certificates is approximately 10 years. The Federal Home Loan
Mortgage Corporation ("FHLMC") is a corporate instrumentality of
the U.S. Government whose stock is owned by the Federal Home Loan
Banks. Certificates issued by FHLMC represent interests in
mortgages from its portfolio. FHLMC guarantees payments under
its certificates but this guarantee is not backed by the full
faith and credit of the United States and FHLMC does not have
authority to borrow from the U.S. Treasury. The average life of
the mortgages backing newly issued FHLMC Certificates is
approximately 10 years. The Government National Mortgage
Association ("GNMA") Certificates represent pools of mortgages
insured by the Federal Housing Administration or the Farmers Home
Administration or guaranteed by the Veterans Administration. The
guarantee of payments under GNMA Certificates is backed by the
full faith and credit of the United States. The average life of
the mortgages backing newly issued GNMA Certificates is
approximately 12 years.
The Government Securities Fund may also purchase mortgage-
backed securities issued by financial institutions, mortgage
banks, and securities broker-dealers (or affiliates of such
institutions established to issue these securities) in the form
- 6 -
<PAGE>
of collateralized mortgage obligations ("CMOs"). CMOs are
obligations fully collateralized directly or indirectly by a pool
of mortgages on which payments of principal and interest are
passed through to the holders of the CMOs, although not
necessarily on a pro rata basis, on the same schedule as they are
received. The most common structure of a CMO contains four
classes of securities; the first three pay interest at their
stated rates beginning with the issue date, the final one is
typically an accrual class (or Z bond). The cash flows from the
underlying mortgage collateral are applied first to pay interest
and then to retire securities. The classes of securities are
retired sequentially. All principal payments are directed first
to the shortest-maturity class (or A bonds). When those
securities are completely retired, all principal payments are
then directed to the next-shortest-maturity security (or B bond).
This process continues until all of the classes have been paid
off. Because the cash flow is distributed sequentially instead
of pro rata as with pass-through securities, the cash flows and
average lives of CMOs are more predictable, and there is a period
of time during which the investors in the longer-maturity classes
receive no principal paydowns.
Commercial banks, savings and loan institutions, private
mortgage insurance companies, mortgage banks, and other secondary
market issuers also create pass-through pools of conventional
residential mortgage loans. In addition, such issuers may be the
originators and/or servicers of the underlying mortgage loans as
well as the guarantors of the mortgage-backed securities. Pools
created by non-governmental issuers generally offer a higher rate
of interest than government and government-related pools because
of the absence of direct or indirect government or agency
guarantees. Timely payment of interest and principal of these
pools may be supported by various forms of insurance or
guarantees, including individual loan, title, pool and hazard
insurance, and letters of credit. The insurance and guarantees
are issued by governmental entities, private insurers, and the
mortgage poolers. Such insurance, guarantees, and the
creditworthiness of the issuers thereof will be considered in
determining whether a mortgage-backed security meets the
Government Securities Fund's investment quality standards. There
can be no assurance that the private insurers or guarantors can
meet their obligations under the insurance policies or guarantee
arrangements. The Fund may buy mortgage-backed securities
without insurance or guarantees, if the Adviser determines that
the securities meet the Fund's quality standards. The Fund will
not purchase mortgage-backed securities or any other assets
which, in the opinion of the Adviser, are illiquid if, as a
result, more than 15% of the value of the Fund's net assets will
be illiquid. The Adviser will, consistent with the Fund's
investment objective, policies, and quality standards, consider
making investments in new types of mortgage-backed securities as
such securities are developed and offered to investors.
- 7 -
<PAGE>
The Government Securities Fund may also purchase other
asset-backed securities (unrelated to mortgage loans) such as
Certificates for Automobile ReceivablesSM ("CARS"SM) and Credit
Card Receivable Securities. CARS represent undivided fractional
interests in a trust whose assets consist of a pool of motor
vehicle retail installment sales contracts and security interests
in the vehicles securing the contracts. Payments of principal
and interest on CARS are "passed-through" monthly to certificate
holders, and are guaranteed up to certain amounts by a letter of
credit issued by a financial institutional unaffiliated with the
trustee or originator of the trust. Underlying sales contracts
are subject to prepayment, which may reduce the overall return to
certificate holders. Certificate holders may also experience
delays in payment or losses on CARS if the full amounts due on
underlying sales contracts are not realized by the trust because
of unanticipated legal or administrative costs of enforcing the
contracts, or because of depreciation, damage, or loss of the
vehicles securing the contracts, or other factors. Credit Card
Receivable Securities are backed by receivables from revolving
credit card agreements. Credit balances on revolving credit card
agreements ("Accounts") are generally paid down more rapidly than
are automobile contracts. Most of the Credit Card Receivable
Securities issued publicly to date have been pass-through
certificates. In order to lengthen the maturity of Credit Card
Receivable Securities, most such securities provide for a fixed
period during which only interest payments on the underlying
Accounts are passed through to the security holder and principal
payments received on such Accounts are used to fund the transfer
to the pool of assets supporting the securities of additional
credit card charges made on an Account. The initial fixed period
usually may be shortened upon the occurrence of specified events
which signal a potential deterioration in the quality of the
assets backing the security, such as the imposition of a cap on
interest rates. The ability of the issuer to extend the life of
an issue of Credit Card Receivable Securities thus depends upon
the continued generation of additional principal amounts in the
underlying Accounts and the non-occurrence of specified events.
The Internal Revenue Code of 1986, which phased out the deduction
for consumer interest, as well as competitive and general
economic factors, could adversely affect the rate at which new
receivables are created in an Account and conveyed to an issuer,
shortening the expected weighted average life of the related
security, and reducing its yield. An acceleration in
cardholders' payment rates or any other event which shortens the
period during which additional credit card charges on an Account
may be transferred to the pool of assets supporting the related
security could have a similar effect on the weighted average life
and yield. Credit card holders are entitled to the protection of
state and federal consumer credit laws, many of which give such
holder the right to set off certain amounts against balances owed
on the credit card, thereby reducing amounts paid on Accounts.
In addition, unlike most other asset-backed securities, Accounts
are unsecured obligations of the cardholder.
- 8 -
<PAGE>
STRIPS. STRIPS are U.S. Treasury bills, notes, and bonds
that have been issued without interest coupons or stripped of
their unmatured interest coupons, interest coupons that have been
stripped from such U.S. Treasury securities, and receipts or
certificates representing interests in such stripped U.S.
Treasury securities and coupons. A STRIPS security pays no
interest in cash to its holder during its life although interest
is accrued for federal income tax purposes. Its value to an
investor consists of the difference between its face value at the
time of maturity and the price for which it was acquired, which
is generally an amount significantly less than its face value.
Investing in STRIPS may help to preserve capital during periods
of declining interest rates. For example, if interest rates
decline, GNMA Certificates owned by a Fund which were purchased
at greater than par are more likely to be prepaid, which would
cause a loss of principal. In anticipation of this, a Fund might
purchase STRIPS, the value of which would be expected to increase
when interest rates decline.
STRIPS do not entitle the holder to any periodic payments of
interest prior to maturity. Accordingly, such securities usually
trade at a deep discount from their face or par value and will be
subject to greater fluctuations of market value in response to
changing interest rates than debt obligations of comparable
maturities which make periodic distributions of interest. On the
other hand, because there are no periodic interest payments to be
reinvested prior to maturity, STRIPS eliminate the reinvestment
risk and lock in a rate of return to maturity. Current federal
tax law requires that a holder of a STRIPS security accrue a
portion of the discount at which the security was purchased as
income each year even though the Fund received no interest
payment in cash on the security during the year.
When-Issued Securities and Securities Purchased On a To-Be-
Announced Basis. The Government Securities Fund may purchase
debt obligations on a "when-issued" or "to-be-announced" basis.
The Fund will only make commitments to purchase securities on a
when-issued or to-be-announced ("TBA") basis with the intention
of actually acquiring the securities. In addition, the Fund may
purchase securities on a when-issued or TBA basis only if
delivery and payment for the securities takes place within 120
days after the date of the transaction. In connection with these
investments, the Fund will direct the Custodian to place cash,
U.S. Government obligations or other liquid high-grade debt
obligations in a segregated account in an amount sufficient to
make payment for the securities to be purchased. When a
segregated account is maintained because the Fund purchases
securities on a when-issued or TBA basis, the assets deposited in
the segregated account will be valued daily at market for the
purpose of determining the adequacy of the securities in the
account. If the market value of such securities declines,
- 9 -
<PAGE>
additional cash or securities will be placed in the account on a
daily basis so that the market value of the account will equal
the amount of the Fund's commitments to purchase securities on a
when-issued or TBA basis. To the extent funds are in a
segregated account, they will not be available for new investment
or to meet redemptions. Securities purchased on a when-issued or
TBA basis and the securities held in the Fund's portfolio are
subject to changes in market value based upon changes in the
level of interest rates (which will generally result in all of
those securities changing in value in the same way, i.e., all
those securities experiencing appreciation when interest rates
decline and depreciation when interest rates rise). Therefore,
if in order to achieve higher returns, the Fund remains
substantially fully invested at the same time that it has
purchased securities on a when-issued or TBA basis, there will be
a possibility that the market value of the Fund's assets will
experience greater fluctuation. The purchase of securities on a
when-issued or TBA basis may involve a risk of loss if the
broker-dealer selling the securities fails to deliver after the
value of the securities has risen.
When the time comes for the Fund to make payment for
securities purchased on a when-issued or TBA basis, the Fund will
do so by using then available cash flow, by sale of the
securities held in the segregated account, by sale of other
securities or, although it would not normally expect to do so, by
directing the sale of the securities purchased on a when-issued
or TBA basis themselves (which may have a market value greater or
less than the Fund's payment obligation). Although the Fund will
only make commitments to purchase securities on a when-issued or
TBA basis with the intention of actually acquiring the
securities, the Fund may sell these securities before the
settlement date if it is deemed advisable by the Adviser as a
matter of investment strategy.
Repurchase Agreements. Repurchase agreements are
transactions by which a Fund purchases a security and
simultaneously commits to resell that security to the seller at
an agreed upon time and price, thereby determining the yield
during the term of the agreement. In the event of a bankruptcy or
other default by the seller of a repurchase agreement, a Fund
could experience both delays in liquidating the underlying
security and losses. To minimize these possibilities, each Fund
intends to enter into repurchase agreements only with its
Custodian, with banks having assets in excess of $10 billion and
with broker-dealers who are recognized as primary dealers in U.S.
Government obligations by the Federal Reserve Bank of New York.
Collateral for repurchase agreements is held in safekeeping in
the customer-only account of the Funds' Custodian at the Federal
Reserve Bank. A Fund will not enter into a repurchase agreement
not terminable within seven days if, as a result thereof, more
than 15% of the value of its net assets would be invested in such
securities and other illiquid securities.
- 10 -
<PAGE>
Although the securities subject to a repurchase agreement
might bear maturities exceeding one year, settlement for the
repurchase would never be more than one year after the Fund's
acquisition of the securities and normally would be within a
shorter period of time. The resale price will be in excess of
the purchase price, reflecting an agreed upon market rate
effective for the period of time the Fund's money will be
invested in the securities, and will not be related to the coupon
rate of the purchased security. At the time a Fund enters into a
repurchase agreement, the value of the underlying security,
including accrued interest, will equal or exceed the value of the
repurchase agreement, and, in the case of a repurchase agreement
exceeding one day, the seller will agree that the value of the
underlying security, including accrued interest, will at all
times equal or exceed the value of the repurchase agreement. The
collateral securing the seller's obligation must be of a credit
quality at least equal to a Fund's investment criteria for
portfolio securities and will be held by the Custodian or in the
Federal Reserve Book Entry System.
For purposes of the Investment Company Act of 1940, a
repurchase agreement is deemed to be a loan from a Fund to the
seller subject to the repurchase agreement and is therefore
subject to that Fund's investment restriction applicable to
loans. It is not clear whether a court would consider the
securities purchased by a Fund subject to a repurchase agreement
as being owned by that Fund or as being collateral for a loan by
the Fund to the seller. In the event of the commencement of
bankruptcy or insolvency proceedings with respect to the seller
of the securities before repurchase of the security under a
repurchase agreement, a Fund may encounter delay and incur costs
before being able to sell the security. Delays may involve loss
of interest or decline in price of the security. If a court
characterized the transaction as a loan and a Fund has not
perfected a security interest in the security, that Fund may be
required to return the security to the seller's estate and be
treated as an unsecured creditor of the seller. As an unsecured
creditor, a Fund would be at the risk of losing some or all of
the principal and income involved in the transaction. As with
any unsecured debt obligation purchased for a Fund, the Adviser
seeks to minimize the risk of loss through repurchase agreements
by analyzing the creditworthiness of the obligor, in this case,
the seller. Apart from the risk of bankruptcy or insolvency
proceedings, there is also the risk that the seller may fail to
repurchase the security, in which case a Fund may incur a loss if
the proceeds to that Fund of the sale of the security to a third
party are less than the repurchase price. However, if the market
value of the securities subject to the repurchase agreement
becomes less than the repurchase price (including interest), the
Fund involved will direct the seller of the security to deliver
additional securities so that the market value of all securities
- 11 -
<PAGE>
subject to the repurchase agreement will equal or exceed the
repurchase price. It is possible that a Fund will be
unsuccessful in seeking to enforce the seller's contractual
obligation to deliver additional securities.
Loans of Portfolio Securities. Each Fund may lend its
portfolio securities subject to the restrictions stated in its
Prospectus. Under applicable regulatory requirements (which are
subject to change), the loan collateral must, on each business
day, at least equal the value of the loaned securities. To be
acceptable as collateral, letters of credit must obligate a bank
to pay amounts demanded by a Fund if the demand meets the terms
of the letter. Such terms and the issuing bank must be
satisfactory to the Fund. The Funds receive amounts equal to the
dividends or interest on loaned securities and also receive one
or more of (a) negotiated loan fees, (b) interest on securities
used as collateral, or (c) interest on short-term debt securities
purchased with such collateral; either type of interest may be
shared with the borrower. The Funds may also pay fees to placing
brokers as well as custodian and administrative fees in
connection with loans. Fees may only be paid to a placing broker
provided that the Trustees determine that the fee paid to the
placing broker is reasonable and based solely upon services
rendered, that the Trustees separately consider the propriety of
any fee shared by the placing broker with the borrower, and that
the fees are not used to compensate the Adviser or any affiliated
person of the Trust or an affiliated person of the Adviser or
other affiliated person. The terms of the Funds' loans must meet
applicable tests under the Internal Revenue Code and permit the
Funds to reacquire loaned securities on five days' notice or in
time to vote on any important matter.
Foreign Securities. Subject to each Fund's investment
policies and quality and maturity standards, the Funds may invest
in the securities (payable in U.S. dollars) of foreign issuers
and in the securities of foreign branches of U.S. banks such as
negotiable certificates of deposit (Eurodollars). Because the
Funds may invest in foreign securities, investment in the Funds
involves risks that are different in some respects from an
investment in a fund which invests only in securities of U.S.
domestic issuers. Foreign investments may be affected favorably
or unfavorably by changes in currency rates and exchange control
regulations. There may be less publicly available information
about a foreign company than about a U.S. company and foreign
companies may not be subject to accounting, auditing and
financial reporting standards and requirements comparable to
those applicable to U.S. companies. There may be less
governmental supervision of securities markets, brokers and
issuers of securities. Securities of some foreign companies are
less liquid or more volatile than securities of U.S. companies
and foreign brokerage commissions and custodian fees are
- 12 -
<PAGE>
generally higher than in the United States. Settlement practices
may include delays and may differ from those customary in United
States markets. Investments in foreign securities may also be
subject to other risks different from those affecting U.S.
investments, including local political or economic developments,
expropriation or nationalization of assets, restrictions on
foreign investment and repatriation of capital, imposition of
withholding taxes on dividend or interest payments, currency
blockage (which would prevent cash from being brought back to the
United States), and difficulty in enforcing legal rights outside
the United States.
Warrants and Rights. Warrants are options to purchase
equity securities at a specified price and are valid for a
specific time period. Rights are similar to warrants, but
normally have a short duration and are distributed by the issuer
to its shareholders. The Equity Fund may purchase warrants and
rights, provided that the Fund does not invest more than 5% of
its net assets at the time of purchase in warrants and rights
other than those that have been acquired in units or attached to
other securities. Of such 5%, no more than 2% of the Fund's
assets at the time of purchase may be invested in warrants which
are not listed on either the New York Stock Exchange or the
American Stock Exchange.
QUALITY RATINGS OF CORPORATE BONDS AND PREFERRED STOCKS
The ratings of Moody's Investors Service, Inc. and Standard
& Poor's Ratings Group for corporate bonds in which the Funds may
invest are as follows:
Moody's Investors Service, Inc.
Aaa - Bonds which are rated Aaa are judged to be of the best
quality. They carry the smallest degree of investment risk and
are generally referred to as "gilt edge." Interest payments are
protected by a large or by an exceptionally stable margin and
principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most
unlikely to impair the fundamentally strong position of such
issues.
Aa - Bonds which are rated Aa are judged to be of high
quality by all standards. Together with the Aaa group they
comprise what are generally known as high grade bonds. They are
rated lower than the best bonds because margins of protection may
not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other
elements present which make the long-term risks appear somewhat
larger than in Aaa securities.
- 13 -
<PAGE>
A - Bonds which are rated A possess many favorable
investment attributes and are to be considered as upper medium
grade obligations. Factors giving security to principal and
interest are considered adequate but elements may be present
which suggest a susceptibility to impairment sometime in the
future.
Baa - Bonds which are rated Baa are considered as medium
grade obligations, i.e., they are neither highly protected nor
poorly secured. Interest payments and principal security appear
adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as
well.
Standard & Poor's Ratings Group
AAA - Bonds rated AAA have the highest rating assigned by
Standard & Poor's to a debt obligation. Capacity to pay interest
and repay principal is extremely strong.
AA - Bonds rated AA have a very strong capacity to pay
interest and repay principal and differ from the highest rated
issues only in small degree.
A - Bonds rated A have a strong capacity to pay interest and
repay principal although they are somewhat more susceptible to
the adverse effects of changes in circumstances and economic
conditions than bonds in higher rated categories.
BBB - Bonds rated BBB are regarded as having an adequate
capacity to pay interest and repay principal. Whereas they
normally exhibit adequate protection parameters, adverse economic
conditions or changing circumstances are more likely to lead to a
weakened capacity to pay interest and repay principal for bonds
in this category than for bonds in higher rated categories.
The ratings of Moody's Investors Service, Inc. and Standard
& Poor's Ratings Group for preferred stocks in which the Funds
may invest are as follows:
Moody's Investors Service, Inc.
aaa - An issue which is rated aaa is considered to be a top-
quality preferred stock. This rating indicates good asset
protection and the least risk of dividend impairment within the
universe of preferred stocks.
aa - An issue which is rated aa is considered a high-grade
preferred stock. This rating indicates that there is reasonable
assurance that earnings and asset protection will remain
relatively well maintained in the foreseeable future.
- 14 -
<PAGE>
a - An issue which is rated a is considered to be an upper-
medium grade preferred stock. While risks are judged to be
somewhat greater than in the "aaa" and "aa" classifications,
earnings and asset protection are, nevertheless, expected to be
maintained at adequate levels.
baa - An issue which is rated baa is considered to be medium
grade, neither highly protected nor poorly secured. Earnings and
asset protection appear adequate at present but may be
questionable over any great length of time.
Standard & Poor's Ratings Group
AAA - This is the highest rating that may be assigned by
Standard & Poor's to a preferred stock issue and indicates an
extremely strong capacity to pay the preferred stock obligations.
AA - A preferred stock issue rated AA also qualifies as a
high-quality fixed income security. The capacity to pay
preferred stock obligations is very strong, although not as
overwhelming as for issues rated AAA.
A - An issue rated A is backed by a sound capacity to pay
the preferred stock obligations, although it is somewhat more
susceptible to the diverse effects of changes in circumstances
and economic conditions.
BBB - An issue rated BBB is regarded as backed by an
adequate capacity to pay the preferred stock obligations.
Whereas it normally exhibits adequate protection parameters,
adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to make payments for a
preferred stock in this category than for issues in the A
category.
Risk Factors of Lower-Rated Securities
Lower-rated debt securities (commonly called "junk bonds")
may be subject to certain risk factors to which other securities
are not subject to the same degree. An economic downturn tends
to disrupt the market for lower-rated bonds and adversely affect
their values. Such an economic downturn may be expected to
result in increased price volatility of lower-rated bonds and of
the value of the Fund's shares, and an increase in issuers'
defaults on such bonds.
Also, many issuers of lower-rated bonds are substantially
leveraged, which may impair their ability to meet their
obligations. In some cases, the securities in which the Fund
invests are subordinated to the prior payment of senior
indebtedness, thus potentially limiting the Fund's ability to
recover full principal or to receive payments when senior
securities are in default.
- 15 -
<PAGE>
The credit rating of a security does not necessarily address
its market value risk. Also, ratings may, from time to time, be
changed to reflect developments in the issuer's financial
condition. Lower-rated securities held by the Fund have
speculative characteristics which are apt to increase in number
and significance with each lower rating category.
When the secondary market for lower-rated bonds becomes
increasingly illiquid, or in the absence of readily available
market quotations for lower-rated bonds, the relative lack of
reliable, objective data makes the responsibility of the Trustees
to value such securities more difficult, and judgment plays a
greater role in the valuation of portfolio securities. Also,
increased illiquidity of the market for lower-rated bonds may
affect the Fund's ability to dispose of portfolio securities at a
desirable price.
In addition, if the Fund experiences unexpected net
redemptions, it could be forced to sell all or a portion of its
lower-rated bonds without regard to their investment merits,
thereby decreasing the asset base upon which the Fund's expenses
can be spread and possibly reducing the Fund's rate of return.
Also, prices of lower-rated bonds have been found to be less
sensitive to interest rate changes and more sensitive to adverse
economic changes and individual corporate developments than more
highly rated investments. Certain laws or regulations may have a
material effect on the Fund's investments in lower-rated bonds.
INVESTMENT LIMITATIONS
The Trust has adopted certain fundamental investment
limitations designed to reduce the risk of an investment in the
Funds. These limitations may not be changed with respect to
either Fund without the affirmative vote of a majority of the
outstanding shares of that Fund.
The limitations applicable to each Fund are:
1. Borrowing Money. The Fund will not borrow money,
except (a) from a bank, provided that immediately after such
borrowing there is asset coverage of 300% for all borrowings of
the Fund; or (b) from a bank or other persons for temporary
purposes only, provided that, when made, such temporary
borrowings are in an amount not exceeding 5% of the Fund's total
assets.
2. Pledging. The Fund will not mortgage, pledge,
hypothecate or in any manner transfer, as security for
indebtedness, any security owned or held by the Fund except as
may be necessary in connection with borrowings described in
limitation (1) above. The Fund will not mortgage, pledge or
hypothecate more than one-third of its assets in connection with
borrowings. Deposit of payment by the Fund of initial or
- 16 -
<PAGE>
maintenance margin in connection with futures contracts and
related options is not considered a pledge or hypothecation of
assets.
3. Margin Purchases. The Fund will not purchase any
securities on "margin" (except such short-term credits as are
necessary for the clearance of transactions). The deposit of
funds in connection with transactions in options, futures
contracts, and options on such contracts will not be considered a
purchase on "margin."
4. Short Sales. The Fund will not make short sales of
securities, or maintain a short position, other than short sales
"against the box,"
5. Commodities; Put or Call Options. The Fund will not
purchase or sell commodities or commodity contracts including
futures, or purchase or write put or call options, except that
the Fund may purchase or sell financial futures contracts and
related options.
6. Underwriting. The Fund will not act as underwriter of
securities issued by other persons. This limitation is not
applicable to the extent that, in connection with the disposition
of portfolio securities, a Fund may be deemed an underwriter
under certain federal securities laws.
7. Real Estate. The Fund will not purchase, hold or deal
in real estate or real estate mortgage loans, including real
estate limited partnership interests, except that the Fund may
purchase (a) securities of companies (other than limited
partnerships) which deal in real estate or (b) securities which
are secured by interests in real estate or by interests in
mortgage loans including securities secured by mortgage-backed
securities.
8. Loans. The Fund will not make loans to other persons,
except (a) by loaning portfolio securities, or (b) by engaging in
repurchase agreements. For purposes of this limitation, the term
"loans" shall not include the purchase of bonds, debentures,
commercial paper or corporate notes, and similar marketable
evidences of indebtedness.
9. Industry Concentration. The Fund will not invest more
than 25% of its total assets in any particular industry.
10. Senior Securities. The Fund will not issue or sell any
senior security as defined by the Investment Company Act of 1940
except in so far as any borrowing that the Fund may engage in may
be deemed to be an issuance of a senior security.
The Trust does not intend to pledge, mortgage or hypothecate
the assets of either Fund. The Trust does not intend to make
- 17 -
<PAGE>
short sales of securities "against the box" as described in
investment limitation 4. The statements of intention in this
paragraph reflect nonfundamental policies which may be changed by
the Board of Trustees without shareholder approval.
Other current investment policies of the Fund, which are not
fundamental and which may be changed by action of the Board of
Directors without shareholder approval, are as follows:
1. Illiquid Investments. The Fund will not purchase
securities for which no readily available market exists or engage
in a repurchase agreement maturing in more than seven days if, as
a result thereof, more than 15% of the value of the net assets of
the Fund would be invested in such securities.
2. Investing for Control. The Fund will not invest in
companies for the purpose of exercising control or management.
3. Other Investment Companies. The Fund will not invest
more than 10% of its total assets in securities of other
investment companies. The Fund will not invest more than 5% of
its total assets in the securities of any single investment
company. The Fund will not hold more than 3% of the outstanding
voting stock of any single investment company.
4. Securities Owned by Affiliates. The Fund will not
purchase or retain the securities of any issuers if those
officers and Trustees of the Trust or officers, directors, or
principals of its Adviser, owning individually more than one-half
of 1% of the securities of such issuer, own in the aggregate more
than 5% of the securities of such issuer.
5. Mineral Leases. The Fund will not purchase oil, gas or
other mineral leases, rights or royalty contracts.
6. Voting Securities of Any Issuer. The Fund will not
purchase more than 10% of the outstanding voting securities of
any one issuer.
With respect to the percentages adopted by the Trust as
maximum limitations on a Fund's investment policies and
restrictions, an excess above the fixed percentage (except for
the percentage limitations relative to the borrowing of money and
the holding of illiquid securities) will not be a violation of
the policy or restriction unless the excess results immediately
and directly from the acquisition of any security or the action
taken.
TRUSTEES AND OFFICERS
The following is a list of the Trustees and executive
officers of the Trust. Each Trustee who is an "interested
- 18 -
<PAGE>
person" of the Trust, as defined by the Investment Company Act of
1940, is indicated by an asterisk.
NAME AGE POSITION HELD
*Harold G. Kotler 52 President/Trustee
*Benjamin H. Gannett 54 Treasurer/Trustee
+________________ __ Trustee
+________________ __ Trustee
+________________ __ Trustee
Irwin M. Heller __ Secretary
* Messrs. Kotler and Gannett, as principals of Gannett Welsh & Kotler,
Inc., the Trust's investment adviser, are "interested persons" of the
Trust within the meaning of Section 2(a)(19) of the Investment Company
Act of 1940.
+ Member of Audit Committee.
The principal occupations of the remaining Trustees and
executive officers of the Trust during the past five years are
set forth below:
[TO BE INSERTED]
Each non-interested Trustee will receive an annual retainer
of $2,000 and a $250 fee for each Board meeting attended and will
be reimbursed for travel and other expenses incurred in the
performance of their duties.
THE INVESTMENT ADVISER
Gannett Welsh & Kotler, Inc. (the "Adviser") is the Trust's
investment manager. Messrs. Gannett and Kotler, as principals of
the Adviser, may directly or indirectly receive benefits from the
advisory fees paid to the Adviser. Under the terms of the
investment advisory agreement between the Trust and the Adviser,
the Adviser manages the Funds' investments. The Equity Fund pays
the Adviser a fee computed and accrued daily and paid monthly at
an annual rate of 1.00% of its average daily net assets. The
Government Securities Fund pays the Adviser a fee computed and
accrued daily and paid monthly at an annual rate of .75% of its
average daily net assets.
The Funds are responsible for the payment of all expenses
incurred in connection with the organization, registration of
shares and operations of the Funds, including such extraordinary
or non-recurring expenses as may arise, such as litigation to
which the Trust may be a party. The Funds may have an obligation
to indemnify the Trust's officers and Trustees with respect to
such litigation, except in instances of willful misfeasance, bad
faith, gross negligence or reckless disregard by such officers
and Trustees in the performance of their duties. The Adviser
- 19 -
<PAGE>
bears promotional expenses in connection with the distribution of
the Funds' shares to the extent that such expenses are not
assumed by the Funds under their plan of distribution (see
below). The compensation and expenses of any officer, Trustee or
employee of the Trust who is an officer, director or employee of
the Adviser are paid by the Adviser.
By its terms, the Trust's investment advisory agreement will
remain in force until ___________, 1998 and from year to year
thereafter, subject to annual approval by (a) the Board of
Trustees or (b) a vote of the majority of a Fund's outstanding
voting securities; provided that in either event continuance is
also approved by a majority of the Trustees who are not
interested persons of the Trust, by a vote cast in person at a
meeting called for the purpose of voting on such approval. The
Trust's investment advisory agreement may be terminated at any
time, on sixty days' written notice, without the payment of any
penalty, by the Board of Trustees, by a vote of the majority of a
Fund's outstanding voting securities, or by the Adviser. The
investment advisory agreement automatically terminates in the
event of its assignment, as defined by the Investment Company Act
of 1940 and the rules thereunder.
The Adviser will reimburse the Funds to the extent that the
expenses of a Fund for any fiscal year exceed the applicable
expense limitations imposed by state securities administrators,
as such limitations may be lowered or raised from time to time.
The most restrictive limitation is presently 2.5% of the first
$30 million of average daily net assets, 2% of the next $70
million of average daily net assets and 1.5% of average daily net
assets in excess of $100 million. If any such reimbursement is
required, the payment of the advisory fee at the end of any month
will be reduced or postponed or, if necessary, a refund will be
made to the Funds at the end of such month. Certain expenses
such as brokerage commissions, if any, taxes, interest,
extraordinary items and other expenses subject to approval of
state securities administrators are excluded from such
limitations. If the expenses of a Fund approach the applicable
limitation in any state, the Trust will consider the various
actions that are available to it, including suspension of sales
to residents of that state.
The names "Gannett Welsh & Kotler" and "GW&K" are property
rights of the Adviser. The Adviser may use the names "Gannett
Welsh & Kotler" and "GW&K" in other connections and for other
purposes, including in the name of other investment companies.
The Trust has agreed to discontinue any use of the names "Gannett
Welsh & Kotler" or "GW&K" if the Adviser ceases to be employed as
the Trust's investment manager.
DISTRIBUTION PLAN
- 20 -
<PAGE>
As stated in each Fund's Prospectus, the Funds have adopted
a plan of distribution (the "Plan") pursuant to Rule 12b-1 under
the Investment Company Act of 1940 which permits each Fund to pay
for expenses incurred in the distribution and promotion of the
Funds' shares, including but not limited to, the printing of
prospectuses, statements of additional information and reports
used for sales purposes, advertisements, expenses of preparation
and printing of sales literature, promotion, marketing and sales
expenses and other distribution-related expenses, including any
distribution fees paid to securities dealers or other firms who
have executed a distribution or service agreement with the Trust.
The Plan expressly limits payment of the distribution expenses
listed above in any fiscal year to a maximum of .25% of the
average daily net assets of each Fund. Unreimbursed expenses
will not be carried over from year to year.
Agreements implementing the Plan (the "Implementation
Agreements"), including agreements with dealers wherein such
dealers agree for a fee to act as agents for the sale of the
Funds' shares, are in writing and have been approved by the Board
of Trustees. All payments made pursuant to the Plan are made in
accordance with written agreements.
The continuance of the Plan and the Implementation
Agreements must be specifically approved at least annually by a
vote of the Trust's Board of Trustees and by a vote of the
Trustees who are not interested persons of the Trust and have no
direct or indirect financial interest in the Plan or any
Implementation Agreement (the "Independent Trustees") at a
meeting called for the purpose of voting on such continuance.
The Plan may be terminated at any time by a vote of a majority of
the Independent Trustees or by a vote of the holders of a
majority of the outstanding shares of a Fund. In the event the
Plan is terminated in accordance with its terms, the affected
Fund will not be required to make any payments for expenses
incurred by the Adviser after the termination date. Each
Implementation Agreement terminates automatically in the event of
its assignment and may be terminated at any time by a vote of a
majority of the Independent Trustees or by a vote of the holders
of a majority of the outstanding shares of a Fund on not more
than 60 days' written notice to any other party to the
Implementation Agreement. The Plan may not be amended to
increase materially the amount to be spent for distribution
without shareholder approval. All material amendments to the
Plan must be approved by a vote of the Trust's Board of Trustees
and by a vote of the Independent Trustees.
In approving the Plan, the Trustees determined, in the
exercise of their business judgment and in light of their
fiduciary duties as Trustees, that there is a reasonable
likelihood that the Plan will benefit the Funds and their
shareholders. The Board of Trustees believes that expenditure of
the Funds' assets for distribution expenses under the Plan should
assist in the growth of the Funds which will benefit the Funds
- 21 -
<PAGE>
and their shareholders through increased economies of scale,
greater investment flexibility, greater portfolio diversification
and less chance of disruption of planned investment strategies.
The Plan will be renewed only if the Trustees make a similar
determination for each subsequent year of the Plan. There can be
no assurance that the benefits anticipated from the expenditure
of the Funds' assets for distribution will be realized. While
the Plan is in effect, all amounts spent by the Funds pursuant to
the Plan and the purposes for which such expenditures were made
must be reported quarterly to the Board of Trustees for its
review. In addition, the selection and nomination of those
Trustees who are not interested persons of the Trust are
committed to the discretion of the Independent Trustees during
such period.
As principals of the Adviser, Messrs. Gannett and Kotler may
be deemed to have a financial interest in the operation of the
Plan and the Implementation Agreements.
SECURITIES TRANSACTIONS
Decisions to buy and sell securities for the Funds and the
placing of the Funds' securities transactions and negotiation of
commission rates where applicable are made by the Adviser and are
subject to review by the Board of Trustees of the Trust. In the
purchase and sale of portfolio securities, the Adviser seeks best
execution for the Funds, taking into account such factors as
price (including the applicable brokerage commission or dealer
spread), the execution capability, financial responsibility and
responsiveness of the broker or dealer and the brokerage and
research services provided by the broker or dealer. The Adviser
generally seeks favorable prices and commission rates that are
reasonable in relation to the benefits received.
Generally, the Funds attempt to deal directly with the
dealers who make a market in the securities involved unless
better prices and execution are available elsewhere. Such
dealers usually act as principals for their own account. On
occasion, portfolio securities for the Funds may be purchased
directly from the issuer. Because the portfolio securities of
the Government Securities Fund are generally traded on a net
basis and transactions in such securities do not normally involve
brokerage commissions, the cost of portfolio securities
transactions of the Fund will consist primarily of dealer or
underwriter spreads.
The Adviser is specifically authorized to select brokers who
also provide brokerage and research services to the Funds and/or
other accounts over which the Adviser exercises investment
discretion and to pay such brokers a commission in excess of the
commission another broker would charge if the Adviser determines
in good faith that the commission is reasonable in relation to
the value of the brokerage and research services provided. The
determination may be viewed in terms of a particular transaction
- 22 -
<PAGE>
or the Adviser's overall responsibilities with respect to the
Funds and to accounts over which it exercises investment
discretion.
Research services include securities and economic analyses,
reports on issuers' financial conditions and future business
prospects, newsletters and opinions relating to interest trends,
general advice on the relative merits of possible investment
securities for the Funds and statistical services and information
with respect to the availability of securities or purchasers or
sellers of securities. Although this information is useful to
the Funds and the Adviser, it is not possible to place a dollar
value on it. Research services furnished by brokers through whom
the Funds effect securities transactions may be used by the
Adviser in servicing all of its accounts and not all such
services may be used by the Adviser in connection with the Funds.
The Adviser may aggregate purchase and sale orders for the
Funds and its other clients if it believes such aggregation is
consistent with its duty to seek best execution for the Funds and
its other clients. The Adviser will not favor any advisory
account over any other account, and each account that
participates in an aggregated order will participate at the
average share price for all transactions of the Adviser in that
security on a given business day, with all transaction costs
shared on a pro rata basis.
Code of Ethics. The Trust and the Adviser have each adopted a
Code of Ethics under Rule 17j-1 of the Investment Company Act of
1940. The Code significantly restricts the personal investing
activities of all employees of the Adviser and, as described
below, imposes additional, more onerous, restrictions on
investment personnel of the Adviser. The Code requires that all
employees of the Adviser preclear any personal securities (with
limited exceptions, such as U.S. Government obligations). The
preclearance requirement and associated procedures are designed
to identify any substantive prohibition or limitation applicable
to the proposed investment. In addition, no employee may
purchase or sell any security which, at that time, is being
purchased or sold (as the case may be), or to the knowledge of
the employee is being considered for purchase or sale, by either
Fund. The substantive restrictions applicable to investment
personnel of the Adviser include a ban on acquiring any
securities in an initial public offering. Furthermore, the Code
provides for trading "blackout periods" which prohibit trading by
investment personnel of the Adviser within periods of trading by
either Fund in the same (or equivalent) security.
PORTFOLIO TURNOVER
A Fund's portfolio turnover rate is calculated by dividing
- 23 -
<PAGE>
the lesser of purchases or sales of portfolio securities for the
fiscal year by the monthly average of the value of the portfolio
securities owned by the Fund during the fiscal year. High
portfolio turnover involves correspondingly greater brokerage
commissions and other transaction costs, which will be borne
directly by the Funds. The Adviser anticipates that the
portfolio turnover rate for each Fund normally will not exceed
100%. A 100% turnover rate would occur if all of a Fund's
portfolio securities were replaced once within a one year period.
Generally, each Fund intends to invest for long-term
purposes. However, the rate of portfolio turnover will depend
upon market and other conditions, and it will not be a limiting
factor when the Adviser believes that portfolio changes are
appropriate.
CALCULATION OF SHARE PRICE
The share price (net asset value) of the shares of each Fund
is determined as of the close of the regular session of trading
on the New York Stock Exchange (currently 4:00 p.m., Eastern
time) on each day the Trust is open for business. The Trust is
open for business on every day except Saturdays, Sundays and the
following holidays: New Year's Day, President's Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving
and Christmas. The Trust may also be open for business on other
days in which there is sufficient trading in either Fund's
portfolio securities that its net asset value might be materially
affected. For a description of the methods used to determine the
share price, see "Calculation of Share Price" in the Prospectus.
TAXES
Each Fund's Prospectus describes generally the tax treatment
of distributions by the Funds. This section of the Statement of
Additional Information includes additional information concerning
federal taxes.
Each Fund intends to qualify annually for the special tax
treatment afforded a "regulated investment company" under
Subchapter M of the Internal Revenue Code so that it does not pay
federal taxes on income and capital gains distributed to
shareholders. To so qualify a Fund must, among other things, (i)
derive at least 90% of its gross income in each taxable year from
dividends, interest, payments with respect to securities loans,
gains from the sale or other disposition of stock, securities or
foreign currency, or certain other income (including but not
limited to gains from options, futures and forward contracts)
derived with respect to its business of investing in stock,
securities or currencies; (ii) derive less than 30% of its gross
income in each taxable year from the sale or other disposition of
- 24 -
<PAGE>
the following assets held for less than three months: (a) stock
or securities, (b) options, futures or forward contracts not
directly related to its principal business of investing in stock
or securities; and (iii) diversify its holdings so that at the
end of each quarter of its taxable year the following two
conditions are met: (a) at least 50% of the value of the Fund's
total assets is represented by cash, U.S. Government securities,
securities of other regulated investment companies and other
securities (for this purpose such other securities will qualify
only if the Fund's investment is limited in respect to any issuer
to an amount not greater than 5% of the Fund's assets and 10% of
the outstanding voting securities of such issuer) and (b) not
more than 25% of the value of the Fund's assets is invested in
securities of any one issuer (other than U.S. Government
securities or securities of other regulated investment
companies).
A Fund's net realized capital gains from securities
transactions will be distributed only after reducing such gains
by the amount of any available capital loss carryforwards.
Capital losses may be carried forward to offset any capital gains
for eight years, after which any undeducted capital loss
remaining is lost as a deduction.
A federal excise tax at the rate of 4% will be imposed on
the excess, if any, of a Fund's "required distribution" over
actual distributions in any calendar year. Generally, the
"required distribution" is 98% of a Fund's ordinary income for
the calendar year plus 98% of its net capital gains recognized
during the one year period ending on November 30 of the calendar
year plus undistributed amounts from prior years. The Funds
intend to make distributions sufficient to avoid imposition of
the excise tax.
The Trust is required to withhold and remit to the U.S.
Treasury a portion (31%) of dividend income on any account unless
the shareholder provides a taxpayer identification number and
certifies that such number is correct and that the shareholder is
not subject to backup withholding or demonstrates an exemption
from withholding.
- 25 -
<PAGE>
REDEMPTION IN KIND
Under unusual circumstances, when the Board of Trustees
deems it in the best interests of a Fund's shareholders, the Fund
may make payment for shares repurchased or redeemed in whole or
in part in securities of the Fund taken at current value. If any
such redemption in kind is to be made, each Fund intends to make
an election pursuant to Rule 18f-1 under the Investment Company
Act of 1940. This election will require the Funds to redeem
shares solely in cash up to the lesser of $250,000 or 1% of the
net asset value of each Fund during any 90 day period for any one
shareholder. Should payment be made in securities, the redeeming
shareholder will generally incur brokerage costs in converting
such securities to cash. Portfolio securities which are issued
in an in-kind redemption will be readily marketable.
HISTORICAL PERFORMANCE INFORMATION
From time to time, each Fund may advertise average annual
total return. Average annual total return quotations will be
computed by finding the average annual compounded rates of return
over 1, 5 and 10 year periods that would equate the initial
amount invested to the ending redeemable value, according to the
following formula:
P (1 + T)n = ERV
Where:
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000
payment made at the beginning of the 1, 5 and 10 year
periods at the end of the 1, 5 or 10 year periods (or
fractional portion thereof)
The calculation of average annual total return assumes the
reinvestment of all dividends and distributions. If a Fund has
been in existence less than one, five or ten years, the time
period since the date of the initial public offering of shares
will be substituted for the periods stated. Each Fund may also
advertise total return (a "nonstandardized quotation") which is
calculated differently from average annual total return. A
nonstandardized quotation of total return may be a cumulative
return which measures the percentage change in the value of an
account between the beginning and end of a period, assuming no
activity in the account other than reinvestment of dividends and
capital gains distributions. A nonstandardized quotation may
also indicate average annual compounded rates of return over
periods other than those specified for average annual total
return. A nonstandardized quotation of total return will always
be accompanied by a Fund's average annual total return as
described above.
- 26 -
<PAGE>
From time to time, each of the Funds may also advertise its
yield. A yield quotation is based on a 30-day (or one month)
period and is computed by dividing the net investment income per
share earned during the period by the maximum offering price per
share on the last day of the period, according to the following
formula:
Yield = 2[(a-b/cd + 1)6 - 1]
Where:
a = dividends and interest earned during the period
b = expenses accrued for the period (net of reimbursements)
c = the average daily number of shares outstanding during the
period that were entitled to receive dividends
d = the maximum offering price per share on the last day of the
period
Solely for the purpose of computing yield, dividend income is
recognized by accruing 1/360 of the stated dividend rate of the
security each day that a Fund owns the security. Generally,
interest earned (for the purpose of "a" above) on debt
obligations is computed by reference to the yield to maturity of
each obligation held based on the market value of the obligation
(including actual accrued interest) at the close of business on
the last business day prior to the start of the 30-day (or one
month) period for which yield is being calculated, or, with
respect to obligations purchased during the month, the purchase
price (plus actual accrued interest). With respect to the
treatment of discount and premium on mortgage or other
receivables-backed obligations which are expected to be subject
to monthly paydowns of principal and interest, gain or loss
attributable to actual monthly paydowns is accounted for as an
increase or decrease to interest income during the period and
discount or premium on the remaining security is not amortized.
The performance quotations described above are based on
historical earnings and are not intended to indicate future
performance.
To help investors better evaluate how an investment in a
Fund might satisfy their investment objective, advertisements
regarding each Fund may discuss various measures of Fund
performance, including current performance ratings and/or
rankings appearing in financial magazines, newspapers and
publications which track mutual fund performance. Advertisements
may also compare performance (using the calculation methods set
forth in the Prospectus) to performance as reported by other
investments, indices and averages. When advertising current
ratings or rankings, the Funds may use the following publications
or indices to discuss or compare Fund performance:
- 27 -
<PAGE>
Lipper Mutual Fund Performance Analysis and Lipper Fixed
Income Fund Performance Analysis measure total return and average
current yield for the mutual fund industry and rank individual
mutual fund performance over specified time periods assuming
reinvestment of all distributions, exclusive of sales loads. The
Equity Fund may provide comparative performance information
appearing in the Growth and Income Funds category and the
Government Securities Fund may provide comparative performance
information appearing in the General U.S. Government Funds
category. In addition, the Funds may use comparative performance
information of relevant indices, including the S&P 500 Index and
the Dow Jones Industrial Average. The S&P 500 Index is an
unmanaged index of 500 stocks, the purpose of which is to portray
the pattern of common stock price movement. The Dow Jones
Industrial Average is a measurement of general market price
movement for 30 widely held stocks listed on the New York Stock
Exchange.
In assessing such comparisons of performance an investor
should keep in mind that the composition of the investments in
the reported indices and averages is not identical to the Fund's
portfolio, that the averages are generally unmanaged and that the
items included in the calculations of such averages may not be
identical to the formula used by the Fund to calculate its
performance. In addition, there can be no assurance that the
Fund will continue this performance as compared to such other
averages.
CUSTODIAN
The ___________ Bank, ________________________, __________,
____, has been retained to act as Custodian for the Funds'
investments. The ___________ Bank acts as each Fund's
depository, safekeeps its portfolio securities, collects all
income and other payments with respect thereto, disburses funds
as instructed and maintains records in connection with its
duties.
AUDITORS
The firm of Arthur Andersen LLP has been selected as
independent public accountants for the Trust for the fiscal year
ending December 31, 1996. Arthur Andersen LLP, 425 Walnut
Street, Cincinnati, Ohio, performs an annual audit of the Trust's
financial statements and advises the Funds as to certain
accounting matters.
MGF SERVICE CORP.
The Trust's transfer agent, MGF Service Corp. ("MGF"),
maintains the records of each shareholder's account, answers
shareholders' inquiries concerning their accounts, processes
purchases and redemptions of the Funds' shares, acts as dividend
and distribution disbursing agent and performs other shareholder
- 28 -
<PAGE>
service functions. MGF receives for its services as transfer
agent a fee payable monthly at an annual rate of $17 per account
from the Equity Fund and $21 per account from the Government
Securities Fund, provided, however, that the minimum fee is
$1,000 per month for each Fund. In addition, the Funds pay out-
of-pocket expenses, including but not limited to, postage,
envelopes, checks, drafts, forms, reports, record storage and
communication lines.
MGF also provides accounting and pricing services to the
Funds. For calculating daily net asset value per share and
maintaining such books and records as are necessary to enable MGF
to perform its duties, each Fund pays MGF a fee in accordance
with the following schedule:
Average Monthly Net Assets Monthly Fee
0 - $ 50,000,000 $2,000
50 - 100,000,000 2,500
100 - 250,000,000 3,000
Over 250,000,000 4,000
In addition, each Fund pays all costs of external pricing
services.
In addition, MGF is retained to provide administrative
services to the Funds. In this capacity, MGF supplies non-
investment related statistical and research data, internal
regulatory compliance services and executive and administrative
services. MGF supervises the preparation of tax returns, reports
to shareholders of the Funds, reports to and filings with the
Securities and Exchange Commission and state securities
commissions, and materials for meetings of the Board of Trustees.
For the performance of these administrative services, each Fund
pays MGF a fee at the annual rate of .15% of the average value of
its daily net assets up to $50,000,000, .125% of such assets from
$50,000,000 to $100,000,000 and .10% of such assets in excess of
$100,000,000; provided, however, that the minimum fee is $1,000
per month for each Fund.
STATEMENTS OF ASSETS AND LIABILITIES
The Funds' Statements of Assets and Liabilities as of
___________, 1996, which have been audited by Arthur Andersen
LLP, are attached to this Statement of Additional Information.
- 29 -
<PAGE>
GANNETT WELSH & KOTLER INVESTMENT TRUST
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) (i) Financial Statements included in Part A:
None
(ii) Financial Statements included in Part B:
Statements of Assets and Liabilities,
___________, 1996*
Notes to Financial Statements*
Report of Independent Accountants*
(b) Exhibits
(1) Agreement and Declaration of Trust
(2) Bylaws
(3) Inapplicable
(4) Inapplicable
(5) Form of Advisory Agreement with Gannett Welsh
& Kotler
(6) Inapplicable
(7) Inapplicable
(8) Form of Custody Agreement with ___________*
(9)(i) Form of Administrative Services Agreement
with MGF Service Corp.
(ii) Form of Accounting Services Agreement with
MGF Service Corp.
(iii) Form of Transfer, Dividend Disbursing,
Shareholder Service and Plan Agency Agreement
with MGF Service Corp.
(10) Opinion and Consent of Counsel*
(11) Consent of Independent Public Accountants*
(12) Inapplicable
- 1 -
<PAGE>
(13) Form of Agreement Relating to Initial Capital
(14) Inapplicable
(15) Form of Plan of Distribution Pursuant to Rule
12b-1
(16) Inapplicable
(17) Financial Data Schedule*
(18) Inapplicable
- --------------------------------------
* To be filed by Amendment
Item 25. Persons Controlled by or Under Common Control with
Registrant
After commencement of the public offering of the
Registrant's shares, the Registrant expects that no
person will be directly or indirectly controlled by or
under common control with the Registrant.
Item 26. Number of Holders of Securities
As of June 10, 1996, there are no holders of the shares
of beneficial interest of the Registrant.
Item 27. Indemnification
Article VI of the Registrant's Agreement and
Declaration of Trust provides for indemnification of
officers and Trustees as follows:
"Section 6.4 INDEMNIFICATION OF TRUSTEES,
OFFICERS, ETC. Subject to and except as otherwise
provided in the Securities Act of 1933, as
amended, and the 1940 Act, the Trust shall
indemnify each of its Trustees and officers,
including persons who serve at the Trust's request
as directors, officers or trustees of another
organization in which the Trust has any interest
as a shareholder, creditor or otherwise
(hereinafter referred to as a "Covered Person")
against all liabilities, including but not limited
to amounts paid in satisfaction of judgments, in
compromise or as fines and penalties, and
expenses, including reasonable accountants' and
counsel fees, incurred by any Covered Person in
- 2 -
<PAGE>
connection with the defense or disposition of any
action, suit or other proceeding, whether civil or
criminal, before any court or administrative or
legislative body, in which such Covered Person may
be or may have been involved as a party or
otherwise or with which such person may be or may
have been threatened, while in office or
thereafter, by reason of being or having been such
a Trustee or officer, director or trustee, and
except that no Covered Person shall be indemnified
against any liability to the Trust or its
Shareholders to which such Covered Person would
otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the
conduct of such Covered Person's office (disabling
conduct). Anything herein contained to the
contrary notwithstanding, no Covered Person shall
be indemnified for any liability to the Trust or
its shareholders to which such Covered Person
would otherwise be subject unless (1) a final
decision on the merits is made by a court or other
body before whom the proceeding was brought that
the Covered Person to be indemnified was not
liable by reason of disabling conduct or, (2) in
the absence of such a decision, a reasonable
determination is made, based upon a review of the
facts, that the Covered Person was not liable by
reason of disabling conduct, by (a) the vote of a
majority of a quorum of Trustees who are neither
"interested persons" of the Company as defined in
the Investment Company Act of 1940 nor parties to
the proceeding ("disinterested, non-party
Trustees"), or (b) an independent legal counsel in
a written opinion.
Section 6.5 ADVANCES OF EXPENSES. The Trust
shall advance attorneys' fees or other expenses
incurred by a Covered Person in defending a
proceeding, upon the undertaking by or on behalf
of the Covered Person to repay the advance unless
it is ultimately determined that such Covered
Person is entitled to indemnification, so long as
one of the following conditions is met: (i) the
Covered Person shall provide security for his
undertaking, (ii) the Trust shall be insured
against losses arising by reason of any lawful
advances, or (iii) a majority of a quorum of the
disinterested non-party Trustees of the Trust, or
an independent legal counsel in a written opinion,
- 3 -
<PAGE>
shall determine, based on a review of readily
available facts (as opposed to full trial-type
inquiry), that there is reason to believe that the
Covered Person ultimately will be found entitled
to indemnification.
Section 6.6 INDEMNIFICATION NOT EXCLUSIVE, ETC.
The right of indemnification provided by this
Article VI shall not be exclusive of or affect any
other rights to which any such Covered Person may
be entitled. As used in this Article VI, "Covered
Person" shall include such person's heirs,
executors and administrators; an "interested
Covered Person" is one against whom the action,
suit or other proceeding in question or another
action, suit or other proceeding on the same or
similar grounds is then or has been pending or
threatened, and a "disinterested" person is a
person against whom none of such actions, suits or
other proceedings or another action, suit or other
proceeding on the same or similar grounds is then
or has been pending or threatened. Nothing
contained in this article shall affect any rights
to indemnification to which personnel of the
Trust, other than Trustees and officers, and other
persons may be entitled by contract or otherwise
under law, nor the power of the Trust to purchase
and maintain liability insurance on behalf of any
such person."
Insofar as indemnification for liability arising under
the Securities Act of 1933 may be permitted to
Trustees, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such
liabilities (other than the payment by the Registrant
of expenses incurred or paid by a Trustee, officer or
controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted
by such Trustee, officer or controlling person in
connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against
public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
- 4 -
<PAGE>
The Registrant expects to maintain a standard mutual
fund and investment advisory professional and directors
and officers liability policy. The policy will provide
coverage to the Registrant, its Trustees and officers,
and Gannett Welsh & Kotler (the "Adviser"). Coverage
under the policy will include losses by reason of any
act, error, omission, misstatement, misleading
statement, neglect or breach of duty.
The Advisory Agreement with the Adviser provides that
the Adviser shall not be liable for any action taken,
omitted or suffered to be taken by it in its reasonable
judgment, in good faith and believed by it to be
authorized or within the discretion or rights or powers
conferred upon it by the Advisory Agreement, or in
accordance with (or in the absence of) specific
directions or instructions from the Trust, provided,
however, that such acts or omissions shall not have
resulted from the Adviser's willful misfeasance, bad
faith or gross negligence, a violation of the standard
of care established by and applicable to the Adviser in
its actions under the Advisory Agreement or breach of
its duty or of its obligations under the Advisory
Agreement.
Item 28. Business and Other Connections of the Investment
Adviser
(a) The Adviser is an independent investment counsel
firm that has advised individual and institutional
clients since 1974. The Adviser serves as the
investment adviser to GW&K Equity Fund, L.P.
(b) The directors and officers of the Adviser and any
other business, profession, vocation or employment
of a substantial nature engaged in at any time
during the past two years:
(i) Harold G. Kotler - A Principal and President
of the Adviser.
President of the Registrant.
(ii) Benjamin H. Gannett - A Principal and
Executive Vice President and Treasurer of the
Adviser.
Treasurer of the Registrant.
(iii) Edward B. White - A Principal and Senior Vice
President of the Adviser.
- 5 -
<PAGE>
(iv) Nancy G. Angell - A Principal and Senior Vice
President of the Adviser.
(v) Jeanne M. Skettino - A Principal and Senior
Vice President of the Adviser.
(vi) Jackson O. Welsh - Senior Vice President of
the Adviser.
(vii) Vicki A. Rellas - Vice President of the
Adviser.
(viii) Mary E. Gilligan, Esq. - Vice President of
the Adviser.
(ix) Christine H. Psyhogeos - Vice President of
the Adviser.
(x) Irwin M. Heller - Clerk of the Adviser.
Secretary of the Registrant.
Item 29. Principal Underwriters
(a) Inapplicable
(b) Inapplicable
(c) Inapplicable
Item 30. Location of Accounts and Records
Accounts, books and other documents required to be
maintained by Section 31(a) of the Investment Company
Act of 1940 and the Rules promulgated thereunder will
be maintained by the Registrant at its offices located
at 222 Berkeley Street, Boston, Massachusetts 02116 as
well as at the offices of the Registrant's transfer
agent located at 312 Walnut Street, 21st Floor,
Cincinnati, Ohio 45202.
Item 31. Management Services Not Discussed in Parts A or B
Inapplicable
Item 32. Undertakings
(a) Inapplicable
(b) The Registrant undertakes to file a post-effective
amendment, using financial statements which need
not be certified, within four to six months from
the effective date of this Registration Statement.
- 6 -
<PAGE>
(c) Inapplicable
(d) The Registrant undertakes to call a meeting of
shareholders, if requested to do so by holders of
at least 10% of the Fund's outstanding shares, for
the purpose of voting upon the question of removal
of a trustee or trustees and to assist in
communications with other shareholders as required
by Section 16(c) of the Investment Company Act of
1940.
- 7 -
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this
Registration Statement to be signed below on its behalf by the undersigned,
thereunto duly authorized, in the City of Boston and Commonwealth of
Massachusetts, on the 14th day of June, 1996.
GANNETT WELSH & KOTLER INVESTMENT TRUST
By:/s/ Harold G. Kotler
Harold G. Kotler
President
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
Signature Title Date
/s/Harold G. Kotler President June 14, 1996
Harold G. Kotler and Trustee
/s/Benjamin H. Gannett Treasurer June 14, 1996
Benjamin H. Gannett and Trustee
/s/Irwin M. Heller Treasurer June 14, 1996
Irwin M. Heller
<PAGE>
INDEX TO EXHIBITS
(1) Agreement and Declaration of Trust
(2) Bylaws
(3) Inapplicable
(4) Inapplicable
(5) Form of Advisory Agreement
(6) Inapplicable
(7) Inapplicable
(8) Form of Custody Agreement*
(9)(i) Form of Administrative Services Agreement
(9)(ii) Form of Accounting Services Agreement
(9)(iii) Form of Transfer, Dividend Disbursing, Shareholder
Service and Plan Agency Agreement
(10) Opinion and Consent of Counsel*
(11) Consent of Independent Public Accountants*
(12) Inapplicable
(13) Form of Agreement Relating to Initial Capital
(14) Inapplicable
(15) Form of Plan of Distribution Pursuant to Rule 12b-1
(16) Inapplicable
(17) Financial Data Schedule*
(18) Inapplicable
- ----------------------------
* To be filed by Amendment
GANNETT WELSH & KOTLER INVESTMENT TRUST
AGREEMENT AND DECLARATION OF TRUST
APRIL 24, 1996
<PAGE>
GANNETT WELSH & KOTLER INVESTMENT TRUST
AGREEMENT AND DECLARATION OF TRUST
PAGE
ARTICLE I. NAME AND DEFINITIONS.................................1
- ---------- --------------------
Section 1.1 Name.................................................1
Section 1.2 Definitions..........................................1
(a) "Trust".....................................1
(b) "Trustees"..................................1
(c) "Shares"....................................1
(d) "Series"....................................1
(e) "Shareholder"...............................2
(f) "1940 Act"..................................2
(g) "Commission"................................2
(h) "Declaration of Trust"......................2
(i) "Bylaws"....................................2
ARTICLE II. PURPOSE OF TRUST.....................................2
- ---------- ----------------
ARTICLE III. THE TRUSTEES.........................................2
- ------------ ------------
Section 3.1 Number, Designation, Election, Term, etc.....2
(a) Initial Trustees............................2
(b) Number......................................2
(c) Term........................................3
(d) Resignation and Retirement..................3
(e) Removal.....................................3
(f) Vacancies...................................3
(g) Effect of Death, Resignation, etc...........4
(h) No Accounting...............................4
Section 3.2 Powers of the Trustees...............................4
(a) Investments.................................5
(b) Disposition of Assets.......................5
(c) Ownership Powers............................5
(d) Subscription................................5
(e) Form of Holding.............................6
(f) Reorganization, etc.........................6
(g) Voting Trusts, etc..........................6
(h) Compromise..................................6
(i) Partnerships, etc...........................6
- i -
<PAGE>
(j) Borrowing and Security.....................6
(k) Guarantees, etc............................6
(l) Insurance..................................7
(m) Pensions, etc..............................7
Section 3.3 Certain Contracts..................................7
(a) Advisory...................................8
(b) Administration.............................8
(c) Distribution...............................8
(d) Custodian and Depository...................8
(e) Transfer and Dividend Disbursing Agency....8
(f) Shareholder Servicing......................8
(g) Legal, Accounting, Taxes and Other.........9
Section 3.4 Payment of Trust Expenses and Compensation
of Trustees.......................................10
Section 3.5 Ownership of Assets of the Trust..................10
ARTICLE IV. SHARES............................................10
- ---------- ------
Section 4.1 Description of Shares.............................10
Section 4.2 Establishment and Designation of Series...........12
(a) Assets Belonging to Series...............12
(b) Liabilities Belonging to Series..........13
(c) Dividends................................13
(d) Liquidation..............................14
(e) Voting...................................15
(f) Redemption by Shareholder................15
(g) Redemption by Trust......................16
(h) Net Asset Value..........................16
(i) Transfer.................................16
(j) Equality.................................16
(k) Fractions................................17
(l) Conversion Rights........................17
Section 4.3 Ownership of Shares..............................17
Section 4.4 Investments in the Trust.........................17
No Preemptive Rights.............................18
Section 4.6 Status of Shares and Limitation of Personal
Liability........................................18
- ii -
<PAGE>
ARTICLE V. SHAREHOLDERS' VOTING POWERS AND MEETINGS.........18
- --------- ----------------------------------------
Section 5.1 Voting Powers....................................18
Section 5.2 Meetings.........................................19
Section 5.3 Record Dates.....................................19
Section 5.4 Quorum and Required Vote.........................20
Section 5.5 Action by Written Consent........................20
Section 5.6 Inspection of Records............................20
Section 5.7 Additional Provisions............................20
ARTICLE VI. LIMITATION OF LIABILITY; INDEMNIFICATION.........21
- ---------- ----------------------------------------
Section 6.1 Trustees, Shareholders, etc. Not Personally
Liable; Notice...................................21
Section 6.2 Trustee's Good Faith Action; Expert Advice;
No Bond or Surety................................21
Section 6.3 Indemnification of Shareholders..................22
Section 6.4 Indemnification of Trustees, Officers, etc.......22
Section 6.5 Advances of Expenses.............................23
Section 6.6 Indemnification Not Exclusive, etc...............23
Section 6.7 Liability of Third Persons Dealing with
Trustees.........................................24
ARTICLE VII. MISCELLANEOUS....................................24
- ----------- -------------
Section 7.1 Duration and Termination of Trust................24
Section 7.2 Reorganization...................................24
Section 7.3 Amendments.......................................25
Section 7.4 Filing of Copies; References; Headings...........25
Section 7.5 Applicable Law...................................26
- iii -
<PAGE>
GANNETT WELSH & KOTLER INVESTMENT TRUST
AGREEMENT AND DECLARATION OF TRUST
AGREEMENT AND DECLARATION OF TRUST made this 24th day of
April, 1996, by the Trustees hereunder, and by the holders of
Shares of beneficial interest to be issued hereunder as hereinafter
provided.
WITNESSETH:
WHEREAS, this Trust is being formed to carry on the business
of an investment company; and
WHEREAS, the Trustees have agreed to manage all property
coming into their hands as trustees of a Massachusetts business
trust in accordance with the provisions hereinafter set forth;
NOW, THEREFORE, the Trustees hereby declare that they will
hold all cash, securities and other assets which they may from time
to time acquire in any manner as Trustees hereunder IN TRUST to
manage and dispose of the same upon the following terms and
conditions for the benefit of the holders from time to time of
Shares of beneficial interest in this Trust as hereinafter set
forth.
ARTICLE I
NAME AND DEFINITIONS
Section 1.1 NAME. This Trust shall be known as "Gannett
Welsh & Kotler Investment Trust" and the Trustees shall conduct the
business of the Trust under that name or any other name as they may
from time to time determine. Until the Trustees determine
otherwise, the principal place of business of the Trust is 222
Berkeley Street, Boston, Massachusetts 02116.
Section 1.2 DEFINITIONS. Whenever used herein, unless
otherwise required by the context or specifically provided:
(a) The "Trust" refers to the Massachusetts business trust
established by this Agreement and Declaration of Trust,
as amended from time to time;
(b) "Trustees" refers to the Trustees of the Trust named
herein or elected in accordance with Article III;
(c) "Shares" refers to the transferable units of interest
into which the beneficial interest in the Trust or any
Series of the Trust (as the context may require) shall be
divided from time to time;
(d) "Series" refers to Series of Shares established and
designated under or in accordance with the provisions of
Article IV;
<PAGE>
(e) "Shareholder" means a record owner of Shares;
(f) The "1940 Act" refers to the Investment Company Act of
1940 and the Rules and Regulations thereunder, all as
amended from time to time;
(g) "Commission" shall have the meaning given it in the 1940
Act;
(h) "Declaration of Trust" shall mean this Agreement and
Declaration of Trust as amended or restated from time to
time; and
(i) "Bylaws" shall mean the Bylaws of the Trust as amended
from time to time.
ARTICLE II
PURPOSE OF TRUST
The purpose of the Trust is to operate as an investment
company, to offer Shareholders one or more investment programs
primarily in securities and debt instruments and to engage in any
and all lawful acts or activities.
ARTICLE III
THE TRUSTEES
Section 3.1 NUMBER, DESIGNATION, ELECTION, TERM, ETC.
(a) Initial Trustees. Upon execution of this Declaration of
Trust or a counterpart hereof or some other writing in
which he accepts such Trusteeship and agrees to the
provisions hereof, Benjamin H. Gannett, 222 Berkeley
Street, Boston Massachusetts 02116, and Harold G. Kotler,
222 Berkeley Street, Boston, Massachusetts 02116 shall
become Trustees hereof.
(b) Number. The Trustees serving as such, whether named
above or hereafter becoming a Trustee, may increase or
decrease the number of Trustees to a number other than
the number theretofore determined. No decrease in the
number of Trustees shall have the effect of removing any
Trustee from office prior to the expiration of his term,
but the number of Trustees may be decreased in
conjunction with the removal of a Trustee pursuant to
subsection (e) of this Section 3.1.
- 2 -
<PAGE>
(c) Term. Each Trustee shall serve as a Trustee during the
lifetime of the Trust and until its termination as
hereinafter provided or until such Trustee sooner dies,
resigns, retires or is removed. The Trustees may elect
their own successors and may, pursuant to Section 3.1(f)
hereof, appoint Trustees to fill vacancies; provided
that, immediately after filling a vacancy, at least two-
thirds of the Trustees then holding office shall have
been elected to such office by the Shareholders at an
annual or special meeting. If at any time less than a
majority of the Trustees then holding office were so
elected, the Trustees shall forthwith cause to be held as
promptly as possible, and in any event within 60 days, a
meeting of Shareholders for the purpose of electing
Trustees to fill any existing vacancies.
(d) Resignation and Retirement. Any Trustee may resign his
trust or retire as a Trustee, by written instrument
signed by him and delivered to the other Trustees or to
any officer of the Trust, and such resignation or
retirement shall take effect upon such delivery or upon
such later date as is specified in such instrument.
(e) Removal. Any Trustee may be removed with or without
cause at any time: (i) by written instrument, signed by
at least two-thirds of the number of Trustees prior to
such removal, specifying the date upon which such removal
shall become effective, (ii) by vote of the Shareholders
holding not less than two-thirds of the Shares then
outstanding, cast in person or by proxy at any meeting
called for the purpose, or (iii) by a declaration in
writing signed by Shareholders holding not less than two-
thirds of the Shares then outstanding and filed with the
Trust's Custodian.
(f) Vacancies. Any vacancy or anticipated vacancy resulting
from any reason, including without limitation, the death,
resignation, retirement, removal or incapacity of any of
the Trustees or resulting from an increase in the number
of Trustees by the Trustees, may (but so long as there
are at least three remaining Trustees, need not unless
required by the 1940 Act) be filled either by a majority
of the remaining Trustees through the appointment in
writing of such other person as such remaining Trustees
in their discretion shall determine (unless a shareholder
election is required by the 1940 Act) or by the election
by the Shareholders, at a meeting called for the purpose,
of a person to fill such vacancy, and such appointment or
election shall be effective upon the written acceptance
of the person named therein to serve as a Trustee and
- 3 -
<PAGE>
agreement by such person to be bound by the provisions of
this Declaration of Trust, except that any such
appointment or election in anticipation of a vacancy to
occur by reason of retirement, resignation, or increase
in number of Trustees to be effective at a later date
shall become effective only at or after the effective
date of said retirement, resignation, or increase in
number of Trustees. As soon as any Trustee so appointed
or elected shall have accepted such appointment or
election and shall have agreed in writing to be bound by
this Declaration of Trust and the appointment or election
is effective, the Trust estate shall vest in the new
Trustee, together with the continuing Trustees, without
any further act or conveyance.
(g) Effect of Death, Resignation, etc. The death,
resignation, retirement, removal, or incapacity of the
Trustees, or any one of them, shall not operate to annul
or terminate the Trust or to revoke or terminate any
existing agency or contract created or entered into
pursuant to the terms of this Declaration of Trust.
(h) No Accounting. Except to the extent required by the 1940
Act or under circumstances which would justify his
removal for cause, no person ceasing to be a Trustee as
a result of his death, resignation, retirement, removal
or incapacity (nor the estate of any such person) shall
be required to make an accounting to the Shareholders or
remaining Trustees upon such cessation.
Section 3.2 POWERS OF THE TRUSTEES. Subject to the
provisions of this Declaration of Trust, the business of the Trust
shall be managed by the Trustees, and they shall have all powers
necessary or convenient to carry out that responsibility and the
purpose of the Trust. Without limiting the foregoing, the Trustees
may: adopt Bylaws not inconsistent with this Declaration of Trust
providing for the conduct of the business and affairs of the Trust
and may amend and repeal them to the extent that such Bylaws do not
reserve that right to the Shareholders; they may, as they consider
appropriate, elect and remove officers and appoint and terminate
agents and consultants and hire and terminate employees, any one or
more of the foregoing of whom may be a Trustee, and may provide for
the compensation of all of the foregoing; they may appoint from
their own number, and terminate, any one or more committees
consisting of two or more Trustees, including without implied
limitation an executive committee, which may, when the Trustees are
not in session and subject to the 1940 Act, exercise some or all of
the power and authority of the Trustees as the Trustees may
determine; in accordance with Section 3.3 they may employ one or
more advisers, administrators, depositories and custodians and may
- 4 -
<PAGE>
authorize any depository or custodian to employ subcustodians or
agents and to deposit all or any part of such assets in a system or
systems for the central handling of securities and debt
instruments, retain transfer, dividend, accounting or Shareholder
servicing agents or any of the foregoing, provide for the
distribution of Shares by the Trust through one or more
distributors, principal underwriters or otherwise, set record dates
or times for the determination of Shareholders or various of them
with respect to various matters; they may compensate or provide for
the compensation of the Trustees, officers, advisers,
administrators, custodians, other agents, consultants and employees
of the Trust or the Trustees on such terms as they deem
appropriate; and in general they may delegate to any officer of the
Trust, to any committee of the Trustees and to any employee,
adviser, administrator, distributor, principal underwriter,
depository, custodian, transfer and dividend disbursing agent, or
any other agent or consultant of the Trust such authority, powers,
functions and duties as they consider desirable or appropriate for
the conduct of the business and affairs of the Trust, including
without implied limitation the power and authority to act in the
name of the Trust and of the Trustees, to sign documents and to act
as attorney-in-fact for the Trustees.
Without limiting the foregoing and to the extent not
inconsistent with the 1940 Act or other applicable law, the
Trustees shall have power and authority:
(a) Investments. To invest and reinvest cash and other
property, and to hold cash or other property uninvested
without in any event being bound or limited by any
present or future law or custom in regard to investments
by trustees;
(b) Disposition of Assets. To sell, exchange, lend, pledge,
mortgage, hypothecate, write options on and lease any or
all of the assets of the Trust;
(c) Ownership Powers. To vote or give assent, or exercise
any rights of ownership, with respect to stock or other
securities, debt instruments or property and to execute
and deliver proxies or powers of attorney to such person
or persons as the Trustees shall deem proper, granting to
such person or persons such power and discretion with
relation to securities, debt instruments or property as
the Trustees shall deem proper;
(d) Subscription. To exercise powers and rights of
subscription or otherwise which in any manner arise out
of ownership of securities or debt instruments;
- 5 -
<PAGE>
(e) Form of Holding. To hold any security, debt instrument
or property in a form not indicating any trust, whether
in bearer, unregistered or other negotiable form, or in
the name of the Trustees or of the Trust or in the name
of a custodian, subcustodian or other depository or a
nominee or nominees or otherwise;
(f) Reorganization, etc. To consent to or participate in any
plan for the reorganization, consolidation or merger of
any corporation or issuer, any security or debt
instrument of which is or was held in the Trust; to
consent to any contract, lease, mortgage, purchase or
sale of property by such corporation or issuer, and to
pay calls or subscriptions with respect to any security
or debt instrument held in the Trust;
(g) Voting Trusts, etc. To join with other holders of any
securities or debt instruments in acting through a
committee, depository, voting trustee or otherwise, and
in that connection to deposit any security or debt
instrument with, or transfer any security or debt
instrument to, any such committee, depository or trustee,
and to delegate to them such power and authority with
relation to any security or debt instrument (whether or
not so deposited or transferred) as the Trustees shall
deem proper, and to agree to pay, and to pay, such
portion of the expenses and compensation of such
committee, depository or trustee as the Trustees shall
deem proper;
(h) Compromise. To compromise, arbitrate or otherwise adjust
claims in favor of or against the Trust or any matter in
controversy, including but not limited to claims for
taxes;
(i) Partnerships, etc. To enter into joint ventures, general
or limited partnerships and any other combinations or
associations;
(j) Borrowing and Security. To borrow funds and to mortgage
and pledge the assets of the Trust or any part thereof to
secure obligations arising in connection with such
borrowing;
(k) Guarantees, etc. To endorse or guarantee the payment of
any notes or other obligations of any person; to make
contracts of guaranty or suretyship, or otherwise assume
liability for payment thereof; and to mortgage and pledge
the Trust property or any part thereof to secure any of
or all such obligations; and
- 6 -
<PAGE>
(l) Insurance. To purchase and pay for entirely out of Trust
property such insurance as they may deem necessary or
appropriate for the conduct of the business, including,
without limitation, insurance policies insuring the
assets of the Trust and payment of distributions and
principal on its portfolio investments, and insurance
policies insuring the Shareholders, Trustees, officers,
employees, agents, consultants, investment advisers,
managers, administrators, distributors, principal
underwriters, or independent contractors, or any thereof
(or any person connected therewith), of the Trust
individually against all claims and liabilities of every
nature arising by reason of holding, being or having held
any such office or position, or by reason of any action
alleged to have been taken or omitted by any such person
in any such capacity, including any action taken or
omitted that may be determined to constitute negligence;
provided, however, that insurance which protects the
Trustees and officers against liabilities rising from
action involving willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved
in the conduct of their offices may not be purchased.
(m) Pensions, etc. To pay pensions for faithful service, as
deemed appropriate by the Trustees, and to adopt,
establish and carry out pension, profit-sharing, share
bonus, share purchase, savings, thrift and other
retirement, incentive and benefit plans, trusts and
provisions, including the purchasing of life insurance
and annuity contracts as a means of providing such
retirement and other benefits, for any or all of the
Trustees, officers, employees and agents of the Trust.
Except as otherwise provided by the 1940 Act or other
applicable law, this Declaration of Trust or the Bylaws, any action
to be taken by the Trustees may be taken by a majority of the
Trustees present at a meeting of Trustees (a quorum, consisting of
at least a majority of the Trustees then in office, being present),
within or without Massachusetts, including any meeting held by
means of a conference telephone or other communications equipment
by means of which all persons participating in the meeting can hear
each other at the same time and participation by such means shall
constitute presence in person at a meeting, or by written consents
of a majority of the Trustees then in office (or such larger or
different number as may be required by the 1940 Act or other
applicable law).
Section 3.3 CERTAIN CONTRACTS. Subject to compliance with
the provisions of the 1940 Act, but notwithstanding any limitations
of present and future law or custom in regard to delegation of
powers by trustees generally, the Trustees may, at any time and
from time to time and without limiting the generality of their
powers and authority otherwise set forth herein, enter into one or
- 7 -
<PAGE>
more contracts with any one or more corporations, trusts,
associations, partnerships, limited partnerships, other type of
organizations, or individuals ("Contracting Party") to provide for
the performance and assumption of some or all of the following
services, duties and responsibilities to, for or of the Trust
and/or the Trustees, and to provide for the performance and
assumption of such other services, duties and responsibilities in
addition to those set forth below as the Trustees may determine
appropriate:
(a) Advisory. Subject to the general supervision of the
Trustees and in conformity with the stated policy of the
Trustees with respect to the investments of the Trust or
of the assets belonging to any Series of Shares of the
Trust (as that phrase is defined in subsection (a) of
Section 4.2), to manage such investments and assets, make
investment decisions with respect thereto, and to place
purchase and sale orders for portfolio transactions
relating to such investments and assets;
(b) Administration. Subject to the general supervision of
the Trustees and in conformity with any policies of the
Trustees with respect to the operations of the Trust, to
supervise all or any part of the operations of the Trust,
and to provide all or any part of the administrative and
clerical personnel, office space and office equipment and
services appropriate for the efficient administration and
operations of the Trust;
(c) Distribution. To distribute the Shares of the Trust, to
be principal underwriter of such Shares, and/or to act as
agent of the Trust in the sale of Shares and the
acceptance or rejection of orders for the purchase of
Shares;
(d) Custodian and Depository. To act as depository for and
to maintain custody of the property of the Trust and
accounting records in connection therewith;
(e) Transfer and Dividend Disbursing Agency. To maintain
records of the ownership of outstanding Shares, the
issuance and redemption and the transfer thereof, and to
disburse any dividends declared by the Trustees and in
accordance with the policies of the Trustees and/or the
instructions of any particular Shareholder to reinvest
any such dividends;
(f) Shareholder Servicing. To provide service with respect
to the relationship of the Trust and its Shareholders,
records with respect to Shareholders and their Shares,
and similar matters; and
- 8 -
<PAGE>
(g) Legal, Accounting, Taxes and Other. To handle all or any
part of the legal, accounting, tax or other
responsibilities, whether with respect to the Trust's
properties, Shareholders or otherwise.
The same person may be the Contracting Party for some or all of the
services, duties and responsibilities to, for and of the Trust
and/or the Trustees, and the contracts with respect thereto may
contain such terms interpretive of or in addition to the
delineation of the services, duties and responsibilities provided
for, including provisions that are not inconsistent with the 1940
Act relating to the standard of duty of and the rights to
indemnification of the Contracting Party and others, as the
Trustees may determine. Nothing herein shall preclude, prevent or
limit the Trust or a Contracting Party from entering into
subcontractual arrangements relative to any of the matters referred
to in Sections 3.3(a) through (g) hereof.
Subject to the provisions of the 1940 Act, the fact that:
(i) any of the Shareholders, Trustees or officers of the
Trust is a shareholder, director, officer, partner, trustee,
employee, manager, adviser, principal underwriter or
distributor or agent of or for any Contracting Party, or of or
for any parent or affiliate of any Contracting Party or that
the Contracting Party or any parent or affiliate thereof is a
Shareholder or has an interest in the Trust, or that
(ii) any Contracting Party may have a contract providing
for the rendering of any similar services to one or more other
corporations, trusts, associations, partnerships, limited
partnerships or other organizations, or has other business or
interests,
shall not affect the validity of any contract for the performance
and assumption of services, duties and responsibilities to, for or
of the Trust and/or the Trustees or disqualify any Shareholder,
Trustee or officer of the Trust from voting upon or executing the
same or create any liability or accountability to the Trust or its
Shareholders, provided that in the case of any relationship or
interest referred to in the preceding clause (i) on the part of any
Trustee or officer of the Trust either (1) the material facts as to
such relationship or interest have been disclosed to or are known
by the Trustees not having any such relationship or interest and
the contract involved is approved in good faith reasonably
justified by such facts by a majority of such Trustees not having
any such relationship or interest (even though such unrelated or
disinterested Trustees are less than a quorum of all of the
Trustees), or (2) the specific contract involved is fair to the
Trust as of the time it is authorized, approved or ratified by the
Trustees or by the Shareholders.
- 9 -
<PAGE>
Section 3.4 PAYMENT OF TRUST EXPENSES AND COMPENSATION OF
TRUSTEES. The Trustees are authorized to pay or to cause to be
paid out of the principal or income of the Trust, or partly out of
principal and partly out of income, and to charge or allocate the
same to, between or among such one or more of the Series that may
be established and designated pursuant to Article IV, as the
Trustees deem fair, all expenses, fees, charges, taxes and
liabilities incurred or arising in connection with the Trust, or in
connection with the management thereof, including, but not limited
to, the Trustees' compensation and such expenses and charges for
the services of the Trust's officers, employees, investment
adviser, administrator, distributor, principal underwriter,
auditor, counsel, depository, custodian, transfer agent, dividend
disbursing agent, accounting agent, Shareholder servicing agent,
and such other agents, consultants, and independent contractors and
such other expenses and charges as the Trustees may deem necessary
or proper to incur. Without limiting the generality of any other
provision hereof, the Trustees shall be entitled to reasonable
compensation from the Trust for their services as Trustees and may
fix the amount of such compensation.
Section 3.5 OWNERSHIP OF ASSETS OF THE TRUST. Title to all
of the assets of the Trust shall at all times be considered as
vested in the Trustees.
ARTICLE IV
SHARES
Section 4.1 DESCRIPTION OF SHARES. The beneficial interest
in the Trust shall be divided into Shares, all without par value,
but the Trustees shall have the authority from time to time to
divide the Shares into two or more Series of Shares, as they deem
necessary or desirable, to establish and designate such Series, and
to fix and determine the relative rights and preferences as between
the different Series of Shares as to right of redemption and the
price, terms and manner of redemption, special and relative rights
as to dividends and other distributions and on liquidation, sinking
or purchase fund provisions, conversion rights, and conditions
under which the several Series shall have separate voting rights or
no voting rights. Except as aforesaid all Shares of the different
Series shall be identical.
The Shares of each Series may be issued or reissued from time
to time in one or more classes ("Classes"), as determined by the
Board of Trustees pursuant to resolution. Each Class shall be
appropriately designated, prior to the issuance of any shares
thereof, by some distinguishing letter, number or title. All
Shares within a Class shall be alike in every particular. All
Shares of each Series shall be of equal rank and have the same
- 10 -
<PAGE>
powers, preferences and rights, and shall be subject to the same
qualifications, limitations and restrictions without distinction
between the shares of different Classes thereof, except with
respect to such differences among such Classes, as the Board of
Trustees shall from time to time determine to be necessary or
desirable, including differences in the rate or rates of dividends
or distributions. The Board of Trustees may from time to time
increase the number of Shares allocated to any Class already
created by providing that any unissued Shares of the applicable
Series shall constitute part of such Class, or may decrease the
number of Shares allocated to any Class already created by
providing that any unissued Shares previously assigned to such
Class shall no longer constitute part thereof. The Board of
Trustees is hereby empowered to classify or reclassify from time to
time any unissued Shares of each Series by fixing or altering the
terms thereof and by assigning such unissued shares to an existing
or newly created Class. Notwithstanding anything to the contrary
in this paragraph the Board of Trustees is hereby empowered (i) to
redesignate any issued Shares of any Series by assigning a
distinguishing letter, number or title to such shares and (ii) to
reclassify all or any part of the issued Shares of any Series to
make them part of an existing or newly created Class.
The number of authorized Shares and the number of Shares of
each Series that may be issued is unlimited, and the Trustees may
issue Shares of any Series for such consideration and on such terms
as they may determine (or for no consideration if pursuant to a
Share dividend or split-up), all without action or approval of the
Shareholders. All Shares when so issued on the terms determined by
the Trustees shall be fully paid and non-assessable (but may be
subject to mandatory contribution back to the Trust as provided in
subsection (g) of Section 4.2). The Trustees may classify or
reclassify any unissued Shares or any Shares previously issued and
reacquired of any Series into one or more Series that may be
established and designated from time to time. The Trustees may
hold as treasury Shares (of the same or some other Series), reissue
for such consideration and on such terms as they may determine, or
cancel, at their discretion from time to time, any Shares of any
Series reacquired by the Trust.
The Trustees may from time to time close the transfer books or
establish record dates and times for the purposes of determining
the holders of Shares entitled to be treated as such, to the extent
provided or referred to in Section 5.3.
The establishment and designation of any Series of Shares in
addition to that established and designated in Section 4.2, or of
any Class of Shares, shall be effective upon the execution by a
majority of the then Trustees of an instrument setting forth such
establishment and designation and the relative rights and
- 11 -
<PAGE>
preferences of such Series or Class, or as otherwise provided in
such instrument. At any time that there are no Shares outstanding
of any particular Series or Class previously established and
designated the Trustees may by an instrument executed by a majority
of their number abolish that Series or Class and the establishment
and designation thereof. Each instrument referred to in this
paragraph shall have the status of an amendment to this Declaration
of Trust.
Any Trustee, officer or other agent of the Trust, and any
organization in which any such person is interested, may acquire,
own, hold and dispose of Shares of any Series of the Trust to the
same extent as if such person were not a Trustee, officer or other
agent of the Trust; and the Trust may issue and sell or cause to be
issued and sold and may purchase Shares of any Series from any such
person or any such organization subject only to the general
limitations, restrictions or other provisions applicable to the
sale or purchase of Shares of such Series generally.
Section 4.2 ESTABLISHMENT AND DESIGNATION OF SERIES.
Without limiting the authority of the Trustees set forth in Section
4.1 to establish and designate any further Series, the Trustees
hereby establish and designate two Series of Shares: The "GW&K
Equity Fund" and the "GW&K Government Securities Fund". The Shares
of the GW&K Equity Fund and the GW&K Government Securities Fund and
any Shares of any further Series that may from time to time be
established and designated by the Trustees shall (unless the
Trustees otherwise determine with respect to some further Series or
Class at the time of establishing and designating the same) have
the following relative rights and preferences:
(a) Assets Belonging to Series. All consideration received
by the Trust for the issue or sale of Shares of a
particular Series, together with all assets in which such
consideration is invested or reinvested, all income,
earnings, profits, and proceeds thereof, including any
proceeds derived from the sale, exchange or liquidation
of such assets, and any funds or payments derived from
any reinvestment of such proceeds in whatever form the
same may be, shall irrevocably belong to that Series for
all purposes, subject only to the rights of creditors,
and shall be so recorded upon the books of account of the
Trust. Such consideration, assets, income, earnings,
profits and proceeds thereof, including any proceeds
derived from the sale, exchange or liquidation of such
assets, and any funds or payments derived from any
reinvestment of such proceeds, in whatever form the same
may be, together with any General Items allocated to that
Series as provided in the following sentence, are herein
- 12 -
<PAGE>
referred to as "assets belonging to" that Series. In the
event that there are any assets, incomes, earnings,
profits, and proceeds thereof, funds, or payments which
are not readily identifiable as belonging to any
particular Series (collectively "General Items"), the
Trustees shall allocate such General Items to and among
any one or more of the Series established and designated
from time to time in such manner and on such basis as
they, in their sole discretion, deem fair and equitable;
and any General Items so allocated to a particular Series
shall belong to that Series. Each such allocation by the
Trustees shall be conclusive and binding upon the
Shareholders of all Series for all purposes.
The Trustees shall have full discretion, to the extent
not inconsistent with the 1940 Act, to determine which
items shall be treated as income and which items as
capital; and each such determination and allocation shall
be conclusive and binding upon the Shareholders.
(b) Liabilities Belonging to Series. The assets belonging to
each particular Series shall be charged with the
liabilities of the Trust in respect of that Series and
all expenses, costs, charges and reserves attributable to
that Series, and any general liabilities, expenses,
costs, charges or reserves of the Trust which are not
readily identifiable as belonging to any particular
Series shall be allocated and charged by the Trustees to
and among any one or more of the Series established and
designated from time to time in such manner and on such
basis as the Trustees in their sole discretion deem fair
and equitable. The liabilities, expenses, costs, charges
and reserves allocated and so charged to a Series are
herein referred to as "liabilities belonging to" that
Series. Each allocation of liabilities, expenses, costs,
charges and reserves by the Trustees shall be conclusive
and binding upon the holders of all Series for all
purposes.
(c) Dividends. Dividends and distributions on Shares of a
particular Series may be paid with such frequency as the
Trustees may determine, which may be daily or otherwise
pursuant to a standing resolution or resolutions adopted
only once or with such frequency as the Trustees may
determine, to the holders of Shares of that Series, from
such of the estimated income and capital gains, accrued
or realized, from the assets belonging to that Series, as
the Trustees may determine, after providing for actual
and accrued liabilities belonging to that Series. All
dividends and distributions on Shares of a particular
- 13 -
<PAGE>
Series shall be distributed pro rata to the holders of
that Series in proportion to the number of Shares of that
Series held by such holders at the date and time of
record established for the payment of such dividends or
distributions, except that in connection with any
dividend or distribution program or procedure the
Trustees may determine that no dividend or distribution
shall be payable on Shares as to which the Shareholder's
purchase order and/or payment have not been received by
the time or times established by the Trustees under such
program or procedure, and except that if Classes have
been established for any Series, the rate of dividends or
distributions may vary among such Classes pursuant to
resolution, which may be a standing resolution, of the
Board of Trustees. Such dividends and distributions may
be made in cash or Shares or a combination thereof as
determined by the Trustees or pursuant to any program
that the Trustees may have in effect at the time for the
election by each Shareholder of the mode of the making of
such dividend or distribution to that Shareholder. Any
such dividend or distribution paid in Shares will be paid
at the net asset value thereof as determined in
accordance with subsection (h) of Section 4.2.
The Trust intends to qualify each Series as a "regulated
investment company" under the Internal Revenue Code of
1986, as amended, or any successor or comparable statute
thereto, and regulations promulgated thereunder.
Inasmuch as the computation of net income and gains for
federal income tax purposes may vary from the computation
thereof on the books of the Trust, the Board of Trustees
shall have the power, in its sole discretion, to
distribute in any fiscal year as dividends, including
dividends designated in whole or in part as capital gains
distributions, amounts sufficient, in the opinion of the
Board of Trustees, to enable each Series to qualify as a
regulated investment company and to avoid liability of
the Series for federal income tax in respect of that
year. However, nothing in the foregoing shall limit the
authority of the Board of Trustees to make distributions
greater than or less than the amount necessary to qualify
as a regulated investment company and to avoid liability
of each Series for such tax.
(d) Liquidation. In event of the liquidation or dissolution
of the Trust, the Shareholders of each Series that has
been established and designated shall be entitled to
receive, as a Series, when and as declared by the
Trustees, the excess of the assets belonging to that
Series over the liabilities belonging to that Series.
- 14 -
<PAGE>
The assets so distributable to the Shareholders of any
particular Series shall be distributed among such
Shareholders in proportion to the number of Shares of
that Series held by them and recorded on the books of the
Trust. The liquidation of any particular Series may be
authorized by vote of a majority of the Trustees then in
office subject to the approval of a majority of the
outstanding voting Shares of that Series, as defined in
the 1940 Act.
(e) Voting. All shares of all Series shall have "equal
voting rights" as such term is defined in the Investment
Company Act of 1940 and except as otherwise provided by
that Act or rules, regulations or orders promulgated
thereunder. On each matter submitted to a vote of the
Shareholders, all Shares of all Series shall vote as a
single class ("Single Class Voting"); provided, however,
that (a) as to any matter with respect to which a
separate vote of any Series is required by the 1940 Act
or rules and regulations promulgated thereunder, or would
be required under the Massachusetts Business Corporation
Law if the Trust were a Massachusetts corporation, such
requirements as to a separate vote by that Series shall
apply in lieu of Single Class Voting as described above;
(b) in the event that the separate vote requirements
referred to in (a) above apply with respect to one or
more Series, then, subject to (c) below, the Shares of
all other Series shall vote as a single class; and (c) as
to any matter which does not affect the interest of a
particular Series, only the holders of Shares of the one
or more affected Series shall be entitled to vote.
(f) Redemption by Shareholder. Each holder of Shares of a
particular Series shall have the right at such times as
may be permitted by the Trust, but no less frequently
than once each week, to require the Trust to redeem all
or any part of his Shares of that Series at a redemption
price equal to the net asset value per Share of that
Series next determined in accordance with subsection (h)
of this Section 4.2 after the Shares are properly
tendered for redemption. Payment of the redemption price
shall be in cash; provided, however, that if the Trustees
determine, which determination shall be conclusive, that
conditions exist which make payment wholly in cash unwise
or undesirable, the Trust may make payment wholly or
partly in securities or other assets belonging to the
Series of which the Shares being redeemed are part at the
value of such securities or assets used in such
determination of net asset value.
- 15 -
<PAGE>
Notwithstanding the foregoing, the Trust may postpone
payment of the redemption price and may suspend the right
of the holders of Shares of any Series to require the
Trust to redeem Shares of that Series during any period
or at any time when and to the extent permissible under
the 1940 Act, and such redemption is conditioned upon the
Trust having funds or property legally available
therefor.
(h) Redemption by Trust. Each Share of each Series that has
been established and designated is subject to redemption
by the Trust at the redemption price which would be
applicable if such Share was then being redeemed by the
Shareholder pursuant to subsection (f) of this Section
4.2: (a) at any time, if the Trustees determine in their
sole discretion that failure to so redeem may have
materially adverse consequences to all or any of the
holders of the Shares, or any Series thereof, of the
Trust, or (b) upon such other conditions as may from time
to time be determined by the Trustees and set forth in
the then current Prospectus of the Trust with respect to
maintenance of Shareholder accounts of a minimum amount.
Upon such redemption the holders of the Shares so
redeemed shall have no further right with respect thereto
other than to receive payment of such redemption price.
(h) Net Asset Value. The net asset value per Share of any
Series shall be the quotient obtained by dividing the
value of the net assets of that Series (being the value
of the assets belonging to that Series less the
liabilities belonging to that Series) by the total number
of Shares of that Series outstanding, all determined in
accordance with the methods and procedures, including
without limitation those with respect to rounding,
established by the Trustees from time to time.
(i) Transfer. All Shares of each particular Series shall be
transferable, but transfers of Shares of a particular
Series will be recorded on the Share transfer records of
the Trust applicable to that Series only at such times as
Shareholders shall have the right to require the Trust to
redeem Shares of that Series and at such other times as
may be permitted by the Trustees.
(j) Equality. All Shares of each particular Series shall
represent an equal proportionate interest in the assets
belonging to that Series (subject to the liabilities
belonging to that Series), and each Share of any
particular Series shall be equal to each other Share of
that Series; but the provisions of this sentence shall
- 16 -
<PAGE>
not restrict any distinctions permissible under
subsection (c) of this Section 4.2 that may exist with
respect to dividends and distributions on Shares of the
same Series. The Trustees may from time to time divide
or combine the Shares of any particular Series into a
greater or lesser number of Shares of that Series without
thereby changing the proportionate beneficial interest in
the assets belonging to that Series or in any way
affecting the rights of Shares of any other Series.
(k) Fractions. Any fractional Share of any Series or Class,
if any such fractional Share is outstanding, shall carry
proportionately all the rights and obligations of a whole
Share of that Series or Class, including with respect to
voting, receipt of dividends and distributions,
redemption of Shares, and liquidation of the Trust.
(l) Conversion Rights. Subject to compliance with the
requirements of the 1940 Act, the Trustees shall have the
authority to provide that holders of Shares of any Series
shall have the right to convert said Shares into Shares
of one or more other Series of Shares in accordance with
such requirements and procedures as may be established by
the Trustees.
Section 4.3 OWNERSHIP OF SHARES. The ownership of Shares
shall be recorded on the books of the Trust or of a transfer or
similar agent for the Trust, which books shall be maintained
separately for the Shares of each Series that has been established
and designated. No certificates certifying the ownership of Shares
need be issued except as the Trustees may otherwise determine from
time to time. The Trustees may make such rules as they consider
appropriate for the issuance of Share certificates, the use of
facsimile signatures, the transfer of Shares and similar matters.
The record books of the Trust as kept by the Trust or any transfer
or similar agent, as the case may be, shall be conclusive as to who
are the Shareholders and as to the number of Shares of each Series
and Class held from time to time by each such Shareholder.
Section 4.4 INVESTMENTS IN THE TRUST. The Trustees may
accept investments in the Trust from such persons and on such terms
and for such consideration, not inconsistent with the provisions of
the 1940 Act, as they from time to time authorize. The Trustees
may authorize any distributor, principal underwriter, custodian,
transfer agent or other person to accept orders for the purchase of
Shares that conform to such authorized terms and to reject any
purchase orders for Shares whether or not conforming to such
authorized terms.
- 17 -
<PAGE>
Section 4.5 NO PREEMPTIVE RIGHTS. Shareholders shall have
no preemptive or other right to subscribe to any additional Shares
or other securities issued by the Trust.
Section 4.6 STATUS OF SHARES AND LIMITATION OF PERSONAL
LIABILITY. Shares shall be deemed to be personal property giving
only the rights provided in this instrument. Every Shareholder by
virtue of having become a Shareholder shall be held to have
expressly assented and agreed to the terms hereof and to have
become a party hereto. The death of a Shareholder during the
continuance of the Trust shall not operate to terminate the Trust
nor entitle the representative of any deceased Shareholder to an
accounting or to take any action in court or elsewhere against the
Trust or the Trustees, but only to the rights of said decedent
under this Trust. Ownership of Shares shall not entitle the
Shareholder to any title in or to the whole or any part of the
Trust property or right to call for a partition or division of the
same or for an accounting, nor shall the ownership of Shares
constitute the Shareholders as partners. Neither the Trust nor the
Trustees, nor any officer, employee or agent of the Trust shall
have any power to bind personally any Shareholder, nor, except as
specifically provided herein, to call upon any Shareholder for the
payment of any sum of money or assessment whatsoever other than
such as the Shareholder may at any time personally agree to pay.
ARTICLE V
SHAREHOLDERS' VOTING POWERS AND MEETINGS
Section 5.1 VOTING POWERS. The Shareholders shall have
power to vote only (i) for the election or removal of Trustees as
provided in Section 3.1, (ii) with respect to any contract with a
Contracting Party as provided in Section 3.3 as to which
Shareholder approval is required by the 1940 Act, (iii) with
respect to any termination or reorganization of the Trust or any
Series to the extent and as provided in Sections 7.1 and 7.2, (iv)
with respect to any amendment of this Declaration of Trust to the
extent and as provided in Section 7.3, (v) to the same extent as
the stockholders of a Massachusetts business corporation as to
whether or not a court action, proceeding or claim should or should
not be brought or maintained derivatively or as a class action on
behalf of the Trust or the Shareholders, and (vi) with respect to
such additional matters relating to the Trust as may be required by
the 1940 Act, this Declaration of Trust, the Bylaws or any
registration of the Trust with the Commission (or any successor
agency) or any state, or as the Trustees may consider necessary or
desirable. There shall be no cumulative voting in the election of
any Trustee or Trustees. Shares may be voted in person or by
proxy. A proxy with respect to Shares held in the name of two or
more persons shall be valid if executed by any one of them unless
- 18 -
<PAGE>
at or prior to exercise of the proxy the Trust receives a specific
written notice to the contrary from any one of them. A proxy
purporting to be executed by or on behalf of a Shareholder shall be
deemed valid unless challenged at or prior to its exercise and the
burden of proving invalidity shall rest on the challenger. Until
Shares are issued, the Trustees may exercise all rights of
Shareholders and may take any action required by law, this
Declaration of Trust or the Bylaws to be taken by Shareholders.
Section 5.2 MEETINGS. Meetings (including meetings
involving only the holders of Shares of one or more but less than
all Series) of Shareholders may be called by the Trustees from time
to time for the purpose of taking action upon any matter requiring
the vote or authority of the Shareholders as herein provided or
upon any other matter deemed by the Trustees to be necessary or
desirable. Written notice of any meeting of Shareholders shall be
given or caused to be given by the Trustees by mailing such notice
at least seven days before such meeting, postage prepaid, stating
the time, place and purpose of the meeting, to each Shareholder at
the Shareholder's address as it appears on the records of the
Trust. The Trustees shall promptly call and give notice of a
meeting of Shareholders for the purpose of voting upon removal of
any Trustee of the Trust when requested to do so in writing by
Shareholders holding not less than 10% of the Shares then
outstanding. If the Trustees shall fail to call or give notice of
any meeting of Shareholders (including a meeting involving only the
holders of Shares of one or more but less than all Series) for a
period of 30 days after written application by Shareholders holding
at least 25% of the Shares then outstanding requesting a meeting be
called for any other purpose requiring action by the Shareholders
as provided herein or in the Bylaws, then Shareholders holding at
least 25% of the Shares then outstanding may call and give notice
of such meeting, and thereupon the meeting shall be held in the
manner provided for herein in case of call thereof by the Trustees.
Section 5.3 RECORD DATES. For the purpose of determining
the Shareholders who are entitled to vote or act at any meeting or
any adjournment thereof, or who are entitled to participate in any
dividend or distribution, or for the purpose of any other action,
the Trustees may from time to time close the transfer books for
such period, not exceeding 30 days (except at or in connection with
the termination of the Trust), as the Trustees may determine; or
without closing the transfer books the Trustees may fix a date and
time not more than 60 days prior to the date of any meeting of
Shareholders or other action as the date and time of record for the
determination of Shareholders entitled to vote at such meeting or
any adjournment thereof or to be treated as Shareholders of record
for purposes of such other action, and any Shareholder who was a
Shareholder at the date and time so fixed shall be entitled to vote
at such meeting or any adjournment thereof or (subject to any
- 19 -
<PAGE>
provisions permissible under subsection (c) of Section 4.2 with
respect to dividends or distributions on Shares that have not been
ordered and/or paid for by the time or times established by the
Trustees under the applicable dividend or distribution program or
procedure then in effect) to be treated as a Shareholder of record
for purposes of such other action, even though he has since that
date and time disposed of his Shares, and no Shareholder becoming
such after that date and time shall be so entitled to vote at such
meeting or any adjournment thereof or to be treated as a
Shareholder of record for purposes of such other action.
Section 5.4 QUORUM AND REQUIRED VOTE. A majority of the
Shares entitled to vote shall be a quorum for the transaction of
business at a Shareholders' meeting, but any lesser number shall be
sufficient for adjournments. Any adjourned session or sessions may
be held, within a reasonable time after the date set for the
original meeting without the necessity of further notice. A
majority of the Shares voted, at a meeting of which a quorum is
present, shall decide any questions and a plurality shall elect a
Trustee, except when a different vote is required or permitted by
any provision of the 1940 Act or other applicable law or by this
Declaration of Trust or the Bylaws.
Section 5.5 ACTION BY WRITTEN CONSENT. Subject to the
provisions of the 1940 Act and other applicable law, any action
taken by Shareholders may be taken without a meeting if a majority
of Shareholders entitled to vote on the matter (or such other
proportion thereof as shall be required by the 1940 Act or by any
express provision of this Declaration of Trust or the Bylaws)
consent to the action in writing and such written consents are
filed with the records of the meetings of Shareholders. Such
consent shall be treated for all purposes as a vote taken at a
meeting of Shareholders.
Section 5.6 INSPECTION OF RECORDS. The records of the
Trust shall be open to inspection by Shareholders to the same
extent as is permitted stockholders of a Massachusetts business
corporation under the Massachusetts Business Corporation Law.
Section 5.7 ADDITIONAL PROVISIONS. The Bylaws may include
further provisions for Shareholders' votes and meetings and related
matters not inconsistent with the provisions hereof.
- 20 -
<PAGE>
ARTICLE VI
LIMITATION OF LIABILITY; INDEMNIFICATION
Section 6.1 TRUSTEES, SHAREHOLDERS, ETC. NOT PERSONALLY
LIABLE; NOTICE. All persons extending credit to, contracting with
or having any claim against the Trust shall look only to the assets
of the Trust for payment under such credit, contract or claim; and
neither the Shareholders nor the Trustees, nor any of the Trust's
officers, employees or agents, whether past, present or future,
shall be personally liable therefor. Every note, bond, contract,
instrument, certificate or undertaking and every other act or thing
whatsoever executed or done by or on behalf of the Trust or the
Trustees or any of them in connection with the Trust shall be
conclusively deemed to have been executed or done only by or for
the Trust or the Trustees and not personally. Nothing in this
Declaration of Trust shall protect any Trustee or officer against
any liability to the Trust or the Shareholders to which such
Trustee or officer would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of the office of Trustee or of
such officer.
Every note, bond, contract, instrument, certificate or
undertaking made or issued by the Trustees or by any officers or
officer shall give notice that this Declaration of Trust is on file
with the Secretary of the Commonwealth of Massachusetts and shall
recite to the effect that the same was executed or made by or on
behalf of the Trust or by them as Trustees or Trustee or as
officers or officer and not individually and that the obligations
of such instrument are not binding upon any of them or the
Shareholders individually but are binding only upon the assets and
property of the Trust, but the omission thereof shall not operate
to bind any Trustees or Trustee or officers or officer or
Shareholders or Shareholder individually.
Section 6.2 TRUSTEE'S GOOD FAITH ACTION; EXPERT ADVICE; NO
BOND OR SURETY. The exercise by the Trustees of their powers and
discretions hereunder shall be binding upon everyone interested.
A Trustee shall be liable for his own willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties
involved in the conduct of the office of Trustee, and for nothing
else, and shall not be liable for errors of judgment or mistakes of
fact or law. Subject to the foregoing, (a) the Trustees shall not
be responsible or liable in any event for any neglect or wrongdoing
of any officer, agent, employee, consultant, adviser,
administrator, distributor or principal underwriter, custodian or
transfer, dividend disbursing, Shareholder servicing or accounting
agent of the Trust, nor shall any Trustee be responsible for the
act or omission of any other Trustee; (b) the Trustees may take
- 21 -
<PAGE>
advice of counsel or other experts with respect to the meaning and
operation of this Declaration of Trust and their duties as
Trustees, and shall be under no liability for any act or omission
in accordance with such advice or for failing to follow such
advice; and (c) in discharging their duties, the Trustees, when
acting in good faith, shall be entitled to rely upon the books of
account of the Trust and upon written reports made to the Trustees
by any officer appointed by them, any independent public
accountant, and (with respect to the subject matter of the contract
involved) any officer, partner or responsible employee of a
Contracting Party appointed by the Trustees pursuant to Section
3.3. The Trustees as such shall not be required to give any bond
or surety or any other security for the performance of their
duties.
Section 6.3 INDEMNIFICATION OF SHAREHOLDERS. In case any
Shareholder or former Shareholder shall be charged or held to be
personally liable for any obligation or liability of the Trust
solely by reason of being or having been a Shareholder and not
because of such Shareholder's acts or omissions or for some other
reason, the Trust (upon proper and timely request by the
Shareholder) shall assume the defense against such charge and
satisfy any judgment thereon, and the Shareholder or former
Shareholder (or his heirs, executors, administrators or other legal
representatives or in the case of a corporation or other entity,
its corporate or other general successor) shall be entitled out of
the assets of the Trust estate to be held harmless from and
indemnified against all loss and expense arising from such
liability.
Section 6.4 INDEMNIFICATION OF TRUSTEES, OFFICERS, ETC.
Subject to and except as otherwise provided in the Securities Act
of 1933, as amended, and the 1940 Act, the Trust shall indemnify
each of its Trustees and officers, including persons who serve at
the Trust's request as directors, officers or trustees of another
organization in which the Trust has any interest as a shareholder,
creditor or otherwise (hereinafter referred to as a "Covered
Person") against all liabilities, including but not limited to
amounts paid in satisfaction of judgments, in compromise or as
fines and penalties, and expenses, including reasonable
accountants' and counsel fees, incurred by any Covered Person in
connection with the defense or disposition of any action, suit or
other proceeding, whether civil or criminal, before any court or
administrative or legislative body, in which such Covered Person
may be or may have been involved as a party or otherwise or with
which such person may be or may have been threatened, while in
office or thereafter, by reason of being or having been such a
Trustee or officer, director or trustee, and except that no Covered
Person shall be indemnified against any liability to the Trust or
its Shareholders to which such Covered Person would otherwise be
- 22 -
<PAGE>
subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the
conduct of such Covered Person's office (disabling conduct).
Anything herein contained to the contrary notwithstanding, no
Covered Person shall be indemnified for any liability to the Trust
or its shareholders to which such Covered Person would otherwise be
subject unless (1) a final decision on the merits is made by a
court or other body before whom the proceeding was brought that the
Covered Person to be indemnified was not liable by reason of
disabling conduct or, (2) in the absence of such a decision, a
reasonable determination is made, based upon a review of the facts,
that the Covered Person was not liable by reason of disabling
conduct, by (a) the vote of a majority of a quorum of Trustees who
are neither "interested persons" of the Company as defined in the
Investment Company Act of 1940 nor parties to the proceeding
("disinterested, non-party Trustees"), or (b) an independent legal
counsel in a written opinion.
Section 6.5 ADVANCES OF EXPENSES. The Trust shall advance
attorneys' fees or other expenses incurred by a Covered Person in
defending a proceeding, upon the undertaking by or on behalf of the
Covered Person to repay the advance unless it is ultimately
determined that such Covered Person is entitled to indemnification,
so long as one of the following conditions is met: (i) the Covered
Person shall provide security for his undertaking, (ii) the Trust
shall be insured against losses arising by reason of any lawful
advances, or (iii) a majority of a quorum of the disinterested non-
party Trustees of the Trust, or an independent legal counsel in a
written opinion, shall determine, based on a review of readily
available facts (as opposed to full trial-type inquiry), that there
is reason to believe that the Covered Person ultimately will be
found entitled to indemnification.
Section 6.6 INDEMNIFICATION NOT EXCLUSIVE, ETC. The right
of indemnification provided by this Article VI shall not be
exclusive of or affect any other rights to which any such Covered
Person may be entitled. As used in this Article VI, "Covered
Person" shall include such person's heirs, executors and
administrators; an "interested Covered Person" is one against whom
the action, suit or other proceeding in question or another action,
suit or other proceeding on the same or similar grounds is then or
has been pending or threatened, and a "disinterested" person is a
person against whom none of such actions, suits or other
proceedings or another action, suit or other proceeding on the same
or similar grounds is then or has been pending or threatened.
Nothing contained in this article shall affect any rights to
indemnification to which personnel of the Trust, other than
Trustees and officers, and other persons may be entitled by
contract or otherwise under law, nor the power of the Trust to
purchase and maintain liability insurance on behalf of any such
person.
- 23 -
<PAGE>
Section 6.7 LIABILITY OF THIRD PERSONS DEALING WITH
TRUSTEES. No person dealing with the Trustees shall be bound to
make any inquiry concerning the validity of any transaction made or
to be made by the Trustees or to see to the application of any
payments made or property transferred to the Trust or upon its
order.
ARTICLE VII
MISCELLANEOUS
Section 7.1 DURATION AND TERMINATION OF TRUST. Unless
terminated as provided herein, the Trust shall continue without
limitation of time. The Trust may be terminated at any time by a
majority of the Trustees then in office subject to a favorable vote
of a majority of the outstanding voting Shares, as defined in the
1940 Act, of each Series voting separately by Series.
Upon termination, after paying or otherwise providing for all
charges, taxes, expenses and liabilities, whether due or accrued or
anticipated as may be determined by the Trustees, the Trust shall
in accordance with such procedures as the Trustees consider
appropriate reduce the remaining assets to distributable form in
cash, securities or other property, or any combination thereof, and
distribute the proceeds to the Shareholders, in conformity with the
provisions of subsection (d) of Section 4.2.
Section 7.2 REORGANIZATION. The Trustees may sell, convey
and transfer the assets of the Trust, or the assets belonging to
any one or more Series, to another trust, partnership, association
or corporation organized under the laws of any state of the United
States, or to the Trust to be held as assets belonging to another
Series of the Trust, in exchange for cash, shares or other
securities (including, in the case of a transfer to another Series
of the Trust, Shares of such other Series) with such transfer being
made subject to, or with the assumption by the transferee of, the
liabilities belonging to each Series the assets of which are so
transferred; provided, however, that if shareholder approval is
required by the 1940 Act, no assets belonging to any particular
Series shall be so transferred unless the terms of such transfer
shall have first been approved at a meeting called for the purpose
by the affirmative vote of the holders of a majority of the
outstanding voting Shares, as defined in the 1940 Act, of that
Series. Following such transfer, the Trustees shall distribute
such cash, shares or other securities (giving due effect to the
assets and liabilities belonging to and any other differences among
the various Series the assets belonging to which have so been
transferred) among the Shareholders of the Series the assets
belonging to which have been so transferred; and if all of the
assets of the Trust have been so transferred, the Trust shall be
terminated.
- 24 -
<PAGE>
Section 7.3 AMENDMENTS. All rights granted to the
Shareholders under this Declaration of Trust are granted subject to
the reservation of the right to amend this Declaration of Trust as
herein provided, except that no amendment shall repeal the
limitations on personal liability of any Shareholder or Trustee or
repeal the prohibition of assessment upon the Shareholders without
the express consent of each Shareholder or Trustee involved.
Subject to the foregoing, the provisions of this Declaration of
Trust (whether or not related to the rights of Shareholders) may be
amended at any time by an instrument in writing signed by a
majority of the then Trustees (or by an officer of the Trust
pursuant to the vote of a majority of such Trustees), when
authorized so to do by the vote in accordance with subsection (e)
of Section 4.2 of Shareholders holding a majority of the Shares
entitled to vote, except that amendments either (a) establishing
and designating any new Series of Shares not established and
designated in Section 4.2, or any Class or (b) having the purpose
of changing the name of the Trust or the name of any Shares
theretofore established and designated or of supplying any
omission, curing any ambiguity or curing, correcting or
supplementing any provision hereof which is internally inconsistent
with any other provision hereof or which is defective or
inconsistent with the 1940 Act or with the requirements of the
Internal Revenue Code and applicable regulations for the Trust's
obtaining the most favorable treatment thereunder available to
regulated investment companies, shall not require authorization by
Shareholder vote. Subject to the foregoing, any such amendment
shall be effective as provided in the instrument containing the
terms of such amendment or, if there is no provision therein with
respect to effectiveness, upon the execution of such instrument and
of a certificate (which may be a part of such instrument) executed
by a Trustee or officer of the Trust to the effect that such
amendment has been duly adopted.
Section 7.4 FILING OF COPIES; REFERENCES; HEADINGS. The
original or a copy of this instrument and of each amendment hereto
shall be kept at the office of the Trust where it may be inspected
by any Shareholder. A copy of this instrument and of each
amendment hereto shall be filed by the Trust with the Secretary of
the Commonwealth of Massachusetts and with the Boston City Clerk,
as well as any other governmental office where such filing may from
time to time be required, but the failure to make any such filing
shall not impair the effectiveness of this instrument or any such
amendment. Anyone dealing with the Trust may rely on a certificate
by an officer of the Trust as to whether or not any such amendments
have been made, as to the identities of the Trustees and officers,
and as to any matters in connection with the Trust hereunder; and,
with the same effect as if it were the original, may rely on a copy
certified by an officer of the Trust to be a copy of this
instrument or of any such amendments. In this instrument and in
- 25 -
<PAGE>
any such amendment, references to this instrument, and all
expressions like "herein," "hereof" and "hereunder" shall be deemed
to refer to this instrument as a whole as the same may be amended
or affected by any such amendments. The masculine gender shall
include the feminine and neuter genders. Headings are placed
herein for convenience of reference only and shall not be taken as
a part hereof or control or affect the meaning, construction or
effect of this instrument. This instrument may be executed in any
number of counterparts each of which shall be deemed an original.
Section 7.5 APPLICABLE LAW. This Declaration of Trust is
created under and is to be governed by and construed and
administered according to the laws of the Commonwealth of
Massachusetts, including the Massachusetts Business Corporation Law
as the same may be amended from time to time, but the reference to
said Corporation Law is not intended to give the Trust, the
Trustees, the Shareholders or any other person any right, power,
authority or responsibility available only to or in connection with
an entity organized in corporate form. The Trust shall be of the
type referred to in Section 1 of Chapter 182 of the Massachusetts
General Laws and of the type commonly called a Massachusetts
business trust, and without limiting the provisions hereof, the
Trust may exercise all powers which are ordinarily exercised by
such a trust.
IN WITNESS WHEREOF, the undersigned have hereunto set their
hands for themselves and their assigns, as of the day and year
first above written.
/s/ Benjamin H. Gannett
Benjamin H. Gannett
/s/ Harold G. Kotler
Harold G. Kotler
- 26 -
BYLAWS
OF
GANNETT WELSH & KOTLER INVESTMENT TRUST
ARTICLE 1
Agreement and Declaration of Trust and Offices
1.1 Agreement and Declaration of Trust. These Bylaws shall
be subject to the Agreement and Declaration of Trust, as from
time to time in effect (the "Declaration of Trust"), of Gannett
Welsh & Kotler Investment Trust, the Massachusetts business trust
established by the Declaration of Trust (the "Trust").
1.2 Offices. The Trust may maintain one or more other
offices, including its principal office, in or outside of
Massachusetts, in such cities as the Trustees may determine from
time to time. Unless the Trustees otherwise determine, the
principal office of the Trust shall be located in Boston,
Massachusetts.
ARTICLE 2
Meetings of Trustees
2.1 Regular Meetings. Regular meetings of the Trustees may
be held without call or notice at such places and at such times
as the Trustees may from time to time determine, provided that
notice of the first regular meeting following any such
determination shall be given to absent Trustees. A regular
meeting of the Trustees may be held without call or notice
immediately after and at the same place as any meeting of the
shareholders.
2.2 Special Meetings. Special meetings of the Trustees may
be held at any time and at any place designated in the call of
the meeting when called by the Chairman of the Board or the
Treasurer or by two or more Trustees, sufficient notice thereof
being given to each Trustee by the Secretary or an Assistant
Secretary or by the officer or the Trustees calling the meeting.
2.3 Notice. It shall be sufficient notice to a Trustee of
a special meeting to send notice by mail at least forty-eight
hours or by telegram at least twenty-four hours before the
meeting addressed to the Trustee at his or her usual or last
known business or residence address or to give notice to him or
her in person or by telephone at least twenty-four hours before
the meeting. Notice of a meeting need not be given to any
<PAGE>
Trustee if a written waiver of notice, executed by him or her
before or after the meeting, is filed with the records of the
meeting, or to any Trustee who attends the meeting without
protesting, prior thereto or at its commencement, the lack of
notice to him or her. Neither notice of a meeting nor a waiver
of a notice need specify the purposes of the meeting.
2.4 Quorum. At any meeting of the Trustees a majority of
the Trustees then in office shall constitute a quorum. Any
meeting may be adjourned from time to time by a majority of the
votes cast upon the question, whether or not a quorum is present,
and the meeting may be held as adjourned without further notice.
2.5 Participation by Telephone. One or more of the
Trustees or of any committee of the Trustees may participate in a
meeting thereof by means of a conference telephone or similar
communications equipment allowing all persons participating in
the meeting to hear each other at the same time. Participation
by such means shall constitute presence in person at a meeting
except as otherwise provided by the Investment Company Act of
1940.
2.6 Action by Consent. Any action required or permitted to
be taken at any meeting of the Trustees or any committee thereof
may be taken without a meeting, if a written consent of such
action is signed by a majority of the Trustees then in office or
a majority of the members of such committee, as the case may be,
and such written consent is filed with the minutes of the
proceedings of the Trustees or such committee.
ARTICLE 3
Officers
3.1 Enumeration; Qualification. The officers of the Trust
shall be a Chairman of the Board, a President, a Treasurer, a
Secretary and such other officers, including Vice Presidents, if
any, as the Trustees from time to time may in their discretion
elect. The Trust may also have such agents as the Trustees from
time to time may in their discretion appoint. The Chairman of
the Board of the Trust shall be a Trustee and may but need not be
a shareholder; and any other officer may be but none need be a
Trustee or shareholder. Any two or more offices may be held by
the same person.
3.2 Election. The Chairman of the Board, the President,
the Treasurer and the Secretary shall be elected annually by the
Trustees. Other officers, if any, may be elected or appointed by
the Trustees at any time. Vacancies in any office may be filled
at any time.
- 2 -
<PAGE>
3.3 Tenure. The Chairman of the Board, the President, the
Treasurer and the Secretary shall hold office for one year and
until their respective successors are chosen and qualified, or in
each case until he or she sooner dies, resigns, is removed or
becomes disqualified. Each other officer shall hold office and
each agent shall retain authority at the pleasure of the
Trustees.
3.4 Powers. Subject to the other provisions of these
Bylaws, each officer shall have, in addition to the duties and
powers herein and in the Declaration of Trust set forth, such
duties and powers as are commonly incident to the office occupied
by him or her as if the Trust were organized as a Massachusetts
business corporation and such other duties and powers as the
Trustees may from time to time designate.
3.5 Chairman of the Board and President. Unless the
Trustees otherwise provide, the Chairman of the Board, or in the
absence of the Chairman of the Board, the President, or in the
absence of the President, any other Trustee chosen by the
Trustees, shall preside at all meetings of the shareholders and
of the Trustees. The Chairman of the Board shall be the chief
executive officer of the Trust.
3.6 Treasurer. The Treasurer shall be the chief financial
and accounting officer of the Trust, and shall, subject to the
provisions of the Declaration of Trust and to any arrangement
made by the Trustees with a custodian, investment adviser or
manager, or transfer, shareholder servicing or similar agent, be
in charge of the valuable papers, books of account and accounting
records of the Trust, and shall have such other duties and powers
as may be designated from time to time by the Trustees or by the
Chairman of the Board.
3.7 Secretary. The Secretary shall record all proceedings
of the shareholders and the Trustees in books to be kept
therefor, which books or a copy thereof shall be kept at the
principal office of the Trust. In the absence of the Secretary
from any meeting of the shareholders or Trustees, an assistant
secretary, or if there be none or if he or she is absent, a
temporary secretary chosen at such meeting shall record the
proceedings thereof in the aforesaid books.
3.8 Resignations and Removals. Any Trustee or officer may
resign at any time by written instrument signed by him or her and
delivered to the Chairman of the Board or the Secretary or to a
meeting of the Trustees. Such resignation shall be effective
upon receipt unless specified to be effective at some other time.
The Trustees may remove any officer elected by them with or
without cause. Except to the extent expressly provided in a
written agreement with the Trust, no Trustee or officer resigning
- 3 -
<PAGE>
and no officer removed shall have any right to any compensation
for any period following his or her resignation or removal, or
any right to damages on account of such removal.
ARTICLE 4
Committees
4.1 General. The Trustees, by vote of a majority of the
Trustees then in office, may elect from their number an Executive
Committee or other committees and may delegate thereto some or
all of their powers except those which by law, by the Declaration
of Trust, or by these Bylaws may not be delegated. Except as the
Trustees may otherwise determine, any such committee may make
rules for the conduct of its business, but unless otherwise
provided by the Trustees or in such rules, its business shall be
conducted so far as possible in the same manner as is provided by
these Bylaws for the Trustees themselves. All members of such
committees shall hold such offices at the pleasure of the
Trustees. The Trustees may abolish any such committee at any
time. Any committee to which the Trustees delegate any of their
powers or duties shall keep records of its meetings and shall
report its action to the Trustees. The Trustees shall have power
to rescind any action of any committee, but no such rescission
shall have retroactive effect.
ARTICLE 5
Reports
5.1 General. The Trustees and officers shall render
reports at the time and in the manner required by the Declaration
of Trust or any applicable law. Officers and committees shall
render such additional reports as they may deem desirable or as
may from time to time be required by the Trustees.
ARTICLE 6
Fiscal Year
6.1 General. The fiscal year of the Trust shall be fixed,
and shall be subject to change by the Trustees.
ARTICLE 7
Seal
7.1 General. If required by applicable law, the seal of
the Trust shall consist of a flat-faced die with the word
"Massachusetts", together with the name of the Trust and the year
of its organization cut or engraved thereon, but, unless
- 4 -
<PAGE>
otherwise required by the Trustees, the seal shall not be
necessary to be placed on, and its absence shall not impair the
validity of, any document, instrument or other paper executed and
delivered by or on behalf of the Trust.
ARTICLE 8
Execution of Papers
8.1 General. Except as the Trustees may generally or in
particular cases authorize the execution thereof in some other
manner, all deeds, leases, contracts, notes and other obligations
made by the Trustees shall be signed by the Chairman of the
Board, the President, any Vice President, the Secretary or the
Treasurer and need not bear the seal of the Trust, but shall
state the substance of or make reference to the provisions of
Section 6.1 of the Declaration of Trust.
ARTICLE 9
Issuance of Share Certificates
9.1 Share Certificates. In lieu of issuing certificates
for shares, the Trustees or the transfer agent may either issue
receipts therefor or may keep accounts upon the books of the
Trust for the record holders of such shares, who shall in either
case be deemed, for all purposes hereunder, to be the holders of
certificates for such shares as if they had accepted such
certificates and shall be held to have expressly assented and
agreed to the terms hereof.
The Trustees may at any time authorize the issuance of
share certificates. In that event, each shareholder shall be
entitled to a certificate stating the number of shares owned by
him, in such form as shall be prescribed from time to time by the
Trustees. Such certificate shall be signed by the Chairman of
the Board or the President and by the Treasurer or Assistant
Treasurer. Such signatures may be facsimiles if the certificate
is signed by a transfer agent, or by a registrar, other than a
Trustee, officer or employee of the Trust. In case any officer
who has signed or whose facsimile signature has been placed on
such certificate shall cease to be such officer before such
certificate is issued, it may be issued by the Trust with the
same effect as if he were such officer at the time of its issue.
9.2 Loss of Certificates. In case of the alleged loss or
destruction or the mutilation of a share certificate, a duplicate
certificate may be issued in place thereof, upon such terms as
the Trustees shall prescribe.
- 5 -
<PAGE>
9.3 Issuance of New Certificate to Pledgee. In the event
certificates have been issued, a pledgee of shares transferred as
collateral security shall be entitled to a new certificate if the
instrument of transfer substantially describes the debt or duty
that is intended to be secured thereby. Such new certificate
shall express on its face that it is held as collateral security,
and the name of the pledgor shall be stated thereon, who alone
shall be liable as a shareholder, and entitled to vote thereon.
9.4 Discontinuance of Issuance of Certificates. The
Trustees may at any time discontinue the issuance of share
certificates and may, by written notice to each shareholder,
require the surrender of share certificates to the Trust for
cancellation. Such surrender and cancellation shall not affect
the ownership of shares in the Trust.
ARTICLE 10
Custodian
10.1 General. The Trust shall at all times employ a bank
or trust company having a capital, surplus and undivided profits
of at least Five Hundred Thousand ($500,000) Dollars as Custodian
of the capital assets of the Trust. The Custodian shall be
compensated for its services by the Trust and upon such basis as
shall be agreed upon from time to time between the Trust and the
Custodian.
ARTICLE 11
Dealings with Trustees and Officers
11.1 General. Any Trustee, officer or other agent of the
Trust may acquire, own and dispose of shares of the Trust to the
same extent as if he were not a Trustee, officer or agent; and
the Trustees may accept subscriptions to shares or repurchase
shares from any firm or company in which he is interested.
ARTICLE 12
Shareholders
12.1 Meetings. A meeting of the shareholders of the Trust
shall be held whenever called by the Trustees, whenever election
of a Trustee or Trustees by shareholders is required by the
provisions of Section 16(a) of the Investment Company Act of 1940
for that purpose or whenever otherwise required pursuant to the
Declaration of Trust. Any meeting shall be held on such day and
at such time as the Chairman of the Board or the Trustees may fix
in the notice of the meeting.
- 6 -
<PAGE>
12.2 Record Dates. For the purpose of determining the
shareholders who are entitled to vote or act at any meeting or
any adjournment thereof, or who are entitled to receive payment
of any dividend or of any other distribution, the Trustees may
from time to time fix a time, which shall be not more than 60
days before the date of any meeting of shareholders or the date
for the payment of any dividend or of any other distribution, as
the record date for determining the shareholders having the right
to notice of and to vote at such meeting and any adjournment
thereof or the right to receive such dividend or distribution,
and in such case, only shareholders of record on such record date
shall have such right, notwithstanding any transfer of shares on
the books of the Trust after the record date; or without fixing
such record date the Trustees may for any such purposes close the
register or transfer books for all or any part of such period.
ARTICLE 13
Amendments to the Bylaws
13.1 General. These Bylaws may be amended or repealed, in
whole or in part, by a majority of the Trustees then in office at
any meeting of the Trustees, or by one or more writings signed by
such a majority.
- 7 -
<PAGE>
Gannett Welsh & Kotler, Inc.
222 Berkeley Street
Boston, Massachusetts 02116
Re: Advisory Agreement
Ladies and Gentlemen:
Gannett Welsh & Kotler Investment Trust (the "Trust") is a
diversified open-end management investment company registered
under the Investment Company Act of 1940, as amended (the "Act"),
and subject to the rules and regulations promulgated thereunder.
The Trust's shares of beneficial interest are divided into two
separate series, the GW&K Equity Fund and the GW&K Government
Securities Fund (the "Funds"). Each such share of a Fund
represents an undivided interest in the assets, subject to the
liabilities, allocated to that Fund. Each Fund has a separate
investment objective and separate investment policies.
1. Appointment as Adviser. The Trust being duly
authorized hereby appoints and employs Gannett Welsh & Kotler,
Inc. ("Adviser") as discretionary portfolio manager, on the terms
and conditions set forth herein, of the Funds.
2. Acceptance of Appointment; Standard of Performance.
Adviser accepts the appointment as discretionary portfolio
manager and agrees to use its best professional judgment to make
advagm.gwk
<PAGE>
timely investment decisions for the Funds in accordance with the
provisions of this Agreement.
3. Portfolio Management Services of Adviser. Adviser is
hereby employed and authorized to select portfolio securities for
investment by the Trust on behalf of the Funds, to purchase and
sell securities of the Funds, and upon making any purchase or
sale decision, to place orders for the execution of such
portfolio transactions in accordance with paragraphs 5 and 6
hereof. In providing portfolio management services to the Funds,
Adviser shall be subject to such investment restrictions as are
set forth in the Act and the rules thereunder, the Internal
Revenue Code of 1986, applicable state securities laws, the
supervision and control of the Trustees of the Trust, such
specific instructions as the Trustees may adopt and communicate
to Adviser and the investment objectives, policies and
restrictions of the Trust applicable to the Funds furnished
pursuant to paragraph 4. Adviser is not authorized by the Trust
to take any action, including the purchase or sale of securities
for the Funds, in contravention of any restriction, limitation,
objective, policy or instruction described in the previous
sentence. Adviser shall maintain on behalf of the Trust the
records listed in Schedule A hereto (as amended from time to
time). At the Trust's reasonable request, Adviser will consult
with the Trust with respect to any decision made by it with
respect to the investments of the Funds.
- 2 -
<PAGE>
4. Investment Objectives, Policies and Restrictions. The
Trust will provide Adviser with the statement of investment
objectives, policies and restrictions applicable to the Funds as
contained in the Trust's registration statements under the Act
and the Securities Act of 1933, and any instructions adopted by
the Trustees supplemental thereto. The Trust will provide
Adviser with such further information concerning the investment
objectives, policies and restrictions applicable thereto as
Adviser may from time to time reasonably request. The Trust
retains the right, on written notice to Adviser from the Trust,
to modify any such objectives, policies or restrictions in any
manner at any time.
5. Transaction Procedures. All transactions will be
consummated by payment to or delivery by The ___________ Bank or
any successor custodian (the "Custodian"), or such depositories
or agents as may be designated by the Custodian in writing, as
custodian for the Trust, of all cash and/or securities due to or
from the Funds, and Adviser shall not have possession or custody
thereof. Adviser shall advise Custodian and confirm in writing
to the Trust and to MGF Service Corp., or any other designated
agent of the Trust, all investment orders for the Funds placed by
it with brokers and dealers. Adviser shall issue to the
Custodian such instructions as may be appropriate in connection
with the settlement of any transaction initiated by the Adviser.
6. Allocation of Brokerage. Adviser shall have authority
and discretion to select brokers and dealers to execute portfolio
- 3 -
<PAGE>
transactions initiated by Adviser and to select the markets on or
in which the transactions will be executed.
In doing so, the Adviser will give primary consideration to
securing the most favorable price and efficient execution.
Consistent with this policy, the Adviser may consider the
financial responsibility, research and investment information and
other services provided by brokers or dealers who may effect or
be a party to any such transaction or other transactions to which
other clients of the Adviser may be a party. It is understood
that neither the Trust nor the Adviser has adopted a formula for
allocation of the Trust's investment transaction business. It is
also understood that it is desirable for the Trust that the
Adviser have access to supplemental investment and market
research and security and economic analyses provided by certain
brokers who may execute brokerage transactions at a higher
commission to the Trust than may result when allocating brokerage
to other brokers on the basis of seeking the lowest commission.
Therefore, the Adviser is authorized to place orders for the
purchase and sale of securities for the Funds with such certain
brokers, subject to review by the Trust's Trustees from time to
time with respect to the extent and continuation of this
practice. It is understood that the services provided by such
brokers may be useful to the Adviser in connection with its
services to other clients.
On occasions when the Adviser deems the purchase or sale of
a security to be in the best interest of the Funds as well as
- 4 -
<PAGE>
other clients, the Adviser, to the extent permitted by applicable
laws and regulations, may, but shall be under no obligation to,
aggregate the securities to be sold or purchased in order to
obtain the most favorable price or lower brokerage commissions
and efficient execution. In such event, allocation of the
securities so purchased or sold, as well as expenses incurred in
the transaction, will be made by the Adviser in the manner it
considers to be the most equitable and consistent with its
fiduciary obligations to the Trust and to such other clients.
For each fiscal quarter of the Trust, Adviser shall prepare
and render reports to the Trust's Trustees of the total brokerage
business placed and the manner in which the allocation has been
accomplished. Such reports shall set forth at a minimum the
information required to be maintained by Rule 31a-1(b)(9) under
the Act.
7. Proxies. The Trust will vote all proxies solicited by
or with respect to the issuers of securities in which assets of
the Funds may be invested from time to time. At the request of
the Trust, Adviser shall provide the Trust with its
recommendations as to the voting of such proxies.
8. Reports to Adviser. The Trust will provide Adviser
with such periodic reports concerning the status of the Funds as
Adviser may reasonably request.
9. Fees for Services. For all of the services to be
rendered and payments made as provided in this Agreement, the
GW&K Equity Fund will pay the Adviser a fee, computed and accrued
- 5 -
<PAGE>
daily and paid monthly, at the annual rate of 1.00% of the Fund's
average daily net assets and the GW&K Government Securities Fund
will pay the Adviser a fee, computed and accrued daily and paid
monthly, at the annual rate of .75% of the Fund's average daily
net assets.
10. Allocation of Charges and Expenses. Adviser shall
employ or provide and compensate the executive, administrative,
secretarial and clerical personnel necessary to provide the
services set forth herein, and shall bear the expense thereof.
Adviser shall compensate all Trustees, officers and employees of
the Trust who are also partners or employees of Adviser. Adviser
will pay all expenses incurred in connection with the sale or
distribution of the Funds' shares to the extent such expenses are
not assumed by the Funds under the Trust's Distribution Expense
Plan.
The Funds will be responsible for the payment of all
operating expenses of the Trust, including fees and expenses
incurred by the Trust in connection with membership in investment
company organizations, brokerage fees and commissions, legal,
auditing and accounting expenses, expenses of registering shares
under federal and state securities laws, insurance expenses,
taxes or governmental fees, fees and expenses of the custodian,
the transfer, shareholder service and dividend disbursing agent
and the accounting and pricing agent of the Funds, expenses
including clerical expenses of issue, sale, redemption or
repurchase of shares of the Funds, the fees and expenses of
- 6 -
<PAGE>
Trustees of the Trust who are not interested persons of the
Trust, the cost of preparing, printing and distributing
prospectuses, statements, reports and other documents to
shareholders, expenses of shareholders' meetings and proxy
solicitations, and such extraordinary or non-recurring expenses
as may arise, including litigation to which the Trust may be a
party and indemnification of the Trust's officers and Trustees
with respect thereto, or any other expense not specifically
described above incurred in the performance of the Trust's
obligations. All other expenses not expressly assumed by Adviser
herein incurred in connection with the organization, registration
of shares and operations of the Funds will be borne by the Funds.
11. Other Investment Activities of Adviser. The Trust
acknowledges that Adviser or one or more of its affiliates may
have investment responsibilities or render investment advice to
or perform other investment advisory services for other
individuals or entities and that Adviser, its affiliates or any
of its or their directors, officers, agents or employees may buy,
sell or trade in any securities for its or their respective
accounts ("Affiliated Accounts"). Subject to the provisions of
paragraph 2 hereof, the Trust agrees that Adviser or its
affiliates may give advice or exercise investment responsibility
and take such other action with respect to other Affiliated
Accounts which may differ from the advice given or the timing or
nature of action taken with respect to the Funds, provided that
Adviser acts in good faith, and provided further, that it is
- 7 -
<PAGE>
Adviser's policy to allocate, within its reasonable discretion,
investment opportunities to the Funds over a period of time on a
fair and equitable basis relative to the Affiliated Accounts,
taking into account the investment objectives and policies of the
Funds and any specific investment restrictions applicable
thereto. The Trust acknowledges that one or more of the
Affiliated Accounts may at any time hold, acquire, increase,
decrease, dispose of or otherwise deal with positions in
investments in which the Funds may have an interest from time to
time, whether in transactions which involve the Funds or
otherwise. Adviser shall have no obligation to acquire for the
Funds a position in any investment which any Affiliated Account
may acquire, and the Trust shall have no first refusal, co-
investment or other rights in respect of any such investment,
either for the Funds or otherwise.
12. Certificate of Authority. The Trust and the Adviser
shall furnish to each other from time to time certified copies of
the resolutions of their Trustees or Board of Directors or
executive committees, as the case may be, evidencing the
authority of officers and employees who are authorized to act on
behalf of the Trust, the Funds and/or the Adviser.
13. Limitation of Liability. Adviser shall not be liable
for any action taken, omitted or suffered to be taken by it in
its reasonable judgment, in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred
upon it by this Agreement, or in accordance with (or in the
- 8 -
<PAGE>
absence of) specific directions or instructions from the Trust,
provided, however, that such acts or omissions shall not have
resulted from Adviser's willful misfeasance, bad faith or gross
negligence, a violation of the standard of care established by
and applicable to Adviser in its actions under this Agreement or
breach of its duty or of its obligations hereunder. Nothing in
this paragraph 12 shall be construed in a manner inconsistent
with Sections 17(h) and (i) of the Act.
14. Confidentiality. Subject to the duty of Adviser and
the Trust to comply with applicable law, including any demand of
any regulatory or taxing authority having jurisdiction, the
parties hereto shall treat as confidential all information
pertaining to the Funds and the actions of Adviser and the Trust
in respect thereof.
15. Assignment. No assignment of this Agreement shall be
made by Adviser, and this Agreement shall terminate automatically
in the event of such assignment. Adviser shall notify the Trust
in writing sufficiently in advance of any proposed change of
control, as defined in Section 2(a)(9) of the Act, as will enable
the Trust to consider whether an assignment will occur, and to
take the steps necessary to enter into a new contract with
Adviser.
16. Representation, Warranties and Agreements of the Trust.
The Trust represents, warrants and agrees that:
- 9 -
<PAGE>
A. Adviser has been duly appointed by the Trustees of
the Trust to provide investment services to the Funds as
contemplated hereby.
B. The Trust will deliver to Adviser true and
complete copies of its then current prospectuses and statements
of additional information as effective from time to time and such
other documents or instruments governing the investments of the
Funds and such other information as is necessary for Adviser to
carry out its obligations under this Agreement.
C. The Trust is currently in compliance and shall at
all times comply with the requirements imposed upon the Trust by
applicable law and regulations.
17. Representations, Warranties and Agreements of Adviser.
Adviser represents, warrants and agrees that:
A. Adviser is registered as an investment adviser
under the Investment Advisers Act of 1940.
B. Adviser will maintain, keep current and preserve
on behalf of the Trust, in the manner and for the time periods
required or permitted by the Act, the records identified in
Schedule A. Adviser agrees that such records (unless otherwise
indicated on Schedule A) are the property of the Trust, and will
be surrendered to the Trust promptly upon request.
C. Adviser will complete such reports concerning
purchases or sales of securities on behalf of the Funds as the
Trust may from time to time require to ensure compliance with the
- 10 -
<PAGE>
Act, the Internal Revenue Code of 1986 and applicable state
securities laws.
D. Adviser has adopted a written code of ethics
complying with the requirements of Rule 17j-1 under the Act and
will provide the Trust with a copy of the code of ethics and
evidence of its adoption. Within forty-five (45) days of the end
of the last calendar quarter of each year while this Agreement is
in effect, a partner of Adviser shall certify to the Trust that
Adviser has complied with the requirements of Rule 17j-1 during
the previous year and that there has been no violation of the
Adviser's code of ethics or, if such a violation has occurred,
that appropriate action was taken in response to such violation.
Upon the written request of the Trust, Adviser shall permit the
Trust, its employees or its agents to examine the reports
required to be made to Adviser by Rule 17j-1(c)(1).
E. Adviser will, promptly after filing with the
Securities and Exchange Commission an amendment to its Form ADV,
furnish a copy of such amendment to the Trust.
F. Upon request of the Trust, Adviser will provide
assistance to the Custodian in the collection of income due or
payable to the Funds.
G. Adviser will immediately notify the Trust of the
occurrence of any event which would disqualify Adviser from
serving as an investment adviser of an investment company
pursuant to Section 9(a) of the Act or otherwise.
- 11 -
<PAGE>
18. Amendment. This Agreement may be amended at any time,
but only by written agreement between Adviser and the Trust,
which amendment, other than amendments to Schedule A, is subject
to the approval of the Trustees and the shareholders of the Funds
in the manner required by the Act and the rules thereunder,
subject to any applicable exemptive order of the Securities and
Exchange Commission modifying the provisions of the Act with
respect to approval of amendments to this Agreement.
19. Effective Date; Term. This Agreement shall become
effective on the date of its execution and shall remain in force
for a period of two (2) years from such date, and from year to
year thereafter but only so long as such continuance is
specifically approved at least annually by the vote of a majority
of the Trustees who are not interested persons of the Trust or
the Adviser, cast in person at a meeting called for the purpose
of voting on such approval, and by a vote of the Board of
Trustees or of a majority of the outstanding voting securities of
the Funds. The aforesaid requirement that this Agreement may be
continued "annually" shall be construed in a manner consistent
with the Act and the rules and regulations thereunder.
20. Termination. This Agreement may be terminated by
either party hereto, without the payment of any penalty,
immediately upon written notice to the other in the event of a
breach of any provision thereof by the party so notified, or
otherwise upon sixty (60) days' written notice to the other, but
- 12 -
<PAGE>
any such termination shall not affect the status, obligations or
liabilities of any party hereto to the other.
21. Limitation of Liability. It is expressly agreed that
the obligations of the Trust hereunder shall not be binding upon
any of the trustees, shareholders, nominees, officers, agents or
employees of the Trust, personally, but bind only the trust
property of the Trust. The execution and delivery of this
Agreement have been authorized by the trustees of the Trust and
signed by an officer of the Trust, acting as such, and neither
such authorization by such trustees nor such execution and
delivery by such officer shall 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 Trust.
22. Use of Names. The names "Gannett Welsh & Kotler" and
"GW&K" are property rights of the Adviser. The Adviser may use the
names "Gannett Welsh & Kotler" and "GW&K" in other connections and
for other purposes, including without limitation in the name of other
investment companies, corporations or business that it may
manage, advise, sponsor or own, or in which it may have a
financial interest. The Trust will discontinue any use of the
names "Gannett Welsh & Kotler" or "GW&K" if the Adviser ceases to be
employed as the Trust's portfolio manager.
23. Definitions. As used in paragraphs 15 and 19 of this
Agreement, the terms "assignment," "interested person" and "vote
of a majority of the outstanding voting securities" shall have
- 13 -
<PAGE>
the meanings set forth in the Act and the rules and regulations
thereunder.
24. Applicable Law. To the extent that state law is not
preempted by the provisions of any law of the United States
heretofore or hereafter enacted, as the same may be amended from
time to time, this Agreement shall be administered, construed and
enforced according to the laws of the State of Ohio.
GANNETT WELSH & KOTLER
INVESTMENT TRUST
By: __________________________
Title:
Date: ___________, 1996
ACCEPTANCE
The foregoing Agreement is hereby accepted.
GANNETT WELSH & KOTLER, INC.
By: __________________________
Title:
Date: ___________, 1996
- 14 -
<PAGE>
SCHEDULE A
RECORDS TO BE MAINTAINED BY THE ADVISER
1. (Rule 31a-1(b)(5) and (6)) A record of each brokerage
order, and all other portfolio purchases or sales, given by
the Adviser on behalf of the Funds for, or in connection
with, the purchase or sale of securities, whether executed
or unexecuted. Such records shall include:
A. The name of the broker;
B. The terms and conditions of the order and of any
modification or cancellation thereof;
C. The time of entry or cancellation;
D. The price at which executed;
E. The time of receipt of a report of execution; and
F. The name of the person who placed the order on behalf
of the Trust.
2. (Rule 31a-1(b)(9)) A record for each fiscal quarter,
completed within ten (10) days after the end of the quarter,
showing specifically the basis or bases upon which the
allocation of orders for the purchase and sale of portfolio
securities to named brokers or dealers was effected, and the
division of brokerage commissions or other compensation on
such purchase and sale orders. Such record:
A. Shall include the consideration given to:
(i) The sale of shares of the Trust by brokers or
dealers.
(ii) The supplying of services or benefits by brokers
or dealers to:
(a) The Trust;
(b) The Adviser; and,
(c) Any person affiliated with the foregoing
persons.
(iii) Any other consideration other than the technical
qualifications of the brokers and dealers as
such.
- 15 -
<PAGE>
B. Shall show the nature of the services or benefits made
available.
C. Shall describe in detail the application of any general
or specific formula or other determinant used in
arriving at such allocation of purchase and sale orders
and such division of brokerage commissions or other
compensation.
D. The name of the person responsible for making the
determination of such allocation and such division of
brokerage commissions or other compensation.
3. (Rule 31a-1(b)(10)) A record in the form of an appropriate
memorandum identifying the person or persons, committees or
groups authorizing the purchase or sale of portfolio
securities. Where an authorization is made by a committee
or group, a record shall be kept of the names of its members
who participate in the authorization. There shall be
retained as part of this record any memorandum,
recommendation or instruction supporting or authorizing the
purchase or sale of portfolio securities and such other
information as is appropriate to support the authorization.*
4. (Rule 31a-1(f)) Such accounts, books and other documents as
are required to be maintained by registered investment
advisers by rule adopted under Section 204 of the Investment
Advisers Act of 1940, to the extent such records are
necessary or appropriate to record the Adviser's
transactions with respect to the Funds.
- -----------------------
* Such information might include: the current Form 10-K,
annual and quarterly reports, press releases, reports by
analysts and from brokerage firms (including their
recommendation; i.e., buy, sell, hold) or any internal
reports or portfolio adviser reviews.
- 16 -
<PAGE>
ADMINISTRATION AGREEMENT
AGREEMENT dated as of ______, 1996 between Gannett Welsh &
Kotler Investment Trust (the "Trust"), a Massachusetts business
trust, and MGF Service Corp. ("MGF"), an Ohio corporation.
WHEREAS, the Trust is an investment company registered under
the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, the Trust wishes to employ the services of MGF to
serve as its administrative agent; and
WHEREAS, MGF wishes to provide such services under the
conditions set forth below;
NOW, THEREFORE, in consideration of the premises and mutual
covenants contained in this Agreement, the Trust and MGF agree as
follows:
1. APPOINTMENT.
The Trust hereby appoints and employs MGF as agent to
perform those services described in this Agreement for the Trust.
MGF shall act under such appointment and perform the obligations
thereof upon the terms and conditions hereinafter set forth.
2. DOCUMENTATION.
The Trust will furnish from time to time the following
documents:
A. Each resolution of the Board of Trustees of the Trust
authorizing the original issue of its shares;
B. Each Registration Statement filed with the Securities
and Exchange Commission (the "SEC") and amendments
thereof;
C. A certified copy of each amendment to the Agreement and
Declaration of Trust and the Bylaws of the Trust;
D. Certified copies of each resolution of the Board of
Trustees authorizing officers to give instructions to
MGF;
E. Specimens of all new forms of share certificates
accompanied by Board of Trustees' resolutions approving
such forms;
- 1 -
<PAGE>
F. Such other certificates, documents or opinions which
MGF may, in its discretion, deem necessary or
appropriate in the proper performance of its duties;
G. Copies of all Investment Advisory Agreements in effect;
and
H. Copies of all documents relating to special investment
or withdrawal plans which are offered or may be offered
in the future by the Trust and for which MGF is to act
as plan agent.
3. TRUST ADMINISTRATION.
Subject to the direction and control of the Trustees of
the Trust, MGF shall supervise the Trust's business affairs not
otherwise supervised by other agents of the Trust. To the extent
not otherwise the primary responsibility of, or provided by,
other agents of the Trust, MGF shall supply (i) office
facilities, (ii) internal auditing and regulatory services, and
(iii) executive and administrative services. MGF shall
coordinate the preparation of (i) tax returns, (ii) reports to
shareholders of the Trust, (iii) reports to and filings with the
SEC and state securities authorities including preliminary and
definitive proxy materials, post-effective amendments to the
Trust's registration statement, and the Trust's Form N-SAR, and
(iv) necessary materials for Board of Trustees' meetings unless
prepared by other parties under agreement with the Trust. MGF
shall provide personnel to serve as officers of the Trust if so
elected by the Board of Trustees; provided, however, that the
Trust shall reimburse MGF for the reasonable out-of-pocket
expenses incurred by such personnel in attending Board of
Trustees' meetings and shareholders' meetings of the Trust.
4. RECORDKEEPING AND OTHER INFORMATION.
MGF shall create and maintain all records required by
applicable laws, rules and regulations, including but not limited
to records required by Section 31(a) of the 1940 Act and the
rules thereunder, as the same may be amended from time to time,
pertaining to the various functions performed by it and not
otherwise created and maintained by another party pursuant to
contract with the Trust. All such records shall be the property
of the Trust at all times and shall be available for inspection
and use by the Trust. Where applicable, such records shall be
maintained by MGF for the periods and in the places required by
Rule 31a-2 under the 1940 Act. The retention of such records
shall be at the expense of the Trust. MGF shall make available
during regular business hours all records and other data created
and maintained pursuant to this Agreement for reasonable audit
and inspection by the Trust, any person retained by the Trust, or
any regulatory agency having authority over the Trust.
- 2 -
<PAGE>
5. FURTHER ACTIONS.
Each party agrees to perform such further acts and
execute such further documents as are necessary to effectuate the
purposes hereof.
6. COMPENSATION.
For the performance of MGF's obligations under this
Agreement, each series of the Trust shall pay MGF, on the first
business day following the end of each month, a monthly fee at
the annual rate of .15% of such series' average daily net assets
up to $50 million; .125% of such assets from $50 to $100 million;
and .1% of such assets in excess of $100 million; provided,
however, that the minimum fee shall be $1,000 per month for each
series. MGF shall not be required to reimburse the Trust or the
Trust's investment adviser for (or have deducted from its fees)
any expenses in excess of expense limitations imposed by certain
state securities commissions having jurisdiction over the Trust.
7. COMPLIANCE WITH GOVERNMENTAL RULES AND REGULATIONS.
The parties hereto acknowledge and agree that nothing
contained herein shall be construed to require MGF to perform any
services for the Trust which services could cause MGF to be
deemed an "investment adviser" of the Trust within the meaning of
Section 2(a)(20) of the 1940 Act or to supersede or contravene
the Trust's prospectus or statement of additional information or
any provisions of the 1940 Act and the rules thereunder. Except
as otherwise provided in this Agreement and except for the
accuracy of information furnished to it by MGF, the Trust assumes
full responsibility for complying with all applicable
requirements of the 1940 Act, the Securities Act of 1933, as
amended, and any other laws, rules and regulations of
governmental authorities having jurisdiction.
8. REFERENCES TO MGF.
The Trust shall not circulate any printed matter which
contains any reference to MGF without the prior written approval
of MGF, excepting solely such printed matter as merely identifies
MGF as Administrative Services Agent, Transfer, Shareholder
Servicing and Dividend Disbursing Agent and Accounting Services
Agent. The Trust will submit printed matter requiring approval
to MGF in draft form, allowing sufficient time for review by MGF
and its counsel prior to any deadline for printing.
9. INDEMNIFICATION OF MGF.
A. MGF may rely on information reasonably believed by it
to be accurate and reliable. Except as may otherwise be required
by the 1940 Act and the rules thereunder, neither MGF nor its
shareholders, officers, directors, employees, agents, control
persons or affiliates of any thereof shall be subject to any
liability for, or any damages, expenses or losses incurred by the
- 3 -
<PAGE>
Trust in connection with any error of judgment, mistake of law,
any act or omission connected with or arising out of any services
rendered under or payments made pursuant to this Agreement or any
other matter to which this Agreement relates, except by reason of
willful misfeasance, bad faith or gross negligence on the part of
any such persons in the performance of the duties of MGF under
this Agreement or by reason of reckless disregard by any of such
persons of the obligations and duties of MGF under this
Agreement.
B. Any person, even though also a director, officer,
employee, shareholder or agent of MGF, or any of its affiliates,
who may be or become an officer, trustee, employee or agent of
the Trust, shall be deemed, when rendering services to the Trust
or acting on any business of the Trust, to be rendering such
services to or acting solely as an officer, trustee, employee or
agent of the Trust and not as a director, officer, employee,
shareholder or agent of or one under the control or direction of
MGF or any of its affiliates, even though paid by one of these
entities.
C. Notwithstanding any other provision of this Agreement,
the Trust shall indemnify and hold harmless MGF, its directors,
officers, employees, shareholders, agents, control persons and
affiliates from and against any and all claims, demands, expenses
and liabilities (whether with or without basis in fact or law) of
any and every nature which MGF may sustain or incur or which may
be asserted against MGF by any person by reason of, or as a
result of: (i) any action taken or omitted to be taken by MGF in
good faith in reliance upon any certificate, instrument, order or
share certificate reasonably believed by it to be genuine and to
be signed, countersigned or executed by any duly authorized
person, upon the oral instructions or written instructions of an
authorized person of the Trust or upon the opinion of legal
counsel for the Trust or its own counsel; or (ii) any action
taken or omitted to be taken by MGF in connection with its
appointment in good faith in reliance upon any law, act,
regulation or interpretation of the same even though the same may
thereafter have been altered, changed, amended or repealed.
However, indemnification under this subparagraph shall not apply
to actions or omissions of MGF or its directors, officers,
employees, shareholders or agents in cases of its or their own
gross negligence, willful misconduct, bad faith, or reckless
disregard of its or their own duties hereunder.
10. TERMINATION
A. The provisions of this Agreement shall be effective on
the date first above written, shall continue in effect for two
years from that date and shall continue in force from year to
year thereafter, but only so long as such continuance is approved
(1) by MGF, (2) by vote, cast in person at a meeting called for
- 4 -
<PAGE>
the purpose, of a majority of the Trust's trustees who are not
parties to this Agreement or interested persons (as defined in
the 1940 Act) of any such party, and (3) by vote of a majority of
the Trust's Board of Trustees or a majority of the Trust's
outstanding voting securities.
B. Either party may terminate this Agreement on any date
by giving the other party at least sixty (60) days' prior written
notice of such termination specifying the date fixed therefore.
Upon termination of this Agreement, the Trust shall pay to MGF
such compensation as may be due as of the date of such
termination, and shall likewise reimburse MGF for any out-of-
pocket expenses and disbursements reasonably incurred by MGF to
such date.
C. In the event that in connection with the termination of
this Agreement a successor to any of MGF's duties or
responsibilities under this Agreement is designated by the Trust
by written notice to MGF, MGF shall, promptly upon such
termination and at the expense of the Trust, transfer all records
maintained by MGF under this Agreement and shall cooperate in the
transfer of such duties and responsibilities, including providing
for assistance from MGF's cognizant personnel in the
establishment of books, records and other data by such successor.
11. SERVICES FOR OTHERS.
Nothing in this Agreement shall prevent MGF or any
affiliated person (as defined in the 1940 Act) of MGF from
providing services for any other person, firm or corporation
(including other investment companies); provided, however, that
MGF expressly represents that it will undertake no activities
which, in its judgment, will adversely affect the performance of
its obligations to the Trust under this Agreement.
12. LIMITATION OF LIABILITY.
It is expressly agreed that the obligations of the
Trust hereunder shall not be binding upon any of the Trustees,
shareholders, nominees, officers, agents or employees of the
Trust, personally, but bind only the trust property of the Trust.
The execution and delivery of this Agreement have been authorized
by the Trustees of the Trust and signed by an officer of the
Trust, acting as such, and neither such authorization by such
Trustees nor such execution and delivery by such officer shall 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 Trust.
- 5 -
<PAGE>
13. SEVERABILITY.
In the event any provision of this Agreement is
determined to be void or unenforceable, such determination shall
not affect the remainder of this Agreement, which shall continue
to be in force.
14. QUESTIONS OF INTERPRETATION.
This Agreement shall be governed by the laws of the
State of Ohio. Any question of interpretation of any term or
provision of this Agreement having a counterpart in or otherwise
derived from a term or provision of the 1940 Act shall be
resolved by reference to such term or provision of the 1940 Act
and to interpretations thereof, if any, by the United States
Courts or in the absence of any controlling decision of any such
court, by rules, regulations or orders of the SEC issued pursuant
to said 1940 Act. In addition, where the effect of a requirement
of the 1940 Act, reflected in any provision of this Agreement, is
revised by rule, regulation or order of the SEC, such provision
shall be deemed to incorporate the effect of such rule,
regulation or order.
15. NOTICES.
All notices, requests, consents and other
communications required or permitted under this Agreement shall
be in writing (including telex and telegraphic communication) and
shall be (as elected by the person giving such notice) hand
delivered by messenger or courier service, telecommunicated, or
mailed (airmail if international) by registered or certified mail
(postage prepaid), return receipt requested, addressed to:
To the Trust: Gannett Welsh & Kotler Investment Trust
222 Berkeley Street
Boston, Massachusetts 02116
Attention: T. Williams Roberts
To MGF: MGF Service Corp.
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202
Attention: Robert G. Dorsey
or to such other address as any party may designate by notice
complying with the terms of this Section 15. Each such notice
shall be deemed delivered (a) on the date delivered if by
personal delivery; (b) on the date telecommunicated if by
telegraph; (c) on the date of transmission with confirmed answer
back if by telex, telefax or other telegraphic method; and (d)
on the date upon which the return receipt is signed or delivery
is refused or the notice is designated by the postal authorities
as not deliverable, as the case may be, if mailed.
- 6 -
<PAGE>
16. AMENDMENT.
This Agreement may not be amended or modified except by
a written agreement executed by both parties.
17. BINDING EFFECT.
Each of the undersigned expressly warrants and
represents that he has the full power and authority to sign this
Agreement on behalf of the party indicated, and that his
signature will operate to bind the party indicated to the
foregoing terms.
18. COUNTERPARTS.
This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
19. FORCE MAJEURE.
If MGF shall be delayed in its performance of services
or prevented entirely or in part from performing services due to
causes or events beyond its control, including and without
limitation, acts of God, interruption of power or other utility,
transportation or communication services, acts of civil or
military authority, sabotages, national emergencies, explosion,
flood, accident, earthquake or other catastrophe, fire, strike or
other labor problems, legal action, present or future law,
governmental order, rule or regulation, or shortages of suitable
parts, materials, labor or transportation, such delay or non-
performance shall be excused and a reasonable time for
performance in connection with this Agreement shall be extended
to include the period of such delay or non-performance.
20. MISCELLANEOUS.
The captions in this Agreement are included for
convenience of reference only and in no way define or limit any
of the provisions hereof or otherwise affect their construction
or effect.
- 7 -
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the day and year first above
written.
GANNETT WELSH & KOTLER
INVESTMENT TRUST
By:_____________________________
Its: President
MGF SERVICE CORP.
By:_____________________________
Its: President
- 8 -
<PAGE>
ACCOUNTING SERVICES AGREEMENT
AGREEMENT dated as of ______, 1996 between Gannett Welsh &
Kotler Investment Trust (the "Trust"), a Massachusetts business
trust, and MGF Service Corp. ("MGF"), an Ohio corporation.
WHEREAS, the Trust is an investment company registered under
the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, the Trust wishes to employ the services of MGF to
provide the Trust with certain accounting and pricing services;
and
WHEREAS, MGF wishes to provide such services under the
conditions set forth below;
NOW, THEREFORE, in consideration of the premises and mutual
covenants contained in this Agreement, the Trust and MGF agree as
follows:
1. APPOINTMENT.
The Trust hereby appoints and employs MGF as agent to
perform those services described in this Agreement for the Trust.
MGF shall act under such appointment and perform the obligations
thereof upon the terms and conditions hereinafter set forth.
2. CALCULATION OF NET ASSET VALUE.
MGF will calculate the net asset value of each series
of the Trust and the per share net asset value of each series of
the Trust, in accordance with the current prospectus and
statement of additional information of each series of the Trust,
once daily as of the time selected by the Trust's Board of
Trustees. MGF will prepare and maintain a daily valuation of all
securities and other assets of the Trust in accordance with
instructions from a designated officer of the Trust or its
investment adviser and in the manner set forth in the Trust's
current prospectus and statement of additional information. In
valuing securities of the Trust, MGF may contract with, and rely
upon market quotations provided by, outside services.
3. BOOKS AND RECORDS.
MGF will maintain and keep current the general ledger
for each series of the Trust, recording all income and expenses,
capital share activity and security transactions of the Trust.
MGF will maintain such further books and records as are necessary
<PAGE>
to enable it to perform its duties under this Agreement, and will
periodically provide reports to the Trust and its authorized
agents regarding share purchases and redemptions and trial
balances of each series of the Trust. MGF will prepare and
maintain complete, accurate and current all records with respect
to the Trust required to be maintained by the Trust under the
Internal Revenue Code of 1986, as amended (the "Code"), and under
the rules and regulations of the 1940 Act, and will preserve said
records in the manner and for the periods prescribed in the Code
and the 1940 Act. The retention of such records shall be at the
expense of the Trust.
All of the records prepared and maintained by MGF pursuant
to this Section 3 which are required to be maintained by the
Trust under the Code and the 1940 Act will be the property of the
Trust. In the event this Agreement is terminated, all such
records shall be delivered to the Trust at the Trust's expense,
and MGF shall be relieved of responsibility for the preparation
and maintenance of any such records delivered to the Trust.
4. PAYMENT OF TRUST EXPENSES.
MGF shall process each request received from the Trust
or its authorized agents for payment of the Trust's expenses.
Upon receipt of written instructions signed by an officer or
other authorized agent of the Trust, MGF shall prepare checks in
the appropriate amounts which shall be signed by an authorized
officer of MGF and mailed to the appropriate party.
5. FORM N-SAR.
MGF shall maintain such records within its control and
shall be requested by the Trust to assist the Trust in fulfilling
the requirements of Form N-SAR.
6. COOPERATION WITH ACCOUNTANTS.
MGF shall cooperate with the Trust's independent public
accountants and shall take all reasonable action in the
performance of its obligations under this Agreement to assure
that the necessary information is made available to such
accountants for the expression of their unqualified opinion where
required for any document for the Trust.
7. FURTHER ACTIONS.
Each party agrees to perform such further acts and
execute such further documents as are necessary to effectuate the
purposes hereof.
- 2 -
<PAGE>
8. FEES.
For the performance of the services under this
Agreement, each series of the Trust shall pay MGF a monthly fee
in accordance with the schedule attached hereto as Schedule A.
The fees with respect to any month shall be paid to MGF on the
last business day of such month. The Trust shall also promptly
reimburse MGF for the cost of external pricing services utilized
by MGF. MGF shall not be required to reimburse the Trust or the
Trust's investment adviser for (or have deducted from its fees)
any expenses in excess of expense limitations imposed by certain
state securities commissions having jurisdiction over the Trust.
9. COMPLIANCE WITH GOVERNMENTAL RULES AND REGULATIONS.
The parties hereto acknowledge and agree that nothing
contained herein shall be construed to require MGF to perform any
services for the Trust which services could cause MGF to be
deemed an "investment adviser" of the Trust within the meaning of
Section 2(a)(20) of the 1940 Act or to supersede or contravene
the Trust's prospectus or statement of additional information or
any provisions of the 1940 Act and the rules thereunder. Except
as otherwise provided in this Agreement and except for the
accuracy of information furnished to it by MGF, the Trust assumes
full responsibility for complying with all applicable
requirements of the 1940 Act, the Securities Act of 1933, as
amended, and any other laws, rules and regulations of
governmental authorities having jurisdiction.
10. REFERENCES TO MGF.
The Trust shall not circulate any printed matter which
contains any reference to MGF without the prior written approval
of MGF, excepting solely such printed matter as merely identifies
MGF as Administrative Services Agent, Transfer, Shareholder
Servicing and Dividend Disbursing Agent and Accounting Services
Agent. The Trust will submit printed matter requiring approval
to MGF in draft form, allowing sufficient time for review by MGF
and its counsel prior to any deadline for printing.
11. EQUIPMENT FAILURES.
MGF shall take all steps necessary to minimize or
avoid service interruptions, and has entered into one or more
agreements making provision for emergency use of electronic data
processing equipment. MGF shall have no liability with respect
to equipment failures beyond its control.
- 3 -
<PAGE>
12. INDEMNIFICATION OF MGF.
A. MGF may rely on information reasonably believed by it
to be accurate and reliable. Except as may otherwise be required
by the 1940 Act and the rules thereunder, neither MGF nor its
shareholders, officers, directors, employees, agents, control
persons or affiliates of any thereof shall be subject to any
liability for, or any damages, expenses or losses incurred by the
Trust in connection with any error of judgment, mistake of law,
any act or omission connected with or arising out of any services
rendered under or payments made pursuant to this Agreement or any
other matter to which this Agreement relates, except by reason of
willful misfeasance, bad faith or gross negligence on the part of
any such persons in the performance of the duties of MGF under
this Agreement or by reason of reckless disregard by any of such
persons of the obligations and duties of MGF under this
Agreement.
B. Any person, even though also a director, officer,
employee, shareholder, or agent of MGF, or any of its
affiliates, who may be or become an officer, trustee, employee or
agent of the Trust, shall be deemed, when rendering services to
the Trust or acting on any business of the Trust, to be rendering
such services to or acting solely as an officer, trustee,
employee or agent of the Trust and not as a director, officer,
employee, shareholder or agent of or one under the control or
direction of MGF or any of its affiliates, even though paid by
one of those entities.
C. Notwithstanding any other provision of this Agreement,
the Trust shall indemnify and hold harmless MGF, its directors,
officers, employees, shareholders, agents, control persons and
affiliates from and against any and all claims, demands, expenses
and liabilities (whether with or without basis in fact or law) of
any and every nature which MGF may sustain or incur or which may
be asserted against MGF by any person by reason of, or as a
result of: (i) any action taken or omitted to be taken by MGF in
good faith in reliance upon any certificate, instrument, order or
share certificate reasonably believed by it to be genuine and to
be signed, countersigned or executed by any duly authorized
person, upon the oral instructions or written instructions of an
authorized person of the Trust or upon the opinion of legal
counsel for the Trust or its own counsel; or (ii) any action
taken or omitted to be taken by MGF in connection with its
appointment in good faith in reliance upon any law, act,
regulation or interpretation of the same even though the same may
thereafter have been altered, changed, amended or repealed.
However, indemnification under this subparagraph shall not apply
to actions or omissions of MGF or its directors, officers,
employees, shareholders or agents in cases of its or their own
gross negligence, willful misconduct, bad faith, or reckless
disregard of its or their own duties hereunder.
- 4 -
<PAGE>
13. TERMINATION.
A. The provisions of this Agreement shall be effective on
the date first above written, shall continue in effect for two
years from that date and shall continue in force from year to
year thereafter, but only so long as such continuance is approved
(1) by MGF, (2) by vote, cast in person at a meeting called for
the purpose, of a majority of the Trust's trustees who are not
parties to this Agreement or interested persons (as defined in
the 1940 Act) of any such party, and (3) by vote of a majority of
the Trust's Board of Trustees or a majority of the Trust's
outstanding voting securities.
B. Either party may terminate this Agreement on any date
by giving the other party at least sixty (60) days' prior written
notice of such termination specifying the date fixed therefore.
Upon termination of this Agreement, the Trust shall pay to MGF
such compensation as may be due as of the date of such
termination, and shall likewise reimburse MGF for any out-of-
pocket expenses and disbursements reasonably incurred by MGF to
such date.
C. In the event that in connection with the termination of
this Agreement a successor to any of MGF's duties or
responsibilities under this Agreement is designated by the Trust
by written notice to MGF, MGF shall, promptly upon such
termination and at the expense of the Trust, transfer all records
maintained by MGF under this Agreement and shall cooperate in the
transfer of such duties and responsibilities, including providing
for assistance from MGF's cognizant personnel in the
establishment of books, records and other data by such successor.
14. SERVICES FOR OTHERS.
Nothing in this Agreement shall prevent MGF or any
affiliated person (as defined in the 1940 Act) of MGF from
providing services for any other person, firm or corporation
(including other investment companies); provided, however, that
MGF expressly represents that it will undertake no activities
which, in its judgment, will adversely affect the performance of
its obligations to the Trust under this Agreement.
15. LIMITATION OF LIABILITY.
It is expressly agreed that the obligations of the
Trust hereunder shall not be binding upon any of the Trustees,
shareholders, nominees, officers, agents or employees of the
Trust, personally, but bind only the trust property of the Trust.
The execution and delivery of this Agreement have been authorized
by the Trustees of the Trust and signed by an officer of the
Trust, acting as such, and neither such authorization by such
Trustees nor such execution and delivery by such officer shall 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 Trust.
- 5 -
<PAGE>
16. SEVERABILITY.
In the event any provision of this Agreement is
determined to be void or unenforceable, such determination shall
not affect the remainder of this Agreement, which shall continue
to be in force.
17. QUESTIONS OF INTERPRETATION.
This Agreement shall be governed by the laws of the
State of Ohio. Any question of interpretation of any term or
provision of this Agreement having a counterpart in or otherwise
derived from a term or provision of the 1940 Act shall be
resolved by reference to such term or provision of the 1940 Act
and to interpretations thereof, if any, by the United States
Courts or in the absence of any controlling decision of any such
court, by rules, regulations or orders of the Securities and
Exchange Commission issued pursuant to said 1940 Act. In
addition, where the effect of a requirement of the 1940 Act,
reflected in any provision of this Agreement, is revised by rule,
regulation or order of the Securities and Exchange Commission,
such provision shall be deemed to incorporate the effect of such
rule, regulation or order.
18. NOTICES.
All notices, requests, consents and other
communications required or permitted under this Agreement shall
be in writing (including telex and telegraphic communication) and
shall be (as elected by the person giving such notice) hand
delivered by messenger or courier service, telecommunicated, or
mailed (airmail if international) by registered or certified mail
(postage prepaid), return receipt requested, addressed to:
To the Trust: Gannett Welsh & Kotler Investment Trust
222 Berkeley Street
Boston, Massachusetts 02116
Attention: T. Williams Roberts
To MGF: MGF Service Corp.
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202
Attention: Robert G. Dorsey
or to such other address as any party may designate by notice
complying with the terms of this Section 18. Each such notice
shall be deemed delivered (a) on the date delivered if by
personal delivery; (b) on the date telecommunicated if by
telegraph; (c) on the date of transmission with confirmed answer
back if by telex, telefax or other telegraphic method; and (d)
on the date upon which the return receipt is signed or delivery
is refused or the notice is designated by the postal authorities
as not deliverable, as the case may be, if mailed.
- 6 -
<PAGE>
19. AMENDMENT.
This Agreement may not be amended or modified except by
a written agreement executed by both parties.
20. BINDING EFFECT.
Each of the undersigned expressly warrants and
represents that he has the full power and authority to sign this
Agreement on behalf of the party indicated, and that his
signature will operate to bind the party indicated to the
foregoing terms.
21. COUNTERPARTS.
This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
22. FORCE MAJEURE.
If MGF shall be delayed in its performance of services
or prevented entirely or in part from performing services due to
causes or events beyond its control, including and without
limitation, acts of God, interruption of power or other utility,
transportation or communication services, acts of civil or
military authority, sabotages, national emergencies, explosion,
flood, accident, earthquake or other catastrophe, fire, strike or
other labor problems, legal action, present or future law,
governmental order, rule or regulation, or shortages of suitable
parts, materials, labor or transportation, such delay or non-
performance shall be excused and a reasonable time for
performance in connection with this Agreement shall be extended
to include the period of such delay or non-performance.
23. MISCELLANEOUS.
The captions in this Agreement are included for
convenience of reference only and in no way define or limit any
of the provisions hereof or otherwise affect their construction
or effect.
- 7 -
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the day and year first above
written.
GANNETT WELSH & KOTLER
INVESTMENT TRUST
By:_____________________________
Its: President
MGF SERVICE CORP.
By:_____________________________
Its: President
- 8 -
<PAGE>
Schedule A
COMPENSATION
Each series of the Trust will pay MGF a monthly fee,
according to the average net assets of such series during such
month, as follows:
Average Monthly Net Assets Monthly Fee
0 - $ 50,000,000 $2,000
50 - 100,000,000 2,500
100 - 250,000,000 3,000
Over 250,000,000 4,000
- 9 -
<PAGE>
TRANSFER, DIVIDEND DISBURSING, SHAREHOLDER SERVICE
AND PLAN AGENCY AGREEMENT
AGREEMENT dated as of ______, 1996 between Gannett Welsh &
Kotler Investment Trust (the "Trust"), a Massachusetts business
trust, and MGF Service Corp. ("MGF"), an Ohio corporation.
WHEREAS, the Trust is an investment company registered under
the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, the Trust wishes to employ the services of MGF to
serve as its transfer, dividend disbursing, shareholder service
and plan agent; and
WHEREAS, MGF wishes to provide such services under the
conditions set forth below;
NOW, THEREFORE, in consideration of the premises and mutual
covenants contained in this Agreement, the Trust and MGF agree as
follows:
1. APPOINTMENT.
The Trust hereby appoints and employs MGF as agent to
perform those services described in this Agreement for the Trust.
MGF shall act under such appointment and perform the obligations
thereof upon the terms and conditions hereinafter set forth.
2. DOCUMENTATION.
The Trust will furnish from time to time the following
documents:
A. Each resolution of the Board of Trustees of the Trust
authorizing the original issue of its shares;
B. Each Registration Statement filed with the Securities
and Exchange Commission (the "SEC") and amendments
thereof;
C. A certified copy of each amendment to the Agreement and
Declaration of Trust and the Bylaws of the Trust;
D. Certified copies of each resolution of the Board of
Trustees authorizing officers to give instructions to
MGF;
E. Specimens of all new forms of share certificates
accompanied by Board of Trustees' resolutions approving
such forms;
- 1 -
<PAGE>
F. Such other certificates, documents or opinions which
MGF may, in its discretion, deem necessary or
appropriate in the proper performance of its duties;
G. Copies of all Investment Advisory Agreements in effect;
and
H. Copies of all documents relating to special investment
or withdrawal plans which are offered or may be offered
in the future by the Trust and for which MGF is to act
as plan agent.
3. MGF TO RECORD SHARES.
MGF shall record the issuance of shares of the Trust
and maintain pursuant to applicable rules of the SEC a record of
the total number of shares of the Trust which are authorized,
issued and outstanding, based upon data provided to it by the
Trust. MGF shall also provide the Trust on a regular basis or
upon reasonable request the total number of shares which are
authorized, issued and outstanding, but shall have no obligation
when recording the issuance of the Trust's shares, except as
otherwise set forth herein, to monitor the issuance of such
shares or to take cognizance of any laws relating to the issue or
sale of such shares, which functions shall be the sole
responsibility of the Trust.
4. MGF TO VALIDATE TRANSFERS.
Upon receipt of a proper request for transfer and upon
surrender to MGF of certificates, if any, in proper form for
transfer, MGF shall approve such transfer and shall take all
necessary steps to effectuate the transfer as indicated in the
transfer request. Upon approval of the transfer, MGF shall
notify the Trust in writing of each such transaction and shall
make appropriate entries on the shareholder records maintained by
MGF.
5. SHARE CERTIFICATES.
If the Trust authorizes the issuance of share
certificates and an investor requests a share certificate, MGF
will countersign and mail, by insured first class mail, a share
certificate to the investor at his address as set forth on the
transfer books of the Trust, subject to any other instructions
for delivery of certificates representing newly purchased shares
and subject to the limitation that no certificates representing
newly purchased shares shall be mailed to the investor until the
cash purchase price of such shares has been collected and
credited to the account of the Trust maintained by the Custodian.
The Trust shall supply MGF with a sufficient supply of blank
share certificates and from time to time shall renew such supply
- 2 -
<PAGE>
upon request of MGF. Such blank share certificates shall be
properly signed, manually or, if authorized by the Trust, by
facsimile; and notwithstanding the death, resignation or removal
of any officers of the Trust authorized to sign share
certificates, MGF may continue to countersign certificates which
bear the manual or facsimile signature of such officer until
otherwise directed by the Trust. In case of the alleged loss or
destruction of any share certificate, no new certificates shall
be issued in lieu thereof, unless there shall first be furnished
an appropriate bond satisfactory to MGF and the Trust, and issued
by a surety company satisfactory to MGF and the Trust.
6. RECEIPT OF FUNDS.
Upon receipt of any check or other instrument drawn or
endorsed to it as agent for, or identified as being for the
account of, the Trust, MGF shall stamp the check or instrument
with the date of receipt, determine the amount thereof due the
Trust and shall forthwith process the same for collection. Upon
receipt of notification of receipt of funds eligible for share
purchases in accordance with the Trust's then current prospectus
and statement of additional information, MGF shall notify the
Trust, at the close of each business day, in writing of the
amount of said funds credited to the Trust and deposited in its
account with the Custodian.
7. PURCHASE ORDERS.
Upon receipt of an order for the purchase of shares of
the Trust, accompanied by sufficient information to enable MGF to
establish a shareholder account, MGF shall, as of the next
determination of net asset value after receipt of such order in
accordance with the Trust's then current prospectus and statement
of additional information, compute the number of shares due to
the shareholder, credit the share account of the shareholder,
subject to collection of the funds, with the number of shares so
purchased, shall notify the Trust in writing or by computer
report at the close of each business day of such transactions and
shall mail to the shareholder and/or dealer of record a notice of
such credit when requested to do so by the Trust.
8. RETURNED CHECKS.
In the event that MGF is notified by the Trust's
Custodian that any check or other order for the payment of money
is returned unpaid for any reason, MGF will:
A. Give prompt notification to the Trust of the non-
payment of said check;
B. In the absence of other instructions from the Trust,
take such steps as may be necessary to redeem any shares
purchased on the basis of such returned check and cause the
proceeds of such redemption plus any dividends declared with
- 3 -
<PAGE>
respect to such shares to be credited to the account of the Trust
and to request the Trust's Custodian to forward such returned
check to the person who originally submitted the check; and
C. Notify the Trust of such actions and correct the
Trust's records maintained by MGF pursuant to this Agreement.
9. DIVIDENDS AND DISTRIBUTIONS.
The Trust shall furnish MGF with appropriate evidence
of Trustee action authorizing the declaration of dividends and
other distributions. MGF shall establish procedures in
accordance with the Trust's then current prospectus and statement
of additional information and with other authorized actions of
the Trust's Board of Trustees under which it will have available
from the Custodian or the Trust any required information for each
dividend and other distribution. After deducting any amount
required to be withheld by any applicable laws, MGF shall, as
agent for each shareholder who so requests, invest the dividends
and other distributions in full and fractional shares in
accordance with the Trust's then current prospectus and statement
of additional information. If a shareholder has elected to
receive dividends or other distributions in cash, then MGF shall
disburse dividends to shareholders of record in accordance with
the Trust's then current prospectus and statement of additional
information. MGF shall, on or before the mailing date of such
checks, notify the Trust and the Custodian of the estimated
amount of cash required to pay such dividend or distribution, and
the Trust shall instruct the Custodian to make available
sufficient funds therefor in the appropriate account of the
Trust. MGF shall mail to the shareholders periodic statements,
as requested by the Trust, showing the number of full and
fractional shares and the net asset value per share of shares so
credited. When requested by the Trust, MGF shall prepare and
file with the Internal Revenue Service, and when required, shall
address and mail to shareholders, such returns and information
relating to dividends and distributions paid by the Trust as are
required to be so prepared, filed and mailed by applicable laws,
rules and regulations.
10. UNCLAIMED DIVIDENDS AND UNCLAIMED REDEMPTION PROCEEDS.
MGF shall, at least annually, furnish in writing to the
Trust the names and addresses, as shown in the shareholder
accounts maintained by MGF, of all shareholders for which there
are, as of the end of the calendar year, dividends, distributions
or redemption proceeds for which checks or share certificates
mailed in payment of distributions have been returned. MGF shall
use its best efforts to contact the shareholders affected and to
follow any other written instructions received from the Trust
concerning the disposition of any such unclaimed dividends,
distributions or redemption proceeds.
- 4 -
<PAGE>
11. REDEMPTIONS AND EXCHANGES.
A. MGF shall process, in accordance with the Trust's then
current prospectus and statement of additional information, each
order for the redemption of shares accepted by MGF. Upon its
approval of such redemption transactions, MGF, if requested by
the Trust, shall mail to the shareholder and/or dealer of record
a confirmation showing trade date, number of full and fractional
shares redeemed, the price per share and the total redemption
proceeds. For each such redemption, MGF shall either: (a)
prepare checks in the appropriate amounts for approval and
verification by the Trust and signature by an authorized officer
of MGF and mail the checks to the appropriate person, or (b) in
the event redemption proceeds are to be wired through the Federal
Reserve Wire System or by bank wire, cause such proceeds to be
wired in federal funds to the bank account designated by the
shareholder, or (c) effectuate such other redemption procedures
which are authorized by the Trust's Board of Trustees or its then
current prospectus and statement of additional information. The
requirements as to instruments of transfer and other
documentation, the applicable redemption price and the time of
payment shall be as provided in the then current prospectus and
statement of additional information, subject to such supplemental
instructions as may be furnished by the Trust and accepted by
MGF. If MGF or the Trust determines that a request for
redemption does not comply with the requirements for redemptions,
MGF shall promptly notify the shareholder indicating the reason
therefor.
B. If shares of the Trust are eligible for exchange with
shares of any other investment company, MGF, in accordance with
the then current prospectus and statement of additional
information and exchange rules of the Trust and such other
investment company, or such other investment company's transfer
agent, shall review and approve all exchange requests and shall,
on behalf of the Trust's shareholders, process such approved
exchange requests.
C. MGF shall notify the Trust and the Custodian on each
business day of the amount of cash required to meet payments made
pursuant to the provisions of this Paragraph 11, and, on the
basis of such notice, the Trust shall instruct the Custodian to
make available from time to time sufficient funds therefor in the
appropriate account of the Trust. Procedures for effecting
redemption orders accepted from shareholders or dealers of record
by telephone or other methods shall be established by mutual
agreement between MGF and the Trust consistent with the Trust's
then current prospectus and statement of additional information.
- 5 -
<PAGE>
D. The authority of MGF to perform its responsibilities
under Paragraph 7, Paragraph 9, and this Paragraph 11 shall be
suspended with respect to any series of the Trust upon receipt of
notification by it of the suspension of the determination of such
series' net asset value.
12. AUTOMATIC WITHDRAWAL PLANS.
MGF will process automatic withdrawal orders pursuant
to the provisions of the withdrawal plans duly executed by
shareholders and the current prospectus and statement of
additional information of the Trust. Payments upon such
withdrawal order shall be made by MGF from the appropriate
account maintained by the Trust with the Custodian on
approximately the last business day of each month in which a
payment has been requested, and MGF will withdraw from a
shareholder's account and present for repurchase or redemption as
many shares as shall be sufficient to make such withdrawal
payment pursuant to the provisions of the shareholder's
withdrawal plan and the current prospectus and statement of
additional information of the Trust. From time to time on new
automatic withdrawal plans a check for a payment date already
past may be issued upon request by the shareholder.
13. WIRE-ORDER PURCHASES.
MGF will send written confirmations to the dealers of
record containing all details of the wire-order purchases placed
by each such dealer by the close of business on the business day
following receipt of such orders by MGF. Upon receipt of any
check drawn or endorsed to the Trust (or MGF, as agent) or
otherwise identified as being payment of an outstanding wire-
order, MGF will stamp said check with the date of its receipt and
deposit the amount represented by such check to MGF's deposit
accounts maintained with the Custodian. MGF will cause the
Custodian to transfer federal funds in an amount equal to the net
asset value of the shares so purchased to the Trust's account
with the Custodian and will notify the Trust before noon of each
business day of the total amount deposited in the Trust's deposit
accounts, and in the event that payment for a purchase order is
not received by MGF or the Custodian on the tenth business day
following receipt of the order, prepare an NASD "notice of
failure of dealer to make payment."
14. OTHER PLANS.
MGF will process such accumulation plans, group
programs and other plans or programs for investing in shares of
the Trust as are now provided for in the Trust's current
prospectus and statement of additional information and will act
as plan agent for shareholders pursuant to the terms of such
plans and programs duly executed by such shareholders.
- 6 -
<PAGE>
15. RECORDKEEPING AND OTHER INFORMATION.
MGF shall create and maintain all records required by
applicable laws, rules and regulations, including but not limited
to records required by Section 31(a) of the 1940 Act and the
rules thereunder, as the same may be amended from time to time,
pertaining to the various functions performed by it and not
otherwise created and maintained by another party pursuant to
contract with the Trust. All such records shall be the property
of the Trust at all times and shall be available for inspection
and use by the Trust. Where applicable, such records shall be
maintained by MGF for the periods and in the places required by
Rule 31a-2 under the 1940 Act. The retention of such records
shall be at the expense of the Trust. MGF shall make available
during regular business hours all records and other data created
and maintained pursuant to this Agreement for reasonable audit
and inspection by the Trust, any person retained by the Trust, or
any regulatory agency having authority over the Trust.
16. SHAREHOLDER RECORDS.
MGF shall maintain records for each shareholder account
showing the following:
A. Names, addresses and tax identifying numbers;
B. Name of the dealer of record, if any;
C. Number of shares held of each series;
D. Historical information regarding the account of each
shareholder, including dividends and distributions in
cash or invested in shares;
E. Information with respect to the source of all dividends
and distributions allocated among income, realized
short-term gains and realized long-term gains;
F. Any instructions from a shareholder including all forms
furnished by the Trust and executed by a shareholder
with respect to (i) dividend or distribution elections
and (ii) elections with respect to payment options in
connection with the redemption of shares;
G. Any correspondence relating to the current maintenance
of a shareholder's account;
H. Certificate numbers and denominations for any
shareholder holding certificates;
I. Any stop or restraining order placed against a
shareholder's account;
- 7 -
<PAGE>
J. Information with respect to withholding in the case of
a foreign account or any other account for which
withholding is required by the Internal Revenue Code of
1986, as amended; and
K. Any information required in order for MGF to perform
the calculations contemplated under this Agreement.
17. TAX RETURNS AND REPORTS.
MGF will prepare in the appropriate form, file with the
Internal Revenue Service and appropriate state agencies and, if
required, mail to shareholders of the Trust such returns for
reporting dividends and distributions paid by the Trust as are
required to be so prepared, filed and mailed and shall withhold
such sums as are required to be withheld under applicable federal
and state income tax laws, rules and regulations.
18. OTHER INFORMATION TO THE TRUST.
Subject to such instructions, verification and approval
of the Custodian and the Trust as shall be required by any
agreement or applicable law, MGF will also maintain such records
as shall be necessary to furnish to the Trust the following:
annual shareholder meeting lists, proxy lists and mailing
materials, shareholder reports and confirmations and checks for
disbursing redemption proceeds, dividends and other distributions
or expense disbursements.
19. ACCESS TO SHAREHOLDER INFORMATION.
Upon request, MGF shall arrange for the Trust's
investment adviser to have direct access to shareholder
information contained in MGF's computer system, including account
balances, performance information and such other information
which is available to MGF with respect to shareholder accounts.
20. COOPERATION WITH ACCOUNTANTS.
MGF shall cooperate with the Trust's independent public
accountants and shall take all reasonable action in the
performance of its obligations under this Agreement to assure
that the necessary information is made available to such
accountants for the expression of their unqualified opinion where
required for any document for the Trust.
21. SHAREHOLDER SERVICE AND CORRESPONDENCE.
MGF will provide and maintain adequate personnel,
records and equipment to receive and answer all shareholder and
dealer inquiries relating to account status, share purchases,
redemptions and exchanges and other investment plans available to
- 8 -
<PAGE>
Trust shareholders. MGF will answer written correspondence from
shareholders relating to their share accounts and such other
written or oral inquiries as may from time to time be mutually
agreed upon, and MGF will notify the Trust of any correspondence
or inquiries which may require an answer from the Trust.
22. PROXIES.
MGF shall assist the Trust in the mailing of proxy
cards and other material in connection with shareholder meetings
of the Trust, shall receive, examine and tabulate returned
proxies and shall, if requested by the Trust, provide at least
one inspector of election to attend and participate as required
by law in shareholder meetings of the Trust.
23. FURTHER ACTIONS.
Each party agrees to perform such further acts and
execute such further documents as are necessary to effectuate the
purposes hereof.
24. COMPENSATION.
For the performance of MGF's obligations under this
Agreement, each series of the Trust shall pay MGF, on the first
business day following the end of each month, a monthly fee in
accordance with the schedule attached hereto as Schedule A. MGF
shall not be required to reimburse the Trust or the Trust's
investment adviser for (or have deducted from its fees) any
expenses in excess of expense limitations imposed by certain
state securities commissions having jurisdiction over the Trust.
The Trust shall promptly reimburse MGF for any out-of-pocket
expenses and advances which are to be paid by the Trust in
accordance with Paragraph 25.
25. EXPENSES.
MGF shall furnish, at its expense and without cost to
the Trust (i) the services of its personnel to the extent that
such services are required to carry out its obligations under
this Agreement and (ii) use of data processing equipment. All
costs and expenses not expressly assumed by MGF under this
Paragraph 25 shall be paid by the Trust, including, but not
limited to, costs and expenses of officers and employees of MGF
in attending meetings of the Board of Trustees and shareholders
of the Trust, as well as costs and expenses for postage,
envelopes, checks, drafts, continuous forms, reports,
communications, statements and other materials, telephone,
telegraph and remote transmission lines, use of outside pricing
services, use of outside mailing firms, necessary outside record
storage, media for storage of records (e.g., microfilm,
microfiche, computer tapes), printing, confirmations and any
- 9 -
<PAGE>
other shareholder correspondence and any and all assessments,
taxes or levies assessed on MGF for services provided under this
Agreement. Postage for mailings of dividends, proxies, reports
and other mailings to all shareholders shall be advanced to MGF
three business days prior to the mailing date of such materials.
26. COMPLIANCE WITH GOVERNMENTAL RULES AND REGULATIONS.
The parties hereto acknowledge and agree that nothing
contained herein shall be construed to require MGF to perform any
services for the Trust which services could cause MGF to be
deemed an "investment adviser" of the Trust within the meaning of
Section 2(a)(20) of the 1940 Act or to supersede or contravene
the Trust's prospectus or statement of additional information or
any provisions of the 1940 Act and the rules thereunder. Except
as otherwise provided in this Agreement and except for the
accuracy of information furnished to it by MGF, the Trust assumes
full responsibility for complying with all applicable
requirements of the 1940 Act, the Securities Act of 1933, as
amended, and any other laws, rules and regulations of
governmental authorities having jurisdiction.
27. REFERENCES TO MGF.
The Trust shall not circulate any printed matter which
contains any reference to MGF without the prior written approval
of MGF, excepting solely such printed matter as merely identifies
MGF as Administrative Services Agent, Transfer, Shareholder
Servicing and Dividend Disbursing Agent and Accounting Services
Agent. The Trust will submit printed matter requiring approval
to MGF in draft form, allowing sufficient time for review by MGF
and its counsel prior to any deadline for printing.
28. EQUIPMENT FAILURES.
MGF shall take all steps necessary to minimize or avoid
service interruptions, and has entered into one or more
agreements making provision for emergency use of electronic data
processing equipment. MGF shall have no liability with respect
to equipment failures beyond its control.
29. INDEMNIFICATION OF MGF.
A. MGF may rely on information reasonably believed by it
to be accurate and reliable. Except as may otherwise be required
by the 1940 Act and the rules thereunder, neither MGF nor its
shareholders, officers, directors, employees, agents, control
persons or affiliates of any thereof shall be subject to any
liability for, or any damages, expenses or losses incurred by the
Trust in connection with any error of judgment, mistake of law,
any act or omission connected with or arising out of any services
rendered under or payments made pursuant to this Agreement or any
- 10 -
<PAGE>
other matter to which this Agreement relates, except by reason of
willful misfeasance, bad faith or gross negligence on the part of
any such persons in the performance of the duties of MGF under
this Agreement or by reason of reckless disregard by any of such
persons of the obligations and duties of MGF under this
Agreement.
B. Any person, even though also a director, officer,
employee, shareholder or agent of MGF, or any of its affiliates,
who may be or become an officer, trustee, employee or agent of
the Trust, shall be deemed, when rendering services to the Trust
or acting on any business of the Trust, to be rendering such
services to or acting solely as an officer, trustee, employee or
agent of the Trust and not as a director, officer, employee,
shareholder or agent of or one under the control or direction of
MGF or any of its affiliates, even though paid by one of these
entities.
C. The Trust shall indemnify and hold harmless MGF, its
directors, officers, employees, shareholders, agents, control
persons and affiliates from and against any and all claims,
demands, expenses and liabilities (whether with or without basis
in fact or law) of any and every nature which MGF may sustain or
incur or which may be asserted against MGF by any person by
reason of, or as a result of: (i) any action taken or omitted to
be taken by MGF in good faith in reliance upon any certificate,
instrument, order or share certificate reasonably believed by it
to be genuine and to be signed, countersigned or executed by any
duly authorized person, upon the oral instructions or written
instructions of an authorized person of the Trust or upon the
opinion of legal counsel for the Trust or its own counsel; or
(ii) any action taken or omitted to be taken by MGF in connection
with its appointment in good faith in reliance upon any law, act,
regulation or interpretation of the same even though the same may
thereafter have been altered, changed, amended or repealed.
However, indemnification under this subparagraph shall not apply
to actions or omissions of MGF or its directors, officers,
employees, shareholders or agents in cases of its or their own
gross negligence, willful misconduct, bad faith, or reckless
disregard of its or their own duties hereunder.
30. TERMINATION
A. The provisions of this Agreement shall be effective on
the date first above written, shall continue in effect for two
years from that date and shall continue in force from year to
year thereafter, but only so long as such continuance is approved
(1) by MGF, (2) by vote, cast in person at a meeting called for
the purpose, of a majority of the Trust's trustees who are not
parties to this Agreement or interested persons (as defined in
the 1940 Act) of any such party, and (3) by vote of a majority of
the Trust's Board of Trustees or a majority of the Trust's
outstanding voting securities.
- 11 -
<PAGE>
B. Either party may terminate this Agreement on any date
by giving the other party at least sixty (60) days' prior written
notice of such termination specifying the date fixed therefore.
Upon termination of this Agreement, the Trust shall pay to MGF
such compensation as may be due as of the date of such
termination, and shall likewise reimburse MGF for any out-of-
pocket expenses and disbursements reasonably incurred by MGF to
such date.
C. In the event that in connection with the termination of
this Agreement a successor to any of MGF's duties or
responsibilities under this Agreement is designated by the Trust
by written notice to MGF, MGF shall, promptly upon such
termination and at the expense of the Trust, transfer all records
maintained by MGF under this Agreement and shall cooperate in the
transfer of such duties and responsibilities, including providing
for assistance from MGF's cognizant personnel in the
establishment of books, records and other data by such successor.
31. SERVICES FOR OTHERS.
Nothing in this Agreement shall prevent MGF or any
affiliated person (as defined in the 1940 Act) of MGF from
providing services for any other person, firm or corporation
(including other investment companies); provided, however, that
MGF expressly represents that it will undertake no activities
which, in its judgment, will adversely affect the performance of
its obligations to the Trust under this Agreement.
32. LIMITATION OF LIABILITY.
It is expressly agreed that the obligations of the
Trust hereunder shall not be binding upon any of the Trustees,
shareholders, nominees, officers, agents or employees of the
Trust, personally, but bind only the trust property of the Trust.
The execution and delivery of this Agreement have been authorized
by the Trustees of the Trust and signed by an officer of the
Trust, acting as such, and neither such authorization by such
Trustees nor such execution and delivery by such officer shall 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 Trust.
33. SEVERABILITY.
In the event any provision of this Agreement is
determined to be void or unenforceable, such determination shall
not affect the remainder of this Agreement, which shall continue
to be in force.
- 12 -
<PAGE>
34. QUESTIONS OF INTERPRETATION.
This Agreement shall be governed by the laws of the
State of Ohio. Any question of interpretation of any term or
provision of this Agreement having a counterpart in or otherwise
derived from a term or provision of the 1940 Act shall be
resolved by reference to such term or provision of the 1940 Act
and to interpretations thereof, if any, by the United States
Courts or in the absence of any controlling decision of any such
court, by rules, regulations or orders of the SEC issued pursuant
to said 1940 Act. In addition, where the effect of a requirement
of the 1940 Act, reflected in any provision of this Agreement, is
revised by rule, regulation or order of the SEC, such provision
shall be deemed to incorporate the effect of such rule,
regulation or order.
35. NOTICES.
All notices, requests, consents and other
communications required or permitted under this Agreement shall
be in writing (including telex and telegraphic communication) and
shall be (as elected by the person giving such notice) hand
delivered by messenger or courier service, telecommunicated, or
mailed (airmail if international) by registered or certified mail
(postage prepaid), return receipt requested, addressed to:
To the Trust: Gannett Welsh & Kotler Investment Trust
222 Berkeley Street
Boston, Massachusetts 02116
Attention: T. Williams Roberts
To MGF: MGF Service Corp.
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202
Attention: Robert G. Dorsey
or to such other address as any party may designate by notice
complying with the terms of this Section 35. Each such notice
shall be deemed delivered (a) on the date delivered if by
personal delivery; (b) on the date telecommunicated if by
telegraph; (c) on the date of transmission with confirmed answer
back if by telex, telefax or other telegraphic method; and (d)
on the date upon which the return receipt is signed or delivery
is refused or the notice is designated by the postal authorities
as not deliverable, as the case may be, if mailed.
36. AMENDMENT.
This Agreement may not be amended or modified except by
a written agreement executed by both parties.
- 13 -
<PAGE>
37. BINDING EFFECT.
Each of the undersigned expressly warrants and
represents that he has the full power and authority to sign this
Agreement on behalf of the party indicated, and that his
signature will operate to bind the party indicated to the
foregoing terms.
38. COUNTERPARTS.
This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
39. FORCE MAJEURE.
If MGF shall be delayed in its performance of services
or prevented entirely or in part from performing services due to
causes or events beyond its control, including and without
limitation, acts of God, interruption of power or other utility,
transportation or communication services, acts of civil or
military authority, sabotages, national emergencies, explosion,
flood, accident, earthquake or other catastrophe, fire, strike or
other labor problems, legal action, present or future law,
governmental order, rule or regulation, or shortages of suitable
parts, materials, labor or transportation, such delay or non-
performance shall be excused and a reasonable time for
performance in connection with this Agreement shall be extended
to include the period of such delay or non-performance.
40. MISCELLANEOUS.
The captions in this Agreement are included for
convenience of reference only and in no way define or limit any
of the provisions hereof or otherwise affect their construction
or effect.
- 14 -
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the day and year first above
written.
GANNETT WELSH & KOTLER
INVESTMENT TRUST
By:_____________________________
Its: President
MGF SERVICE CORP.
By:_____________________________
Its: President
- 15 -
<PAGE>
Schedule A
COMPENSATION
Services FEE
As Transfer Agent and Shareholder (Per Account)
Servicing Agent:
GW&K Equity Fund Payable monthly at
rate of $17.00/year
GW&K Government Securities Fund Payable monthly at
rate of $21.00/year
Each Fund will be subject to a minimum charge of $1,000 per
month.
- 16 -
<PAGE>
AGREEMENT RELATING TO INITIAL CAPITAL
June __, 1996
GANNETT WELSH & KOTLER INVESTMENT TRUST
222 Berkeley Street
Boston, Massachusetts 02116
Dear Sir/Madam:
In conjunction with the purchase by __________________ (the
"Purchaser") of ______ shares of beneficial interest of the GW&K
Equity Fund and ______ shares of beneficial interest of the GW&K
Government Securities Fund of the Gannett Welsh & Kotler Investment
Trust (The "Shares"), the Purchaser hereby represents that it is
acquiring the Shares for investment with no intention of reselling
or otherwise distributing the Shares. The Purchaser hereby further
agrees that any transfer of any of the Shares or any interest
therein shall be subject to the following conditions:
1. The Purchaser shall furnish you and counsel
satisfactory to you prior to the time of transfer,
a written description of the proposed transfer
specifying its nature and consequence and giving
the name of the proposed transferee.
2. You shall have obtained from your counsel a written
opinion stating whether in the opinion of such
counsel the proposed transfer may be effected
without registration under the Securities Act of
1933. If such opinion states that such transfer
may be so effected, the Purchaser shall then be
entitled to transfer the Shares in accordance with
the terms specified in its description of the
transaction to you. If such opinion states that
the proposed transfer may not be so effected, the
Purchaser will not be entitled to transfer the
Shares unless the Shares are registered.
The Purchaser hereby authorizes you to take such action as you
shall reasonably deem appropriate to prevent any violation of the
Securities Act of 1933 in connection with the transfer of the
Shares, including the imposition of a requirement that any
transferee of the Shares sign a letter agreement similar to this
one. The Purchaser agrees that in the event the Shares are
<PAGE>
redeemed by the Purchaser or its successors or any current holder
prior to the complete amortization of organization expenses by the
GW$K Equity Fund or the GW&K Government Securities Fund, the
redemption proceeds payable in respect of the Shares so redeemed
shall be reduced by the pro-rata share (based on the proportionate
share of the Shares redeemed to the total number of the Shares
outstanding at the time of redemption) of the then unamortized
deferred organization expenses as of the date of such redemption.
Very truly yours,
By: ___________________________
Its:
- 2 -
<PAGE>
PLAN OF DISTRIBUTION
PURSUANT TO RULE 12B-1
WHEREAS, Gannett Welsh & Kotler Investment Trust (the
"Trust"), an unincorporated business trust organized under the
laws of the Commonwealth of Massachusetts, engages in business as
an open-end management investment company and is registered as
such under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, the Trust is authorized to issue an unlimited
number of shares of beneficial interest without par value (the
"Shares"), which may be divided into two or more Series of
Shares; and
WHEREAS, the Trustees of the Trust as a whole, and the
Trustees who are not interested persons of the Trust (as defined
in the 1940 Act) and who have no direct or indirect financial
interest in the operation of this Plan or in any agreement
relating hereto (the "Rule 12b-1 Trustees"), having determined,
in the exercise of reasonable business judgment and in light of
their fiduciary duties under state law and under Section 36(a)
and (b) of the 1940 Act, that there is a reasonable likelihood
that this Plan will benefit the Trust and its shareholders, have
approved this Plan by votes cast in person at a meeting called
for the purpose of voting hereon and on any agreements related
hereto; and
WHEREAS, the Plan has been approved by the vote of at least
a majority of the outstanding voting securities (as defined in
the 1940 Act) of each Series of the Trust;
NOW, THEREFORE, the Trust hereby adopts this Plan in
accordance with Rule 12b-1 under the 1940 Act, on the following
terms and conditions:
1. Distribution Activities. Subject to the supervision of
the Trustees of the Trust, the Trust may, directly or indirectly,
engage in any activities related to the distribution of Shares,
which activities may include, but are not limited to, the
following: (a) payments to securities dealers and others who are
engaged in the sale of Shares and who may be advising
shareholders of the Trust regarding the purchase, sale or
retention of Shares; (b) expenses of maintaining personnel
(including personnel of organizations with which the Trust has
entered into agreements related to this Plan) who engage in or
support distribution of Shares or who render shareholder support
services not otherwise provided by the Trust's transfer agent,
including, but not limited to, office space and equipment,
telephone facilities and expenses, answering routine inquiries
regarding the Trust, processing shareholder transactions, and
- 1 -
<PAGE>
providing such other shareholder services as the Trust may
reasonably request; (c) formulating and implementing of marketing
and promotional activities, including, but not limited to, direct
mail promotions and television, radio, newspaper, magazine and
other mass media advertising; (d) preparing, printing and
distributing sales literature; (e) preparing, printing and
distributing prospectuses and statements of additional
information and reports of the Trust for recipients other than
existing shareholders of the Trust; and (f) obtaining such
information, analyses and reports with respect to marketing and
promotional activities as the Trust may, from time to time, deem
advisable. The Trust is authorized to engage in the activities
listed above, and in any other activities related to the
distribution of Shares, either directly or through other persons
with which the Trust has entered into agreements related to this
Plan.
2. Maximum Expenditures. The expenditures to be made by
the Trust pursuant to this Plan and the basis upon which payment
of such expenditures will be made shall be determined by the
Trustees of the Trust, but in no event may such expenditures
exceed in any fiscal year an amount calculated at the rate of
.25% of the average daily net asset value of any Series of the
Trust. Such payments for distribution activities may be made
directly by the Trust or the Trust's investment adviser may incur
such expenses and obtain reimbursement from the Trust.
3. Term and Termination. (a) This Plan shall become
effective on the date hereof. Unless terminated as herein
provided, this Plan shall continue in effect for one year from
the date hereof and shall continue in effect for successive
periods of one year thereafter, but only so long as each such
continuance is specifically approved by votes of a majority of
both (i) the Trustees of the Trust and (ii) the Rule 12b-1
Trustees, cast in person at a meeting called for the purpose of
voting on such approval.
(b) This Plan may be terminated at any time by vote of
a majority of the Rule 12b-1 Trustees or by vote of a majority of
the outstanding voting securities (as defined in the 1940 Act) of
the Trust.
4. Amendments. This Plan may not be amended to increase
materially the amount of expenditures provided for in Section 2
hereof unless such amendment is approved by a vote of the
majority of the outstanding voting securities of the Trust (as
defined in the 1940 Act), and no material amendment to this Plan
shall be made unless approved in the manner provided for annual
renewal of this Plan in Section 3(a) hereof.
- 2 -
<PAGE>
5. Selection and Nomination of Trustees. While this Plan
is in effect, the selection and nomination of Trustees who are
not interested persons (as defined in the 1940 Act) of the Trust
shall be committed to the discretion of the Trustees who are not
interested persons of the Trust.
6. Quarterly Reports. The Treasurer of the Trust shall
provide to the Trustees and the Trustees shall review, at least
quarterly, a written report of the amounts expended pursuant to
this Plan and any related agreement and the purposes for which
such expenditures were made.
7. Recordkeeping. The Trust shall preserve copies of this
Plan and any related agreement and all reports made pursuant to
Section 6 hereof, for a period of not less than six years from
the date of this Plan, the agreements or such reports, as the
case may be, the first two years in an easily accessible place.
8. Limitation of Liability. A copy of the Agreement and
Declaration of Trust of the Trust is on file with the Secretary
of the Commonwealth of Massachusetts and notice is hereby given
that this Plan is executed on behalf of the Trustees of the Trust
as trustees and not individually and that the obligations of this
instrument are not binding upon the Trustees or shareholders of
the Trust individually but are binding only upon the assets and
property of the Trust.
IN WITNESS WHEREOF, the Trust has caused this Plan to be
executed as of the date set forth below.
Dated: _________, 1996
Attest:
_______________________________ By: __________________________
Secretary President
- 3 -
<PAGE>
