<PAGE>
Securities Act of 1933 Registration No. 333-37727
Investment Act of 1940 Registration No. 811-8435
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. 6 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /x/
Amendment No. 8 [X]
KOBRICK INVESTMENT TRUST
(Exact Name of Registrant as Specified in Charter)
101 Federal Street, Boston, Massachusetts 02110
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (617) 342-3500
Frederick R. Kobrick
President
Kobrick Investment Trust
101 Federal Street
Boston, Massachusetts 02110
(Name and Address of Agent for Service)
Copies to:
John E. Pelletier, Esq. John M. Loder, Esq.
New England Funds, L.P. Ropes & Gray
399 Boylston Street One International Place
Boston, Massachusetts 02110 Boston, Massachusetts 02110
It is proposed that this filing will become effective under Rule 485:
[ ] Immediately upon filing pursuant to paragraph (b),
[x] On October 29, 1999 pursuant to paragraph (b),
[ ] 60 days after filing pursuant to paragraph (a)(1),
[ ] On ___________ pursuant to paragraph (a)(1),
[ ] 75 days after filing pursuant to paragraph (a)(2),
[ ] On ___________ pursuant to paragraph (a)(2).
If appropriate, check the following box:
[ ] This post-effective amendment designates a new effective
date for a previously filed post-effective amendment.
<PAGE>
Kobrick Funds
Stock Funds
All-Cap Equity
Kobrick Capital Fund
Small-Cap Equity
Kobrick Emerging Growth Fund
Large-Cap Equity
Kobrick Growth Fund
Prospectus
November 1, 1999
What's Inside
Goals, Strategies & Risks
Page 2
Fund Fees & Expenses
Page 7
Management Team
Page 10
Fund Services
Page 11
Fund Performance
Page 23
The Securities and Exchange Commission has not approved any Fund's shares or
determined whether this Prospectus is accurate or complete. Anyone who tells you
otherwise is committing a crime.
For general information on the Funds or any of their services and for assistance
in opening an account, contact your financial representative or call New England
Funds.
New England Funds
399 Boylston Street, Boston, Massachusetts 02116
800-225-5478
<PAGE>
Table of Contents
Goals, Strategies & Risks
Kobrick Capital Fund 2
Kobrick Emerging Growth Fund 4
Kobrick Growth Fund 6
Fund Fees & Expenses
Fund Fees & Expenses 7
More About Risk
More About Risk 9
Management Team
Meet the Funds' Investment Adviser 10
Meet the Funds' Portfolio Managers 10
Fund Services
Investing in the Funds 11
How Sales Charges are Calculated 12
Ways to Reduce or Eliminate Sales Charges 13
It's Easy to Open an Account 14
Buying Shares 15
Selling Shares 16
Selling Shares in Writing 17
Exchanging Shares 18
Restrictions on Buying, Selling and Exchanging Shares 18
How Fund Shares are Priced 19
Dividends and Distributions 20
Tax Consequences 20
Compensation to Securities Dealers 21
Additional Investor Services 22
Fund Performance
Fund Performance 23
Glossary of Terms
Glossary of Terms 24
If you have any questions about any of the terms used in this Prospectus, please
refer to the "Glossary of Terms."
To learn more about the possible risks of investing in a Fund, please refer to
the section entitled "More About Risk." This section details the risks of
practices in which the Funds may engage. Please read this section carefully
before you invest.
Fund shares are not bank deposits and are not guaranteed, endorsed or insured by
the Federal Deposit Insurance Corporation or any other government agency, and
are subject to investment risks, including possible loss of the principal
invested.
<PAGE>
Goals, Strategies & Risks
Kobrick Capital Fund
Adviser: Kobrick Funds LLC (the "Adviser")
Manager: Frederick R. Kobrick
Category: All-Cap Equity
Fund Focus grid
Ticker Symbol: Class A Class B Class C
KFCFX pending pending
Investment Goal
The Capital Fund seeks maximum capital appreciation by investing primarily in
equity securities of companies with small, medium and large capitalizations.
Investment Strategies
Under normal market conditions, the Capital Fund will invest substantially all
of its assets in equity securities of companies with small, medium and large
capitalizations, including those that the Adviser believes are undervalued
special situations and emerging growth companies. This approach provides the
Adviser with flexibility to emphasize in the Fund companies with different
capitalizations as market conditions change. The Adviser considers emerging
growth companies to be those companies that are less mature and have the
potential to grow substantially faster than the economy. The Adviser's bottom-up
approach utilizes fundamental and qualitative analysis to select individual
companies, not sectors, with the greatest potential for growth. In selecting
investments for the Fund, the Adviser generally seeks companies in a wide range
of industries and considers a variety of factors, including any one or more of
the following:
o the strength of a company's management team
o relative financial condition
o entrepreneurial character
o expected growth in earnings
o competitive position and business strategy
o new or innovative products, services or processes
In making investment decisions, the Adviser employs the following four-part
investment approach:
o Screening: The Adviser analyzes thousands of companies in order to find a
select group that has the potential to meet its buy disciplines described below.
Many of the companies within this group are special situation companies which,
because of unique circumstances, such as an ability to fill a particular niche,
are attractive investments.
o Portfolio Construction: The Adviser applies buy disciplines which emphasize
strong management, compelling valuations and high earnings growth. At the core
of this approach is regular contact with a company's management team to assess
its ability to execute the company's strategy. The Adviser considers potential
risks in selecting securities to construct a diversified portfolio that limits
volatility.
o Portfolio Supervision: The Adviser closely monitors each holding in the Fund's
portfolio to determine whether it continues to possess the factors identified
when the original investment was made. This process includes continuous review
of absolute and relative valuations, evaluation of management's execution of the
company's strategy and assessment of the company's prospects relative to the
overall economic, political and financial environment.
o Portfolio Realignment: The Adviser will generally sell a position when its
target price, which is continuously evaluated, is reached, when there is a
change in a company's management or strategy, or when a company fails to execute
its strategy.
Although it is anticipated that most of the Capital Fund's assets will be
invested in equity securities, the Fund may invest at any time up to 35% of its
total assets in other types of securities (including corporate bonds and
securities of the U.S. government). Because the Fund's investment goal provides
flexibility to emphasize companies having different capitalizations as market
conditions change, the Fund may engage in frequent trading of securities. This
may produce higher transaction costs and a higher level of capital gains, which
may lower your return.
A "snapshot" of the Fund's investments may be found in the current annual or
semiannual report (see back cover).
Investment Risks
Equity securities: Because the Capital Fund invests primarily in equity
securities, its major risks are those commonly associated with investing in
stocks. This means that you may lose money on your investment due to
unpredictable drops in a stock's value or periods of below-average performance
in a given stock or in the stock market as a whole. Growth stocks are generally
more sensitive to market movements than other types of stocks, primarily because
their stock prices are based heavily on future expectations. Small
capitalization and emerging growth companies may be subject to more abrupt price
movements, limited markets and less liquidity than larger, more established
companies, which could adversely affect the value of the portfolio. With special
situation companies, the primary risk is that they may not achieve their
expected value because events do not materialize as the Adviser anticipated.
Because the Fund invests in, among other things, undervalued special situations,
emerging growth companies and companies with small capitalizations, an
investment in the Fund involves greater than average risks. Accordingly, the
value of the Fund's shares may fluctuate more widely than the value of shares of
a fund that invests in larger, more established companies.
Evaluating The Fund's Past Performance
The bar chart and table shown below give an indication of the risks of investing
in Kobrick Capital Fund. The Fund's past performance does not necessarily
indicate how the Fund will perform in the future.
The bar chart shows the Fund's adjusted total returns for Class A shares for the
one calendar year since the Fund's inception on December 31, 1997.+ The returns
for the other classes of shares offered by this Prospectus differ from the Class
A returns shown in the bar chart, depending upon the respective expenses of each
class. The chart does not reflect any sales charge that you may be required to
pay when you buy or redeem the Fund's shares. A sales charge will reduce your
return.
(Bar chart with 1998 total return of 50.0% )
+ The Capital Fund's Class A shares total return year-to-date as of
September 30, 1999 was 14.73%.
/\ Highest Quarterly Return: Fourth Quarter 1998, up 40.32%
\/ Lowest Quarterly Return: Third Quarter 1998, down 13.86%
The table below shows how the Fund's average annual total returns for the
one-year period compared to those of the Russell 3000 Index, a market
value-weighted, unmanaged index of large company stocks. They are also compared
to the Lipper Capital Appreciation Fund Average and Morningstar Mid Cap Growth
Fund Average, each an average of the total returns of all mutual funds with an
investment style similar to that of the Capital Fund, as calculated by Lipper,
Inc. and Morningstar, Inc., respectively. It is not possible to invest directly
in an index. The Fund's total returns are adjusted to reflect the Fund's
expenses for Class A, B, and C shares and the maximum sales charge that you may
pay when you buy or redeem the Fund's shares. The Russell 3000 Index returns
have not been adjusted for ongoing management, distribution and operating
expenses and sales charges applicable to mutual fund investments. The Lipper
Capital Appreciation Fund Average and Morningstar Mid Cap Growth Fund Average
returns have been adjusted for these expenses but do not reflect any sales
charges.
Average Annual Total Returns
(for the periods ended December 31, 1998)
Past 1 Year
Kobrick Capital Fund: Class A* (inception 12/31/97) 41.4%
Russell 3000 Index 24.1
Lipper Capital Appreciation Fund Average 20.5
Morningstar Mid Cap Growth Fund Average 16.5
Kobrick Capital Fund: Class B* (inception 11/1/99) 44.3%
Russell 3000 Index 24.1
Lipper Capital Appreciation Fund Average 20.5
Morningstar Mid Cap Growth Fund Average 16.5
Kobrick Capital Fund: Class C* (inception 11/1/99) 48.3%
Russell 3000 Index 24.1
Lipper Capital Appreciation Fund Average 20.5
Morningstar Mid Cap Growth Fund Average 16.5
* Until November 1, 1999, the Fund had only one class of shares and was offered
without a sales charge. These returns have been adjusted to reflect the expenses
and sales loads of the Fund's new multiple class structure. See "Fund Fees &
Expenses."
<PAGE>
Goals, Strategies & Risks
Kobrick Emerging Growth Fund
Adviser: Kobrick Funds LLC (the "Adviser")
Manager: Frederick R. Kobrick
Category: Small-Cap Equity
Fund Focus
Ticker Symbol: Class A Class B Class C
KFEGX pending pending
Investment Goal
The Emerging Growth Fund seeks to provide growth of capital by investing
primarily in equity securities of emerging growth companies, with an emphasis on
companies with small capitalizations.
Investment Strategies
Under normal market conditions, the Emerging Growth Fund will invest
substantially all of its assets in equity securities of emerging growth
companies in any industry, with emphasis on companies with small
capitalizations. The Adviser considers emerging growth companies to be those
companies which are less mature and have the potential to grow substantially
faster than the economy. The small capitalization companies in which the Fund
invests are generally comparable to the size of companies included in the
Russell 2000 Index, which is a commonly used index of small stock performance.
The median market capitalization in this index as of September 30, 1999 was
approximately $421 million and the largest market capitalization in this index
as of such date was approximately $3 billion. Levels of capitalization and the
companies constituting the Russell 2000 Index could vary over time because of
market conditions and other factors relating to small capitalization companies
generally and investments in such companies. While a company's market
capitalization may be small at the time the Fund first invests in the company,
the Fund may continue to hold and acquire shares of the company after its market
capitalization increases. Small and emerging growth companies that are
identified as good candidates for the Fund can be found in a variety of
industries. In selecting investments for the Fund, the Adviser may consider a
variety of factors, including any one or more of the following:
o the strength of a company's management team
o relative financial condition
o competitive position and business strategy
o new or innovative products, services or processes
o expected growth in earnings
o cash flow
o overall potential as an enterprise
In making investment decisions, the Adviser employs the following four-part
investment approach:
o Screening: The Adviser analyzes thousands of companies in order to find a
select group that has the potential to meet its buy disciplines described below.
Many of the companies within this group are special situation companies which,
because of unique circumstances, such as an ability to fill a particular niche,
are attractive investments.
o Portfolio Construction: The Adviser applies buy disciplines which emphasize
strong management, compelling valuations and high earnings growth. At the core
of this approach is regular contact with a company's management team to assess
its ability to execute the company's strategy. The Adviser considers potential
risks in selecting securities to construct a diversified portfolio that limits
volatility.
o Portfolio Supervision: The Adviser closely monitors each holding in the Fund's
portfolio to determine whether it continues to possess the factors identified
when the original investment was made. This process includes continuous review
of absolute and relative valuations, evaluation of management's execution of the
company's strategy and assessment of the company's prospects relative to the
overall economic, political and financial environment.
o Portfolio Realignment: The Adviser will generally sell a position when its
target price, which is continuously evaluated, is reached, when there is a
change in a company's management or strategy, or when a company fails to execute
its strategy. Although it is anticipated that most of the Emerging Growth Fund's
assets will be invested in equity securities of emerging growth companies, the
Fund may invest at any time up to 35% of its total assets in other types of
securities (including corporate bonds and securities of the U.S. government) and
in securities issued by larger, more mature companies and undervalued special
situation companies. The Fund may engage in frequent trading of securities,
which may produce higher transaction costs and a higher level of capital gains.
This may lower your return.
A "snapshot" of the Fund's investments may be found in the current annual or
semiannual report (see back cover).
Investment Risks
Equity securities: Because the Emerging Growth Fund invests primarily in equity
securities, its major risks are those commonly associated with investing in
stocks. This means that you may lose money on your investment due to
unpredictable drops in a stock's value or periods of below-average performance
in a given stock or in the stock market as a whole. Growth stocks are generally
more sensitive to market movements than other types of stocks, primarily because
their stock prices are based heavily on future expectations. Small
capitalization and emerging growth companies may be subject to more abrupt price
movements, limited markets and less liquidity than larger, more established
companies, which could adversely affect the value of the portfolio. With special
situation companies, the primary risk is that they may not achieve their
expected value because events do not materialize as the Adviser anticipated.
Because the Fund invests in, among other things, undervalued special situations,
emerging growth companies and companies with small capitalizations, an
investment in the Fund involves greater than average risks. Accordingly, the
value of the Fund's shares may fluctuate more widely than the value of shares of
a fund that invests in larger, more established companies.
Evaluating The Fund's Past Performance
The bar chart and table shown below give an indication of the risks of investing
in Kobrick Emerging Growth Fund. The Fund's past performance does not
necessarily indicate how the Fund will perform in the future.
The bar chart shows the Fund's adjusted total returns for Class A shares for the
one calendar year since the Fund's inception on December 31, 1997.+ The returns
for the other classes of shares offered by this Prospectus differ from the Class
A returns shown in the bar chart, depending upon the respective expenses of each
class. The chart does not reflect any sales charge that you may be required to
pay when you buy or redeem the Fund's shares. A sales charge will reduce your
return.
(bar chart with 1998 total return of 39.5%)
+ The Emerging Growth Fund's Class A shares total return year-to-date
as of September 30, 1999 was 18.57%.
/\ Highest Quarterly Return: Fourth Quarter 1998, up 37.57%
\/ Lowest Quarterly Return: Third Quarter 1998, down 19.27%
The table below shows how the Fund's average annual total returns for the
one-year period compared to those of the Russell 2000 Index, a market
value-weighted, unmanaged index of small company stocks. It is also compared to
the Lipper Small Company Fund Average and Morningstar Small Cap Growth Fund
Average, each an average of the total returns of all mutual funds with an
investment style similar to that of the Emerging Growth Fund, as calculated by
Lipper, Inc. and Morningstar Inc., respectively. It is not possible to invest
directly in an index. The Fund's total returns are adjusted to reflect the
Fund's expenses for Class A, B, and C shares and the maximum sales charge that
you may pay when you buy or redeem the Fund's shares. The Russell 2000 Index
returns have not been adjusted for ongoing management, distribution and
operating expenses and sales charges applicable to mutual fund investments. The
Lipper Small Company Fund Average and Morningstar Small Cap Growth Fund Average
returns have been adjusted for these expenses but do not reflect any sales
charges.
Average Annual Total Returns
(for the periods ended December 31, 1998)
Past 1 Year
Kobrick Emerging Growth Fund: Class A* (inception 12/31/97) 31.5%
Russell 2000 Index -2.6
Lipper Small Company Fund Average -0.2
Morningstar Small Cap Growth Fund Average 6.2
Kobrick Emerging Growth Fund: Class B* (inception 11/1/99) 33.8%
Russell 2000 Index -2.6
Lipper Small Company Fund Average -0.2
Morningstar Small Cap Growth Fund Average 6.2
Kobrick Emerging Growth Fund: Class C* (inception 11/1/99) 37.8%
Russell 2000 Index -2.6
Lipper Small Company Fund Average -0.2
Morningstar Small Cap Growth Fund Average 6.2
* Until November 1, 1999, the Fund had only one class of shares and was offered
without a sales charge. These returns have been adjusted to reflect the expenses
and sales loads of the Fund's new multiple class structure. See "Fund Fees &
Expenses."
<PAGE>
Goals, Strategies & Risks
Kobrick Growth Fund
Adviser: Kobrick Funds LLC (the "Adviser")
Manager: Michael E. Nance
Category: Large-Cap Equity
Fund Focus grid
Ticker Symbol: Class A Class B Class C
KFGRX pending pending
Investment Goal
The Growth Fund seeks long-term growth of capital by investing primarily in
equity securities of companies with large capitalizations that the Adviser
believes have better than average long-term growth potential.
Investment Strategies
Under normal market conditions, the Growth Fund will be primarily invested in
equity securities of large capitalization companies that the Adviser expects
will have better than average long-term growth potential. The Adviser's
bottom-up approach utilizes fundamental and qualitative analysis to select
individual companies, not sectors, with the greatest potential for growth. The
Fund invests in a diversified portfolio of securities of larger, more
established companies in a broad range of industries. The Adviser seeks to
invest in companies which offer the greatest potential for profitable expansion
and sustained growth and considers a variety of factors, including any one or
more of the following:
o management that can execute business plans
o expected growth in earnings
o a sound business strategy
o compelling valuations
A company's valuations are based on a variety of measures including
price/earnings to growth rates, price to book value and price to sales.
Potential income is not a major factor in the selection of investments.
In making investment decisions, the Adviser employs the following four-part
investment approach:
o Screening: The Adviser analyzes thousands of companies in order to find a
select group that has the potential to meet its buy disciplines described below.
o Portfolio Construction: The Adviser applies buy disciplines which emphasize
strong management, compelling valuations and high earnings growth. At the core
of this approach is regular contact with a company's management team to assess
its ability to execute the company's strategy. The Adviser considers potential
risks in selecting securities to construct a diversified portfolio that limits
volatility.
o Portfolio Supervision: The Adviser closely monitors each holding in the Fund's
portfolio to determine whether it continues to possess the factors identified
when the original investment was made. This process includes continuous review
of absolute and relative valuations, evaluation of management's execution of the
company's strategy and assessment of the company's prospects relative to the
overall economic, political and financial environment.
o Portfolio Realignment: The Adviser will generally sell a position when its
target price, which is continuously evaluated, is reached, when there is a
change in a company's management or strategy, or when a company fails to execute
its strategy.
Although it is anticipated that most of the Growth Fund's assets will be
invested in equity securities of companies with large capitalizations, the Fund
may invest at any time up to 35% of its total assets in other types of
securities (including corporate bonds and securities of the U.S. government) and
in smaller capitalization and emerging growth companies. The Fund may engage in
frequent trading of securities, which may produce higher transaction costs and a
higher level of capital gains. This may lower your return.
A "snapshot" of the Fund's investments may be found in the current annual or
semiannual report (see back cover).
Investment Risks
Equity securities: Because the Growth Fund invests primarily in equity
securities, its major risks are those commonly associated with investing in
stocks. This means that you may lose money on your investment due to sudden,
unpredictable drops in a stock's value or periods of below-average performance
in a given stock or in the stock market as a whole. Growth stocks are generally
more sensitive to market movements than other types of stocks, primarily because
their stock prices are based heavily on future expectations. Because of these
and other risks, the Fund may underperform certain other stock funds during
periods when large company growth stocks are generally out of favor.
Performance
Since the Fund has only been in existence since September 1, 1998, its
performance and its comparison to broad-based securities market indexes are not
permitted to be included in this Prospectus. The Fund's performance is generally
compared to the S&P Composite Index of 500 Stocks, Lipper Growth Fund Average,
and Morningstar Large Cap Growth Fund Average.
<PAGE>
Fund Fees & Expenses
The following tables describe the fees and expenses that you may pay if you buy
and hold shares of each Fund.
Shareholder Fees
(fees paid directly from your investment)
Class A Class B Class C
------- ------- -------
Maximum sales charge
(load) imposed on
purchases (as a
percentage of offering
price)(1)(2) 5.75% None None
Maximum deferred sales
charge (load) (as a
percentage of original
purchase price or
redemption proceeds, as
applicable)(2) (3) 5.00% 1.00%
Redemption fees None* None* None*
(1) A reduced sales charge on Class A shares applies in some cases. See "Ways to
Reduce or Eliminate Sales Charges."
(2) Does not apply to reinvested distributions.
(3) A 1.00% contingent deferred sales charge applies with respect to certain
purchases of Class A shares greater than $1,000,000 redeemed within 1 year after
purchase, but not to any other purchases or redemptions of Class A shares. See
"How Sales Charges are Calculated."
* Generally, a transaction fee will be charged for expedited payment of
redemption proceeds such as by wire or overnight delivery.
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets, as a percentage of average daily
net assets)
<TABLE>
<CAPTION>
Kobrick Capital Fund Kobrick Emerging Growth Fund Kobrick Growth Fund
Class A Class B Class C Class A Class B Class C Class A Class B Class C
------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Management fees 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%
Distribution and/or
service (12b-1) fees 0.25% 1.00%* 1.00%* 0.25 1.00%* 1.00%* 0.25% 1.00%* 1.00%*
Other expenses 0.52% 0.52% 0.52% 0.83% 0.83% 0.83% 0.88% 0.88% 0.88%
Total annual fund
operating expenses (a) 1.77% 2.52% 2.52% 2.08% 2.83% 2.83% 2.13% 2.88% 2.88%
Fee waiver and/or expense
reimbursement (b) -0.27% -0.27% -0.27% -0.58% -0.58% -0.58% -0.73% -0.73% -0.73%
Net expenses 1.50% 2.25% 2.25% 1.50% 2.25% 2.25% 1.40% 2.15% 2.15%
* Because of the higher 12b-1 fees, long-term shareholders may pay more than the economic equivalent of the maximum front-end
sales charge permitted by rules of the National Association of Securities Dealers, Inc.
(a) Until November 1, 1999, the Funds had only one class of shares and were offered without a sales charge and therefore Total
expenses have been restated to account for fees and expenses under the Funds' new multiple class structure.
(b) The Adviser has agreed to cap the amount of Total Expenses at 1.50%, 2.25% and 2.25% for the Class A, B and C shares,
respectively of the Kobrick Capital Fund and Kobrick Emerging Growth Fund and 1.40%, 2.15% and 2.15% for the Class A, B and C
shares, respectively of the Kobrick Growth Fund. Accordingly, to the extent Total Expenses exceed the amount of the respective
cap, the Adviser will reduce its management fees and/or reimburse the Funds for certain expenses. With respect to each Fund, the
Adviser shall be permitted to recover expenses it has borne after November 1, 1999 (whether through reduction of its management
fee or otherwise) in later periods to the extent that a Fund's expenses fall below the rates set forth above; provided, however,
that a Fund is not obligated to pay any such deferred fees more than one year after the end of the fiscal year in which the fee
was deferred. If the Adviser had not agreed to the cap and if the reimbursements and waivers were not in effect for a Fund,
performance would be reduced accordingly.
</TABLE>
Example
This example is intended to help you compare the cost of investing in the Funds
with the cost of investing in other mutual funds.
The example assumes that:
o You invest $10,000 in a Fund for the time periods indicated;
o Your investment has a 5% return each year; and
o A Fund's operating expenses remain the same.
Although your actual costs and returns may be higher or lower, based on these
assumptions your costs would be:
<TABLE>
<CAPTION>
Kobrick Capital Fund Kobrick Emerging Growth Fund Kobrick Growth Fund
Class A Class B Class C Class A Class B Class C Class A Class B Class C
------- ------- ------- ------- ------- ------- ------- ------- -------
(1) (2) (1) (2) (1) (2) (1) (2) (1) (2) (1) (2)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 year $ 719 $ 728 $ 228 $ 328 $ 228 $ 719 $ 728 $ 228 $ 328 $ 228 $ 709 $ 718 $ 218 $ 318 $ 218
3 years $1,022 $1,003 $ 703 $ 703 $ 703 $1,022 $1,003 $ 703 $ 703 $ 703 $ 993 $ 973 $ 673 $ 673 $ 673
5 years $1,346 $1,405 $1,205 $1,205 $1,205 $1,346 $1,405 $1,205 $1,205 $1,205 $1,297 $1,354 $1,154 $1,154 $1,154
10 years* $2,263 $2,514 $2,396 $2,585 $2,585 $2,263 $2,514 $2,396 $2,585 $2,585 $2,158 $2,410 $2,292 $2,483 $2,483
(1) Assumes redemption at end of period
(2) Assumes no redemption at end of period
* Class B shares automatically convert to Class A shares after 8 years; therefore, Class B amounts are calculated using Class A
expenses in years 9 and 10.
</TABLE>
<PAGE>
More About Risk
The Funds have principal investment strategies that come with inherent risks.
The following is a list of risks to which each Fund may be subject by investing
in various types of securities or engaging in various practices.
Market Risk (All Funds) The risk that the market value of a security may move up
and down, sometimes rapidly and unpredictably based upon change in a company's
financial condition as well as overall market and economic conditions.
Risk of Small Capitalization Companies (Capital and Emerging Growth Funds) These
companies carry special risks, including narrower markets, limited financial and
management resources, less liquidity and greater volatility than large company
stocks.
Management Risk (All Funds) The risk that a strategy used by a Fund's portfolio
management may fail to produce the intended result.
Credit Risk (All Funds) The risk that the issuer of a security, or the
counterparty to a contract, will default or otherwise become unable to honor a
financial obligation.
Interest Rate Risk (All Funds) The risk of market losses attributable to changes
in interest rates. In general, the prices of fixed-income securities rise when
interest rates fall, and fall when interest rates rise.
Information Risk (All Funds) The risk that key information about a security is
inaccurate or unavailable.
Opportunity Risk (All Funds) The risk of missing out on an investment
opportunity because the assets necessary to take advantage of it are invested in
less profitable investments.
Liquidity Risk (All Funds) The risk that certain securities may be difficult or
impossible to sell at the time and at the price that the seller would like. This
may result in a loss or may be costly to a Fund.
Valuation Risk (All Funds) The risk that a Fund has valued certain securities at
a higher price than it can sell them for.
Political Risk (All Funds) The risk of losses directly attributable to
government or political actions.
Year 2000 (All Funds) Many computer systems today cannot distinguish between the
year 1900 and the year 2000. The Adviser does not currently anticipate that
computer problems related to the year 2000 will have a material effect on any
Fund. However, there can be no assurances in this area, including the
possibility that year 2000 computer problems could negatively affect
communication systems, investment markets including investments by a Fund or the
economy in general. The Funds and the Adviser have and will take steps that they
believe are reasonable to address this problem in their own computer systems and
to obtain assurances that reasonable steps are being taken by the Funds' major
service providers.
<PAGE>
Management Team
Meet the Funds' Investment Adviser
The Kobrick Funds family consists of three mutual funds designed to offer
investors a range of growth oriented investment opportunities. Kobrick Funds are
distributed through New England Funds, L.P. (the "Distributor"). This Prospectus
covers Class A, Class B, and Class C shares of Kobrick Capital Fund, Kobrick
Emerging Growth Fund and Kobrick Growth Fund, all of which constitute the
"Kobrick Funds." As a shareholder of one or more of the Kobrick Funds, you are
entitled to the same benefits and privileges as a shareholder of the New England
Funds, including the ability to exchange into or out of any fund in the New
England Funds family (See "Exchanging Shares"). The New England Funds family,
which includes the Kobrick Funds, includes 25 mutual funds with a total of over
$7.5 billion in assets under management as of September 30, 1999. New England
Stock Funds, New England Bond Funds, New England Star Funds and New England
State Tax-Free Funds, constitute the "New England Funds." New England Cash
Management Trust Money Market Series and New England Tax Exempt Money Market
Trust constitute the "Money Market Funds."
Adviser
The Adviser, Kobrick Funds LLC, located at 101 Federal Street, Boston,
Massachusetts 02110, serves as the investment adviser to each of the Funds and
is a subsidiary of Nvest Companies, L.P. ("Nvest Companies"). The Adviser, the
predecessor to which was formed in 1997, focuses primarily on managing
growth-oriented equity funds including each of the Funds. Nvest Companies is
part of an affiliated group including Nvest, L.P., a publicly-traded company
listed on the New York Stock Exchange. Nvest Companies' 14 principal subsidiary
or affiliated asset management firms, collectively, had $127 billion in assets
under management as of September 30, 1999.
In 1998, the Funds paid 1.00% of their respective average daily net assets to
the Adviser in advisory fees.
Portfolio Trades
In placing portfolio trades, the Adviser may use brokerage firms that market the
Funds' shares or are affiliated with Nvest Companies or the Adviser. In placing
trades, the Adviser will seek to obtain the best combination of price and
execution, which involves a number of judgmental factors. Such portfolio trades
are subject to applicable regulatory restrictions and related procedures adopted
by the Funds' Board of Trustees.
Meet the Funds' Portfolio Managers
Frederick R. Kobrick
Frederick Kobrick has managed Kobrick Capital Fund from its inception and
Kobrick Emerging Growth Fund from its inception until February 1, 1999 and
returned as its portfolio manager on April 9, 1999. Mr. Kobrick previously
managed the Kobrick Growth Fund from its inception until June 30, 1999. He has
been in the investment business for more than 28 years. For the 12 year period
immediately prior to becoming President of the predecessor to Kobrick Funds LLC
in 1997, he was an equity portfolio manager at State Street Research &
Management Company, where he served as Senior Vice President since 1989 and as a
member of the firm's Equity Investment Committee since 1985. He received an
M.B.A. from Harvard Business School and a B.A. from Boston University. Mr.
Kobrick is also a Chartered Financial Analyst. In addition to serving as senior
officer of the Adviser, Mr. Kobrick is also a portfolio manager and a principal
in private investment partnerships and may act in that capacity with respect to
other similar investment partnerships.
Michael E. Nance
Michael Nance has managed Kobrick Growth Fund since July 1, 1999. Mr. Nance,
Senior Vice President of the Adviser, joined the company in June 1999. Prior to
joining the Adviser, he was a Senior Vice President at Putnam Investments, where
he was a co-manager of the Putnam Voyager Fund, as well as other institutional
accounts. Mr. Nance joined Putnam in 1994 as an Assistant Vice President and
equity analyst in the Global Equity Research Group. Mr. Nance received an M.B.A.
from the University of Chicago Graduate School of Business and a B.S. in
Industrial Engineering from Drexel University. In addition to serving as Senior
Vice President of the Adviser, Mr. Nance is also a portfolio manager in private
investment partnerships and may act in that capacity with respect to other
similar investment partnerships.
<PAGE>
Fund Services
Investing in the Funds
Choosing a Share Class
Each Fund offers Class A, Class B and Class C shares to the public. Each class
has different costs associated with buying, selling and holding Fund shares,
which allows you to choose the class that best meets your needs. Which class you
choose will depend upon the size of your investment and how long you intend to
hold your shares. Class B shares, Class C shares and certain shareholder
features may not be available to you if you hold your shares in a street name
account. Your financial representative can help you decide which class of shares
is most appropriate for you.
Class A Shares
o You pay a sales charge when you buy Fund shares. There are several ways to
reduce this charge. See the section entitled "Ways to Reduce or Eliminate Sales
Charges."
o You pay lower annual expenses than Class B and Class C shares, giving you the
potential for higher returns per share.
o You do not pay a sales charge on orders of $1 million or more, but you may pay
a charge on redemption if you redeem these shares within 1 year of purchase.
Class B Shares
o You do not pay a sales charge when you buy Fund shares. All of your money goes
to work for you right away.
o You pay higher annual expenses than Class A shares.
o You will pay a charge on redemptions if you sell your shares within 6
years of purchase, as described in the section "How Sales Charges are
Calculated."
o Your Class B shares will automatically convert into Class A shares after 8
years, which reduces your annual expenses.
o We will not accept an order for $1 million or more of Class B shares. You may,
however, purchase $1 million or more of Class A shares, which will have no sales
charge as well as lower annual expenses. You may pay a charge on redemption if
you redeem these shares within 1 year of purchase.
Class C Shares
o You do not pay a sales charge when you buy Fund shares. All of your money goes
to work for you right away.
o You pay higher annual expenses than Class A shares.
o You will pay a charge on redemptions if you sell your shares within 1 year of
purchase.
o Your Class C shares will not automatically convert into Class A shares. If you
hold your shares for longer than 8 years, you'll pay higher expenses than other
classes.
o We will not accept an order for $1 million or more of Class C shares. You may,
however, purchase $1 million or more of Class A shares, which will have no sales
charge as well as lower annual expenses. You may pay a charge on redemption if
you redeem these shares within 1 year of purchase.
For expenses associated with Class A, B and C shares, see the section entitled
"Fund Fees & Expenses" in this Prospectus.
Certificates
Certificates will not be automatically issued for any class of shares. Upon
written request, you may receive certificates for Class A shares only.
<PAGE>
Fund Services
How Sales Charges are Calculated
Class A Shares
The price that you pay when you buy Class A shares ("offering price") is their
net asset value plus a sales charge (sometimes called a "front-end sales
charge") which varies depending upon the size of your purchase.
Class A Sales Charges
As a % of As a % of
Your Investment offering price your investment
--------------- -------------- ---------------
Less than $ 50,000 5.75% 6.10%
$ 50,000 - $ 99,999 4.50% 4.71%
$100,000 - $249,999 3.50% 3.63%
$250,000 - $499,999 2.50% 2.56%
$500,000 - $999,999 2.00% 2.04%
$1,000,000 or more* 0.00% 0.00%
For purchases of Class A shares of the Funds of $1 million or more or purchases
by Retirement Plans (Plans under Sections 401(a) or 401(k) of the Internal
Revenue Code with investments of $1 million or more or that have 100 or more
eligible employees), there is no front-end sales charge, but a contingent
deferred sales charge of 1.00% may apply to redemptions of your shares within
one year of the date of purchase. See the section entitled "Ways to Reduce or
Eliminate Sales Charges."
Class B Shares
The offering price of Class B shares is their net asset value, without a
front-end sales charge. However, there is a contingent deferred sales charge
("CDSC") on shares that you sell within 6 years of buying them. The amount of
the CDSC, if any, declines each year that you own your shares. The holding
period for purposes of timing the conversion to Class A shares and determining
the CDSC will continue to run after an exchange to Class B shares of another
Kobrick Fund or a New England Fund. The CDSC equals the following percentages of
the dollar amounts subject to the charge:
Class B Contingent Deferred Sales Charges
Year Since Purchase CDSC on Shares Being Sold
------------------- -------------------------
1st 5.00%
2nd 4.00%
3rd 3.00%
4th 3.00%
5th 2.00%
6th 1.00%
Thereafter 0.00%
Class C Shares
The offering price of Class C shares is their net asset value, without a
front-end sales charge. However, Class C shares are subject to a CDSC of 1.00%
on redemptions made within one year of the date of purchase. The holding period
for determining the CDSC will continue to run after an exchange to Class C
shares of another Kobrick Fund or a New England Fund.
Class C Contingent Deferred Sales Charges
Year Since Purchase CDSC on Shares Being Sold
------------------- -------------------------
1st 1.00%
Thereafter 0.00%
How the CDSC Is Applied to Your Shares
The CDSC is a sales charge you pay when you redeem certain Fund shares. The
CDSC:
o is calculated based on the number of shares you are selling;
o is based on either your original purchase price or the current net asset value
of the shares being sold, whichever is lower;
o is deducted from the proceeds of the redemption, not from the amount remaining
in your account; and
o for year one applies to redemptions through the day one year after the date on
which your purchase was accepted, and so on for subsequent years.
A CDSC will not be charged on:
o increases in net asset value above the purchase price; or
o shares you acquired by reinvesting your dividends or capital gains
distributions.
To keep your CDSC as low as possible, each time that you place a request to sell
shares we will first sell any shares in your account that carry no CDSC. If
there are not enough of these shares available to meet your request, we will
sell the shares with the lowest CDSC.
Exchanges into Shares of a New England Money Market Fund
If you exchange shares of a Fund into shares of the New England Money Market
Funds, the holding period for purposes of determining the CDSC and conversion to
Class A shares stops until you exchange back into shares of another Kobrick Fund
or a New England Fund. If you choose to redeem those New England Money Market
Fund shares, a CDSC may apply.
<PAGE>
Fund Services
Ways to Reduce or Eliminate Sales Charges
Class A Shares
Reducing Sales Charges
There are several ways you can lower your sales charge, including:
o Letter of Intent -- allows you to purchase Class A shares of any Kobrick Fund
or New England Fund over a 13-month period but pay sales charges as if you had
purchased all shares at once. This program can save you money if you plan to
invest $50,000 or more over 13 months. Purchases in Class B and Class C shares
may be used toward meeting the letter of intent.
o Combining Accounts -- allows you to combine shares of multiple Kobrick Funds
and other New England Funds and classes for purposes of calculating your sales
charge. You may combine your purchases with those of qualified accounts of a
spouse, parents, children, siblings, grandparents, grandchildren, in-laws,
individual fiduciary accounts, sole proprietorships, single trust estates and
any other group of individuals acceptable to the Distributor.
These privileges do not apply to the New England Money Market Funds unless
shares are purchased through an exchange from another Kobrick Fund or New
England Fund.
Eliminating Sales Charges and CDSC
Class A shares may be offered without front-end sales charges or a CDSC to the
following individuals and institutions:
o Any government entity that is prohibited from paying a sales charge or
commission to purchase mutual fund shares;
o Selling brokers, sales representatives or other intermediaries;
o Fund Trustees and other individuals who are affiliated with any Kobrick Fund,
New England Fund or Money Market Fund (this also applies to any spouse, parents,
children, siblings, grandparents, grandchildren and in-laws of those mentioned);
o Participants in certain Retirement Plans with at least 100 members (one-year
CDSC may apply);
o Non-discretionary and non-retirement accounts of bank trust departments or
trust companies only if they principally engage in banking or trust activities;
o Investments of $25,000 or more in Kobrick Funds, New England Funds or Money
Market Funds by clients of an adviser or subadviser to any Kobrick Fund, New
England Fund or Money Market Fund; and
o Accounts open as of October 31, 1999 that became Class A shareholders of the
relevant Fund, are not subject to applicable sales charges and may exchange into
Class A shares of another Kobrick Fund or New England Fund without the
imposition of a sales charge.
Repurchasing Fund Shares
You may apply proceeds from redeeming Class A shares of the Funds without paying
a sales charge to repurchase Class A shares of any Kobrick Fund or New England
Fund. To qualify, you must reinvest some or all of the proceeds within 120 days
after your redemption and notify New England Funds or your financial
representative at the time of reinvestment that you are taking advantage of this
privilege. You may reinvest your proceeds either by returning the redemption
check or by sending a new check for some or all of the redemption amount. Please
note: For federal income tax purposes, a redemption is a sale that involves tax
consequences, even if the proceeds are later reinvested. Please consult your tax
adviser for how a redemption would affect you.
If you repurchase Class A shares of $1 million or more within 30 days after you
redeem such shares, the Distributor will rebate the amount of the CDSC charged
on the redemption.
Class A, B or C Shares
Eliminating the CDSC
As long as we are notified at the time you sell, the CDSC for any share class
will generally be eliminated in the following cases:
o to make distributions from a retirement plan (a plan termination or total plan
redemption may incur a CDSC);
o to make payments through a systematic withdrawal plan; or
o due to shareholder death or disability.
If you think you may be eligible for a sales charge elimination or reduction,
contact your financial representative or New England Funds.
<PAGE>
Fund Services
It's Easy to Open an Account
To open an account with New England Funds:
1. Read this Prospectus carefully.
2. Determine how much you wish to invest. The following chart shows the
investment minimums for various types of accounts:
<TABLE>
<CAPTION>
Minimum to Open an
Minimum to Open an Account Using Minimum for Existing
Type of Account Account Investment Builder Accounts
- --------------- ------- ------------------ --------
<S> <C> <C> <C>
Any account other than those listed below $2,500 $100 $100
Accounts registered under the Uniform Gifts $2,000 $100 $100
to Minors Act or the Uniform Transfers to
Minors Act
Individual Retirement Accounts (IRAs) $500 $100 $100
Retirement plans with tax benefits such as
corporate pension, profit sharing and $250 $100 $100
Keogh plans
Payroll Deduction Investment Programs for
SARSEP, SEP, SIMPLE, 403(b)(7)
and certain other retirement plans $25 N/A N/A
</TABLE>
3. Complete the appropriate parts of the account application, carefully
following the instructions. If you have any questions, please call your
financial representative or New England Funds at 800-225-5478. For more
information on New England Funds' investment programs, refer to the section
entitled "Additional Investor Services" in this Prospectus.
4. Use the following sections as your guide for purchasing shares.
Self-Servicing Your Account
Buying or selling shares is easy with the services
described below:
New England Funds Personal Access Line(TM) ("PAL")
800-225-5478, press 1
New England Funds Web site
www.mutualfunds.com
You have access to your account 24 hours a day by calling PAL from a touch-tone
telephone or by visiting us online.
By using these customer service options, you may:
o purchase, exchange or redeem shares in your existing accounts (certain
restrictions may apply);
o review your account balance, recent transactions, Fund prices and recent
performance;
o order duplicate account statements; and
o obtain tax information.
Please see the following pages for other ways to buy, exchange or sell your
shares.
<PAGE>
Fund Services
Buying Shares
Opening an Account
Adding to an Account
Through Your Investment Dealer
o Call your investment dealer for information
o Call your investment dealer for information
By Mail
o Make out a check in U.S. dollars for the investment amount, payable to "New
England Funds." Third party checks will generally not be accepted.
o Mail the check with your completed application to New England Funds, P.O. Box
8551, Boston, MA 02266-8551.
o Make out a check in U.S. dollars for the investment amount, payable to "New
England Funds." Third party checks will generally not be accepted.
o Fill out the detachable investment slip from an account statement. If no slip
is available, include with the check a letter specifying the Fund name, your
class of shares, your account number and the registered account name(s). To make
investing even easier, you can order more investment slips by calling
800-225-5478.
By Exchange
o The exchange must be for a minimum of $1,000 or for all of your shares.
o Obtain a current prospectus for the Fund into which you are exchanging by
calling your investment dealer or New England Funds at 800-225-5478.
o Call your investment dealer or New England Funds to request an exchange.
o See the section entitled "Exchanging Shares."
o The exchange must be for a minimum of $1,000 or for all of your shares.
o Call your investment dealer or New England Funds at 800-225-5478 to request an
exchange.
o See the section entitled "Exchanging Shares."
By Wire
o Call New England Funds at 800-225-5478 to obtain an account number and wire
transfer instructions. Your bank may charge you for such a transfer.
o Instruct your bank to transfer funds to State Street Bank & Trust Company,
ABA# 011000028, DDA# 99011538.
o Specify the Fund name, your class of shares, your account number and the
registered account name(s). Your bank may charge you for such a transfer.
Automatic Investing Through Investment Builder
o Indicate on your application that you would like to begin an automatic
investment plan through Investment Builder and the amount of the monthly
investment ($100 minimum).
o Send a check marked "Void" or a deposit slip from your bank account along with
your application.
o Please call New England Funds at 800-225-5478 for a Service Options Form. A
signature guarantee may be required to add this privilege.
o See the section entitled "Additional Investor Services."
Through Automated Clearing House (ACH)
o Ask your bank or credit union whether it is a member of the ACH system.
o Complete the "Telephone Withdrawal and Exchange" and "Bank Information"
sections on your account application.
o Mail your completed application to New England Funds, P.O. Box 8551, Boston,
MA 02266-8551.
o Call New England Funds at 800-225-5478 to add shares to your account through
ACH.
o If you have not signed up for the ACH system, please call New England Funds
for a Service Options Form. A signature guarantee may be required to add this
privilege.
<PAGE>
Fund Services
Selling Shares
To Sell Some or All of Your Shares
Certain restrictions may apply. See section entitled "Restrictions on Buying,
Selling and Exchanging Shares."
Through Your Investment Dealer
o Call your investment dealer for information.
By Mail
o Write a letter to request a redemption specifying the name of the Fund, the
class of shares, your account number, the exact registered account name(s), the
number of shares or the dollar amount to be redeemed and the method by which you
wish to receive your proceeds. Additional materials may be required. See the
section entitled "Selling Shares in Writing."
o The request must be signed by all of the owners of the shares including the
capacity in which they are signing, if appropriate.
o Mail your request to New England Funds, P.O. Box 8551, Boston, MA 02266-8551.
o Your proceeds (less any applicable CDSC) will be delivered by the method
chosen in your letter. If you choose to have your proceeds delivered by mail,
they will generally be mailed to you on the business day after the request is
received. You may also choose to redeem by wire or through ACH (see below).
By Exchange
o Obtain a current prospectus for the Fund into which you are exchanging by
calling your investment dealer or New England Funds at 800-225-5478.
o Call New England Funds to request an exchange.
o See the section entitled "Exchanging Shares" for more details.
By Wire
o Fill out the "Telephone Withdrawal and Exchange" and "Bank Information"
sections on your account application.
o Call New England Funds at 800-225-5478 or indicate in your redemption request
letter (see above) that you wish to have your proceeds wired to your bank.
o Proceeds (less any applicable CDSC) will generally be wired on the next
business day. A wire fee (currently $5.00) will be deducted from the proceeds.
Through Automated Clearing House (ACH)
o Ask your bank or credit union whether it is a member of the ACH system.
o Complete the "Telephone Withdrawal and Exchange" and "Bank Information"
sections on your account application.
o If you have not signed up for the ACH system on your application, please call
New England Funds at 800-225-5478 for a Service Options Form.
o Call New England Funds to request a redemption through this system.
o Proceeds (less any applicable CDSC) will generally arrive at your bank within
three business days.
By Systematic Withdrawal Plan
o Please refer to the section entitled "Additional Investor Services" or call
New England Funds at 800-225-5478 or your financial representative for
information.
o Because withdrawal payments may have tax consequences, you should consult your
tax adviser before establishing such a plan.
By Telephone
o You may receive your proceeds by mail, by wire or through ACH (see above).
o Call New England Funds at 800-225-5478 to choose the method you wish to use to
redeem your shares.
<PAGE>
Fund Services
Selling Shares in Writing
If you wish to redeem your shares in writing, all owners of the shares must sign
the redemption request in the exact names in which the shares are registered and
indicate any special capacity in which they are signing. In certain situations,
you will be required to make your request to sell shares in writing. In these
instances, a letter of instruction signed by the authorized owner is necessary.
In certain situations we also may require a signature guarantee or additional
documentation.
A signature guarantee protects you against fraudulent orders and is necessary
if:
o your address of record has been changed within the past 30 days;
o you are selling more than $100,000 worth of shares and you are requesting the
proceeds by check; or
o a proceeds check for any amount is mailed to an address other than the address
of record or not payable to the registered owner(s).
A notary public cannot provide a signature guarantee. A signature guarantee can
be obtained from one of the following sources:
o a financial representative or securities dealer;
o a federal savings bank, cooperative or other type of bank;
o a savings and loan or other thrift institution;
o a credit union; or
o a securities exchange or clearing agency.
Seller (Account Type) Requirements for written requests
Individual, joint, sole proprietorship, UGMA/UTMA (minor accounts)
o The signatures on the letter must include all persons authorized to sign,
including title, if applicable.
o Signature guarantee, if applicable (see above).
Corporate or association accounts
o The signatures on the letter must include all persons authorized to sign,
including title.
Owners or trustees of trust accounts
o The signature on the letter must include all trustees authorized to sign,
including title.
o If the names of the trustees are not registered on the account, please provide
a copy of the trust document certified within the past 60 days.
o Signature guarantee, if applicable (see above).
Joint tenancy whose co-tenants are deceased
o The signatures on the letter must include all surviving tenants of the
account.
o Copy of the death certificate.
o Signature guarantee if proceeds check is issued to other than the surviving
tenants.
Power of Attorney (POA)
o The signatures on the letter must include the attorney-in-fact, indicating
such title.
o A signature guarantee.
o Certified copy of the POA document stating it is still in full force and
effect, specifying the exact Fund and account number, and certified within 30
days of receipt of instructions.*
Qualified retirement benefit plans (except New England Funds prototype
documents)
o The signature on the letter must include all signatures of those authorized to
sign, including title.
o Signature guarantee, if applicable (see above).
Executors of estates, administrators, guardians, conservators
o The signature on the letter must include those authorized to sign, including
capacity.
o A signature guarantee.
o Certified copy of court document where signer derives authority, e.g.: Letters
of Administration, Conservatorship, Letters Testamentary.*
Individual Retirement Accounts (IRAs)
o Additional documentation and distribution forms are required.
*Certification may be made on court documents by the court, usually certified by
the clerk of the court. POA certification may be made by a commercial bank,
broker/member of a domestic stock exchange or a practicing attorney.
<PAGE>
Fund Services
Exchanging Shares
In general, you may exchange shares of your Fund for shares of the same class of
another Kobrick Fund or other New England Fund without paying a sales charge or
a CDSC (see the sections entitled "Buying Shares" and "Selling Shares"). The
exchange must be for a minimum of $1,000 (or the total net asset value of your
account, whichever is less), or $100 if made under the Automatic Exchange Plan
(see the section entitled "Additional Investor Services"). All exchanges are
subject to the eligibility requirements of the Kobrick Fund, New England Fund or
Money Market Fund into which you are exchanging. The exchange privilege may be
exercised only in those states where shares of the Kobrick Funds, New England
Funds or Money Market Funds may be legally sold. For federal income tax
purposes, an exchange of Fund shares for shares of another Kobrick Fund, New
England Fund or Money Market Fund is generally treated as a sale on which gain
or loss may be recognized. Please refer to the Statement of Additional
Information (the "SAI") for more detailed information on exchanging Fund shares.
Restrictions on Buying, Selling and Exchanging Shares
Purchase and Exchange Restrictions
Although the Funds do not anticipate doing so, they reserve the right to suspend
or change the terms of purchasing or exchanging shares. Each Fund and the
Distributor reserve the right to refuse or limit any purchase or exchange order
by a particular purchaser (or group of related purchasers) if the transaction is
deemed harmful to the best interest of the Fund's other shareholders or would
disrupt the management of the Fund. The Funds and the Distributor reserve the
right to restrict purchases and exchanges for the accounts of "market timers" by
limiting the transaction to a maximum dollar amount. An account will be deemed
to be one of a market timer if: (i) more than two exchange purchases of a given
Fund are made for the account in a calendar quarter or (ii) the account makes
one or more exchange purchases of a given Fund in a calendar quarter in an
aggregate amount in excess of 1% of the Fund's total net assets.
Selling Restrictions
The table below describes restrictions placed on selling shares of any Fund
described in this Prospectus:
Restriction Situation
The Fund may suspend the right of redemption or postpone payment for more than 7
days:
o When the New York Stock Exchange is closed (other than a weekend/holiday)
o During an emergency
o Any other period permitted by the SEC
The Fund reserves the right to suspend account services or refuse transaction
requests:
o With a notice of a dispute between registered owners
o With suspicion/evidence of a fraudulent act
The Fund may pay the redemption price in whole or part by a distribution in kind
of readily marketable securities in lieu of cash or may take up to 7 days to pay
a redemption request in order to raise capital:
o When it is detrimental for the Fund to make cash payments as determined in the
sole discretion of the adviser
The Fund may close your account and send you the proceeds. You will have 60 days
after being notified of the Fund's intention to close your account to increase
the account to the set minimum. This does not apply to certain qualified
retirement plans, automatic investment plans or accounts that have fallen below
the minimum solely because of fluctuations in the Fund's net asset value per
share:
o When the Fund account falls below a set minimum (currently $1,000 as set by
the Fund's Board of Trustees)
The Fund may withhold redemption proceeds until the check or funds have cleared:
o When redemptions are made within 10 calendar days of purchase by check or ACH
of the shares being redeemed
Telephone redemptions are not accepted for tax-qualified retirement accounts.
If you hold certificates representing your shares, they must be sent with your
request for it to be honored.
The Fund recommends that certificates be sent by registered mail.
<PAGE>
Fund Services
How Fund Shares Are Priced
"Net asset value" is the price of one share of a Fund without a sales charge,
and is calculated each business day using this formula:
Total market value of securities +
Cash and other assets - Liabilities
Net Asset Value = --------------------------------------------------
Number of outstanding shares
The net asset value of Fund shares is determined according to this schedule:
o A share's net asset value is determined at the close of regular trading on the
New York Stock Exchange (the "Exchange") on the days the Exchange is open for
trading. This is normally 4:00 p.m. Eastern time.
o The price you pay for purchasing, redeeming or exchanging a share will be
based upon the net asset value next calculated after your order is received "in
good order" by State Street Bank and Trust Company, the Fund's custodian (plus
or minus applicable sales charges as described earlier in this Prospectus).
o Requests received by the Distributor after the Exchange closes will be
processed based upon the net asset value determined at the close of regular
trading on the next day that the Exchange is open, with the exception that those
orders received by your investment dealer before the close of the Exchange and
received by the Distributor before 5:00 p.m. Eastern time* on the same day will
be based on the net asset value determined on that day.
o A Fund heavily invested in foreign securities may have net asset value changes
on days when you cannot buy or sell its shares.
*Under limited circumstances, the Distributor may enter into a contractual
agreement where it may accept orders after 5:00 p.m., but not later than 8:00
p.m.
Generally, during times of substantial economic or market change, it may be
difficult to place your order by phone. During these times, you may deliver your
order in person to the Distributor or send your order by mail as described in
"Buying Shares" and "Selling Shares."
Generally, Fund securities are valued as follows:
o Equity securities -- most recent sales or quoted bid price as provided by a
pricing service.
o Debt securities (other than short-term obligations) -- based upon pricing
service valuations.
o Short-term obligations (remaining maturity of less than 60 days)-- amortized
cost (which approximates market value).
o Securities traded on foreign exchanges -- most recent sale/bid price on the
non-U.S. exchange, unless an occurrence after the close of the exchange will
materially affect its value. In that case, it is given fair value as determined
by or under the direction of the Fund's Board of Trustees at the close of
regular trading on the Exchange.
o Options -- last sale price, or if not available, last offering price.
o Futures -- unrealized gain or loss on the contract using current settlement
price. When a settlement price is not used, futures contracts will be valued at
their fair value as determined by or under the direction of the Fund's Board of
Trustees.
o All other securities -- fair market value as determined by the Adviser under
the direction of the Fund's Board of Trustees.
The effect of fair value pricing as described above under "Securities traded on
foreign exchanges" and "All other securities" is that securities may not be
priced on the basis of quotations from the primary market in which they are
traded but rather, may be priced by another method that the Fund's Board of
Trustees believes actually reflects fair value.
<PAGE>
Fund Services
Dividends and Distributions
The Funds generally distribute most or all of their net investment income
annually (other than capital gains) in the form of dividends. Each Fund
distributes all net realized long- and short-term capital gains annually, after
applying any available capital loss carryovers. The Funds' Board of Trustees may
adopt a different schedule as long as payments are made at least annually.
Depending on your investment goals and priorities, you may choose to:
o participate in the Dividend Diversification Program, which allows you to have
all dividends and distributions automatically invested at net asset value in
shares of the same class of another Kobrick Fund or other New England Fund
registered in your name. Certain investment minimums and restrictions may apply.
For more information about this program, see the section entitled "Additional
Investor Services."
o receive distributions from dividends and interest in cash while reinvesting
distributions from capital gains in additional shares of the same class of the
Fund or in the same class of another Kobrick Fund or New England Fund.
o receive all distributions in cash.
Unless you select one of the options set forth above, distributions will
automatically be reinvested in shares of the same class of the Fund at net asset
value.
For more information or to change your distribution option, contact New England
Funds in writing or call 800-225-5478.
If you earn more than $10 annually in taxable income from a non-retirement plan
Fund, you will receive a Form 1099 to help you report the prior calendar year's
distributions on your federal income tax return. Be sure to keep the Form 1099
as a permanent record. A fee may be charged for any duplicate information
requested.
Tax Consequences
Each Fund intends to meet all requirements of the Internal Revenue Code
necessary to qualify as a "regulated investment company" and thus does not
expect to pay any federal income tax on income and capital gains distributed to
shareholders.
Fund distributions paid to you either in cash or reinvested in additional shares
are generally taxable to you either as ordinary income or as capital gains.
Distributions derived from short-term capital gains or investment income are
generally taxable at ordinary income rates. If you are a corporation investing
in a Fund, a portion of these dividends may qualify for the dividends-received
deduction provided that you meet certain holding period requirements.
Distributions of gains from investments that a Fund owned for more than one year
that are designated by a Fund as capital gain dividends will generally be
taxable to a shareholder receiving such distributions as long-term capital gain,
regardless of how long the shareholder has held Fund shares.
An exchange of shares for shares of another Kobrick Fund, New England Fund or
Money Market Fund is generally treated as a sale, and any resulting gain or loss
may be subject to federal income tax. If you purchase shares of a Fund shortly
before it declares a capital gain distribution or a dividend, a portion of the
purchase price may be returned to you as a taxable distribution. You should
consult your tax adviser about any federal, state and local taxes that may apply
to the distributions you receive.
As of the date of this Prospectus, a single investor owns a significant portion
of the shares of each Fund. Redemption by this investor of all or a substantial
part of its investment in a Fund could require the Adviser to sell a large
amount of portfolio securities. Such sales could result in the realization of
capital gains, which would be required to be distributed to shareholders of the
affected Fund.
<PAGE>
Fund Services
Compensation to Securities Dealers
As part of their business strategies, the Funds pay securities dealers that sell
their shares. This compensation originates from two sources: sales charges
(front-end or deferred) and 12b-1 fees (comprising the annual service and/or
distribution fees of a plan adopted pursuant to Rule 12b-1 under the Investment
Company Act of 1940). The sales charges are detailed in the section entitled
"How Sales Charges are Calculated." Each class of Fund shares pays an annual
service fee of 0.25% of its average daily net assets. In addition to this
service fee, Class B shares pay an annual distribution fee of 0.75% of their
average daily net assets for 8 years (at which time they automatically convert
into Class A shares). Class C shares are subject to a distribution fee of 0.75%
of their average daily net assets. Generally, the 12b-1 fees are paid to
securities dealers on a quarterly basis. The Distributor retains the first year
of such fees for Class C shares. Because these distribution fees are paid out of
the Fund's assets on an ongoing basis, over time these fees for Class B and
Class C shares will increase the cost of your investment and may cost you more
than paying the front-end sales charge on Class A shares.
The Distributor may, at its expense, pay concessions in addition to the payments
described above to dealers which satisfy certain criteria established from time
to time by the Distributor relating to increasing net sales of shares of the
Kobrick Funds or other New England Funds over prior periods, and certain other
factors. See the SAI for more details.
<PAGE>
Fund Services
Additional Investor Services
Retirement Plans
New England Funds offers a range of retirement plans, including IRAs, SEPs,
SARSEPs, SIMPLEs, 403(b) plans and other pension and profit sharing plans. Refer
to the section entitled "It's Easy to Open an Account" for investment minimums.
For more information about our Retirement Plans, call us at 800-225-5478.
Investment Builder Program
This is New England Funds' automatic investment plan. You may authorize
automatic monthly transfers of $100 or more from your bank checking or savings
account to purchase shares of one or more Kobrick Funds or New England Funds. To
join the Investment Builder Program, please refer to the section entitled
"Buying Shares."
Dividend Diversification Program
This program allows you to have all dividends and any other distributions
automatically invested in shares of the same class of another Kobrick Fund, New
England Fund or Money Market Fund, subject to the eligibility requirements of
that other Fund and to state securities law requirements. Shares will be
purchased at the selected Fund's net asset value without a front-end sales
charge or CDSC on the dividend record date. Before establishing a Dividend
Diversification Program into any other Kobrick Fund, New England Fund or Money
Market Fund, please read its prospectus carefully.
Automatic Exchange Plan
New England Funds has an automatic exchange plan under which shares of a class
of a Fund are automatically exchanged each month for shares of the same class of
other Kobrick Funds or New England Funds or Money Market Funds. There is no fee
for exchanges made under this plan, but there may be a sales charge in certain
circumstances. Please refer to the SAI for more information on the Automatic
Exchange Plan.
Systematic Withdrawal Plan
This plan allows you to redeem shares and receive payments from your Fund on a
regular schedule. Redemption of shares that are part of the Systematic
Withdrawal Plan are not subject to a CDSC. However, the amount or percentage
that you specify in the plan may not exceed, on an annualized basis, 10% of the
value of your Fund account based upon the value of your Fund account on the day
you establish your plan. To establish a Systematic Withdrawal Plan, please refer
to the section entitled "Selling Shares."
New England Funds Personal Access Line(TM) ("PAL")
This automated customer service system allows you to have access to your account
24 hours a day by calling 800-225-5478, press 1. With a touch-tone telephone,
you can obtain information about your current account balance, recent
transactions, Fund prices and recent performance. You may also use PAL to
purchase, exchange or redeem shares in any of your existing accounts. Certain
restrictions may apply.
New England Funds Web site
Visit us at www.mutualfunds.com to review your account balance and recent
transactions, to view daily prices and performance information or to order
duplicate account statements and tax information. You may also go online to
purchase, exchange or redeem shares in any of your existing accounts. Certain
restrictions may apply.
<PAGE>
Fund Performance
The financial highlights table is intended to help you understand each Fund's
financial performance since the Fund's commencement of operations. Certain
information reflects financial results for a single Fund share. The total
returns in the table represent the return that an investor would have earned on
an investment in the Fund (assuming reinvestment of all dividends and
distributions). This information has been audited by PricewaterhouseCoopers LLP,
independent accountants, whose report, along with each Fund's financial
statements, are included in the Statement of Additional Information, which is
available upon request.
<TABLE>
<CAPTION>
Kobrick Funds
Kobrick Capital Fund Kobrick Emerging Growth Fund Kobrick Growth Fund
Class A Class A Class A
For the Period For the Period For the Period
December 31, December 31, September 1,
Year Ended 1997* through Year Ended 1997* through Year Ended 1998* through
September 30, September 30, September 30, September 30, September 30, September 30,
1999 1998 1999 1998 1999 1998
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period $10.71 $10.00 $10.14 $10.00 $10.32 $10.00
Income (Loss) from
investment operations:
Net investment income
(loss) (c) -0.18 -0.13 -0.18 -0.11 -0.08 0.00
Net realized and
unrealized gain
(loss) on investments 6.68 0.84 6.58 0.25(d) 5.17(d) 0.32
Total from investment
operations 6.50 0.71 6.40 0.14 5.09 0.32
Net asset value, end of
period $17.21 $10.71 $16.54 $10.14 $15.41 $10.32
Total Return (a) 60.69% 7.10% 63.12% 1.40% 49.35% 3.20%
Ratios and Supplemental Data
Net Assets, end of period
(000s) $102,879 $27,463 $52,175 $18,330 $46,827 $1,054
Ratios to average net assets:
Net expenses (b) 1.75% 1.75% 1.75% 1.75% 1.40% 1.40%
Expenses before fee
waiver (b) 1.77% 2.21% 2.08% 2.24% 2.13% 11.11%
Net investment income
(loss)(b) -1.09% -1.38% -1.24% -1.16% -0.55% 0.32%
Portfolio turnover rate 778% 350% 442% 287% 632% 11%
* Commencement of Operations
(a) Total Returns are historical and assume changes in share price and reinvestments of dividends. Had certain expenses not been
reduced during the periods shown, total returns would have been lower. Periods of less than one year are not annualized.
(b) Annualized for periods less than one year.
(c) Computed using the average shares method.
(d) Amount shown for a share outstanding does not correspond with the net realized and unrealized gain (loss) on investments due
to the timing of sales and repurchases of Fund shares in relation to fluctuating market values of the investments of the Fund.
</TABLE>
<PAGE>
Glossary of Terms
Bid price -- The price a prospective buyer is ready to pay. This term is used by
traders who maintain firm bid and offer prices in a given security by standing
ready to buy or sell security units at publicly quoted prices.
Bottom-up approach -- The search for outstanding performance by first
considering individual companies before considering the impact of industry and
economic trends.
Capital gain distributions -- Payments to a Fund's shareholders of profits
earned from selling securities in a Fund's portfolio. Capital gain distributions
are usually paid once a year.
Derivative -- A financial instrument whose value and performance is based on the
value and performance of another security or financial instrument.
Diversification -- The strategy of investing in a wide range of companies or
industries to reduce the risk if an individual company or sector of the market
suffers losses.
Earnings growth -- A pattern of increasing rate of growth in earnings per share
from one period to another, which usually causes a stock's price to rise.
Fundamental Analysis -- An analysis of the balance sheet and income statements
of a company in order to forecast its future stock price movements. Fundamental
analysis considers records of assets, earnings, sales, products, research and
development and markets in predicting future trends in these indicators of a
company's success or failure.
Growth investing -- An investment style that emphasizes companies with strong
earnings growth. Growth investing is generally considered more aggressive than
"value" investing.
Income distributions -- Payments to a Fund's shareholders resulting from the net
interest or dividend income earned by a Fund's portfolio.
Market capitalization -- Market price multiplied by number of shares
outstanding. The figures used to distinguish small, medium and large market
capitalizations may vary depending upon the index being used and/or the
guidelines set by the portfolio manager.
Net asset value (NAV) -- The market value of one share of the Fund on any given
day without a front-end sales charge or CDSC. It is determined by dividing the
Fund's total net assets by the number of shares outstanding.
Qualitative Analysis -- An analysis of the qualities possessed by a company,
including its management, products and competitive positions, to help determine
if the company can execute its strategy.
Target price -- Price that an investor is hoping a stock he or she has just
bought will rise to within a specified period of time. An investor may buy XYZ
at $20, with a target price of $40 in one year's time, for instance.
Total return -- The change in value of an investment in the Fund over a specific
time period expressed as a percentage. Total returns assume all earnings are
reinvested in additional shares of the Fund.
Volatility -- The general variability of a portfolio's value resulting from
price fluctuations of its investments. In most cases, the more diversified a
portfolio is, the less volatile it will be.
<PAGE>
Notes --
<PAGE>
If you would like more information about the Kobrick Funds, the following
documents are available free upon request:
Annual and Semiannual Reports -- Provide additional information about each
Fund's investments. Each report includes a discussion of the market conditions
and investment strategies that significantly affected the Fund's performance
during its last fiscal year.
Statement of Additional Information (SAI) -- Provides more detailed information
about the Funds and their investment limitations and policies, has been filed
with the Securities and Exchange Commission and is incorporated into this
Prospectus by reference.
To order a free copy of the Fund's annual or semiannual report or its SAI,
contact your financial representative, or the Funds at:
New England Funds, L.P.
399 Boylston Street
Boston, Massachusetts 02116
Telephone: 800-225-5478
Internet: www.mutualfunds.com
Your financial representative or New England Funds will also be happy to answer
your questions or to provide any additional information that you may require.
You can review the Funds' reports and SAI at the Public Reference Room of the
Securities and Exchange Commission. Text-only copies are available free from the
Commission's Web site at: www.sec.gov.
Copies of these publications are also available for a fee by writing or calling
the Public Reference Room of the SEC, Washington, D.C. 20549-6009 Telephone:
800-SEC-0330
New England Funds, L.P., and other firms selling shares of Kobrick Funds and New
England Funds are members of the National Association of Securities Dealers,
Inc. (NASD). As a service to investors, the NASD has asked that we inform you of
the availability of a brochure on its Public Disclosure Program. The program
provides access to information about securities firms and their representatives.
Investors may obtain a copy by contacting the NASD at 800-289-9999 or by
visiting their Web site at www.NASDR.com.
Kobrick Funds
Kobrick Capital Fund
Kobrick Emerging Growth Fund
Kobrick Growth Fund
Investment Company Act File No. 811-8435
XK51-1199
<PAGE>
Kobrick Funds
Stock Funds
Class A and Y Shares
Kobrick Capital Fund
Kobrick Emerging Growth Fund
Kobrick Growth Fund
Prospectus
November 1, 1999
What's Inside
Goals, Strategies & Risks
Page 2
Fund Fees & Expenses
Page 7
Management Team
Page 9
Fund Services
Page 10
Fund Performance
Page 19
The Securities and Exchange Commission has not approved any Fund's
shares or determined whether this Prospectus is accurate or complete. Anyone who
tells you otherwise is committing a crime.
For general information on the Funds or any of their services and for
assistance in opening an account, contact your financial representative or call
Kobrick Funds.
Kobrick Funds
P.O. Box 8551, Boston, Massachusetts 02266-8551
1-888-KCFUND1 (1-888-523-8631)
Table of Contents
Goals, Strategies & Risks
Kobrick Capital Fund 2
Kobrick Emerging Growth Fund 4
Kobrick Growth Fund 6
Fund Fees & Expenses.
Fund Fees & Expenses 7
More About Risk.
More About Risk 8
Management Team
Meet the Funds' Investment Adviser 9
Meet the Funds' Portfolio Managers 9
Fund Services
Investing in the Funds 10
How Sales Charges are Calculated 11
It's Easy to Open an Account 11
Buying Shares 12
Selling Shares 13
Selling Shares in Writing 14
Exchanging Shares 15
Restrictions on Buying, Selling and Exchanging Shares 15
How Fund Shares are Priced 16
Dividends and Distributions 17
Tax Consequences 17
Compensation to Securities Dealers 18
Fund Performance
Fund Performance 19
Glossary of Terms
Glossary of Terms 20
If you have any questions about any of the terms used in this Prospectus, please
refer to the "Glossary of Terms." To learn more about the possible risks of
investing in a Fund, please refer to the section entitled "More About Risk."
This section details the risks of practices in which the Funds may engage.
Please read this section carefully before you invest.
Fund shares are not bank deposits and are not guaranteed, endorsed or insured by
the Federal Deposit Insurance Corporation or any other government agency, and
are subject to investment risks, including possible loss of the principal
invested.
Goals, Strategies & Risks
Kobrick Capital Fund
Adviser: Kobrick Funds LLC (the "Adviser")
Manager: Frederick R. Kobrick
Fund Focus Graphic
Ticker symbol: Class A KFCCFX Class Y pending
Investment Goal
The Capital Fund seeks maximum capital appreciation by investing primarily in
equity securities of companies with small, medium and large capitalizations.
Investment Strategies
Under normal market conditions, the Capital Fund will invest substantially all
of its assets in equity securities of companies with small, medium and large
capitalizations, including those that the Adviser believes are undervalued
special situations and emerging growth companies. This approach provides the
Adviser with flexibility to emphasize in the Fund companies with different
capitalizations as market conditions change. The Adviser considers emerging
growth companies to be those companies that are less mature and have the
potential to grow substantially faster than the economy. The Adviser's bottom-up
approach utilizes fundamental and qualitative analysis to select individual
companies, not sectors, with the greatest potential for growth. In selecting
investments for the Fund, the Adviser generally seeks companies in a wide range
of industries and considers a variety of factors, including any one or more of
the following:
o the strength of a company's management team
o relative financial condition
o entrepreneurial character
o expected growth in earnings
o competitive position and business strategy
o new or innovative products, services or processes
In making investment decisions, the Adviser employs the following four-part
investment approach:
o Screening: The Adviser analyzes thousands of companies in order to find a
select group that have the potential to meet its buy disciplines described
below. Many of the companies within this group are special situation companies
which, because of unique circumstances, such as an ability to fill a particular
niche, are attractive investments.
o Portfolio Construction: The Adviser applies buy disciplines which emphasize
strong management, compelling valuations and high earnings growth. At the core
of this approach is regular contact with a company's management team to assess
its ability to execute the company's strategy. The Adviser considers potential
risks in selecting securities to construct a diversified portfolio that limits
volatility.
o Portfolio Supervision: The Adviser closely monitors each holding in the Fund's
portfolio to determine whether it continues to possess the factors identified
when the original investment was made. This process includes continuous review
of absolute and relative valuations, evaluation of management's execution of the
company's strategy and assessment of the company's prospects relative to the
overall economic, political and financial environment.
o Portfolio Realignment: The Adviser will generally sell a position when its
target price, which is continuously evaluated, is reached, when there is a
change in a company's management or strategy, or when a company fails to execute
its strategy.
Although it is anticipated that most of the Capital Fund's assets will be
invested in equity securities, the Fund may invest at any time up to 35% of its
total assets in other types of securities (including corporate bonds and
securities of the U.S. government). Because the Fund's investment goal provides
flexibility to emphasize companies having different capitalizations as market
conditions change, the Fund may engage in frequent trading of securities. This
may produce higher transaction costs and a higher level of capital gains, which
may lower your return.
A "snapshot" of the Fund's investments may be found in the current annual or
semiannual report (see back cover).
Investment Risks
Equity securities: Because the Capital Fund invests primarily in equity
securities, its major risks are those commonly associated with investing in
stocks. This means that you may lose money on your investment due to
unpredictable drops in a stock's value or periods of below-average performance
in a given stock or in the stock market as a whole. Growth stocks are generally
more sensitive to market movements than other types of stocks, primarily because
their stock prices are based heavily on future expectations. Small
capitalization and emerging growth companies may be subject to more abrupt price
movements, limited markets and less liquidity than larger, more established
companies, which could adversely affect the value of the portfolio. With special
situation companies, the primary risk is that they may not achieve their
expected value because events do not materialize as the Adviser anticipated.
Because the Fund invests in, among other things, undervalued special situations,
emerging growth companies and companies with small capitalizations, an
investment in the Fund involves greater than average risks. Accordingly, the
value of the Fund's shares may fluctuate more widely than the value of shares of
a fund that invests in larger, more established companies.
Evaluating The Fund's Past Performance
The bar chart and table shown below give an indication of the risks of investing
in Kobrick Capital Fund. The returns shown are those of the Fund's Class A
shares. Class Y shares would have substantially similar annual returns because
they would be invested in the same portfolio of securities as the Class A shares
and would only differ to the extent that the classes do not have the same
expenses. The Fund also offers Class B and Class C shares in a separate
prospectus. The Fund's past performance does not necessarily indicate how the
Fund will perform in the future.
The bar chart shows the Fund's adjusted total returns for Class A shares for the
one calendar year since the Fund's inception on December 31, 1997.+ The returns
for Class B, C and Y shares differ from the Class A returns shown in the bar
chart, depending upon the respective expenses of each class. The chart does not
reflect any sales charge that you may be required to pay when you buy or redeem
the Fund's shares. A sales charge will reduce your return.
+ The Capital Fund's Class A shares total return
year-to-date as of September 30, 1999 was 14.73%.
Bar Chart with 1998 total return of 50.0%
/\ Highest Quarterly Return: Fourth Quarter 1998, up 40.32%
\/ Lowest Quarterly Return: Third Quarter 1998, down 13.86%
The table below shows how the Fund's average annual total returns for the
one-year period compared to those of the Russell 3000 Index, a market
value-weighted, unmanaged index of large company stocks. They are also compared
to the Lipper Capital Appreciation Fund Average and Morningstar Mid Cap Growth
Fund Average, each an average of the total returns of all mutual funds with an
investment style similar to that of the Capital Fund, as calculated by Lipper,
Inc. and Morningstar, Inc., respectively. It is not possible to invest directly
in an index. The Fund's total returns are adjusted to reflect the Fund's
expenses for Class A and Y shares and the maximum sales charge that you may pay
when you buy or redeem the Fund's shares. The Russell 3000 Index returns have
not been adjusted for ongoing management, distribution and operating expenses
and sales charges applicable to mutual fund investments. The Lipper Capital
Appreciation Fund Average and Morningstar Mid Cap Growth Fund Average returns
have been adjusted for these expenses but do not reflect any sales charges.
Average Annual Total Returns
(for the periods ended December 31, 1998)
Past 1 Year
Kobrick Capital Fund: Class A* (inception 12/31/97) 41.4%
Russell 3000 Index 24.1
Lipper Capital Appreciation Fund Average 20.5
Morningstar Mid Cap Growth Fund Average 16.5
Kobrick Capital Fund: Class Y* (inception 11/1/99) 50.3%
Russell 3000 Index 24.1
Lipper Capital Appreciation Fund Average 20.5
Morningstar Mid Cap Growth Fund Average 16.5
* Until November 1, 1999, the Fund had only one class of shares and was offered
without a sales charge. These returns have been adjusted to reflect expenses and
sales loads of the Fund's new multiple class structure. See "Fund Fees &
Expenses."
Goals, Strategies & Risks
Kobrick Emerging Growth Fund
Adviser: Kobrick Funds LLC (the "Adviser")
Manager: Frederick R. Kobrick
Fund Focus Graphic
Ticker symbol: Class A KFEGX Class Y pending
Investment Goal
The Emerging Growth Fund seeks to provide growth of capital by investing
primarily in equity securities of emerging growth companies, with an emphasis on
companies with small capitalizations.
Investment Strategies
Under normal market conditions, the Emerging Growth Fund will invest
substantially all of its assets in equity securities of emerging growth
companies in any industry, with emphasis on companies with small
capitalizations. The Adviser considers emerging growth companies to be those
companies which are less mature and have the potential to grow substantially
faster than the economy. The small capitalization companies in which the Fund
invests are generally comparable to the size of companies included in the
Russell 2000 Index, which is a commonly used index of small stock performance.
The median market capitalization in this index as of September 30, 1999 was
approximately $421 million and the largest market capitalization in this index
as of such date was approximately $3 billion. Levels of capitalization and the
companies constituting the Russell 2000 Index could vary over time because of
market conditions and other factors relating to small capitalization companies
generally and investments in such companies. While a company's market
capitalization may be small at the time the Fund first invests in the company,
the Fund may continue to hold and acquire shares of the company after its market
capitalization increases. Small and emerging growth companies that are
identified as good candidates for the Fund can be found in a variety of
industries. In selecting investments for the Fund, the Adviser may consider a
variety of factors, including any one or more of the following:
o the strength of a company's management team
o relative financial condition
o competitive position and business strategy
o new or innovative products, services or processes
o expected growth in earnings
o cash flow
o overall potential as an enterprise
In making investment decisions, the Adviser employs the following four-part
investment approach:
o Screening: The Adviser analyzes thousands of companies in order to find a
select group that have the potential to meet its buy disciplines described
below. Many of the companies within this group are special situation companies
which, because of unique circumstances, such as an ability to fill a particular
niche, are attractive investments.
o Portfolio Construction: The Adviser applies buy disciplines which emphasize
strong management, compelling valuations and high earnings growth. At the core
of this approach is regular contact with a company's management team to assess
its ability to execute the company's strategy. The Adviser considers potential
risks in selecting securities to construct a diversified portfolio that limits
volatility.
o Portfolio Supervision: The Adviser closely monitors each holding in the Fund's
portfolio to determine whether it continues to possess the factors identified
when the original investment was made. This process includes continuous review
of absolute and relative valuations, evaluation of management's execution of the
company's strategy and assessment of the company's prospects relative to the
overall economic, political and financial environment.
o Portfolio Realignment: The Adviser will generally sell a position when its
target price, which is continuously evaluated, is reached, when there is a
change in a company's management or strategy, or when a company fails to execute
its strategy. Although it is anticipated that most of the Emerging Growth Fund's
assets will be invested in equity securities of emerging growth companies, the
Fund may invest at any time up to 35% of its total assets in other types of
securities (including corporate bonds and securities of the U.S. government) and
in securities issued by larger, more mature companies and undervalued special
situation companies. The Fund may engage in frequent trading of securities,
which may produce higher transaction costs and a higher level of capital gains.
This may lower your return.
A "snapshot" of the Fund's investments may be found in the current annual or
semiannual report (see back cover).
Investment Risks
Equity securities: Because the Emerging Growth Fund invests primarily in equity
securities, its major risks are those commonly associated with investing in
stocks. This means that you may lose money on your investment due to
unpredictable drops in a stock's value or periods of below-average performance
in a given stock or in the stock market as a whole. Growth stocks are generally
more sensitive to market movements than other types of stocks, primarily because
their stock prices are based heavily on future expectations. Small
capitalization and emerging growth companies may be subject to more abrupt price
movements, limited markets and less liquidity than larger, more established
companies, which could adversely affect the value of the portfolio. With special
situation companies, the primary risk is that they may not achieve their
expected value because events do not materialize as the Adviser anticipated.
Because the Fund invests in, among other things, undervalued special situations,
emerging growth companies and companies with small capitalizations, an
investment in the Fund involves greater than average risks. Accordingly, the
value of the Fund's shares may fluctuate more widely than the value of shares of
a fund that invests in larger, more established companies.
Evaluating The Fund's Past Performance
The bar chart and table shown below give an indication of the risks of investing
in Kobrick Emerging Growth Fund. The returns are those of the Fund's Class A
shares. Class Y shares would have substantially similar annual returns because
they would be invested in the same portfolio of securities as the Class A shares
and would differ to the extent that the classes do not have the same expenses.
The Fund also offers Class B and Class C shares in a separate prospectus. The
Fund's past performance does not necessarily indicate how the Fund will perform
in the future.
The bar chart shows the Fund's adjusted total returns for Class A shares for the
one calendar year since the Fund's inception on December 31, 1997.+ The returns
for Class B, C and Y shares differ from the Class A returns shown in the bar
chart, depending upon the respective expenses of each class. The chart does not
reflect any sales charge that you may be required to pay when you buy or redeem
the Fund's shares. A sales charge will reduce your return.
+ The Emerging Growth Fund's Class A shares total return
year-to-date as of September 30, 1999 was 18.57%.
Bar Chart with 1998 total return of 39.5%
/\ Highest Quarterly Return: Fourth Quarter 1998, up 37.57%
\/ Lowest Quarterly Return: Third Quarter 1998, down 19.27%
The table below shows how the Fund's average annual total returns for the
one-year period compared to those of the Russell 2000 Index, a market
value-weighted, unmanaged index of small company stocks. It is also compared to
the Lipper Small Company Fund Average and Morningstar Small Cap Growth Fund
Average, each an average of the total returns of all mutual funds with an
investment style similar to that of the Emerging Growth Fund, as calculated by
Lipper, Inc. and Morningstar, Inc., respectively. It is not possible to invest
directly in a index. The Fund's total returns are adjusted to reflect the Fund's
expenses for Class A and Y shares and the maximum sales charge that you may pay
when you buy or redeem the Fund's shares. The Russell 2000 Index returns have
not been adjusted for ongoing management, distribution and operating expenses
and sales charges applicable to mutual fund investments. The Lipper Small
Company Funds Average and Morningstar Small Cap Growth Fund Average returns have
been adjusted for these expenses but do not reflect any sales charge.
Average Annual Total Returns
(for the periods ended December 31, 1998)
Past 1 Year
Kobrick Emerging Growth Fund: Class A* (inception 12/31/97) 31.5%
Russell 2000 Index -2.6
Lipper Small Company Fund Average -0.2
Morningstar Small Cap Growth Fund Average 6.2
Kobrick Emerging Growth Fund: Class Y* (inception 11/1/99) 39.8%
Russell 2000 Index -2.6
Lipper Small Company Fund Average -0.2
Morningstar Small Cap Growth Fund Average 6.2
* Until November 1, 1999, the Fund had only one class of shares and was offered
without a sales charge. These returns have been adjusted to reflect expenses
and sales loads of the Fund's new multiple class structure. See "Fund Fees &
Expenses."
Goals, Strategies & Risks
Kobrick Growth Fund
Adviser: Kobrick Funds LLC (the "Adviser")
Manager: Michael E. Nance
Investment Goal
The Growth Fund seeks long-term growth of capital by investing primarily in
equity securities of companies with large capitalizations that the Adviser
believes have better than average long-term growth potential.
Investment Strategies
Under normal market conditions, the Growth Fund will be primarily invested in
equity securities of large capitalization companies that the Adviser expects
will have better than average long-term growth potential. The Adviser's
bottom-up approach utilizes fundamental and qualitative analysis to select
individual companies, not sectors, with the greatest potential for growth. The
Fund invests in a diversified portfolio of securities of larger, more
established companies in a broad range of industries. The Adviser seeks to
invest in companies which offer the greatest potential for profitable expansion
and sustained growth and considers a variety of factors, including any one or
more of the following:
o management that can execute business plans
o expected growth in earnings
o a sound business strategy
o compelling valuations
A company's valuations are based on a variety of measures including
price/earnings to growth rates, price to book value and price to sales.
Potential income is not a major factor in the selection of investments.
In making investment decisions, the Adviser employs the following four-part
investment approach:
o Screening: The Adviser analyzes thousands of companies in order to find a
select group that have the potential to meet its buy disciplines described
below.
o Portfolio Construction: The Adviser applies buy disciplines which emphasize
strong management, compelling valuations and high earnings growth. At the core
of this approach is regular contact with a company's management team to assess
its ability to execute the company's strategy. The Adviser considers potential
risks in selecting securities to construct a diversified portfolio that limits
volatility.
o Portfolio Supervision: The Adviser closely monitors each holding in the Fund's
portfolio to determine whether it continues to possess the factors identified
when the original investment was made. This process includes continuous review
of absolute and relative valuations, evaluation of management's execution of the
company's strategy and assessment of the company's prospects relative to the
overall economic, political and financial environment.
o Portfolio Realignment: The Adviser will generally sell a position when its
target price, which is continuously evaluated, is reached, when there is a
change in a company's management or strategy, or when a company fails to execute
its strategy.
Although it is anticipated that most of the Growth Fund's assets will be
invested in equity securities of companies with large capitalizations, the Fund
may invest at any time up to 35% of its total assets in other types of
securities (including corporate bonds and securities of the U.S. government) and
in smaller capitalization and emerging growth companies. The Fund may engage in
frequent trading of securities, which may produce higher transaction costs and a
higher level of capital gains. This may lower your return. A "snapshot" of the
Fund's investments may be found in the current annual or semiannual report (see
back cover).
Investment Risks
Equity securities: Because the Growth Fund invests primarily in equity
securities, its major risks are those commonly associated with investing in
stocks. This means that you may lose money on your investment due to sudden,
unpredictable drops in a stock's value or periods of below-average performance
in a given stock or in the stock market as a whole. Growth stocks are generally
more sensitive to market movements than other types of stocks, primarily because
their stock prices are based heavily on future expectations. Because of these
and other risks, the Fund may underperform certain other stock funds during
periods when large company growth stocks are generally out of favor.
Performance
Since the Fund has only been in existence since September 1, 1998, its
performance and its comparison to broad based securities market indexes are not
permitted to be included in this Prospectus. The Fund's performance is generally
compared to the S&P Composite Index of 500 Stocks, Lipper Growth Fund Average,
and Morningstar Large Cap Growth Fund Average.
Fund Fees & Expenses
The following tables describe the fees and expenses that you may pay if you buy
and hold shares of each Fund.
Shareholder Fees
(fees paid directly from your investment)
Class A Class Y
------- -------
Maximum sales charge (load) imposed on purchases 5.75%+ None
Maximum deferred sales charge (load) None None
Redemption fees None* None*
* Generally, a transaction fee will be charged for expedited payment of
redemption proceeds such as by wire or overnight delivery.
+ The front-end sales charge typically charged on Class A shares is waived for
investors who meet certain eligibility and minimum investment requirements (see
"Investing in the Funds.")
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets, as a percentage of average daily
net assets)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
Kobrick Capital Fund Kobrick Emerging Growth Kobrick Growth Fund
Fund
- --------------------------------------------------------------------------------------------------------
Class A Class Y Class A Class Y Class A Class Y
<S> <C> <C> <C> <C> <C> <C>
Management fees 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%
Distribution and/or service 0.25% 0.00% 0.25% 0.00% 0.25% 0.00%
(12b-1) fees
Other expenses 0.52% 0.52% 0.83% 0.83% 0.88% 0.88%
Total annual fund operating 1.77% 1.52% 2.08% 1.83% 2.13% 1.88%
expenses (a)
Fee waiver and/or expense -0.27% -0.27% -0.58% -0.58% -0.73% -0.73%
reimbursement (b)
Net expenses 1.50% 1.25% 1.50% 1.25% 1.40% 1.15%
- ---------------------------------------------------------------------------------------------------------
</TABLE>
(a) Until November 1, 1999, the Funds had only one class of shares and were
offered without a sales charge and therefore total expenses have been restated
to account for fees and expenses under the Funds' new multiple class structure.
(b) The Adviser has agreed to cap the amount of Total Expenses at 1.50% for
Class A shares (1.25% for Class Y shares) for the Kobrick Capital Fund and
Kobrick Emerging Growth Fund and 1.40% for Class A shares (1.15% for Class Y
shares) for the Kobrick Growth Fund. Accordingly, to the extent Total Expenses
exceed the amount of the respective cap, the Adviser will reduce its management
fees and/or reimburse the Funds for certain expenses. With respect to each Fund,
the Adviser shall be permitted to recover expenses it has borne after November
1, 1999 (whether through reduction of its management fee or otherwise) in later
periods to the extent that a Fund's expenses fall below the rates set forth
above; provided, however, that a Fund is not obligated to pay any such deferred
fees more than one year after the end of the fiscal year in which the fee was
deferred. If the Adviser had not agreed to the cap and if the reimbursements and
waivers were not in effect for a Fund, performance would be reduced accordingly.
Example
This example is intended to help you compare the cost of investing in the Funds
with the cost of investing in other mutual funds.
The example assumes that:
o You invest $10,000 in a Fund for the time periods indicated;
o Your investment has a 5% return each year; and
o A Fund's operating expenses remain the same.
Although your actual costs and returns may be higher or lower, based on these
assumptions your costs would be:
<TABLE>
<CAPTION>
Kobrick Capital Fund Kobrick Emerging Growth Fund Kobrick Growth Fund
Class A Class Y Class A Class Y Class A Class Y
<S> <C> <C> <C> <C> <C> <C>
1 year $ 719 $ 127 $ 719 $ 127 $ 709 $ 117
3 years $1,022 $ 397 $1,022 $ 397 $ 993 $ 365
5 years $1,346 $ 686 $1,346 $ 686 $1,297 $ 633
10 years $2,263 $1,511 $2,263 $1,511 $2,158 $1,398
</TABLE>
More About Risk
The Funds have principal investment strategies that come with inherent risks.
The following is a list of risks to which each Fund may be subject by investing
in various types of securities or engaging in various practices.
Market Risk (All Funds) The risk that the market value of a security may move up
and down, sometimes rapidly and unpredictably based upon change in a company's
financial condition as well as overall market and economic conditions.
Risk of Small Capitalization Companies (Capital and Emerging Growth Funds) These
companies carry special risks, including narrower markets, limited financial and
management resources, less liquidity and greater volatility than large company
stocks.
Management Risk (All Funds) The risk that a strategy used by a Fund's portfolio
management may fail to produce the intended result.
Credit Risk (All Funds) The risk that the issuer of a security, or the
counterparty to a contract, will default or otherwise become unable to honor a
financial obligation.
Interest Rate Risk (All Funds) The risk of market losses attributable to changes
in interest rates. In general, the prices of fixed-income securities rise when
interest rates fall, and fall when interest rates rise.
Information Risk (All Funds) The risk that key information about a security is
inaccurate or unavailable.
Opportunity Risk (All Funds) The risk of missing out on an investment
opportunity because the assets necessary to take advantage of it are invested in
less profitable investments.
Liquidity Risk (All Funds) The risk that certain securities may be difficult or
impossible to sell at the time and at the price that the seller would like. This
may result in a loss or may be costly to a Fund.
Valuation Risk (All Funds) The risk that a Fund has valued certain securities at
a higher price than it can sell them for.
Political Risk (All Funds) The risk of losses directly attributable to
government or political actions.
Year 2000 (All Funds) Many computer systems today cannot distinguish between the
year 1900 and the year 2000. The Adviser does not currently anticipate that
computer problems related to the year 2000 will have a material effect on any
Fund. However, there can be no assurances in this area, including the
possibility that year 2000 computer problems could negatively affect
communication systems, investment markets including investments by a Fund or the
economy in general. The Funds and the Adviser have and will take steps that they
believe are reasonable to address this problem in their own computer systems and
to obtain assurances that reasonable steps are being taken by the Funds' major
service providers.
Management Team
Meet the Funds' Investment Adviser
The Kobrick Funds family consists of three mutual funds designed to offer
investors a range of growth oriented investment opportunities. Kobrick Funds are
distributed through New England Funds, L.P. (the "Distributor"). This Prospectus
covers Class A and Class Y shares of Kobrick Capital Fund, Kobrick Emerging
Growth Fund and Kobrick Growth Fund, all of which constitute the "Kobrick
Funds." As a shareholder of one or more of the Kobrick Funds, you are entitled
to the same benefits and privileges as a shareholder of the New England Funds,
including the ability to exchange into or out of any fund in the New England
Funds family (See "Exchanging Shares"). The New England Funds family, which
includes the Kobrick Funds, includes 25 mutual funds with a total of over $7.5
billion in assets under management as of September 30, 1999. New England Stock
Funds, New England Bond Funds, New England Star Funds and New England State
Tax-Free Funds, constitute the "New England Funds." New England Cash Management
Trust Money Market Series and New England Tax Exempt Money Market Trust
constitute the "Money Market Funds."
Adviser
The Adviser, Kobrick Funds LLC, located at 101 Federal Street, Boston,
Massachusetts 02110, serves as the investment adviser to each of the Funds and
is a subsidiary of Nvest Companies, L.P. ("Nvest Companies"). The Adviser, the
predecessor to which was formed in 1997, focuses primarily on managing
growth-oriented equity funds including the Funds. Nvest Companies is part of an
affiliated group including Nvest, L.P., a publicly-traded company listed on the
New York Stock Exchange. Nvest Companies' 14 principal subsidiary or affiliated
asset management firms, collectively, had $127 billion in assets under
management as of September 30, 1999.
In 1998, the Funds paid 1.00% of their respective average daily net assets to
the Adviser in advisory fees.
Portfolio Trades
In placing portfolio trades, the Adviser may use brokerage firms that market the
Fund's shares or are affiliated with Nvest Companies or the Adviser. In placing
trades, the Adviser will seek to obtain the best combination of price and
execution, which involves a number of judgmental factors. Such portfolio trades
are subject to applicable regulatory restrictions and related procedures adopted
by the Funds' Board of Trustees.
Meet the Funds' Portfolio Managers
Frederick R. Kobrick
Frederick Kobrick has managed Kobrick Capital Fund from its inception and
Kobrick Emerging Growth Fund from its inception until February 1, 1999 and
returned as its portfolio manager on April 9, 1999. Mr. Kobrick previously
managed the Kobrick Growth Fund from its inception until June 30, 1999. He has
been in the investment business for more than 28 years. For the 12 year period
immediately prior to becoming President of the predecessor to Kobrick Funds LLC
in 1997, he was an equity portfolio manager at State Street Research &
Management Company, where he served as Senior Vice President since 1989 and as a
member of the firm's Equity Investment Committee since 1985. He received an
M.B.A. from Harvard Business School and a B.A. from Boston University. Mr.
Kobrick is also a Chartered Financial Analyst. In addition to serving as senior
officer of the Adviser, Mr. Kobrick is also a portfolio manager and a principal
in private investment partnerships and may act in that capacity with respect to
other similar investment partnerships.
Michael E. Nance
Michael Nance has managed Kobrick Growth Fund since July 1, 1999. Mr. Nance,
Senior Vice President of the Adviser, joined the company in June 1999. Prior to
joining the Adviser, he was a Senior Vice President at Putnam Investments, where
he was a co-manager of the Putnam Voyager Fund, as well as other institutional
accounts. Mr. Nance joined Putnam in 1994 as an Assistant Vice President and
equity analyst in the Global Equity Research Group. Mr. Nance received an M.B.A.
from the University of Chicago Graduate School of Business and a B.S. in
Industrial Engineering from Drexel University. In addition to serving as Senior
Vice President of the Adviser, Mr. Nance is also a portfolio manager in private
investment partnerships and may act in that capacity with respect to other
similar investment partnerships.
Fund Services
Investing in the Funds
Choosing a Share Class
Each Fund offers Class A, B, C and Y shares. This prospectus is intended to
offer Class Y shares, and Class A shares to investors eligible for a waiver of
the front-end sales load (listed below). If you are interested in purchasing
Class A (retail), B or C shares, please call New England Funds at
1-800-225-5478. Each class has different eligibility and minimum investment
requirements. Each class also has different costs associated with buying,
selling and holding Fund shares, which allows you to choose the class that best
meets your needs. Your financial representative can help you decide which class
of shares is most appropriate for you.
Class A Shares
o You pay a sales charge when you buy Fund shares unless you qualify
for a waiver as described below.
o You pay higher annual expenses than Class Y shares.
Class A shares may be offered without front-end sales charges or a CDSC to the
following individuals and institutions:
o Any government entity that is prohibited from paying a sales charge
or commission to purchase mutual fund shares;
o Selling brokers, sales representatives or other intermediaries;
o Fund Trustees and other individuals who are affiliated with any
Kobrick Fund, New England Fund or Money Market Fund (this also applies
to any spouse, parents, children, siblings, grandparents, grandchildren and
in-laws of those mentioned);
o Participants in certain Retirement Plans with at least 100 members
(one-year CDSC may apply);
o Non-discretionary and non-retirement accounts of bank trust
departments or trust companies only if they principally engage in banking or
trust activities; and
o Investments of $25,000 or more in Kobrick Funds, New England Funds
or Money Market Funds by clients of an adviser or subadviser to any Kobrick
Fund, New England Fund or Money Market Fund.
o Accounts open as of October 31, 1999 that became Class A
shareholders of the relevant Fund, are not subject to applicable sales charges
and may exchange into Class A shares of another Kobrick Fund or New England Fund
without the imposition of a sales charge.
o You do not pay a sales charge on orders of $1 million or more, but
you may pay a charge on redemption if you redeem these shares within 1 year
of purchase.
Certificates
Certificates will not be issued automatically for any class of shares. Upon
written request, you may receive certificates for Class A shares only.
Class Y Shares
o You do not pay a sales charge when you buy Fund shares. All of your
money goes to work for you right away.
o You pay lower annual expenses than Class A shares, giving you the
potential for higher returns per share.
Class Y shares of the Funds may be purchased by the following entities at the
following investment minimums.
There is no initial or subsequent investment minimum for:
o Retirement Plans (401(a), 401(k), 457 or 403(b) plans) that have total
investment assets of at least $10 million. Plan sponsor accounts can be
aggregated to meet this minimum.
o Insurance Company Accounts of Metropolitan Life Insurance Company
("MetLife") or its affiliates.
o Separate Accounts of MetLife or its affiliates.
o Wrap Fee Programs of certain broker-dealers not being paid by the
Funds or the Distributor. Such wrap fee programs may be subject to additional or
different conditions, including a wrap account fee. Each broker-dealer is
responsible for transmitting to its customer a schedule of fees and other
information regarding any such conditions. If the participant who purchased
Class Y shares through a wrap fee program should terminate the wrap fee
arrangement with the broker-dealer, then the Class Y shares will, at the
discretion of the broker-dealer, automatically be converted to a number of Class
A shares of the same Fund having the same net asset value of the shares
converted, and the broker-dealer may thereafter be entitled to receive from that
Fund an annual service fee of 0.25% of the value of Class A shares owned by that
shareholder.
o Certain individual retirement accounts if the amounts invested
represent rollover distributions from investments by any of the Retirement Plans
set forth above.
o Deferred Compensation Plan Accounts of New England Life Insurance
Company ("NELICO"), MetLife or their affiliates ("Deferred Compensation
Accounts").
o Service Accounts through an omnibus account by investment
advisers, financial planners, broker-dealers or other intermediaries who have
entered into a service agreement with a Fund. A fee may be charged to
shareholders purchasing through a service account if they effect transactions
through such parties and should contact such parties regarding information about
such fees.
The minimum initial investment is $1 million and the minimum for each subsequent
investment is $10,000 for:
o Other mutual funds, endowments, foundations, bank trust departments
or trust companies.
For expenses associated with Class A and Y shares, see the section entitled
"Fund Fees & Expenses" in this Prospectus.
Fund Services
How Sales Charges are Calculated
Class A Shares
The price that you pay when you buy Class A shares ("offering price") is their
net asset value plus a sales charge (sometimes called a "front-end sales
charge") which varies depending upon the size of your purchase. However, for
purchases of Class A shares of the Funds of $1 million or more or purchases by
Retirement Plans (Plans under Sections 401(a) or 401(k) of the Internal Revenue
Code with investments of $1 million or more or that have 100 or more eligible
employees), there is no front-end sales charge, but a contingent deferred sales
charge of 1.00% may apply to redemptions of such shares within one year of the
date of purchase. See the eligibility requirements for sales charge waivers in
the section entitled "Investing in the Funds -- Class A."
Class A Sales Charges
Your Investment As a % of offering price As a % of your investment
- ------------------- ------------------------ -------------------------
Less than $ 50,000 5.75% 6.10%
$ 50,000 - $ 99,999 4.50% 4.71%
$100,000 - $249,999 3.50% 3.63%
$250,000 - $499,999 2.50% 2.56%
$500,000 - $999,999 2.00% 2.04%
$1,000,000 or more 0.00% 0.00%
It's Easy to Open an Account
To open an account with Kobrick Funds:
1. Read this Prospectus carefully.
2. Read the eligibility and minimum investment requirements described
above under "Investing in the Funds" and choose the class of shares that best
meets your needs.
3. You should contact Kobrick Funds at 1-888-523-8631 if you have
any questions about purchasing Fund shares.
4. Use the sections of this Prospectus that follow as your guide for
purchasing shares.
<PAGE>
Fund Services
Buying Shares
Opening an Account
Adding to an Account
Through Your Investment Dealer
o Call your investment dealer for information
o Call your investment dealer for information By Mail
o Make out a check in U.S. dollars for the investment amount, payable to
"Kobrick Funds." Third party checks will generally not be accepted.
o Mail the check with your completed application to Kobrick Funds, P.O. Box
8551, Boston, MA 02266-8551.
o Make out a check in U.S. dollars for the investment amount, payable to
"Kobrick Funds." Third party checks will generally not be accepted.
o Fill out the detachable investment slip from an account statement. If no
slip is available, include with the check a letter specifying the Fund
name, your class of shares, your account number and the registered account
name(s). To make investing even easier, you can order more investment
slips by calling 1-888-523-8631.
By Exchange
o Obtain a current prospectus for the Fund into which you are exchanging by
calling your investment dealer or Kobrick Funds at 1-888-523-8631.
o Call your investment dealer or Kobrick Funds to request an exchange.
o See the section entitled "Exchanging Shares."
o Call your investment dealer or Kobrick Funds at 1-888-523-8631 to request
an exchange.
o See the section entitled "Exchanging Shares."
By Wire
o Call Kobrick Funds at 1-888-523-8631 to obtain an account number and wire
transfer instructions. Your bank may charge you for such a transfer.
o Instruct your bank to transfer funds to State Street Bank & Trust Company,
ABA# 011000028, DDA# 99011538.
o Specify the Fund name, your class of shares, your account number and the
registered account name(s). Your bank may charge you for such a transfer.
Through Automated Clearing House (ACH)
o Ask your bank or credit union whether it is a member of the ACH system.
o Complete the "Telephone Withdrawal and Exchange" and "Bank Information"
sections on your account application.
o Mail your completed application to Kobrick Funds, P.O. Box 8551, Boston,
MA 02266-8551.
o Call Kobrick Funds at 1-888-523-8631 to add shares to your account through
ACH.
o If you have not signed up for the ACH system, please call Kobrick Funds
for a Service Options Form. A signature guarantee may be required to add
this privilege.
<PAGE>
Fund Services
Selling Shares
To Sell Some or All of Your Shares
Certain restrictions may apply. See section entitled "Restrictions on Buying,
Selling and Exchanging Shares."
Through Your Investment Dealer
o Call your investment dealer for information.
By Mail
o Write a letter to request a redemption specifying the name of the Fund,
your class of shares, your account number, the exact registered account
name(s), the number of shares or the dollar amount to be redeemed and the
method by which you wish to receive your proceeds. Additional materials
may be required. See the section entitled "Selling Shares in Writing."
o The request must be signed by all of the owners of the shares including
the capacity in which they are signing, if appropriate.
o Mail your request to Kobrick Funds, P.O. Box 8551, Boston, MA 02266-8551.
o Your proceeds will be delivered by the method chosen in your letter. If
you choose to have your proceeds delivered by mail, they will generally be
mailed to you on the business day after the request is received in good
order. You may also choose to redeem by wire or through ACH (see below).
By Exchange
o Obtain a current prospectus for the Fund into which you are exchanging by
calling your investment dealer or Kobrick Funds at 1-888-523-8631.
o Call Kobrick Funds to request an exchange.
o See the section entitled "Exchanging Shares" for more details.
By Wire
o Fill out the "Telephone Withdrawal and Exchange" and "Bank Information"
sections on your account application.
o Call Kobrick Funds at 1-888-523-8631 or indicate in your redemption
request letter (see above) that you wish to have your proceeds wired to
your bank.
o Proceeds will generally be wired on the next business day. A wire fee
(currently $5.00) will be deducted from the proceeds.
Through Automated Clearing House (ACH)
o Ask your bank or credit union whether it is a member of the ACH system.
o Complete the "Telephone Withdrawal and Exchange" and "Bank Information"
sections on your account application.
o If you have not signed up for the ACH system on your application, please
call Kobrick Funds at 1-888-523-8631 for a Service Options Form.
o Call Kobrick Funds to request a redemption through this system.
o Proceeds will generally arrive at your bank within three business days.
By Telephone
o You may receive your proceeds by mail, by wire or through ACH (see above).
o Call Kobrick Funds at 1-888-523-8631 to choose the method you wish to use
to redeem your shares.
<PAGE>
Fund Services
Selling Shares in Writing
If you wish to redeem your shares in writing, all owners of the shares must sign
the redemption request in the exact names in which the shares are registered and
indicate any special capacity in which they are signing. In certain situations,
you will be required to make your request to sell shares in writing. In these
instances, a letter of instruction signed by the authorized owner is necessary.
In certain situations we also may require a signature guarantee or additional
documentation.
A signature guarantee protects you against fraudulent orders and is
necessary if:
o your address of record has been changed within the past 30 days;
o you are selling more than $100,000 worth of shares and you are requesting
the proceeds by check; or
o a proceeds check for any amount is mailed to an address other than the
address of record or not payable to the registered owner(s).
A notary public cannot provide a signature guarantee.
A signature guarantee can be obtained from one of the following sources:
o a financial representative or securities dealer;
o a federal savings bank, cooperative or other type of bank;
o a savings and loan or other thrift institution;
o a credit union; or
o a securities exchange or clearing agency.
<PAGE>
Fund Services
Exchanging Shares
You may exchange shares of your Kobrick Fund for shares of the same class of
another Kobrick Fund or another New England Fund or for Class A shares of the
Money Market Funds. At the discretion of NELICO or MetLife, Class Y shares of
any Deferred Compensation Accounts may be exchanged for Class A shares of any
other Kobrick Fund or New England Fund which does not offer Class Y shares.
Class A shares of any Kobrick Fund or New England Fund in a Deferred
Compensation Account may also be exchanged for Class Y shares of any Kobrick
Fund or New England Fund. All exchanges are subject to the eligibility
requirements of the Kobrick Fund, New England Fund or Money Market Fund into
which you are exchanging. The exchange privilege may be exercised only in those
states where shares of Kobrick Funds, New England Funds or Money Market Funds
may be legally sold. For federal income tax purposes, an exchange of Fund shares
for shares of another Kobrick Fund, New England Fund or Money Market Fund is
generally treated as a sale on which gain or loss may be recognized. Please
refer to the Statement of Additional Information (the "SAI") for more detailed
information on exchanging Fund shares.
Restrictions on Buying, Selling and Exchanging Shares
Purchase and Exchange Restrictions
Although the Funds do not anticipate doing so, they reserve the right to suspend
or change the terms of purchasing or exchanging shares. Each Fund and the
Distributor reserve the right to refuse or limit any purchase or exchange order
by a particular purchaser (or group of related purchasers) if the transaction is
deemed harmful to the best interest of the Fund's other shareholders or would
disrupt the management of the Fund. The Funds and the Distributor reserve the
right to restrict purchases and exchanges for the accounts of "market timers" by
limiting the transaction to a maximum dollar amount. An account will be deemed
to be one of a market timer if: (i) more than two exchange purchases of a given
Fund are made for the account in a calendar quarter or (ii) the account makes
one or more exchange purchases of a given Fund in a calendar quarter in an
aggregate amount in excess of 1% of the Fund's total net assets.
Selling Restrictions
The table below describes restrictions placed on selling shares of any Fund
described in this Prospectus:
Restriction Situation
The Fund may suspend the right of redemption or postpone payment for more than 7
days:
o When the New York Stock Exchange is closed (other than a weekend/holiday)
o During an emergency
o Any other period permitted by the SEC
The Fund reserves the right to suspend account services or refuse
transaction requests:
o With a notice of a dispute between registered owners
o With suspicion/evidence of a fraudulent act
The Fund may pay the redemption price in whole or part by a distribution in kind
of readily marketable securities in lieu of cash or may take up to 7 days to pay
a redemption request in order to raise capital:
o When it is detrimental for the Fund to make cash payments as determined in
the sole discretion of the adviser
The Fund may withhold redemption proceeds until the check or funds have
cleared:
o When redemptions are made within 10 calendar days of purchase by check or
ACH of the shares being redeemed.
Telephone redemptions are not accepted for tax-qualified retirement
accounts.
If you hold certificates representing your shares, they must be sent with
your request for it to be honored. The Fund recommends that certificates
be sent by registered mail.
<PAGE>
Fund Services
How Fund Shares Are Priced
"Net asset value" is the price of one share of the Fund without a sales charge,
and is calculated each business day using this formula:
Total market value of securities + Cash and
Net Asset Value = other assets - Liabilities
-----------------------------------------------------
Number of outstanding shares
The net asset value of Fund shares is determined according to this schedule:
o A share's net asset value is determined at the close of regular trading on
the New York Stock Exchange (the "Exchange") on the days the Exchange is
open for trading. This is normally 4:00 p.m. Eastern time.
o The price you pay for purchasing, redeeming or exchanging a share will be
based upon the net asset value next calculated after your order is
received "in good order" by State Street Bank and Trust Company, the
Fund's custodian (plus or minus applicable sales charges as described
earlier in this Prospectus).
o Requests received by the Distributor after the Exchange closes will be
processed based upon the net asset value determined at the close of
regular trading on the next day that the Exchange is open, with the
exception that those orders received by your investment dealer before the
close of the Exchange and received by the Distributor before 5:00 p.m.
Eastern time* on the same day will be based on the net asset value
determined on that day.
o A Fund heavily invested in foreign securities may have net asset value
changes on days when you cannot buy or sell its shares.
*Under limited circumstances, the Distributor may enter into a contractual
agreement where it may accept orders after 5:00 p.m., but not later than
8:00 p.m.
Generally, during times of substantial economic or market change, it may
be difficult to place your order by phone. During these times, you may
deliver your order in person to the Distributor or send your order by mail
as described in "Buying Shares" and "Selling Shares."
Generally, Fund securities are valued as follows:
o Equity securities -- most recent sales or quoted bid price as provided by
a pricing service.
o Debt securities (other than short-term obligations) -- based upon pricing
service valuations.
o Short-term obligations (remaining maturity of less than 60 days)--
amortized cost (which approximates market value).
o Securities traded on foreign exchanges -- most recent sale/bid price on
the non-U.S. exchange, unless an occurrence after the close of the
exchange will materially affect its value. In that case, it is given fair
value as determined by or under the direction of the Fund's Board of
Trustees at the close of regular trading on the Exchange.
o Options -- last sale price, or if not available, last offering price.
o Futures -- unrealized gain or loss on the contract using current
settlement price. When a settlement price is not used, futures contracts
will be valued at their fair value as determined by or under the direction
of the Fund's Board of Trustees.
o All other securities -- fair market value as determined by the Adviser
under the direction of the Fund's Board of Trustees. The effect of fair
value pricing as described above under "Securities traded on foreign
exchanges" and "All other securities" is that securities may not be priced
on the basis of quotations from the primary market in which they are
traded but rather, may be priced by another method that the Fund's Board
of Trustees believes actually reflects fair value.
<PAGE>
Fund Services
Dividends and Distributions
The Funds generally distribute most or all of their net investment income
annually (other than capital gains) in the form of dividends. Each Fund
distributes all net realized long- and short-term capital gains annually, after
applying any available capital loss carryovers. The Funds' Board of Trustees may
adopt a different schedule as long as payments are made at least annually.
Depending on your investment goals and priorities, you may choose to:
o receive distributions from dividends and interest in cash while
reinvesting distributions from capital gains in additional shares of the
same class of the Fund, or in the same class of another Kobrick Fund or
New England Fund.
o receive all distributions in cash.
Unless you select one of the options set forth above, distributions will
automatically be reinvested in shares of the same class of the Fund. For more
information or to change your distribution option, contact Kobrick Funds in
writing or call 1-888-523-8631.
If you earn more than $10 annually in taxable income from a non-retirement plan
Fund, you will receive a Form 1099 to help you report the prior calendar year's
distributions on your federal income tax return. Be sure to keep the Form 1099
as a permanent record. A fee may be charged for any duplicate information
requested.
Tax Consequences
Each Fund intends to meet all requirements of the Internal Revenue Code
necessary to qualify as a "regulated investment company" and thus does not
expect to pay any federal income tax on income and capital gains distributed to
shareholders.
Fund distributions paid to you either in cash or reinvested in additional shares
are generally taxable to you either as ordinary income or as capital gains.
Distributions derived from short-term capital gains or investment income are
generally taxable at ordinary income rates. If you are a corporation investing
in a Fund, a portion of these dividends may qualify for the dividends-received
deduction provided that you meet certain holding period requirements.
Distributions of gains from investments that a Fund owned for more than one year
that are designated by a Fund as capital gain dividends will generally be
taxable to a shareholder receiving such distributions as long-term capital gain,
regardless of how long the shareholder has held Fund shares.
An exchange of shares for shares of another Kobrick Fund, New England Fund or
Money Market Fund is generally treated as a sale, and any resulting gain or loss
may be subject to federal income tax. If you purchase shares of a Fund shortly
before it declares a capital gain distribution or a dividend, a portion of the
purchase price may be returned to you as a taxable distribution. You should
consult your tax adviser about any federal, state and local taxes that may apply
to the distributions you receive.
As of the date of this Prospectus, a single investor owns a significant portion
of the shares of each Fund. Redemption by this investor of all or a substantial
part of its investment in a Fund could require the Adviser to sell a large
amount of portfolio securities. Such sales could result in the realization of
capital gains, which would be required to be distributed to shareholders of the
affected Fund.
<PAGE>
Fund Services
Compensation to Securities Dealers
As part of their business strategies, the Funds may pay securities dealers that
sell their shares. This compensation originates from two sources: sales charges
(front-end or deferred) and 12b-1 fees (comprising the annual service and/or
distribution fees of a plan adopted pursuant to Rule 12b-1 under the Investment
Company Act of 1940). The sales charges are detailed in the section entitled
"How Sales Charges are Calculated." Class A shares pays an annual service fee of
0.25% of its average daily net assets. Generally, the 12b-1 fees are paid to
securities dealers on a quarterly basis.
The Distributor may, at its expense, pay concessions in addition to the payments
described above to dealers which satisfy certain criteria established from time
to time by the Distributor relating to increasing net sales of shares of the
Kobrick Funds or other New England Funds over prior periods and certain other
factors. See the SAI for more details.
<PAGE>
Fund Performance
The financial highlights table is intended to help you understand each Fund's
financial performance since the Fund's commencement of operations. Certain
information reflects financial results for a single Fund share. The total
returns in the table represent the return that an investor would have earned on
an investment in the Fund (assuming reinvestment of all dividends and
distributions). This information has been audited by PricewaterhouseCoopers LLP,
independent accountants, whose report, along with each Fund's financial
statements, are included in the Statement of Additional Information, which is
available upon request.
Kobrick Funds
<TABLE>
<CAPTION>
Kobrick Capital Fund Kobrick Emerging Growth Fund Kobrick Growth Fund
Class A Class A Class A
-------------------------------- ------------------------------- -------------------------------
For the Period For the Period For the Period
December 31, December 31, September 1,
Year Ended 1997* through Year Ended 1997* through Year Ended 1998* through
September 30, September 30, September 30, September 30, September 30, September 30,
1999 1998 1999 1998 1999 1998
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period
Income (Loss) from $10.71 $10.00 $10.14 $10.00 $10.32 $10.00
investment operations:
Net investment
income (loss) (c) -0.18 -0.13 -0.18 -0.11 -0.08 0.00
Net realized and
unrealized gain
(loss) on
investments 6.68 0.84 6.58 0.25(d) 5.17(d) 0.32
Total from investment
operations 6.50 0.71 6.40 0.14 5.09 0.32
Net asset value, end of
period $17.21 $10.71 $16.54 $10.14 $15.41 $10.32
Total Return (a) 60.69% 7.10% 63.12% 1.40% 49.35% 3.20%
Ratios and Supplemental
Data
Net Assets, end of
period (000s) $102,879 $27,463 $52,175 $18,330 46,827 $1,054
Ratios to average net
assets:
Net expenses (b) 1.75% 1.75% 1.75% 1.75% 1.40% 1.40%
Expenses before fee
waiver (b) 1.77% 2.21% 2.08% 2.24% 2.13% 11.11%
Net investment
income (loss)(b) -1.09% -1.38% -1.24% -1.16% -0.55% 0.32%
Portfolio turnover rate 778% 350% 442% 287% 632% 11%
* Commencement of Operations
(a) Total Returns are historical and assume changes in share price and reinvestments of dividends. Had certain expenses not been
reduced during the periods shown, total returns would have been lower. Periods of less than one year are not annualized.
(b) Annualized for periods less than one year.
(c) Computed using the average shares method.
(d) Amount shown for a share outstanding does not correspond with the net realized and unrealized gain (loss) on investments due to
the timing of sales and repurchases of Fund shares in relation to fluctuating market values of the investments of the Fund.
</TABLE>
<PAGE>
Glossary of Terms
Bid price -- The price a prospective buyer is ready to pay. This term is used by
traders who maintain firm bid and offer prices in a given security by standing
ready to buy or sell security units at publicly quoted prices.
Bottom-up approach -- The search for outstanding performance by first
considering individual companies before considering the impact of industry and
economic trends. Capital gain distributions -- Payments to a Fund's shareholders
of profits earned from selling securities in a Fund's portfolio.
Capital gain distributions are usually paid once a year.
Derivative -- A financial instrument whose value and performance is based on the
value and performance of another security or financial instrument.
Diversification -- The strategy of investing in a wide range of companies or
industries to reduce the risk if an individual company or sector of the market
suffers losses.
Earnings growth -- A pattern of increasing rate of growth in earnings per share
from one period to another, which usually causes a stock's price to rise.
Fundamental Analysis -- An analysis of the balance sheet and income statements
of a company in order to forecast its future stock price movements. Fundamental
analysis considers records of assets, earnings, sales, products, research and
development and markets in predicting future trends in these indicators of a
company's success or failure.
Growth investing -- An investment style that emphasizes companies with strong
earnings growth. Growth investing is generally considered more aggressive than
"value" investing.
Income distributions -- Payments to a Fund's shareholders resulting from the net
interest or dividend income earned by a Fund's portfolio.
Market capitalization -- Market price multiplied by number of shares
outstanding. The figures used to distinguish small, medium and large market
capitalizations may vary depending upon the index being used and/or the
guidelines set by the portfolio manager.
Net asset value (NAV) -- The market value of one share of the Fund on any given
day without a front-end sales charge or CDSC. It is determined by dividing the
Fund's total net assets by the number of shares outstanding.
Qualitative Analysis -- An analysis of the qualities possessed by a company,
including its management, products and competitive positions, to help determine
if the company can execute its strategy.
Target price -- Price that an investor is hoping a stock he or she has just
bought will rise to within a specified period of time. An investor may buy XYZ
at $20, with a target price of $40 in one year's time, for instance.
Total return -- The change in value of an investment in the Fund over a specific
time period expressed as a percentage. Total returns assume all earnings are
reinvested in additional shares of the Fund.
Volatility -- The general variability of a portfolio's value resulting from
price fluctuations of its investments. In most cases, the more diversified a
portfolio is, the less volatile it will be.
<PAGE>
Notes
<PAGE>
If you would like more information about the Kobrick Funds, the following
documents are available free upon request:
Annual and Semiannual Reports -- Provide additional information about each
Fund's investments. Each report includes a discussion of the market conditions
and investment strategies that significantly affected the Fund's performance
during its last fiscal year.
Statement of Additional Information (SAI) -- Provides more detailed information
about the Funds and their investment limitations and policies, has been filed
with the Securities and Exchange Commission and is incorporated into this
Prospectus by reference.
To order a free copy of the Fund's annual or semiannual report or its SAI,
contact your financial representative, or the Funds at:
Kobrick Funds
P.O. Box 8551
Boston, Massachusetts 02266-8551
Telephone: 1-888-523-8631
Internet: www.kcfund.com
Your financial representative or Kobrick Funds will also be happy to answer your
questions or to provide any additional information that you may require. You can
review the Funds' reports and SAI at the Public Reference Room of the Securities
and Exchange Commission. Text-only copies are available free from the
Commission's Web site at: www.sec.gov.
Copies of these publications are also available for a fee by writing or calling
the Public Reference Room of the SEC, Washington, D.C. 20549-6009 Telephone:
800-SEC-0330 New England Funds, L.P., and other firms selling shares of Kobrick
Funds are members of the National Association of Securities Dealers, Inc.
(NASD). As a service to investors, the NASD has asked that we inform you of the
availability of a brochure on its Public Disclosure Program. The program
provides access to information about securities firms and their representatives.
Investors may obtain a copy by contacting the NASD at 800-289-9999 or by
visiting their Web site at www.NASDR.com.
Kobrick Funds
Class A and Y Shares of:
Kobrick Capital Fund
Kobrick Emerging Growth Fund
Kobrick Growth Fund
Investment Company Act File No. 811-8435
YK51-1199
<PAGE>
Supplement dated November 1, 1999 to the November 1, 1999
Statement of Additional Information
For Kobrick Investment Trust
Kobrick Capital Fund, Kobrick Emerging Growth Fund
and Kobrick Growth Fund (the "Funds")
The following information supplements the section in the Funds'
Statement of Additional Information captioned
"Distribution Agreement and Rule 12b-1 Plans"
For the period from November 1, 1999 through February 29, 2000, the Distributor
may reallow to participating investment dealers 100% of the sales charge on
sales of each Fund's Class A shares on which a sales commission is paid. During
this period, the Distributor may pay participating investment dealers an
additional commission of 0.50% on sales of such Funds' Class B shares and on
sales of $1,000,000 or more of such Funds' Class A shares, and an additional
0.25% on sales of such Funds' Class C shares.
For the purpose of the foregoing, "sales" do not include exchanges made at net
asset value from another New England Fund.
<PAGE>
KOBRICK INVESTMENT TRUST
STATEMENT OF ADDITIONAL INFORMATION
November 1, 1999
Kobrick Capital Fund
Kobrick Emerging Growth Fund
Kobrick Growth Fund
This Statement of Additional Information (the "Statement") is not a prospectus.
This Statement relates to the Prospectuses of Kobrick Capital Fund, Kobrick
Emerging Growth Fund and Kobrick Growth Fund Classes A, B, and C shares and
Classes A and Y shares, each dated November 1, 1999 (the "Prospectus" or
"Prospectuses") and should be read in conjunction there with. A copy of the
Prospectuses can be obtained from New England Funds, L.P. (the "Distributor"),
399 Boylston Street, Boston, Massachusetts 02116.
The Kobrick Investment Trust's financial statements and accompanying notes are
incorporated by reference into this Statement. The Trust's annual and semiannual
reports contain additional performance information and are available upon
request and without charge by calling 800-225-5478.
<PAGE>
Kobrick Investment Trust
101 Federal Street
Boston, Massachusetts 02110
Table of Contents
The Trust 3
Investment Limitations 3
Additional Information Concerning Certain Investment Techniques 5
Debt Instruments and Permitted Cash Investments 10
Quality Ratings of Corporate Bonds and Preferred Stocks 12
Trustees and Officers 13
The Investment Adviser 16
Distribution Agreement and 12b-1 Plans 17
Securities Transactions 21
Portfolio Turnover 23
How to Buy Shares 23
Net Asset Value and Public Offering Price 24
Reduced Sale Charges - Class A Shares Only 25
Shareholder Services 27
Open Accounts 27
Automatic Investment Plans 27
Retirement Plans Offering Tax Benefits 28
Systematic Withdrawal Plans 28
Dividend Diversification Program 29
Exchange Program 29
Automatic Exchange Plan 31
Broker Trading Privileges 31
NvestPRO 32
Self-Servicing Your Account 32
Redemptions 34
Standard Performance Measures 36
Investment Performance of the Funds 38
Income Dividends, Capital Gain Distributions and Tax Status 40
Financial Statements 43
Appendix A - Publications That May Contain Fund Information 44
Appendix B - Advertising and Promotional Literature 45
<PAGE>
- --------------------------------------------------------------------------------
THE TRUST
- --------------------------------------------------------------------------------
Kobrick Investment Trust (the "Trust") was organized as a Massachusetts
business trust on October 10, 1997. The Trust currently offers three series of
shares to investors: the Kobrick Capital Fund, the Kobrick Emerging Growth Fund
and the Kobrick Growth Fund (referred to individually as a "Fund" and
collectively as the "Funds"). Each Fund has its own investment objective and
policies. The Trust is a diversified, open-end management investment company.
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 or her 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
Master Trust Agreement 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 Master Trust Agreement 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 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.
Under the Master Trust Agreement of the Trust, no annual or regular
meeting of shareholders is required. Thus, there will ordinarily be no
shareholder meetings unless required by the Investment Company Act of 1940. At
that time, a meeting of shareholders will be called. Under the Master Trust
Agreement, any Trustee may be removed by vote of two-thirds of the outstanding
Trust shares and holders of 10% or more of the outstanding shares of the Trust
can require that the Trustees call a meeting of shareholders for purposes of
voting on the removal of one or more Trustees. In connection with such meetings
called by shareholders, shareholders will be assisted in shareholder
communications to the extent required by applicable law.
- --------------------------------------------------------------------------------
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 any Fund without the affirmative vote of a
majority of the outstanding shares of that Fund. The vote of a majority of the
outstanding voting shares of a Fund means the vote (A) of 67% or more of the
voting shares present at a meeting, if the holders of more than 50% of the
outstanding voting shares of the Trust are present or represented by proxy; or
(B) of more than 50% of the outstanding voting shares of the Trust, whichever is
less.
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 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 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. The Fund will not purchase or sell commodities or commodity
contracts including futures, or purchase or write put or call options on
commodities, 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, except in the case of U.S. Government
securities.
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 any Fund. 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 each of the Funds, which are not
fundamental and which may be changed by action of the Board of Trustees 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 and the Fund will
not purchase restricted securities (excluding securities eligible for resale
under Rule 144A and commercial paper issued under Section 4(2) of the Securities
Act of 1933) if, as a result thereof, more than 10% 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. Issuer Concentration. The Fund will not purchase a security of any one issuer
if such purchase at the time thereof would cause (a) more than 10% of the Fund's
total assets to be invested in the securities of any one issuer or (b) cause
more than 10% of any class of securities of such issuer to be held by the Fund.
4. 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.
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.
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION CONCERNING CERTAIN INVESTMENT TECHNIQUES
- --------------------------------------------------------------------------------
Among other investments described below, each Fund may buy and sell
futures contracts, options on securities, options on securities indices, options
on futures contracts, foreign investments, currencies, repurchase agreements,
reverse repurchase agreements, swap arrangements, "when issued" securities and
may enter into closing transactions with respect to each of the foregoing, and
invest in other derivatives and engage in securities lending under circumstances
in which such instruments and techniques are expected by Kobrick Funds LLC (the
"Investment Adviser") to aid in achieving the investment objective of the Funds.
Each Fund on occasion may also purchase instruments with characteristics of both
futures and securities (e.g., debt instruments with interest and principal
payments determined by reference to the value of a currency at a future time)
and which, therefore, possess the risks of both futures and securities
investments.
Futures Contracts
Futures contracts are publicly traded contracts to buy or sell
underlying assets, such as certain securities, currencies, or an index of
securities, at a future time at a specified price. A contract to buy establishes
a "long" position while a contract to sell establishes a "short" position.
The purchase of a futures contract on securities or an index of
securities normally enables a buyer to participate in the market movement of
underlying asset or index after paying a transaction charge and posting margin
in an amount equal to a small percentage of the value of the underlying asset or
index. Each Fund will initially be required to deposit with the Trust's
custodian or the broker effecting the futures transaction an amount of "initial
margin" in cash or U.S. Treasury obligations.
Initial margin in futures transactions is different from margin in
securities transactions in that the former does not involve the borrowing of
funds by the customer to finance the transaction. Rather, the initial margin is
like a performance bond or good faith deposit on the contract. Subsequent
payments (called "maintenance margin") to and from the broker will be made on a
daily basis as the price of the underlying assets fluctuates. This process is
known as "marking to market." For example, when a Fund has taken a long position
in a futures contract and the value of the underlying asset has risen, that
position will have increased in value and the applicable Fund will receive from
the broker a maintenance margin payment equal to the increase in value of the
underlying asset. Conversely, when a Fund has taken a long position in a futures
contract and the value of the underlying instrument has declined, the position
would be less valuable, and the applicable Fund would be required to make a
maintenance margin payment to the broker. At any time prior to expiration of the
futures contract, the Fund may elect to close the position by taking an opposite
position which will terminate the Fund's position in the futures contract. A
final determination of maintenance margin is then made, additional cash is
required to be paid by or released to the Fund, and the Fund realizes a loss or
a gain. While futures contracts with respect to securities do provide for the
delivery and acceptance of such securities, such delivery and acceptance are
seldom made.
Futures contracts will be executed primarily (a) to establish a short
position, and thus protect the Fund from experiencing the full impact of an
expected decline in market value of portfolio holdings without requiring the
sale of holdings, or (b) to establish a long position, and thus to participate
in an expected rise in market value of securities or currencies which the Fund
intends to purchase. Subject to the limitations described above, each Fund may
also enter into futures contracts for purposes of enhancing return. In
transactions establishing a long position in a futures contract, money market
instruments equal to the face value of the futures contract will be identified
by the Fund to the Trust's custodian for maintenance in a separate account to
insure that the use of such futures contracts is unleveraged. Similarly, a
representative portfolio of securities having a value equal to the aggregate
face value of the futures contract will be identified with respect to each short
position. Each Fund will employ any other appropriate method of cover which is
consistent with applicable regulatory and exchange requirements.
Options on securities
Each Fund may use options on securities to implement its investment
strategy. A call option on a security, for example, gives the purchaser of the
option the right to buy, and the writer the obligation to sell, the underlying
asset at the exercise price during the option period. Conversely, a put option
on a security gives the purchaser the right to sell, and the writer the
obligation to buy, the underlying asset at the exercise price during the option
period.
Purchased options have defined risk, i.e., the premium paid for the
option, no matter how adversely the price of the underlying asset moves, while
affording an opportunity for gain corresponding to the increase or decrease in
the value of the optioned asset.
Written options have varying degrees of risk. An uncovered written call
option theoretically carries unlimited risk, as the market price of the
underlying asset could rise far above the exercise price before its expiration.
This risk is tempered when the call option is covered, i.e., when the option
writer owns the underlying asset. In this case, the writer runs the risk of the
lost opportunity to participate in the appreciation in value of the asset rather
than the risk of an out-of-pocket loss. A written put option has defined risk,
i.e., the difference between the agreed-upon price that a Fund must pay to the
buyer upon exercise of the put and the value, which could be zero, of the asset
at the time of exercise.
The obligation of the writer of an option continues until the writer
effects a closing purchase transaction or until the option expires. To secure
his obligation to deliver the underlying asset in the case of a call option, or
to pay for the underlying asset in the case of a put option, a covered writer is
required to deposit in escrow the underlying security or other assets in
accordance with the rules of the applicable clearing corporation and exchanges.
Options on securities indices
Each Fund may engage in transactions in call and put options on
securities indices. For example, a Fund may purchase put options on indices of
securities in anticipation of or during a market decline to attempt to offset
the decrease in market value of its securities that might otherwise result.
Put options on indices of securities are similar to put options on the
securities themselves except that the delivery requirements are different.
Instead of giving the right to make delivery of a security at a specified price,
a put option on an index of securities gives the holder the right to receive an
amount of cash upon exercise of the option if the value of the underlying index
has fallen below the exercise price. The amount of cash received will be equal
to the difference between the closing price of the index and the exercise price
of the option expressed in dollars times a specified multiple. As with options
on securities, a Fund may offset its position in index options prior to
expiration by entering into a closing transaction on an exchange or it may let
the option expire unexercised.
A securities index assigns relative values to the securities included in
the index and the index options are based on a broad market index. Although
there are at present few available options on indices of fixed income
securities, other than tax-exempt securities, or futures and related options
based on such indices, such instruments may become available in the future. In
connection with the use of such options, a Fund may cover its position by
identifying a representative portfolio of securities having a value equal to the
aggregate face value of the option position taken. However, a Fund may employ
any appropriate method to cover its positions that is consistent with applicable
regulatory and exchange requirements.
Options on Futures Contracts
An option on a futures contract gives the purchaser the right, in return
for the premium paid, to assume a position in a futures contract (a long
position if the option is a call and a short position if the option is a put) at
a specified exercise price at any time during the period of the option.
Options Strategy
A basic option strategy for protecting a Fund against a decline in
securities prices could involve (a) the purchase of a put - - thus "locking in"
the selling price of the underlying securities or securities indices -- or (b)
the writing of a call on securities or securities indices held by the Fund - -
thereby generating income (the premium paid by the buyer) by giving the holder
of such call the option to buy the underlying asset at a fixed price.The premium
will offset, in whole or in part, a decline in portfolio value; however, if
prices of the relevant securities or securities indices rose instead of falling,
the call might be exercised, thereby resulting in losing the ability to
participate in the appreciation of the underlying securities or securities
indices.
A basic option strategy when a rise in securities prices is anticipated
is the purchase of a call - thus "locking in" the purchase price of the
underlying security or other asset. In transactions involving the purchase of
call options by a Fund, money market instruments equal to the aggregate exercise
price of the options will be identified by the Fund to the Trust's custodian to
insure that the use of such investments is unleveraged.
Each Fund may write options in connection with buy-and-write
transactions; that is, the Fund may purchase a security and concurrently write a
call option against that security. If the call option is exercised in such a
transaction, the Fund's maximum gain will be the premium received by it for
writing the option, adjusted upward or downward by the difference between the
Fund's purchase price of the security and the exercise price of the option. If
the option is not exercised and the price of the underlying security declines,
the amount of such decline will be offset in part, or entirely, by the premium
received.
The writing of covered put options is similar in terms of risk/return
characteristics to buy-and-write transactions. If the market price of the
underlying security rises or otherwise is above the exercise price, the put
option will expire worthless and the Fund's gain will be limited to the premium
received. If the market price of the underlying security declines or otherwise
is below the exercise price, the Fund's return will be the premium received from
writing the put option minus the amount by which the market price of the
security is below the exercise price.
Limitations and Risks of Options and Futures Activity
Each Fund will engage in transactions in futures contracts or options
primarily as a hedge against changes resulting from market conditions which
produce changes in the values of its securities or the securities which it
intends to purchase (e.g., to replace portfolio securities which will mature in
the near future) or subject to the limitations described below, to enhance
return. No Fund will purchase any futures contract or purchase any call option
if, immediately thereafter, more than one third of such Fund's net assets would
be represented by long futures contracts or call options. No Fund will write a
covered call or put option if, immediately thereafter, the aggregate value of
the assets (securities in the case of written calls and cash or cash equivalents
in the case of written puts) underlying all such options, determined as of the
dates such options were written, would exceed 25% of such Fund's net assets. In
addition, no Fund may establish a position in a commodity futures contract or
purchase or sell a commodity option contract for other than bona fide hedging
purposes if immediately thereafter the sum of the amount of initial margin
deposits and premiums required to establish such positions for such nonhedging
purposes would exceed 5% of the market value of such Fund's net assets.
Although effective hedging can generally capture the bulk of a desired
risk adjustment, no hedge is completely effective. A Fund's ability to hedge
effectively through transactions in futures and options depends on the degree to
which price movements in its holdings correlate with price movements of the
futures and options.
Some positions in futures and options may be closed out only on an
exchange which provides a secondary market therefor. There can be no assurance
that a liquid secondary market will exist for any particular futures contract or
option at any specific time. Thus, it may not be possible to close such an
option or futures position prior to maturity. The inability to close options and
futures positions also could have an adverse impact on the Fund's ability to
effectively hedge its securities and might in some cases require the Fund to
deposit cash to meet applicable margin requirements. The Funds will enter into
an option or futures position only if it appears to be a liquid investment.
Foreign Investments
The Funds reserve the right to invest without limitation in securities
of non-U.S. issuers directly, or indirectly in the form of American Depositary
Receipts ("ADRs"), European Depositary Receipts ("EDRs") or similar securities
representing interests in the securities of foreign issuers. Under current
policy, however, each Fund limits such investments, including ADRs and EDRs, to
a maximum of 35% of its total assets.
ADRs are receipts, typically issued by a U.S. bank or trust company,
which evidence ownership of underlying securities issued by a foreign
corporation or other entity. EDRs are receipts issued in Europe which evidence a
similar ownership arrangement. Generally, ADRs in registered form are designed
for use in U.S. securities markets and EDRs are designed for use in European
securities markets. The underlying securities are not always denominated in the
same currency as the ADRs or EDRs. Although investment in the form of ADRs or
EDRs facilitates trading in foreign securities, it does not mitigate all the
risks associated with investing in foreign securities.
ADRs are available through facilities which may be either "sponsored" or
"unsponsored." In a sponsored arrangement, the foreign issuer establishes the
facility, pays some or all of the depository's fees, and usually agrees to
provide shareholder communications. In an unsponsored arrangement, the foreign
issuer is not involved, and the ADR holders pay the fees of the depository.
Sponsored ADRs are generally more advantageous to the ADR holders and the issuer
than are unsponsored ADRs. More and higher fees are generally charged in an
unsponsored program compared to a sponsored facility. Only sponsored ADRs may be
listed on the New York or American Stock Exchanges. Unsponsored ADRs may prove
to be more risky, due to (a) the additional costs involved to the Funds; (b) the
relative illiquidity of the issue in U.S. markets; and (c) the possibility of
higher trading costs in the over-the-counter market as opposed to exchange based
trading. Each Fund will take these and other risk considerations into account
before making an investment in an unsponsored ADR.
To the extent a Fund invests in securities of issuers in less developed
countries or emerging foreign markets, it will be subject to a variety of
additional risks, including risks associated with political instability,
economies based on relatively few industries, lesser market liquidity, high
rates of inflation, significant price volatility of portfolio holdings and high
levels of external debt in the relevant country.
Although each Fund may invest in securities denominated in foreign
currencies, each Fund values its securities and other assets in U.S. dollars. As
a result, the net asset value of a Fund's shares may fluctuate with U.S. dollar
exchange rates as well as with price changes of the Fund's securities in the
various local markets and currencies. Thus, an increase in the value of the U.S.
dollar compared to the currencies in which a Fund makes its investments could
reduce the effect of increases and magnify the effect of decreases in the prices
of the Fund's securities in their local markets. Conversely, a decrease in the
value of the U.S. dollar will have the opposite effect of magnifying the effect
of increases and reducing the effect of decreases in the prices of a Fund's
securities in the local markets.
Currency Transactions
Each Fund's dealings in forward currency exchange contracts will be
limited to hedging involving either specific transactions or aggregate portfolio
positions. A forward currency contract involves an obligation to purchase or
sell a specific currency at a future date, which may be any fixed number of days
from the date of the contract agreed upon by the parties, at a price set at the
time of the contract. These contracts are not commodities and are entered into
in the interbank market conducted directly between currency traders (usually
large commercial banks) and their customers. Although spot and forward contracts
will be used primarily to protect the Fund from adverse currency movements, they
also involve the risk that anticipated currency movements will not be accurately
predicted, which may result in losses to each Fund. This method of protecting
the value of a Fund's portfolio securities against a decline in the value of a
currency does not eliminate fluctuations in the underlying prices of the
securities. It simply establishes a rate of exchange that can be achieved at
some future point in time. Although such contracts tend to minimize the risk of
loss due to a decline in the value of hedged currency, they tend to limit any
potential gain that might result should the value of such currency increase.
Repurchase Agreements
Each Fund may enter into repurchase agreements. Repurchase agreements
occur when a Fund acquires a security and the seller, which may be either (i) a
primary dealer in U.S. Government securities or (ii) an FDIC-insured bank having
gross assets in excess of $500 million, simultaneously commits to repurchase it
at an agreed-upon price on an agreed-upon date within a specified number of days
(usually not more than seven) from the date of purchase. The repurchase price
reflects the purchase price plus an agreed-upon market rate of interest which is
unrelated to the coupon rate or maturity of the acquired security. A Fund will
only enter into repurchase agreements involving U.S. Government securities.
Repurchase agreements could involve certain risks in the event of default or
insolvency of the other party, including possible delays or restrictions upon
the Fund's ability to dispose of the underlying securities. Repurchase
agreements with maturities greater than seven days when combined with other
illiquid securities will be limited to 15% of each Fund's net assets.
Reverse Repurchase Agreements
Each Fund may enter into reverse repurchase agreements. However, a Fund
may not engage in reverse repurchase agreements in excess of 5% of the
applicable Fund's total assets. In a reverse repurchase agreement the Fund
transfers possession of a portfolio instrument to another person, such as a
financial institution, broker or dealer, in return for a percentage of the
instrument's market value in cash, and agrees that on a stipulated date in the
future the Fund will repurchase the portfolio instrument by remitting the
original consideration plus interest at an agreed-upon rate. The ability to use
reverse repurchase agreements may enable, but does not ensure the ability of, a
Fund to avoid selling portfolio instruments at a time when a sale may be deemed
to be disadvantageous. When effecting reverse repurchase agreements, assets of
the applicable Fund in a dollar amount sufficient to make payment of the
obligations to be purchased are segregated on the applicable Fund's records at
the trade date and maintained until the transaction is settled.
Swap Arrangements
Each Fund may enter into various forms of swap arrangements with
counterparties with respect to interest rates, currency rates, securities or
indices, including the purchase of caps, floors and collars as described below.
In an interest rate swap a Fund could agree for a specific period to pay a bank
or investment banker the floating rate of interest on a so-called notional
principal amount (i.e., an assumed figure selected by the parties for this
purpose) in exchange for agreement by the bank or investment banker to pay the
Fund a fixed rate of interest on the notional principal amount. In a currency
swap a Fund would agree with the other party to exchange cash flows based on the
relative differences in values of a notional amount of two (or more) currencies;
in an index swap, a Fund would agree to exchange cash flows on a notional amount
based on changes in the values of the selected indices. Purchase of a cap
entitles the purchaser to receive payments from the seller on a notional amount
to the extent that the selected index exceeds an agreed upon interest rate or
amount whereas purchase of a floor entitles the purchaser to receive such
payments to the extent the selected index falls below an agreed upon interest
rate or amount. A collar combines a cap and a floor.
Most swaps entered into by a Fund will be on a net basis; for example,
in an interest rate swap, amounts generated by application of the fixed rate and
the floating rate to the notional principal amount would first offset one
another, with the Fund either receiving or paying the difference between such
amounts. In order to be in a position to meet any obligations resulting from
swaps, the applicable Fund will set up a segregated custodial account to hold
appropriate liquid assets, including cash; for swaps entered into on a net
basis, assets will be segregated having a daily net asset value equal to any
excess of the applicable Fund's accrued obligations over the accrued obligations
of the other party, while for swaps on other than a net basis assets will be
segregated having a value equal to the total amount of the applicable Fund's
obligations.
These arrangements will be made primarily for hedging purposes, to
preserve the return on an investment or on a portion of the applicable Fund's
portfolio. However, a Fund may enter into such arrangements for income purposes
to the extent permitted by the Commodities Futures Trading Commission for
entities which are not commodity pool operators, such as the Fund. In entering a
swap arrangement, a Fund is dependent upon the creditworthiness and good faith
of the counterparty. Each Fund attempts to reduce the risks of nonperformance by
the counterparty by dealing only with established, reputable institutions. The
swap market is still relatively new and emerging; positions in swap arrangements
may become illiquid to the extent that nonstandard arrangements with one
counterparty are not readily transferable to another counterparty or if a market
for the transfer of swap positions does not develop. The use of interest rate
swaps is a highly specialized activity which involves investment techniques and
risks different from those associated with ordinary portfolio securities
transactions. If the Investment Adviser is incorrect in its forecasts of market
values, interest rates and other applicable factors, the investment performance
of the applicable Fund would diminish compared with what it would have been if
these investment techniques were not used. Moreover, even if the Investment
Adviser is correct in its forecast, there is a risk that the swap position may
correlate imperfectly with the price of the asset or liability being hedged.
When-issued Securities
Each Fund may purchase "when-issued" equity securities, which are traded
on a price basis prior to actual issuance. Such purchases will be made only to
achieve a Fund's investment objective and not for leverage. The when-issued
trading period generally lasts from a few days to months, or over a year or
more; during this period dividends on equity securities are not payable. No
dividend income accrues to the Fund prior to the time it takes delivery. A
frequent form of when-issued trading occurs when corporate securities to be
created by a merger of companies are traded prior to the actual consummation of
the merger. Such transactions may involve a risk of loss if the value of the
securities fall below the price committed to prior to the actual issuance. The
Trust's custodian will establish a segregated account for each Fund when it
purchases securities on a when- issued basis consisting of cash or liquid
securities equal to the amount of the when-issued commitments. Securities
transactions involving delayed deliveries or forward commitments are frequently
characterized as when-issued transactions and are similarly treated by each
Fund.
Securities Lending
Each Fund may seek additional income by lending portfolio securities to
qualified institutions having a value of up to 33 1/3% of each Fund's assets.
The Fund will receive cash or cash equivalent (e.g. Government obligations) as
collateral in an amount at least equal to 100% of the current market value of
the loaned securities plus accrued interest. The collateral will generally be
held in the form received, although cash may be invested in securities issued or
guaranteed by the U.S. Government and/or irrevocable stand-by letters of credit.
By reinvesting cash it receives in these transactions, a Fund could magnify any
gain or loss it realizes on the underlying investment. If the borrower fails to
return the securities and the collateral is insufficient to cover the loss, the
Fund could lose money.
Illiquid Securities (Rule 144 and Section 4(2) commercial paper)
Illiquid securities are those which are not readily resalable, which may
include securities whose disposition is restricted by federal securities laws.
Rule 144A securities are privately offered securities that can be resold only to
certain qualified institutional buyers pursuant to Rule 144A under the
Securities Act of 1933. Certain Funds may also purchase commercial paper issued
under Section 4(2) of the Securities Act of 1933. Investing in Rule 144A
securities and Section 4(2) commercial paper could have the effect of increasing
the level of a Fund's illiquidity to the extent that qualified institutional
buyers become, for a time, uninterested in purchasing these securities. Rule
144A securities and Section 4(2) commercial paper are treated as illiquid,
unless the Investment Advisor has determined, under guidelines established by
the Trust's Board of Trustees, that the particular issue of Rule 144A securities
is liquid. Also, a Fund may incur expenses, losses or delays in the process of
registering restricted securities prior to resale, which would have an adverse
effect on the Fund.
Short Sales
Each Fund may sell securities short against the box, that is: (1) enter
into short sales of securities that it currently owns or has the right to
acquire through the conversion or exchange of other securities that it owns
without additional consideration; and (2) enter into arrangements with the
broker-dealers through which such securities are sold short to receive income
with respect to the proceeds of short sales during the period the Fund's short
positions remain open. A Fund may make short sales of securities only if at all
times when a short position is open the Fund owns at least an equal amount of
such securities or securities convertible into or exchangeable for, without
payment of any further consideration, securities of the same issue as, and equal
in amount to, the securities sold short.
In a short sale against the box, a Fund does not deliver from its
portfolio the securities sold and does not receive immediately the proceeds from
the short sale. Instead, the Fund borrows the securities sold short from a
broker-dealer through which the short sale is executed, and the broker-dealer
delivers such securities, on behalf of the Fund, to the purchaser of such
securities. Such broker-dealer is entitled to retain the proceeds from the short
sale until the Fund delivers to such broker-dealer the securities sold short. In
addition, the Fund is required to pay to the broker-dealer the amount of any
dividends paid on shares sold short. Finally, to secure its obligation to
deliver to such broker-dealer the securities sold short, the Fund must deposit
and continuously maintain in a separate account with the Fund's custodian an
equivalent amount of the securities sold short or securities convertible into or
exchangeable for such securities without the payment of additional
consideration. A Fund is said to have a short position in the securities sold
until it delivers to the broker-dealer the securities sold, at which time the
Fund receives the proceeds of the sale. A Fund may close out a short position by
purchasing on the open market and delivering to the broker-dealer an equal
amount of the securities sold short, rather than by delivering portfolio
securities.
Short sales may protect a Fund against risk of losses in the value of
its portfolio securities because any unrealized losses with respect to such
portfolio securities should be wholly or partially offset by a corresponding
gain in the short position. However, any potential gains in such portfolio
securities should be wholly or partially offset by a corresponding loss in the
short position. The extent to which such gains or losses are offset will depend
upon the amount of securities sold short relative to the amount the Fund owns,
either directly or indirectly, and, in the case where the Fund owns convertible
securities, changes in the conversion premium.
Short sale transactions involve certain risks. If the price of the
security sold short increases between the time of the short sale and the time
the Fund replaces the borrowed security, the Fund will incur a loss and if the
price declines during this period, the Fund will realize a short-term capital
gain. Any realized short-term capital gain will be decreased, and any incurred
loss increased, by the amount of transaction costs and any premium, dividend or
interest which the Fund may have to pay in connection with such short sale.
Certain provisions of the Internal Revenue Code of 1986, as amended, (the
"Code") may limit the degree to which a Fund is able to enter into short sales.
There is no limitation on the amount of each Fund's assets that, in the
aggregate, may be deposited as collateral for the obligation to replace
securities borrowed to effect short sales and allocated to segregated accounts
in connection with short sales. No Fund currently expects that more than 5% of
its total assets would be involved in short sales against the box.
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DEBT INSTRUMENTS AND PERMITTED CASH INVESTMENTS
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As indicated in the Funds' Prospectus, a Fund may invest in long-term
and short-term debt securities. Certain debt securities and money market
instruments in which a Fund may invest are described below.
U.S. Government and Related Securities
U.S. Government securities are securities which are issued or guaranteed
as to principal or interest by the U.S. Government, a U.S. Government agency or
instrumentality, or certain mixed-ownership Government corporations as described
herein. The U.S. Government securities in which each Fund invests include, among
others: direct obligations of the U.S. Treasury, i.e., U.S. Treasury bills,
notes, certificates and bonds; obligations of U.S. Government agencies or
instrumentalities such as the Federal Home Loan Banks, the Federal Farm Credit
Banks, the Federal National Mortgage Association, the Government National
Mortgage Association and the Federal Home Loan Mortgage Corporation; and
obligations of mixed-ownership Government corporations such as Resolution
Funding Corporation.
U.S. Government securities which each Fund may buy are backed in a
variety of ways by the U.S. Government, its agencies or instrumentalities. Some
of these obligations, such as Government National Mortgage Association mortgage-
backed securities, are backed by the full faith and credit of the U.S. Treasury.
Other obligations, such as those of the Federal National Mortgage Association,
are backed by the discretionary authority of the U.S. Government to purchase
certain obligations of agencies or instrumentalities, although the U.S.
Government has no legal obligation to do so. Obligations such as those of the
Federal Home Loan Banks, the Federal Farm Credit Banks, the Federal National
Mortgage Association and the Federal Home Loan Mortgage Corporation are backed
by the credit of the agency or instrumentality issuing the obligations. Certain
obligations of Resolution Funding Corporation, a mixed-ownership Government
corporation, are backed with respect to interest payments by the U.S. Treasury,
and with respect to principal payments by U.S. Treasury obligations held in a
segregated account with a Federal Reserve Bank. Except for certain mortgage-
related securities, each Fund will only invest in obligations issued by mixed-
ownership Government corporations where such securities are guaranteed as to
payment of principal or interest by the U.S. Government or a U.S. Government
agency or instrumentality, and any unguaranteed principal or interest is
otherwise supported by U.S. Government obligations held in a segregated account.
U.S. Government securities may be acquired by each Fund in the form of
separately traded principal and interest components of securities issued or
guaranteed by the U.S. Treasury. The principal and interest components of
selected securities are traded independently under the Separate Trading of
Registered Interest and Principal of Securities ("STRIPS") program. Under the
STRIPS program, the principal and interest components are individually numbered
and separately issued by the U.S. Treasury at the request of depository
financial institutions, which then trade the component parts independently.
Obligations of Resolution Funding Corporation are similarly divided into
principal and interest components and maintained as such on the book entry
records of the Federal Reserve Banks.
In addition, each Fund may invest in custodial receipts that evidence
ownership of future interest payments, principal payments or both on certain
U.S. Treasury notes or bonds in connection with programs sponsored by banks and
brokerage firms. Such notes and bonds are held in custody by a bank on behalf of
the owners of the receipts. These custodial receipts are known by various names,
including "Treasury Receipts" ("TRs"), "Treasury Investment Growth Receipts"
("TIGRs") and "Certificates of Accrual on Treasury Securities" ("CATS") , and
may not be deemed U.S. Government securities. Each Fund may also invest from
time to time in collective investment vehicles, the assets of which consist
principally of U.S. Government securities or other assets substantially
collateralized or supported by such securities, such as Government trust
certificates.
Bank Money Investments
Bank money investments include but are not limited to certificates of
deposit, bankers' acceptances and time deposits. Certificates of deposit are
generally short-term (i.e., less than one year), interest-bearing negotiable
certificates issued by commercial banks or savings and loan associations against
funds deposited in the issuing institution. A banker's acceptance is a time
draft drawn on a commercial bank by a borrower, usually in connection with an
international commercial transaction (to finance the import, export, transfer or
storage of goods). A banker's acceptance may be obtained from a domestic or
foreign bank, including a U.S. branch or agency of a foreign bank. The borrower
is liable for payment as well as the bank, which unconditionally guarantees to
pay the draft at its face amount on the maturity date. Most acceptances have
maturities of six months or less and are traded in secondary markets prior to
maturity. Time deposits are nonnegotiable deposits for a fixed period of time at
a stated interest rate. The Funds will not invest in any such bank money
investment unless the investment is issued by a U.S. bank that is a member of
the Federal Deposit Insurance Corporation ("FDIC"), including any foreign branch
thereof, a U.S. branch or agency of a foreign bank, a foreign branch of a
foreign bank, or a savings bank or savings and loan association that is a member
of the FDIC and which at the date of investment has capital, surplus and
undivided profits (as of the date of its most recently published financial
statements) in excess of $50 million. The Funds will not invest in time deposits
maturing in more than seven days and will not invest more than 10% of the total
assets of the applicable Fund in time deposits maturing in two to seven days.
U.S. branches and agencies of foreign banks are offices of foreign banks
and are not separately incorporated entities. They are chartered and regulated
either federally or under state law. U.S. federal branches or agencies of
foreign banks are chartered and regulated by the Comptroller of the Currency,
while state branches and agencies are chartered and regulated by authorities of
the respective states or the District of Columbia. U.S. branches of foreign
banks may accept deposits and thus are eligible for FDIC insurance; however, not
all such branches elect FDIC insurance. Unlike U.S. branches of foreign banks,
U.S. agencies of foreign banks may not accept deposits and thus are not eligible
for FDIC insurance. Both branches and agencies can maintain credit balances,
which are funds received by the office incidental to or arising out of the
exercise of their banking powers and can exercise other commercial functions,
such as lending activities.
Short-Term Corporate Debt Instruments
Short-term corporate debt instruments include commercial paper to
finance short-term credit needs (i.e., short-term, unsecured promissory notes)
issued by corporations including but not limited to (a) domestic or foreign bank
holding companies or (b) their subsidiaries or affiliates where the debt
instrument is guaranteed by the bank holding company or an affiliated bank or
where the bank holding company or the affiliated bank is unconditionally liable
for the debt instrument. Commercial paper is usually sold on a discounted basis
and has a maturity at the time of issuance not exceeding nine months.
Commercial Paper Ratings
Commercial paper investments at the time of purchase will be rated
within the "A" major rating category by Standard & Poor's Ratings Group ("S&P")
or within the "Prime" major rating category by Moody's Investors Service, Inc.
("Moody's"), or, if not rated, issued by companies having an outstanding long-
term unsecured debt issue rated at least within the "A" rating category by S&P
or by Moody's. The money market investments in corporate bonds and debentures
(which must have maturities at the date of settlement of one year or less) must
be rated at the time of purchase at least within the "A" rating category by S&P
or by Moody's.
Commercial paper rated within the "A" category (highest quality) by S&P
is issued by entities which have liquidity ratios which are adequate to meet
cash requirements. Long-term senior debt is rated within the "A" category or
better, although in some cases credits within the BBB category 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. 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-l, A-2 or A-
3.(Those A-l issues determined to possess overwhelming safety characteristics
are denoted with a plus (+) sign: A-l+.)
The rating Prime is the highest commercial paper rating assigned by
Moody's. Among the factors considered by Moody's in assigning ratings are the
following: evaluation 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
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-l, Prime-2 or Prime-3.
- --------------------------------------------------------------------------------
QUALITY RATINGS OF CORPORATE BONDS AND PREFERRED STOCKS
- --------------------------------------------------------------------------------
Corporate Bonds
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.
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.
Preferred Stocks
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.
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.
- --------------------------------------------------------------------------------
TRUSTEES AND OFFICERS
- --------------------------------------------------------------------------------
The Funds are governed by a Board of Trustees, which is responsible for
generally overseeing the conduct of Fund business and for protecting the
interests of shareholders. The Trustees meet periodically throughout the year to
oversee the Funds' activities, review contractual arrangements with companies
that provide services to the Funds and review the Funds' performance.
The following is a list of the Trustees and executive officers of the
Trust. Each Trustee who is an "interested person" of the Trust, as defined by
the Investment Company Act of 1940, as amended (the "1940 Act"), is indicated by
an asterisk.
NAME AGE POSITION HELD
*Frederick R. Kobrick 56 President/Trustee
Jay H. Atlas 54 Trustee
Samuel L. Hayes, III 64 Trustee
Joseph P. Paster 54 Trustee
Sherri A. Brown 33 Treasurer
Richard A. Goldman 39 Secretary
The principal occupations of the Trustees and executive officers of the Trust
during the past five years are set forth below:
*Frederick R. Kobrick, 101 Federal Street, Boston, MA 02110, serves as a Trustee
and President of the Trust. His principal occupation currently is President of
Kobrick Funds LLC. Prior to becoming President of the predecessor to Kobrick
Funds LLC in 1997, he served from 1985 as a senior vice president and portfolio
manager for State Street Research & Management Company. He is also currently a
principal in certain private investment partnerships.
Jay H. Atlas, 2540 Route 130, Cranbury, NJ 08512, serves as a Trustee of the
Trust. His principal occupation is as Chief Executive Officer, President and
Director of Ariel Corporation. During the past five years, and prior to joining
Ariel Corporation, he has provided consulting services as a sole proprietor to
information technology businesses and served as a Vice President and General
Manager of Sales and Marketing for Convex Computer Corporation and as Vice
President of Computervision Corporation.
Samuel L. Hayes, III, Harvard University, Graduate School of Business
Administration, Soldiers Field Road, Boston, MA 02163, serves as a Trustee of
the Trust. His principal occupation is as a Professor at the Harvard Business
School. Professor Hayes has taught at Harvard since 1972.
Joseph P. Paster, John Hancock Place, Post Office Box 111, Boston, MA 02117,
serves as a Trustee of the Trust. His principal occupation is as a Vice
President of John Hancock Mutual Life Insurance Company, where he has served in
various capacities since 1967.
Sherri A. Brown, 101 Federal Street, Boston, MA 02110, serves as Treasurer of
the Trust. Her principal occupation currently is Chief Financial Officer of
Kobrick Funds LLC. Prior to becoming Chief Financial Officer in June 1999, she
was Director of Accounting at Vinik Asset Management Co. from November 1996 to
June 1999, an operations consultant with Deloitte & Touche LLP from February
1996 to November 1996 and a Vice President at Manchester Growth Fund L.P. from
June 1990 to February 1996.
Richard A. Goldman, 101 Federal Street, Boston, MA 02110, serves as Secretary of
the Trust. His principal occupation currently is Chief Operating Officer of
Kobrick Funds LLC. Prior to becoming Chief Operating Officer of the predecessor
to Kobrick Funds LLC in 1997, he was associated with Mintz, Levin, Cohn, Ferris,
Glovsky & Popeo, P.C. from August 1989 until October 1997.
The Audit Committee of the Trust is comprised of Messrs. Atlas and
Paster, both not interested persons of the Trust (as defined in the 1940 Act)
("Independent Trustees"), and considers matters relating to the scope and
results of the Funds' audits and serves as a forum in which the independent
accountants can raise any issues or problems identified in the audit with the
Board of Trustees. This Committee also reviews and monitors compliance with
stated investment objectives and policies and SEC and IRS regulations.
Each Independent Trustee (Messrs. Atlas, Hayes and Paster) will receive
an annual retainer of $4,000 and a $500 fee from each Fund for each Board
meeting and committee meeting attended and will be reimbursed for travel and
other expenses incurred in the performance of his duties. No other compensation
or pension or retirement benefits will be paid to or accrued by any other
officer or Trustee as part of the expenses of the Funds.
Compensation Table
During the fiscal year ended September 30, 1999, the Trustees of the
Trust received the compensation shown in the following table for serving as
Trustee of the Trust.
<TABLE>
<CAPTION>
Total
Pension or Compensation
Aggregate Retirement Estimated From Registrant
Compensation Benefits Annual and Fund
Name of Person, From Accrued as Part Benefits Upon Complex Paid to
Position Registrant of Fund Expenses Retirement Directors
- -------- ------------ ---------------- ------------- ---------------
<S> <C> <C> <C> <C>
Jay H. Atlas $10,000 -0- -0- $10,000
Trustee
Samuel L. Hayes, III $7,000 -0- -0- $7,000
Trustee
Joseph P. Paster $10,000 -0- -0- $10,000
Trustee
</TABLE>
As of September 30, 1999, to the Trust's knowledge, the following
persons owned of record or beneficially 5% or more of the outstanding shares of
the indicated Funds set forth below. In addition, each person that has direct or
indirect beneficial ownership of more than 25% of the outstanding shares of the
indicated Funds set forth below may be deemed to control that Fund as defined in
the 1940 Act.
As of September 30, 1999, the officers and Trustees of the Trust as a
group owned less than 1% of the outstanding shares of each Fund.
<TABLE>
<CAPTION>
FUND SHAREHOLDER AND ADDRESS OWNERSHIP PERCENTAGE
<S> <S> <C>
KOBRICK CAPITAL FUND
Cendant Corporation 41.60%
6 Sylvan Way
Parsippany, NJ 07054-3826
National Financial Services 18.20%
Corporation
200 Liberty Street
1 World Financial Center
New York, NY 10281-1003
Charles Schwab & Co., Inc. 11.70%
101 Montgomery Street
San Francisco, CA 94104-4122
KOBRICK EMERGING GROWTH FUND
Cendant Corporation 61.80%
6 Sylvan Way
Parsippany, NJ 07054-3826
Charles Schwab & Co., Inc. 15.30%
101 Montgomery Street
San Francisco, CA 94104-4122
National Financial Services 5.90%
Corporation
200 Liberty Street
1 World Financial Center
New York, NY 10281-1003
Kobrick Growth Fund
Cendant Corporation 80.57%
6 Sylvan Way
Parsippany, NJ 07054-3826
</TABLE>
- --------------------------------------------------------------------------------
THE INVESTMENT ADVISER
- --------------------------------------------------------------------------------
Kobrick Funds LLC (the "Investment Adviser") is the Trust's investment
adviser. The Investment Adviser is a wholly owned subsidiary of Nvest Companies,
L.P. ("Nvest"). Nvest has 18 affiliates and divisions and $127 billion in assets
under management (as of September 30, 1999). Under the terms of the Investment
Advisory Agreement between the Trust and the Investment Adviser, the Investment
Adviser manages the Funds' investments. On a monthly basis, each Fund pays the
Investment Adviser an annual advisory fee computed as 1.00% of the average of
the values of the net assets of the Fund as determined at the close of each
business day during the year. The gross advisory fees payable to the
predecessors to the Investment Adviser during the Funds' fiscal year ended
September 30, 1998, were $250,782 with respect to the Capital Fund, $239,480
with respect to the Emerging Growth Fund and $856 with respect to the Growth
Fund. Such advisory fees covered services rendered to the Capital Fund and the
Emerging Growth Fund for nine months and to the Growth Fund for one month. The
gross advisory fees payable to the predecessor to the Investment Adviser (and to
the Investment Adviser effective July 7, 1999) during the Funds' fiscal year
ended September 30, 1999, were $780,662, $381,071 and $295,301 with respect to
the Capital Fund, the Emerging Growth Fund and the Growth Fund, respectively.
Effective November 1, 1999, the Investment Adviser has given a binding
undertaking to the Funds to reduce its management fees and, if necessary, to
bear certain expenses associated with the Funds, through at least January 31,
2001, to the extent necessary to limit the Funds' expenses to the annual rates
set forth below. As set forth in the Prospectus, the Adviser shall be permitted
to recover expenses it has borne after November 1, 1999 in later periods to the
extent that a Fund's expenses fall below the annual rates set forth below;
provided, however, that a Fund is not obligated to pay any such deferred fees
more than one year after the end of any fiscal year in which the fee was
deferred.
Name of Fund Expense Cap
- ------------ -----------
Kobrick Capital Fund 1.50% for Class A shares
2.25% for Class B shares
2.25% for Class C shares
1.25% for Class Y shares
Kobrick Emerging Growth Fund 1.50% for Class A shares
2.25% for Class B shares
2.25% for Class C shares
1.25% for Class Y shares
Kobrick Growth Fund 1.40% for Class A shares
2.15% for Class B shares
2.15% for Class C shares
1.15% for Class Y shares
Prior to November 1, 1999, only one class of each Fund existed and the
Investment Adviser and the predecessors to the Investment Adviser agreed to
reduce the management fee, and if necessary, to bear certain expenses associated
with the Funds, to the extent necessary to limit the expenses to an annual rate
of 1.75%, 1.75% and 1.40% for the Capital Fund, Emerging Growth Fund and the
Growth Fund, respectively. The amount of these voluntary waivers and
reimbursements from the predecessors to the Investment Adviser (and the
Investment Adviser effective July 7, 1999) were as follows:
- --------------------------------------------------------------------------------
Fiscal period ended Fiscal year ended
9/30/98 9/30/99
- --------------------------------------------------------------------------------
Capital Fund $126,253 $17,427
- --------------------------------------------------------------------------------
Emerging Growth Fund $127,193 $126,146
- --------------------------------------------------------------------------------
Growth Fund $23,912 $206,885
- --------------------------------------------------------------------------------
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 operating expenses include
fees and expenses in connection with membership in investment company
organizations, brokerage fees and commissions, legal, auditing and accounting
expenses, expenses related to the distribution of the Funds' shares (which
expenses will be paid from the 12b-1 fees under the 12b-1 Plans; see
"Distribution Agreement and 12b-1 Plans"), insurance expenses, taxes or
governmental fees, fees and expenses of the custodian, transfer agent,
administrator, and accounting and pricing agent of the Funds, 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, and expenses of shareholders' meetings and
proxy solicitations. 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 compensation and
expenses of any officer, Trustee or employee of the Trust who is an officer,
director or employee of the Investment Adviser are paid by the Investment
Adviser.
The Investment Advisory Agreement provides that the Investment Adviser
shall furnish the Trust with suitable office space and facilities and such
management, investment advisory, statistical and research facilities and
services as may be required from time to time by the Trust and the Funds are
responsible for their other expenses and services. In view of the requirements
for management of the Funds' particular investment program, this fee is higher
than those charges for many other funds.
By its terms, the Trust's Investment Advisory Agreement will remain in
force until July 6, 2001 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 Investment Adviser. The Investment Advisory Agreement
automatically terminates in the event of its assignment, as defined by the 1940
Act and the rules thereunder.
The name "Kobrick" is the property right of the Investment Adviser. The
Investment Adviser may use the name "Kobrick" 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 name "Kobrick" if the Investment Adviser
ceases to be employed as the Trust's Investment Adviser.
- --------------------------------------------------------------------------------
DISTRIBUTION AGREEMENT AND 12b-1 PLANS
- --------------------------------------------------------------------------------
Under an agreement with the Trust, New England Funds, L.P., (the
"Distributor"), 399 Boylston Street, Boston, Massachusetts 02116, acts as the
principal distributor of each class of shares of the Funds. Under this
agreement, the Distributor is not obligated to sell a specific number of shares.
The Distributor bears the cost of making information about the Funds available
through advertising and other means and the cost of printing and mailing
Prospectuses to persons other than shareholders. Each Fund pays the cost of
registering and qualifying its shares under state and federal securities laws
and the distribution of Prospectuses to existing shareholders. The Distributor
also serves as the principal distributor for the New England Funds, described in
more detail on page 28. Nvest owns the entire limited partnership interest in
the Distributor.
The Distributor is compensated under each agreement through receipt of
the sales charges on Class A shares described below under "Net Asset Value and
Public Offering Price" and is paid by the Funds the service and distribution
fees described in the Prospectus. The Distributor may, at its discretion,
reallow the entire sales charge imposed on the sale of Class A shares of each
Fund to investment dealers from time to time. The SEC is of the view that
dealers receiving all or substantially all of the sales charge may be deemed
underwriters of a Fund's shares.
The Trust has adopted Rule 12b-1 plans (the "Plans") for each Fund's
Class A, Class B, and Class C shares which, among other things, permit the Funds
to pay the Distributor monthly fees out of net assets. These fees consist of a
service fee and a distribution fee. Any such fees that are paid by the
Distributor to securities dealers are known as "trail commissions." Pursuant to
Rule 12b-1 under the 1940 Act, the Plans were approved by the shareholders of
each class of each Fund, and (together with the related Distribution Agreement)
by the Board of Trustees, including a majority of 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 operations of the Plans or the
Distribution Agreement.
Under the Plans, each Fund pays the Distributor a monthly service fee at
an annual rate not to exceed 0.25% of the Fund's average daily net assets
attributable to the Class A, Class B and Class C shares. In the case of the
Class B shares, the Distributor pays investment dealers the first year's service
fee at the time of sale, in the amount of up to 0.25% of the amount invested. In
the case of Class C shares, the Distributor retains the first year's service fee
of 0.25% assessed against such shares. After the first year for Class A, Class B
and Class C shares, the Distributor may pay up to the entire amount of this fee
to securities dealers who are dealers of record with respect to the Fund's
shares, on a quarterly basis, unless other arrangements are made between the
Distributor and the securities dealer, for providing personal services to
investors in shares of the Fund and/or the maintenance of shareholder accounts.
To the extent that the Distributor's reimbursable expenses in any year
exceed the maximum amount payable under the Plan for that year, such expenses
may be carried forward for reimbursement in future years in which the Plan
remains in effect.
Each Fund's Class B and Class C shares also pay the Distributor a
monthly distribution fee at an annual rate not to exceed 0.75% of the average
net assets of the respective Fund's Class B and Class C shares. The Distributor
retains the 0.75% distribution fee assessed against both Class B and Class C
shares during the first year of investment. After the first year for Class B
shares, the Distributor retains the annual distribution fee as compensation for
its services as distributor of such shares. After the first year for Class C
shares, the Distributor may pay up to the entire amount of this fee to
securities dealers who are dealers of record with respect to the Fund's shares,
as distribution fees in connection with the sale of the Fund's shares on a
quarterly basis, unless other arrangements are made between the Distributor and
the securities dealer.
Each Plan may be terminated by vote of a majority of the Independent
Trustees, or by vote of a majority of the outstanding voting securities of the
relevant class of shares of the relevant Fund. Each Plan may be amended by vote
of the Trustees, including a majority of the Independent Trustees, cast in
person at a meeting called for that purpose. Any change in any Plan that would
materially increase the fees payable thereunder by the relevant class of shares
of the relevant Fund requires approval by vote of the holders of a majority of
such shares outstanding. The Trustees review quarterly a written report of such
costs and the purposes for which such costs have been incurred. For so long as a
Plan is in effect, selection and nomination of the Independent Trustees shall be
committed to the discretion of such Independent Trustees.
The Distributor has entered into selling agreements with investment
dealers, including New England Securities, an affiliate of the Distributor, for
the sale of the Funds' shares. The Distributor may, at its expense, pay an
amount not to exceed 0.50% of the amount invested to dealers who have selling
agreements with the Distributor. Class Y shares of the Funds may be offered by
registered representatives of New England Securities who are also employees of
New England Investment Associates, Inc. ("NEIA"), an indirect, wholly-owned
subsidiary of Nvest Companies. NEIA may receive compensation from the Investment
Adviser with respect to sales of Class Y shares.
The Distribution Agreement for any Fund may be terminated at any time on
60 days' written notice without payment of any penalty by the Distributor or by
vote of a majority of the outstanding voting securities of the relevant Fund or
by vote of a majority of the Independent Trustees.
The Distribution Agreements and the Plans will continue in effect for
successive one-year periods, provided that each such continuance is specifically
approved (i) by the vote of a majority of the Independent Trustees and (ii) by
the vote of a majority of the entire Board of Trustees cast in person at a
meeting called for that purpose or by a vote of a majority of the outstanding
securities of a Fund (or the relevant class, in the case of the Plans).
With the exception of the Distributor, New England Securities and their
direct and indirect parent companies, no interested person of the Trust or any
Trustee of the Trust had any direct or indirect financial interest in the
operation of the Plans or any related agreement.
Benefits to the Funds and their shareholders resulting from the Plans
are believed to include (1) enhanced shareholder service, (2) asset retention,
(3) enhanced bargaining position with third party service providers and
economies of scale arising from having higher asset levels and (4) portfolio
management opportunities arising from having an enhanced positive cash flow.
The distribution expenses incurred during the Fund's initial fiscal year
ended September 30, 1998 were $62,695 with respect to the Capital Fund, $59,870
with respect to the Emerging Growth Fund and $214 with respect to the Growth
Fund. Such distribution expenses were incurred for Class A only as the other
classes had not yet been established. These expenses were incurred with respect
to the Capital Fund and the Emerging Growth Fund for nine months and to the
Growth Fund for one month. The distribution expenses incurred during the Funds'
fiscal year ended September 30, 1999 were $195,165, $95,268 and $73,825 for the
Capital Fund, Emerging Growth Fund and Growth Fund, respectively.
The portion of the various fees and expenses for Class A, B, and with
respect to certain Funds, C shares that are paid (reallowed) to securities
dealers are shown below:
For Class A shares, the service fee is payable only to reimburse the
Distributor for amounts it pays in connection with providing personal services
to investors and/or maintaining shareholder accounts. To the extent that the
Distributor's reimbursable expenses in any year exceed the maximum amount
payable for that year under the relevant service plan, these expenses may be
carried forward for reimbursement in future years as long as the plan remains in
effect. The portion of the various fees and expenses for Class A shares of the
Funds that are paid to securities dealers are shown below:
<TABLE>
<CAPTION>
MAXIMUM MAXIMUM MAXIMUM MAXIMUM
SALES CHARGE REALLOWANCE OR FIRST YEAR FIRST YEAR
PAID BY INVESTORS COMMISSION SERVICE FEE COMPENSATION
(% OF (% OF (% OF (% OF
INVESTMENT OFFERING PRICE) OFFERING PRICE) NET INVESTMENT) OFFERING PRICE)
<S> <C> <C> <C> <C>
Less than $50,000 5.75% 5.00% 0.25% 5.25%
$50,000 - $99,999 4.50% 4.00% 0.25% 4.25%
$100,000 - $249,999 3.50% 3.00% 0.25% 3.25%
$250,000 - $499,999 2.50% 2.15% 0.25% 2.40%
$500,000 - $999,999 2.00% 1.70% 0.25% 1.95%
Investments of $1 million or more
First $3 Million none 1.00%(2) 0.25% 1.25%
Excess over $3 Million (1) none 0.50%(2) 0.25% 0.75%
Investments with no Sales Charge(3) none 0.00% 0.25% 0.25%
</TABLE>
(1) For investments by Retirement Plans (Plans under Sections 401(a) or 401(k)
of the Code with investments of $1 million or more that have 100 or more
eligible employees), the Distributor may pay a 0.50% commission for
investments in excess of $3 million and up to $10 million. Those Plans with
investments of over $10 million are eligible to purchase Class Y shares of
the funds, which are described in a separate prospectus.
(2) These commissions are not payable if the purchase represents the
reinvestment of a redemption made during the previous 12 calendar months.
(3) Refers to any investments made by municipalities, financial institutions,
trusts and affinity group members as described earlier in the Prospectus
under the section entitled "Ways to Reduce or Eliminate Sales Charges."
The Class B and Class C service fees are payable regardless of the
amount of the Distributor's related expenses. The portion of the various fees
and expenses for Class B and Class C shares of the Funds that are paid to
securities dealers are shown below:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
MAXIMUM REALLOWANCE MAXIMUM FIRST YEAR MAXIMUM FIRST YEAR
OR COMMISSION SERVICE FEE COMPENSATION
INVESTMENT (% OF OFFERING PRICE) (% OF OFFERING PRICE) (% OF OFFERING PRICE)
<S> <C> <C> <C>
All amounts for Class B 3.75% 0.25% 4.00%
All amounts for Class C 1.00% 0.00% 1.00%
- ------------------------------------------------------------------------------------------------
</TABLE>
Each Fund receives the net asset value next determined after an order is
received on sales of each class of shares. The sales charge is allocated between
the investment dealer and the Distributor. The Distributor receives the
Contingent Deferred Sales Charge (the "CDSC"). Proceeds from the CDSC on Class A
and Class C shares are paid to the Distributor and are used by the Distributor
to defray the expenses for services the Distributor provides the Trusts.
Proceeds from the CDSC on Class B shares are paid to the Distributor and are
remitted to FEP Capital, L.P. to compensate FEP Capital, L.P. for financing the
sale of Class B shares pursuant to certain Class B financing and servicing
agreements between the Distributor and FEP Capital, L.P. The Distributor may, at
its discretion, pay (reallow) the entire sales charge imposed on the sale of
Class A shares to investment dealers from time to time.
For new amounts invested at net asset value by an eligible governmental
authority, the Distributor may, at its expense, pay investment dealers a
commission of 0.025% of the average daily net assets of an account at the end of
each calendar quarter for up to one year. These commissions are not payable if
the purchase represents the reinvestment of redemption proceeds from any other
New England Fund or if the account is registered in street name.
The Distributor may, at its expense, provide additional concessions to
dealers who sell shares of the Funds, including: (i) full reallowance of the
sales charge of Class A shares, (ii) additional compensation with respect to the
sale of Class A, B and C shares and (iii) financial assistance programs to firms
who sell or arrange for the sale of Fund shares including, but not limited to,
remuneration for: the firm's internal sales contests and incentive programs,
marketing and sales fees, expenses related to advertising or promotional
activity and events, and shareholder record keeping or miscellaneous
administrative services. Payment for travel, lodging and related expenses may be
provided for attendance at New England Funds' seminars and conferences, e.g.,
due diligence meetings held for training and educational purposes. The payment
of these concessions and any other compensation offered will conform with state
and federal laws and the rules of any self-regulatory organization, such as the
National Association of Securities Dealers, Inc. The participation of such firms
in financial assistance programs is at the discretion of the firm.
Custodial Arrangements
State Street Bank and Trust Company ("State Street Bank"), 225 Franklin
Street, Boston, Massachusetts 02110, is the Trust's custodian. As such, State
Street Bank holds in safekeeping certificated securities and cash belonging to
each Fund and, in such capacity, is the registered owner of securities in
book-entry form belonging to each Fund. Upon instruction, State Street Bank
receives and delivers cash and securities of each Fund in connection with Fund
transactions and collects all dividends and other distributions made with
respect to Fund portfolio securities. State Street Bank also maintains certain
accounts and records of the Trusts and calculates the total net asset value,
total net income and net asset value per share of each Fund on a daily basis.
Independent Accountants
The Trust's independent accountant is PricewaterhouseCoopers LLP, 160
Federal Street, Boston, Massachusetts 02110. The independent accountants conduct
an annual audit of the Trust financial statements, assist in the preparation of
federal and state income tax returns and consult with the Trust as to matters of
accounting and federal and state income taxation. The information concerning
financial highlights in the Prospectuses, and financial statements contained in
the Funds' annual reports for the year ended September 30, 1999 and incorporated
by reference into this Statement, have been so included in reliance on the
reports of the Trust's independent accountants, given on the authority of such
firms as experts in auditing and accounting.
Other Arrangements
Pursuant to a contract between the Funds and Nvest Services Company,
Nvest Services Company acts as shareholder servicing and transfer agent for the
Funds and is responsible for services in connection with the establishment,
maintenance and recording of shareholder accounts, including all related tax and
other reporting requirements and the implementation of investment and redemption
arrangements offered in connection with the sale of the Funds' shares. The Funds
pay an annual per-account fee to Nvest Services Company for these services in
the amount of $19.70 for Capital, Growth and Emerging Growth Funds. Nvest
Services Company has subcontracted with State Street Bank for it to provide,
through its subsidiary, Boston Financial Data Services, Inc. ("BFDS"),
transaction processing, mail and other services. Prior to October 25, 1999, the
Funds contracted with State Street Bank for these services.
In addition, Nvest Services Company performs certain accounting and
administrative services for the Funds including: (i) expenses for personnel
performing bookkeeping, accounting, internal auditing and financial reporting
functions and clerical functions relating to the Fund, (ii) expenses for
services required in connection with the preparation of registration statements
and prospectuses, registration of shares in various states, shareholder reports
and notices, proxy solicitation material furnished to shareholders of the Fund
or regulatory authorities and reports and questionnaires for SEC compliance, and
(iii) registration, filing and other fees in connection with requirements of
regulatory authorities. For the services provided by Nvest Services Company to
the Trust hereunder, the Trust shall pay Nvest Services Company the greater of
the following: (1) an annual fee payable in equal monthly installments equal to
$70,000 per outstanding Fund; or (2) a monthly fee (accrued daily) based on the
Funds' average daily net assets during the calendar month, such fee being
calculated at the annualized rates set forth below:
ANNUALIZED FEE RATE
AVERAGE DAILY NET ASSETS AS A % OF AVERAGE DAILY NET ASSETS
$0 - $100,000,000 0.070%
$100,000,000 - $400,000,000 0.050%
Over $400,000,000 0.030%
Nvest Services Company, Inc. will also do business as Nvest Services
Company, Nvest Services Co. and New England Funds Service Company.
Marketing and Sales Support
Kobrick and New England Funds, L.P. have entered into an agreement,
whereby New England Funds L.P. is providing marketing and sales support services
for the following fee on certain assets:
ASSET RANGE (IN MILLIONS) FEES PAID TO NEW ENGLAND FUNDS, L.P.
(AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS)
$0 - 1,000 0.20%
1,000 - 2,000 0.35%
Over 2,000 0.30%
Year 2000
- ---------
The investment management services provided to each Fund by the
Investment Adviser and the services provided to shareholders by Nvest Services
Company, Inc. depend on the smooth functioning of their computer systems. Many
computer software systems in use today cannot recognize the year 2000, but
revert to 1900 or some other date, due to the manner in which dates were encoded
and calculated. That failure could have a negative impact on a Fund's
operations, including the handling of securities trades, pricing and account
services. The Investment Adviser, and Nvest Services Company, Inc. have advised
each Fund that they have been reviewing all of their computer systems and
actively working on necessary changes to their systems to prepare for the year
2000 and expect that their systems will be compliant before that date. In
addition, the Investment Adviser has been advised by the Fund's custodian,
transfer agent and accounting service agent that they are also in the process of
modifying their systems with the same goal. There can, however, be no assurance
that the Investment Adviser, Nvest Services Company, Inc. or any other service
provider will be successful, or that interaction with other non-complying
computer systems will not impair Fund services at that time. In addition, the
ability of issuers to make timely payments of interest and principal or to
continue their operations or services may be impaired by then adequate
preparation of their computer systems for the year 2000. This may adversely
affect the market values of securities of specific issuers or of securities
generally if the inadequacy of preparation is perceived as widespread or as
affecting trading markets.
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SECURITIES TRANSACTIONS
- --------------------------------------------------------------------------------
The Investment Adviser's policy is to seek for its clients, including
the Funds, what in the Investment Adviser's judgment will be the best overall
execution of purchase or sale orders and the most favorable net prices in
securities transactions consistent with its judgment as to the business
qualifications of the various broker or dealer firms with whom the Investment
Adviser may do business, and the Investment Adviser may not necessarily choose
the broker offering the lowest available commission rate. Decisions with respect
to the market where the transaction is to be completed, to the form of
transaction (whether principal or agency) and to the allocation of orders among
brokers or dealers are made in accordance with this policy. In selecting brokers
or dealers to effect portfolio transactions, consideration is given to their
proven integrity and financial responsibility, their demonstrated execution
experience and capabilities both generally and with respect to particular
markets or securities, the competitiveness of their commission rates in agency
transactions (and their net prices in principal transactions), their willingness
to commit capital, and their clearance and settlement capability. The Investment
Adviser makes every effort to keep informed of commission rate structures and
prevalent bid/ask spread characteristics of the markets and securities in which
transactions for the Funds occur. Against this background, the Investment
Adviser evaluates the reasonableness of a commission or a net price with respect
to a particular transaction by considering such factors as difficulty of
execution or security positioning by the executing firm. The Investment Adviser
may or may not solicit competitive bids based on its judgment of the expected
benefit or harm to the execution process for that transaction.
When it appears that a number of firms could satisfy the required
standards in respect of a particular transaction, consideration may also be
given to services other than execution services which certain of such firms have
provided in the past or may provide in the future. Negotiated commission rates
and prices, however, are based upon the Investment Adviser's judgment of the
rate which reflects the execution requirements of the transaction without regard
to whether the broker provides services in addition to execution. Among such
other services are the supplying of supplemental investment research; general
economic, political and business information; analytical and statistical data;
relevant market information, quotation equipment and services; reports and
information about specific companies, industries and securities; purchase and
sale recommendations for stocks and bonds; portfolio strategy services;
historical statistical information; market data services providing information
on specific issues and prices; financial publications; proxy voting data and
analysis services; technical analysis of various aspects of the securities
markets, including technical charts; computer hardware used for brokerage and
research purposes; computer software and databases, including those used for
portfolio analysis and modeling; and portfolio evaluation services and relative
performance of accounts.
Certain nonexecution services provided by broker-dealers may in turn be
obtained by the broker-dealers from third parties who are paid for such services
by the broker-dealers.
The Investment Adviser regularly reviews and evaluates the services
furnished by broker-dealers. Some services may be used for research and
investment decision-making purposes, and also for marketing or administrative
purposes. Under these circumstances, the Investment Adviser allocates the cost
of such services to determine the appropriate proportion of the cost which is
allocable to purposes other than research or investment decision-making and is
therefore paid directly by the Investment Adviser. Some research and execution
services may benefit the Investment Adviser's clients as a whole, while others
may benefit a specific segment of clients. Not all such services will
necessarily be used exclusively in connection with the accounts which pay the
commissions to the broker-dealer producing the services.
The Investment Adviser has no fixed agreements or understanding with any
broker-dealer as to the amount of brokerage business which that firm may expect
to receive for services supplied to the Investment Adviser or otherwise. There
may be, however, understandings with certain firms that in order for such firms
to be able to continuously supply certain services, they need to receive
allocation of a specified amount of brokerage business. These understandings are
honored to the extent possible in accordance with the Investment Adviser's
obligation to best execution and the policies set forth above.
To the extent permitted by applicable law, and in all instances subject
to the foregoing policy of best execution, the Investment Adviser may allocate
brokerage transactions in a manner that takes into account the sale of shares of
one or more Funds distributed by New England Funds, L.P. In addition, the
Investment Adviser may allocate brokerage transactions to broker-dealers
(including affiliates of the Distributor) that have entered into arrangements in
which the broker-dealer allocates a portion of commissions paid by a Fund toward
the reduction of that Fund's expenses, subject to the requirement that the
Investment Adviser will seek best execution.
It is not the Investment Adviser's policy to intentionally pay a firm a
brokerage commission higher that that which another firm would charge for
handling the same transaction in recognition of services (other than execution
services), provided, however, that the Investment Adviser is aware that this is
an area where differences of opinion as to fact and circumstances may exist, and
in such circumstances, if any, the Investment Adviser relies on the provisions
of Section 28(e) of the Securities Act of 1934, to the extent applicable.
The aggregate brokerage commissions paid by each Fund during the fiscal
years ended September 30, 1998 and 1999 were as set forth below:
1998 1999
---- ----
Kobrick Capital Fund $232,149 $1,031,352
Kobrick Emerging Growth Fund $183,965 $279,842
Kobrick Growth Fund $811 $320,297
Code of Ethics
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The Trust and the Investment Adviser have each adopted a Code of Ethics
under Rule 17j-1 of the 1940 Act. The Code significantly restricts the personal
investing activities of certain officers and investment personnel of the
Investment Adviser, including having to 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,
certain officers and investment personnel may not purchase or sell any security
which, at that time, is being purchased or sold (as the case may be), or to the
knowledge of such person, is being considered for purchase or sale, by any of
the Funds. The substantive restrictions applicable to certain officers and
investment personnel of the Investment 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 certain officers and
investment personnel of the Investment Adviser within periods of trading by any
of the Funds in the same (or equivalent) security.
Grouping of Securities Transactions
- -----------------------------------
Messrs. Kobrick and Nance, in addition to serving as senior officers of
the Investment Adviser, are also the portfolio managers (Mr. Kobrick is also a
principal) in private investment partnerships, and may act in that capacity with
respect to other similar investment partnerships. One or more of such accounts,
may from time to time, purchase or sell securities or have securities under
consideration for purchase or sale that are also being sold or purchased or
considered for sale or purchase by the Funds. In those instances where
securities transactions are carried on at the same time on behalf of any or all
of the Funds and such other accounts, transactions in such securities for such
accounts may be grouped with securities transactions carried out on behalf of
the Funds. The practice of grouping orders of various accounts will be followed
to get the benefit of best prices or commission rates. In certain cases where
the aggregate order may be executed in a series of transactions at various
prices the transactions will be allocated as to amount and price in a manner
considered equitable to each account so that each receives, to the extent
practicable, the average price for such transactions. Transactions will not be
grouped unless it is the judgment of the Investment Adviser that such
aggregation is consistent with its duty to seek best execution (which includes
the duty to seek best price) for the Funds and in each case the books and
records of the Funds and any such other account will separately reflect, for
each account, the orders of which are aggregated and the securities held by and
bought and sold for that account.
- --------------------------------------------------------------------------------
PORTFOLIO TURNOVER
- --------------------------------------------------------------------------------
A Fund's portfolio turnover rate is calculated by dividing the lesser of
purchases or sales of portfolio securities, excluding securities having maturity
dates at acquisition of one year or less, 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, thereby decreasing the Funds' total return. The Investment Adviser
anticipates that the portfolio turnover rate for the Growth Fund normally will
be in the range of 100% - 200% and for each of the Capital Fund and the Emerging
Growth Fund the portfolio turnover normally will be in the range of 150% - 300%.
The portfolio turnover rate for September 30, 1999 was significantly higher for
each of the Funds due to the unprecedented volatility in the stock market during
the 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 Investment Adviser believes that
portfolio changes are appropriate.
- --------------------------------------------------------------------------------
HOW TO BUY SHARES
- --------------------------------------------------------------------------------
The procedures for purchasing shares of the Funds are summarized in the
Prospectuses. All purchases made by check should be in U.S. dollars and made
payable to New England Funds (Kobrick Funds for Class Y shares), or, in the case
of a retirement account, the custodian or trustee. Banks may charge a fee for
transmitting funds by wire. With respect to shares purchased by federal funds,
shareholders should bear in mind that wire transfers may take two or more hours
to complete.
For purchase of Fund shares by mail, the settlement date is the first
business day after receipt of the check by the transfer agent so long as it is
received by the close of regular trading of the New York Stock Exchange on a day
when the Exchange is open; otherwise the settlement date is the following
business day. For telephone orders, the settlement date is the third business
day after the order is made.
Shares may also be purchased either in writing, by phone, by electronic
funds transfer using Automated Clearing House ("ACH"), or by exchange as
described in the Prospectuses through firms that are members of the National
Association of Securities Dealers, Inc. and that have selling agreements with
the Distributor. You may also use New England Funds Personal Access Line(TM)
(800-225-5478, press 1) or New England Funds Web site (www.mutualfunds.com) to
purchase Fund Class A, B and C shares. You may call the Kobrick Funds
(1-888-523-8631) to purchase Fund Class Y shares. For more information, see the
section entitled "Shareholder Services" in this Statement.
The Distributor may at its discretion accept a telephone order for the
purchase of $5,000 or more of a Fund's Class A, B and C shares. Payment must be
received by the Distributor within three business days following the transaction
date or the order will be subject to cancellation. Telephone orders must be
placed through the Distributor or your investment dealer.
If you wish transactions in your account to be effected by another
person under a power of attorney from you, special rules as summarized in the
Prospectus may apply.
- --------------------------------------------------------------------------------
NET ASSET VALUE AND PUBLIC OFFERING PRICE
- --------------------------------------------------------------------------------
The method for determining the public offering price and net asset value
per share is summarized in the Prospectus.
The total net asset value of each class of shares of a Fund (the excess
of the assets of such Fund attributable to such class over the liabilities
attributable to such class) is determined as of the close of regular trading
(normally 4:00 p.m. Eastern time) on each day that the New York Stock Exchange
(the "NYSE") is open for trading. The observed holidays that the NYSE is
expected to be closed are New Year's Day, Martin Luther King Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day
and Christmas Day.
Securities listed on a national securities exchange or on the NASDAQ
National Market System are valued at their last sale price, or, if there is no
reported sale during the day, the closing bid price. Unlisted securities traded
in the over-the-counter market are valued at the last reported sale price, or,
if a last sale price is not readily available, at the last reported bid price
quoted by brokers that make a market in the securities. Securities traded in
more than one market are valued using the most representative market. Short-term
investments with maturities less than 60 days are valued at amortized cost which
approximates market value. Options, interest rate futures and options thereon
that are traded on exchanges are valued at their last sale price as of the close
of such exchanges. Securities for which current market quotations are not
readily available and all other assets are taken at fair value as determined in
good faith by the Board of Trustees, although the actual calculations may be
made by persons acting pursuant to the direction of the board.
Generally, trading in foreign government securities and other
fixed-income securities, as well as trading in equity securities in markets
outside the United States, is substantially completed each day at various times
prior to the close of the NYSE. Securities traded on a non-U.S. exchange will be
valued at their last sale price (or the last reported bid price, if there is no
reported sale during the day), on the exchange on which they principally trade,
as of the close of regular trading on such exchange except for securities traded
on the London Stock Exchange ("British Equities"). British Equities will be
valued at the mean between the last bid and last asked prices on the London
Stock Exchange. The value of other securities principally traded outside the
United States will be computed as of the completion of substantial trading for
the day on the markets on which such securities principally trade. Securities
principally traded outside the United States will generally be valued several
hours before the close of regular trading on the NYSE, generally 4:00 p.m.
Eastern time, when the Funds compute the net asset value of their shares.
Occasionally, events affecting the value of securities principally traded
outside the United States may occur between the completion of substantial
trading of such securities for the day and the close of the NYSE, which events
will not be reflected in the computation of a Fund's net asset value. If events
materially affecting the value of a Fund's securities occur during such period,
then these securities will be valued at their fair value as determined in good
faith by or in accordance with procedures approved by the Trusts' Trustees. The
effect of fair value pricing is that securities may not be priced on the basis
of quotations from the primary market in which they are traded but rather, may
be priced by another method that the Board of Trustees believes accurately
reflects fair value.
Trading in some of the portfolio securities of the Funds may take place
in various markets outside the United States on days and at times other than
when the NYSE is open for trading. Therefore, the calculation of these Funds'
net asset value does not take place at the same time as the prices of many of
its portfolio securities are determined, and the value of the Fund's portfolio
may change on days when the Fund is not open for business and its shares may not
be purchased or redeemed.
The per share net asset value of a class of a Fund's shares is computed
by dividing the number of shares outstanding into the total net asset value
attributable to such class. The public offering price of a Class A share of a
Fund is the net asset value per share next-determined after a properly completed
purchase order is accepted by Nvest Services Company or State Street Bank, plus
a sales charge as set forth in the Fund's Prospectus. The public offering price
of a Class B, C or Y share of a Fund is the next-determined net asset value.
- --------------------------------------------------------------------------------
REDUCED SALES CHARGES
CLASS A SHARES ONLY
- --------------------------------------------------------------------------------
The following special purchase plans are summarized in the Prospectuses. See
page 30 for a description of the New England Funds.
CUMULATIVE PURCHASE DISCOUNT. A Fund shareholder may make an initial or
an additional purchase of Class A shares and be entitled to a discount on the
sales charge payable on that purchase. This discount will be available if the
shareholder's "total investment" in the Fund reaches the breakpoint for a
reduced sales charge in the table under "How Sales Charges are Calculated-Class
A shares" in the Prospectus. The total investment is determined by adding the
amount of the additional purchase, including sales charge, to the current public
offering price of all series and classes of shares of the Kobrick Funds and the
other New England Funds held by the shareholder in one or more accounts. If the
total investment exceeds the breakpoint, the lower sales charge applies to the
entire additional investment even though some portion of that additional
investment is below the breakpoint to which a reduced sales charge applies. For
example, if a shareholder who already owns shares of one or more Kobrick Funds
or of the other New England Funds with a value at the current public offering
price of $30,000 makes an additional purchase of $20,000 of Class A shares of
another Kobrick Fund or New England Fund, the reduced sales charge of 4.5% of
the public offering price will apply to the entire amount of the additional
investment.
LETTER OF INTENT. A Letter of Intent (a "Letter"), which can be effected
at any time, is a privilege available to investors which reduces the sales
charge on investments in Class A shares. Ordinarily, reduced sales charges are
available for single purchases of Class A shares only when they reach certain
breakpoints (e.g., $50,000, $100,000, etc.). By signing a Letter, a shareholder
indicates an intention to invest enough money in Class A shares within 13 months
to reach a breakpoint. If the shareholder's intended aggregate purchases of all
series and classes of the Kobrick Funds or New England Funds over a defined
13-month period will be large enough to qualify for a reduced sales charge, the
shareholder may invest the smaller individual amounts at the public offering
price calculated using the sales load applicable to the 13-month aggregate
investment.
A Letter is a non-binding commitment, the amount of which may be
increased, decreased or canceled at any time. The effective date of a Letter is
the date it is received in good order by the Distributor, or, if communicated by
a telephone exchange or order, at the date of telephoning provided a signed
Letter, in good order, reaches the Distributor within five business days.
A reduced sales charge is available for aggregate purchases of all
series and classes of shares of the Kobrick Funds or New England Funds pursuant
to a written Letter effected within 90 days after any purchase. In the event the
account was established prior to 90 days before the effective date of the
Letter, the account will be credited with the Rights of Accumulation ("ROA")
towards the breakpoint level that will be reached upon the completion of the 13
months' purchases. The ROA credit is the value of all shares held as of the
effective dates of the Letter based on the "public offering price computed on
such date."
The cumulative purchase discount, described above, permits the aggregate
value at the current public offering price of Class A shares of any accounts
with the Kobrick Funds or New England Funds held by a shareholder to be added to
the dollar amount of the intended investment under a Letter, provided the
shareholder lists them on the account application.
State Street Bank will hold in escrow shares with a value at the current
public offering price of 5% of the aggregate amount of the intended investment.
The amount in escrow will be released when the commitment stated in the Letter
is completed. If the shareholder does not purchase shares in the amount
indicated in the Letter, the shareholder agrees to remit to State Street Bank
the difference between the sales charge actually paid and that which would have
been paid had the Letter not been in effect, and authorizes State Street Bank to
redeem escrowed shares in the amount necessary to make up the difference in
sales charges. Reinvested dividends and distributions are not included in
determining whether the Letter has been completed.
COMBINING ACCOUNTS. Purchases of all series and classes of the Kobrick
Funds or the New England Funds (excluding shares of New England Cash Management
Trust and New England Tax Exempt Money Market Trust [the "Money Market Funds"]
unless the shares were purchased through an exchange of another Kobrick Fund or
New England Fund) by or for an investor, the investor's spouse, parents,
children, siblings, in-laws, grandparents or grandchildren and any other account
of the investor, including sole proprietorships, in any Fund or New England Fund
may be treated as purchases by a single individual for purposes of determining
the availability of a reduced sales charge. Purchases for a single trust estate
or a single fiduciary account may also be treated as purchases by a single
individual for this purpose, as may purchases on behalf of a participant in a
tax-qualified retirement plan and other employee benefit plans, provided that
the investor is the sole participant in the plan. Any other group of individuals
acceptable to the Distributor may also combine accounts for such purpose. The
values of all accounts are combined to determine the sales charge.
COMBINING WITH OTHER SERIES AND CLASSES OF THE KOBRICK AND NEW ENGLAND
FUNDS. A shareholder's total investment for purposes of the cumulative purchase
discount includes the value at the current public offering price of any shares
of series and classes of the Kobrick Funds or New England Funds that the
shareholder owns (which excludes shares of the Money Market Funds unless such
shares were purchased by exchanging shares of any other Kobrick Fund or New
England Fund). Shares owned by persons described in the preceding paragraph may
also be included.
UNIT HOLDERS OF UNIT INVESTMENT TRUSTS. Unit investment trust
distributions may be invested in Class A shares of any Fund at a reduced sales
charge of 1.50% of the public offering price (or 1.52% of the net amount
invested); for large purchases on which a sales charge of less than 1.50% would
ordinarily apply, such lower charge also applies to investments of unit
investment trust distributions.
KOBRICK FUND SHAREHOLDERS AS OF OCTOBER 31, 1999 AND CLIENTS OF THE
INVESTMENT ADVISER. Accounts open as of October 31, 1999 that became Class A
shareholders of the relevant Fund and are not subject to applicable sales
charges and may exchange into Class A shares of another Fund or New England Fund
without the imposition of a sales charge. No front-end sales charge or
contingent deferred sales charge applies to investments of $25,000 or more in
Class A shares of the Funds by (1) clients of an adviser or subadviser to any
series of the Kobrick Funds or New England Funds; any director, officer or
partner of a client of an adviser or subadviser to any series of the Kobrick
Funds or New England Funds; and the spouse, parents, children, siblings,
in-laws, grandparents or grandchildren of the foregoing; (2) any individual who
is a participant in a Keogh or IRA Plan under a prototype of an adviser or
subadviser to any series of the Kobrick Funds or New England Funds if at least
one participant in the plan qualifies under category (1) above; and (3) an
individual who invests through an IRA and is a participant in an employee
benefit plan that is a client of an adviser or subadviser to any series of the
Kobrick Funds or New England Funds. Any investor eligible for this arrangement
should so indicate in writing at the time of the purchase.
OFFERING TO EMPLOYEES OF METLIFE AND ASSOCIATED ENTITIES. There is no
front-end sales charge, CDSC or initial investment minimum related to
investments in Class A shares of the Kobrick Funds by any of the advisers or
subadvisers of the Kobrick Funds or the New England Funds, New England Funds,
L.P. or any other company affiliated with New England Financial or Metropolitan
Life Insurance Company ("MetLife"); current and former directors and Trustees of
the Kobrick Funds or New England Funds; agents and general agents of New England
Financial or MetLife and their insurance company subsidiaries; current and
retired employees of such agents and general agents; registered representatives
of broker-dealers who have selling arrangements with New England Funds, L.P.;
the spouse, parents, children, siblings, in-laws, grandparents or grandchildren
of the persons listed above and any trust, pension, profit sharing or other
benefit plans for any of the foregoing persons and any separate account of New
England Financial or MetLife or any insurance company affiliated with New
England Financial or MetLife.
ELIGIBLE GOVERNMENTAL AUTHORITIES. There is no sales charge or
contingent deferred sales charge related to investments in Class A shares of any
Fund by any state, county or city or any instrumentality, department, authority
or agency thereof that has determined that a Fund is a legally permissible
investment and that is prohibited by applicable investment laws from paying a
sales charge or commission in connection with the purchase of shares of any
registered investment company.
INVESTMENT ADVISERY ACCOUNTS. Shares of any Fund may be purchased at net
asset value by investment advisers, financial planners or other intermediaries
who place trades for their own accounts or the accounts of their clients and who
charge a management, consulting or other fee for their services; clients of such
investment advisers, financial planners or other intermediaries who place trades
for their own accounts if the accounts are linked to the master account of such
investment adviser, financial planner or other intermediary on the books and
records of the broker or agent; and retirement and deferred compensation plans
and trusts used to fund those plans, including, but not limited to, those
defined in Sections 401(a), 403(b), 401(k) and 457 of the Code and "rabbi
trusts." Investors may be charged a fee if they effect transactions through a
broker or agent.
CERTAIN BROKER-DEALERS AND FINANCIAL SERVICES ORGANIZATIONS. Shares of
any Fund also may be purchased at net asset value through certain broker-dealers
and/or financial services organizations without any transaction fee. Such
organizations may also receive compensation based upon the average value of the
Fund shares held by their customers. This compensation may be paid by Kobrick
out of its own assets, and/or be paid indirectly by the Fund in the form of
servicing, distribution or transfer agent fees.
CERTAIN RETIREMENT PLANS. Shares of the Funds are available at net asset
value for investments by participant-directed 401(a) and 401(k) plans that have
100 or more eligible employees or by retirement plans whose third party
administrator or dealer has entered into a service agreement with the
Distributor to perform certain administrative services, subject to certain
operational and minimum size requirements specified from time to time by the
Distributor. This compensation may be paid indirectly by the Fund in the form of
service and/or distribution fees.
BANK TRUST DEPARTMENTS OR TRUST COMPANIES. Shares of the Funds are
available at net asset value for investments by non-discretionary and
non-retirement accounts of bank trust departments or trust companies, but are
unavailable if the trust department or institution is part of an organization
not principally engaged in banking or trust activities.
SHAREHOLDERS OF REICH AND TANG GOVERNMENT SECURITIES TRUST. Shareholders
of Reich and Tang Government Securities Trust may exchange their shares of that
fund for Class A shares of the Funds at net asset value and without imposition
of a sales charge.
The reduction or elimination of the sales charges in connection with
special purchase plans described above reflects the absence or reduction of
expenses associated with such sales.
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SHAREHOLDER SERVICES
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The Kobrick Funds are organized as separate series of the Kobrick
Investment Trust, a Massachusetts business trust. The Kobrick Funds are
distributed by New England Funds, L.P., which also serves as the principal
distributor for the New England Funds. As a shareholder of one or more of the
Kobrick Funds, you are entitled to the same benefits and privileges as a
shareholder of the New England Funds, including participating in numerous
shareholder services and plans and having the ability to exchange into or out of
any New England Fund (subject to applicable restrictions). For purchasers of
Class Y shares, certain services may be different. Such purchasers should call
Kobrick Funds at 1-888-523-8631.
Open Accounts
A shareholder's investment is automatically credited to an open account
maintained for the shareholder by State Street Bank. Following each transaction
in the account, a shareholder will receive a confirmation statement disclosing
the current balance of shares owned and the details of recent transactions in
the account. After the close of each calendar year, State Street Bank will send
each shareholder a statement providing federal tax information on dividends and
distributions paid to the shareholder during the year. This statement should be
retained as a permanent record. Nvest Services Company may charge a fee for
providing duplicate information.
The open account system provides for full and fractional shares
expressed to three decimal places and, by making the issuance and delivery of
stock certificates unnecessary, eliminates problems of handling and safekeeping,
and the cost and inconvenience of replacing lost, stolen, mutilated or destroyed
certificates. Certificates will not be issued for Class B, Class C or Class Y
shares.
The costs of maintaining the open account system are paid by the Funds
and no direct charges are made to shareholders. Although the Funds have no
present intention of making such direct charges to shareholders, they each
reserve the right to do so. Shareholders will receive prior notice before any
such charges are made.
Automatic Investment Plans (Class A, B and C Shares)
Subject to each Fund's investor eligibility requirements, investors may
automatically invest in additional shares of a Fund on a monthly basis by
authorizing the Distributor to draw checks on an investor's bank account. The
checks are drawn under the Investment Builder Program, a program designed to
facilitate such periodic payments, and are forwarded to Nvest Services Company
for investment in the Fund. A plan may be opened with an initial investment of
$100 or more and thereafter regular monthly checks of $100 or more will be drawn
on the investor's account. The reduced minimum initial investment pursuant to an
automatic investment plan is referred to in the Prospectus. An Investment
Builder application must be completed to open an automatic investment plan. An
application may be found in the Prospectus or may be obtained by calling the
Distributor at 800-225-5478 or your investment dealer.
This program is voluntary and may be terminated at any time by the
Kobrick Funds upon notice to existing plan participants.
The Investment Builder Program plan may be discontinued at any time by
the investor by written notice to Nvest Services Company, which must be received
at least five business days prior to any payment date. The plan may be
discontinued by State Street Bank at any time without prior notice if any check
is not paid upon presentation; or by written notice to you at least thirty days
prior to any payment date. State Street Bank is under no obligation to notify
shareholders as to the nonpayment of any check.
Retirement Plans Offering Tax Benefits (Class A, B and C Shares)
The federal tax laws provide for a variety of retirement plans offering
tax benefits. These plans may be funded with shares of the Funds or with certain
other investments. The plans include H.R. 10 (Keogh) plans for self-employed
individuals and partnerships, individual retirement accounts (IRAs), corporate
pension trust and profit sharing plans, including 401(k) plans, and retirement
plans for public school systems and certain tax-exempt organizations, i.e.,
403(b) plans.
The reduced minimum initial investment available to retirement plans
offering tax benefits is referred to in the Prospectus. For these plans, initial
investments in a Fund must be at least $250 for each participant in corporate
pension and profit sharing plans and Keogh plans, at least $500 for IRAs and at
least $100 for any subsequent investments. There is a special initial and
subsequent investment minimum of $25 for payroll deduction investment programs
for 401(k), SARSEP, SEP, SIMPLE Plans, 403(b) and certain other retirement
plans. Income dividends and capital gain distributions must be reinvested
(unless the investor is over age 59 1/2 or disabled). Plan documents and further
information can be obtained from the Distributor.
An investor should consult a competent tax or other adviser as to the
suitability of a Fund's shares as a vehicle for funding a plan, in whole or in
part, under the Employee Retirement Income Security Act of 1974, as amended
("ERISA") and as to the eligibility requirements for a specific plan and its
state as well as federal tax aspects.
Certain retirement plans may also be eligible to purchase Class Y
shares. See the Prospectus relating to Class Y shares.
Systematic Withdrawal Plans (Class A, B and C Shares)
An investor owning a Fund's shares having a value of $5,000 or more at
the current public offering price may establish a Systematic Withdrawal Plan
providing for periodic payments of a fixed or variable amount. An investor may
terminate the plan at any time. A form for use in establishing such a plan is
available from the servicing agent or your investment dealer. Withdrawals may be
paid to a person other than the shareholder if a signature guarantee is
provided. Please consult your investment dealer or the Distributor.
A shareholder under a Systematic Withdrawal Plan may elect to receive
payments monthly, quarterly, semiannually or annually for a fixed amount of not
less than $50 or a variable amount based on (1) the market value of a stated
number of shares, (2) a specified percentage of the account's market value or
(3) a specified number of years for liquidating the account (e.g., a 20-year
program of 240 monthly payments would be liquidated at a monthly rate of 1/240,
1/239, 1/238, etc.). The initial payment under a variable payment option may be
$50 or more.
In the case of shares subject to a CDSC, the amount or percentage you
specify may not, on an annualized basis, exceed 10% of the value, as of the time
you make the election, of your account with the Fund with respect to which you
are electing the Plan. Withdrawals of Class B shares of a Fund under the Plan
will be treated as redemptions of shares purchased through the reinvestment of
Fund distributions, or, to the extent such shares in your account are
insufficient to cover Plan payments, as redemptions from the earliest purchased
shares of such Fund in your account. No CDSC applies to a redemption pursuant to
the Plan.
All shares under the Plan must be held in an open (uncertificated)
account. Income dividends and capital gain distributions will be reinvested
(without a sales charge in the case of Class A shares) at net asset value
determined on the record date.
Since withdrawal payments represent proceeds from the liquidation of
shares, withdrawals may reduce and possibly exhaust the value of the account,
particularly in the event of a decline in net asset value. Accordingly, a
shareholder should consider whether a Systematic Withdrawal Plan and the
specified amounts to be withdrawn are appropriate in the circumstances. The
Funds and the Distributor make no recommendations or representations in this
regard. It may be appropriate for a shareholder to consult a tax adviser before
establishing such a plan. The Funds may modify or terminate this program at any
time.
It may be disadvantageous for a shareholder to purchase on a regular
basis additional Fund shares with a sales charge while redeeming shares under a
Systematic Withdrawal Plan. Accordingly, the Funds and the Distributor do not
recommend additional investments in Class A shares by a shareholder who has a
withdrawal plan in effect and who would be subject to a sales load on such
additional investments.
Because of statutory restrictions this plan is not available to pension
or profit-sharing plans, IRAs or 403(b) plans that have State Street Bank as
trustee.
Dividend Diversification Program (Class A, B and C shares)
You may also establish a Dividend Diversification Program, which allows
you to have all dividends and any other distributions automatically invested in
shares of the same class of another New England Fund, subject to the investor
eligibility requirements of that other fund and to state securities law
requirements. Shares will be purchased at the selected fund's net asset value
(without a sales charge or CDSC) on the dividend record date. A dividend
diversification account must be in the same registration (shareholder name) as
the distributing fund account and, if a new account in the purchased fund is
being established, the purchased fund's minimum investment requirements must be
met. Before establishing a Dividend Diversification Program into any other New
England Fund, you must obtain and carefully read a copy of that fund's
Prospectus.
Exchange Privilege
A shareholder may exchange the shares of any Kobrick Fund or New England
Fund (except for Class A shares of the New England Intermediate Term Tax Free
Fund of California only if such shares have been held for at least six months)
for shares of the same class of any other Kobrick Fund or New England Fund
(subject to the investor eligibility requirements, if any, of the Kobrick Fund
or New England Fund into which the exchange is being made) on the basis of
relative net asset values at the time of the exchange without any sales charge.
An exchange of shares in one fund for shares of another fund is a taxable event
on which gain or loss may be recognized. When an exchange is made from the Class
A, Class B or Class C shares of one fund to the same class of shares of another
fund, the shares received by the shareholder in the exchange will have the same
age characteristics as the shares exchanged. The age of the shares determines
the expiration of the CDSC and, for the Class B shares, the conversion date. If
you own Class A, Class B or Class C shares, you may also elect to exchange your
shares of any fund for shares of the same class of the Money Market Funds. On
all exchanges of Class A or C shares subject to a CDSC and Class B shares into
the Money Market Funds, the exchange stops the aging period relating to the
CDSC, and, for Class B shares only, conversion to Class A shares. The aging
period resumes only when an exchange is made back into Class A, B, or C shares
of a Fund. In addition, you may also exchange Class A shares of the Money Market
Funds that have not previously paid a sales charge to Class B or Class C shares
of any Kobrick Fund or New England Fund. If you own Class Y shares, you may
exchange those shares for Class Y shares of other funds or for Class A shares of
the Money Market Funds. These options are summarized in the Prospectus. An
exchange may be effected, provided that neither the registered name nor address
of the accounts are different and provided that a certificate representing the
shares being exchanged has not been issued to the shareholder, by (1) a
telephone request to the Kobrick Funds or Nvest Services Company at 800-225-5478
(1-888-523-8631 for Class Y shares) or (2) a written exchange request to the
Fund or Nvest Services Company, P.O. Box 8551, Boston, MA 02266-8551. You must
acknowledge receipt of a current Prospectus for a fund before an exchange for
that fund can be effected. The minimum amount for an exchange is $1,000.
Agents, general agents, directors and senior officers of New England
Financial and its insurance company subsidiaries may, at the discretion of New
England Financial, elect to exchange Class A shares of any series of the New
England Funds or Kobrick Funds acquired in connection with deferred compensation
plans offered by New England Financial for Class Y shares of any series of the
New England Funds or Kobrick Funds which offers Class Y shares. To obtain a
prospectus and more information about Class Y shares, please call Kobrick Funds
at 1-888-523-8631.
Except as otherwise permitted by SEC rule, shareholders will receive at
least 60 days advance notice of any material change to the exchange privilege.
The investment objectives of the New England Funds and the Money Market Funds as
set forth in the respective Prospectuses are as follows:
Stock Funds:
NEW ENGLAND GROWTH FUND seeks long-term growth of capital through
investments in equity securities of companies whose earnings are expected to
grow at a faster rate than the United States economy.
NEW ENGLAND CAPITAL GROWTH FUND seeks long-term growth of capital.
NEW ENGLAND VALUE FUND seeks a reasonable long-term investment return
from a combination of market appreciation and dividend income from equity
securities.
NEW ENGLAND BALANCED FUND seeks a reasonable long-term investment return
from a combination of long-term capital appreciation and moderate current
income.
NEW ENGLAND GROWTH AND INCOME FUND seeks opportunities for long-term
growth of capital and income.
NEW ENGLAND INTERNATIONAL EQUITY FUND seeks total return from long-term
growth of capital and dividend income primarily through investment in a
diversified portfolio of marketable international equity securities.
NEW ENGLAND STAR ADVISERS FUND seeks long-term growth of capital.
NEW ENGLAND STAR WORLDWIDE FUND seeks long-term growth of capital.
NEW ENGLAND STAR SMALL CAP FUND seeks capital appreciation.
NEW ENGLAND EQUITY INCOME FUND seeks current income and capital growth.
NEW ENGLAND BULLSEYE FUND seeks long-term growth of capital.
BOND FUNDS:
NEW ENGLAND GOVERNMENT SECURITIES FUND seeks a high level of current
income consistent with safety of principal by investing in U.S. Government
securities and engaging in transactions involving related options, futures and
options on futures.
NEW ENGLAND LIMITED TERM U.S. GOVERNMENT FUND seeks a high current
return consistent with preservation of capital.
NEW ENGLAND SHORT TERM CORPORATE INCOME FUND seeks a high level of
current income consistent with preservation of capital.
NEW ENGLAND STRATEGIC INCOME FUND seeks high current income with a
secondary objective of capital growth.
NEW ENGLAND BOND INCOME FUND seeks a high level of current income
consistent with what the Fund considers reasonable risk.
NEW ENGLAND HIGH INCOME FUND seeks high current income plus the
opportunity for capital appreciation to produce a high total return.
NEW ENGLAND MUNICIPAL INCOME FUND seeks as high a level of current
income exempt from federal income taxes as is consistent with reasonable risk
and protection of shareholders' capital.
NEW ENGLAND MASSACHUSETTS TAX FREE INCOME FUND seeks as high a level of
current income exempt from federal income tax and Massachusetts personal income
taxes as the Fund's subadviser believes is consistent with preservation of
capital.
NEW ENGLAND INTERMEDIATE TERM TAX FREE FUND OF CALIFORNIA seeks as high
a level of current income exempt from federal income tax and its state personal
income tax as is consistent with preservation of capital.
ACCESS SHARES: (NOT CURRENTLY OFFERED FOR SALE)
NEW ENGLAND CORE EQUITY FUND seeks long-term capital appreciation by
investing all or substantially all of its assets in The Oakmark Fund.
NEW ENGLAND STOCK AND BOND FUND seeks high current income as well as
preservation and growth of capital by investing all or substantially all of its
assets in The Oakmark Equity and Income Fund.
NEW ENGLAND SELECT FUND seeks long-term capital appreciation by
investing all or substantially all of its assets in The Oakmark Select Fund.
NEW ENGLAND SMALL CAP VALUE FUND seeks long-term capital appreciation by
investing all or substantially all of its assets in The Oakmark Small Cap Fund.
NEW ENGLAND SMALL CAP GROWTH FUND seeks long-term capital growth by
investing all or substantially all of its assets in the Loomis Sayles Small Cap
Growth Fund.
NEW ENGLAND TOTAL RETURN BOND FUND seeks high total investment return
through a combination of current income and capital appreciation by investing
all or substantially all of its assets in the Loomis Sayles Bond Fund.
MONEY MARKET FUNDS:
NEW ENGLAND CASH MANAGEMENT TRUST - MONEY MARKET SERIES seeks maximum
current income consistent with preservation of capital and liquidity.
NEW ENGLAND TAX EXEMPT MONEY MARKET TRUST - seeks current income exempt
from federal income taxes consistent with preservation of capital and liquidity.
As of September 30, 1999, the net assets of the New England Funds (including the
Kobrick Funds) and the Money Market Funds totaled over $7.5 billion.
Automatic Exchange Plan (Class A, B and C Shares)
As described in the Prospectus following the caption "Additional
Investor Services," a shareholder may establish an Automatic Exchange Plan under
which shares of a Fund are automatically exchanged each month for shares of the
same class of one or more of the other New England Funds (including the Kobrick
Funds) and the Money Market Funds. Registration on all accounts must be
identical. The exchanges are made on the 15th of each month or the first
business day thereafter if the 15th is not a business day until the account is
exhausted or until Nvest Services Company is notified in writing to terminate
the plan. Exchanges may be made in amounts of $100 or more. The Service Options
Form is available from Nvest Services Company or your financial representative
to establish an Automatic Exchange Plan.
Broker Trading Privileges
The Distributor may, from time to time, enter into agreements with one
or more brokers or other intermediaries to accept purchase and redemption orders
for Fund shares until the close of regular trading on the NYSE (normally, 4:00
p.m. Eastern Time on each day that the Exchange is open for trading); such
purchase and redemption orders will be deemed to have been received by the Fund
when the authorized broker or intermediary accepts such orders; and such orders
will be priced using that Fund's net asset value next computed after the orders
are placed with and accepted by such brokers or intermediaries. Any purchase and
redemption orders received by a broker or intermediary under these agreements
will be transmitted daily to the Distributor no later than the time specified in
such agreement; but, in any event, no later than 6:00 a.m. following the day
that such purchase or redemption orders are received by the broker or
intermediary.
Nvest Portfolio Reporting Option ("NvestPRO") (Class A, B and C shares)
Fund Shareholders who are clients of broker-dealers that have entered
into an agreement with New England Funds and the Distributor, and have total net
assets of $50,000 or more may be eligible to receive NvestPRO Quarterly Reports
in addition to their standard New England Funds quarterly statements. Eligible
clients are defined as clients with a portfolio of regular and IRA accounts that
are assigned to the same social security number having a minimum account value
of: (i) $50,000 in the case of a new account or (ii) $100,000 in the case of an
existing account. NvestPRO Quarterly Reports include graphic performance
illustrations and are designed to provide investors with individualized
performance information on their New England Funds holdings. Individualized
performance illustrated in the NvestPRO reports is determined from the first
date of participation in the NvestPRO product, not the account open date.
Clients who elect to participate in the NvestPRO program are also
offered access to an asset allocation questionnaire that is designed to assist
them and their registered representative in choosing an initial portfolio of New
England Funds based on their financial profile, objectives, and risk tolerance.
This is not an actively managed asset allocation program as described in Rule
3a-4 of the 1940 Act. The Distributor will charge a fee for this product
(currently $35 annually per portfolio), and has the right to determine account
minimums for participation in the product.
Self-Servicing Your Account with New England Funds Personal Access Line(TM) and
Web site (Class A, B and C shares)
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Shareholders may access account information, including share balances
and recent account activity online, by visiting the New England Funds Web site
at www.mutualfunds.com. Transactions may also be processed online for certain
accounts (restrictions may apply). Such transactions include purchases,
redemptions and exchanges, and shareholders are automatically eligible for these
features. New England Funds has taken measures to ensure the security of
shareholder accounts, including the encryption of data and the use of personal
identification (PIN) numbers. In addition, you may restrict these privileges
from your account by calling New England Funds at 800-225-5478, or writing to us
at P.O. Box 8551, Boston, MA 02116. More information regarding these features
may be found on the Web site at www.mutualfunds.com.
Investor activity through these mediums are subject to the terms and conditions
outlined in the following NEW ENGLAND FUNDS ONLINE AND TELEPHONIC CUSTOMER
AGREEMENT. This agreement is also posted on our Web site. The initiation of any
activity through the New England Funds Personal Access Line(TM), or Web site at
www.mutualfunds.com by an investor shall indicate agreement with the following
terms and conditions:
NEW ENGLAND FUNDS ONLINE AND TELEPHONIC CUSTOMER AGREEMENT
NOTE: ACCESSING OR REQUESTING ACCOUNT INFORMATION OR TRANSACTIONS THROUGH THIS
SITE CONSTITUTES AND SHALL BE DEEMED TO BE AN ACCEPTANCE OF THE FOLLOWING TERMS
AND CONDITIONS.
The accuracy, completeness and timeliness of all mutual fund information
provided is the sole responsibility of the mutual fund company which provides
the information. No party which provides a connection between this web site and
a mutual fund or its transfer agency system can verify or ensure the receipt of
any information transmitted to or from a mutual fund or its transfer agent, or
the acceptance by, or completion of any transaction with, a mutual fund.
The online acknowledgments or other messages which appear on your screen for
transactions entered do not mean that the transactions have been received,
accepted or rejected by the mutual fund. These acknowledgments are only an
indication that the transactional information entered by you has either been
transmitted to the mutual fund, or that it cannot be transmitted. It is the
responsibility of the mutual fund to confirm to you that it has received the
information and accepted or rejected a transaction. It is the responsibility of
the mutual fund to deliver to you a current prospectus, confirmation statement
and any other documents or information required by applicable law.
NO TRANSACTION SHALL BE DEEMED ACCEPTED UNTIL YOU RECEIVE A WRITTEN CONFIRMATION
FROM THE FUND COMPANY.
You are responsible for reviewing all mutual fund account statements received by
you in the mail in order to verify the accuracy of all mutual fund account
information provided in the statement and transactions entered through this
site. You are also responsible for promptly notifying the mutual fund of any
errors or inaccuracies relating to information contained in, or omitted from
your mutual fund account statements, including errors or inaccuracies arising
from the transactions conducted through this site.
TRANSACTIONS ARE SUBJECT TO ALL REQUIREMENTS, RESTRICTIONS AND FEES AS SET FORTH
IN THE PROSPECTUS OF THE SELECTED FUND.
THE CONDITIONS SET FORTH IN THIS AGREEMENT EXTEND NOT ONLY TO TRANSACTIONS
TRANSMITTED VIA THE INTERNET BUT TO TELEPHONIC TRANSACTIONS INITIATED THROUGH
THE NEW ENGLAND FUNDS PERSONAL ACCESS LINE(TM) (PAL).
You are responsible for the confidentiality and use of your personal
identification numbers, account numbers, social security numbers and any other
personal information required to access the site or transmit telephonically. Any
individual that possesses the information required to pass through all security
measures will be presumed to be you. All transactions submitted by an individual
presumed to be you will be solely your responsibility.
You agree that New England Funds does not have the responsibility to inquire as
to the legitimacy or propriety of any instructions received from you or any
person believed to be you, and is not responsible or liable for any losses that
may occur from acting on such instructions.
New England Funds is not responsible for incorrect data received via the
Internet or telephonically from you or any person believed to be you.
Transactions submitted over the Internet and telephonically are solely your
responsibility and New England Funds makes no warranty as to the correctness,
completeness, or the accuracy of any transmission. Similarly New England Funds
bears no responsibility for the performance of any computer hardware, software,
or the performance of any ancillary equipment and services such as telephone
lines, modems, or Internet service providers.
The processing of transactions over this site or telephonically will involve the
transmission of personal data including social security numbers, account numbers
and personal identification numbers. While New England Funds has taken
reasonable security precautions including data encryption designed to protect
the integrity of data transmitted to and from the areas of our Web site that
relate to the processing of transactions, we disclaim any liability for the
interception of such data.
You agree to immediately notify New England Funds if any of the following
occurs:
1. You do not receive confirmation of a transaction submitted via the Internet
or telephonically within five (5) business days.
2. You receive confirmation of a transaction of which you have no knowledge and
was not initiated or authorized by you.
3. You transmit a transaction for which you do not receive a confirmation
number.
4. You have reason to believe that others may have gained access to your
personal identification number (PIN) or other personal data.
5. You notice an unexplained discrepancy in account balances or other changes
to your account, including address changes, and banking instructions on any
confirmations or statements.
Any costs incurred in connection with the use of the New England Funds Personal
Access Line(TM) or the New England Funds Internet site including telephone line
costs, and Internet service provider costs are solely your responsibility.
Similarly New England Funds makes no warranties concerning the availability of
Internet services, or network availability.
New England Funds reserves the right to suspend, terminate or modify the
Internet capabilities offered to shareholders without notice.
YOU HAVE THE ABILITY TO RESTRICT INTERNET AND TELEPHONIC ACCESS TO YOUR ACCOUNTS
BY NOTIFYING NEW ENGLAND FUNDS OF YOUR DESIRE TO DO SO.
Written notifications to New England Funds should be sent to:
New England Funds
P O Box 8551
Boston, MA 02266-8551
Notification may also be made by calling 800-225-5478 during normal business
hours.
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REDEMPTIONS
- --------------------------------------------------------------------------------
The procedures for redemption of shares of a Fund are summarized in the
Prospectus. As described in the Prospectus, a CDSC may be imposed on certain
purchases of Class A, Class B and Class C shares. For purposes of the CDSC, an
exchange of shares from one fund to another fund is not considered a redemption
or a purchase. For federal tax purposes, however, such an exchange is considered
a sale and a purchase and, therefore, would be considered a taxable event on
which you may recognize a gain or loss. In determining whether a CDSC is
applicable to a redemption of Class A, Class B or Class C shares, the
calculation will be determined in the manner that results in the lowest rate
being charged. Therefore, for Class B shares it will be assumed that the
redemption is first of any Class A shares in the shareholder's Fund account,
second of shares held for over six years, third of shares issued in connection
with dividend reinvestment and fourth of shares held longest during the six-year
period. For Class C shares and Class A shares subject to CDSC, it will be
assumed that the redemption is first of any shares that have been in the
shareholder's Fund account for over a year, and second of any shares that have
been in the shareholder's Fund account for under a year. The charge will not be
applied to dollar amounts representing an increase in the net asset value of
shares since the time of purchase or reinvested distributions associated with
such shares. Unless you request otherwise at the time of redemption, the CDSC is
deducted from the redemption, not the amount remaining in the account.
To illustrate, assume an investor purchased 100 Class B shares at $10
per share (at a cost of $1,000) and in the second year after purchase, the net
asset value per share is $12 and, during such time, the investor has acquired 10
additional shares under dividend reinvestment. If at such time the investor
makes his or her first redemption of 50 shares (proceeds of $600), 10 shares
will not be subject to the CDSC because of dividend reinvestment. With respect
to the remaining 40 shares, the CDSC is applied only to the original cost of $10
per share and not to the increase in the net asset value of $2 per share.
Therefore, $400 of the $600 redemption proceeds will be charged at a rate of 4%
(the applicable rate in the second year after purchase).
Signatures on redemption requests must be guaranteed by an "Eligible
Guarantor Institution," as defined in Rule 17Ad-15 under the Securities Exchange
Act of 1934. However, a signature guarantee will not be required if the proceeds
of the redemption do not exceed $100,000 and the proceeds check is made payable
to the registered owner(s) and mailed to the record address.
If you select the telephone redemption service in the manner described
in the next paragraph, shares of a Fund may be redeemed by calling toll free
800-225-5478 (1-888-523-8631 for Class Y shares). A wire fee, currently $5.00,
will be deducted from the proceeds. Telephone redemption requests must be
received by the close of regular trading on the NYSE. Requests made after that
time or on a day when the NYSE is not open for business cannot be accepted and a
new request on a later day will be necessary. The proceeds of a telephone
withdrawal will normally be sent on the first business day following receipt of
a proper redemption request.
In order to redeem shares by telephone, a shareholder must either select
this service when completing the Fund application or must do so subsequently on
the Service Options Form, available from Nvest Services Company or your
investment dealer. When selecting the service, a shareholder must designate a
bank account to which the redemption proceeds should be sent. Any change in the
bank account so designated may be made by furnishing to Nvest Services Company
or your investment dealer a completed Service Options Form with a signature
guarantee. Whenever the Service Options Form is used, the shareholder's
signature must be guaranteed as described above. Telephone redemptions may only
be made if the designated bank is a member of the Federal Reserve System or has
a correspondent bank that is a member of the System. If the account is with a
savings bank, it must have only one correspondent bank that is a member of the
System.
The redemption price will be the net asset value per share (less any
applicable CDSC) next determined after the redemption request and any necessary
special documentation are received by State Street Bank or your investment
dealer in proper form. Payment normally will be made by State Street Bank on
behalf of the Fund within seven days thereafter. However, in the event of a
request to redeem shares for which the Fund has not yet received good payment,
the Funds reserve the right to withhold payments of redemption proceeds if the
purchase of shares was made by a check which was deposited less than fifteen
days prior to the redemption request (unless the Fund is aware that the check
has cleared).
The CDSC may be waived on redemptions made from IRA accounts due to
attainment of age 59 1/2 for IRA shareholders who established accounts prior to
January 3, 1995. The CDSC may also be waived on redemptions made from IRA
accounts due to death, disability, return of excess contribution, required
minimum distributions at age 70 1/2 (waivers apply only to amounts necessary to
meet the required minimum amount), certain withdrawals pursuant to a systematic
withdrawal plan, not to exceed 10% annually of the value of the account, and
redemptions made from the account to pay custodial fees.
The CDSC may be waived on redemptions made from 403(b)(7) custodial
accounts due to attainment of age 59 1/2 for shareholders who established
custodial accounts prior to January 3, 1995.
The CDSC may also be waived on redemptions necessary to pay plan
participants or beneficiaries from qualified retirement plans under Section 401
of the Code, including profit sharing plans, money purchase plans, 401(k) and
custodial accounts under Section 403(b)(7) of the Code. Distributions necessary
to pay plan participants and beneficiaries include payment made due to death,
disability, separation from service, normal or early retirement as defined in
the plan document, loans from the plan and hardship withdrawals, return of
excess contributions, required minimum distributions at age 70 1/2 (waivers only
apply to amounts necessary to meet the required minimum amount), certain
withdrawals pursuant to a systematic withdrawal plan, not to exceed 10% annually
of the value of your account, and redemptions made from qualified retirement
accounts or Section 403(b)(7) custodial accounts necessary to pay custodial
fees.
A CDSC will apply in the event of plan level transfers, including
transfers due to changes in investment where assets are transferred outside of
Kobrick Funds or New England Funds, including IRA and 403(b)(7)
participant-directed transfers of assets to other custodians (except for the
reasons given above) or qualified transfers of assets due to trustee-directed
movement of plan assets due to merger, acquisition or addition of additional
funds to the plan.
The Funds will normally redeem shares for cash; however, the Funds
reserve the right to pay the redemption price wholly or partly in kind if the
relevant Trust's Board of Trustees determines it to be advisable and in the
interest of the remaining shareholders of a Fund. The redemptions in kind will
be selected by the Fund's Investment Adviser in light of the Fund's objective
and will not generally represent a pro rata distribution of each security held
in the Fund's portfolio. If portfolio securities are distributed in lieu of
cash, the shareholder will normally incur brokerage commissions upon subsequent
disposition of any such securities. However, the Funds have elected to be
governed by Rule 18f-1 under the 1940 Act, pursuant to which the Funds are
obligated to redeem shares solely in cash for any shareholder during any 90-day
period up to the lesser of $250,000 or 1% of the total net asset value of the
relevant Fund at the beginning of such period. The Funds do not currently intend
to impose any redemption charge (other than the CDSC imposed by the Funds'
distributor), although it reserves the right to charge a fee not exceeding 1% of
the redemption price. A redemption constitutes a sale of shares for federal
income tax purposes on which the investor may realize a long- or short-term
capital gain or loss. See also "Income Dividends, Capital Gain Distributions and
Tax Status," below.
The Funds may also close your account and send you the proceeds if the
balance in your account falls below a minimum amount set by each Trust's Board
of Trustees (currently $1,000 for all accounts except Keogh, pension and profit
sharing plans, automatic investment plans and accounts that have fallen below
the minimum solely because of fluctuations in the net asset value per share).
Shareholders who are affected by this policy will be notified of the Fund's
intention to close the account and will have 60 days immediately following the
notice to bring the account up to the minimum.
Reinstatement Privilege (Class A shares only)
The Prospectus describes redeeming shareholders' reinstatement
privileges for Class A shares. Written notice and the investment check from
persons wishing to exercise this reinstatement privilege must be received by
your investment dealer within 120 days after the date of the redemption. The
reinstatement or exchange will be made at net asset value next determined after
receipt of the notice and the investment check and will be limited to the amount
of the redemption proceeds or to the nearest full share if fractional shares are
not purchased.
Even though an account is reinstated, the redemption will constitute a
sale for federal income tax purposes. Investors who reinstate their accounts by
purchasing shares of the Funds should consult with their tax advisers with
respect to the effect of the "wash sale" rule if a loss is realized at the time
of the redemption.
- --------------------------------------------------------------------------------
STANDARD PERFORMANCE MEASURES
- --------------------------------------------------------------------------------
Calculation of Total Return. Total return is a measure of the change in
value of an investment in a Fund over the period covered, which assumes that any
dividends or capital gains distributions are automatically reinvested in shares
of the same class of that Fund rather than paid to the investor in cash. Each
Fund may show each class's average annual total return for the one-year,
five-year and ten-year periods (or for the life of the class, if shorter)
through the end of the most recent calendar quarter. The formula for total
return used by the Funds is prescribed by the SEC and includes three steps: (1)
adding to the total number of shares of the particular class that would be
purchased by a hypothetical $10,000 investment in the Fund (with or without
giving effect to the deduction of sales charge or CDSC, if applicable) all
additional shares that would have been purchased if all dividends and
distributions paid or distributed during the period had been automatically
reinvested; (2) calculating the value of the hypothetical initial investment as
of the end of the period by multiplying the total of shares owned at the end of
the period by the net asset value per share of the relevant class on the last
trading day of the period; (3) dividing this account value for the hypothetical
investor by the amount of the initial investment, and annualizing the result for
periods of less than one year. Total return may be stated with or without giving
effect to any expense limitations in effect for a Fund. For each Fund that
presents returns reflecting an expense limitation or waiver, its total return
would have been lower if no limitation or waiver were in effect.
Performance Comparisons
Total Return. Total returns will generally be higher for Class A shares
than for Class B and Class C shares of the same Fund, because of the higher
levels of expenses borne by the Class B and Class C shares. Because of its lower
operating expenses, Class Y shares of each Fund can be expected to achieve a
higher total return than the same Fund's Class A, Class B and Class C shares.
The Funds may from time to time include their total return in advertisements or
in information furnished to present or prospective shareholders. Each Fund may
from time to time include in advertisements its total return and the ranking of
those performance figures relative to such figures for groups of mutual funds
categorized by Lipper Analytical Services as having similar investment
objectives.
Total return may also be used to compare the performance of the Fund
against certain widely acknowledged standards or indices for stock and bond
market performance or against the U.S. Bureau of Labor Statistics' Consumer
Price Index.
The Standard & Poor's Composite Index of 500 Stocks (the "S&P 500") is a
market capitalization-weighted and unmanaged index showing the changes in the
aggregate market value of 500 stocks relative to the base period 1941-43. The
S&P 500 is composed almost entirely of common stocks of companies listed on the
NYSE, although the common stocks of a few companies listed on the American Stock
Exchange or traded over-the-counter are included.
The Standard & Poor's Composite Index of 400 Stocks (the "S&P 400") is a
market capitalization-weighted and unmanaged index that includes approximately
10% of the capitalization of U.S. equity securities. This index is comprised of
stocks in the middle capitalization range. Any midcap stocks already included in
the S&P 500 are excluded from this index.
The Dow Jones Industrial Average is a market value-weighted and
unmanaged index of 30 large industrial stocks traded on the NYSE.
The Consumer Price Index, published by the U.S. Bureau of Labor
Statistics, is a statistical measure of changes, over time, in the prices of
goods and services in major expenditure groups.
Lipper, Inc. is an independent service that monitors the performance of
over 10,000 mutual funds, and calculates total return for the funds grouped by
investment objective. Lipper's Mutual Fund Performance Analysis, Small Cap
Company Analysis and Mutual Fund Indices measure total return and average
current yield for the mutual fund industry. Rankings of individual mutual fund
performance over specified time periods assume reinvestment of all
distributions, exclusive of sales charges.
The Russell 3000 Index is a market capitalization-weighted index which
comprises 3,000 of the largest capitalized U.S. companies whose common stock is
traded in the United States on the NYSE, the American Stock Exchange and NASDAQ.
The Russell 2000 Index represents the smallest 2,000 companies within the
Russell 3000 Index as measured by market capitalization. The Russell 1000 Index
represents the largest 1,000 companies within the Russell 3000 Index. The
Russell 1000 Growth Index is an unmanaged subset of stocks from the larger
Russell 1000 Index, selected for their greater growth orientation. The Russell
1000 Value Index is an unmanaged subset of stocks from the larger Russell 1000
Index, selected for their greater value orientation.
Articles and releases, developed by the Funds and other parties, about
the Funds regarding performance, rankings, statistics and analyses of the
individual Funds' and the fund group's asset levels and sales volumes, numbers
of shareholders by Fund or in the aggregate for the Funds, statistics and
analyses of industry sales volumes and asset levels, and other characteristics
may appear in advertising, promotional literature, publications, including, but
not limited to, those publications listed in Appendix B to this Statement, and
on various computer networks, for example, the Internet. In particular, some or
all of these publications may publish their own rankings or performance reviews
of mutual funds, including, but not limited to, Lipper Analytical Services and
Morningstar. References to these rankings or reviews or reprints of such
articles may be used in the Funds' advertising and promotional literature. Such
advertising and promotional material may refer to Nvest Companies, its
structure, goals and objectives and the Advisory subsidiaries of Nvest
Companies, including their portfolio management responsibilities, portfolio
managers and their categories and background; their tenure, investment styles
and strategies and their shared commitment to fundamental investment principles
and may identify specific clients, as well as discuss the types of institutional
investors who have selected the advisers to manage their investment portfolios
and the reasons for that selection. The references may discuss the independent,
entrepreneurial nature of each Advisory organization and allude to or include
excerpts from articles appearing in the media regarding Nvest Companies, its
Advisory subsidiaries and their personnel. For additional information about the
Funds' advertising and promotional literature, see Appendix B.
The Funds may use the accumulation charts below in their advertisements
to demonstrate the benefits of monthly savings at an 8% and 10% rate of return,
respectively.
INVESTMENTS AT 8% RATE OF RETURN
5 YRS. 10 15 20 25 30
-------- ---- ---- ---- ---- -----
$50 3,698 9,208 17,417 29,647 47,868 75,015
75 5,548 13,812 26,126 44,471 71,802 112,522
100 7,396 18,417 34,835 59,295 95,737 150,029
150 11,095 27,625 52,252 88,942 143,605 225,044
200 14,793 36,833 69,669 118,589 191,473 300,059
500 36,983 92,083 174,173 296,474 478,683 750,148
INVESTMENTS AT 10% RATE OF RETURN
5 YRS. 10 15 20 25 30
------- ---- ---- ---- ---- -----
$50 3,904 10,328 20,896 38,285 66,895 113,966
75 5,856 15,491 31,344 57,427 100,342 170,949
100 7,808 20,655 41,792 76,570 133,789 227,933
150 11,712 30,983 62,689 114,855 200,684 341,899
200 15,616 41,310 83,585 153,139 267,578 455,865
500 39,041 103,276 208,962 382,848 668,945 1,139,663
The Funds' advertising and sales literature may refer to historical,
current and prospective political, social, economic and financial trends and
developments that affect domestic and international investment as they relate to
any of the Funds. The Funds' advertising and sales literature may include
historical and current performance and total returns of investment alternatives
to the Funds. Articles, releases, advertising and literature may discuss the
range of services offered by the Trust, the Distributor, and the transfer agent
of the Funds, with respect to investing in shares of the Funds and customer
service. Such materials may discuss the multiple classes of shares available
through the Trust and their features and benefits, including the details of the
pricing structure.
The Distributor may make reference in its advertising and sales
literature to awards, citations and honors bestowed on it by industry
organizations and other observers and raters including, but not limited to,
Dalbar's Quality Tested Service Seal and Key Honors Award. Such reference may
explain the criteria for the award, indicate the nature and significance of the
honor and provide statistical and other information about the award and the
Distributor's selection including, but not limited to, the scores and categories
in which the Distributor excelled, the names of funds and fund companies that
have previously won the award and comparative information and data about those
against whom the Distributor competed for the award, honor or citation.
The Distributor may publish, allude to or incorporate in its advertising
and sales literature testimonials from shareholders, clients, brokers who sell
or own shares, broker-dealers, industry organizations and officials and other
members of the public, including, but not limited to, Fund performance, features
and attributes, or service and assistance provided by departments within the
organization, employees or associates of the Distributor.
Advertising and sales literature may also refer to the beta coefficient
of the Funds. A beta coefficient is a measure of systematic or undiversifiable
risk of a stock. A beta coefficient of more than 1 means that the company's
stock has shown more volatility than the market index (e.g., the S&P 500) to
which it is being related. If the beta is less than 1, it is less volatile than
the market average to which it is being compared. If it equals 1, its risk is
the same as the market index. High variability in stock price may indicate
greater business risk, instability in operations and low quality of earnings.
The beta coefficients of the Funds may be compared to the beta coefficients of
other funds.
The Funds may enter into arrangements with banks exempted from
broker-dealer registration under the Securities Exchange Act of 1934.
Advertising and sales literature developed to publicize such arrangements will
explain the relationship of the bank to the Funds and the Distributor as well as
the services provided by the bank relative to the Funds. The material may
identify the bank by name and discuss the history of the bank including, but not
limited to, the type of bank, its asset size, the nature of its business and
services and its status and standing in the industry.
In addition, sales literature may be published concerning topics of
general investor interest for the benefit of registered representatives and the
Funds' prospective shareholders. These materials may include, but are not
limited to, discussions of college planning, retirement planning and reasons for
investing and historical examples of the investment performance of various
classes of securities, securities markets and indices.
- --------------------------------------------------------------------------------
INVESTMENT PERFORMANCE OF THE FUNDS
- --------------------------------------------------------------------------------
PERFORMANCE RESULTS - PERCENT CHANGE*
For The Periods Ended 9/30/99
CAPITAL FUND+
Aggregate Average Annual
Total Return Total Return
-------------------------------------------------
Since Since
Class A shares: As a % of 1 Year 12/31/97** 12/31/97**
- -------------------------- ------ ---------- ----------
Net Asset Value 60.7 72.1 36.4
Maximum Offering Price 51.5 62.2 31.8
Aggregate Average Annual
Total Return Total Return
-------------------------------------------------
Since Since
Class B shares: As a % of 1 Year 11/01/99** 11/01/99**
- -------------------------- ------ ---------- ----------
Net Asset Value 59.9 70.8 35.6
Redemption at End of Period 54.9 66.8 31.6
Aggregate Average Annual
Total Return Total Return
-------------------------------------------------
Since Since
Class C shares: As a % of 1 Year 11/01/99** 11/01/99**
- -------------------------- ------ ---------- ----------
Net Asset Value 59.9 70.8 35.6
Redemption at End of Period 58.9 70.8 35.6
Aggregate Average Annual
Total Return Total Return
-------------------------------------------------
Since Since
Class Y shares: As a % of 1 Year 11/01/99** 11/01/99**
- -------------------------- ------ ---------- ----------
Net Asset Value 60.9 72.5 36.6
EMERGING GROWTH FUND+
Aggregate Average Annual
Total Return Total Return
-------------------------------------------------
Since Since
Class A shares: As a % of 1 Year 12/31/97** 12/31/97**
- -------------------------- ------ ---------- ----------
Net Asset Value 63.1 65.4 33.3
Maximum Offering Price 53.7 55.9 28.9
Aggregate Average Annual
Total Return Total Return
-------------------------------------------------
Since Since
Class B shares: As a % of 1 Year 11/01/99** 11/01/99**
- -------------------------- ------ ---------- ----------
Net Asset Value 62.4 64.1 32.6
Redemption at End of Period 57.4 60.1 28.6
Aggregate Average Annual
Total Return Total Return
-------------------------------------------------
Since Since
Class C shares: As a % of 1 Year 11/01/99** 11/01/99**
- -------------------------- ------ ---------- ----------
Net Asset Value 62.4 64.1 32.6
Redemption at End of Period 61.4 64.1 32.6
Aggregate Average Annual
Total Return Total Return
-------------------------------------------------
Since Since
Class Y shares: As a % of 1 Year 11/01/99** 11/01/99**
- -------------------------- ------ ---------- ----------
Net Asset Value 63.4 65.8 33.6
GROWTH FUND+
Aggregate Average Annual
Total Return Total Return
-------------------------------------------------
Since Since
Class A shares: As a % of 1 Year 9/01/98** 9/01/98**
- -------------------------- ------ ---------- ----------
Net Asset Value 49.3 54.1 49.1
Maximum Offering Price 40.8 45.3 41.2
Aggregate Average Annual
Total Return Total Return
-------------------------------------------------
Since Since
Class B shares: As a % of 1 Year 9/01/98** 9/01/98**
- -------------------------- ------ ---------- ----------
Net Asset Value 48.6 53.3 48.4
Redemption at End of Period 43.6 49.3 44.4
Aggregate Average Annual
Total Return Total Return
-------------------------------------------------
Since Since
Class C shares: As a % of 1 Year 11/01/99** 11/01/99**
- -------------------------- ------ ---------- ----------
Net Asset Value 48.6 53.3 48.4
Redemption at End of Period 47.6 53.3 48.4
Aggregate Average Annual
Total Return Total Return
-------------------------------------------------
Since Since
Class Y shares: As a % of 1 Year 11/01/99** 11/01/99**
- -------------------------- ------ ---------- ----------
Net Asset Value 49.6 54.4 49.4
*Federal regulations require this example to be calculated using a $1,000
investment. The normal minimum initial investment in shares of the Funds is
$2,500, however.
**Commencement of Fund operations or offering of specified class of shares.
+Until November 1, 1999 the Funds had only one class of shares and were offered
without a sales charge. Therefore performance results have been restated to
account for fees and expenses under the Funds' new multiple class structure.
The foregoing data represent past performance only and are not a prediction as
to the future returns of any Fund. The investment return and principal value of
an investment in any Fund will fluctuate so that the investor's shares, when
redeemed, may be worth more or less than this original cost.
- --------------------------------------------------------------------------------
INCOME DIVIDENDS, CAPITAL GAIN DISTRIBUTIONS AND TAX STATUS
- --------------------------------------------------------------------------------
As described in the Prospectus, it is the policy of each Fund to pay its
shareholders, as dividends, substantially all net investment income and to
distribute annually all net realized long-term capital gains, if any, after
offsetting any capital loss carryovers.
Ordinary income dividends and capital gain distributions are payable in
full and fractional shares of the relevant class of the particular Fund based
upon the net asset value determined as of the close of the NYSE on the record
date for each dividend or distribution. Shareholders, however, may elect to
receive their ordinary income dividends or capital gain distributions, or both,
in cash. The election may be made at any time by submitting a written request
directly to the Funds. In order for a change to be in effect for any dividend or
distribution, it must be received by the Funds on or before the record date for
such dividend or distribution.
If you elect to receive your dividends in cash and the dividend checks
sent to you are returned "undeliverable" to the Fund or remain uncashed for six
months, your cash election will automatically be changed and your future
dividends will be reinvested. No interest will accrue on amounts represented by
uncashed dividend or redemption checks.
As required by federal law, detailed federal tax information will be
furnished to each shareholder for each calendar year on or before January 31 of
the succeeding year.
Each Fund intends to qualify each year as a regulated investment company
under Subchapter M of the Code. In order to qualify, each 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 certain securities loans, gains
from the sale of securities or foreign currencies, or other income (including,
but not limited to, gains from options, futures or forward contracts) derived
with respect to its business of investing in such stock, securities or
currencies; (ii) distribute at least 90% of its dividend, interest and certain
other taxable income each year; and (iii) diversify its holdings so that at the
end of each fiscal quarter, (a) at least 50% of the value of its total assets
consists of cash, U.S. Government securities, securities of other regulated
investment companies, and other securities limited generally, with respect to
any one issuer, to no more than 5% of the value of the Fund's total assets and
10% of the outstanding voting securities of such issuer, and (b) not more than
25% of the value of its assets is invested in the securities (other than those
of the U.S. Government or other regulated investment companies) of any one
issuer or of two or more issuers which the Fund controls and which are engaged
in the same, similar or related trades or businesses. So long as it qualifies
for treatment as a regulated investment company, a Fund will not be subject to
federal income tax on income paid to its shareholders in the form of dividends
or capital gains distributions.
An excise tax at the rate of 4% will be imposed on the excess, if any,
of each Fund's "required distribution" over its actual distributions in any
calendar year. Generally, the "required distribution" is 98% of the Fund's
ordinary income for the calendar year plus 98% of its capital gain net income
recognized during the one-year period ending on October 31 (or December 31, if
the Fund is so permitted to elect and so elects) plus undistributed amounts from
prior years. Each Fund intends to make distributions sufficient to avoid
imposition of the excise tax. Distributions declared and payable by a Fund
during October, November or December to shareholders of record on a date in any
such month and paid by the Fund during the following January will be treated for
federal tax purposes as paid by the Fund and received by shareholders on
December 31 of the year in which declared.
Fund distributions paid to you either in cash or reinvested in
additional shares are generally taxable to you either as ordinary income or as
capital gains. Distributions derived from short-term capital gains or investment
income are generally taxable at ordinary income rates. If you are a corporation
investing in a Fund, a portion of these dividends may qualify for the
dividends-received deduction provided that you meet certain holding period
requirements. Distributions of net long-term capital gains (i.e., the excess of
net gains from capital assets held for more than one year over net losses from
capital assets held for not more than one year) that are designated by a Fund as
capital gain dividends will generally be taxable to a shareholder receiving such
distributions as long-term capital gain (generally taxed at a 20% tax rate for
noncorporate shareholders) regardless of how long the shareholder has held Fund
shares. To avoid an excise tax, each Fund intends to distribute dividends prior
to calendar year-end. Some dividends paid in January may be taxable as if they
were received in the previous December.
A loss on the sale of shares held for six months or less will be
disallowed for federal income tax purposes to the extent of exempt-interest
dividends received with respect to such shares and thereafter treated as a
long-term capital loss to the extent of any long-term capital gain dividend paid
to the shareholder with respect to such shares.
Dividends and distributions on a Fund's shares are generally subject to
federal income tax as described herein to the extent they do not exceed the
Fund's realized income and gains, even though such dividends and distributions
may economically represent a return of a particular shareholder's investment.
Such distributions are likely to occur in respect of shares purchased at a time
when a Fund's net asset value reflects gains that are either unrealized, or
realized but not distributed. Such realized gains may be required to be
distributed even when a Fund's net asset value also reflects unrealized losses.
Each Fund's transactions, if any, in foreign currencies are likely to
result in a difference between the Fund's book income and taxable income. This
difference may cause a portion of the Fund's income distributions to constitute
a return of capital or capital gain for tax purposes or require the Fund to make
distributions exceeding book income to avoid excise tax liability and to qualify
as a regulated investment company.
A Fund's transactions in foreign currency-denominated debt securities
and its hedging activities, if any, will likely produce a difference between its
book income and its taxable income. This difference may cause a part or all of a
Fund's income distributions to constitute returns of capital for tax purposes or
require the Fund to make distributions exceeding book income to avoid federal
income tax liability.
Redemptions and exchanges of each Fund's shares are taxable events and,
accordingly, shareholders may realize gains and losses on these transactions.
Generally, if a shareholder redeems or exchanges shares that have been held for
more than one year, gain or loss realized will be recognized and taxed at
long-term federal tax rates (generally 20% for noncorporate shareholders),
provided the shareholder holds the shares as a capital asset. Furthermore, no
loss will be allowed on the sale of Fund shares to the extent the shareholder
acquired other shares of the same Fund within 30 days prior to the sale of the
loss shares or 30 days after such sale.
The foregoing is a general and abbreviated summary of the applicable
provisions of the Code and related regulations currently in effect. For the
complete provisions, reference should be made to the pertinent Code sections and
regulations. The Code and regulations are subject to change by legislative or
administrative actions.
Dividends and distributions also may be subject to state and local
taxes. Shareholders are urged to consult their tax advisers regarding specific
questions as to federal, state or local taxes.
Each Fund is required to withhold 31% of all income dividends and
capital gains distributions it pays to you if you do not provide a correct,
certified taxpayer identification number, if a Fund is notified that you have
underreported income in the past or if you fail to certify to a Fund that you
are not subject to such withholding. If you are a tax-exempt shareholder,
however, these backup withholding rules will not apply so long as you furnish
the Fund with an appropriate certification.
The foregoing discussion relates solely to U.S. federal income tax law.
Non-U.S. investors should consult their tax advisers concerning the tax
consequences of ownership of shares of the Fund, including the possibility that
distributions may be subject to a 30% United States withholding tax (or a
reduced rate of withholding provided by treaty).
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The audited Statements of Assets and Liabilities, Statements of
Operations and Statements of Changes in Net Assets, Financial Highlights and
Schedule of Investments for the Capital Fund, the Emerging Growth Fund and the
Growth Fund as of September 30, 1999 are included in this Statement of
Additional Information.
<PAGE>
APPENDIX A
PUBLICATIONS THAT MAY CONTAIN FUND INFORMATION
<TABLE>
<CAPTION>
<S> <C> <C>
ABC and affiliates Fortune Pensions and Investments
Adam Smith's Money World Fox Network and affiliates Personal Investor
America On Line Fund Action Philadelphia Inquirer
Anchorage Daily News Fund Decoder Porter, Sylvia (syndicated column)
Arizona Republic Global Finance Portland Oregonian
Atlanta Constitution (the) Guarantor Prodigy
Atlanta Journal Hartford Courant Public Broadcasting Service
Austin American Statesman Houston Chronicle Quinn, Jane Bryant (syndicated column)
B'nai B'rith Jewish Monthly INC Registered Representative
Baltimore Sun Indianapolis Star Research Magazine
Bank Investment Marketing Individual Investor Resource
Barron's Institutional Investor Reuters
Bergen County Record (NJ) International Herald Tribune Rocky Mountain News
Bloomberg Business News Internet Rukeyser's Business (syndicated column)
Bond Buyer Investment Adviser Sacramento Bee
Boston Business Journal Investment Company Institute San Diego Tribune
Boston Globe Investment Dealers Digest San Francisco Chronicle
Boston Herald Investment Profiles San Francisco Examiner
Broker World Investment Vision San Jose Mercury
Business Radio Network Investor's Business Daily Seattle Post-Intelligencer
Business Week IRA Reporter Seattle Times
CBS and affiliates Journal of Commerce Securities Industry Management
CFO Changing Times Kansas City Star Smart Money
Chicago Sun Times KCMO (Kansas City) St. Louis Post Dispatch
Chicago Tribune KOA-AM (Denver) St. Petersburg Times
Christian Science Monitor LA Times Standard & Poor's Outlook
Christian Science Monitor News Service Lear's Standard & Poor's Stock Guide
Cincinnati Enquirer Leckey, Andrew (syndicated column) Stanger's Investment Adviser
Cincinnati Post Life Association News Stockbroker's Register
CNBC Lifetime Channel Strategic Insight
CNN Miami Herald Tampa Tribune
Columbus Dispatch Milwaukee Sentinel Time
CompuServe Money Tobias, Andrew (syndicated column)
Dallas Morning News Money Maker Toledo Blade
Dallas Times-Herald Money Management Letter UPI
Denver Post Morningstar US News and World Report
Des Moines Register Mutual Fund Market News USA Today
Detroit Free Press Mutual Funds Magazine USA TV Network
Donoghues Money Fund Report National Public Radio Value Line
Dorfman, Dan (syndicated column) National Underwriter Wall St. Journal
Dow Jones News Service NBC and affiliates Wall Street Letter
Economist New England Business Wall Street Week
FACS of the Week New England Cable News Washington Post
Fee Adviser New Orleans Times-Picayune WBZ
Financial News Network New York Daily News WBZ-TV
Financial Planning New York Times WCVB-TV
Financial Planning on Wall Street Newark Star Ledger WEEI
Financial Research Corp. Newsday WHDH
Financial Services Week Newsweek Worcester Telegram
Financial World Nightly Business Report World Wide Web
Fitch Insights Orange County Register Worth Magazine
Forbes Orlando Sentinel WRKO
Fort Worth Star-Telegram Palm Beach Post
Pension World
</TABLE>
<PAGE>
APPENDIX B
ADVERTISING AND PROMOTIONAL LITERATURE
References may be included in the Funds' advertising and promotional
literature to Nvest Companies and its affiliates.
The Funds' advertising and promotional material may include, but is not
limited to, discussions of the following information about both affiliated and
unaffiliated entities:
|X| Specific and general assessments and forecasts regarding U.S. and world
economies, and the economies of specific nations and their impact on the Kobrick
Funds and New England Funds;
|X| Specific and general investment emphasis, specialties, fields of expertise,
competencies, operations and functions;
|X| Specific and general investment philosophies, strategies, processes,
techniques and types of analysis;
|X| Specific and general sources of information, economic models, forecasts and
data services utilized, consulted or considered in the course of providing
advisory or other services;
|X| The corporate histories, founding dates and names of founders of the
entities;
|X| Awards, honors and recognition given to the entities;
|X| The names of those with ownership interest and the percentage of ownership
interest;
|X| The industries and sectors from which clients are drawn and specific client
names and background information on current individual, corporate and
institutional clients, including pension and profit sharing plans;
|X| Current capitalizations, levels of profitability and other financial and
statistical information;
|X| Identification of portfolio managers, researchers, economists, principals
and other staff members and employees;
|X| The specific credentials of the above individuals, including, but not
limited to, previous employment, current and past positions, titles and duties
performed, industry experience, educational background and degrees, awards and
honors;
|X| Specific and general reference to past and present notable and renowned
individuals including reference to their field of expertise and/or specific
accomplishments;
|X| Current and historical statistics regarding:
- -total dollar amount of assets managed
- -Kobrick Funds' and New England Funds' assets managed in total and by fund
- -the growth of assets
- -asset types managed
- -numbers of principal parties and employees, and the length of their tenure,
including officers, portfolio managers, researchers, economists, technicians and
support staff
- -the above individuals' total and average number of years of industry experience
and the total and average length of their service to the adviser or sub-adviser;
|X| The general and specific strategies applied by the advisers in the
management of Kobrick Funds and New England Funds portfolios including, but not
limited to:
- -the pursuit of growth, value, income oriented, risk management or other
strategies
- -the manner and degree to which the strategy is pursued
- -whether the strategy is conservative, moderate or extreme and an explanation of
other features and attributes
- -the types and characteristics of investments sought and specific portfolio
holdings
- -the actual or potential impact and result from strategy implementation
- -through its own areas of expertise and operations, the value added by
sub-advisers to the management process
- -the disciplines it employs
- -the systems utilized in management, the features and characteristics of those
systems and the intended results from such computer analysis, and
|X| Specific reference to 360 (degree) research (sm), 360 degree research(sm),
Kobrick 360 (degree) research(sm) and Kobrick 360 degree research(sm) as an
approach that involves meeting with companies' management, employees, customers,
competition and suppliers to determine whether what these people say aligns with
company strategies and objectives.
|X| Specific and general references to portfolio managers and funds that they
serve as portfolio manager of, other than Kobrick Funds and New England Funds,
and those families of funds. Any such references will indicate that Kobrick
Funds, New England Funds and the other funds of the managers differ as to
performance, objectives, investment restrictions and limitations, portfolio
composition, asset size and other characteristics, including fees and expenses.
References may also be made to industry rankings and ratings of the Funds and
other funds managed by the Funds' adviser, including, but not limited to, those
provided by Morningstar, Lipper Analytical Services, Forbes and Worth.
In addition, communications and materials developed by the Funds will
make reference to the following information about Nvest Companies and its
affiliates:
Nvest Companies is part of an affiliated group including Nvest, L.P. a
publicly traded company listed on the NYSE. Nvest Companies has 18 principal
subsidiary or affiliated asset management firms, which collectively had $127
billion of assets under management as of September 30, 1999. In addition,
promotional materials may include:
|X| Specific and general references to New England Funds multi-manager approach
through Nvest Companies affiliates and outside firms including, but not limited
to, the following:
-that each adviser/manager operates independently on a day-to-day basis and
maintains an image and identity separate from Nvest Companies and the
other Investment Advisers
-other fund companies are limited to a "one size fits all" approach but New
England Funds draws upon the talents of multiple managers whose expertise
best matches the fund objective
-in this and other contexts reference may be made to New England Funds'
slogan "Where The Best Minds Meet"(R) and that New England Funds' ability
to match the talent to the task is one more reason it is becoming known as
"Where The Best Minds Meet."
Nvest Advisor Services ("NAS") and Nvest Retirement Services ("NRS"),
divisions of Nvest Companies, may be referenced in Fund advertising and
promotional literature concerning the marketing services it provides to Nvest
Companies affiliated fund groups including: New England Funds, Loomis Sayles
Funds, Jurika & Voyles, Back Bay Advisors, Oakmark Funds, Delafield Fund and
Kobrick Funds.
NAS and NRS will provide marketing support to Nvest Companies affiliated
fund groups targeting financial advisers, financial intermediaries and
institutional clients who may transact purchases and other fund-related business
directly with these fund groups. Communications will contain information
including, but not limited to: descriptions of clients and the marketplaces to
which it directs its efforts; the mission and goals of NAS and NRS and the types
of services it provides which may include: seminars; its 1-800 number, web site,
Internet or other electronic facilities; qualitative information about the
funds' investment methodologies; information about specific strategies and
management techniques; performance data and features of the funds; institutional
oriented research and portfolio manager insight and commentary. Additional
information contained in advertising and promotional literature may include:
rankings and ratings of the funds including, but not limited to, those of
Morningstar and Lipper Analytical Services; statistics about the advisers', fund
groups' or a specific fund's assets under management; the histories of the
advisers and biographical references to portfolio managers and other staff
including, but not limited to, background, credentials, honors, awards and
recognition received by the advisers and their personnel; and commentary about
the advisers, their funds and their personnel from third-party sources including
newspapers, magazines, periodicals, radio, television or other electronic media.
References may be included in Kobrick Funds or New England Funds'
advertising and promotional literature about its 401(k) and retirement plans.
The information may include, but is not limited to:
|X| Specific and general references to industry statistics regarding 401(k) and
retirement plans including historical information, industry trends and
forecasts regarding the growth of assets, numbers of plans, funding
vehicles, participants, sponsors and other demographic data relating to
plans, participants and sponsors, third party and other administrators,
benefits consultants and other organizations involved in 401(k) and
retirement programs with whom New England Funds may or may not have a
relationship.
|X| Specific and general references to comparative ratings, rankings and other
forms of evaluation as well as statistics regarding the Kobrick Funds or New
England Funds as a 401(k) or retirement plan funding vehicle produced by,
including, but not limited to, Investment Company Institute and other
industry authorities, research organizations and publications.
|X| Specific and general discussion of economic, legislative, and other
environmental factors affecting 401(k) and retirement plans, including, but
not limited to, statistics, detailed explanations or broad summaries of:
-past, present and prospective tax regulation, Internal Revenue Service
requirements and rules, including, but not limited to, reporting
standards, minimum distribution notices, Form 5500, Form 1099R and other
relevant forms and documents, Department of Labor rules and standards and
other regulations. This includes past, current and future initiatives,
interpretive releases and positions of regulatory authorities about the
past, current or future eligibility, availability, operations,
administration, structure, features, provisions or benefits of 401(k) and
retirement plans;
-information about the history, status and future trends of Social Security
and similar government benefit programs including, but not limited to,
eligibility and participation, availability, operations and
administration, structure and design, features, provisions, benefits and
costs; and
-current and prospective ERISA regulation and requirements.
|X| Specific and general discussion of the benefits of 401(k) investment and
retirement plans to the participant and plan sponsor, including
explanations, statistics and other data, about:
-increased employee retention
-reinforcement or creation of morale
-deductibility of contributions for participants
-deductibility of expenses for employers
-tax deferred growth, including illustrations and charts
-loan features and exchanges among accounts
-educational services materials and efforts, including, but not limited to,
videos, slides, presentation materials, brochures, an investment
calculator, payroll stuffers, quarterly publications, releases and
information on a periodic basis and the availability of wholesalers and
other personnel.
|X| Specific and general reference to the benefits of investing in mutual funds
for 401(k) and retirement plans, and the Kobrick Funds or New England Funds
as a 401(k) or retirement plan funding vehicle.
|X| Specific and general reference to the role of the investment dealer and the
benefits and features of working with a financial professional including:
-access to expertise on investments
-assistance in interpreting past, present and future market trends and
economic events -providing information to clients including participants
during enrollment and on an ongoing basis after
participation
-promoting and understanding the benefits of investing, including mutual
fund diversification and professional management.
<PAGE>
KOBRICK INVESTMENT TRUST
PART C. OTHER INFORMATION
Item 23. Exhibits
(a) Agreement and Declaration of Trust
1) Agreement and Declaration of Trust filed as part of Registration
Statement on October 10, 1997.
2) Amended and Restated Master Trust Agreement filed as part of
Post-Effective Amendment No.1 on June 12, 1998.
3) Amendment to Master Trust Agreement filed herewith.
(b) Bylaws filed as part of Registration Statement on October 10, 1997.
(c) Inapplicable
(d) Advisory Agreement
1) Advisory Agreement, dated December 22, 1997, with Kobrick-HFS
Funds, Inc. filed herewith.
2) Amendment to the Advisory Agreement, dated September 1, 1998, with
Kobrick-Cendant Funds, Inc. filed herewith.
3) Advisory Agreement, dated July 7, 1999, with Kobrick Funds LLC
filed herewith.
(e) Distribution Agreement and Selling Agreements
1) Form of Distribution Agreement with Funds Distributor and Form of
Selling Agreement filed as part of Pre-Effective Amendment No.1 on
December 5, 1997.
2) Distribution Agreement with New England Funds, L.P. and Form of
Selling Agreement filed herewith.
(f) Inapplicable
(g) Custodian Agreement
1) Form of Custodian Agreement with State Street Bank and Trust
Company filed as part of Pre-Effective Amendment No. 1 on December
5, 1997.
2) Revised form of Custodian Agreement with State Street Bank and
Trust Company (exhibits previously filed) filed as part of
Pre-Effective Amendment No.2 on December 24, 1997.
3) Amendment to Custodian Agreement with State Street Bank and Trust
Company filed herewith.
(h) Other Material Contacts
1) Administration Agreements
a) Form of Administration Agreement with State Street Bank and
Trust Company filed as part of Pre-Effective Amendment No.1 on
December 5, 1997.
b) Administrative Services Agreement with Nvest Services Company,
Inc. filed herewith.
2) Transfer Agency Agreements
a) Form of Transfer Agency and Service Agreement with State Street
Bank and Trust filed as part of Pre-Effective Amendment No.1 on
December 5, 1997, and exhibits concerning fees filed as part of
Pre-Effective Amendment No.2 on December 24, 1997.
b) Transfer Agency and Service Agreement with Nvest Services
Company, Inc. filed herewith.
(i) Legal Opinions
1) Opinion and Consent of Mintz, Levin, Cohn, Ferris, Glovsky, and
Popeo, P.C. filed as part of Pre-Effective Amendment No.2 on
December 24, 1997.
2) Opinion and Consent of Ropes & Gray filed herewith.
(j) Consent of Independent Public Accountants filed herewith.
(k) Inapplicable.
(l) Agreement Relating to Initial Capital filed as part of Pre-Effective
Amendment No.2 on December 24, 1997.
(m) Rule 12b-1 Plans
1) Plan of Distribution pursuant to Rule 12b-1 filed as part of
Pre-Effective Amendment No.1 on December 5, 1997.
2) Class A Service Plan (amended Plan of Distribution Pursuant to Rule
12b-1) filed herewith.
3) Class B Distribution and Service Plan filed herewith.
4) Class C Distribution and Service Plan filed herewith.
(n) Inapplicable
(o) Rule 18f-3 Plan filed herewith.
Item 24. Persons Controlled by or Under Common Control with the Fund
Inapplicable
Item 25. 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 Exchange 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, except with
respect to any matter as to which it has been determined that such Covered
Person had acted with willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of such Covered
Person's office (such conduct referred to hereafter as "Disabling Conduct"). A
determination that the Covered Person is entitled to indemnification may be made
by (i) a final decision on the merits by a court or other body before whom the
proceeding was brought that the person to be indemnified was not liable by
reason of Disabling Conduct, (ii) dismissal of a court action or an
administrative proceeding against a Covered Person for insufficiency of evidence
of Disabling Conduct, or (iii) a reasonable determination, based upon a review
of the facts, that the indemnitee was not liable by reason of Disabling Conduct
by (a) a vote of a majority of a quorum of Trustees who are neither "interested
persons" of the Trust as defined in section 2(a) (19) of the 1940 Act nor
parties to the proceeding, or (b) an independent legal counsel in a written
opinion. Expenses, including accountants' and counsel fees so incurred by any
such Covered Person (but excluding amounts paid in satisfaction of judgments, in
compromise or as fines or penalties), may be paid from time to time by the Trust
in advance of the final disposition of any such action, suit or proceeding,
provided that the Covered Person shall have undertaken to repay the amounts so
paid to the Trust if it is ultimately determined that indemnification of such
expenses is not authorized under this Article VI and (i) the Covered Person
shall have provided security for such 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 Trustees who are not a party to the
proceeding, or an independent legal counsel in a written opinion, shall have
determined, based on a review of readily available facts (as opposed to a full
trial-type inquiry), that there is reason to believe that the Covered Person
ultimately will be found entitled to indemnification.
Section 6.5 Compromise Payment.
As to any matter disposed of by a compromise payment by any such Covered Person
referred to in Section 6.4, pursuant to a consent decree or otherwise, no such
indemnification either for said payment or for any other expenses shall be
provided unless such indemnification shall be approved (a) by a majority of the
disinterested Trustees who are not parties to the proceeding or (b) by an
independent legal counsel in a written opinion. Approval by the Trustees
pursuant to clause (a) or by independent legal counsel pursuant to clause (b)
shall not prevent the recovery from any Covered Person of any amount paid to
such Covered Person in accordance with any of such clauses as indemnification if
such Covered Person is subsequently adjudicated by a court of competent
jurisdiction to have been liable to the Trust or its Shareholders 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.
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. 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 Kobrick Funds LLC (the "Investment Manager"). 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 Investment Manager provides that the Investment
Manager 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 Investment Manager's willful
misfeasance, bad faith or gross negligence, a violation of the standard of care
established by and applicable to the Investment Manager in its actions under the
Advisory Agreement or breach of its duty or of its obligations under the
Advisory Agreement.
Item 26. Business and Other Connections of the Investment Adviser
(a) The Investment Adviser is a limited liability company formed as an
investment management firm. On July 7, 1999, the Investment Adviser succeeded to
the business of the prior investment manager to the Registrant, also known as
Kobrick Funds LLC (the "Prior Adviser"), as a result of the transfer of
substantially all of the assets and liabilities of the Prior Adviser. Following
the close of business on December 31, 1998, the Prior Adviser succeeded to the
business of Kobrick-Cendant Funds, Inc., which was formed in October 1997,
pursuant to a reorganization.
(b) The managers and officers of the Investment Adviser and any other business,
profession, vocation or employment of a substantial nature engaged in at any
time during the past two years:
(i) Frederick R. Kobrick - President and Chief Executive Officer of the
Investment Adviser and its predecessors and President and Trustee of the
Registrant since October 1997; Portfolio Manager and Senior Vice President of
State Street Research and Management Company from March 1985 to August 1997. He
is also currently a principal in certain private investment partnerships.
(ii) Richard A. Goldman - Chief Operating Officer and a Manager of the
Investment Adviser and Secretary of the Registrant since October 1997, Member,
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. from April 1996 to October
1997 and Associate, Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. from
August 1989 to March 1996.
(iii) Sherri A. Brown - Chief Financial Officer of the Investment Advisor
since June 1999 and Treasurer of the Registrant since October 1999; Director of
Accounting at Vinik Asset Management Co. from November 1996 to June 1999;
Operations Consultant with Deloitte & Touche LLP from February 1996 to November
1996; and Vice President at Manchester Growth Fund L.P. from June 1990 to
February 1996.
(iv) Neal G. Litvak - Manager of the Investment Adviser since July 1999.
Executive Vice President, Research Marketing, Nvest Companies, L.P. since
February 1997.
(v) Sherry A. Umberfield - Manager of the Investment Adviser since July
1999. Executive Vice President, Corporate Development, Nvest Companies, L.P.
(formerly Nvest L.P.) since September 1993.
Item 27. Principal Underwriters
(a) New England Funds, L.P. (the "Distributor") acts as principal underwriter
for the following investment companies other than the Registrant:
New England Funds Trust I
New England Funds Trust II
New England Funds Trust III
New England Tax Exempt Money Market Trust
New England Cash Management Trust
New England Funds, L.P. is registered with the Securities and Exchange
Commission as a broker-dealer and is a member of the National Association of
Securities Dealers. New England Funds, L.P. is located at 399 Boylston Street,
Boston, Massachusetts 02116.
(b) The following is a list of the general partner and officers of the
Registrant's principal underwriter, New England Funds, L.P., and their addresses
are as follows:
<TABLE>
<CAPTION>
Positions and Offices with Positions and Offices with
Name Principal Underwriter Registrant
- ---- -------------------------------- --------------------------
<S> <C> <C>
NEF Corporation General Partner None
Bruce R. Speca Managing Director, President and None
Chief Executive Officer
John Hailer Managing Director and Executive None
Vice President
John E. Pelletier Senior Vice President, General Assistant Secretary
Counsel, Secretary and Clerk
Caren I. Leedom Managing Director and Senior Vice None
President
Scott Wennerholm Managing Director, Chief None
Financial Officer, Treasurer and
Senior Vice President
Diane Whelan Managing Director and Senior Vice None
President
Coleen Downs Dinneen Vice President, Associate Assistant Secretary
Counsel, Assistant Secretary and
Assistant Clerk
Raymond K. Girouard Senior Vice President, None
Comptroller and Assistant
Treasurer
Kirk Williamson Senior Vice President None
Martin G. Dyer Vice President and Assistant None
Secretary
Frank Maeslli Managing Director and Senior Vice None
President
Steven DiMaio Vice President None
Marla McDougall Vice President None
Kristen Vigneaux Vice President, Assistant None
Secretary and Assistant Clerk
</TABLE>
(c) Inapplicable.
Item 28. 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 101 Federal Street,
Boston, Massachusetts 02110 as well as at the offices of the Registrant's
transfer agent and administrator located at 399 Boylston Street, Boston, MA
02116.
Item 29. Management Services Not Discussed in Parts A or B
Inapplicable
Item 30. Undertakings
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.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certifies that it meets all of the
requirements for effectiveness of this registration statement under Rule 485(b)
under the Securities Act and 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 28th day of October
1999.
KOBRICK INVESTMENT TRUST
By: /s/ Frederick R. Kobrick
-------------------------
Frederick R. Kobrick
President
Pursuant to the requirements of the Securities Act, this registration statement
has been signed below by the following persons in the capacities and on the date
indicated.
Signature Title Date
/s/ Frederick R. Kobrick President and Trustee October 28, 1999
- ----------------------------
Frederick R. Kobrick
/s/ Sherri A. Brown Treasurer October 28, 1999
- ----------------------------
Sherri A. Brown
Jay H. Atlas* Trustee October 28, 1999
- ----------------------------
Jay H. Atlas
Samuel L. Hayes, III* Trustee October 28, 1999
- ----------------------------
Samuel L. Hayes, III
Joseph P. Paster* Trustee October 28, 1999
- ----------------------------
Joseph P. Paster
*By /s/ Frederick R. Kobrick
- ----------------------------
Frederick R. Kobrick
Attorney-in-fact
<PAGE>
Exhibit 99.a(3)
KOBRICK-CENDANT INVESTMENT TRUST
AMENDMENT TO MASTER TRUST AGREEMENT
(CHANGING NAME TO KOBRICK INVESTMENT TRUST)
Amendment to the Agreement and Declaration of Trust made at Boston,
Massachusetts as of December 29, 1998, by the Trustees thereunder.
WITNESSETH
WHEREAS, the Trust was formed by the Agreement and Declaration of Trust,
dated as of October 10, 1997; and
WHEREAS, the Declaration of Trust provides that the Declaration of Trust
may be amended at any time, so long as such amendment does not have a material
adverse effect on the rights of any Shareholder with respect to which such
amendment is or purports to be applicable and so long as such amendment is not
in contravention of applicable law, including the 1940 Act, by an instrument in
writing signed by an officer of the Trust pursuant to the vote of a majority of
the Trustees; and
WHEREAS, by unanimous vote on December 7, 1998, the Trustees approved the
amendment of the Declaration of Trust to change the name of the Trust to Kobrick
Investment Trust.
NOW, THEREFORE, the Declaration of Trust is hereby amended to reflect the
name of the Trust and the Funds created thereunder to "Kobrick Investment
Trust," the "Kobrick Emerging Growth Fund," and the "Kobrick Capital Fund" and
the "Kobrick Growth Fund."
IN WITNESS WHEREOF, the undersigned hereunto sets his hand in the City of
Boston, Massachusetts as of the day and year first above written.
/s/ Richard A. Goldman
------------------------------
Richard A. Goldman
Secretary
<PAGE>
Exhibit 99.d(1)
Kobrick-HFS Investment Trust
101 Federal Street
Boston, Massachusetts 02110
December 22, 1997
Kobrick-HFS Funds, Inc.
101 Federal Street
Boston, Massachusetts 02110
Re: Advisory Agreement
Ladies and Gentlemen:
Kobrick-HFS 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 Kobrick-HFS Capital Fund and the Kobrick-HFS
Emerging Growth 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 Kobrick-HFS Funds, 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 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, 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.
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 State Street Bank and Trust Company 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 Boston Financial Data Services, Inc., 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 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 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 Kobrick-HFS Capital Fund and Kobrick-HFS
Emerging Growth Fund will each pay the Adviser a monthly advisory fee computed
as 1.00% of the average of the values of the net assets of the Fund as
determined at the close of each business day during the month.
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 shareholders 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 appropriate fund under
the Trustees' 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 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
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
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:
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 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.
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 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 "Kobrick-HFS" and "Kobrick-Cendant" are the
property right of the Adviser. The Adviser may use the names "Kobrick-HFS" and
"Kobrick-Cendant" 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 "Kobrick-HFS" and
"Kobrick-Cendant" 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 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 Commonwealth of
Massachusetts.
KOBRICK-HFS INVESTMENT TRUST
By: /s/ Frederick R. Kobrick
----------------------------
Frederick R. Kobrick
Title: President
Date: December 22, 1997
ACCEPTANCE
The foregoing Agreement is hereby accepted.
KOBRICK-HFS FUNDS, INC.
By: /s/ Frederick R. Kobrick
----------------------------
Frederick R. Kobrick
Title: President
Date: December 22, 1997
<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.
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.
<PAGE>
Exhibit 99.d(2)
Kobrick-Cendant Investment Trust
101 Federal Street
Boston, Massachusetts 02110
September 1, 1998
Kobrick-Cendant Funds, Inc.
101 Federal Street
Boston, Massachusetts 02110
Re: Advisory Agreement
Ladies and Gentlemen:
Reference is made to the Advisory Agreement dated December 22, 1997 (the
"Agreement") between Kobrick-Cendant Investment Trust (f/k/a Kobrick-HFS
Investment Trust) (the "Trust") and Kobrick-Cendant Funds, Inc. (f/k/a
Kobrick-HFS Funds, Inc.) (the "Adviser"). Whereas, on June 1, 1998, the Trustees
of the Trust approved the establishment of the Kobrick-Cendant Growth Fund as a
separate series of the Trust (the "Growth Fund") and authorized the amendment of
the Agreement in connection therewith. Now, therefore, the undersigned parties
agree that the Agreement is amended as of the date hereof to include the Growth
Fund as a Fund (as such term is defined in the Agreement) under the Agreement
and for all of the services to be rendered and payments made as provided in the
Agreement, the Growth Fund will pay the Adviser a monthly advisory fee computed
at the annual rate of 1.00% of the average of the values of the net assets of
the Fund as determined at the close of each business day during the month.
KOBRICK-CENDANT INVESTMENT TRUST
By: /s/ Frederick R. Kobrick
-----------------------------------
Frederick R. Kobrick, President
Date: September 1, 1998
ACCEPTANCE
The foregoing Amendment is hereby accepted.
KOBRICK-CENDANT FUNDS, INC.
By: /s/ Frederick R. Kobrick
- ----------------------------------------
Frederick R. Kobrick, President
Date: September 1, 1998
<PAGE>
Exhibit 99.d(3)
Kobrick Investment Trust
101 Federal Street
Boston, Massachusetts 02110
July 7, 1999
Kobrick Funds LLC
101 Federal Street
Boston, Massachusetts 02110
Re: Advisory Agreement
Ladies and Gentlemen:
Kobrick 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 three separate series, the Kobrick Growth Fund, the Kobrick Capital Fund
and the Kobrick Emerging Growth 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 Kobrick Funds, LLC ("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 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, 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.
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 State Street Bank and Trust Company 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 Boston Financial Data Services, Inc., 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 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 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 Kobrick Growth Fund, the Kobrick Capital
Fund and Kobrick Emerging Growth Fund will each pay the Adviser a monthly
advisory fee computed daily at the annual rate of 1.00% of the average of the
values of the net assets of the Fund as determined at the close of each business
day during the month.
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 shareholders 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 appropriate fund under
the Trustees' 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 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
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
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 13 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:
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 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,
an officer of Adviser shall certify to the Trust that Adviser has
complied with the requirements of Rule 17j-1 during the previous
quarter 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.
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 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 "Kobrick" and "Kobrick Funds" are the property
right of the Adviser. The Adviser and Frederick R. Kobrick may use the names
"Kobrick" and "Kobrick Funds" 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 "Kobrick" and "Kobrick Funds" 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 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 Commonwealth of
Massachusetts.
KOBRICK INVESTMENT TRUST
By: /s/ Frederick R. Kobrick
----------------------------
Frederick R. Kobrick
Title: President
Date: July 7, 1999
ACCEPTANCE
The foregoing Agreement is hereby accepted.
KOBRICK FUNDS LLC
By: /s/ Frederick R. Kobrick
----------------------------
Frederick R. Kobrick
Title: President
Date: July 7, 1999
<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.
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.
<PAGE>
Exhibit 99.e(2)
KOBRICK INVESTMENT TRUST
Distribution Agreement
AGREEMENT made this 6th day of October, 1999 by and between Kobrick
Investment Trust, a Massachusetts business trust (the "Trust"), and NEW ENGLAND
FUNDS, L.P., a Delaware limited partnership (the "Distributor").
W I T N E S S E T H:
WHEREAS, this Agreement has been approved by the Trustees of the Trust in
contemplation of the transfer by the Distributor of its rights to receive the
Class B Distribution Fee (as defined in the Class B Distribution and Service
Plan attached hereto as Exhibit A) and/or contingent deferred sales charges to a
financing party in order to raise funds to cover distribution expenditures;
WHEREAS, the Trustees of the Trust recognize the importance to the Trust
of the Distributor being able to obtain financing with which to pay commissions
on Class B shares at the time of sale;
WHEREAS, the Trustees of the Trust acknowledge that by providing financing
to the Distributor the financing party enables the Distributor to provide
valuable services to the Series (as defined below); and
WHEREAS, the Trustees of the Trust, in the context of considering the best
interests of the Series and its shareholders at the time of and in preparation
for any vote, consent or other action that the Trustees of the Trust may from
time to time take relating to the continued receipt by the Distributor (and/or
the financing party) of the Distribution Fee, intend to consider the effect on
the Distributor and any financing party of any such vote, consent or action.
NOW, THEREFORE, in consideration of the premises and covenants hereinafter
contained, the Trust and the Distributor agree as follows:
1. Distributor. The Trust hereby appoints the Distributor as general
distributor of shares of beneficial interest ("Series shares") of the
Trust's three series (the "Series") (Kobrick Capital Fund, Kobrick Growth
Fund, and Kobrick Emerging Growth Fund) during the term of this Agreement.
The Trust reserves the right, however, to refuse at any time or times to
sell any Series shares hereunder for any reason deemed adequate by the
Board of Trustees of the Trust.
2. Sale and Payment. Under this agreement, the following provisions shall
apply with respect to the sale of and payment for Series shares:
(a) The Distributor shall have the right, as principal, to purchase
Series shares from the Trust at their net asset value and to sell
such shares to the public against orders therefor at the applicable
public offering price, as defined in Section 4 hereof. The
Distributor shall also have the right, as principal, to sell shares
to dealers against orders therefor at the public offering price less
a concession determined by the Distributor.
(b) Prior to the time of delivery of any shares by the Trust to, or
on the order of, the Distributor, the Distributor shall pay or cause
to be paid to the Trust or to its order an amount in Boston or New
York clearing house funds equal to the applicable net asset value of
such shares. The Distributor shall retain so much of any sales
charge or underwriting discount as is not allowed by it as a
concession to dealers.
3. Fees. For its services as general distributor of the Class B Series
shares, the Trust shall cause the Series to pay to the Distributor (or its
designee or transferee) in addition to the sales charge, if any, referred
to in Section 4 below, the Class B Distribution Fee at the rate and upon
the terms and conditions set forth in the Class B Distribution and Service
Plan attached as Exhibit A hereto, and as amended from time to time, and
the Distributor shall also be entitled to receive any contingent deferred
sales charges that may be payable upon redemption or repurchase of Class B
Series shares. The Class B Distribution Fee shall be accrued daily and
paid monthly to the Distributor (or, at its direction, to its designee or
transferee) as soon as practicable after the end of the calendar month in
which it accrues, but in any event within five business days following the
last day of the month. So long as this agreement and the Class B
Distribution and Service Plan have not been terminated in accordance with
their respective terms, the Series' obligation to pay the Class B
Distribution Fee to the Distributor shall be absolute and unconditional
and shall not be subject to any dispute, offset, counterclaim or defense
whatsoever (it being understood that nothing in this sentence shall be
deemed a waiver by the Trust or the Series of its right separately to
pursue any claims it may have against the Distributor and to enforce such
claims against any assets (other than its rights to be paid the Class B
Distribution Fee and to be paid contingent deferred sales charges with
respect to Class B Series shares) of the Distributor).
4. Public Offering Price. The public offering price shall be the net asset
value of Series shares, plus any applicable sales charge, all as set forth
in the current prospectus and statement of additional information
("prospectus") of the Trust relating to the Series shares. In no event
shall the public offering price exceed 1000/935 of such net asset value,
and in no event shall any applicable sales charge or underwriting discount
exceed 6.5% of the public offering price. The net asset value of Series
shares shall be determined in accordance with the provisions of the
agreement and declaration of trust and by-laws of the Trust and the
current prospectus of the Trust relating to the Series shares.
5. Trust Issuance of Series Shares. The delivery of Series shares shall be
made promptly by a credit to a shareholder's open account for the Series
or by delivery of a share certificate. The Trust reserves the right (a) to
issue Series shares at any time directly to the shareholders of the Series
as a stock dividend or stock split, (b) to issue to such shareholders
shares of the Series, or rights to subscribe to shares of the Series, as
all or part of any dividend that may be distributed to shareholders of the
Series or as all or part of any optional or alternative dividend that may
be distributed to shareholders of the Series, and (c) to sell Series
shares in accordance with the current applicable prospectus of the Trust
relating to the Series shares.
6. Redemption or Repurchase. The Distributor shall act as agent for the Trust
in connection with the redemption or repurchase of Series shares by the
Trust to the extent and upon the terms and conditions set forth in the
current applicable prospectus of the Trust relating to the Series shares,
and the Trust agrees to reimburse the Distributor, from time to time upon
demand, for any reasonable expenses incurred in connection with such
redemptions or repurchases. The Trust will remit to the Distributor any
contingent deferred sales charges imposed on redemptions or repurchases of
Series shares (other than Class B shares) upon the terms and conditions
set forth in the then current prospectus of the Trust. The Trust will also
remit to the Distributor (or its designee or transferee), in addition to
the Class B Distribution Fee, any contingent deferred sales charges
imposed on redemptions or repurchases of Class B shares, in accordance
with the Remittance Agreement attached hereto as Exhibit B.
7. Undertaking Regarding Sales. The Distributor shall use reasonable efforts
to sell Series shares but does not agree hereby to sell any specific
number of Series shares and shall be free to act as distributor of the
shares of other investment companies. Series shares will be sold by the
Distributor only against orders therefor. The Distributor shall not
purchase Series shares from anyone except in accordance with Sections 2
and 6 and shall not take "long" or "short" positions in Series shares
contrary to the agreement and declaration of trust or by-laws of the
Trust.
8. Compliance. The Distributor shall conform to the Rules of Fair Practice of
the NASD and the sale of securities laws of any jurisdiction in which it
sells, directly or indirectly, any Series shares. The Distributor agrees
to make timely filings, with the Securities and Exchange Commission in
Washington, D.C. (the "SEC"), the NASD and such other regulatory
authorities as may be required, of any sales literature relating to the
Series and intended for distribution to prospective investors. The
Distributor also agrees to furnish to the Trust sufficient copies of any
agreements or plans it intends to use in connection with any sales of
Series shares in adequate time for the Trust to file and clear them with
the proper authorities before they are put in use (which the Trust agrees
to use its best efforts to do as expeditiously as reasonably possible),
and not to use them until so filed and cleared.
9. Registration and Qualification of Series Shares. The Trust agrees to
execute such papers and to do such acts and things as shall from time to
time be reasonably requested by the Distributor for the purpose of
qualifying and maintaining qualification of the Series shares for sale
under the so-called Blue Sky Laws of any state or for maintaining the
registration of the Trust and of the Series shares under the federal
Securities Act of 1933 and the federal Investment Company Act of 1940 (the
"1940 Act"), to the end that there will be available for sale from time to
time such number of Series shares as the Distributor may reasonably be
expected to sell. The Trust shall advise the Distributor promptly of (a)
any action of the SEC or any authorities of any state or territory, of
which it may be advised, affecting registration or qualification of the
Trust or the Series shares, or rights to offer Series shares for sale, and
(b) the happening of any event which makes untrue any statement or which
requires the making of any change in the Trust's registration statement or
its prospectus relating to the Series shares in order to make the
statements therein not misleading.
10. Distributor Independent Contractor. The Distributor shall be an
independent contractor and neither the Distributor nor any of its officers
or employees as such is or shall be an employee of the Trust. The
Distributor is responsible for its own conduct and the employment, control
and conduct of its agents and employees and for injury to such agents or
employees or to others through its agents or employees. The Distributor
assumes full responsibility for its agents and employees under applicable
statutes and agrees to pay all employer taxes thereunder.
11. Expenses Paid by Distributor. While the Distributor continues to act as
agent of the Trust to obtain subscriptions for and to sell Series shares,
the Distributor shall pay the following:
(a) all expenses of printing (exclusive of typesetting) and
distributing any prospectus for use in offering Series shares for
sale, and all other copies of any such prospectus used by the
Distributor, and
(b) all other expenses of advertising and of preparing, printing and
distributing all other literature or material for use in connection
with offering Series shares for sale.
12. Interests in and of Distributor. It is understood that any of the
shareholders, trustees, officers, employees and agents of the Trust may be
a shareholder, director, officer, employee or agent of, or be otherwise
interested in, the Distributor, any affiliated person of the Distributor,
any organization in which the Distributor may have an interest or any
organization which may have an interest in the Distributor; that the
Distributor, any such affiliated person or any such organization may have
an interest in the Trust; and that the existence of any such dual interest
shall not affect the validity hereof or of any transaction hereunder
except as otherwise provided in the agreement and declaration of trust or
by-laws of the Trust, in the limited partnership agreement of the
Distributor or by specific provision of applicable law.
13. Words. "New England" and "Nvest" and Letters "TNE". The Distributor and/or
its parent organization and Nvest Companies, L.P. ("Nvest"), retain
proprietary rights in the words "New England" and "Nvest", the letters
"TNE", which may be used by the Trust and the Series only with the consent
of the Distributor, which is authorized by Nvest to give such consent as
provided herein. The Distributor may consent to the use by the Series of
any name embodying the words "New England" or "Nvest" or the letters
"TNE", in such forms as the Distributor shall in writing approve, but only
on condition and so long as (i) this Agreement shall remain in full force
and (ii) the Trust shall fully perform, fulfill and comply with all
provisions of this Agreement expressed herein to be performed, fulfilled
or complied with by it. No such name shall be used by the Trust or the
Series at any time or in any place or for any purposes or under any
conditions except as in this section provided. The foregoing authorization
by the Distributor as agent of Nvest to the Trust and the Series to use
said words or letters as part of a business or name is not exclusive of
the right of the Distributor itself to use, or to authorize others to use,
the same; the Trust acknowledges and agrees that as between the
Distributor and the Trust and the Series, the Distributor has the
exclusive right so to use, or authorize others to use, said words and
letters, and the Trust agrees to take such action as may reasonably be
requested by the Distributor to give full effect to the provisions of this
section (including, without limitation, consenting to such use of said
words or letters). Without limiting the generality of the foregoing, the
Trust agrees that, upon any termination of this Agreement by either party
or upon the violation of any of its provisions by the Trust, the Trust
will, at the request of the Distributor made within six months after the
Distributor has knowledge of such termination or violation, use its best
efforts to change the name of the Trust and the Series so as to eliminate
all reference, if any, to the words "New England" or "Nvest" or the
letters "TNE" and will not thereafter transact any business in a name
containing the words "New England" or "Nvest" or the letters "TNE" in any
form or combination whatsoever, or designate itself as the same entity as
or successor to any entity of such name, or otherwise use the words "New
England" or "Nvest" or the letters "TNE" or any other reference to the
Distributor. Such covenants on the part of the Trust and the Series shall
be binding upon it, its trustees, officers, shareholders, creditors and
all other persons claiming under or through it.
14. Effective Date and Termination. This Agreement shall become effective as
of the date first written above, and
(a) Unless otherwise terminated, this Agreement shall continue in
effect with respect to the shares of the Series for an initial term
of two years and will continue thereafter so long as such
continuation is specifically approved at least annually (i) by the
Board of Trustees of the Trust or by the vote of a majority of the
votes which may be cast by shareholders of the Series and (ii) by a
vote of a majority of the Board of Trustees of the Trust who are not
interested persons of the Distributor or the Trust, cast in person
at a meeting called for the purpose of voting on such approval.
(b) This Agreement may at any time be terminated on sixty days'
notice to the Distributor either by vote of a majority of the
Trust's Board of Trustees then in office or by the vote of a
majority of the votes which may be cast by shareholders of the
Series.
(c) This Agreement shall automatically terminate in the event of its
assignment (excluding for this purpose any assignment of rights to
payment described in the recitals and in Section 19 of the Agreement
which are hereby ratified and approved).
(d) This Agreement may be terminated by the Distributor on ninety
days' written notice to the Trust.
Termination of this Agreement pursuant to this section shall be without
payment of any penalty.
15. Definitions. For purposes of this Agreement, the following definitions
shall apply:
(a) The "vote of a majority of the votes which may be cast by
shareholders of the Series" means (1) 67% or more of the votes of
the Series present (in person or by proxy) and entitled to vote at
such meeting, if the holders of more than 50% of the outstanding
shares of the Series entitled to vote at such meeting are present;
or (2) the vote of the holders of more than 50% of the outstanding
shares of the Series entitled to vote at such meeting, whichever is
less.
(b) The terms "affiliated person," "interested person" and
"assignment" shall have their respective meanings as defined in the
1940 Act subject, however, to such exemptions as may be granted by
the SEC under the 1940 Act.
16. Amendment. This Agreement may be amended at any time by mutual consent of
the parties, provided that such consent on the part of the Series shall be
approved (i) by the Board of Trustees of the Trust or by vote of a
majority of the votes which may be cast by shareholders of the Series and
(ii) by a vote of a majority of the Board of Trustees of the Trust who are
not interested persons of the Distributor or the Trust cast in person at a
meeting called for the purpose of voting on such approval.
17. Applicable Law and Liabilities. This Agreement shall be governed by and
construed in accordance with the laws of The Commonwealth of
Massachusetts. All sales hereunder are to be made, and title to the Series
shares shall pass, in Boston, Massachusetts.
18. Limited Recourse. The Distributor hereby acknowledges that the Trust's
obligations hereunder with respect to the shares of the Series are binding
only on the assets and property belonging to the Series.
19. Payments to Distributor's Transferees. The Distributor may transfer its
rights to payments hereunder with respect to Class B shares (but not its
obligations hereunder) in order to raise funds to cover distribution
expenditures, and any such transfer shall be effective upon written notice
from the Distributor to the Trust. In connection with the foregoing, the
Series is authorized to pay all or a part of the Distribution Fee and/or
contingent deferred sales charges in respect of Class B shares directly to
such transferee as directed by the Distributor.
20. Liquidation etc. As long as the Class B Distribution and Service Plan is
in effect, the Series shall not change the manner in which the
Distribution Fee is computed (except as may be required by a change in
applicable law after the date hereof) or adopt a plan of liquidation
without the consent of the Distributor (or any designee or transferee of
the Distributor's rights to receive payment hereunder in respect of Class
B shares) except in circumstances where a surviving entity or transferee
of the Series' assets adopts the Class B Distribution and Service Plan and
assumes the obligations of the Series to make payments to the Distributor
(or its transferee) hereunder in respect of Class B shares.
21. "Distributor's Shares" etc. The Trust, on behalf of the Series, agrees
that it will not pay any portion of the Class B Distribution Fee which is
calculated by reference to the "Distributor's Shares" (nor shall it pay a
Distribution Fee calculated by reference to Class B shares ("Other Class B
Shares") other than the Distributor's Shares at a rate exceeding .75% per
annum of the net assets attributable to Other Class B Shares) to any
person other than the Distributor (or its designee or transferee) without
the written consent of the Distributor. "Distributor's Shares" shall mean
(i) Class B shares of the Series that were sold by the Distributor, plus
(ii) Class B shares of the Series issued in connection with the exchange,
for Class B shares of the Series, of Class B shares of another fund in the
New England fund group that were sold by the Distributor, plus (iii) Class
B shares of the Series issued in connection with the exchange, for Class B
shares of the Series, of Class B shares of another fund in the New England
fund group issued in respect of the automatic reinvestment of dividends or
capital gain distributions in respect of Class B shares of such other fund
that were sold by the Distributor, plus (iv) Class B shares of the Series
issued in respect of the automatic reinvestment of dividends or capital
gain distributions in respect of Class B shares of the Series described in
clauses (i), (ii) and (iii). To the extent permitted under the 1940 Act,
the terms of this Section 21 shall survive the termination of this
Agreement.
22. Limitation on Reduction of Class B Distribution Fee. The Trust, on behalf
of the Series, agrees that it will not reduce the Distribution Fee in
respect of Series' assets attributable to Class B shares below the annual
rate of 0.75% unless it has ceased (and not resumed) paying all "service
fees" (within the meaning of Section 26 of the Rules of Fair Practice of
the National Association of Securities Dealers, Inc. or any successor
provision thereto) to the Distributor, to any affiliate of the Distributor
and to any other person in circumstances where substantially all of the
services and functions relating to the distribution of Class B Series
shares have been delegated to, or are being performed by, the Distributor
or an affiliate of the Distributor. To the extent permitted under the 1940
Act, the terms of this Section 22 shall survive the termination of this
Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first above written.
KOBRICK INVESTMENT TRUST, NEW ENGLAND FUNDS, L.P.
on behalf of its three series:
By: NEF Corporation, its general partner
Kobrick Capital Fund
Kobrick Growth Fund
Kobrick Emerging Growth Fund
By: /s/ Frederick R. Kobrick By: /s/ Bruce R. Speca
- ------------------------------------ ------------------------------------
Name: Frederick R. Kobrick Name: Bruce Speca
Title: President Title: President
<PAGE>
A copy of the Agreement and Declaration of Trust establishing Kobrick
Investment Trust (the "Trust") is on file with the Secretary of The Commonwealth
of Massachusetts, and notice is hereby given that this Agreement is executed
with respect to the Trust's three series: Kobrick Capital Fund, Kobrick Growth
Fund and Kobrick Emerging Growth Fund (the "Series") on behalf of the Trust by
officers of the Trust as officers and not individually and that the obligations
of or arising out of this Agreement are not binding upon any of the trustees,
officers or shareholders of the Trust individually but are binding only upon the
assets and property of the Series.
New England Funds, L.P.
399 Boylston Street
Boston, Massachusetts 02116
Dealer Agreement
As dealer for our own account, we offer to sell to you shares of each of the
Funds distributed by us (the "Funds" and each a "Fund"), each of which Funds we
are a principal underwriter as defined in the Investment Company Act of 1940
(the "Act") and from which we have the right to purchase shares.
With respect to each of the Funds (except for paragraph 4, which applies only
with respect to each Fund having in effect from time to time a service plan or
service and distribution plan adopted pursuant to Rule 12b-1 under the Act):
1. In all sales of shares of the Fund to the public you shall act as dealer for
your own account, and in no transaction shall you have any authority to act as
agent for any of the Funds or for us.
2. Orders received from you will be accepted by us only at the public offering
price applicable to each order, except for transactions to which a reduced
offering price applies as provided in the then current Prospectus (which term as
used herein shall include the Statement of Additional Information) of the Fund.
The minimum dollar purchase of shares of each Fund by any investor shall be the
applicable minimum amount described in the then current Prospectus of the fund
and no order for less than such amount will be accepted hereunder. The public
offering price shall be the net asset value per share plus the sales charge, if
any, applicable to the transaction, expressed as a percentage of the public
offering price, as determined and effective as of the time specified in the then
current Prospectus of the Fund. The procedures relating to the handling of
orders shall be subject to any instructions that we shall forward from time to
time to you. All orders are subject to acceptance or rejection by us in our sole
discretion. You hereby agree to comply with the attached Policies and Procedures
with Respect to the Sales of Shares of Funds Offering Multiple Classes of
Shares.
3. The sales charge applicable to any sale of Fund shares by you and the dealer
concession or commission applicable to any order from you for the purchase of
Fund shares accepted by us shall be set forth in the then current Prospectus of
the Fund. You may be deemed to be an underwriter in connection with sales by you
of shares of the fund where you receive all or substantially all of the sales
charge as set forth in the Fund's Prospectus, and therefore you may be subject
to applicable provisions of the Securities Act of 1933.
We are entitled to a contingent deferred sales charge ("CDSC") on redemptions of
applicable Classes of shares of the Funds, as described in the then current
Prospectus. You agree that you will sell shares subject to a CDSC and that are
to be held in omnibus accounts only if you are a NETWORKING participant with the
National Securities Clearing Corporation and if such accounts are established
pursuant to a NETWORKING Agreement.
Reduced sales charges or no sales charge may apply to certain transactions under
letter of intent, combined purchases or investments, reinvestment of dividends
and distributions, repurchase privilege, unit investment trust distribution
reinvestment or other programs, as described in the then current Prospectus of
the Fund.
4. Rule 12b-1 Plans. The substantive provisions of this Paragraph 4 have been
adopted pursuant to Rule 12b-1 under the Act by certain funds, under plans
pursuant to such Rule (each a "Plan")
(a) You agree to provide (i) for the Funds with a Service Plan, personal
services to investors in shares of the Funds and/or the maintenance of
shareholder accounts and (ii) for those Funds with a Service and Distribution
Plan, both personal services to investors in shares of the funds and/or the
maintenance of shareholder accounts and also distribution and marketing services
in the promotion of Fund shares. As compensation for these services, we shall
pay you, with respect to Fund shares which are owned of record by your firm as
nominee for your customers or which are owned by those shareholders whose
records, as maintained by the Fund or its agent, designate your firm as the
shareholder's dealer of record, a quarterly services fee or services fee and
distribution fee based on the average daily net asset value of such Fund shares
at the rate set forth with respect to the Fund in the then current Prospectus.
No such fee will be paid to you with respect to shares purchased by you and
redeemed or repurchased by the Fund or by us as an agent within seven (7)
business days after the date of our confirmation of such purchase. No such fee
will be paid to you with respect to any of your customers if the amount of such
fee based upon the value of such customer's Fund shares will be less than $5.00
Normally, payment of such fee to you shall be made within forty-five (45) days
after the close of each quarter for which such fee is payable.
(b) You shall furnish us and the Fund with such information as shall reasonably
be requested by the Trustees or Directors of the Fund with respect to the fees
paid to you pursuant to this paragraph 4.
(c) The provisions of this Paragraph 4 may be terminated by the vote of a
majority of the Trustees or Directors of the Fund who are not interested persons
of the fund and who have no direct or indirect financial interest in the
operation of the Plan or in any agreements related to the Plan, or by a vote of
a majority of the Fund's outstanding shares, on sixty (60) days' written notice,
without payment of any penalty. Such provisions will be terminated also by any
act that terminates either the Fund's Distributor's Contract or Underwriting
Agreement with us or this Dealer Agreement and shall terminate automatically in
the event of the assignment (as that term is defined in the Act) of this Dealer
Agreement.
(d) The provisions of the Distributor's Contract or Underwriting Agreement
between the Fund and us, insofar as they relate to the Plan, are incorporated
herein by reference. The provisions of this paragraph 4 shall continue in full
force and effect only so long as the continuance of the Plan, the Distributor's
Contract or Underwriting Agreement and these provisions are approved at least
annually by a vote of the Trustees or Directors, including a majority of the
Trustees or Directors who are not interested persons of the Fund and who have no
direct or indirect financial interest in the operation of the Plan or in any
agreements related to the Plan, cast in person at a meeting called for the
purpose of voting thereon.
5. You agree to purchase shares only from us or from your customers. If you
purchase shares from us, you agree that all such purchases shall be made only:
(a) to cover orders already received by you from your customers; (b) for shares
being acquired by your customers pursuant to either Exchange privilege or the
Reinvestment Privilege, as described in the then current prospectus of the Fund;
(c) for your own bona fide investment; or (d) for investments by any IRS
qualified pension, profit sharing or other trust established for the benefit of
your employees or for investments in Individual Retirement Accounts established
by your employees, and if you so advise us in writing prior to any sale of Fund
shares pursuant to this subparagraph (d), you agree to waive all your dealer
concessions to all sales of Fund shares pursuant to this subparagraph (d). If
you purchase shares from your customers, you agree to pay such customers not
less than the applicable redemption price as established by the then current
Prospectus of the Fund. We agree that we will not purchase any securities from
the Fund except for our own bona fide investment purposes for the purpose of
covering purchase orders that we have already received or for shares to be
acquired by our customers pursuant to either exchange privilege or the
repurchase privilege, as described in the then current prospectus of the Fund.
6. You shall sell shares only: (a) to customers at the applicable public
offering price, except for shares being acquired by your customers at net asset
value pursuant to either the exchange privilege or the repurchase privilege as
described in the then current Prospectus of the Fund, and (b) to us agent for
the Fund at the redemption price. In such a sale to us, you may act as either as
principal for your own account or as agent for your customer. If you act as
principal for your own account in purchasing shares for resale to us, you agree
to pay your customer not less than the price that you receive from us. If you
act as an agent for your customer in selling shares to us, you agree not to
charge your customer more than a fair commission for handling the transaction,
except that you agree to receive no compensation of any kind based on the
reinvestment of redemption or repurchase proceeds pursuant to the repurchase
privilege, as described in the current Prospectus of the Fund.
7. You hereby certify that all of your customers' taxpayer identification
numbers ("TIN") or social security numbers ("SSN") furnished to us by you are
correct and that you will not open an account without providing the customer's
TIN or SSN.
8. You shall not withhold placing with us orders received from your customers so
as to profit yourself as a result of such withholding; e.g., by a change in the
net asset value from that used in determining the public offering price to your
customers.
9. We will not accept from you any conditional orders for shares.
10. If any Fund shares sold to you under the terms of this Agreement are
redeemed by the Fund or repurchased by us as agent for the Fund within seven (7)
business days after the date of our confirmation of the original purchase by
you, it is agreed that you shall forfeit your right to the dealer concession or
commission received by you on such Fund shares.
We will notify you of any such repurchase or redemption within ten (10) business
days after the date thereof and you shall forthwith refund to us the entire
concession or commission allowed or paid to you on such sale. We agree, in the
event of any such repurchase or redemption, to refund to the Fund the portion of
the sales charge if any, retained by us and upon receipt from you of the
concession allowed to you on Class A Shares, to pay such refund forthwith to the
Fund.
11. Payment for Fund shares sold to you shall be made on or before the
settlement date specified in our confirmation, at the office of our clearing
agent, and by check payable to the order of the Fund, which reserves the right
to delay issuance, redemption or transfer of shares until such check has
cleared. If such payment is not received by us, we reserve the right, without
notice, forthwith either to cancel the sale, or at our option, to sell the
shares ordered back to the Fund, resulting from your failure to make payment as
aforesaid.
12. You will also act as principal in all purchases by a shareholder for whom
you are the dealer of record of fund shares with payments sent directly by such
shareholder to the Shareholder Services and Transfer agent (the "Agent")
specified in the then current Prospectus of the Fund, and you authorize and
appoint the Agent to execute and confirm such purchases to such shareholder on
your behalf. The Agent will remit not less frequently than monthly to you the
amount of any concessions due with respect to such purchases, except that no
concessions will be paid to you on any transaction for which your net sales
concession is less than the total of $5.00 in any one month. You also represent
that with respect to all such direct purchases by such shareholder, you may
lawfully sell shares of such Fund in the state designated as such shareholder's
record address.
13. Stock certificates for shares sold to you shall be issued only if
specifically requested and upon terms specified from time-to-time by the
Trustees of the Fund. If no open account registration or transfer instructions
are received by the Agent within 20 days after payment by you for shares sold to
you, an open account for such shares will be established in your name. You agree
to hold harmless and indemnify us, the Agent and the Fund, for any loss or
expenses resulting from such open account registration of such shares.
14. No person is authorized to make any representations concerning shares of the
Fund except those contained in the then current Prospectuses of the Fund and in
sales literature issued by us supplemental to such Prospectuses. In purchasing
shares from us, you shall rely solely on the representations contained in such
Prospectus and such sales literature. We will furnish you with additional copies
of such Prospectuses and such sales literature and other releases and
information issued by us in reasonable quantities upon request.
If, with prior approval from us, you use any advertisement or sales literature
which has not been supplied by us, you are responsible for ensuring that the
material complies with all applicable regulations and has been filed with the
appropriate authorities. Also, you will send us copies of all such materials
within (10) days of first use.
You shall indemnify and hold us (Distributor and its directors, officers,
employees, and agents) harmless from and against any and all losses, claims,
liabilities and expenses (including reasonable attorneys' fees)("Losses")
incurred by any of them arising out of (i) your dissemination of information
regarding any Fund that is alleged to contain an untrue statement of material
fact or any omission of a material fact necessary in order to make the
statements made, in light of the circumstances under which they were made, not
misleading and that was not published or provided to you by or on behalf of us
or our affiliated persons ("Affiliates"), as defined under the Investment
Company Act of 1940, as amended (the "1940 Act"), or accurately derived from
information published or provided by or on behalf of us or any of our
affiliates, (ii) any breach by you of any representation, warranty or agreement
contained in this agreement, or (iii) any willful misconduct or negligence on
your part in the performance of, or failure to perform, your obligations under
this agreement, except to the extent such losses are caused by our breach of
this Agreement or our willful misconduct or negligence in the performance, or
failure to perform, its obligations under this Agreement. This Section (16)
shall survive termination of this Agreement.
15. The Fund reserves the right in its discretion and we reserve the right in
our discretion, without notice, to suspend sales or withdraw the offering of
Fund shares entirely. We reserve the right, by written notice to you, to amend,
modify, cancel or assign this Dealer Agreement. Notice for all purposes shall be
deemed to be given when mailed or electronically transmitted to you.
16. This Dealer Agreement shall replace any prior agreement between you and us
or any of our predecessor entities (TNE Investment Services, Investors Trust of
Boston) and is conditioned upon your representation and warranty that you are a
member of the National Association of Securities Dealers, Inc. Or, in the
alternative, that you are a foreign dealer not eligible for membership in that
Association, in which case you agree that, in making any sales to purchasers
within the United States of securities acquired from us, you will conform to the
provisions of paragraphs (a) and (b) of Rule 2420 of that Association's Conduct
Rules. You and we agree to abide by the Rules and Regulations of the National
Association of Securities Dealers, Inc. Including without limitation Conduct
Rules 2310, 3110, and 2830 , and all applicable state and federal laws, rules
and regulations.
You will not offer Fund shares for sale in any state (a) where they are not
qualified for sale under the blue sky laws and regulations of such state or (b)
where you are not qualified to act as a dealer.
In the event that you offer fund shares outside the United States, you agree to
comply with the applicable laws, rules and regulations of the foreign government
having jurisdiction over such sales, including any regulations of United States
military authorities applicable to solicitations to military personnel.
17. All communications to us should be sent to the above address. Any notice to
you shall be duly given if mailed or telegraphed to you at the address specified
by you below. This Agreement shall be effective when accepted by you below and
shall be construed under the laws of the Commonwealth of Massachusetts.
Accepted: New England Funds, L.P.
By: /s/ Bruce R. Speca
- ------------------------------------ -----------------------------
Bruce R. Speca, President
Dealer's Name
Address
- ------------------------------------
By:
---------------------------------
Authorized Signature of Dealer
- ------------------------------------
(Please print name)
Date:
-------------------------------
<PAGE>
POLICIES AND PROCEDURES WITH RESPECT TO SALES OF NEW ENGLAND FUNDS OFFERING
MULTIPLE CLASSES OR SHARES
In connection with the offering by certain Funds (the "Funds") with multiple
classes of shares, one subject to a front-end sales load and a service fee or
service and distribution fee ("Class A shares"), one subject to a service fee, a
distribution fee, no front-end sales load and a contingent deferred sales charge
("CDSC") on redemptions within a time period specified in the then current
prospectus of the Fund ("Class B shares"), one subject to a service fee,
distribution fee, no front-end sales load and a CDSC if redeemed in the first
year ("Class C shares") and one intended only for certain institutional
investors and subject to no front-end sales load ("Class Y shares"), an investor
must choose the method of purchasing shares which best suits his/her particular
circumstances. To assist investors in these decisions, the Distributor has
instituted the following policies with respect to orders for Fund shares. These
policies apply to each broker/dealer which distributes Fund shares.
1. No purchase order may be placed for Class B shares if the amount of the
orders equals or exceeds $1,000,000 or the order is eligible for a net
asset value purchase price (i.e. no front-end sales charge) of Class A
shares, as provided in the prospectus.
2. No purchase order may be placed for Class C shares if the amount of the
order equals or exceeds $1,000,000 or the order is eligible for a net
asset value purchase price (i.e. no front-end sales charge) of Class A
shares unless the investor indicates on the relevant section of the
application that the investor has been advised of the relative advantages
and disadvantages of Class A and C shares.
3. Any purchase order for less than $1,000,000 may be for either Class, A, B
or C shares in light of the relevant facts and circumstances, including:
a) the specific purchase order dollar amount;
b) the length of time the investor expects to hold his/her shares; and
c) any other relevant circumstances such as the availability of
purchase under a Letter of Intent, Breakpoints (a volume discount),
or Rights of Accumulation, as described in the prospectus.
4. The following types of investors are eligible only to purchase Class Y
shares so long as they meet the minimum initial investment standard; they
are not eligible to invest in Class A, B or C shares:
a) tax-qualified retirement plans ($2,000,000 minimum initial
investment);
b) endowments, foundations and other tax-qualified organizations
($1,000,000 minimum initial investment);
c) separate accounts of New England Financial or any insurance company
affiliated with New England Financial (no minimum);
d) omnibus accounts of retirement plans with at least 500 eligible plan
participants and $1,000,000 of plan assets.
Institutional investors described above who will not make the initial minimum
investment amount are eligible to invest in Class A, B or C shares. They should
be advised, however, of the lower fees and expenses applicable to Class Y shares
and should consider whether a larger investment, to meet the Class Y
requirements, would be appropriate and desirable for their circumstances.
There are instances when one method of purchasing shares may be more appropriate
than the other. For example, investors who would qualify for a significant
discount from the maximum sales load on Class A shares may determine that
payment of such a reduced front-end sales load and service fee is preferable to
payment of a higher ongoing distribution fee. Investors whose orders would not
qualify for such a discount and who anticipate holding their investment for more
than eight years might consider Class B shares because 100% of the purchase
price is invested immediately. Investors making smaller investments who
anticipate redeeming their shares within eight years might consider Class C
shares for the same reason.
Appropriate supervisory personnel within your organization must ensure that all
employees and representatives receiving investor inquires about the purchase of
shares of a Fund advise the investor of then available pricing structures
offered by the Fund, and the impact of choosing one method over another. In some
instances it may be appropriate for a supervisory person to discuss a purchase
with the investor.
This policy is effective with respect to any order for the purchase of shares of
a Fund offering multiple classes of shares.
Questions relating to this policy should be directed to Bruce R. Speca,
President and Chief Executive Officer, New England Funds, L.P. at
(617) 578-1117.
<PAGE>
Exhibit 99.g(3)
STATE STREET BANK AND TRUST COMPANY
CUSTODIAN FEE SCHEDULE
KOBRICK INVESTMENT TRUST
Kobrick Capital Fund
Kobrick Emerging Growth Fund
Kobrick Growth Fund
- --------------------------------------------------------------------------------
I. Administration
A. Custody, Portfolio and Fund Accounting Service - Maintain
custody of fund assets. Settle portfolio purchases and sales. Report
buy and sell fails. Determine and collect portfolio income. Make
cash disbursements and report cash transactions. Maintain investment
ledgers, provide selected portfolio transactions, position and
income reports. Maintain general ledger and capital stock accounts.
Prepare daily trial balance. Calculate net asset value daily.
Provide selected general ledger reports. Securities yield or market
value quotations will be provided to State Street by the fund.
The administration fee shown below is an annual charge, billed and
payable monthly, based on average monthly net assets.
ANNUAL FEES PER PORTFOLIO
A. Custody, Portfolio
Fund Net Assets and Fund Accounting
--------------- ---------------------
First $20 Million 1/15 of 1%
Next $80 Million 1/30 of 1%
Excess 1/100 of 1%
Minimum Monthly Charges $2,500
MONTHLY FEE FOR EACH ADDITIONAL CLASS OF SHARES
Second Class $1,000
All Other Classes $250
II. GLOBAL CUSTODY - Comprised of asset charges and transaction charges.
Country Grouping
Group I Group II Group III Group IV Group V
------- -------- --------- -------- -------
Euroclear Austria Australia Denmark Mexico
Canada Belgium Finland Portugal
W. Germany Netherlands France Spain
Hong Kong New Zealand Italy Sweden
Japan Norway Malaysia Emerging
Singapore Thailand Market
Switzerland United Kingdom Countries
ASSET CHARGE (BASIS POINTS):
Group I Group II Group III Group IV Group V
------- -------- --------- -------- -------
First $50 Million 5 12 15 18 25
Next $50 Million 4.5 10 13 16 25
Over $100 Million 4 8 11 14 25
TRANSACTION CHARGE:
Group I Group II Group III Group IV Group V
------- -------- --------- -------- -------
$25 $30 $45 $60 $75
III. Portfolio Trades - For each line item processed
State Street Bank Repos $ 7.00
DTC or Fed Book Entry $10.00
New York Physical Settlements $25.00
PTC Purchase, Sale, Deposit or Withdrawal $20.00
All Other Trades $16.00
Third Party Foreign Exchanges (FX's) $50.00
IV. Options
Option charge for each option written or closing contract,
per issue, per broker $25.00
Option expiration charge, per issue, per broker $15.00
Option exercised charge, per issue, per broker $15.00
V. Interest Rate Futures
Transactions -- no security movement $ 8.00
VI. Principal Reduction Payments
Per Paydown $10.00
VII. Dividend Charges (For items held at the Request of
Traders over record date in street form) $50.00
VIII. Special Services
Fees for activities of a non-recurring nature such as fund
consolidations or reorganizations, extraordinary security shipments
and the preparation of special reports will be subject to
negotiation. Fees for automated pricing, yield calculation and other
special items will be negotiated separately.
IX. SEC Yields
For each portfolio maintained, monthly charge is based on the number
of holdings as followed:
Second Class All Add'l Classes
Holding Per Portfolio Monthly Charge Monthly Charge Monthly Charge
- --------------------- -------------- -------------- -----------------
0-50 $250 $200 $100
50-100 $300 $250 $150
over 100 $350 $300 $200
X. Out-of-Pocket Expenses
A billing for the recovery of applicable out-of-pocket expenses will
be made as of the end of each month. Out-of-pocket expenses include,
but are not limited to the following:
Telephone
Wire Charges ($5.25 per wire in and $5.00 out)
Postage and Insurance
Courier Service
Duplicating
Legal Fees
Supplies related to fund records
Rush Transfer -- $8.00 each
Transfer Fees
Subcustodian Charges
Price Waterhouse Audit Letter
Federal Reserve Fee for Return Check items over $2,500 - $4.25
GNMA Transfer - $15.00 each
PTC Deposit/Withdrawal for same day turnarounds - $50.00
KOBRICK INVESTMENT TRUST STATE STREET BANK & TRUST COMPANY
By: /s/ Frederick R. Kobrick By: /s/ Timothy J. Panaro
-------------------------- --------------------------
Frederick R. Kobrick Timothy J. Panaro
Title: President Title: Vice President
Date: October 1, 1999 Date: October 5, 1999
<PAGE>
STATE STREET BANK AND TRUST COMPANY
Fee Information for Automated Pricing
KOBRICK INVESTMENT TRUST
This service provides securities pricing on request. Services and fees are based
on the schedule below. Reports can be generated at State Street or on a remote
basis via PC. Reporting has both up load and down load capabilities. Customized
reports may require programming fees.
- --------------------------------------------------------------------------------
Monthly charges for the State Street Bank Automated Pricing System are
determined by:
1. Mix of security positions.
2. The number of positions that are priced during the month.
Monthly Base Fee $200.00
Monthly Quote Charge:
- Municipal Bonds via Muller Data $16.00
- Municipal Bonds via Kenny Information Systems $16.00
- Government, Corporate and Convertible Bonds via
Merrill Lynch $11.00
- Corporate and Government Bonds via Muller Data $11.00
- Options, Futures and Private Placements $6.00
- Foreign Equities, OTC Equities, and Bonds $6.00
- Listed Equities, OTC Equities, and Bonds $6.00
- Corporate, Municipal, Convertible and Government Bonds,
Adjustable Rate Preferred Stocks via IDSI $6.00
For billing purposes, the monthly quote charge will be based on the average
number of positions in the portfolio.
KOBRICK INVESTMENT TRUST STATE STREET BANK & TRUST COMPANY
By: /s/ Frederick R. Kobrick By: /s/ Timothy J. Panaro
-------------------------- --------------------------
Frederick R. Kobrick Timothy J. Panaro
Title: President Title: Vice President
Date: October 1, 1999 Date: October 5, 1999
<PAGE>
Exhibit 99.(h)(1)(b)
ADMINISTRATIVE SERVICES AGREEMENT
AGREEMENT made as of the 1st day of October 1999, by and between Kobrick
Investment Trust (the "Trust"), a Massachusetts business trust, and Nvest
Services Company, Inc., a Massachusetts corporation ("NSC").
WITNESSETH:
WHEREAS, the Trust is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, the Trust desires to employ NSC to provide certain administrative
services to the Trust in the manner and on the terms set forth in this
Agreement, and NSC wishes to perform such services;
NOW, THEREFORE, in consideration of the premises and covenants hereinafter
contained, the parties hereby agree as follows:
1. APPOINTMENT AND ACCEPTANCE. The Trust hereby employs NSC to act as
Administrator of the Trust on the terms set forth in this agreement. NSC hereby
accepts such employment and agrees to furnish the services and to assume the
obligations herein set forth for the compensation herein provided. The Trust
will initially consist of the portfolios and/or classes of shares (each a "Fund"
and collectively, the "Funds") listed on Schedule A to this Agreement. In the
event that the Trust establishes one or more additional Funds with respect to
which it wishes to employ NSC to act as Administrator hereunder, the Trust shall
notify NSC in writing. Upon written acceptance by NSC, such Fund shall become
subject to the provisions of this Agreement to the same extent as the existing
funds, except to the extent that such provisions (including those relating to
the compensation and expenses payable by the Trust and its Funds) may be
modified with respect to each additional Fund in writing by the Trust and NSC at
the time of the addition of the Fund.
2. SERVICES PROVIDED BY NSC.
(a) NSC shall perform or arrange for the performance of the various
administrative and clerical services listed in Schedule B hereto. The
administrative services provided hereunder shall be subject to the
control, supervision and direction of the Trust and the review and
comment by the Trust's auditors and legal counsel and shall be performed
in accordance with procedures which may be established from time to time
between the Trust and NSC. NSC shall provide the office space,
facilities, equipment and the personnel required by it to perform the
services contemplated herein.
(b) In providing any or all of the services listed in Schedule B hereto, and
in satisfaction of its obligations to provide such services, NSC may enter
into agreements with one or more other third parties to provide such
services to the Trust; provided, however, that NSC shall be as fully
responsible to the Trust, and the Funds for the acts and omissions of any
such third party service providers as it would be for its own acts or
omissions hereunder.
3. COMPENSATION AND EXPENSES.
(a) For the services provided by NSC to the Trust hereunder, the Trust shall
pay NSC the greater of the following:
(1) an annual fee payable in equal monthly installments equal to $70,000
per outstanding Fund; or
(2) a monthly fee (accrued daily) based on the Funds' average daily net
assets during the calendar month, such fee being calculated at the
annualized rates set forth below:
AVERAGE DAILY NET ASSETS ANNUALIZED FEE RATE
AS A % OF AVERAGE DAILY NET ASSETS
--------------------------- ----------------------------------
$0 - $100,000,000 0.070%
$100,000,000 - $400,000,000 0.050%
Over $400,000,000 0.030%
(b) In addition, the Funds shall reimburse NSC for its reasonable
out-of-pocket expenses as well as any other advances incurred by NSC with
the consent of the Funds with respect to its provision of services
hereunder. It is agreed that the expense for Blue Sky administrative
services performed and vendor will be paid by the Funds.
(c) For any period less than a full calendar month, any fees payable to NSC
for such period shall be pro-rated for such lesser period. All of the
foregoing fees and expenses will be billed monthly in arrears by NSC. The
Trust shall pay such fees and reimburse such expenses promptly upon
receipt of an invoice therefor and, in no event, later than five (5)
business days after receipt of the invoice.
(d) The Funds agree promptly to reimburse NSC for any equipment and supplies
specially ordered by or for the Trust through NSC at the Funds' request or
with the Funds' consent and for any other expenses not contemplated by
this Agreement that NSC may incur on the Funds' behalf at the Funds'
request or with the Funds' consent.
(e) The Funds will bear all expenses that are incurred in their operation
and not specifically assumed by NSC. Expenses to be borne by the Funds,
include, but are not limited to: organizational expenses; cost of
services of independent accountants and outside legal and tax counsel
(including such counsel's review of the Trust's registration statement,
proxy materials, federal and state tax qualification as a regulated
investment company and other reports and materials prepared by NSC under
this Agreement); cost of any services contracted for by the Funds
directly from parties other than NSC; cost of trading operations and
brokerage fees, commissions and transfer taxes in connection with the
purchase and sale of securities for the Funds; investment advisory fees;
taxes, insurance premiums and other fees and expenses applicable to its
operation; costs incidental to any meetings of shareholders including,
but not limited to, legal and accounting fees, proxy filing fees and the
costs of preparation, printing and mailing of any proxy materials; costs
incidental to Board meetings, including fees and expenses of Board
members; the salary and expenses of any officer, director/trustee or
employee of the Trust; costs incidental to the preparation, printing and
distribution of the Trust's registration statements and any amendments
thereto and shareholder reports; cost of typesetting and printing of
prospectuses; cost of preparation and filing of the Fund's tax returns,
Form N-1A and Form N-SAR, and all notices, registrations and amendments
associated with applicable federal and state tax and securities laws;
all applicable registration fees and filing fees required under federal
and state securities laws; fidelity bond and directors' and officers'
liability insurance; and cost of independent pricing services used in
computing the Fund's net asset value.
4. LIMITATION OF LIABILITY; INDEMNIFICATION.
(a) NSC shall not be liable to the Trust or the Funds for any error of
judgment or mistake of law or for any loss arising out of any act or
omission by NSC, or any persons engaged pursuant to Section 2(b) hereof,
including officers, agents, and employees of NSC and its affiliates, in
the performance of its duties hereunder; provided, however, that nothing
contained herein shall be construed to protect NSC against any liability
to the Trust, the Funds, or the shareholders to which NSC shall
otherwise be subject by reason of its willful misfeasance, bad faith, or
negligence in the performance of its duties or the reckless disregard of
its obligations and duties hereunder.
(b) NSC will indemnify and hold harmless the Trust, its trustees, officers,
employees, and agents and any persons who control the Trust
(collectively, the "Trust Indemnified Parties") and hold each of them
harmless from any losses, claims, damages, liabilities, or actions in
respect thereof to which the Trust Indemnified Parties may become
subject, including amounts paid in settlement with the prior written
consent of NSC, insofar as such losses, claims, damages, liabilities,
or actions in respect thereof arise out of or result from the failure
of NSC to comply with the terms of this Agreement.
NSC will reimburse the Trust for reasonable legal or other expenses
reasonably incurred by the Trust in connection with investigating or
defending against any such loss, claim, damage, liability, or action. NSC
shall not be liable to the Trust for any action taken or omitted by the
Trust in bad faith or with willful misfeasance or negligence or with
reckless disregard by the Trust of its obligations and duties hereunder.
The indemnities herein shall, upon the same terms and conditions, extend
to and inure to the benefit of each of the trustees and officers of the
Trust and any person controlling the Trust.
(c) The obligations set forth in this Section 4 shall survive the termination
of this Agreement.
5. ACTIVITIES OF NSC NOT EXCLUSIVE; DUAL INTERESTS.
(a) The services of NSC under this Agreement are not to be deemed exclusive,
and NSC and any person controlled by or under common control with NSC
shall be free to render similar services to others.
(b) It is understood that any of the trustees, officers, employees, and
agents of the Trust may be a shareholder, director, officer, employee,
or agent of, or be otherwise interested in, NSC, any affiliated person
of NSC, any organization in which NSC may have an interest, or any
organization that may have an interest in the Trust, or a Fund. Except
as otherwise provided by specific provisions of applicable law, the
existence of any such dual interest shall not affect the validity of
this Agreement or any of the transactions hereunder.
6. REPRESENTATIONS AND WARRANTIES.
(a) The Trust represents and warrants to NSC that this Agreement has been
duly authorized by the Board of Trustees of the Trust and, when
executed and delivered by the Trust, will constitute a legal, valid,
and binding obligation of the Trust, enforceable against the Trust and
its Funds in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium, and other laws of general
application affecting the rights and remedies of creditors and secured
parties.
(b) NSC represents and warrants to the Trust that this Agreement has been duly
authorized by NSC and, when executed and delivered by NSC, will constitute
a legal, valid, and binding obligation of NSC, enforceable against NSC in
accordance with its terms, subject to bankruptcy, insolvency,
reorganization, moratorium, and other laws of general application
affecting the rights and remedies of creditors and secured parties.
7. DURATION AND TERMINATION OF THIS AGREEMENT.
(a) This Agreement shall become effective as of the date first above written
and, unless otherwise terminated, shall continue indefinitely; provided,
however, that this Agreement may be terminated at any time without the
payment of any penalty by either party on not less than sixty (60) days'
written notice to the other party.
(b) NSC hereby agrees that any books and records prepared hereunder with
respect to the Trust are the property of the Trust and shall be readily
accessible to the Trust and its trustees, officers and agents during
normal business hours. NSC further agrees that, upon the termination of
this Agreement or otherwise upon request, NSC will surrender promptly to
the Trust copies of all such books and records.
8. AMENDMENTS AND WAIVERS. This Agreement may be amended by the parties
hereto only if such amendment is specifically approved by the Trust's Board of
Trustees, and such amendment is set forth in a written instrument executed by
each of the parties hereto. At any time, any of the provisions hereof may be
waived by the written mutual consent of the parties hereto.
9. NOTICES. All notices or other communications hereunder to either party
shall be in writing and shall be deemed to be received on the earlier of the
date actually received or on the fourth day after the postmark if such notice is
mailed first class postage prepaid. Notices shall be sent to the addresses set
forth below or to such other address as either party may designate by written
notice to the other.
If to NSC:
Nvest Services Company, Inc.
399 Boylston Street
Boston, MA 02116
Attention: President
With a copy to: General Counsel
If to the Trust:
Kobrick Investment Trust
101 Federal Street, 10th floor
Boston, MA 02110
Attention: President
With a copy to: Chief Operating Officer
Notice shall also be deemed sufficient if given electronically or by telex,
telecopier, telegram, or other similar means of same day delivery (with a
confirming copy by mail as provided herein).
10. ADDITIONAL PROVISIONS
(a) Confidentiality. NSC shall, except as otherwise required by law or in
connection with any required disclosure to a regulatory authority, keep
confidential all records and information in its possession relating to the
Trust, the Funds, shareholders or shareholder accounts and will not disclose
the same to any person except at the request or with the consent of the
Trust. To the extent reasonable practicable, NSC shall notify the Trust of
any request for disclosure received from a regulatory authority or made by
the legal process.
(b) Year 2000. Neither party shall be held liable for computer-related problems
arising out of or associated with third party vendor computer systems or
related equipment that are incurred in connection with the change from the
years 1999 to 2000. NSC has conducted a commercially reasonable
investigation of the applicable computer systems of the Trust's fund
accounting agent, State Street Bank and Trust, and is not aware of any Year
2000 issues. NSC will notify the Trust promptly in the event it becomes
aware of any Year 2000 issues.
(c) Separate Portfolios. This Agreement shall be construed to be made by the
Trust as a separate agreement with respect to each Fund, and under no
circumstances shall the rights, obligations, or remedies with respect to a
particular Fund be deemed to constitute a right, obligation, or remedy
applicable to any other Fund.
(d) Non-Assignability. This agreement shall not be assigned by either party
hereto without the prior consent in writing of the other party, except that
NSC may assign this agreement to a successor of all or a substantial portion
of its business, or to a party controlling, controlled by or under common
control with NSC.
(e) Entire Agreement. This Agreement constitutes the entire agreement of the
parties with respect to the subject matter hereof and supersedes any prior
arrangements, agreements, or understandings.
(f) Severability. If any term or provision of this Agreement or the application
thereof to any person or circumstance is held to be invalid or unenforceable
to any extent, the remainder of this Agreement or the application of such
provision to other persons or circumstances shall not be affected thereby
and shall be enforced to the fullest extent permitted by law.
(g) Governing Law. The provisions of this Agreement shall be construed and
interpreted in accordance with the laws of The Commonwealth of Massachusetts
as then in effect.
(h) Counterparts. This Agreement may be executed by the parties hereto in one or
more counterparts, and, if so executed, the separate instruments shall
constitute one agreement.
(i) Headings. Headings used in this Agreement are included for convenience only
and are not to be used to construe or interpret this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day
and year first above written.
KOBRICK INVESTMENT TRUST
By: /s/ Frederick R. Kobrick
-----------------------------
Name: Frederick R. Kobrick
Title: President
NVEST SERVICES COMPANY, INC.
By: /s/ Christopher L. Wilson
-----------------------------
Name: Christopher L. Wilson
Title: President
<PAGE>
SCHEDULE A
TRUST PORTFOLIOS
1. Kobrick Capital Fund
2. Kobrick Growth Fund
3. Kobrick Emerging Growth Fund
<PAGE>
SCHEDULE B
DESCRIPTION OF SERVICES PROVIDED
NSC shall perform or arrange for the performance of the following administration
and clerical service:
CORPORATE SECRETARIAL SERVICES
1. provide Assistant Secretaries for the Trust and other officers as
requested, subject to the general supervision of the Secretary of the
Trust;
2. maintain general corporate calendar, tracking all legal and regulatory
compliance through annual cycles;
3. prepare Board materials for quarterly Board meetings and Board committee
meetings, including agenda and background materials for annual review of
advisory and distribution fees, presentation of issues to the Board,
prepare minutes and follow-up on matters raised at meetings;
4. maintain charter documents for the Trust;
5. prepare organizational Board meeting materials for new Funds;
6. draft contracts, assisting in negotiation and planning, as appropriate,
for example advisory, distribution and selling agreements, transfer
agency and custodian agreements, 12b-1 and shareholder servicing plans
and related agreements and various other agreements and amendments;
7. prepare and file proxy solicitation materials, oversee solicitation and
tabulation efforts, conduct shareholder meetings and provide legal
presence at meetings;
REGISTRATION AND DISCLOSURE ASSISTANCE SERVICES
8. prepare and file amendments to the Funds' registration statement,
including updating prospectuses and SAIs;
9. prepare and file prospectus and SAI supplements, as needed;
10. prepare and file other regulatory documents, including N-SARs, Rule
24f-2/24e-2 Notices;
11. negotiate, obtain and file fidelity bonds and monitor compliance with
Rule 17g-1 and Rule 17d-1(7) under the 1940 Act;
12. negotiate, obtain and monitor directors' and officers' errors and
omissions policies;
13. prepare and file shareholder meeting materials and assist with all
shareholder communications;
14. coordinate and monitor state Blue Sky qualification through an
experienced vendor partner;
LEGAL CONSULTING AND PLANNING SERVICES
15. provide general legal advice on matters relating to portfolio
management, Fund operations, mutual fund sales, development of
advertising materials, changing or improving prospectus disclosure, and
any potential changes in each Fund's investment pollicies, operations,
or structure;
16. communicate significant emerging regulatory and legislative developments
to the Adviser and Board and provide related planning assistance;
17. develop or assist in developing guidelines and procedures to improve
overall compliance by the Adviser and Funds;
18. provide advice with regard to litigation matters, routine fund
examinations and investigations by regulatory agencies;
19. provide advice regarding long-term planning for the Funds, including
creation of new funds or portfolios, corporate structural changes,
mergers, acquisitions, and other asset gathering plans including new
distribution methods;
20. maintain effective communications with fund counsel and counsel to the
independent Trustees if any;
21. create and implement timing and responsibility system for outside legal
counsel when necessary to implement major projects and the legal
management of such projects;
22. monitor activities and billing practices of counsel performing services
for the Funds or in connection with related fund activities;
23. provide consultation and advice for resolving compliance questions along
with the Adviser, its counsel and fund counsel;
24. provide active involvement with the management of SEC and other
regulatory examinations;
25. advise regarding distribution arrangements for compliance with
applicable broker-dealer regulations;
26. maintain the Trust's Code of Ethics and monitor compliance of personnel;
BROKER-DEALER COMPLIANCE SERVICES
27. complete, file and maintain Form BD, state broker-dealer renewals,
annual financials, quarterly financial statements (FOCUS Reports) and
NASD annual assessments;
28. provide dynamic broker-dealer supervisory structure which is documented
and detailed in writing by the Hierarchy of Supervision, Office of
Supervisory Jurisdiction and Detached Office Manual, Registered
Representative Compliance Manual, Advertising and Sales Literature
Manual, and Continuing Education Plan;
29. deliver effective broker-dealer compliance programs, as mandated by
regulation, including annual compliance meetings, Office of Supervisory
Jurisdiction annual inspection, correspondence oversight, firm element
continuing education course evaluation/attendance monitoring, complaint
coordination, resolution and reporting, and periodic interpretive
releases and guidance on compliance developments;
30. coordinate the fingerprinting, registration and licensing of personnel
through the NASD CRD System, including conducting background checks,
processing U-4 registration applications and U-5 termination notices,
annual renewals, arranging for examination dates and continuing
education regulatory element sessions;
TRANSFER AGENT COMPLIANCE SERVICES
31. ensure that the content of confirmations, statements, annual and
semi-annual reports, disclosure statements and shareholder
administrative communications conform to regulatory requirements and are
distributed within the mandated time frames;
32. monitor and review transfer agent activity in order to evaluate the
status of regulatory compliance, protect the integrity of the funds and
shareholders, search for systemic weaknesses, and examine for potential
liability and fraud;
33. investigate and research customer and other complaints to determine
liability, facilitate resolution and promote equitable treatment of all
parties;
34. consult with transfer agent and other staff regarding prospectus and SAI
provisions and requirements, distribution issues including payment
programs, sub-transfer agent arrangements and other regulatory issues;
TREASURY FINANCIAL SERVICES
35. provide Assistant Treasurers for the Trust as requested, subject to the
general supervision of the Treasurer of the Trust;
36. generate portfolio schedules utilizing State Street Safire system;
37. create financial statements and financial highlight tables;
38. maintain and update the notes to the financials;
39. supply State Street Bank with a listing of audit reports and schedules;
40. coordinate with external auditors for annual audit;
41. review financial statements for completeness accuracy and full
disclosure;
42. coordinate ROCSOP adjustments with auditors;
43. determine and monitor expense accrual for each fund;
44. verify management and 12b-1 fees calculated by State Street;
45. review fund waivers and deferrals;
46. calculate total returns for each fund and respective classes using the
Fundstation system;
47. oversee and review custodial bank services including maintenance of
books and records;
48. provide service bureaus with funds statistical information;
49. oversee the determination and publication of the Funds' net asset
values;
50. review the calculation, submit for approval by an officer of the Funds',
and arrange for the payment of the Funds' expenses;
51. oversee and review the calculation of fees paid to the Funds' adviser,
custodian, transfer agent and distributor and submit to an officer for
Funds' approval;
TREASURY REGULATORY SERVICES
52. prepare and file annual and semi-annual N-SAR forms with the SEC;
53. provide Trustees with condensed portfolio information;
54. review securities lending activity;
55. review pricing errors;
56. review fair value pricing;
57. review stale pricing;
58. review collateral segregation;
59. provide bi-monthly summaries of pricing overrides to management;
60. provide a review of expense caps and management fee waivers to
management;
61. review short sales;
62. review derivatives positions;
63. review brokerage commissions;
64. review dividends and capital gain distributions;
TREASURY TAX SERVICES
65. provide annual tax information (Form 1099) for each fund or class of
shares to shareholders and transfer agents;
66. calculate distribution of capital gains, income and spill back
requirements;
67. provide estimates of capital gains;
68. provide 1099 information to vendors;
69. provide service bureaus, brokers and various parties with tax
information noticed;
70. prepare excise tax returns;
71. prepare income tax returns;
72. prepare tax identification number filings;
73. perform IRS sub-Chapter M testing for 25% diversification, 50%
diversification, 90% gross income, 90% income distribution requirement
(annually), and 98% excise distribution requirement (annually);
TREASURY COMPLIANCE SERVICES
74. perform oversight review to ensure investment manager compliance with
investment policies and limitations;
75. obtain and review investment manager certification on adhering to all
investment policies, restrictions and guidelines;
76. monitor SEC diversification with 75% diversification test and Section 12
diversification test;
77. review bi-monthly designated collateral on all fund derivative and
delayed delivery positions;
TREASURY SPECIAL SERVICES
78. administer daily review of securities lending with Goldman Sachs and
State Street Bank;
79. ensure semiannual review of Portfolios for opportunities with lending
and review of current income levels;
80. establish opportunities with investment manager and brokers for directed
commission programs;
81. monitor line of credit arrangement and payment of commitment fees;
82. maintain Trustee payments and monitor deferred compensation
arrangements;
83. provide Trustees with Form 1099 information;
84. generate expense proformas for new products;
85. negotiate with vendors to ensure new products are brought in at the
lowest costs;
86. ensure all aspects of new products are operationally ready.
<PAGE>
Exhibit 99.h(2)(b)
TRANSFER AGENCY AND SERVICE AGREEMENT
between
KOBRICK INVESTMENT TRUST
and
NVEST SERVICES COMPANY, INC.
<PAGE>
TABLE OF CONTENTS
Page
----
1. Appointment and Duties........................................... 1
2. Third Party Administrators for Defined Contribution Plans ....... 3
3. Fees and Expenses................................................ 4
4. Representations and Warranties of the Transfer Agent............. 5
5. Representations and Warranties of the Fund....................... 5
6. Wire Transfer Operating Guidelines............................... 6
7. Data Access and Proprietary Information.......................... 7
8. Confidentiality.................................................. 9
9. Indemnification................................................. 10
10. Standard of Care................................................ 11
11. Information to be Furnished by the Fund ........................ 12
12. Recordkeeping................................................... 12
13. Termination of Agreement........................................ 13
14. Assignment and Third Party Beneficiaries........................ 13
15. Subcontractors.................................................. 14
16. Miscellaneous................................................... 14
17. Additional Funds................................................ 16
18. Limitations of Liability of the Trustees and Shareholders....... 17
<PAGE>
TRANSFER AGENCY AND SERVICE AGREEMENT
Agreement made as of this 25th day of October, 1999, by and between KOBRICK
INVESTMENT TRUST, a Massachusetts business trust, having its principal office
and place of business at 101 Federal Street, 10th Floor, Boston, Massachusetts
02110 ("Fund"), and NVEST SERVICES COMPANY, INC., a Massachusetts corporation
having its principal office and place of business at 399 Boylston Street,
Boston, Massachusetts 02116 (the "Transfer Agent").
WHEREAS, the Fund is authorized to issue shares in separate series, with each
such series representing interests in a separate portfolio of securities and
other assets;
WHEREAS, the Fund currently offers shares in three series, such series being
named in the attached Schedule A, which may be amended by the parties from time
to time (each such series, together with all other series subsequently
established by the Fund and made subject to this Agreement in accordance with
Section 17 hereof, being herein referred to as a "Portfolio," and collectively
as the "Portfolios"); and
WHEREAS, the Fund, on behalf of the Portfolios, desires to appoint the Transfer
Agent as its transfer agent, dividend disbursing agent, and agent in connection
with certain other activities, and the Transfer Agent desires to accept such
appointment.
WHEREAS, the Transfer Agent intends to engage Boston Financial Data Services,
Inc. (the "Sub-Transfer Agent") to perform certain of the services to be
provided by the Transfer Agent hereunder and enter into a Sub-Transfer Agency
and Service Agreement with the Sub-Transfer Agent to that effect, and the Fund
hereby acknowledges the Transfer Agent's intent to so engage the Sub-Transfer
Agent.
NOW, THEREFORE, in consideration of the mutual covenants herein contained, the
parties hereto agree as follows:
l. Appointment and Duties
1.1 General. Subject to the terms and conditions set forth in this
Agreement, the Fund, on behalf of the Portfolios, hereby employs and
appoints the Transfer Agent to act as, and the Transfer Agent agrees to
act as, its transfer agent for the authorized and issued shares of
beneficial interest of the Fund ("Shares"), dividend disbursing agent,
and agent in connection with any accumulation, open-account, or similar
plan provided to the shareholders of each of the respective Portfolios
of the Fund ("Shareholders") and set out in the currently effective
prospectus and statement of additional information ("prospectus") of the
Fund, on behalf of the applicable Portfolio, including, without
limitation, any periodic investment plan or periodic withdrawal program.
In accordance with written procedures established from time to time by
agreement between the Fund and the Transfer Agent, the Transfer Agent
agrees that it will perform the services set forth in Schedule B hereto.
As the Fund and the Transfer Agent may, from time to time, mutually
agree in writing, the Transfer Agent may at times perform only a portion
of the services listed in Schedule B, and the Fund or its agent may
perform such services.
1.2 Retirement Accounts. With respect to certain retirement plans or
accounts (such as individual retirement accounts ("IRAs"), SIMPLE IRAs,
SEP IRAs, Roth IRAs, Education IRAs, and 403(b) Plans (such accounts,
"Retirement Accounts")), the Transfer Agent, at the request of the Fund,
may provide or arrange for the provision of appropriate prototype plans
as well as provide or arrange for the provision of various services to
such plans and/or accounts, which services may include plan custodian
services, account set-up, maintenance, and disbursements as well as such
other services as the parties hereto shall mutually agree upon.
If at any time and for any reason the Transfer Agent, any of its agent
or sub-contractors, or any of their affiliates chooses to resign as
custodian of any or all Retirement Accounts, the Transfer Agent will
give the Fund at least eighty-five (85) days' prior written notice and
shall not be required to designate a successor custodian. If either
party chooses to terminate this Agreement pursuant to Section 13 hereof,
the Transfer Agent, any of its agents or sub-contractors, or any of
their affiliates may thereupon resign as custodian in respect to any or
all of the Retirement Accounts upon eighty-five (85) days' prior written
notice to the Fund. In either such event, the Fund will promptly
distribute notice of the custodian's resignation to such persons and in
such manner as are called for under the applicable provisions of the
Retirement Account and in form and content satisfactory to and signed by
the Transfer Agent. The Fund shall be responsible for obtaining a
successor custodian for all Retirement Accounts.
1.3 Review and Maintenance of Fund Prototype Retirement Plans or Account
Materials.
(a) If the Fund develops and makes available its own retirement plan
prototypes or account materials (the "Fund Prototype(s)") for use in
connection with a Retirement Account or Accounts, the Fund, subject to
the terms set forth below, may appoint the Transfer Agent, one of its
agent or sub-contractors, or an affiliate thereof as the custodian with
respect to such Retirement Accounts.
(b) The Fund agrees that the Fund Prototypes will comply with applicable
sections of the Internal Revenue Code of 1986, as amended (the "Code"),
and regulations promulgated thereunder as in effect at the time. The
Fund will be responsible for establishing, maintaining, and updating the
Fund Prototypes in compliance with the Code and all other applicable
federal or state law or regulations, when changes in the law require
such updating.
(c) The Fund agrees that the Fund Prototypes are the responsibility of
the Fund and further agrees that it will indemnify, defend, and hold
harmless the Transfer Agent, its affiliates, successors,
representatives, and assigns from and against any and all losses,
damages, costs, charges, expenses, including reasonable fees for
counsel, taxes, penalties, and liabilities (collectively, "Losses")
arising out of or attributable to the use of a Fund Prototype by the
Fund or the Transfer Agent, its agents, employees, representatives, or
any other person acting on a Fund's behalf, except to the extent that
such Losses arise out of or are attributable to the negligence, bad
faith, or willful misconduct of the Transfer Agent (or its agents,
affiliates, successors, or assigns), unless such negligence is a result
of complying with a Fund Prototype. This indemnification obligation will
survive termination of this Agreement.
(d) The Fund agrees that any modifications made by the Fund to a Fund
Prototype without the Transfer Agent's written consent or the required
written consent of any of the Transfer Agent's agents or sub-contractors
or any of their affiliates shall not increase the liabilities or
responsibilities of the Transfer Agent or that of such agent,
sub-contractor, or affiliate as custodian or limit the Transfer Agent's
ability or that of that of its agent or sub-contractor, or any of their
affiliates to resign as custodian as provided hereunder. The Fund will
furnish the Transfer Agent with a copy of each Fund Prototype. The
Transfer Agent shall not be required to review, comment, or advise on
such Fund Prototypes.
1.4 Blue Sky. The Fund shall (a) identify to the Transfer Agent in writing
those transactions and assets to be treated as exempt from blue sky
reporting for each State and (b) verify the establishment of
transactions for each State on the system prior to activation and
thereafter monitor the daily activity for each State. The responsibility
of the Transfer Agent for the Fund's blue sky State registration status
is solely limited to the initial establishment of transactions subject
to blue sky compliance by the Fund and providing a system that will
enable the Fund to monitor the total number of Shares sold in each
State.
2. Third Party Administrators for Defined Contribution Plans
2.1 The Fund may decide to make available to certain of its customers a
qualified plan program (the "Program") pursuant to which such customers
("Employers") may adopt certain plans (each a "Plan," and collectively,
"Plans") for the benefit of Plan participants (the "Participants"), such
Plans being qualified under Section 401(a) of the Code, and administered
by third party administrators, which may be "administrators" as defined
in the Employee Retirement Income Security Act of 1974, as amended
("TPA(s)").
2.2 In accordance with the procedures established in Schedule 2.2 hereto
entitled "Third Party Administrator Procedures," as may be amended by
the Transfer Agent and the Fund from time to time ("Schedule 2.2"), the
Transfer Agent shall:
(a) treat Shareholder accounts established by the Plans in the name of
the Plan Trustees, the Plans or TPAs, as the case may be, as omnibus
accounts;
(b) maintain omnibus accounts on its records in the name of the TPA or
its designee as the Trustee for the benefit of the Plan; and
(c) perform all services under Section 1 as transfer agent of the Funds
and not as a record-keeper for the Plans.
2.3 Transactions identified under Section 2 of this Agreement shall be
deemed exception services ("Exception Services") when such transactions:
(a) require the Transfer Agent or its sub-agent to use methods and
procedures other than those usually employed by the Transfer Agent or
its sub-agent to perform services described under Section 1 of this
Agreement;
(b) involve the provision of information to the Transfer Agent or its
sub-agent after the commencement of the nightly processing cycle of the
transfer agency data processing system then in use by the Transfer Agent
or its sub-agent (the "System"); or
(c) require more manual intervention by the Transfer Agent or its
sub-agent, either in the entry of data or in the modification or
amendment of reports generated by the System than is usually required by
non-retirement plan and pre-nightly transactions.
3. Fees and Expenses
3.1 Fee Schedule. For the performance by the Transfer Agent pursuant to this
Agreement, the Fund agrees to pay the Transfer Agent fees as set forth
in the attached fee schedule ("Schedule 3.1"). Such fees and
out-of-pocket expenses and advances identified under Section 3.2 below
may be changed from time to time subject to mutual written agreement
between the Fund and the Transfer Agent.
3.2 Out-of-Pocket Expenses. In addition to the fees paid under Section 3.1
above, the Fund agrees to reimburse the Transfer Agent for the Transfer
Agent's reasonable out-of-pocket expenses, including, but not limited
to, confirmation production, postage, investor statements, telephone,
telecommunication and line charges, microfilm, microfiche, checks, forms
(including year end forms), wire fees, mailing and tabulating proxies,
records storage, costs associated with certain specialty products,
systems, or services, as applicable (such as "Investor," "Voice," "Fan,"
and "Vision"), or advances incurred by the Transfer Agent for the items
set out in Schedule 3.1 attached hereto. In addition, any other expenses
reasonably incurred by the Transfer Agent at the request or with the
consent of the Fund will be reimbursed by the Fund.
3.3 Postage. Postage for mailing of dividends, proxies, Fund reports, and
other mailings to all shareholder accounts shall be advanced to the
Transfer Agent by the Fund at least seven (7) days prior to the mailing
date of such materials.
3.4 Invoices. The Fund agrees, on behalf of each Portfolio, to pay all fees
and reimbursable expenses within thirty (30) days following the receipt
of the respective billing notice, except for any fees or expenses that
are subject to good faith dispute. In the event of such a dispute, the
Fund may withhold only that portion of the fee or expense subject to the
good faith dispute. The Fund will use reasonable efforts to notify the
Transfer Agent in writing within twenty-one (21) calendar days following
the receipt of each billing notice if the Fund is disputing any amounts
in good faith.
4. Representations and Warranties of the Transfer Agent
The Transfer Agent represents and warrants to the Fund that:
4.1 It is a corporation duly organized and existing and in good standing
under the laws of The Commonwealth of Massachusetts and is duly
registered as a transfer agent under the Securities Exchange Act of
1934, as amended.
4.2 It is duly qualified to carry on its business in The Commonwealth of
Massachusetts.
4.3 It is empowered under applicable laws and by its Charter and By-Laws to
enter into and perform this Agreement.
4.4 All requisite corporate proceedings have been taken to authorize it to
enter into and perform this Agreement.
4.5 It has and will continue to have access (either directly or pursuant to
contractual arrangements with third parties) to the necessary
facilities, equipment, and personnel to perform its duties and
obligations under this Agreement.
5. Representations and Warranties of the Fund
The Fund represents and warrants to the Transfer Agent that:
5.1 It is a business trust duly organized and existing and in good standing
under the laws of Massachusetts.
5.2 It is empowered under applicable laws and by its Declaration of Trust
and By-Laws to enter into and perform this Agreement.
5.3 All corporate proceedings required by said Declaration of Trust and
By-Laws have been taken to authorize it to enter into and perform this
Agreement.
5.4 It is an open-end management investment company registered under the
Investment Company Act of 1940, as amended.
5.5 A registration statement under the Securities Act of 1933, as amended,
is currently effective and will remain effective, and appropriate state
securities law filings have been made and will continue to be made, with
respect to all Shares of the Fund being offered for sale.
6. Wire Transfer Operating Guidelines
6.1 The Transfer Agent is authorized to promptly debit the appropriate Fund
bank account(s) upon the receipt of a payment order in compliance with
the selected security procedure (the "Security Procedure") chosen for
funds transfer and in the amount of money that the Transfer Agent has
been instructed to transfer. The Transfer Agent shall execute payment
orders in compliance with the Security Procedure and with the Fund
instructions on the execution date, provided that such payment order is
received by the customary deadline for processing such a request, unless
the payment order specifies a later time. All payment orders and
communications received after this the customary deadline will be deemed
to have been received the next business day.
6.2 The Fund acknowledges that the Security Procedure it has designated on
the Transfer Agent's Wire Transfer Security Procedures Customer
Selection Form (the form of which is attached hereto as Schedule 6.2)
was selected by the Fund from security procedures offered by the
Transfer Agent. The Fund shall restrict access to confidential
information relating to the Security Procedure to authorized persons as
communicated to the Transfer Agent in writing. The Fund shall notify the
Transfer Agent immediately if it has reason to believe unauthorized
persons may have obtained access to such information or of any change in
the Fund's authorized personnel. The Transfer Agent shall verify the
authenticity of all Fund instructions according to the Security
Procedure.
6.3 The Transfer Agent shall process all payment orders on the basis of the
account number contained in the payment order. In the event of a
discrepancy between any name indicated on the payment order and the
account number, the account number shall take precedence and govern.
6.4 The Transfer Agent reserves the right to decline to process or delay the
processing of a payment order (a) which is in excess of the collected
balance in the account to be charged at the time of the Transfer Agent's
receipt of such payment order; (b) if initiating such payment order
would cause the Transfer Agent, in the Transfer Agent's sole judgement,
to exceed any volume, aggregate dollar, network, time, credit or similar
limits that are applicable to the Transfer Agent or any of its
sub-agents; or (c) if the Transfer Agent, in good faith, is unable to
satisfy itself that the transaction has been properly authorized.
6.5 The Transfer Agent shall use reasonable efforts to act on all authorized
requests to cancel or amend payment orders received in compliance with
the Security Procedure, provided that such requests are received in a
timely manner affording the Transfer Agent reasonable opportunity to
act. However, the Transfer Agent assumes no liability if the request for
amendment or cancellation cannot be satisfied.
6.6 The Transfer Agent shall assume no responsibility for failure to detect
any erroneous payment order, provided that the Transfer Agent complies
with the payment order instructions as received and the Transfer Agent
complies with the Security Procedure. The Security Procedure is
established for the purpose of authenticating payment orders only and
not for the detection of errors in payment orders.
6.7 The Transfer Agent shall assume no responsibility for lost interest with
respect to the refundable amount of any unauthorized payment order. In
no event (including failure to execute a payment order) shall the
Transfer Agent be liable for special, indirect, or consequential
damages, even if advised of the possibility of such damages.
6.8 When the Fund initiates or receives Automated Clearing House ("ACH")
credit and debit entries pursuant to these guidelines and the rules of
the National Automated Clearing House Association and the New England
Clearing House Association, the Transfer Agent or its sub-agent will act
as an "Originating Depository Financial Institution" and/or "Receiving
Depository Financial Institution," as the case may be, with respect to
such entries. Credits given by the Transfer Agent or its sub-agent with
respect to an ACH credit entry are provisional until the Transfer Agent
or its sub-agent receives final settlement for such entry from the
Federal Reserve Bank. If the Transfer Agent or its sub-agent does not
receive such final settlement, the Fund agrees that the Transfer Agent
shall receive a refund of the amount credited to the Fund in connection
with such entry, and the party making payment to the Fund via such entry
shall not be deemed to have paid the amount of the entry.
6.9 Confirmation of the Transfer Agent's execution of payment orders shall
ordinarily be provided within twenty-four (24) hours, notice of which
may be delivered through the Transfer Agent's or its sub-agent's
proprietary information systems, or by facsimile or call-back. The Fund
must notify the Transfer Agent of any objections to the execution of an
order within thirty (30) days.
7. Data Access and Proprietary Information
7.1 The Fund acknowledges that the databases, computer programs, screen
formats, report formats, interactive design techniques, and
documentation manuals furnished to the Fund by the Transfer Agent or its
sub-agent as part of the Fund's ability to access certain Fund-related
data ("Customer Data") maintained by the Transfer Agent on databases
under the control and ownership of the Transfer Agent or its sub-agent
("Data Access Services") constitute copyrighted, trade secret, or other
proprietary information (collectively, "Proprietary Information") of
substantial value to the Transfer Agent or its sub-agent. In no event
shall Proprietary Information be deemed Customer Data. The Fund agrees
to treat all Proprietary Information as proprietary to the Transfer
Agent or its sub-agent and further agrees that it shall not divulge any
Proprietary Information to any person or organization except as may be
provided hereunder. Without limiting the foregoing, the Fund agrees for
itself and its employees and agents to:
(a) use such programs and databases (i) solely on the Fund's computers,
or (ii) solely from equipment at the locations agreed to between the
Fund and the Transfer Agent, and (iii) solely in accordance with the
Transfer Agent's or its sub-agent's applicable user documentation;
(b) refrain from copying or duplicating in any way (other than in the
normal course of performing processing on the Fund's computer(s)) the
Proprietary Information;
(c) refrain from obtaining unauthorized access to any portion of the
Proprietary Information, and, if such access is inadvertently obtained,
to inform the Transfer Agent in a timely manner of such fact and dispose
of such information in accordance with the Transfer Agent's
instructions;
(d) refrain from causing or allowing information transmitted from the
Transfer Agent's computer to the Fund's terminal to be retransmitted to
any other computer terminal or other device except as expressly
permitted by the Transfer Agent;
(e) allow the Fund to have access only to those authorized transactions
as agreed to between the Fund and the Transfer Agent; and
(f) honor all reasonable written requests made by the Transfer Agent to
protect at the Transfer Agent's or its sub-agent's expense the rights of
the Transfer Agent or its sub-agent in Proprietary Information at common
law, under federal copyright law and under other federal or state law.
7.2 Proprietary Information shall not include all or any portion of any of
the foregoing items that (a) are or become publicly available without
breach of this Agreement; (b) are released for general disclosure by a
written release by the Transfer Agent or its sub-agent; or (c) are
already in the possession of the receiving party at the time or receipt
without obligation of confidentiality or breach of this Agreement.
7.3 The Fund acknowledges that its obligation to protect the Transfer
Agent's and its sub-agent's Proprietary Information is essential to the
business interest of the Transfer Agent and that the disclosure of such
Proprietary Information in breach of this Agreement would cause the
Transfer Agent or its sub-agent immediate, substantial, and irreparable
harm, the value of which would be extremely difficult to determine.
Accordingly, the parties agree that, in addition to any other remedies
that may be available at law, in equity or otherwise for the disclosure
or use of the Proprietary Information in breach of this Agreement, the
Transfer Agent or its sub-agent shall be entitled to seek and obtain a
temporary restraining order, injunctive relief, or other equitable
relief against the continuance of such breach.
7.4 If the Fund notifies the Transfer Agent that any of the Data Access
Services do not operate in material compliance with the most recently
issued user documentation for such services, the Transfer Agent shall
endeavor in a timely manner to correct such failure. Organizations from
which the Transfer Agent or its sub-agent may obtain certain data
included in the Data Access Services are solely responsible for the
contents of such data, and the Fund agrees to make no claim against the
Transfer Agent or its sub-agent arising out of the contents of such
third-party data, including, but not limited to, the accuracy thereof.
DATA ACCESS SERVICES AND ALL COMPUTER PROGRAMS AND SOFTWARE
SPECIFICATIONS USED IN CONNECTION THEREWITH ARE PROVIDED ON AN AS IS, AS
AVAILABLE BASIS. THE TRANSFER AGENT AND ITS SUB-AGENTS EXPRESSLY
DISCLAIM ALL WARRANTIES EXCEPT THOSE EXPRESSLY STATED HEREIN INCLUDING,
BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE.
7.5 If the transactions available to the Fund include the ability to
originate electronic instructions to the Transfer Agent or its sub-agent
in order to (a) effect the transfer or movement of cash or Shares; or
(b) transmit Shareholder information or other information, then in such
event the Transfer Agent and its sub-agent shall be entitled to rely on
the validity and authenticity of such instruction without undertaking
any further inquiry as long as such instruction is undertaken in
conformity with security procedures established by the Transfer Agent or
its sub-agent from time to time.
7.6 Each party shall take reasonable efforts to advise its employees of
their obligations pursuant to this Section 7. The obligations of the
Fund under this Section shall survive any termination of this Agreement.
8. Confidentiality
8.1 Subject to the provisions of Section 8.2 hereof, the Transfer Agent and
the Fund agree that they will not, at any time during the term of this
Agreement or after its termination, reveal, divulge or make known to any
person, firm, corporation, or other business organization, any
customers' lists, trade secrets, cost figures and projections, profit
figures and projections or any other secret or confidential information
whatsoever, whether of the Transfer Agent or its sub-agent or of the
Fund, used or gained by the Transfer Agent or its sub-agent or the Fund
during performance under this Agreement. The Fund and the Transfer Agent
further covenant and agree to retain all such knowledge and information
acquired during and after the term of this Agreement respecting such
lists, trade secrets, or any secret or confidential information
whatsoever in trust for the sole benefit of the Transfer Agent or its
sub-agent or the Fund and their successors and assigns. In the event of
breach of the foregoing, the remedies provided by Section 7.3 shall be
available to the party whose confidential information is disclosed. The
above prohibition of disclosure shall not apply to the extent that the
Transfer Agent must disclose such data to its sub-agent or to agents or
representatives of the Fund for purposes of providing services under
this Agreement.
8.2 In the event that any requests or demands are made for the inspection of
the Shareholder records of the Fund, other than request for records of
Shareholders pursuant to subpoenas from state or federal government
authorities, the Transfer Agent will endeavor to notify the Fund and to
secure instructions from an authorized officer of the Fund as to such
inspection. The Transfer Agent expressly reserves, for itself and its
sub-agents, the right, however, to exhibit the Shareholder records to
any person whenever it is advised by counsel that it may be held liable
for the failure to exhibit the Shareholder records to such person or if
required by law or court order.
9. Indemnification
9.1 The Transfer Agent shall not be responsible for, and the Fund shall
indemnify and hold the Transfer Agent harmless from and against, any and
all reasonable losses, damages, costs, charges, counsel fees, payments,
expenses and liabilities arising out of or attributable to:
(a) all actions of the Transfer Agent or its agents or subcontractors
required to be taken pursuant to this Agreement, provided that such
actions are taken in good faith and without negligence or willful
misconduct;
(b) the Fund's (or its trustees', officers' or employees') lack of good
faith, negligence, or willful misconduct which arise out of the breach
of any representation or warranty by the Fund;
(c) the Transfer Agent's (and its sub-agent's) reliance upon, and any
subsequent use of or action taken or omitted by the Transfer Agent (or
its sub-agents) in good faith based on (i) any information, records,
documents, data, stock certificates, or services that are received by
the Transfer Agent or its agents or subcontractors by machine readable
input, facsimile, CRT data entry, electronic instructions, or other
similar means authorized by the Fund, and that have been prepared,
maintained, or performed by the Fund or any other person or firm on
behalf of the Fund, including, but not limited to, any previous transfer
agent or registrar and reasonably believed to be genuine, authentic or
signed by the proper person or persons; (ii) any instructions or
requests received by the Transfer Agent from the Fund or any of its
authorized officers and reasonably believed to be genuine, authentic or
signed by the proper person or persons; (iii) any instructions or
opinions of legal counsel with respect to any matter arising in
connection with the services to be performed by the Transfer Agent under
this Agreement that are provided to the Transfer Agent after
consultation with such legal counsel; or (iv) any paper or document,
reasonably believed to be genuine, authentic or signed by the proper
person or persons;
(d) the offer or sale of Shares in violation of federal or state
securities laws or regulations requiring that such Shares be registered
or in violation of any stop order or other determination or ruling by
any federal or any state agency with respect to the offer of sale of
such Shares, unless such violation of state securities law was directly
attributable to the Transfer Agent's negligence, bad faith, or willful
misconduct (with respect to this Section 9.1(d), in addition to
indemnifying and holding harmless the Transfer Agent, the Fund shall
also indemnify and hold harmless the Transfer Agent's agents and
sub-contractors);
(e) the negotiation and processing of any checks, including, without
limitation, for deposit into any bank account of the Fund so long as the
Transfer Agent complies with applicable procedures and guidelines
approved by the Fund; or
(f) the Transfer Agent's entering into any agreements required by the
National Securities Clearing Corporation ("NSCC") for the transmission
of Fund or Shareholder data through the NSCC clearing systems.
9.2 In order that the indemnification provisions contained in this Section 9
shall apply, upon the assertion of a claim for which the Fund may be
required to indemnify the Transfer Agent, the Transfer Agent shall
promptly notify the Fund of such assertion and shall keep the Fund
advised with respect to all developments concerning such claim. The Fund
shall have the option to participate with the Transfer Agent in the
defense of such claim or to defend against said claim in its own name or
in the name of the Transfer Agent. The Transfer Agent shall in no case
confess any claim or make any compromise in any case in which the Fund
may be required to indemnify the Transfer Agent except with the Fund's
prior written consent (which shall not be unreasonably withheld).
10. Standard of Care
10.1 The Transfer Agent shall at all times act in good faith and agrees to
use its best efforts within reasonable limits to insure the accuracy of
all services performed under this Agreement, but assumes no
responsibility and shall not be liable for loss or damage due to errors
unless such errors are caused by its negligence, bad faith, or willful
misconduct or that of its employees, except as provided in Section 10.2
below. The parties agree that any encoding or payment processing errors
and the liability arising under Section 4-209 of the Uniform Commercial
Code shall be governed by this Section 10.1.
10.1.1 In the case of Exception Services as defined in Section 2.3 herein, the
Transfer Agent shall be held to a standard of gross negligence.
11. Information to be Furnished by the Fund
11.1 The Fund shall promptly furnish to the Transfer Agent the following:
(a) a certified copy of the resolution of the Board of Trustees of the
Fund authorizing the appointment of the Transfer Agent and the execution
and delivery of this Agreement;
(b) a copy of the Declaration of Trust and By-Laws of the Fund and all
amendments thereto;
(c) a list of all officers of the Fund, together with specimen
signatures of those officers, who are authorized to instruct the
Transfer Agent in all matters; and
(d) two copies of the following:
1. all of its current Prospectuses and Statements of Additional
Information; and
2. all other forms commonly used by the Fund with regard to its
relationships and transactions with Shareholders of the Fund.
12. Recordkeeping
12.1 The Transfer Agent hereby agrees to establish and maintain facilities
and procedures reasonably acceptable to the Fund for safekeeping of
stock certificates, check forms, and facsimile signature imprinting
devices, if any; and for the preparation or use, and for keeping account
of, such certificates, forms and devices.
12.2 The Transfer Agent shall keep records relating to the services to be
performed hereunder, in such form and manner as it may deem advisable.
To the extent required by Section 31 of the Investment Company Act of
1940, as amended, and the Rules thereunder, the Transfer Agent agrees
that all such records prepared or maintained by the Transfer Agent
relating to the services to be performed by the Transfer Agent hereunder
are the property of the Fund and will be preserved, maintained, and made
available in accordance with such Section and Rules, and will be
surrendered promptly to the Fund on and in accordance with its request.
12.3 Upon reasonable notice and during normal business hours, the Transfer
Agent shall make available to the Fund its records supporting
performance of its obligations hereunder, provided however such
disclosure will not relate in any way whatsoever to records of the
Transfer Agent's other clients.
13. Termination of Agreement
13.1 This Agreement may be terminated by either party upon one hundred twenty
(120) days' written notice to the other.
13.2 Should the Fund exercise its right to terminate this Agreement, all
reasonable out-of-pocket expenses associated with the movement of
records and material will be borne by the Fund at cost. Additionally,
the Transfer Agent reserves the right to charge for any other reasonable
expenses associated with such termination. Payment of such expenses or
costs shall be in accordance with Section 3.4 of this Agreement.
13.3 Upon termination of this Agreement, each party shall return to the other
party all copies of confidential or proprietary materials or information
received from such other party hereunder, other than materials or
information required to be retained by such party under applicable laws
or regulations. In addition, the Transfer Agent shall promptly provide
to the Fund or a successor transfer agent all records and information
required to be maintained by the Transfer Agent hereunder. To the extent
reasonably possible, the Transfer Agent shall deliver such records and
information in machine readable form.
13.4 Upon the resignation by the Transfer Agent or any of its agents or
sub-contractors or their affiliates as custodian of a Retirement
Account, the Transfer Agent shall promptly return to the Fund and shall
require its agents or sub-contractors to promptly return to the Fund all
Fund and Fund Shareholder records and information held or maintained by
such party in its capacity as Retirement Account custodian. To the
extent reasonably possible, such records and information shall be
delivered to the Fund in machine readable form.
13.5 If either party defaults in the performance of any material provision of
this Agreement, or commits a series of non-material defaults which in
the aggregate impair to a material extent the value of this Agreement to
the other Party, and the default or deficiency or condition is not cured
within the shorter period of (a) thirty (30) days after the receipt of
written notice thereof; or (b) the period of time allowed to cure such
deficiency by applicable regulations. If the default or failure or
condition is not cured during the thirty (30) day period, then this
agreement will terminate immediately upon receipt by the defaulting or
failing Party of a second written notice from the other Party stating
that such termination is then effective. If the Fund terminates this
Agreement pursuant to this paragraph, the Fund shall be liable for all
reasonable out-of-pocket expenses associated with such termination,
including any fees due to the Sub-Transfer Agent pursuant to such
applicable notice period.
14. Assignment and Third Party Beneficiaries.
14.1 Neither this Agreement nor any rights or obligations hereunder may be
assigned by either party without the written consent of the other party.
Any attempt to do so in violation of this Section shall be void. Unless
specifically stated to the contrary in any written consent to an
assignment, no assignment will release or discharge the assignor from
any duty or responsibility under this Agreement.
14.2 Except as explicitly stated elsewhere in this Agreement, nothing under
this Agreement shall be construed to give any rights or benefits under
this Agreement to anyone other than the Transfer Agent and the Fund, and
the duties and responsibilities undertaken pursuant to this Agreement
shall be for the sole and exclusive benefit of the Transfer Agent and
the Fund. This Agreement shall inure to the benefit of and be binding
upon the parties and their respective permitted successors and assigns.
14.3 This Agreement does not constitute an agreement for a partnership or
joint venture between the Transfer Agent and the Fund.
15. Subcontractors
15.1 The Transfer Agent may, without further consent on the part of the Fund,
engage subcontractors to perform any of the obligations of the Transfer
Agent under this Agreement; provided, however, that the Transfer Agent
shall be fully responsible to the Fund for the acts and omissions of the
subcontractor as it is for its own acts and omissions.
15.2 Except as otherwise provided in Section 15.1, nothing herein shall
impose any duty upon the Transfer Agent in connection with or make the
Transfer Agent liable for the actions or omissions to act of
unaffiliated third parties, such as, by way of example and not
limitation, Airborne Services, Federal Express, United Parcel Service,
the U.S. Mails, NSCC and telecommunication companies, provided, if the
Transfer Agent selected such company, the Transfer Agent shall have
exercised due care in selecting the same.
16. Miscellaneous
16.1 Relationship of Parties. The parties agree that they are independent
contractors and not partners or co-venturers, and nothing contained
herein shall be interpreted or construed otherwise.
16.2 Amendment. This Agreement may be amended or modified by a written
agreement executed by both parties.
16.3 Massachusetts Law to Apply. This Agreement shall be construed and the
provisions thereof interpreted under and in accordance with the laws of
The Commonwealth of Massachusetts.
16.4 Force Majeure. In the event either party is unable to perform its
obligations under the terms of this Agreement because of acts of God,
strikes, equipment or transmission failure or damage reasonably beyond
its control, or other causes reasonably beyond its control, such party
shall not be liable for damages to the other for any damages resulting
from such failure to perform or otherwise from such causes.
16.5 Consequential Damages. Neither party to this Agreement shall be liable
to the other party for consequential damages under any provision of this
Agreement or for any consequential damages arising out of any act or
failure to act hereunder.
16.6 Survival. All provisions regarding indemnification, warranty, liability,
and limits thereon and confidentiality and/or protections of proprietary
rights and trade secrets shall survive the termination of this
Agreement.
16.7 Severability. If any provision or provisions of this Agreement shall be
held invalid, unlawful or unenforceable, the validity, legality, and
enforceability of the remaining provisions shall not in any way be
affected or impaired.
16.8 Priorities Clause. In the event of any conflict, discrepancy, or
ambiguity between the terms and conditions contained in this Agreement
and any schedules or attachments hereto, the terms and conditions
contained in this Agreement shall take precedence.
16.9 Waiver. No waiver by either party or any breach or default of any of the
covenants or conditions herein contained and performed by the other
party shall be construed as a waiver of any succeeding breach of the
same or of any other covenant or condition.
16.10 Merger of Agreement. This Agreement constitutes the entire agreement
between the parties hereto and supersedes any prior agreement with
respect to the subject matter hereof whether oral or written.
16.11 Counterparts. This Agreement may be executed by the parties hereto on
any number of counterparts, and all of said counterparts taken together
shall be deemed to constitute one and the same instrument.
16.12. Reproduction of Documents. This Agreement and all schedules, exhibits,
attachments and amendments hereto may be reproduced by any photographic,
photostatic, microfilm, micro-card, miniature photographic, or other
similar process. The parties hereto each agree that any such
reproduction shall be admissible in evidence as the original itself in
any judicial or administrative proceeding, whether or not the original
is in existence and whether or not such reproduction was made by a party
in the regular course of business, and that any enlargement, facsimile,
or further reproduction shall likewise be admissible in evidence.
16.13 Year 2000. The Transfer Agent will take reasonable steps to ensure that
its products reflect the available technology to offer products that are
Year 2000 ready, including, but not limited to, century recognition of
dates, calculations that correctly compute same century and multicentury
formulas and date values, and interface values that reflect the date
issues arising between now and the next one-hundred years. The Transfer
Agent shall not be liable for computer-related problems arising out of,
or associated with, third-party vendor computer systems or related
equipment that are incurred in connection with the change from the years
1999 to 2000, such third-party vendors including, but not limited to,
the Sub-Transfer Agent, DST Systems, Inc., and Output Technologies, Inc.
The Transfer Agent has conducted a commercially reasonable investigation
of the Sub-Transfer Agent's applicable computer systems and is not aware
of any Year 2000 issues. The Transfer Agent will notify the Fund
promptly in the event it becomes aware of any Year 2000 issues.
16.14 Notices. All notices and other communications as required or permitted
hereunder shall be in writing and sent by first class mail, postage
prepaid, addressed as follows or to such other address or addresses of
which the respective party shall have notified the other.
(a) If to Nvest Services Company, Inc., to:
Nvest Services Company, Inc.
399 Boylston Street
Boston, Massachusetts 02116
Attention: President
With a copy to: General Counsel
Facsimile: (617) 578-1191
(b) If to the Fund, to:
Kobrick Investment Trust
101 Federal Street, 10th Floor
Boston, Massachusetts 02110
Attention: President
With a copy to: Chief Operating Officer
Facsimile: (617) 342-3514
17. Additional Funds
In the event that the Fund establishes one or more series of Shares in
addition to those named on the attached Schedule A with respect to which
it desires to have the Transfer Agent render services as transfer agent
under the terms hereof, it shall so notify the Transfer Agent in
writing, and, if the Transfer Agent agrees in writing to provide such
services, such series of Shares shall become a Portfolio hereunder.
18. Limitations of Liability of the Trustees and Shareholders
A copy of the Fund's Declaration of Trust is on file with the Secretary
of the Commonwealth of Massachusetts, and notice is hereby given that
this instrument is executed on behalf of the Fund by an Officer and not
individually and that the obligations of or arising out of this
instrument are not binding upon any of the Trustees, Officers or
Shareholders of the Fund individually, but are binding only upon the
assets and property of the indicated portfolio series of the Fund.
REMAINDER OF THIS PAGE LEFT BLANK INTENTIONALLY
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
in their names and on their behalf by and through their duly authorized
officers, as of the day and year first above written.
KOBRICK INVESTMENT TRUST
BY: /s/ Frederick R. Kobrick
------------------------------------
Frederick R. Kobrick, President
(Hereunto Duly Authorized)
ATTEST:
/s/ Richard A. Goldman
- ------------------------------------
Richard A. Goldman
NVEST SERVICES COMPANY, INC.
BY: /s/ Christopher L. Wilson
------------------------------------
Christopher L. Wilson, President
ATTEST:
/s/ John E. Pelletier
- ------------------------------------
John E. Pelletier
<PAGE>
SCHEDULE A
LIST OF KOBRICK INVESTMENT TRUST PORTFOLIOS
1. Kobrick Capital Fund
2. Kobrick Growth Fund
3. Kobrick Emerging Growth Fund
KOBRICK INVESTMENT TRUST NVEST SERVICES COMPANY, INC.
BY: /s/ Frederick R. Kobrick BY: /s/ Christopher L. Wilson
--------------------------------- --------------------------------
Frederick R. Kobrick, President Christopher L. Wilson, President
(Hereunto Duly Authorized)
<PAGE>
SCHEDULE B
SERVICES TO BE PROVIDED BY THE TRANSFER AGENT
Perform the customary services of a transfer agent, dividend disbursing agent,
and, as relevant, agent in connection with accumulation, open-account or similar
plan (including any periodic investment plan or periodic withdrawal program),
including, but not limited to, the following:
1. maintain all Shareholder accounts;
2. process transactions, including, but not limited to, new account set
up, transfer of Share ownership, exchange of Shares, telephone
transactions, and literature requests;
3. prepare Shareholder meeting lists;
4. mail Shareholder proxies, Shareholder reports, and prospectuses to
current Shareholders;
5. receive and tabulate shareholders proxies;
6. withhold taxes on U.S. resident and non-resident alien accounts;
7. prepare and file U.S. Treasury Department Forms 1099 and other
appropriate forms with respect to dividends and distributions by
federal authorities for all Shareholders;
8. prepare and mail confirmation forms and statements of account to
Shareholders for all purchases and redemptions of Shares and other
confirmable transactions in Shareholder accounts;
9. prepare and mail activity statements for Shareholders;
10. provide Shareholder account information through various means,
including, but not limited to, telephone calls, correspondence, and
research;
11. receive for acceptance orders for the purchase of Shares and promptly
deliver payment and appropriate documentation thereof to the custodian
of the Fund (the "Custodian") authorized pursuant to the Fund's
Declaration of Trust;
12. pursuant to purchase orders, issue the appropriate number of Shares and
hold such Shares in the appropriate Shareholder account;
13. receive for acceptance redemption requests and redemption directions
either in correspondence, via telephone, facsimile transmission, or
through NSCC or any other method deemed appropriate by the Fund and
deliver the appropriate documentation thereof to the Custodian;
14. at the appropriate time as and when it receives monies paid to it by
the Custodian with respect to any redemption, pay over or cause to be
paid over in the appropriate manner such monies as instructed by the
redeeming Shareholders;
15. with respect to the transactions in items 11, 12, 13 and 14 above, the
Transfer Agent shall execute transactions directly with broker-dealers
authorized by the Fund;
16. effect transfers of Shares by the registered owners thereof upon
receipt of appropriate instructions;
17. prepare and transmit payments for dividends and distributions declared
by the Fund on behalf of the applicable Portfolio;
18. maintain such bank accounts (which accounts may be in the name of the
Transfer Agent or a subagent thereof) as the Transfer Agent shall deem
necessary to the performance of its duties hereunder, including, but
not limited to, the processing of Share purchases and redemptions and
the payment of Portfolio dividends; any income or expense associated
with any such account shall accrue to or be borne by the Transfer
Agent;
19. if applicable, issue replacement certificates for those certificates
alleged to have been lost, stolen, or destroyed upon receipt by the
Transfer Agent of indemnification satisfactory to the Transfer Agent
and protecting the Transfer Agent and the Fund; the Transfer Agent, at
its option, may issue replacement certificates in place of mutilated
stock certificates upon presentation thereof and without such
indemnity;
20. report abandoned property to the various states as authorized by the
Fund according to policies and principles agreed upon by the Fund and
the Transfer Agent;
21. maintain records of account for and advise the Fund and its
Shareholders as to the foregoing;
22. record the issuance of Shares of the Fund and maintain a record of the
total number of Shares of the Fund that are authorized, based upon data
provided to it by the Fund, and issued and outstanding; the Transfer
Agent shall also provide the Fund on a regular basis with the total
number of Shares that are authorized and issued and outstanding and
shall have no obligation, when recording the issuance of Shares, 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 Fund;
23. maintain a daily record and produce a daily report for the Fund of all
transactions, receipts, and disbursements of money and securities to
and from Shareholders and deliver a copy of such report for the Fund
for each business day to the Fund no later than 10:00 AM Eastern Time,
or such earlier time as the Fund may reasonably require, on the next
business day; and
24. register and maintain accounts through Networking and accept and
effectuate the purchase, redemption, transfer and exchange of Shares in
such accounts through Fund/SERV (Networking and Fund/SERV being
programs operated by NSCC on behalf of NSCC's participants, including
the Fund), in accordance with instructions transmitted to and received
by the Transfer Agent by transmission from NSCC on behalf of
broker-dealers and banks, which have been established, or in accordance
with the instructions of authorized persons as hereinafter defined on
the dealer file maintained by the Transfer Agent; issue instructions to
the Fund's banks for the settlement of transactions between the Fund
and NSCC (acting on behalf of its broker-dealer and bank participants);
provide account and transaction information from the affected Fund's
records on the System in accordance with NSCC's Networking and
Fund/SERV rules for those broker-dealers; and maintain Shareholder
accounts on the System through Networking.
KOBRICK INVESTMENT TRUST NVEST SERVICES COMPANY, INC.
BY: /s/ Frederick R. Kobrick BY: /s/ Christopher L. Wilson
------------------------------- --------------------------------
Frederick R. Kobrick, President Christopher L. Wilson, President
(Hereunto Duly Authorized)
<PAGE>
SCHEDULE 2.2
THIRD PARTY ADMINISTRATOR PROCEDURES
DATED ___________________
1. On each Business Day, the TPA shall receive, on behalf of and as agent of
the Fund(s), Instructions (as hereinafter defined) from the Plan.
Instructions shall mean as to each Fund (i) orders by the Plan for the
purchases of Shares, and (ii) requests by the Plan for the redemption of
Shares; in each case, based on the Plan's receipt of purchase orders and
redemption requests by Participants in proper form by the time required by
the terms of the Plan, but not later than the time of day at which the net
asset value of a Fund is calculated, as described from time to time in
that Fund's prospectus. Each Business Day on which the TPA receives
Instructions shall be a "Trade Date."
2. The TPA shall communicate the TPA's acceptance of such Instructions to the
applicable Plan.
3. On the next succeeding Business Day following the Trade Date on which it
accepted Instructions for the purchase and redemption of Shares (TD+1),
the TPA shall notify the Transfer Agent of the net amount of such
purchases or redemptions, as the case may be, for each Plan. In the case
of net purchases by any Plan, the TPA shall instruct the Trustees of such
Plan to transmit the aggregate purchase price for Shares by wire transfer
to the Transfer Agent on TD+1. In the case of net redemptions by any Plan,
the TPA shall instruct the Fund's custodian to transmit the redemption
proceeds for Shares by wire transfer to the Trustees of such Plan on TD+1.
The times at which such notification and transmission shall occur on TD+1
shall be as mutually agreed upon by each Fund, the TPA, and the Transfer
Agent.
4. The TPA shall maintain separate records for each Plan, which records shall
reflect Shares purchased and redeemed, including the date and price for
all transactions, and Share balances. The TPA shall maintain on behalf of
each of the Plans a single master account with the Transfer Agent and such
account shall be in the name of that Plan, the TPA, or the nominee of
either thereof as the record owner of Shares owned by such Plan.
5. The TPA shall maintain records of all proceeds of redemptions of Shares
and all other distributions not reinvested in Shares.
6. The TPA shall prepare, and transmit to each of the Plans, periodic account
statements showing the total number of Shares owned by that Plan as of the
statement closing date, purchases and redemptions of Shares by the Plan
during the period covered by the statement, and the dividends and other
distributions paid to the Plan on Shares during the statement period
(whether paid in cash or reinvested in Shares).
7. The TPA shall, at the request and expense of each Fund, transmit to the
Plans prospectuses, proxy materials, reports and other information
provided by each Fund for delivery to its shareholders.
8. The TPA shall, at the request of each Fund, prepare and transmit to each
Fund or any agent designated by it such periodic reports covering Shares
of each Plan as each Fund shall reasonably conclude are necessary to
enable the Fund to comply with state Blue Sky requirements.
9. The TPA shall transmit to the Plans confirmation of purchase orders and
redemption requests placed by the Plans.
10. The TPA shall, with respect to Shares, maintain account balance
information for the Plan and daily and monthly purchase summaries
expressed in Shares and dollar amounts.
11. Plan sponsors may request, or the law may require, that prospectuses,
proxy materials, periodic reports, and other materials relating to each
Fund be furnished to Participants, in which event, the Transfer Agent or
each Fund shall mail or cause to be mailed such materials to Participants.
With respect to any such mailing, the TPA shall, at the request of the
Transfer Agent or each Fund, provide at the TPA's expense complete and
accurate set of mailing labels with the name and address of each
Participant having an interest through the Plans in Shares.
KOBRICK INVESTMENT TRUST NVEST SERVICES COMPANY, INC.
BY: /s/ Frederick R. Kobrick BY: /s/ Christopher L. Wilson
------------------------------- --------------------------------
Frederick R. Kobrick, President Christopher L. Wilson, President
(Hereunto Duly Authorized)
<PAGE>
SCHEDULE 3.1
FEES
DATED AS OF OCTOBER 25, 1999
ANNUAL ACCOUNT SERVICE FEES
- --------------------------------------------------------------------------------
Each Portfolio/Class $ 19.70
Fees are billable on a monthly basis at the rate of 1/12 of the annual fee. A
charge is made for an account in the month that an account opens or closes.
Account service fees are the higher of open account charges plus closed account
charges or the fund minimum.
Monthly Minimum (per Portfolio/Class)
Portfolios 1 through 3 $ 1,500
1. Kobrick Capital Fund
2. Kobrick Growth Fund
3. Kobrick Emerging Growth Fund
ACTIVITY BASED FEES
- --------------------------------------------------------------------------------
New Account Set-up $ 4.60/each
BANKING SERVICES
- --------------------------------------------------------------------------------
ACH (per item) $ 0.35
OTHER FEES
- --------------------------------------------------------------------------------
Investor Processing $ 1.80/Investor
Disaster Recovery $ 0.25/Account
IRA CUSTODIAL FEES
- --------------------------------------------------------------------------------
Annual Maintenance (payable by shareholders) $15.00/Account
Out-of-pocket expenses include, but are not limited to, confirmation statements,
postage, investor statements, audio response, telephone, telecommunication and
line charges, record storage, records retention, transcripts, microfilm,
microfiche, checks, forms (including year end forms), wire fees, mailing and
tabulating proxies, costs associated with certain specialty products, systems,
or services, as applicable (such as "Investor," "Voice," "FAN," and "Vision"),
and any other expenses incurred at the specific direction of the Fund.
Subject to each party's right to terminate this Agreement pursuant to Section 13
hereof, the Transfer Agent and the Fund agree that the fees set forth in this
Schedule 3.1 shall remain in effect for a period of one year from the date of
this Agreement. Upon the expiration of such one year period, the Transfer Agent
and the Fund hereby agree to negotiate in good faith such changes to this
Schedule as they may deem necessary.
KOBRICK INVESTMENT TRUST NVEST SERVICES COMPANY, INC.
BY: /s/ Frederick R. Kobrick BY: /s/ Christopher L. Wilson
---------------------------------- --------------------------------
Frederick R. Kobrick, President Christopher L. Wilson, President
(Hereunto Duly Authorized)
<PAGE>
SCHEDULE 6.2
WIRE TRANSFER SECURITY PROCEDURES
CUSTOMER SELECTION FORM
SECTION I
Details the types of funds transfers processed on behalf of
____________________.
Please select the appropriate security procedures from Section II for each type
of funds transfer listed in Section I.
TYPES OF FUNDS TRANSFERS
__________ Expedited Redemptions
__________ Same Day Wires
__________ Manual Wires
__________ Wire Transfers Initiated by FAX
__________ Group Divided Wire
__________ Remote Bach Transmissions
__________ ACH Transactions
SECTION II
Lists the types of security procedures offered.
SECURITY PROCEDURES
A. REPETITIVE WIRES/ACH TRANSACTIONS
B. TELEPHONE CONFIRMATION
C. ENCRYPTION
AUTHORIZATION
Nvest Services Company, Inc. is hereby instructed to implement the above checked
security procedure(s) in regard to payment orders initiated by or on behalf of
our organization or its shareholders.
- --------------------------------------------- --------------------------
Authorized Signature Date
<PAGE>
FUNDS TRANSFER SECURITY PROCEDURES DEFINITIONS
REPETITIVE WIRES
1. Shareholder Generated
Wires initiated from existing authorized shareholder accounts. Each wire
is sent to the same pre-established destination bank and beneficiary
account number. Only the date of the wire and dollar amount may vary from
instruction to instruction. Changes to that file can only be performed
based on written instructions coupled with a signature guarantee. The
establishment of the repetitive wire is confirmed via a written notice to
the shareholder's address of record.
2. CLIENT GENERATED
Manual wires processed on behalf of the client. Wires are initiated from
the same authorized debit account and sent to the same destination bank
and beneficiary account number each time. Only the date and the dollar
amount may vary from instruction to instruction.
TELEPHONE CONFIRMATION
Telephone confirmation will be used to verify funds transfer instructions
received via telephone, untested facsimile or mail. This security procedure
can be used to authenticate non-repetitive and repetitive wire transfers
instructions. Repetitive wires may be subject to a specific threshold at
the client's discretion.
As part of the confirmation process, customers must designate individuals
as authorized initiators and authorized confirmers. Within 24 hours of
receipt of the wire instruction and prior to execution, a Transfer Agent
associate will contact someone other than the originator at the customer's
location to authenticate the instructions. Additionally, a confirmation log
will be maintained to provide an evidentiary control as well as providing
an invaluable operational tool for resolving any disputes.
ENCRYPTION
Delivery of wire transfer is completed via computer to computer data
communications. Recommended security procedures include encryption, the
process by which data traveling over communication lines is
cryptographically transformed (encrypted). This control is appropriate not
only for terminal based initiation, but also being used by some
institutions in the form of both encrypted facsimile and encrypted voice
communication. This delivery mechanism is typically used for high volume
business such as shareholder redemptions and dividends.
TELEPHONE COMMUNICATIONS
All telephone communication between the Transfer Agent and the client will
be handled on recorded telephone lines.
TRANSFERS INITIATED VIA FACSIMILE TRANSMISSION
Transfers initiated via fax may use either repetitive wire security
procedures, telephone confirmation or a combination of both.
OPTIONAL SECURITY PROCEDURE
Client may establish telephone confirmation procedures to authenticate
repetitive manual wires initiated via telephone, untested facsimile or mail
in excess of certain dollar amounts using the attached forms.
<PAGE>
FUNDS TRANSFER OPERATING GUIDELINES
1. OBLIGATION OF THE SENDER: The Transfer Agent is authorized to promptly debit
the appropriate Fund account(s) upon the receipt of a payment order in
compliance with the selected security procedure (the "Security Procedure")
chosen for funds transfer and in the amount of money that the Transfer Agent
has been instructed to transfer. The Transfer Agent shall execute payment
orders in compliance with the Security Procedure and with the Fund
instructions on the execution date provided that such payment order is
received by the customary deadline for processing such a request, unless the
payment order specifies a later time. All payment orders and communications
received after this the customary deadline will be deemed to have been
received the next business day.
2. SECURITY PROCEDURE: The Fund acknowledges that the Security Procedure it has
designated on the Selection Form was selected by the Fund from security
procedures offered by the Transfer Agent. The Fund shall restrict access to
confidential information relating to the Security Procedure to authorized
persons as communicated to the Transfer Agent in writing. The Fund must
notify the Transfer Agent immediately if it has reason to believe
unauthorized persons may have obtained access to such information or of any
change in the Fund's authorized personnel. The Transfer Agent shall verify
the authenticity of all Fund instructions according to the Security
Procedure.
3. ACCOUNT NUMBERS: The Transfer Agent shall process all payment orders on the
basis of the account number contained in the payment order. In the event
discrepancy between any name indicated on the payment order and the account
number, the account number shall take precedence and govern.
4. REJECTION: The Transfer Agent reserves the right to decline to process or
delay the processing of a payment order which (a) is in excess of the
collected balance in the account to be charged at the time of the Transfer
Agent's receipt of such payment order; (b) if initiating such payment order
would cause the Transfer Agent, in the Transfer Agent's sole judgment, to
exceed any volume, aggregate dollar, network, time, credit or similar limits
that are applicable to the Transfer Agent; or (c) if the Transfer Agent, in
good faith, is unable to satisfy itself that the transaction has been
properly authorized.
5. CANCELLATION OF AMENDMENT: The Transfer Agent shall use reasonable efforts to
act on all authorized requests to cancel or amend payment orders received in
compliance with the Security Procedure provided that such requests are
received in a timely manner affording the Transfer Agent reasonable
opportunity to act. However, the Transfer Agent assumes no liability if the
request for amendment or cancellation cannot be satisfied.
6. ERRORS: The Transfer Agent shall assume no responsibility for failure to
detect any erroneous payment order provided that the Transfer Agent complies
with the payment order instructions as received and the Transfer Agent
complies with the Security Procedure. The Security Procedure is established
for the purpose of authenticating payment orders only and not for the
detection of errors in payment orders.
7. INTEREST AND LIABILITY LIMITS: The Transfer Agent shall assume no
responsibility for lost interest with respect to the refundable amount of any
unauthorized payment order. In no event (including failure to execute a
payment order) shall the Transfer Agent be liable for special, indirect or
consequential damages, even if advised of the possibility of such damages.
8. AUTOMATED CLEARING HOUSE ("ACH") CREDIT ENTRIES/PROVISIONAL PAYMENTS: When
the Fund initiates or receives Automated Clearing House credit and debit
entries pursuant to these guidelines and the rules of the National Automated
Clearing House Association and the New England Clearing House Association,
the Transfer Agent will act as an Originating Depository Financial
Institution and/or Receiving Depository Financial Institution, as the case
may be, with respect to such entries. Credits given by the Transfer Agent
with respect to an ACH credit entry are provisional until the Transfer Agent
receives final settlement, the Fund agrees that the Transfer Agent shall
receive a refund of the amount credited to the Fund in connection with such
entry, and the party making payment to the Fund via such entry shall not be
deemed to have paid the amount of the entry.
9. CONFIRMATION STATEMENTS: Confirmation of Transfer Agent's execution of
payment orders shall ordinarily be provided within twenty four (24) hours,
notice of which may be delivered through the Transfer Agent's or its
subagent's proprietary information systems, or by facsimile or call-back. The
Fund must report any objections to the execution of an order within thirty
(30) days.
I understand and agree to the terms and conditions described above. I am
authorized to sign on behalf of each of the mutual funds or other entities named
on Schedule __ attached.
BY: _______________________________________ DATE: __________________
NAME: _____________________________________
TITLE: ______________________________________
<PAGE>
SCHEDULE ___
LIST OF MUTUAL FUNDS
<PAGE>
SECTIONS I and II SHOULD BE COMPLETED BY ALL CLIENTS
PLEASE TYPE ALL DOCUMENTATION
SECTION I
CLIENT/FUND
- --------------------------------------------------------------------------------
STREET: APT:
- --------------------------------------------------------------------------------
CITY: STATE: ZIP:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PHONE NUMBER: FAX NUMBER:
- ---------------------------------------------------------------------------
SECTION II
Please list the number of all demand deposit accounts (DDAs) from which you
intend to initiate wire transfers
MAXIMUM $ LIMIT MAXIMUM $ LIMIT
DDA NUMBER PER TRANSACTION DDA NUMBER PER TRANSACTION
(8 DIGITS) (IF ANY) (8 DIGITS) (IF ANY)
1. 1.
- ----------------- ----------------- ----------------- -----------------
2. 2.
- ----------------- ----------------- ----------------- -----------------
3. 3.
- ----------------- ----------------- ----------------- -----------------
4. 4.
- ----------------- ----------------- ----------------- -----------------
5. 5.
- ----------------- ----------------- ----------------- -----------------
6. 6.
- ----------------- ----------------- ----------------- -----------------
<PAGE>
Exhibit 99.i(2)
October 28, 1999
Kobrick Investment Trust
(Organized as: Kobrick-HFS Investment Trust and
formerly known as: Kobrick-Cendant Investment Trust)
101 Federal Street
Boston, Massachusetts 02110
Ladies and Gentlemen:
You have informed us that you propose to register under the Securities Act of
1933, as amended (the "Act"), and offer and sell from time to time shares of
beneficial interest, without par value, of your Kobrick Capital Fund, Kobrick
Growth Fund and Kobrick Emerging Growth Fund series ("Shares"), at not less than
net asset value.
We have examined an executed copy of your Agreement and Declaration of Trust
dated October 10, 1997, as amended by Amendment No. 1 thereto (the "Declaration
of Trust"), and are familiar with the action taken by your trustees to authorize
the issue and sale to the public from time to time of authorized and unissued
Shares. We have further examined a copy of your By-Laws and such other documents
and records as we have deemed necessary for the purpose of this opinion.
Based on the foregoing, we are of the opinion that:
1. The beneficial interest in each of your Kobrick Capital Fund, Kobrick Growth
Fund and Kobrick Emerging Growth Fund series is divided into an unlimited number
of Shares.
2. The issue and sale of the authorized but unissued Shares has been duly
authorized under Massachusetts law. Upon the original issue and sale of any of
such authorized but unissued Shares and upon receipt of the authorized
consideration therefor in an amount not less than the applicable net asset
value, the Shares so issued will be validly issued, fully paid and nonassessable
by the Trust.
The Trust is an entity of the type commonly known as a "Massachusetts business
trust." Under Massachusetts law, shareholders could, under certain
circumstances, be held personally liable for the obligations of the Trust.
However, the Declaration of Trust disclaims shareholder liability for acts or
obligations of the Trust and requires that notice of such disclaimer be given in
every note, bond, contract, investment, certificate or undertaking made or
issued by the trustees or officers of the Trust. The Declaration of Trust
provides for indemnification out of the property of the Trust for all loss and
expense of any shareholder held personally liable solely by reason of his or her
being or having been such a shareholder. Thus, the risk of a shareholder
incurring financial loss on account of shareholder liability is limited to
circumstances in which the Trust itself would be unable to meet its obligations.
We understand that this opinion is to be used in connection with the
registration of an indefinite number of Shares for offering and sale pursuant to
the Act. We consent to the filing of this opinion with and as part of your
Registration Statement on Form N-1A (File No. 333-37727) relating to such
offering and sale.
Very truly yours,
/s/ Ropes & Gray
Ropes & Gray
<PAGE>
Exhibit 99.(j)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference into the Prospectuses and
Statement of Additional Information in Post-Effective Amendment No. 6 to the
Registration Statement on Form N-1A (File No. 333-37727) of Kobrick Investment
Trust: Kobrick Capital Fund, Kobrick Emerging Growth Fund, and Kobrick Growth
Fund of our report dated October 25, 1999 on the financial statements and
financial highlights included in the September 30, 1999 Annual Report to
shareholders of Kobrick Capital Fund, Kobrick Emerging Growth Fund, and Kobrick
Growth Fund.
We further consent to the references to our Firm under the headings "Fund
Performance" in the Prospectuses and "Independent Accountants" in the Statement
of Additional Information.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
October 25, 1999
<PAGE>
Exhibit 99.m(2)
KOBRICK INVESTMENT TRUST
CLASS A SERVICE PLAN
(AS AMENDED EFFECTIVE OCTOBER 6, 1999)
This Plan (the "Plan") constitutes the Service Plan relating to the Class
A shares of the three series of Kobrick Investment Trust (the "Trust"); Kobrick
Capital Fund, Kobrick Growth Fund and Kobrick Emerging Growth Fund (the
"Series").
Section 1. The Trust, on behalf of the Series, will pay to New England
Funds L.P., a Massachusetts limited partnership which acts as the Principal
Distributor of the Series' shares, or such other entity as shall from time to
time act as the Principal Distributor of the Series' shares (the "Distributor"),
a fee (the "Service Fee") for expenses borne by the Distributor in connection
with the provision of personal services provided to investors in Class A shares
of the Series and/or the maintenance of shareholder accounts, at an annual rate
not to exceed 0.25% of the Series' average daily net assets attributable to the
Class A shares. Subject to such limit and subject to the provisions of Section 7
hereof, the Service Fee shall be as approved from time to time by (a) the
Trustees of the Trust and (b) the Independent Trustees of the Trust. The Service
Fee shall be accrued daily and paid monthly or at such other intervals as the
Trustees shall determine. All payments under this Service Plan are intended to
qualify as "service fees" as defined in Section 26 of the Rules of Fair Practice
of the National Association of Securities Dealers, Inc. (or any successor
provision) as in effect from time to time.
Section 2. The Service Fee may be paid only to reimburse the Distributor
for expenses of providing personal services to investors in Class A shares of
the Series and/or in connection with the maintenance of shareholder accounts
(including such expenses incurred after the original adoption of this Plan but
prior to October 6, 1999 that have not previously been reimbursed hereunder),
including, but not limited to, (i) expenses (including overhead expenses) of the
Distributor for providing personal services to investors in Class A shares of
the Series or in connection with the maintenance of shareholder accounts and
(ii) payments made by the Distributor to any securities dealer or other
organization (including, but not limited to, any affiliate of the Distributor)
with which the Distributor has entered into a written agreement for this
purpose, for providing personal services to investors in Class A shares of the
Series and/or the maintenance of shareholder accounts, which payments to any
such organization may be in amounts in excess of the cost incurred by such
organization in connection therewith.
Section 3. This Plan shall continue in effect for a period of more than
one year after October 6, 1999 only so long as such continuance is specifically
approved at least annually by votes of the majority (or whatever other
percentage may, from time to time, be required by Section 12(b) of the
Investment Company Act of 1940 (the "Act") or the rules and regulations
thereunder) of both (a) the Trustees of the Trust, and (b) the Independent
Trustees of the Trust, cast in person at a meeting called for the purpose of
voting on this Plan or such agreement.
Section 4. Any person authorized to direct the disposition of monies paid
or payable by the Trust pursuant to this Plan or any related agreement shall
provide to the Trustees of the Trust, and the Trustees shall review, at least
quarterly, a written report of the amounts so expended and the purposes for
which such expenditures were made.
Section 5. This Plan may be terminated at any time by vote of a majority
of the Independent Trustees, or by vote of a majority of the outstanding Class A
shares of the Series.
Section 6. All agreements with any person relating to implementation of
this Plan shall be in writing, and any agreement related to this Plan shall
provide:
A. That such agreement may be terminated at any time, without payment of
any penalty, by vote of a majority of the Independent Trustees or by vote of a
majority of the outstanding Class A shares of the Series, on not more than 60
days' written notice to any other party to the agreement; and
B. That such agreement shall terminate automatically in the event of its
assignment.
Section 7. This Plan may not be amended to increase materially the amount
of expenses permitted pursuant to Section 1 hereof without approval by a vote of
at least a majority of the outstanding Class A shares of the Series, and all
material amendments of this Plan shall be approved in the manner provided for
continuation of this Plan in Section 3.
Section 8. As used in this Plan, (a) the term "Independent Trustees" shall
mean those Trustees of the Trust who are not interested persons of the Trust,
and have no direct or indirect financial interest in the operation of this Plan
or any agreements related to it, and (b) the terms "assignment" and "interested
person" shall have the respective meanings specified in the Act and the rules
and regulations thereunder, and the term "majority of the outstanding Class A
shares of the Series" shall mean the lesser of the 67% or the 50% voting
requirements specified in clauses (A) and (B), respectively, of the third
sentence of Section 2(a)(42) of the Act, all subject to such exemptions as may
be granted by the Securities and Exchange Commission.
<PAGE>
Exhibit 99.m(3)
KOBRICK INVESTMENT TRUST
CLASS B DISTRIBUTION AND SERVICE PLAN
This Plan (the "Plan") entered into as of November 1, 1999 constitutes
the Distribution and Service Plan relating to the Class B shares of KOBRICK
INVESTMENT TRUST, a Massachusetts business trust (the "Trust") on behalf of its
three series: Kobrick Capital Fund, Kobrick Growth Fund, and Kobrick Emerging
Growth Fund (the "Series").
Section 1. Service Fee. The Trust, on behalf of the Series, will pay to
New England Funds, L.P. ("NEF"), a Delaware limited partnership which acts as
the Principal Distributor of the Series' shares, or such other entity as shall
from time to time act as the Principal Distributor of the Series' shares (the
"Distributor"), a fee (the "Service Fee") at an annual rate not to exceed 0.25%
of the Series' average daily net assets attributable to the Class B shares.
Subject to such limit and subject to the provisions of Section 7 hereof, the
Service Fee shall be as approved from time to time by (a) the Trustees of the
Trust and (b) the Independent Trustees of the Trust; provided, however, that no
Service Fee or other fee that is a "service fee" as defined in Section 26 of the
Rules of Fair Practice of the National Association of Securities Dealers, Inc.
(or any successor provision thereto) as in effect from time to time (the "NASD
Rule") shall be paid, with respect to Class B shares of the Series, to NEF (or
to any affiliate of NEF, or to any other person in circumstances where
substantially all of the services and functions relating to the distribution of
Class B shares of the Series have been delegated to, or are being performed by,
NEF or an affiliate of NEF), under this Plan or otherwise, if the Distribution
Fee is terminated or is reduced below the rate set forth in Section 2. The
Service Fee shall be accrued daily and paid monthly or at such other intervals
as the Trustees shall determine. The Distributor may pay all or any portion of
the Service Fee to securities dealers or other organizations (including, but not
limited to, any affiliate of the Distributor) as service fees pursuant to
agreements with such organizations for providing personal services to investors
in Class B shares of the Series and/or the maintenance of shareholder accounts,
and may retain all or any portion of the Service Fee as compensation for
providing personal services to investors in Class B shares of the Series and/or
the maintenance of shareholder accounts. All payments under this Section 1 are
intended to qualify as "service fees" as defined in the NASD Rule.
Section 2. Distribution Fee. In addition to the Service Fee, the Trust,
on behalf of the Series, will pay to the Distributor a fee (the "Distribution
Fee") at an annual rate of 0.75% (unless reduced as contemplated by and
permitted pursuant to the next sentence hereof) of the Series' average daily net
assets attributable to the Class B shares in consideration of the services
rendered in connection with the sale of such shares by the Distributor. The
Trust will not terminate the Distribution Fee in respect of Series assets
attributable to Class B shares, or pay such fee at an annual rate of less than
0.75% of the Series' average daily net assets attributable to the Class B
shares, unless it has ceased, and not resumed, paying the Service Fee (or any
other fee that constitutes a "service fee" as defined in the NASD Rule) to NEF
(or to any affiliate of NEF, or to any other person in circumstances where
substantially all of the services and functions relating to the distribution of
Class B shares of the Series have been delegated to, or are being performed by,
NEF or an affiliate of NEF). Subject to such restriction and subject to the
provisions of Section 7 hereof, the Distribution Fee shall be as approved from
time to time by (a) the Trustees of the Trust and (b) the Independent Trustees
of the Trust. The Distribution Fee shall be accrued daily and paid monthly or at
such other intervals as the Trustees shall determine.
The obligation of the Series to pay the Distribution Fee shall
terminate upon the termination of this Plan or the relevant distribution
agreement between the Distributor and the Trust relating to the Series, in
accordance with the terms hereof or thereof, but until any such termination
shall not be subject to any dispute, offset, counterclaim or defense whatsoever
(it being understood that nothing in this sentence shall be deemed a waiver by
the Trust or the Series of its right separately to pursue any claims it may have
against the Distributor and enforce such claims against any assets of the
Distributor (other than its right to be paid the Distribution Fee and to be paid
contingent deferred sales charges)).
The right of NEF to receive the Distribution Fee (but not the relevant
distribution agreement or NEF's obligations thereunder) may be transferred by
NEF in order to raise funds which may be useful or necessary to perform its
duties as principal underwriter, and any such transfer shall be effective upon
written notice from NEF to the Trust. In connection with the foregoing, the
Series is authorized to pay all or part of the Distribution Fee directly to such
transferee as directed by NEF.
The Distributor may pay all or any portion of the Distribution Fee to
securities dealers or other organizations (including, but not limited to, any
affiliate of the Distributor) as commissions, asset-based sales charges or other
compensation with respect to the sale of Class B shares of the Series, and may
retain all or any portion of the Distribution Fee as compensation for the
Distributor's services as principal underwriter of the Class B shares of the
Series. All payments under this Section 2 are intended to qualify as
"asset-based sales charges" as defined in the NASD Rule.
Section 3. This Plan shall continue in effect for a period of more than
one year after November 1, 1999 only so long as such continuance is specifically
approved at least annually by votes of the majority (or whatever other
percentage may, from time to time, be required by Section 12(b) of the
Investment Company Act of 1940 (the "Act") or the rules and regulations
thereunder) of both (a) the Trustees of the Trust, and (b) the Independent
Trustees of the Trust, cast in person at a meeting called for the purpose of
voting on this Plan or such agreement.
Section 4. Any person authorized to direct the disposition of monies
paid or payable by the Trust pursuant to this Plan or any related agreement
shall provide to the Trustees of the Trust, and the Trustees shall review, at
least quarterly, a written report of the amounts so expended and the purposes
for which such expenditures were made.
Section 5. This Plan may be terminated at any time by vote of a
majority of the Independent Trustees, or by vote of a majority of the
outstanding Class B shares of the Series.
Section 6. All agreements with any person relating to implementation of
this Plan shall be in writing, and any agreement related to this Plan shall
provide:
A. That such agreement may be terminated at any time, without
payment of any penalty, by vote of a majority of the
Independent Trustees or by vote of a majority of the
outstanding Class B shares of the Series, on not more than 60
days' written notice to any other party to the agreement; and
B. That such agreement shall terminate automatically in the
event of its assignment.
Section 7. This Plan may not be amended to increase materially the
amount of expenses permitted pursuant to Sections 1 or 2 hereof without approval
by a vote of at least a majority of the outstanding Class B shares of the
Series, and all material amendments of this Plan shall be approved in the manner
provided for continuation of this Plan in Section 3.
Section 8. As used in this Plan, (a) the term "Independent Trustees"
shall mean those Trustees of the Trust who are not interested persons of the
Trust, and have no direct or indirect financial interest in the operation of
this Plan or any agreements related to it, and (b) the terms "assignment" and
"interested person" shall have the respective meanings specified in the Act and
the rules and regulations thereunder, and the term "majority of the outstanding
Class B shares of the Series" shall mean the lesser of the 67% or the 50% voting
requirements specified in clauses (A) and (B), respectively, of the third
sentence of Section 2(a)(42) of the Act, all subject to such exemptions as may
be granted by the Securities and Exchange Commission.
<PAGE>
Exhibit 99.m(4)
KOBRICK INVESTMENT TRUST
CLASS C DISTRIBUTION AND SERVICE PLAN
This Plan (the "Plan") entered into as of November 1, 1999 constitutes
the Distribution and Service Plan relating to the Class C shares of KOBRICK
INVESTMENT TRUST, a Massachusetts business trust (the "Trust") on behalf of its
three series: Kobrick Capital Fund, Kobrick Growth Fund, and Kobrick Emerging
Growth Fund (the "Series").
Section 1. Service Fee. The Trust, on behalf of the Series, will pay to
New England Funds, L.P. ("NEF"), a Delaware limited partnership which acts as
the Principal Distributor of the Series' shares, or such other entity as shall
from time to time act as the Principal Distributor of the Series' shares (the
"Distributor"), a fee (the "Service Fee") at an annual rate not to exceed 0.25%
of the Series' average daily net assets attributable to the Class C shares.
Subject to such limit and subject to the provisions of Section 7 hereof, the
Service Fee shall be as approved from time to time by (a) the Trustees of the
Trust and (b) the Independent Trustees of the Trust; provided, however, that no
Service Fee or other fee that is a "service fee" as defined in Section 26 of the
Rules of Fair Practice of the National Association of Securities Dealers, Inc.
(or any successor provision thereto) as in effect from time to time (the "NASD
Rule") shall be paid, with respect to Class C shares of the Series, to NEF (or
to any affiliate of NEF, or to any other person in circumstances where
substantially all of the services and functions relating to the distribution of
Class C shares of the Series have been delegated to, or are being performed by,
NEF or an affiliate of NEF), under this Plan or otherwise, if the Distribution
Fee is terminated or is reduced below the rate set forth in Section 2. The
Service Fee shall be accrued daily and paid monthly or at such other intervals
as the Trustees shall determine. The Distributor may pay all or any portion of
the Service Fee to securities dealers or other organizations (including, but not
limited to, any affiliate of the Distributor) as service fees pursuant to
agreements with such organizations for providing personal services to investors
in Class C shares of the Series and/or the maintenance of shareholder accounts,
and may retain all or any portion of the Service Fee as compensation for
providing personal services to investors in Class C shares of the Series and/or
the maintenance of shareholder accounts. All payments under this Section 1 are
intended to qualify as "service fees" as defined in the NASD Rule.
Section 2. Distribution Fee. In addition to the Service Fee, the Trust,
on behalf of the Series, will pay to the Distributor a fee (the "Distribution
Fee") at an annual rate of 0.75% (unless reduced as contemplated by and
permitted pursuant to the next sentence hereof) of the Series' average daily net
assets attributable to the Class C shares in consideration of the services
rendered in connection with the sale of such shares by the Distributor. The
Trust will not terminate the Distribution Fee in respect of Series assets
attributable to Class C shares, or pay such fee at an annual rate of less than
0.75% of the Series' average daily net assets attributable to the Class C
shares, unless it has ceased, and not resumed, paying the Service Fee (or any
other fee that constitutes a "service fee" as defined in the NASD Rule) to NEF
(or to any affiliate of NEF, or to any other person in circumstances where
substantially all of the services and functions relating to the distribution of
Class C shares of the Series have been delegated to, or are being performed by,
NEF or an affiliate of NEF). Subject to such restriction and subject to the
provisions of Section 7 hereof, the Distribution Fee shall be as approved from
time to time by (a) the Trustees of the Trust and (b) the Independent Trustees
of the Trust. The Distribution Fee shall be accrued daily and paid monthly or at
such other intervals as the Trustees shall determine.
The obligation of the Series to pay the Distribution Fee shall
terminate upon the termination of this Plan or the relevant distribution
agreement between the Distributor and the Trust relating to the Series, in
accordance with the terms hereof or thereof, but until any such termination
shall not be subject to any dispute, offset, counterclaim or defense whatsoever
(it being understood that nothing in this sentence shall be deemed a waiver by
the Trust or the Series of its right separately to pursue any claims it may have
against the Distributor and enforce such claims against any assets of the
Distributor (other than its right to be paid the Distribution Fee and to be paid
contingent deferred sales charges)).
The right of NEF to receive the Distribution Fee (but not the relevant
distribution agreement or NEF's obligations thereunder) may be transferred by
NEF in order to raise funds which may be useful or necessary to perform its
duties as principal underwriter, and any such transfer shall be effective upon
written notice from NEF to the Trust. In connection with the foregoing, the
Series is authorized to pay all or part of the Distribution Fee directly to such
transferee as directed by NEF.
The Distributor may pay all or any portion of the Distribution Fee to
securities dealers or other organizations (including, but not limited to, any
affiliate of the Distributor) as commissions, asset-based sales charges or other
compensation with respect to the sale of Class C shares of the Series, and may
retain all or any portion of the Distribution Fee as compensation for the
Distributor's services as principal underwriter of the Class C shares of the
Series. All payments under this Section 2 are intended to qualify as
"asset-based sales charges" as defined in the NASD Rule.
Section 3. This Plan shall continue in effect for a period of more than
one year after November 1, 1999 only so long as such continuance is specifically
approved at least annually by votes of the majority (or whatever other
percentage may, from time to time, be required by Section 12(b) of the
Investment Company Act of 1940 (the "Act") or the rules and regulations
thereunder) of both (a) the Trustees of the Trust, and (b) the Independent
Trustees of the Trust, cast in person at a meeting called for the purpose of
voting on this Plan or such agreement.
Section 4. Any person authorized to direct the disposition of monies
paid or payable by the Trust pursuant to this Plan or any related agreement
shall provide to the Trustees of the Trust, and the Trustees shall review, at
least quarterly, a written report of the amounts so expended and the purposes
for which such expenditures were made.
Section 5. This Plan may be terminated at any time by vote of a
majority of the Independent Trustees, or by vote of a majority of the
outstanding Class C shares of the Series.
Section 6. All agreements with any person relating to implementation of
this Plan shall be in writing, and any agreement related to this Plan shall
provide:
A. That such agreement may be terminated at any time, without
payment of any penalty, by vote of a majority of the
Independent Trustees or by vote of a majority of the
outstanding Class C shares of the Series, on not more than 60
days' written notice to any other party to the agreement; and
B. That such agreement shall terminate automatically in the
event of its assignment.
Section 7. This Plan may not be amended to increase materially the
amount of expenses permitted pursuant to Sections 1 or 2 hereof without approval
by a vote of at least a majority of the outstanding Class C shares of the
Series, and all material amendments of this Plan shall be approved in the manner
provided for continuation of this Plan in Section 3.
Section 8. As used in this Plan, (a) the term "Independent Trustees"
shall mean those Trustees of the Trust who are not interested persons of the
Trust, and have no direct or indirect financial interest in the operation of
this Plan or any agreements related to it, and (b) the terms "assignment" and
"interested person" shall have the respective meanings specified in the Act and
the rules and regulations thereunder, and the term "majority of the outstanding
Class C shares of the Series" shall mean the lesser of the 67% or the 50% voting
requirements specified in clauses (A) and (B), respectively, of the third
sentence of Section 2(a)(42) of the Act, all subject to such exemptions as may
be granted by the Securities and Exchange Commission.
<PAGE>
Exhibit 99.o
Kobrick Investment Trust
Plan pursuant to Rule 18f-3(d) under the Investment Company Act of 1940
As adopted effective November 1, 1999
Each series ("Fund") of Kobrick Investment Trust (the "Trust") may from time to
time issue one or more of the following classes of shares: Class A shares, Class
B shares, Class C shares and Class Y shares. Each class is subject to such
investment minimums and other conditions of eligibility as are set forth in the
Funds' prospectuses as from time to time in effect. The differences in expenses
among these classes of shares, and the conversion and exchange features of each
class of shares, are set forth below in this Plan, which is subject to change,
to the extent permitted by law and by the Declaration of Trust and By-Laws of
the Trust, by action of the Board of Trustees of the Trust.
Initial Sales Charge
Class A shares are offered at a public offering price that is equal to their net
asset value ("NAV") plus a sales charge of up to 5.75% of the public offering
price (which maximum may be less for certain Funds, as described in the Funds'
prospectus as from time to time in effect). The sales charges on Class A shares
are subject to reduction or waiver as permitted by Rule 22d-1 under the
Investment Company Act of 1940 (the "1940 Act") and as described in the Funds'
prospectuses as from time to time in effect.
Class B, Class C and Class Y shares are offered at their NAV, without an initial
sales charge.
Contingent Deferred Sales Charge
Purchases of Class A shares of $1 million or more, purchases of Class C shares
or purchases by certain retirement plans as described in the Funds'
prospectuses, that are redeemed within one year from purchase are subject to a
contingent deferred sales charge (a "CDSC") of 1% of either the purchase price
or the NAV of the shares redeemed, whichever is less. Class A and C shares are
not otherwise subject to a CDSC.
Class B shares that are redeemed within 6 years from purchase are subject to a
CDSC of up to 5% of either the purchase price or the NAV of the shares redeemed,
whichever is less; such percentage declines the longer the shares are held, as
described in the Funds' prospectuses as from time to time in effect. Class B
shares purchased with reinvested dividends or capital gain distributions are not
subject to a CDSC.
The CDSC on Class A, Class B and Class C shares is subject to reduction or
waiver in certain circumstances, as permitted by Rule 6c-10 under the 1940 Act
and as described in the Funds' prospectuses as from time to time in effect.
Class Y shares are not subject to any CDSC.
Service, Administration and Distribution Fees
Class A, Class B and Class C shares pay distribution and service fees pursuant
to plans adopted pursuant to Rule 12b-1 under the 1940 Act (the "12b-1 Plans")
for such classes. There is no 12b-1 Plan for Class Y shares.
Class A, Class B and Class C shares each pay, pursuant to the 12b-1 Plans, a
service fee of up to .25% per annum of the average daily net assets attributable
to such class.
Class A shares do not pay a distribution fee.
Class B and Class C shares pay, pursuant to the 12b-1 Plans, a distribution fee
of up to .75% per annum of the average daily net assets of such Fund
attributable to such class of shares.
Conversion and Exchange Features
Class B shares automatically convert to Class A shares of the same Fund eight
years after purchase, except that Class B shares purchased through the
reinvestment of dividends and other distributions on Class B shares convert to
Class A shares at the same time as the shares with respect to which they were
purchased are converted. Class Y shares of a Fund purchased through wrap fee
programs offered by certain broker-dealers will, upon termination of the
holder's participation in the wrap fee program and at the discretion of the
broker-dealer, be converted to Class A shares of the same Fund. Class A, Class C
and Class Y shares do not convert to any other class of shares.
Class A shares of any Fund may be exchanged, at the holder's option, for Class A
shares of another fund distributed by New England Funds L.P. (except a Money
Market Fund, defined below) without the payment of a sales charge. The holding
period for determining any CDSC will include the holding period of the shares
exchanged. Class A shares may also be exchanged for Class A shares or Class Y
shares of New England Cash Management Trust or New England Tax Exempt Money
Market Trust (the "Money Market Funds"), in which case the holding period for
purposes of determining the expiration of the CDSC on such shares, if any, will
stop and will resume only when an exchange is made back into Class A shares of a
non-money market Fund distributed by New England Funds L.P. If such Money Market
Fund shares are subsequently redeemed for cash, they will be subject to a CDSC
to the same extent that the shares exchanged would have been subject to a CDSC
at the time of the exchange into the Money Market Fund. Class A or Class Y
shares of a Money Market Fund so purchased may be exchanged for Class A shares
of a fund distributed by New England Funds L.P. without sales charge or CDSC to
the same extent as the Class A or Class Y shares exchanged for the Money Market
Fund Class A or Class Y shares could have been so exchanged. The holding period
for determining any CDSC for the acquired Fund shares will not include the
period during which the Money Market Fund shares were held, but will include the
holding period for the Class A Fund shares that were exchanged for the Money
Market Fund shares.
Class A shares of a Fund acquired in connection with certain deferred
compensation plans offered by New England Life Insurance Company ("NELICO") and
its affiliates to any of their directors, senior officers, agents or general
agents may be exchanged, at the holder's option and with the consent of NELICO,
for Class Y shares of the same Fund or for Class Y shares of any other Fund
distributed by New England Funds L.P. that offers Class Y shares.
Class B shares of any Fund may be exchanged, at the holder's option, for Class B
shares of another fund distributed by New England Funds L.P. (except a Money
Market Fund) without the payment of a CDSC. The holding period for determining
the CDSC and the conversion to Class A shares will include the holding period of
the shares exchanged. Class B shares of any Fund may also be exchanged for Class
B shares of a Money Market Fund, without the payment of a CDSC. If such Money
Market Fund shares are subsequently redeemed for cash, they will be subject to a
CDSC to the same extent that the shares exchanged would have been subject to a
CDSC at the time of the exchange into the Money Market Fund. If such Money
Market Fund shares are exchanged for Class B shares of a fund distributed by New
England Funds L.P., no CDSC will apply to the exchange, and the holding period
for the acquired shares will include the holding period of the shares that were
exchanged for the Money Market Fund shares (but not the period during which the
Money Market Fund shares were held).
Class C shares of any Fund may be exchanged, at the holder's option, for Class C
shares of any other fund distributed by New England Funds L.P. that offers Class
C shares, or for Class C shares of a Money Market Fund.
Class Y shares of any Fund may be exchanged, at the holder's option, for Class Y
shares of any other fund distributed by New England Funds L.P. that offers Class
Y shares to the general public, or for Class A shares of a Money Market Fund or
of any other fund distributed by New England Funds L.P. that does not offer
Class Y shares to the general public.
