As Filed with the
Commission on June 14, 1996
Registration No. 2-80805
SEC File No. 811-3615
Securities and Exchange Commission
Washington, D.C.
Form N-1A
Registration Statement Under the Securities Act of 1933 X
Pre-Effective Amendment No.
Post-Effective Amendment No. 17 X
Registration Statement Under the Investment Company Act
of 1940 X
Amendment No. 20
GIT Equity Trust
(Exact Name of Registrant as Specified in Charter)
1655 Fort Myer Drive, Arlington, Virginia 22209
Registrant's Telephone Number: (703) 528-3600
W. Richard Mason, Assistant Secretary
GIT Equity Trust
1655 Fort Myer Drive
Arlington, Virginia 22209
(Name and Address of Agent for Service)
Copy to:
John A. Dudley, Esquire
Sullivan & Worcester, LLP
1025 Connecticut Avenue, N.W.
Washington, D.C. 20036
Approximate Date of Proposed Public Offering
It is proposed that this filing will become effective:
immediately upon filing pursuant to Rule 485(b)
on pursuant to Rule 485(b)
60 days after filing pursuant to Rule 485(a)(1)
X on July 31, 1996 pursuant to Rule 485(a)(1)
75 days after filing pursuant to Rule 485(a)(2)
on pursuant to Rule 485(a)(2)
The Registrant has registered an indefinite number of its shares pursuant
to Rule 24f-2 under the Investment Company Act of 1940. The Registrant's
Notice under Rule 24f-2 for the fiscal year ended March 31, 1996 was filed
on May 20, 1996.
<PAGE>
GIT EQUITY TRUST
Special Growth Portfolio
Select Growth Portfolio
Equity Income Portfolio
Prospectus
July 31, 1996
GIT
GIT Investment Funds
<PAGE>
Table of Contents
About GIT Equity Trust 2
Expense Summary 2
Financial Highlights 3
Investment Objective 4
Investment Policies 4
Management of the Trust 5
The Trust and Its Shares 6
Dividends 6
Performance Information 7
Taxes 7
Net Asset Value 7
How to Purchase and Redeem Shares 8
Office
1700 North Moore Street
Arlington, VA 22209
Custodian
Star Bank, N.A.
Cincinnati, OH 45202
Auditors
Ernst & Young LLP
Telephone Numbers
Shareholder Services
Washington, DC area: 703-528-6500
Toll-free nationwide: 800-336-3063
24-Hour ACCESS
Toll-free nationwide: 800-448-4422
<PAGE>
Prospectus/July 31, 1996
1655 Fort Myer Drive, Arlington, Virginia 22209-3108
GIT Equity Trust
Special Growth Portfolio
Select Growth Portfolio
Equity Income Portfolio
This GIT Equity Trust prospectus offers shares of three separate
portfolios which have different investment objectives and which
invest in differing equity securities, as described below.
Special Growth Portfolio. For long-term investing to obtain
maximum capital appreciation. Portfolio management emphasis is on
smaller companies that may offer rapid growth potential. Current
income is not a factor in investment selection. Designed for
investors who can assume an above-average level of risk from
investment in common stock.
Select Growth Portfolio. For long-term investing to obtain
capital appreciation with a secondary objective of current
income. Portfolio management emphasis is on established companies
that may be undervalued or may offer good management and
significant growth potential. Designed for investors who can
assume the market and other risks of common stock investment.
Equity Income Portfolio. For current dividend income from equity
investments with a secondary goal of capital appreciation.
Managed to provide high income while seeking to preserve capital.
Designed for investors who can assume a reasonable level of risk
while seeking current income and preservation of capital.
Features
No commissions or sales charges
No "12b-1" expenses
$2,500 minimum initial investment
Free exchanges from other GIT mutual funds
Invest or withdraw funds by mail, wire transfer or in person
This Prospectus is intended to be a concise statement of
information which investors should know before investing. After
reading the Prospectus, it should be retained for future
reference. A paper copy of the prospectus is available to
investors who received an electronic prospectus without charge by
calling or writing the Trust.
A Statement of Additional Information concerning the Trust,
bearing the same date as this Prospectus, has been filed with the
Securities and Exchange Commission and is incorporated herein by
reference. It is available without charge by calling or writing
the Trust.
Shares of the Trust are not deposits or obligations of, or
guaranteed or endorsed by, any bank. Shares are not federally
insured by the Federal Deposit Insurance Corporation, the Federal
Reserve Board, or any other agency.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Bankers Finance Advisors, LLC
Investment Adviser
<PAGE>
About GIT Equity Trust
GIT Equity Trust (the "Trust") is a diversified, open-end
management investment company, commonly known as a mutual fund.
The Trust was organized as a Massachusetts business trust under a
Declaration of Trust dated November 18, 1982. The Trust is
managed by Bankers Finance Advisors, LLC (the
"Adviser") of the same address as the Trust.
The Trust offers shares of four separate portfolios: the Special
Growth Portfolio, the Select Growth Portfolio, the Equity Income
Portfolio and the Worldwide Growth Portfolio. The Worldwide
Growth Portfolio is offered pursuant to a separate prospectus.
Expense Summary
The purpose of this table is to assist investors in understanding
the various costs and expenses that an investor will bear
directly or indirectly (see also "Management of the Trust"
below).
Special Select Equity
Growth Growth Income
Shareholder Transaction Expenses
Maximum Sales Load Imposed
on Purchases None None None
Redemption Fee None None None
Exchange Fee None None None
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fees 0.75% 0.75% 0.75%
Other Expenses 0.66% 1.04% 1.17%
Total Fund Operating Expenses 1.41% 1.79% 1.92%
Example 1 Year 3 Years 5 Years 10 Years
You would pay the following
expenses on a $1,000
investment, assuming:
(1) a five percent annual
return and (2) redemption at
the end of each time period:
Special Growth Portfolio $14 $45 $77 $169
Select Growth Portfolio $18 $56 $97 $211
Equity Income Portfolio $20 $60 $104 $224
The hypothetical example shown above is based on the expense
levels listed under the caption "Annual Fund Operating Expenses"
and is intended to provide the investor with an understanding of
the level of expenses that might be incurred in the future. The
five percent return used in the example is arbitrary and is for
illustrative purposes only. It should not be considered
representative of any portfolio's past or future performance, nor
should the expenses in the example be considered representative
of future expenses, which may actually be greater or less than
those shown.
<PAGE>
Financial Highlights
The financial highlights data for a share outstanding and other
performance information for the fiscal year ended March 31, 1996
appearing below is derived from the financial statements audited
by Ernst & Young LLP, independent auditors, whose report appears
in the Annual Report to Shareholders. This report is incorporated
by reference in the Statement of Additional Information and is
available by calling or writing the Trust. The tabulation below
of information for the fiscal years ended March 31, 1987,
1988, 1989, 1990, 1991, 1992, 1993, 1994 and 1995 has also been derived
from the financial statements audited by Ernst & Young LLP.
<TABLE>
<CAPTION>
Special Growth Portfolio
Year ended March 31,
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
Net asset
value
beginning
of period $18.092 21.110 19.970 19.099 18.047 17.634 16.669 15.122 18.017 16.440
Net
investment
income $0.133 0.152 0.171 0.092 0.175 0.287 0.378 0.346 0.128 0.139
Net
realized &
unrealized
gains
(losses) on
securities $3.621 0.190 2.125 1.031 1.245 0.502 1.557 1.588 (0.277) 1.706
Total from
investment
operations $3.754 0.342 2.296 1.123 1.420 0.789 1.935 1.934 (0.149) 1.845
Distributions
from net
investment
income $(0.115)(0.152)(0.170)(0.121)(0.159)(0.376)(0.396)(0.239)(0.128)(0.139)
Distributions
from capital
gains $(1.243)(3.208)(0.986)(0.131)(0.209) -- (0.574)(0.148)(2.618)(0.129)
Total
Distributions$(1.358)(3.360)(1.156)(0.252)(0.368)(0.376)(0.970)(0.387)(2.746)(0.268)
Net asset
value end
of period $20.488 18.092 21.110 19.970 19.099 18.047 17.634 16.669 15.122 18.017
Total
Return 21.22% 2.27% 11.57% 5.90% 7.92% 4.76% 11.67% 13.05% 2.47% 11.22%
Net assets
at end of
period
(thousands) $17,091 31,590 34,931 38,911 58,867 51,465 36,593 18,262 15,501 19,580
Ratio of
expenses to
average net
assets 1.41% 1.30% 1.45% 1.35% 1.39% 1.40% 1.47% 1.50% 1.50% 1.50%
Net
investment
income to
average
net assets 0.56% 0.76% 0.75% 0.44% 0.95% 1.82% 2.59% 2.24% 0.73% 0.92%
Portfolio
turnover 21% 4% 7% 13% 24% 6% 15% 27% 29% 8%
Select Growth Portfolio
Net asset
value
beginning
of period $16.706 17.706 18.486 19.670 18.884 17.105 15.707 14.273 17.001 14.299
Net
investment
income $(0.045)(0.032)(0.053) 0.137 0.268 0.400 0.511 0.580 0.353 0.262
Net
realized &
unrealized
gains
(losses) on
securities $5.329 0.741 (0.318) 1.410 0.736 2.031 1.446 1.287 (1.638) 2.789
Total from
investment
operations $5.284 0.709 (0.371) 1.547 1.004 2.431 1.957 1.867 (1.285) 3.051
Distributions
from net
investment
income $ -- -- (0.007)(0.175)(0.218)(0.498)(0.559)(0.433)(0.352)(0.262)
Distributions
from capital
gains $ -- (1.709)(0.402)(2.556) -- (0.154) -- -- (1.091)(0.087)
Total
Distributions$ -- (1.709)(0.409)(2.731)(0.218)(0.652)(0.559)(0.433)(1.443)(0.349)
Net asset
value end
of period $21.990 16.706 17.706 18.486 19.670 18.884 17.105 15.707 14.273 17.001
Total
Return 31.63% 4.55% (2.05)% 8.45% 5.28% 14.65% 12.47% 13.30% (6.81)%21.38%
Net assets
at end of
period
(thousands) $7,389 4,749 4,760 5,742 5,483 3,917 3,280 2,740 3,394 4,073
Ratio of
expenses to
average net
assets 1.79% 1.90% 2.02% 2.00% 2.00% 2.00% 1.53% 1.50% 1.50% 1.45%
Net
investment
income to
average
net assets (0.26)%(0.19)%(0.27)% 0.70% 1.44% 2.28% 3.00% 3.42% 2.16% 2.25%
Portfolio
turnover 56% 82% 48% 125% 60% 12% 35% 23% 22% 9%
Equity Income Portfolio
Net asset
value
beginning
of period $15.411 15.809 16.814 15.117 14.805 14.661 13.137 12.300 13.606 12.667
Net
investment
income $0.373 0.504 0.382 0.416 0.499 0.627 0.690 0.725 0.599 0.634
Net
realized &
unrealized
gains
(losses) on
securities $3.839 0.364 (0.543) 1.961 0.203 0.298 1.551 0.629 (1.309) 1.087
Total from
investment
operations $4.212 0.868 (0.161) 2.377 0.702 0.925 2.241 1.354 (0.710) 1.721
Distributions
from net
investment
income $(0.293)(0.504)(0.352)(0.449)(0.390)(0.781)(0.717)(0.517)(0.596)(0.634)
Distributions
from capital
gains $ -- (0.762)(0.492)(0.231) -- -- -- -- -- (0.148)
Total
Distributions$(0.293)(1.266)(0.844)(0.680)(0.390)(0.781)(0.717)(0.517)(0.596)(0.782)
Net asset
value end
of period $19.330 15.411 15.809 16.814 15.117 14.805 14.661 13.137 12.300 13.606
Total
Return 27.56% 6.04% (1.08)%16.11% 4.74% 6.58% 17.39% 11.32% (5.37)%13.84%
Net assets
at end of
period
(thousands) $4,440 3,413 3,625 3,315 2,838 2,709 2,291 1,716 2,160 2,577
Ratio of
expenses to
average net
assets 1.92% 2.07% 2.17% 2.19% 2.15% 2.25% 1.55% 1.50% 1.50% 1.47%
Net
investment
income to
average
net assets 2.13% 2.53% 2.27% 2.58% 3.47% 4.28% 4.77% 5.54% 4.56% 4.66%
Portfolio
turnover 7% 29% 34% 55% 32% 9% 18% -- 16% 23%
</TABLE>
<PAGE>
Investment Objective
The three Trust portfolios offered by this prospectus have
different investment objectives and invest in differing equity
securities. The portfolios differ principally in the relative
importance of capital appreciation potential, dividend income and
risk as considerations in selecting investments. The Trust's
investment objectives may be changed without shareholder
approval; however, shareholders will receive prior written notice
of any material change. There can be no assurance that the
Trust's investment objectives will be achieved.
The Special Growth Portfolio seeks maximum capital appreciation
through emphasis on smaller companies that may offer rapid growth
potential. Current income is not a factor in the selection of
investments for this portfolio. Because it may assume above-
average investment risks, the Special Growth Portfolio may be
unsuitable for persons who must depend on the invested funds for
other purposes, such as current income.
The Select Growth Portfolio seeks capital appreciation with a
secondary objective of current income through investment in
established companies that are believed to be undervalued or to
have good management and significant growth potential.
Consideration is given to the relative value of each investment,
compared with historical trends in its industry.
The Equity Income Portfolio seeks to earn substantial current
dividend income through the selection of securities offering
current income with some capital appreciation potential.
Consideration is given to each investment's potential for
appreciation and factors tending to protect the investment's
value.
Investment Policies
The Trust seeks to achieve its investment objectives through
diversified investment by each of its portfolios, principally in
equity securities. Equity securities may include common stocks,
convertible debt securities, preferred stocks and warrants.
The Trust intends normally to maintain at least 65 percent of the
assets of each of its portfolios invested in equity securities.
The Trust may also invest in short-term money market instruments
for liquidity purposes to meet redemption requirements and it may
hold a portion of its assets in uninvested cash. Short-term
investments that the Trust may hold include U.S. Government
securities, certificates of deposit, high-grade commercial paper
and repurchase agreements. If the Adviser determines that it
would be appropriate to adopt a temporary defensive investment
position by reducing exposure in the equity markets, up to 100
percent of any portfolio could be invested in short-term
investments. To the extent more than 35 percent of any portfolio
is so invested, it is not invested in accordance with policies
designed to achieve its stated investment objective.
The Trust's fundamental investment policies, which may not be
changed without a shareholder vote, limit investments in the
securities of any one issuer (excluding U.S. Government
securities) to five percent of a Portfolio's total assets as of
the date of purchase. Additionally, the Trust will not invest
more than 10 percent of the total assets of a portfolio offered
by this prospectus in securities which cannot be liquidated
within seven days, and it will not invest more than 25 percent of
the total assets of a portfolio in securities of issuers in a
single industry. Other fundamental policies are described in the
Statement of Additional Information.
Specialized Investment Techniques
To achieve its objectives, each portfolio may use certain
specialized investment techniques, including writing covered call
options, investment in foreign securities, "when-issued"
securities, loans of portfolio securities and repurchase
agreement transactions. Use of these techniques may involve
certain risks, some of which are summarized below and described
further in the Statement of Additional Information.
Investment in foreign securities may involve risks not normally
associated with domestic investments. The market value of foreign
securities may be affected
<PAGE>
by changes in foreign exchange rates and may be adversely
affected by economic, diplomatic or political developments.
Foreign issuers are generally not subject to uniform accounting,
auditing and financial reporting standards applicable to domestic
issuers, and may be subject to less governmental supervision and
regulation than their U.S. counterparts. Information about
foreign issuers may be more limited and less widely available
than information on domestic issuers.
Repurchase agreements involve a sale of securities to the Trust
by a financial institution or securities dealer, simultaneous
with an agreement by that institution to repurchase the same
securities at the same price, plus interest, at a later date. The
Trust will limit repurchase agreement transactions to those
financial institutions and securities dealers who are deemed
creditworthy pursuant to guidelines adopted by the Trust's Board
of Trustees. The Adviser will follow a procedure to ensure that
all repurchase agreements acquired by the Trust are always at
least 100 percent collateralized as to principal and interest.
When investing in repurchase agreements, the Trust relies on the
other party to complete the transaction on the scheduled date by
repurchasing the securities. Should the other party fail to do
so, the Trust would end up holding securities it did not intend
to own. Were it to sell such securities, the Trust might incur a
loss. In the event of insolvency or bankruptcy of the other party
to a repurchase agreement, the Trust could encounter difficulties
and might incur losses upon the exercise of its rights under the
repurchase agreement.
Investment Risk Considerations
Although diversification of investments may tend to reduce the
exposure involved in holding individual equity securities,
substantially all of the securities purchased by the Trust will
be subject to market and business risks. The Special Growth
Portfolio may invest in new companies or in the securities of
companies in emerging industries; the Special Growth Portfolio
may therefore involve an above-average level of risk and should
be only one part of a balanced investment program. Certain of the
specialized investment techniques the Trust intends to use,
including investment in foreign securities and repurchase
agreement transactions, may involve risks greater than those that
would be experienced by holding a portfolio of conventional
equity securities; see "Specialized Investment Techniques" above.
Management of the Trust
The Trustees. Under the terms of the Declaration of Trust, which
is governed by the laws of the Commonwealth of Massachusetts, the
Trustees are ultimately responsible for the conduct of the
Trust's affairs. They serve indefinite terms of unlimited
duration and they appoint their own successors, provided that
always at least two-thirds of the Trustees have been elected by
shareholders. The Declaration of Trust provides that a Trustee
may be removed at any special meeting of shareholders by a vote
of two-thirds of the Trust's outstanding shares.
The Adviser. Bankers Finance Advisors, LLC is a division of Madison
Investment Advisors, Inc., 6411 Mineral Point Road, Madison,
Wisconsin, 53705 ("Madison"). Bankers Finance Advisors, LLC
administers approximately $200 million in assets and manages the
GIT family of mutual funds, which includes stock, bond and money
market portfolios. Madison, a licensed investment advisory firm for
over 22 years, provides professional portfolio management services
to a number of clients, including stock and bond mutual funds, and
has approximately $2.5 billion under management.
The Adviser is responsible for the day-
to-day administration of the Trust's activities. Investment
decisions regarding each of the Trust's portfolios can be
influenced in various manners by a number of individuals. The
individuals primarily responsible for the management of the
Trust's Portfolios are Charles J. Tennes and Frank E.
Burgess. Mr. Tennes, vice president, who had been associated
since 1985 with Bankers Finance Investment Management Corp.,
the adviser to the Trust prior to July 31, 1996, has been involved
in the operation of the Select Growth and Equity Income
Portfolios since early 1993 and assumed responsibility for the
Special Growth Portfolio in December 1995. Mr. Burgess,
President and founder of Madison, began managing the
Portfolios after July 31, 1996.
The Adviser is controlled by Madison. The Adviser purchased
the investment management assets of Bankers Finance Investment
Management Corp. effective July 31, 1996. The Adviser has the
same address as the Trust.
<PAGE>
Compensation. For its services under its Investment Advisory
Agreement with the Trust, the Adviser receives a fee, payable
monthly, calculated as 3/4 percent per annum of the average daily
net assets of each of the Trust portfolios offered by this
prospectus. The Adviser may, in turn, compensate certain
financial organizations for services resulting in purchases of
Trust shares.
Distributor. GIT Investment Services, Inc. of the same address as
the Trust acts as the Trust's Distributor. The Distributor is
wholly owned by A. Bruce Cleveland.
Services Agreement. Under a separate Services Agreement with the
Trust, the Adviser provides operational and other support
services, for which it is reimbursed at cost.
Transfer Agent and Dividend Paying Agent. The Trust acts as its
own transfer agent and dividend paying agent.
Expenses. The Trust is responsible for all of its expenses not
assumed by the Adviser, including the costs of the following:
shareholder services; legal, custodian and audit fees; trade
association memberships; accounting; certain Trustees' fees and
expenses; fees for registering the Trust's shares; the
preparation of prospectuses, proxy materials and reports to
shareholders; and the expense of holding shareholder meetings.
For the fiscal year ending March 31, 1996, the expenses paid by
each portfolio offered by this prospectus, including advisory
fees and reimbursable expenses paid to the Adviser, were as
follows: for the Special Growth Portfolio, $412,594; for the
Select Growth Portfolio, $105,407; and for the Equity Income
Portfolio, $76,709.
The Trust and Its Shares
Under the terms of the Declaration of Trust the Trustees may
issue an unlimited number of whole and fractional shares of
beneficial interest without par value for each series of shares
they have authorized. All shares issued will be fully paid and
nonassessable and will have no preemptive or conversion rights.
Under Massachusetts law, the shareholders may, under certain
circumstances, be held personally liable for the Trust's
obligations. The Declaration of Trust, however, provides
indemnification out of Trust property of any shareholder held
personally liable for obligations of the Trust.
Shares in four portfolios are authorized by the Trustees: Special
Growth Portfolio, Select Growth Portfolio, Equity Income
Portfolio and Worldwide Growth Portfolio. Shares of each
portfolio are of a single class, each representing an equal
proportionate share in the assets, liabilities, income and
expense of the respective portfolio and each having the same
rights as any other share within the series.
Each share has one vote and fractional shares have fractional
votes. Voting is not cumulative.
The Trust does not intend to have regular shareholder meetings.
Shareholder inquiries can be made to the offices of the Trust at
the address on the cover of the prospectus.
Dividends
Each Portfolio's net income is declared as dividends and
distributed to shareholders at least twice annually, once during
the last two months of the calendar year and once at the end of
the Trust's March 31 fiscal year. The Trust also intends to
declare and pay regular quarterly dividends on Equity Income
Portfolio shares.
<PAGE>
Dividends are paid in the form of additional shares credited to
investor accounts, unless a shareholder elects in writing to
receive dividend payments by check or direct deposit. Any net
realized short- and long-term capital gains will be paid to
shareholders as capital gains distributions. Prior to inclusion
in declared dividends, the Trust's net income will be reflected
in each portfolio's net asset value per share.
Performance Information
From time to time the Trust advertises its total return. Total
return is based on historical data and is not intended to
indicate future performance.
For advertising purposes, total return takes changes in share
prices into account, assuming that dividends and other
distributions are reinvested when paid. In addition to average
annual total return, the Trust may quote total return over
various periods, and may quote the aggregate total return for a
period. The Trust may also cite the ranking or performance of a
portfolio as reported in the public media or by independent
performance measurement firms.
Further information on the methods used to calculate the Trust's
total return may be found in the Trust's Statement of Additional
Information. The Trust's Annual Report contains additional
performance information. A copy of the Annual Report may be
obtained without charge by calling or writing the Trust at the
telephone number and address on the cover of this prospectus.
Taxes
For federal income tax purposes, the Trust intends to maintain
its status under Subchapter M of the Internal Revenue Code as a
regulated investment company by distributing to shareholders 100
percent of its net income and net capital gains for each
portfolio by the end of its fiscal year. The Internal Revenue
Code also requires each portfolio to distribute at least 98
percent of undistributed net income and capital gains realized
from the sale of investments by calendar year-end. The capital
gains distribution is determined as of October 31 each year.
Capital gains distributions, if any, are taxable to the
shareholder. The Trust will send shareholders an annual notice of
dividends and other distributions paid during the prior year.
Because each portfolio's share price fluctuates, a redemption of
shares by the investor creates a capital gain or loss which has
tax consequences. It is the shareholder's responsibility to
calculate the cost basis of shares purchased. Investors are
advised to retain all statements received from the Trust and to
maintain accurate records of their investments.
Investors who fail to provide a valid social security or tax
identification number may be subject to federal withholding at a
rate of 31 percent of dividends and
any capital gains distributions.
At the state and local level, dividend income and capital gains
are generally considered taxable income. Because tax laws vary
from state to state, shareholders should consult their tax
advisers concerning the impact of mutual fund ownership in their
own tax jurisdictions.
Net Asset Value
The net asset value per share of each portfolio is calculated as
of the close of the New York Stock Exchange each day the New York
Stock Exchange is open for trading. The net asset value per share
of each portfolio is determined by adding the value of all its
securities and other assets, subtracting liabilities and dividing
the result by the total number of outstanding shares for the
portfolio.
For purposes of calculating net asset value, securities traded on
national securities exchanges are valued at their daily closing
sale prices, if available, and if not available, such securities
are valued at the mean between the bid and ask prices. Other
securities for which current market quotations are readily
available are valued at the mean between their bid and ask
prices; securities for which current market quotations are not
readily available are valued at their fair value as determined in good
faith according to procedures
<PAGE>
established by the Trustees. The Trustees may use an independent
pricing service for determination of securities values.
How to Purchase and Redeem Shares
Account Transactions
Transactions into or out of the Trust are entered in the
investor's account and recorded in shares. The number of shares
in the account is maintained to an accuracy of 1/1000th of a
share. Unless an investor specifically requests in writing,
certificates will not be issued to represent shares in the Trust.
The Trust will provide a subaccounting report for institutions
needing to maintain separate information on accounts under their
supervision.
Telephone Transactions
The option to initiate inter-fund exchanges and redemptions and
to obtain account balance information by telephone is available
automatically to all shareholders. The Trust will employ
reasonable security procedures to confirm that instructions
communicated by telephone are genuine; if it does not, it may be
liable for losses due to unauthorized or fraudulent transactions.
These procedures can include, among other things, requiring one
or more forms of personal identification prior to acting upon
telephone instructions, providing written confirmations and
recording all telephone tranactions. Certain transactions,
including account registration or address changes, must be
authorized in writing.
Purchasing Shares
Shareholder purchases are priced at the net asset value per share
next determined after the purchase order is received by the Trust
in proper form and funds are received by the Trust's Custodian.
This is normally one or two business days after an investment is
received at the Trust.
New Accounts. A minimum of $2,500 is required to open an account.
Each investor is given an account with a balance denominated in
shares. When a new account is opened by telephone for funds wired
to the Trust, the investor will be required to submit a signed
application promptly thereafter. Payment of redemption proceeds
is not permitted until a signed application is on file with the
Trust.
New accounts may be opened by completing an application and
forwarding it with a check for the initial investment to:
GIT Equity Trust
1655 Fort Myer Drive, Suite 1000
Arlington, VA 22209-3108
Subsequent Investments. Subsequent investments may be made in any
amount, but the Trust reserves the right to return investments of
less than $50.00. See "Redeeming Shares" for an explanation of
the Trust's policies regarding the 10-day hold on invested
checks.
Subsequent investments should be sent to:
GIT Equity Trust
P.O. Box 640393
Cincinnati, OH 45264-0393
Please include an investment deposit slip or a clear indication
of the account to be credited. Checks should be payable to GIT
Equity Trust.
In Person. Accounts may be opened and subsequent deposits made at
any office of the Trust.
By Wire. Federal funds wires should be sent to Star Bank, N.A.,
Cinti/Trust, ABA No. 0420-0001-3, for credit as follows:
GIT Special Growth Account No. 48038-8883
(Investor name and account number)
GIT Select Growth Account No. 48038-8883
(Investor name and account number)
GIT Equity Income Account No. 48038-8883
(Investor name and account number)
Please call before or shortly after funds are wired to ensure
proper credit. The Trust must be notified by 1
<PAGE>
p.m. Washington, DC time, to credit the shareholder's account the
same day. There is a charge of $6.00 for processing incoming
wires of less than $2,500.
By Inter-Fund Exchange. Investors may redeem shares from one GIT
account and concurrently invest the proceeds in another GIT
account by telephone when the account registration and tax
identification number remain the same. There is no charge for
this service. When a new account is opened by exchange, a new
account application is required if the account registration or
tax identification number will differ from that on the
application for the original account. Exchanges may only be made
into funds that are registered or otherwise permitted to be sold
in the investor's state of residence.
By Automatic Monthly Investment. Regular monthly investments in
any fixed amount of $100 or more can be made automatically by
Electronic Funds Transfer from accounts at banks or savings and
loan associations which have the required transfer capabilities.
The investor can change the amount of this automatic investment
or discontinue the service at any time by writing the Trust.
Redeeming Shares
Share redemptions are processed on any day the New York Stock
Exchange is open and are effected at the net asset value per
share next determined after the redemption request is received in
proper form. Redemptions may be made by wire transfer, by mail,
in person or pursuant to standing instructions. The Trust does
not distribute currency or coin.
To protect your account, the Trust requires signature guarantees
before certain redemptions or registration changes are considered
in good order. Signature guarantees help the Trust ensure the
identity of the authorized account owner or owners before the
Trust releases redemption proceeds or recognizes a new person to
request redemptions. Signature guarantees are required for any
account transfers or delivery of redemption proceeds to a person
other than the shareholder of record (i) at an address other than
the shareholder's address of record or (ii) by wire to a bank
account other than the shareholder's previously designated bank
account that receives wire transfers. The Trust recognizes
signature guarantees from banks with FDIC insurance, certain
credit unions, trust companies, and members of a domestic stock
exchange. A guarantee from a notary public is not an acceptable
signature guarantee.
Limit on Payment of Same-Day Redemption Proceeds. Payment of
redemption proceeds on the day of the request in excess of 80
percent of the current value of an account are normally not
permitted. In addition, the Trust reserves the right, whenever
the Dow Jones Industrial Average declines 50 points or more at
any time during a day, to limit the payment of redemption
proceeds on the day of the request to 60 percent or less of the
value of the account from which the redemption is being made,
valued as of the close of the preceding business day. This limit
does not affect redemptions for which payment is to be made on
the next business day.
By Wire. Wire transfers permit funds to be credited to a
shareholder's bank account, usually the same day. Wires may only
be sent to the bank account previously designated in writing.
Other wires and wires to third parties are normally not
permitted.
Redemptions of $10,000 or more will be paid by wire to U.S.
domestic banks without charge. Wires for lesser amounts will be
paid after deducting a $10 service charge. Wires to foreign banks
require a service charge of $30, or the cost of the wire, if
greater.
Payment of proceeds of wire requests received after 12:30 p.m.,
Washington, DC time, and requests exceeding 80 percent of the
account's current value will normally be processed the next
business day. Wires can be arranged by calling the telephone
numbers on the cover of this prospectus.
By Mail. Upon written or telephone request, redemptions may be
sent to the shareholder of record by official check of the Trust.
Redemption requests received
<PAGE>
by mail are normally processed within one business day.
In Person. Redemptions may be requested in person at any office
of the Trust. Payment of proceeds of same day redemptions in
excess of $10,000 are not permitted.
Uncollected Funds. To protect shareholders against loss or
dilution resulting from deposit items that are returned unpaid,
the delivery of the proceeds of any redemption of shares may be
delayed 10 days or more until it can be determined that the check
or other deposit item (including Automatic Monthly Investments)
used for purchase of the shares has cleared. Such deposit items
are considered "uncollected," unless the Trust has determined
that they have actually been paid by the bank on which they were
drawn.
Shares purchased by cash, federal funds wire or U.S. Treasury
check are considered collected when received. All deposit items
earn dividends from the day of credit to a shareholder's account,
even while not collected.
Stop Payments. The Trust normally charges a fee of $28.00, or the
cost of stop payment, if greater, for stop payment requests on
"official checks" issued by the Trust on behalf of shareholders.
Certain documents may be needed before such a request can be
processed.
Periodic Redemptions. Investors may request automatic monthly
redemptions of a fixed or readily determinable sum, or of the
actual dividends earned during the past month, if applicable.
Such payments will be sent to the investor or to any other single
payee authorized in writing by the account holder. There is no
charge for this service, but the Trust reserves the right to
impose a charge, or to impose a minimum amount for periodic
redemptions.
Transaction Charges
In addition to charges described elsewhere in this prospectus, an
account in the Special Growth or Equity Income Portfolios will be
charged (by redemption of shares) $3.00 per month if its month-
end balance is below $700. Investors in the Special Growth and
Equity Income Portfolios who own shares with an account balance
that falls below these amounts should carefully consider the
impact of the $3.00 charge on their investment. The charge may
be greater than the investment return and may deplete a
shareholder's account over time. The Trust will contact each
investor prior to charging the account and inform the investor of
the option to increase the account balance or close the account
within 30 days to avoid a fee.
Accounts will be charged (by redemption of shares) $10.00 for
invested items returned for any reason. The Trust charges $5.00
to process each bearer bond coupon deposited.
Investors who purchase or redeem shares through a securities broker
may be charged a transaction fee by the broker for the handling of the
transaction if the broker so elects. Such charges are retained by the
broker and not transmitted to the Trust. However, investors may
engage in any transaction directly with the Trust to avoid such charges.
The Trust reserves the right to impose additional charges, upon
30 days' written notice, to cover the costs of unusual
transactions. Services for which charges could be imposed
include, but are not limited to, processing items sent for
special collection, transfers to accounts at the Trust's
custodial bank and issuance of multiple share certificates.
Retirement Plans
IRAs. Individual Retirement Accounts ("IRAs") may be opened with
a reduced minimum investment of $500. Even though they may be
nondeductible or partially deductible, IRA contributions up to
the allowable annual limits may be made, and the earnings on such
contributions will accumulate tax-free until distribution. The
Trust currently charges an annual fee of $12 for each investor's
IRA, which may be invested in an unlimited number of GIT mutual
funds. A separate application is required for IRA accounts.
Keogh Plans. The Trust also offers Keogh (or H.R. 10) plans for
self-employed individuals and their employees, which enable them
to obtain tax-sheltered retirement benefits similar to those
available to employees covered by other qualified retirement
plans. Currently the Trust charges an annual maintenance fee of
$15 for Keogh accounts.
<PAGE>
The Trust also offers SEP IRAs, SARSEPs, 401(k) and 403(b)
retirement plans. Further information on the retirement plans
available through the Trust, including minimum investments, may
be obtained by calling the Trust's shareholder service
department.
Closing an Account
An investor who wishes to close an account should request that
the account be closed, rather than redeeming the amount believed
to be the account balance. When an account is closed, shares will
be redeemed at the next determined net asset value.
The Trust reserves the right to involuntarily redeem accounts
with balances of less than $700 due to prior shareholder
redemptions. Prior to closing any such account, the investor will
be given 30 days written notice, during which time the investor
may increase his or her balance to avoid having the account
closed.
<PAGE>
Telephone Numbers
Shareholder Service
Washington, DC area: 703/528-6500
Toll-free nationwide: 800/336-3063
24-Hour ACCESS
Toll-free nationwide: 800/448-4422
The GIT Family of Mutual Funds
GIT Equity Trust
Special Growth Portfolio
Select Growth Portfolio
Equity Income Portfolio
Worldwide Growth Portfolio
GIT Income Trust
Maximum Income Portfolio
Government Portfolio
GIT Tax-Free Trust
Arizona Portfolio
Maryland Portfolio
Missouri Portfolio
Virginia Portfolio
National Portfolio
Money Market Portfolio
Government Investors Trust
For more complete information on any GIT Investment Fund,
including charges and expenses, request a prospectus by
calling the numbers above. Read it carefully before you
invest or send money. This prospectus does not constitute an
offering by the distributor in any jurisdiction in which such
offering may not be lawfully made.
GIT
GIT Investment Funds
1655 Fort Myer Drive
Arlington Virginia 22209
http://www.gitfunds.com
<PAGE>
GIT Equity Trust
Worldwide Growth Portfolio
Prospectus/July 31, 1996
1655 Fort Myer Drive, Arlington, Virginia 22209-3108
800/336-3063
Worldwide Growth Portfolio
GIT Equity Trust Worldwide Growth Portfolio (the "Portfolio") is
a diversified mutual fund whose goal is to obtain capital
appreciation for its investors. It invests primarily in foreign
equity securities, emphasizing companies that are likely to
benefit from the growth of the world's smaller and emerging
capital markets.
This strategy reflects a belief that the world's smaller and
emerging markets offer significant investment opportunities and
may benefit from higher national growth rates than markets in the
more developed countries. Investors are cautioned, however, that
these smaller and emerging markets involve risks in addition to
those normally associated with foreign stock investments. These
risks are discussed further in this prospectus.
Features
No commissions or sales charges.
$5,000 minimum initial investment.
No "12b-1" fees.
Free exchanges with other GIT mutual funds.
Purchases and redemptions by mail, wire or in person at one of
the Trust's offices.
Telephone exchanges and redemptions.
This prospectus is intended to be a concise statement of
information investors should know before investing. After reading
the prospectus, it should be retained for future reference. A
paper copy of the prospectus is available to investors who
received an electronic prospectus without charge by calling or
writing the Trust.
A Statement of Additional Information concerning the Trust
bearing the same date as this prospectus, has been filed with the
Securities and Exchange Commission and is incorporated herein by
reference. It is available without charge by calling or writing
the Trust.
Shares of the Trust are not deposits or obligations of, or
guaranteed or endorsed by, any bank. Shares are not federally
insured by the Federal Deposit Insurance Corporation, the Federal
Reserve Board, or any other agency.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
Bankers Finance Advisors, LLC.
Investment Adviser
<PAGE>
Table of Contents
Features 1
Expense Summary 2
Financial Highlights 2
About GIT Equity Trust 3
Investment Objective 3
Investment Policies 3
Specialized Investment Techniques 3
Investment Risks 4
Management of Trust 4
The Trust and Its Shares 5
Dividends 5
Performance Information 5
Taxes 5
Net Asset Value 6
How to Purchase and Redeem Shares 6
Expense Summary
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases None
Maximum Sales Load Imposed on Reinvested Dividends None
Deferred Sales Load None
Redemption Fee None
Exchange Fee None
Annual Fund Operating Expenses After Expense
Reimbursements (as a percentage of average net assets)
Management Fees 0.50%
12b-1 Fee None
Other Expenses 1.97%
Total Fund Operating Expenses 2.47%
Example
You would pay the following expenses on a $1,000 investment,
assuming (1) a five percent annual return and (2) redemption at
the end of each period:
1 year $25
3 years $78
5 years $133
10 years $283
The purpose of this table is to assist investors in understanding
the various costs and expenses that an investor will bear
directly and indirectly. For a detailed discussion of the
Portfolio's fees and expenses, see "Management of the Trust."
The hypothetical example shown above is based on the expense
levels listed under the caption "Annual Fund Operating Expenses"
and is intended to provide an understanding of the level of
expenses that might be incurred in the future. The five percent
return used in the example is arbitrary and is for illustrative
purposes only; it should not be considered representative of the
Trust's past or future performance, nor should the expenses in
the example be considered representative of future expenses,
which may actually be greater or less than those shown.
Additional fees and transaction charges described elsewhere in
this prospectus, if applicable, will increase the level of
expenses that can be incurred.
For the year ending March 31, 1996, the Adviser waived a portion
of its management fees of 1.00%. Had it not done so, the total fund
operating expenses would have been 2.97%.
Financial Highlights
The financial highlights data for a share outstanding and other
performance information for the fiscal years ending March 31, 1996
and 1995 and for the period beginning on the fund's inception on
April 16, 1993 through March 31, 1994 appearing below is derived
from the financial statements audited by Ernst & Young LLP,
independent auditors, whose report appears in the Annual Report to
Shareholders. This report is incorporated by reference in the
Statement of Additional Information and is available by calling
or writing the Trust.
<TABLE>
<CAPTION>
Year ended Year ended Period ended<F1>
March 31, 1996 March 31, 1995 March 31, 1994
<C> <C> <C>
Net asset value beginning
of period $ 8.501 $12.511 $10.000
Net investment income (loss) 0.044 0.022 (0.035)
Net realized and unrealized
gains (losses) on securities 1.387 (2.491) 2.546
Total from investment
operations 1.431 (2.469) 2.511
Distributions from net
investment income (0.070) (0.025) --
Distributions from capital
gains -- (1.516) --
Total distributions (0.070) (1.541) --
Net asset value end of
period $ 9.862 $8.501 12.511
Total return 16.88% (22.20)% 26.19%<F2>
Net assets at end of
period (thousands) 3,116 3,319 3,526
Expenses to average net assets 2.38%<F2> 2.05% 1.81%
Net income to average net
assets 0.43% 0.21% (0.48)%<F2>
Portfolio turnover 78% 65% 83%
<FN>
<F1>
April 16, 1993 (inception) to March 31, 1994
<F2>
Annualized
</FN>
For the periods presented the Adviser waived its advisory
fee and deferred the billing of certain reimburseable expenses.
Had such adviser not waived a portion of its advisory fee for the
year ending March 31, 1996, the Portfolio's annualized ratio of
expenses and net investment loss to average net assets would have
been 2.97% and (0.17)%, respectively. Had the
Adviser not waived the advisory fee for the year ending March 31,
1995, the Portfolio's annualized ratio of expenses and net
investment loss to average net assets would have been 3.05% and
(0.79)%, respectively. For the period ending March 31, 1994,
had such adviser not waived or deferred these expenses, the
Portfolio's annualized ratios of expenses and net income to
average net assets would have been 4.24% and (2.92)%, respectively.
Total return would have been 16.10%, (23.14)% and 23.34%
for 1996, 1995 and 1994, respectively.
<PAGE>
About GIT Equity Trust
GIT Equity Trust (the "Trust") is a diversified, open-end
management investment company, commonly known as a mutual fund.
The Trust was organized as a Massachusetts business trust under a
Declaration of Trust dated November 18, 1982. The Trust is
managed by Bankers Finance Advisors, LLC (the
"Adviser") of the same address as the Trust.
Only shares in the Trust's Worldwide Growth Portfolio (the
"Portfolio") are offered by means of this prospectus. The Trust
may offer additional portfolios which are managed independently.
Currently there are three such additional portfolios offered by a
separate prospectus: the Special Growth Portfolio, the Select
Growth Portfolio and the Equity Income Portfolio.
Investment Objective
The Worldwide Growth Portfolio's objective is capital
appreciation. The Portfolio's investment objective may be changed
without shareholder approval. Shareholders will, however, receive
prior written notice of any material change. There can be no
assurance that the Portfolio's investment objective will be
achieved.
Investment Policies
Under normal circumstances, the Portfolio intends to invest at
least 65 percent of its assets in the equity securities of
issuers whose principal activities are outside the United States.
The Portfolio will emphasize investments that, in the opinion of
the Adviser, are likely to benefit from the world's rapidly
growing economies and newly formed capital markets. The Portfolio
may invest in the securities of issuers located anywhere in the
world, in companies of all sizes and industries. The Portfolio
will normally maintain investments in at least three countries.
In addition to common stocks, the Portfolio's foreign equity
securities investments may include convertible debt securities,
preferred stocks, warrants and American Depository Receipts. To
the extent that the Portfolio's assets are not invested in
foreign equity securities, the Portfolio may invest in U.S.
equity securities or U.S. or foreign debt securities if they
present an opportunity for capital appreciation. It is possible
that any debt securities purchased by the Portfolio will be lower
rated or unrated and may have speculative characteristics.
Investment in such debt securities, however, is expected to be
less than five percent of the Portfolio's assets.
To meet redemption requirements, the Portfolio may also invest in
short-term money market instruments denominated in U.S. dollars,
and it may hold a portion of its assets in uninvested cash.
Investments purchased for this purpose will include repurchase
agreements, U.S. Government securities and high-grade commercial
paper.
If the Adviser determines that market conditions warrant the
adoption of a temporary defensive investment position, as much as
100 percent of the Portfolio could be invested in equity
securities traded on a U.S. market or exchange, or in high-grade
debt or short-term investments denominated in U.S. dollars. To
the extent that the Portfolio is not invested in foreign equity
securities, it is not invested in accordance with policies
designed to achieve its stated investment objective.
The Portfolio's fundamental investment policies, which may not be
changed without a shareholder vote, limit investments in the
securities of any one issuer (excluding U.S. Government
securities) to five percent of a Portfolio's total assets as of
the date of purchase. Additionally, the Portfolio will not invest
more than 15 percent of its total assets in securities which
cannot be liquidated within seven days, and it will not invest
more than 25 percent of its total assets in securities of issuers
in a single industry. For purposes of the Portfolio's 15 percent
limitation on investments in illiquid securities, the Portfolio
may invest in Rule 144A securities which are determined to be
liquid based on guidelines adopted by the Trustees for making
such determinations. The Portfolio does not intend to borrow
under normal circumstances and will not borrow amounts exceeding
25 percent of total assets. Other fundamental policies are
described in the Statement of Additional Information.
The Portfolio intends to purchase securities for the purpose of
long-term investment and does not expect to engage in short-term
trading. Portfolio turnover generally is not expected to exceed
100 percent per year.
Specialized Investment Techniques
To achieve its objectives, the Portfolio may use certain
specialized investment techniques. These include repurchase
agreements, investments in "when-issued" securities, foreign
currency transactions (for hedging purposes only and not for
speculation), writing covered call options, Global Depository
Shares or closed-end funds and loans of Portfolio securities. Use
of these techniques may involve certain risks, some of which are
summarized below and described further in the Statement of
Additional Information.
Repurchase agreements involve the sale of securities to the
Portfolio by a financial institution or securities dealer,
simultaneous with an agreement by that seller to repurchase the
securities at the same price, plus interest, at a later date. The
Portfolio will limit the parties with which it will engage
in repurchase agreements to those financial institutions and
securities dealers that are deemed creditworthy pursuant to
guidelines adopted by the Trust's Board of Trustees. The Adviser
will follow procedures to ensure that all repurchase agreements
acquired by the Portfolio are always at least 100 percent
collateralized as to principal and interest.
<PAGE>
When investing in repurchase agreements, the Portfolio relies on
the other party to complete the transaction on the scheduled
date. Should the other party fail to do so, the Portfolio would
hold securities it did not intend to own. Were it to sell such
securities, the Portfolio might incur a loss. In the event of
insolvency or bankruptcy of the other party to a repurchase
agreement, the Portfolio could encounter difficulties and might
incur losses upon the exercise of its rights under the repurchase
agreement.
The Portfolio may invest up to five percent of the value of its
total assets in shares of any closed-end fund that holds
securities of the type purchased by the Portfolio. Closed-end
funds differ from open-end investment companies in that their
price is not based on the net asset value of the underlying
securities of the fund. As such, the price of a closed-end fund
may fluctuate without regard to the value of the securities it
holds.
Investment Risks
An investment in the Worldwide Growth Portfolio involves certain
risks. It should be used as one part of a diversified investment
program.
Investment in foreign securities involves risks in addition to
those associated with domestic investments. The Adviser intends
to emphasize investment in countries with smaller and emerging
markets, which may exacerbate these risks. In general, it can be
said that prices of foreign securities are more volatile than
those of securities issued in the U.S., and that this volatility
could be exaggerated in smaller and emerging markets.
Since foreign securities are generally purchased and sold in
foreign currencies, while the Worldwide Growth Portfolio's net
asset value is computed in U.S. dollars, the Portfolio's net
asset value will be affected by currency fluctuations. In
addition, dividends and other income payments will require
conversion to U.S. currency. While it is possible that the
Portfolio will incur gains from currency fluctuations, losses are
also possible. In addition to the risk of loss due to currency
fluctuations, the Portfolio will bear the costs of currency
exchange transactions.
There may be less publicly available information about foreign
securities than about securities issued in the United States.
Accounting standards, auditing practices and financial reporting
requirements differ, and foreign markets may be subject to
significantly less government regulation. These risk factors may
be especially salient in the smaller and emerging markets in
which the Portfolio intends to invest.
Smaller and emerging markets have substantially less
trading volume than other markets, reducing the liquidity of
investments. The settlement times foreign securities may be
longer than the customary five day settlement time for U.S.
securities, further reducing liquidity.
Political factors are often unpredictable in countries having
smaller and emerging markets. In addition to having a possible
negative financial impact on companies operating in these
countries, political risks include the possibility of seizure of
foreign assets and confiscatory taxation. The Adviser's ability
to manage the Portfolio may be limited by governmental
restrictions such as limitations on the repatriation of income
and restrictions on foreign ownership of securities. In some
countries, the Portfolio's purchases may be limited to certain
types of investment vehicles, such as closed-end mutual funds.
In addition to these and other possible risks associated with
foreign securities, the Portfolio's holdings will be subject to
the economic, business and market risks associated with common
stock investment.
Management of the Trust
The Trustees. Under the terms of the Declaration of Trust, which
is governed by the laws of the Commonwealth of Massachusetts, the
Trustees are ultimately responsible for the conduct of the
Trust's affairs. They serve indefinite terms of unlimited
duration and they appoint their own successors, provided that at
least two-thirds of the Trustees have been elected by
shareholders. The Declaration of Trust provides that a Trustee
may be removed at any special meeting of shareholders by a vote
of two-thirds of the Trust's outstanding shares.
The Adviser. Bankers Finance Advisors, LLC is a division of Madison
Investment Advisors, Inc., 6411 Mineral Point Road, Madison,
Wisconsin, 53705 ("Madison"). Bankers Finance Advisors, LLC
administers approximately $200 million in assets and manages the
GIT family of mutual funds, which includes stock, bond and money
market portfolios. Madison, a licensed investment advisory firm for
over 22 years, provides professional portfolio management services
to a number of clients, including stock and bond mutual funds, and
has approximately $2.5 billion under management.
The Adviser is responsible for the day-
to-day administration of the Trust's activities. Investment
decisions regarding each of the Trust's portfolios can be
influenced in various manners by a number of individuals.
The individuals primarily responsible for the management of the
Worldwide Growth Portfolio are Charles J. Tennes and Frank E.
Burgess. Mr. Tennes, vice president, who had been associated
since 1985 with Bankers Finance Investment Management Corp.,
the adviser to the Portfolio prior to July 31, 1996, has managed the
Worldwide Growth Portfolio since its inception. Mr. Burgess,
President and founder of Madison, began managing the
Portfolio after July 31, 1996.
The Adviser is controlled by Madison. The Adviser purchased
the investment management assets of Bankers Finance Investment
Management Corp. effective July 31, 1996. The Adviser has the
same address as the Trust.
Compensation. For its services to the Portfolio under its
investment advisory agreement with the Trust, the Adviser
receives a fee, payable monthly, calculated as one percent per
annum of the average daily net assets of the Worldwide Growth
Portfolio. Due to the more complex management demands of
international investing, this fee is higher than that paid by
most investment companies. The Adviser may compensate certain
financial organizations for services resulting in purchases of
Portfolio shares.
<PAGE>
Distributor. GIT Investment Services, Inc. of the same address as
the Trust, acts as the Trust's Distributor. The Distributor is
wholly owned by A. Bruce Cleveland.
Services Agreement. Under a separate services agreement with the
Trust, the Adviser provides operational and other support
services, for which it is reimbursed at cost.
Transfer Agent and Dividend Paying Agent. The Trust acts as its
own transfer agent and dividend paying agent.
Expenses. The Trust is responsible for all of its expenses not
assumed by the Adviser, including the costs of the following:
shareholder services; legal, custodian and audit fees; trade
association memberships; accounting; certain Trustees' fees and
expenses; fees for registering the Trust's shares; the
preparation of prospectuses, proxy materials and reports to
shareholders; and the expense of holding shareholder meetings.
For the fiscal year ended March 31, 1996, the Portfolio paid
expenses of $82,870.
The Trust and Its Shares
Under the terms of the Declaration of Trust, the Trustees may
issue an unlimited number of whole and fractional shares of
beneficial interest without par value for each series of shares
they have authorized. All shares issued will be fully paid and
nonassessable and will have no preemptive or conversion rights.
Under Massachusetts law, the shareholders may, under certain
circumstances, be held personally liable for the Trust's
obligations; the Declaration of Trust, however, provides
indemnification out of Trust property of any shareholder held
personally liable for obligations of the Trust.
Shares in four GIT Equity Trust portfolios are currently
authorized by the Trustees: Worldwide Growth Portfolio, Special
Growth Portfolio, Select Growth Portfolio, and Equity Income
Portfolio. The shares of each portfolio represent a separate
series of shares and are all of a single class, each representing
an equal proportionate share in the assets, liabilities, income
and expense of the respective portfolio and each having the same
rights as any other share within the series. Each share has one
vote and fractional shares have fractional votes. Voting is not
cumulative.
The Trust does not intend to hold annual shareholder meetings.
Shareholder inquiries can be made to the offices of the Trust at
the address on the cover of this prospectus.
Dividends
The Portfolio's net income is declared as dividends and
distributed to shareholders at least twice annually, once during
the last two months of the calendar year and once at the end of
the Trust's March 31 fiscal year.
Dividends are paid in the form of additional shares credited to
investor accounts, unless a shareholder elects in writing to
receive dividend checks. Any net realized short and long-term
capital gains will be paid to shareholders as capital gains
distributions. Prior to inclusion in declared dividends, the
Trust's net income will be reflected in each Portfolio's net
asset value per share.
Performance Information
From time to time, the Trust advertises its total return. Total
return is based on historical data and is not intended to
indicate future performance. For advertising purposes, total
return takes into account changes in share price and assumes that
dividends and other distributions are reinvested when paid. In
addition to average annual total return, the Trust may quote
total return over various periods, and may quote the aggregate
total return for a period.
The Trust may also cite the ranking or performance of a Portfolio
as reported in the public media or by independent performance
measurement firms. The Trust's Annual Report contains additional
performance information. A copy of the Annual Report may be
obtained without charge by calling or writing the Trust at the
telephone number and address on the first page of this
prospectus.
Taxes
For federal income tax purposes, the Portfolio intends to
maintain its status under Subchapter M of the Internal Revenue
Code of 1986, as amended (the "Code"), as a regulated investment
company by distributing to shareholders 100 percent of its net
income and net capital gains by the end of its fiscal year. The
Code also requires the Portfolio to distribute at least 98
percent of undistributed net income and capital gains realized
from the sale of investments by the end of each calendar year.
The capital gains distribution is determined as of October 31
each year. Capital gains distributions, if any, are taxable to
the shareholder. For tax purposes, the Trust will send
shareholders an annual notice of dividends and other
distributions paid during the prior year.
Because the Portfolio's share price fluctuates, a redemption of
shares by the investor creates a capital gain or loss which has
tax consequences. It is the shareholder's responsibility to
calculate the cost basis of shares purchased. Investors are
advised to retain all statements received from the Trust and to
maintain accurate records of their investments.
Investors who fail to provide a valid social security or tax
identification number may be subject to federal withholding at a
rate of 31 percent of dividends and capital gains distributions.
<PAGE>
Any fine assessed against the Trust as a result of an investor's
failure to provide a valid social security or tax identification
number will be charged against the investor's account.
At the federal as well as state and local levels, dividend income
and capital gains are generally considered taxable income.
Because tax laws vary from state to state, shareholders should
consult their tax advisers concerning the impact of mutual fund
ownership in their own tax jurisdictions.
Income received by the Portfolio may be subject to withholding or
taxation by foreign governments. If more than 50 percent of the
value of the Portfolio's assets at the close of a taxable year
consists of securities of foreign corporations, the Portfolio may
elect to "pass-through" its foreign tax liability to
shareholders. In this case, shareholders would include in gross
income both dividends paid to them by the Portfolio and the
foreign taxes paid by the Portfolio. Shareholders could then
take a credit (or, if more advantageous, a deduction), for
foreign income taxes paid by the Portfolio, subject to
limitations imposed by the Code. The Portfolio will advise
shareholders annually of any foreign taxes paid which might be
the source of a tax credit.
Net Asset Value
Net asset value is calculated as of the close of the New York
Stock Exchange each day the New York Stock Exchange is open for
trading. The net asset value per share of the Portfolio is
determined by adding the value of all its securities and other
assets, subtracting liabilities and dividing the result by the
total number of outstanding shares for the Portfolio.
For purposes of calculating net asset value, securities traded on
securities exchanges are valued at their daily closing sale
prices, if available, and if not available, such securities are
valued at the mean between the bid and ask prices. Other
securities for which current market quotations are readily
available are valued at the mean between their bid and ask
prices. Securities for which current market quotations are not
readily available are valued at their fair value as determined in
good faith according to procedures established by the Trustees.
The Trust may use an independent pricing service for
determination of securities values.
The Portfolio is expected to purchase securities listed on
foreign exchanges and markets whose trading days may differ from
those of the United States. Securities whose prices are quoted in
foreign currencies are normally translated to U.S. dollars based
on exchange rates at 1 p.m., Washington, DC time.
Because of time zone differences, many foreign exchanges and
securities markets close prior to the closing of the New York
Stock Exchange. The values of foreign securities will be
determined as of the most recent closing time of such exchanges
and securities markets or as of the time such securities are valued
by independent pricing services, if different, pursuant to procedures
adopted by the Trustees. If the Adviser becomes aware of events
subsequent to normal valuation time which could have a material
effect on the value of securities owned, the securities will be
priced at fair value as determined in good faith and in
accordance with procedures adopted by the Trustees.
How to Purchase and Redeem Shares
Account Transactions
Transactions into or out of the Trust are entered in the
investor's account and recorded in shares. The number of shares
in the account is maintained to an accuracy of 1/1000th of a
share. Unless an investor specifically requests in writing,
certificates will not be issued to represent shares in the Trust.
The Trust will provide a sub-accounting report for institutions
needing to maintain separate information for accounts under their
supervision.
Telephone Transactions
The option to initiate inter-fund exchanges and redemptions and
to obtain account balance information by telephone is available
automatically to all shareholders. The Trust will employ
reasonable security procedures to confirm that instructions
communicated by telephone are genuine; if it does not, it may be
liable for any losses due to unauthorized or fraudulent
instructions. These security procedures may include, among
others, requiring one or more forms of personal identification
prior to acting upon telephone instructions, providing written
confirmations and recording telephone calls. Certain
transactions, including account registration or address changes,
must be authorized in writing.
Purchasing Shares
Shareholder purchases are priced at the net asset value per share
next determined after the purchase or redemption order is
received by the Trust in proper form and funds are received by
the Trust's Custodian. This is usually one or two business days
after an investment is received at the Trust. Investments are
not considered to be in proper form until physical payment or
notice of electronic payment has been received by the Trust.
New Accounts. A minimum of $5,000 is required to open an account.
Each investor is given an account with a balance denominated in
shares. When a new account is opened by telephone for funds wired
to the Trust, the investor will be required to submit a signed
application promptly thereafter. Payment of redemption proceeds
is not permitted until a signed application is on file with the
Trust.
New accounts may be opened by completing an application and
forwarding it with a check for the initial investment to:
GIT Equity Trust
1655 Fort Myer Drive, Suite 1000
Arlington, VA 22209-3108
Subsequent investments. Subsequent investments may be made in any
amount, but the Trust reserves the right to return investments of
less than $50.00. See "Redeeming Shares" for an explanation of
the Trust's policies regarding the 10-day hold on invested
checks.
<PAGE>
Subsequent investments should be sent to:
GIT Investment Funds
P.O. Box 640393
Cincinnati, OH 45264-0393
Please include an investment deposit slip or a clear indication
of the account to be credited. Checks should be payable to GIT
Equity Trust.
In Person. Accounts may be opened and subsequent deposits made at
any office of the Trust.
By Wire. Federal funds wires should be sent to Star Bank, N.A.,
Cinti/Trust, ABA No. 0420-0001-3, for credit as follows:
GIT Worldwide Growth Account No. 48038-8883
(Investor name and account number)
Please call before or shortly after funds are wired to ensure
proper credit. The Trust must be notified by 1 p.m. Washington,
DC time, to credit the shareholder's account the same day. There
is a charge of $6.00 for processing incoming wires of less than
$2,500.
By Inter-Fund Exchange. Investors may redeem shares from one GIT
account and concurrently invest the proceeds in another GIT
account by telephone when the account registration and tax
identification number remain the same. There is no charge for
this service. When a new account is opened by exchange, a new
account application is required if the account registration or
tax identification number will differ from that on the
application for the original account. Exchanges may only be made
into funds that are registered or otherwise permitted to be sold
in the investor's state of residence.
By Automatic Monthly Investment. Regular monthly
investments in any fixed amount of $100 or more can be made
automatically by Electronic Funds Transfer from accounts at banks
or savings and loan associations which have the required transfer
capabilities. The investor can change the amount of this
automatic investment or discontinue the service at any time by
writing the Trust.
Redeeming Shares
Redemptions are processed any day the New York Stock Exchange is
open and are effected at the net asset value per share next
determined after the redemption request is received in proper
form. Redemptions may be made by wire transfer, by mail, in
person or pursuant to standing instructions. The Trust does not
distribute currency or coin.
To protect your account, the Trust requires signature guarantees
before certain redemptions or registration changes are considered
in good order. Signature guarantees help the Trust ensure the
identity of the authorized account owner or owners before the
Trust releases redemption proceeds or recognizes a new person to
request redemptions. Signature guarantees are required for any
account transfers or delivery of redemption proceeds to a person
other than the shareholder of record (i) at an address other than
the shareholder's address of record or (ii) by wire to a bank
account other than the shareholder's previously designated bank
account that receives wire transfers. The Trust recognizes
signature guarantees from banks with FDIC insurance, certain
credit unions, trust companies, and members of a domestic stock
exchange. A guarantee from a notary public is not an acceptable
signature guarantee.
Limit on Payment of Same-Day Redemption Proceeds. Payment of
redemption proceeds on the day of the request in excess of 80
percent of the current value of an account are normally not
permitted. In addition, the Trust reserves the right to limit
payment of redemption proceeds on the day of the request to 60
percent or less of the value of the account from which the
redemption is being made, valued as of the close of the preceding
business day, whenever the Dow Jones Industrial Average declines
50 points or more at any time during a day or at any time when,
in the opinion of the Adviser, market conditions warrant such a
policy.
By Wire. Wire transfers permit funds to be credited to a
shareholder's bank account, usually the same day. Wires may only
be sent to the bank account previously designated in writing.
Other wires and wires to third parties are normally not
permitted.
Redemptions of $10,000 or more will be paid by wire to U.S.
domestic banks without charge. Wires for lesser amounts will be
paid after deducting a $10 service charge. Wires to foreign banks
require a service charge of $30, or the cost of the wire, if
greater.
Payment of proceeds of wire requests received after 12:30 p.m.,
Washington, DC time, and requests exceeding 80 percent of the
account's current value will normally be processed the next
business day. Wires can be arranged by calling the telephone
numbers on the last page of this prospectus.
By Mail. Upon written or telephone request, redemptions may be
sent to the shareholder of record by official check of the Trust.
Redemption requests received by mail are normally processed
within one business day.
In Person. Redemptions may be requested in person at any office
of the Trust. Payment of proceeds of same day redemptions in
excess of $10,000 are not permitted at the branch office.
Uncollected Funds. To protect shareholders against loss or
dilution resulting from deposit items that are returned unpaid,
the delivery of the proceeds of any redemption of shares may be
delayed 10 days or more until it can be determined the check used
for purchase of the shares has cleared. Such deposit items are
considered "uncollected" unless the Trust has determined that
they have actually been paid by the bank on which they were
drawn.
If a written request in proper form is submitted directly to the
Trust to redeem shares that were purchased by check or by
Automatic Monthly Investment within the past 10 days, the
<PAGE>
redemption will be processed at the next determined net asset
value, and the proceeds will be forwarded promptly upon clearance
of the deposit item, which may take 10 days or more.
Shares purchased by cash, federal funds wire or U.S. Treasury
check are considered collected when received. All deposit items
that are ultimately collected are considered invested and earn
dividends from the day of credit to a shareholder's account, even
while not collected.
Stop Payments. The Trust normally charges a fee of $28.00, or the
cost of stop payment, if greater, for stop payment requests on
"official checks" issued by the Trust on behalf of shareholders.
Certain documents may be needed before such a request can be
processed.
Periodic Redemptions. Investors may request automatic monthly
redemptions of a fixed or readily determinable sum, or of the
actual dividends earned during the past month. Such payments will
be sent to the investor or to any other single payee authorized
in writing by the account holder. There is no charge for this
service, but the Trust reserves the right to impose a charge, or to
impose a minimum amount for periodic redemptions.
Transaction Charges
In addition to charges described elsewhere in this prospectus, an
account will be charged (by redemption of shares) $3.00 per month
if its month-end balance is below $700. Investors whose account
balance falls below this amount should carefully consider the
impact of the $3.00 charge. The charge may be greater than the
investment return and may deplete a shareholder's investment over
time. The Trust will contact each investor prior to charging the
account and inform the investor of the option to increase the
account balance or close the account within 30 days to avoid such
fee.
Accounts will be charged (by redemption of shares) $10.00 for
invested items returned for any reason. The Trust charges $5.00
to process each bearer bond coupon deposited.
Investors who purchase or redeem shares through a securities broker
may be charged a transaction fee by the broker for the handling of the
transaction if the broker so elects. Such charges are retained by the
broker and not transmitted to the Trust. However, investors may
engage in any transaction directly with the Trust to avoid such charges.
The Trust reserves the right to impose additional charges, upon
30 days written notice, to cover the costs of unusual
transactions. Services for which charges could be imposed
include, but are not limited to, processing items sent for
special collection, transfers to accounts at the Trust's
Custodian and issuance of multiple share certificates.
Retirement Plans
IRAs. Individual Retirement Accounts ("IRAs") may be opened with
a reduced minimum investment of $500. Even if nondeductible or
partially deductible, IRA contributions may be made to the
allowable annual limits, and the earnings on all contributions
will accumulate tax-free until distribution. The Trust currently
charges an annual maintenance fee of $12 for each IRA, which may
be invested in an unlimited number of GIT mutual funds. A
separate application is required for IRA accounts.
Keogh Plans. The Trust offers Keogh (or H.R. 10) plans for self-
employed individuals and their employees, which enable them to
obtain tax-sheltered retirement benefits similar to those
available to employees covered by qualified retirement plans.
Currently the Trust charges an annual maintenance fee of $15 for
Keogh accounts.
The Trust also offers SEP, SARSEP, 401(k) and 403(b) retirement
plans. Further information (including minimum investment
requirements) may be obtained by calling the Trust's shareholder
service department.
Closing an Account
An investor who wishes to close an account should request that
the account be closed, rather than redeeming the amount believed
to be the account balance. When an account is closed, shares will
be redeemed at the next determined net asset value per share.
The Trust reserves the right to involuntarily redeem accounts
with balances of less than $700 due to prior shareholder
redemptions. Prior to closing any such account, the investor will
be given at least 30 days' written notice, during which time the
investor may increase his or her balance to avoid having the
account closed.
Office
1700 North Moore Street
Arlington, VA 22209
Custodian
Star Bank, N.A.
Cincinnati, OH 45202
Auditors
Ernst & Young LLP
Telephone Numbers
Shareholder Services
Washington, DC area: 703-528-6500
Toll-free nationwide: 800-336-3063
24-Hour ACCESS
Toll-free nationwide: 800-448-4422
For more complete information on any GIT Investment Fund,
including charges and expenses, request a prospectus by
calling the numbers above. Read it carefully before you
invest or send money. This prospectus does not constitute an
offering by the distributor in any jurisdiction in which such
offering may not be lawfully made.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
Dated July 31, 1996
For use with the prospectus of the Special Growth, Select Growth
and Equity Income Portfolios dated July 31, 1996 and with the
prospectus of the Worldwide Growth Portfolio dated July 31, 1996.
GIT EQUITY TRUST
1655 Fort Myer Drive
Arlington, VA 22209-3108
(800) 336-3063
(703) 528-6500
This Statement of Additional Information is not a prospectus. It
should be read in conjunction with the prospectuses of GIT Equity
Trust bearing the dates indicated above (the "Prospectuses"). A
copy of each Prospectus may be obtained from the Trust at the
address and telephone numbers shown.
Table of Contents
Introductory Information ("About GIT Equity Trust") 2
Supplimental Investment Policies
("Investment Objectives" and "Investment Policies") 2
Investment Limitations
("Investment Policies") 6
The Investment Adviser
("Management of the Trust") 7
Organization of the Trust
("The Trust and Its Shares") 8
Trustees and Officers
("Management of the Trust") 10
Administrative and Other Expenses
("Management of the Trust") 11
Portfolio Transactions
("Management of the Trust") 11
Share Purchases
("How to Purchase and Redeem Shares") 12
Share Redemptions
("How to Purchase and Redeem Shares") 13
Retirement Plans
("How to Purchase and Redeem Shares") 14
Declaration of Dividends
("Dividends") 14
Determination of Net Asset Value
("Net Asset Value") 14
Additional Tax Matters
("Taxes") 15
Total Return Calculations
("Performance Information") 16
Custodians and Special Custodians 17
Legal Matters and Independent Auditors
("Financial Highlights") 17
Additional Information 17
Financial Statements and Report of Independent Auditors
("Financial Highlights") 17
Note: The items appearing in parentheses above are cross
references to sections in the Prospectuses which correspond to
the sections of this Statement of Additional Information.
<PAGE>
Statement of Additional Information Page 2
GIT Equity Trust July 31, 1996
Introductory Information
GIT Equity Trust (the "Trust") currently issues four series of
shares: Worldwide Growth Fund shares, Special Growth Fund shares,
Select Growth Fund shares and Equity Income Fund shares. These
four series of shares correspond, respectively, to four separate
portfolios consisting primarily of equity securities: the
Worldwide Growth Portfolio, the Special Growth Portfolio, the
Select Growth Portfolio and the Equity Income Portfolio. These
portfolios are described more fully below (see "Supplemental
Investment Policies").
Supplemental Investment
The investment objectives of the Trust are described in the
Prospectuses (see "Investment Objectives"). Reference should also
be made to the Prospectuses for general information concerning
the Trust's investment policies (see "Investment Policies"). The
Trust seeks to achieve its investment objectives through
diversified investment by each of its portfolios principally in
equity securities.
Basic Investment Policies. The Trust intends generally to select
portfolio investments on the basis of their fundamental values
rather than on the basis of technical market factors. This means
that the Trust's investments will normally be held until there is
a change in the fundamental considerations that were the reason
for their purchase. However, the Trust will be free to sell any
of its investments at any time in response to market timing or
other considerations. Any such sales may result in realized long-
term or short-term capital gains and losses. The Trust does not
intend to engage in extensive short-term trading; thus, since it
will not normally be able to take advantage of short-term market
swings, the Trust should not be viewed as a vehicle for short-
term investment.
The Worldwide Growth Portfolio assumes the highest risks among
the Trust's four portfolios. It invests in foreign securities
subject to currency fluctuation against the U.S. dollar and in
securities issued by companies located in countries with
unpredictable political systems. The portfolio also bears the
risk that it may be limited in its ability to invest in certain
international markets if the U.S. Government or foreign
governments impose restrictions on such investment. Under such
circumstances, the Fund may be required to invest in U.S.
securities. Likewise, laws or regulations regarding
convertibility and repatriation of assets may require the
portfolio to increase its U.S. market investments in order to
ensure an adequate supply of U.S. dollars to meet anticipated
redemptions. Currently, it is not anticipated that such
considerations will affect the portfolio's investment strategy.
The Special Growth Portfolio is intended to achieve the highest
capital appreciation while assuming the highest risks of the
Trust's three domestic securities portfolios. Such risks may
arise from investments in companies that have limited resources,
that lack a stable earnings history or may be incurring losses,
that are engaged in the development of unproven products or that
are promoting products and services lacking well established
sales. This portfolio emphasizes investments in smaller companies
that may offer rapid growth potential. It may also invest in
companies undergoing fundamental changes deemed to offer the
possibility of a rapid increase in value.
The Select Growth Portfolio seeks investments that are
undervalued or have good management and significant growth
potential. Investments for this portfolio are selected on the
basis of such fundamental measures as the relationship between
stock price and underlying tangible assets, the ratio of stock
price to earnings compared with typical historical or other
contemporary levels for this ratio, and the company's relative
rate of growth and market position.
The Equity Income Portfolio is intended to earn substantial
current dividend income with some capital appreciation while
assuming less risk than the Trust's other portfolios.
Consideration will also be given to an investment's potential for
appreciation as a hedge against inflation and factors tending to
protect the investment's value. Common stock investments will be
limited to those with a record of regular dividend payments.
While investments in this portfolio are intended to be less
volatile than those of the Trust's other portfolios, no assurance
can be given that this portfolio will avoid losses or succeed in
growing at a rate matching the rate of inflation. Experience has
shown that high levels of inflation may depress stock prices,
limiting the value of common stocks as an inflation hedge.
Other Policies. The Trust will not invest more than 25% of the
assets of a portfolio in any one industry. During defensive
periods the Trust may invest without limitation in U.S.
Government securities and the money market obligations of
domestic banks, their branches and other domestic depository
institutions (see "Investment Limitations"). The Trust will limit
its investments to liquid securities having readily available
market quotations, except that up to 10% of the Special, Select
or Equity Income Portfolio and up to 15% of the Worldwide Growth
Portfolio may be invested in securities having restrictions on
resale or which are otherwise illiquid (see "Investment
Limitations").
Debt Instruments. The portion of any portfolio of the Trust that
is not invested in equity securities may be invested in debt
instruments. The "Debt Instruments" in which the Trust may invest
are limited to the following U.S. dollar denominated investments:
(1) U.S. Government securities; (2) obligations of banks having
total assets of $750 million or more (including assets of
affiliates); (3) high grade commercial paper; (4) other corporate
and foreign government obligations of investment grade issued and
sold publicly within the United States; and (5) repurchase
agreements involving any of the foregoing securities.
In addition to the above, the Worldwide Growth Portfolio may
invest in corporate and foreign government obligations which are
issued and sold publicly outside the U. S. Such debt securities
may be in the top four rating categories or have, in the
Adviser's judgment, the characteristics of investment grade
securities. The Trust is permitted to invest in foreign debt
securities which are speculative and, in the Adviser's judgment,
have credit characteristics similar to debt securities rated
below investment grade quality. Foreign government issuers of
such securities may have a large foreign debt and foreign
corporate issuers may be highly leveraged. As such, the risks
associated with acquiring the securities of such issuers is
greater than is the case with higher rated securities. The
issuer's ability to service its debt obligations may be adversely
affected by foreign economic
<PAGE>
Statement of Additional Information Page 3
GIT Equity Trust July 31, 1996
downturns and by specific issuer developments such as the
unavailability of additional financing. The risk of default by
the issuer is significantly greater for speculative securities
because they may be unsecured or subordinated to other creditors.
The market for such securities is generally less liquid than for
investment grade securities and the Worldwide Growth Portfolio
may experience difficulty disposing of any such securities.
"U.S. Government securities" are obligations issued or guaranteed
by the United States Government, its agencies and
instrumentalities. U.S. Government securities include direct
obligations of the United States issued by the U.S. Treasury,
such as Treasury bills, notes and bonds. Also included are
obligations of the various federal agencies and
instrumentalities, such as the Government National Mortgage
Association, the Federal Farm Credit System, the Federal Home
Loan Mortgage Corporation and the Federal Home Loan Banks, the
Small Business Administration, the Student Loan Marketing
Association, and deposits fully insured as to principal by
federal deposit insurance. Except for Treasury securities, all of
which are full faith and credit obligations, U.S. Government
securities may either be agency securities backed by the full
faith and credit of the United States, such as those issued by
the Government National Mortgage Association, or only by the
credit of the particular federal agency or instrumentality which
issues them, such as those issued by the Federal Farm Credit
System and the Federal Home Loan Mortgage Corporation; some such
agencies have borrowing authority from the U.S. Treasury, while
others do not.
Bank obligations include certificates of deposit ("CDs"), bankers
acceptances ("BAs") and time deposits. CDs are generally short-
term, interest-bearing negotiable certificates issued by banks
against funds deposited with the issuing bank for a specified
period of time. BAs are time drafts drawn against a business,
often an importer, and "accepted" by a bank, which agrees
unconditionally to pay the draft on its maturity date. BAs are
negotiable and trade in the secondary market. Time deposits
include money market deposit accounts. The Trust will not invest
in non-transferable time deposits having penalties for early
redemption if such time deposits mature in more than seven
calendar days, and such time deposits maturing in two business
days to seven calendar days will be limited to 10% of the Special
Growth, Select Growth or Equity Income Portfolio's respective
total assets and limited to 15% of the Worldwide Growth
Portfolio's total assets.
"Commercial paper" describes the unsecured promissory notes
issued by major corporations to finance short-term credit needs.
Commercial paper is issued in maturities of nine months or less
and usually on a discount basis. High grade commercial paper is
rated A-1 by Standard and Poor's Corporation ("S&P") or P-1 by
Moody's Investors Service, Inc. ("Moody's") or is of equivalent
quality. Other corporate and foreign government obligations
generally include notes and debentures (for maturities not
exceeding 10 years) and bonds (for longer maturities). These
obligations normally pay interest to the holder semiannually;
they may be either secured or, more commonly, unsecured.
Investment grade obligations are those rated Baa or better by
Moody's or BBB or better by S&P or are of equivalent quality.
Specialized Investment Techniques. In order to achieve its
investment objectives, the Trust may use, when the Adviser deems
appropriate, certain specialized investment techniques. Such
specialized investment techniques principally include those
identified in the Prospectus (see "Investment Policies") which
are described more fully below:
1. Covered Call Options. The Trust may write "covered call
options" against any of its portfolio securities. These options
represent contracts sold on a national options exchange or in the
over-the-counter market allowing the purchaser of the contract to
buy specified underlying securities at a specified price (the
"strike price") prior to a specified expiration date. Writing
covered call options may increase the Trust's income, because a
fee (the "premium") is received by the Trust for each option
contract written, but unless the option contract is exercised it
has no other ultimate impact on the Trust. The premium received,
plus the strike price of the option, will always be greater than
the value of the underlying securities at the time the option is
written.
When an option contract is "covered" it means that the Trust, as
the writer of the option contract, holds in its portfolio the
underlying securities described in the contract or securities
convertible into such securities. Thus, if the holder of the
option decides to exercise his purchase rights, the Trust may
sell at the strike price securities it already holds in portfolio
or may obtain by conversion (rather than risking having to first
buy the securities in the open market at an undetermined price).
However, an option contract would not normally be exercised
unless the market price for the underlying securities specified
were greater than the strike price. Thus, when an option is
exercised the Trust will normally be forced to sell portfolio
securities at below their current market value or otherwise will
be required to buy a corresponding call contract at a price
reflecting this price differential to offset the call contract
previously written (such an offsetting call contract purchase is
called a "closing purchase transaction").
To the extent the Trust writes covered call options it will be
foregoing any opportunity for appreciation on the underlying
securities above the strike price during the period prior to
expiration of the option contract. The Trust reserves the right
to close out call option contracts written at any time in closing
purchase transactions, but there is no assurance that the Trust
will be able to effect such transactions at any particular time
or at an acceptable price. The Trust will not sell the securities
covering an option contract written prior to its expiration date
unless substitute covering securities are purchased or unless the
contract written is first offset in a closing purchase
transaction; nor will the Trust write additional option contracts
if more than 25% of the Trust's assets would then be required to
cover the options written. All of the Trust's investments will be
selected on a basis consistent with its investment policies for
the respective portfolio, notwithstanding the potential for
additional premium income from option writing. The writing of
options could increase the Trust's gross income from securities
held less than three months, and is therefore limited by tax
considerations to providing 30% of gross income or less (see
"Additional Tax Matters").
<PAGE>
Statement of Additional Information Page 4
GIT Equity Trust July 31, 1996
2. When-Issued Securities. The Trust may purchase and sell
securities on a when-issued or delayed delivery basis. When-
issued and delayed delivery transactions arise when securities
are bought or sold with payment for and delivery of the
securities scheduled to take place at a future time. Frequently
when newly issued securities are purchased, payment and delivery
may not take place for 15 to 45 days after the Trust commits to
the purchase. Fluctuations in the value of securities contracted
for future purchase settlement may increase changes in the value
of the respective portfolio, because such value changes must be
added to changes in the values of those securities actually held
in the portfolio during the same period. When-issued transactions
represent a form of leveraging; the Trust will be at risk as soon
as the when-issued purchase commitment is made, prior to actual
delivery of the securities purchased.
When engaging in when-issued or delayed delivery transactions,
the Trust must rely upon the buyer or seller to complete the
transaction at the scheduled time; if the other party fails to do
so, then the Trust might lose a purchase or sale opportunity that
could be more advantageous than alternative opportunities
available at the time of the failure. If the transaction is
completed, intervening changes in market conditions or the
issuer's financial condition could make it less advantageous than
investment alternatives otherwise available at the time of
settlement. While the Trust will only commit to securities
purchases that it intends to complete, it reserves the right, if
deemed advisable, to sell any securities purchase contracts
before settlement of the transaction; in any such case the Trust
could realize either a gain or a loss, despite the fact that the
original transaction was never completed. When fixed price
contracts are made for the purchase of when-issued securities,
the Trust will maintain in a segregated account designated
investments which are liquid or mature prior to the scheduled
settlement and cash sufficient in aggregate value to provide
adequate funds for completion of the scheduled purchase.
3. Foreign Securities. The Trust may invest in securities of
foreign issuers that are listed on a recognized domestic or
foreign exchange without restriction. At least 65% of the
Worldwide Growth Portfolio is intended to be invested in foreign
equity securities. Foreign investments involve certain special
considerations not typically associated with domestic
investments. Foreign investments may be denominated in foreign
currencies and may require the Trust to hold temporary foreign
currency bank deposits while transactions are completed; although
the Trust might therefore benefit from favorable currency
exchange rate changes, it could also be affected adversely by
changes in
exchange rates, by currency control regulations and by costs
incurred when converting between various currencies. Further-
more, foreign issuers may not be subject to the uniform
accounting, auditing and financial reporting requirements
applicable to domestic issuers, and there may be less publicly
available information about such issuers.
In general, foreign securities markets have substantially less
volume than comparable domestic markets and therefore foreign
investments may be less liquid and more volatile in price than
comparable domestic investments. Fixed commissions in foreign
securities markets may result in higher commissions than for
comparable domestic transactions, and foreign markets may be
subject to less governmental supervision and regulation than
their domestic counterparts. Foreign securities transactions are
subject to documentation and delayed settlement risks arising
from difficulties in international communications. Moreover,
foreign investments may be adversely affected by diplomatic,
political, social or economic circumstances or events in other
countries, including civil unrest, expropriation or
nationalization, unanticipated taxes, economic controls, and acts
of war. Individual foreign economies may also differ from the
United States economy in such measures as growth, productivity,
inflation, national resources and balance of payments position.
4. Loans of Portfolio Securities. The Trust, in certain
circumstances, may be able to earn additional income by loaning
portfolio securities to a broker-dealer or financial institution.
The Trust may make such loans only if cash or U.S. Government
securities, equal in value to 100% of the market value of the
securities loaned, are delivered to the Trust by the borrower and
maintained in a segregated account at full market value each
business day. During the term of any securities loan, the
borrower will pay to the Trust all dividend and interest income
earned on the loaned securities; at the same time the Trust will
also be able to invest any cash portion of the collateral or
otherwise will charge a fee for making the loan, thereby
increasing its overall potential return. It is the Trust's policy
that it shall have the option to terminate any loan of portfolio
securities at any time upon seven days' notice to the borrower.
In making a loan of securities, the Trust would be exposed to the
possibility that the borrower of the securities might be unable
to return them when required, which would leave the Trust with
the collateral maintained against the loan; if the collateral
were of insufficient value, the Trust could suffer a loss. The
Trust may pay fees for the placement, administration and custody
of securities loans, as it deems appropriate.
Any loans by the Trust of portfolio securities will be made in
accordance with applicable guidelines established by the
Securities and Exchange Commission or the Trustees. In
determining whether to lend securities to a particular broker,
dealer or other financial institution, the Adviser will consider
the creditworthiness of the borrowing institution. The Trust will
not enter into any securities lending agreement having a duration
of greater than one year.
5. Repurchase Agreement Transactions. A repurchase agreement
involves the acquisition of securities from a financial
institution, such as a bank or securities dealer, with the right
to resell the same securities to the financial institution on a
future date at a fixed price. Repurchase agreements are a highly
flexible medium of investment, in that they may be for very short
periods, including frequently maturities of only one day. Under
the Investment Company Act of 1940, repurchase agreements are
considered loans and the securities involved may be viewed as
collateral. It is the Trust's policy to limit the financial
institutions with which it engages in repurchase agreements to
banks, savings and loan associations and securities dealers
meeting financial responsibility standards prescribed in
guidelines adopted by the Trustees.
<PAGE>
Statement of Additional Information Page 5
GIT Equity Trust July 31, 1996
When investing in repurchase agreements, the Trust could be
subject to the risk that the other party may not complete the
scheduled repurchase and the Trust would then be left holding
securities it did not expect to retain. If those securities
decline in price to a value of less than the amount due at the
scheduled time of repurchase, then the Trust could suffer a loss
of principal or interest. The Adviser will follow procedures
designed to ensure that repurchase agreements acquired by the
Trust are always at least 100% collateralized as to principal and
interest. It is the Trust's policy to require delivery of
repurchase agreement collateral to its Custodian or (in the case
of book-entry securities held by the Federal Reserve System) that
such collateral is registered in the Custodian's name or in
negotiable form. In the event of insolvency or bankruptcy of the
other party to a repurchase agreement, the Trust could encounter
restrictions on the exercise of its rights under the repurchase
agreement.
To the extent the Trust requires cash to meet redemption requests
and determines that it would not be advantageous to sell
portfolio securities to meet those requests, then it may sell its
portfolio securities to another investor with a simultaneous
agreement to repurchase them. Such a transaction is commonly
called a "reverse repurchase agreement." It would have the
practical effect of constituting a loan to the Trust, the
proceeds of which would be used to meet cash requirements for
redemption requests. During the period of any reverse repurchase
agreement, the Trust would recognize fluctuations in value of the
underlying securities to the same extent as if those securities
were held by the Trust outright. If the Trust engages in reverse
repurchase agreement transactions, it will maintain in a separate
account designated securities which are liquid or mature prior to
the scheduled repurchase and cash sufficient in aggregate value
to provide adequate funds for completion of the repurchase. It is
the Trust's current operating policy not to engage in reverse
repurchase agreements for any purpose, if as a result reverse
repurchase agreements in the aggregate would exceed five percent
of the Trust's total assets.
6. Foreign Currency Transactions. Securities acquired in foreign
markets will normally be denominated in foreign currency instead
of U.S. dollars. When such securities are sold, the Trust will
normally convert the proceeds to U.S. dollars; the resulting
foreign exchange transaction may be completed immediately (a
"spot transaction"). Under such circumstances, the foreign
exchange dealer will realize a profit based on the difference
between the price at which it buys a particular currency and the
price at which it sells such currency. In order to avoid the
costs of spot transactions, the Trust may enter into forward
currency exchange contracts involving an obligation to purchase
or sell a specific foreign currency at an agreed price and date.
Currency traders (typically large commercial banks) and their
customers trade these contracts directly. Generally, these
contracts are traded without deposit requirements or commissions.
The Trust will normally be "covered" in any forward contract long
positions it may hold. In the case of an uncovered long position
in a forward contract, the Trust may cover the contract it sells
by establishing and maintaining with its Custodian or Special
Custodian a segregated account consisting of cash or other liquid
assets. When a forward contract matures, the Trust may sell
portfolio securities and make delivery of foreign currency or it
may retain portfolio securities and terminate its forward
contract by purchasing an "offsetting" contract with the same
currency trader, thereby obliging the Trust to purchase the same
amount of the foreign currency. This may result in a gain or
loss to the Trust. The Trust may be required to engage in spot
transactions to sell or purchase additional foreign currency
depending on the extent to which the market value of foreign
denominated securities rises or falls, respectively, between the
date a forward contract is established and the date it matures.
The Worldwide Growth Portfolio may engage in a form of foreign
currency transaction known as "settlement hedging" by entering
into a forward contract in order to fix a definite U.S. dollar
price for specific foreign securities in connection with the
purchase or sale of such securities. This helps to ensure that
the portfolio has a sufficient volume of foreign currency to
purchase foreign securities after any exchange rate fluctuations
between the date a transaction is initiated and the date it is
settled.
Another form of foreign currency transaction in which the
Worldwide Growth Portfolio may engage in is "portfolio hedging."
This is accomplished by entering into a forward contract in order
to generally hedge securities in the entire portfolio that are
denominated in foreign currencies against losses caused by a
decline in foreign currency values. This allows the portfolio to
exchange foreign currency for U.S. dollars at a fixed exchange
rate. If the Trust engages in portfolio hedging, it foregoes the
opportunity to profit from an increase in value of the foreign
currency relative to the U.S. dollar.
The portfolio may also write covered put and call options and
purchase put and call options on currencies to hedge against
movements in exchange rates. Premiums for currency options held
by the portfolio may not exceed five percent of its total assets.
The portfolio will make no attempt to hedge all of its portfolio
positions and may not hedge any positions. Hedging will not
eliminate price fluctuations or prevent losses from currency
fluctuations. The portfolio will not enter foreign currency
transactions for speculative purposes.
7. Global Depository Shares and American Depository Receipts.
The Trust may invest in Global Depository Shares ("GDSs") or
American Depository Receipts ("ADRs"). These instruments are
negotiable receipts for a given number of shares of securities in
a foreign corporation. The foreign stock certificates remain in
the custody of a foreign bank. GDSs are issued by foreign banks
and traded in foreign markets while ADRs are issued by large
commercial U.S. banks and traded in U.S. markets or on U.S.
exchanges. The GDS or ADR represents the depository bank's
guarantee that it holds the underlying securities. The Trust may
invest in a GDS or ADR in lieu of trading in the underlying
shares on a foreign market. GDS investments (which include such
similarly denominated foreign securities as European Depository
Receipts) have the same risks as other foreign securities. By
comparison, ADRs are subject to a degree of U.S. regulation and
are denominated in U.S. dollars.
<PAGE>
Statement of Additional Information Page 6
GIT Equity Trust July 31, 1996
8. Closed-end funds. The Worldwide Growth Portfolio may invest
in shares of closed-end investment companies ("closed-end funds")
which hold securities of the type purchased by the portfolio.
Closed-end funds are similar to other corporations in that a
fixed number of shares are authorized and issued, but differ from
open-end investment companies in that their price is not based on
the net asset value of the underlying securities of the fund.
The portfolio may invest in foreign closed-end funds or U.S.
closed-end funds. No greater than five percent of the value of
the total assets of the portfolio may be invested in shares of
any one U.S. closed-end fund. The Trust may invest in closed-end
funds which hold foreign securities of companies traded on the
markets of countries in which the portfolio's direct ownership of
securities is restricted.
Policy Review. If, in the judgment of a majority of the Trustees
of the Trust, unanticipated future circumstances make inadvisable
the continuation of the Trust's policy of seeking capital
appreciation from investment principally in equity securities, or
continuation of the more specific policies of each portfolio,
then the Trustees may change any such policies without
shareholder approval, subject to the limitations provided
elsewhere in this Statement of Additional Information (see
"Investment Limitations") and after giving 30 days' written
notice to the Trust's affected shareholders.
Except for the fundamental investment limitations placed upon the
Trust's activities, the Trustees reserve the right to review and
change the other investment policies and techniques employed by
the Trust, from time to time as they deem appropriate, in
response to market conditions and other factors. Reference should
be made to "Investment Limitations" for a description of those
fundamental investment policies which may not be changed without
shareholder approval. Such fundamental policies would permit the
Trust, after notice to shareholders but without a shareholder
vote, to adopt policies permitting a wide variety of investments,
including money market instruments, all types of common and
preferred equity securities, all types of long-term debt
securities, convertible securities, and certain types of option
contracts. In the event of such a policy change, a change in the
Trust's name might be required. There can be no assurance that
the Trust's present objectives will be achieved.
Investment Limitations
The Trust has adopted as fundamental policies the following
limitations on its investment activities, which apply to each of
its portfolios; these fundamental policies may not be changed
without a majority vote of the Trust's shareholders as defined in
the Investment Company Act of 1940 (see "Organization of the
Trust").
1. Permissible Investments. Subject to the investment policies
from time to time adopted by the Trustees, the Trust may purchase
any type of securities under such terms as the Trust may
determine; and any such securities may be acquired pursuant to
repurchase agreements with financial institutions or securities
dealers or may be purchased from any person, under terms and
arrangements determined by the Trust, for future delivery. Any of
these securities may have limited markets and may be purchased
with restrictions on transfer; however, the Trust may not make
any investment (including repurchase agreements) for which there
is no readily available market and which may not be redeemed,
terminated or otherwise converted into cash within seven days,
unless after making the investment not more than 10% of the
Special Growth, Select Growth or Equity Income Portfolios' net
assets would be so invested and not more than 15% of the
Worldwide Growth Portfolio's net assets would be so invested.
Securities of foreign issuers not listed on a recognized domestic
or foreign exchange are considered to be illiquid securities and
fall within this percentage limitation unless, in the Adviser's
reasonable judgment, such securities may be liquidated in the
ordinary course of business in seven or fewer days.
2. Restricted Investments. Not more than five percent of the
value of the total assets of a portfolio of the Trust may be
invested in the securities of any one issuer (other than
securities issued or guaranteed by the United States Government
or any of its agencies or instrumentalities and excluding bank
deposits); nor may securities be purchased when as a result more
than 10% of the voting securities of the issuer would be held by
any portfolio of the Trust. Except to the extent a portfolio
purchases obligations issued or guaranteed by the United States
Government or its agencies and instrumentalities, obligations
which provide income exempt from federal income taxes, and
obligations of domestic banks, their branches, and other domestic
depository institutions, the Trust will limit its investments so
that not more than 25% of the assets of each of its portfolios
are invested in any one industry. For purposes of these
restrictions, the issuer is deemed to be the specific legal
entity having ultimate responsibility for performance of the
obligations evidenced by the security and whose assets and
revenues principally back the security. Any security that does
not have a governmental jurisdiction or instrumentality
ultimately responsible for its repayment may not be purchased by
the Trust when the entity responsible for such repayment has been
in operation for less than three years, if such purchase would
result in more than five percent of the total assets of the
respective portfolio of the Trust being invested in such
securities.
The Trust may not purchase the securities of other investment
companies, except for shares of unit investment trusts and, with
respect to the Worldwide Growth Portfolio only, closed-end
investment companies, holding securities of the type purchased by
the Trust itself and then only if the value of such shares of any
one investment company does not exceed 5% of the value of the
total assets of the Trust's portfolio in which the shares are
included and the aggregate value of all such shares does not
exceed 10% of the value of such total assets, or except in
connection with an investment company merger, consolidation,
acquisition or reorganization. The Trust may not purchase any
security for purposes of exercising management or control of the
issuer, except in connection with a merger, consolidation,
acquisition or reorganization of an investment company. The Trust
may not purchase or retain the securities of any issuer if, to
the knowledge of the Trust's management, the holdings of those of
the Trust's officers, Trustees and officers of its Adviser who
beneficially hold one-half percent or more of such securities,
together exceed 5% of such outstanding securities.
<PAGE>
Statement of Additional Information Page 7
GIT Equity Trust July 31, 1996
3. Borrowing and Lending. It is a fundamental policy of the Trust
that it may borrow (including engaging in reverse repurchase
agreement transactions) in amounts not exceeding 25% of a
portfolio's total assets for investment purposes. A portfolio of
the Trust may not otherwise issue senior securities representing
indebtedness and may not pledge, mortgage or hypothecate any
assets to secure bank loans, except in amounts not exceeding 15%
of its net assets taken at cost.
The Trust may loan its portfolio securities in an amount not in
excess of one-third of the value of the portfolio's gross assets,
provided collateral satisfactory to the Trust's Adviser is
continuously maintained in amounts not less than the value of the
securities loaned. The Trust may not lend money (except to
governmental units), but is not precluded from entering into
repurchase agreements or purchasing debt securities.
4. Other Activities. The Trust may not act as an underwriter
(except for activities in connection with the acquisition or
disposition of securities intended for or held by one of the
Trust's portfolios), make short sales or maintain a short
position (unless a Trust portfolio owns at least an equal amount
of such securities, or securities convertible or exchangeable
into such securities, and not more than 25% of the portfolio's
net assets is held as collateral for such sales). Nor may the
Trust purchase securities on margin (except for customary credit
used in transaction clearance), invest in commodities, purchase
interests in real estate, real estate limited partnerships, or
invest in oil, gas or other mineral exploration or development
programs or oil, gas or mineral leases. However, the Trust may
purchase securities secured by real estate or interests therein
and may use financial futures contracts, including contracts
traded on a regulated commodity market or exchange, to purchase
or sell securities which the Trust would be permitted to purchase
or sell by other means and where the Trust intends to take or
make the required delivery. The Trust may acquire put options in
conjunction with a purchase of portfolio securities; it may also
purchase put options and write call options covered by securities
held in the respective portfolio (and purchase offsetting call
options in closing purchase transactions), provided that the put
option purchased or call option written at all times remains
covered by portfolio securities, whether directly or by
conversion or exchange rights; but it may not otherwise invest in
or write puts and calls or combinations thereof.
Except as otherwise specifically provided, the foregoing
percentage limitations need only be met when the investment is
made or other relevant action is taken. As a matter of operating
policy in order to comply with certain applicable State
restrictions, but not as a fundamental policy, the Trust will not
pledge, mortgage or hypothecate in excess of 10% of a portfolio's
total assets taken at market value. Although permitted to do so
by its fundamental policies, it is the Trust's current policy not
to use financial futures contracts and not to acquire put options
nor to invest in warrants (other than warrants acquired as a part
of a unit or attached to other securities at the time of
purchase) if such warrants (valued at the lower of cost or
market) would then exceed five percent of a portfolio's net
assets and any such warrants not listed on the New York or
American Stock Exchange would exceed two percent of the
portfolio's net assets.
Notwithstanding the Trust's fundamental policies, it does not
presently intend to borrow (including engaging in reverse
repurchase agreement transactions) for investment purposes nor to
borrow (including engaging in reverse repurchase agreement
transactions) for any purpose in amounts in excess of five
percent of a portfolio's total assets. If the Trust were to
borrow for the purpose of making additional investments, such
borrowing and investment would constitute "leverage." Leverage
would exaggerate the impact of increases or decreases in the
value of a portfolio's total assets on its net asset value, and
thus increase the risk of holding the portfolio's shares.
Furthermore, if bank borrowings by the Trust for any purpose
exceeded one-third of the value of a portfolio's total assets
(net of liabilities other than the bank borrowings), then the
Investment Company Act of 1940 would require the portfolio,
within three business days, to liquidate assets and
commensurately reduce bank borrowings until the borrowing level
was again restored to such one-third level. Funds borrowed for
leverage purposes would be subject to interest costs which might
not be recovered by interest, dividends or appreciation from the
respective securities purchases. The Trust might also be required
to maintain minimum bank balances in connection with such
borrowings or to pay line-of-credit commitment fees or other fees
to continue such borrowings; either of these requirements would
increase the cost of the borrowing.
In connection with the Trust's limitation on the industry
concentration of its investments, domestic banks and their
branches may include the domestic branches of foreign banks, to
the extent such domestic branches are subject to the same
regulations as United States banks; but they will not include the
foreign branches of domestic banks, unless the obligations of
such foreign branches are unconditionally guaranteed by the
domestic parent.
If a portfolio of the Trust alters any of the foregoing current
operating policies (relating to financial futures contracts,
options, warrants or borrowing), it will notify shareholders of
the policy revision at least 30 days prior to its implementation
and describe the new investment techniques to be employed. In the
implementation of its investment policies the Trust will not
consider securities to be readily marketable unless they have
readily available market quotations.
The Investment Adviser
Effective July 31, 1996, Bankers Finance Advisors, LLC, 1655 Fort Myer
Drive, Arlington, Virginia 22209-3108, is the investment adviser
to the Trust and is called the "Adviser" throughout this
Statement of Additional Information and the Prospectus. The
Adviser is responsible for the investment management of the Trust
and is authorized to execute the Trust's portfolio
transactions, to select the methods and firms with which such
transactions are executed, to oversee the Trust's operations, and
otherwise to administer the affairs of the Trust as it deems
advisable. In the execution of these responsibilities, the
Adviser is subject to the investment policies and limitations of
the Trust described in the Prospectus and this Statement of
Additional Information, to the terms of the Declaration of Trust
and the Trust's By-Laws, and to written directions given from
time to time by the Trustees.
The Adviser is a division of Madison Investment Advisors, Inc.
("Madison"), 6411 Mineral Point Road, Madison, Wisconsin.
Madison is a registered investment adviser and has numerous
advisory clients of its own. Madison also serves as investment
manager to the following investment companies:
Bascom Hill Investors, Inc., Bascom Hill BALANCED Fund,
Inc. and Madison Bond Fund, Inc. Madison was founded in
1973 and has never been controlled or affiliated with any
other business entity or person.
<PAGE>
Statement of Additional Information Page 8
GIT Equity Trust July 31, 1996
The investment advisory agreement between the Trust, on behalf
of the portfolios, and the Adviser is subject to annual review
and approval by the Trustees, including a majority of those Trustees
who are not "interested persons," as defined in the Investment
Company Act of 1940. The investment advisory agreement was
approved by shareholders for an initial two year term at a special
meeting of each portfolio's shareholders held in July 1996.
The investment advisory agreement may be terminated at any time,
without penalty, by the Trustees or, with respect to any series
or class of the Trust's shares, by the vote of a majority of the
outstanding voting securities of that series or class (see
"Organization of the Trust"), or by the Adviser, upon sixty days'
written notice to the other party. The investment advisory
agreement may not be assigned by the Adviser, and will
automatically terminate upon any assignment.
Background of the Adviser. The Adviser was formed in 1996 by
Madison for the purpose of providing investment management
services to the GIT family of mutual funds, including the Trust.
The Adviser purchased the investment management assets of the
former adviser to the Trust, Bankers Finance Investment
Management Corp on July 31, 1996. For periods prior to July 31,
1996, references in this Statement of Additional Information and in
the Prospectus to the "Adviser" refer to Bankers Finance Investment
Management Corp. The Adviser also serves as the investment adviser to
Government Investors Trust, GIT Income Trust and GIT Tax-Free
Trust.
Management. Frank E. Burgess is President, Treasurer and
Director of Madison and Vice President of the Adviser.
Mr. Burgess owns a majority of the controlling interest of Madison,
which, in turn, controls the Adviser. Mr. Burgess is also a Trustee and
Vice President of the Trust. Mr. Burgess holds the same positions
with Government Investors Trust, GIT Income Trust and
GIT Tax-Free Trust. Katherine L. Frank is President and Treasurer
of the Adviser and Vice President of Madison. Ms. Frank holds the
same positions with Government Investors Trust, GIT Income Trust and
GIT Tax-Free Trust.
Advisory Fee and Expense Limitations. For its services under the
investment advisory agreement, the Adviser receives a fee,
payable monthly, calculated as 3/4 percent per annum of the
average daily net assets of the Special Growth, Select Growth and
Equity Income Portfolios during the month and as one percent per
annum of the average daily net assets of the Worldwide Growth
Portfolio during the month. Such fees do not decrease as net
assets increase. The Adviser may waive or reduce such fees during
any period; the Adviser may also reduce such fees on a permanent
basis, without any requirement for consent by the Trust or its
shareholders, under such terms as it may determine, by written
notice thereof to the Trust.
The Adviser has agreed to reimburse the Trust for all of its
expenses (including any management fees paid to the Adviser), but
excluding securities transaction commissions and expenses, taxes,
interest, share distribution expenses, and other extraordinary
and non-recurring expenses, which during any fiscal year exceed
the applicable expense limitation in any state or other
jurisdiction in which the Trust, during the fiscal year, becomes
subject to regulation by qualification or sale of its shares. As
of the date of this Statement of Additional Information, the
Trust believes this applicable annual expense limitation to be
equivalent to two and one-half percent of each portfolio's
aggregate daily average net assets up to $30 million; two percent
of the amount of such net assets exceeding $30 million, but not
exceeding $100 million; and one and one-half percent of the
amount, if any, by which such net assets exceed $100 million.
In addition, the Adviser has agreed, in any event, to be
responsible for the fees and expenses of the Trustees and
officers of the Trust who are affiliated with the Adviser, the
rent expenses of the Trust's principal executive office premises,
and its various promotional expenses (including the distribution
of Prospectuses to potential shareholders). Other than investment
management and related expenses, and the foregoing items, the
Adviser is not obligated to provide or pay for any other services
to the Trust, although it has discretion to elect to do so.
The investment advisory agreement permits the Adviser to make
payments out of its fee to other persons. During the fiscal year
ended March 31, 1996, the Adviser received fees of $219,111 with
respect to the Special Growth Portfolio; $44,041with respect to
the Select Growth Portfolio, and $29,875 with respect to the
Equity Income Portfolio. During the fiscal year
ended March 31, 1995, the Adviser received advisory fees of
$264,829 with respect to the Special Growth Portfolio, $34,429
with respect to the Select Growth Portfolio, and $26,151 with
respect to the Equity Income Portfolio. During the fiscal year
ended March 31, 1994, the Adviser received advisory fees of
$291,361 with respect to the Special Growth Portfolio, $40,173
with respect to the Select Growth Portfolio, and $27,570 with
respect to the Equity Income Portfolio. During prior fiscal years
the Adviser has waived portions or all of its advisory fees with respect
to each of the Trust's portfolios. During the fiscal year ended March
31, 1996, the Adviser received advisory fees of $14,252 with regard
to the Worldwide Growth Portfolio. No advisory fees were paid with
respect to the Worldwide Growth Portfolio for periods prior to the
fiscal year ended March 31, 1996.
Organization of the Trust
The Trust's Declaration of Trust, dated November 18, 1982, has
been filed with the Secretary of State of the Commonwealth of
Massachusetts and the Clerk of the City of Boston, Massachusetts.
The Prospectuses contain general information concerning the
<PAGE>
Statement of Additional Information Page 9
GIT Equity Trust July 31, 1996
Trust's form of organization and its shares (see "The Trust and
Its Shares"), including the series of shares currently
authorized.
Series and Classes of Shares. The Trustees may authorize at any
time the creation of additional series of shares (the proceeds of
which would be invested in separate, independently managed
portfolios) and additional classes of shares within any series
(which would be used to distinguish among the rights of different
categories of shareholders, as might be required by future
regulations, methods of share distribution or other unforeseen
circumstances) with such preferences, privileges, limitations,
and voting and dividend rights as the Trustees may determine. All
consideration received by the Trust for shares of any additional
series or class, and all assets in which such consideration is
invested, would belong to that series or class (but classes may
represent proportionate undivided interests in a series), and
would be subject to the liabilities related thereto. The
Investment Company Act of 1940 would require the Trust to submit
for the approval of the shareholders of any such additional
series or class any adoption of an investment advisory contract
or any changes in the Trust's fundamental investment policies
related to the series or class.
The Trustees may divide or combine the shares of any series into
a greater or lesser number of shares without thereby changing the
proportionate interests in the series. Any assets, income and
expenses of the Trust not readily identifiable as belonging to a
particular series are allocated by or under the direction of the
Trustees in such a manner as they deem fair and equitable. Upon
any liquidation of the Trust or of a series of its shares, the
shareholders are entitled to share pro-rata in the liquidation
proceeds available for distribution. Shareholders of each series
have an interest only in the assets allocated to that series.
Voting Rights. The voting rights of shareholders are not
cumulative, so that holders of more than 50 percent of the shares
voting can, if they choose, elect all Trustees being selected,
while the holders of the remaining shares would be unable to
elect any Trustees. As of May 20, 1996, the shareholders which
held five percent or more of the Special Growth Portfolio were:
Charles Schwab & Co., 101 Montgomery St., San
Fransisco, CA (5%); of the Select Growth Portfolio: Firstcinco
Trust Company, Box 1118, Cincinnati, OH 45201 (7%) and Wenonah
Development Company, 1019 Park Street, Peekskill, NY 10566 (7%);
of the Equity Income Portfolio, Wenonah Development Company,
1019 Park Street, Peekskill, NY 10566 (6%); and of the Worldwide
Growth Portfolio: Bankers Finance Investment Management Corp.,
1655 Ft. Myer Drive, Arlington, Virginia 22209 (6%) and Wenonah
Development Company, 1019 Park Street, Peekskill, NY 10566 (8%).
Shareholder votes relating to the election of Trustees, approval
of the Trust's selection of independent public accountants and
any contract with a principal underwriter, as well as any other
matter in which the interests of all shareholders are
substantially identical, will be voted upon without regard to
series or classes of shares. Matters that do not affect any
interest of a series or class of shares will not be voted upon by
the unaffected shareholders. Certain other matters in which the
interests of more than one series or class of shares are
affected, but where such interests are not substantially
identical, will be voted upon separately by each series or class
affected and will require a majority vote of each such series or
class to be approved by it. When a matter is voted upon
separately by more than one series or class of shares, it may be
approved with respect to a series or class even if it fails to
receive a majority vote of any other series or class or fails to
receive a majority vote of all shares entitled to vote on the
matter.
Because there is no requirement for annual elections of Trustees,
the Trust does not anticipate having regular annual shareholder
meetings after the initial meeting; shareholder meetings will be
called as necessary to consider questions requiring votes by the
shareholders. The selection of the Trust's independent auditors
will be submitted to a vote of ratification at any annual
meetings held by the Trust. Any change in the Declaration of
Trust, in the Investment Advisory Agreement (except for
reductions of the Adviser's fee) or
in the fundamental investment policies of the Trust must be
approved by a majority of the affected shareholders before it can
become effective. For this purpose, a "majority" of the shares of
the Trust means either the vote, at an annual or special meeting
of the shareholders, of 67 percent or more of the shares present
at such meeting if the holders of more than 50 percent of the
outstanding shares of the Trust are present or represented by
proxy or the vote of 50 percent of the outstanding shares of the
Trust, whichever is less. Voting groups will be comprised of
separate series and classes of shares or of all of the Trust's
shares, as appropriate to the matter being voted upon.
The Declaration of Trust provides that two-thirds of the holders
of record of the Trust's shares may remove a Trustee from office
either by declarations in writing filed with the Trust's
Custodian or by votes cast in person or by proxy at a meeting
called for the purpose. The Trustees are required to promptly
call a meeting of shareholders for the purpose of voting on
removal of a Trustee if requested to do so in writing by the
record holders of at least 10% of the Trust's outstanding shares.
Ten or more persons who have been shareholders for at least six
months and who hold shares with a total value of at least $25,000
(or 1% of the Trust's net assets, if less) may require the
Trustees to assist a shareholder solicitation to call such a
meeting by providing either a shareholder mailing list or an
estimate of the number of shareholders and approximate cost of
the shareholder mailing, in which latter case, unless the
Securities and Exchange Commission determines otherwise, the
shareholders desiring the solicitation may require the Trustees
to undertake the mailing if those shareholders provide the
materials to be mailed and assume the cost of the mailing.
Shareholder Liability. Under Massachusetts law, the share-holders
of an entity such as the Trust may, under certain circumstances,
be held personally liable for its obligations. The Declaration of
Trust contains an express disclaimer of 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
Declaration of Trust provides for indemnification out of the
Trust property of any shareholder held personally liable for the
obligations of the Trust. The Declaration of Trust also provides
that the Trust shall, upon request, assume the defense of any
claim made against any shareholder for any act or obligation of
the Trust and satisfy any judgment thereof. Thus the risk of a
shareholder incurring financial loss on account of status as a
shareholder is
<PAGE>
Statement of Additional Information Page 10
GIT Equity Trust July 31, 1996
limited to circumstances in which the Trust itself would be
unable to meet its obligations.
Liability of Trustees and Others. The Declaration of Trust
provides that the officers and Trustees of the Trust will not be
liable for any neglect, wrongdoing, errors of judgment, or
mistakes of fact or law, except that they shall not be protected
from liability arising out of willful misfeasance, bad faith,
gross negligence, or reckless disregard of their duties to the
Trust. Similar protection is provided to the Adviser under the
terms of the investment advisory agreement and the services
agreement. In addition, protection from personal liability for
the obligations of the Trust itself, similar to that provided to
shareholders, is provided to all Trustees, officers, employees
and agents of the Trust.
Trustees and Officers
As of July 31, 1996, the Trustees and executive officers of the
Trust and their principal occupations during the past five years
are shown below:
Frank E. Burgess <F1>
6411 Mineral Point Road, Madison, WI 53705
Trustee and Vice President
President and Director of Madison Investment
Advisors, Inc., the entity which controls the Adviser. Prior to
forming Madison in 1973, he was Assistant Vice President and
Trust Officer of M&I Bank of Madison, Wisconsin. Mr. Burgess
received his BS from Iowa State University and his law degree
from the University of Wisconsin. He is a member of the State
Bar of Wisconsin. b. 8/4/42.
Thomas S. Kleppe***
7100 Darby Road, Bethesda, MD 20817
Trustee
Private Investor; formerly Visiting Professor at the University
of Wyoming, Secretary of the U.S. Department of the Interior,
Administrator of the U.S. Small Business Administration, U.S.
Congressman from North Dakota, Vice President and Director of
Dain, Kalman & Quail, investment bankers, and President of Gold
Seal Co., manufacturers of household cleaning products. Attended
Valley City State College of North Dakota. b. 7/1/19.
James R. Imhoff, Jr.***
429 Gammon Place, Madison, WI 53719
Trustee
President of First Weber Group, Inc. of Madison, Wisconsin. b. 5/20/44.
b.
Lorence D. Wheeler***
P.O. Box 431, Madison, WI 53701
Trustee
President of Credit Union Benefits Services, Inc.
b. 1/31/38.
Katherine L. Frank
6411 Mineral Point Road, Madison, WI 53705
President
President of GIT Investment Funds, Vice President
of Madison Investment Advisors, Inc. A graduate
of Macalester College, St. Paul, Minnesota.
Charles J. Tennes
1655 Fort Myer Drive, Arlington, VA 22209-3108
Vice President
Vice President of GIT Investment Funds and Executive
Vice President of GIT Investment Services, Inc.;
Director of Presidential Savings Bank, FSB and
Presidential Service Corp.; formerly Vice President
of Ferris & Company, Inc. (now Ferris, Baker Watts). A Certified
Financial Planner and graduate of the University of Washington.
Jay R. Sekelsky
6411 Mineral Point Road, Madison, WI 53705
Vice President
Vice President of GIT Investment Funds and of
Madison Investment Advisors, Inc. Formerly Vice President
of Wellington Management Group of Boston, MA.
Mr. Sekelsky holds a BBA in Accounting and an MBA in
Finance from the University of Wisconsin.
Christopher C. Berberet
6411 Mineral Point Road, Madison, WI 53705
Vice President
Vice President of GIT Investment Funds and of
Madison Investment Advisors, Inc. Formerly the
Director of Fixed Income Management for the
ELCA Board of Pensions, Minneapolis, MN. A
graduate of the University of Wisconsin.
W. Richard Mason
1655 Ft. Myer Drive, Arlington, VA 22209
Secretary
Secretary of GIT Investment Funds, GIT Investment
Services, Inc., Presidential Savings Bank, FSB and
Presidential Service Corporation. Formerly Assistant
General Counsel for the Investment Company
Institute. Mr. Mason holds a BS in Foreign Service
from Georgetown University and received his law
degree from The George Washington University. He is
a member of the District of Columbia and Texas bars.
<FN>
<F1>
Trustee deemed to be an "interested person" of the Trust as the
term is defined in the Investment Company Act of 1940. Only those
persons named in the table of Trustees and officers who are not
interested persons of the Trust are eligible to be compensated by
the Trust. The compensation of each non-interested Trustee
who may be compensated by the Trust has been fixed at $4,000
per year, to be pro-rated according to the number of regularly
scheduled meetings each year. Four Trustees' meetings are currently
scheduled to take place each year. In addition to such compensation,
those Trustees who may be compensated by the Trust shall be reimbursed
for any out-of-pocket expenses incurred by them in connection with the
affairs of the Trust. Mr. Kleppe will receive annual compensation
from the Trust and from the other investment companies managed
by the Adviser or Madison (see "the Investment Adviser") totalling
$15,000. Mr. Imhoff and Mr. Wheeler will receive annual
compensation from the Trust and from other investment companies
managed by the Adviser or Madison totalling $18,000.
During the last fiscal year of the Trust, the Trustees were compensated
as follows:
Total
Pension or Compensation
Retirement from
Aggregate Benefits Estimated Portfolios
Compensa- Accrued as Annual and Fund
tion part of Benefits Complex
from Portfolios Upon Paid to
Portfolios Expense Retirement Trustees(a)
Frank E. Burgess 0 0 0 0
Thomas S. Kleppe 4,000 0 0 15,000
James R. Imhoff, Jr.(b) 0 0 0 3,000
Lorence D. Wheeler(b) 0 0 0 3,000
(a) Complex is comprised of 4 trusts and three corporations with
a total of 16 funds and/or series.
(b) Messrs. Imhoff and Wheeler joined the Board of Trustees on
July 31, 1996. Their expected annual compensation is decribed
above.
***
Member of the Audit Committee of the Trust. The Audit Committee
is responsible for reviewing the results of each audit of the
Trust by its independent auditors and for recommending the
selection of independent auditors for the coming year.
Under the Declaration of Trust, the Trustees are entitled to be
indemnified by the Trust to the fullest extent permitted by law
against all liabilities and expenses reasonably incurred by them
in connection with any claim, suit or judgment or other liability
or obligation of any kind in which they become involved by virtue
of their service as Trustees of the Trust, except liabilities
incurred by reason of their willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the
conduct of their office.
As of May 20, 1996 the then-acting Trustees and officers directly or
indirectly owned less than one percent of the outstanding shares
in the Special Growth Portfolios, while 7% of the Select Growth
Portfolio, 1% of the Equity Income Portfolio
and 8% of the Worldwide Growth Portfolio was held directly or
indirectly by the then-acting Trustees and officers and less than one
percent by the current Trustees and officers.
<PAGE>
Statement of Additional Information Page 11
GIT Equity Trust July 31, 1996
Adminstrative and Other Expenses
Except for certain expenses assumed by the Adviser (see "The
Investment Adviser"), the Trust is responsible for payment from
its assets of all of its expenses. These expenses can include any
of the business or other expenses of organizing, maintaining and
operating the Trust. Certain expense items which may represent
significant costs to the Trust include the payment of the
Adviser's fee; the expense of shareholder accounting, customer
services, and calculation of net asset value; the fees of the
Custodian, of the Trust's independent accountants, and of legal
counsel to the Trust; the expense of registering the Trust and
its shares, of printing and distributing prospectuses and
periodic financial reports to current shareholders, and of trade
association membership; and the expense of preparing shareholder
reports, proxy materials and of holding shareholder meetings of
the Trust. The Trust is also responsible for any extraordinary or
non-recurring expenses it may incur.
Services Agreement. The Trust does not have any officers or
employees who are paid directly by the Trust. The Trust has
entered into a services agreement with the Adviser for the
provision of operational and other services required by the
Trust. Such services may include the functions of shareholder
servicing agent and transfer agent, bookkeeping and portfolio
accounting services, the handling of telephone inquiries, cash
withdrawals and other customer service functions including
monitoring wire transfers, and providing to the Trust appropriate
supplies, equipment and ancillary services necessary to the
conduct of its affairs. The Trust is registered with the
Securities and Exchange Commission as the transfer agent for its
shares and acts as its own dividend-paying agent; while transfer
agent personnel and facilities are included among those provided
to the Trust under the services agreement, the Trust itself is
solely responsible for its transfer agent and dividend payment
functions and for the supervision of those functions by its
officers.
All such services provided to the Trust by the Adviser are
rendered at cost. The term "cost" includes both direct
expenditures and the related overhead costs, such as
depreciation, employee supervision, rent and the like;
reimbursements to the Adviser pursuant to the services agreement
are in addition to and independent of payments made pursuant to
the investment advisory agreement. The Trust believes that
contracting for the previously described services may permit them
to be provided on a relatively efficient basis, whereby many
separate specialized functions are performed by personnel and
equipment not required to be devoted full time to serving the
Trust. Accordingly, certain of the "costs" attributable to
services provided to the Trust may require allocation of
expenses, such as employee salaries, occupancy expense, telephone
service, computer service and equipment costs, depreciation,
interest, and supervisory expenses. To the extent that costs must
be allocated between the Trust and other activities of the
Adviser, such allocations may be made on the basis of reasonable
approximations calculated by the Adviser and periodically
reviewed by the Trustees.
Distribution Agreement. GIT Investment Services, Inc. acts as the
Trust's distributor pursuant to a distribution agreement, dated
January 11, 1983, without compensation under such agreement. This
agreement has an initial term of two years and may thereafter
continue in effect only if approved annually by the Trustees,
including a majority of those who are not "interested persons,"
as defined in the Investment Company Act of 1940; the agreement
provides for distribution of the Trust's shares without a sales
charge to the investor. The distributor may act as the Trust's
agent for any sales of its shares, but the Trust may also sell
its shares directly to any person. The distributor makes the
Trust's shares continuously available to the general public in
those states where it has qualified to do so, but has assumed no
obligation to purchase any of the Trust's shares. The distributor
is wholly owned by A. Bruce Cleveland, its President.
Portfolio Transactions
Decisions as to the purchase and sale of securities for the
Trust, and decisions as to the execution of these transactions,
including selection of market, broker or dealer and the
negotiation of commissions are, where applicable, to be made by
the Adviser, subject to review by the officers and Trustees of
the Trust. The Sub-Adviser may execute portfolio transactions for
the Special Growth Portfolio under the general direction and
control of the Adviser, but only if the Sub-Adviser determines
that time considerations or services rendered to the Trust
require the execution by it of a particular order directly with a
specific broker or dealer.
In general, in the purchase and sale of portfolio securities the
Trust will seek to obtain prompt and reliable execution of orders
at the most favorable prices or yields. In determining the best
price and execution, the Adviser may take into account a dealer's
operational and financial capabilities, the type of transaction
involved, the dealer's general relationship with the Adviser, and
any statistical, research or other services provided by the
dealer to the Adviser. Research and statistical information
regarding the U.S. mutual fund industry may be used by the
Adviser for the benefit of all members of the GIT family of
mutual funds. To the extent such non-price factors are taken into
account the execution price paid may be increased, but only in
reasonable relation to the benefit of such non-price factors to
the Trust as determined in good faith by the Adviser.
Brokers or dealers who execute portfolio transactions for the
Trust may also sell its shares; however, any such sales will not
be either a qualifying or disqualifying factor in the selection
of brokers or dealers. During its three most recent fiscal years
the Trust paid aggregate brokerage commissions as follows:
$156,680 for the fiscal year ending March 31, 1996; $126,777 for
the fiscal year ending March 31, 1995; and $118,479 for the
fiscal year ending March 31, 1994.
<PAGE>
Statement of Additional Information Page 12
GIT Equity Trust July 31, 1996
The Adviser anticipates that brokerage transactions involving
securities of foreign companies will be conducted primarily on
the markets or stock exchanges in which such companies are
located. Such markets or exchanges are generally subject to less
governmental supervision and regulation than those in the U.S.
Brokerage costs for purchase and sale of such foreign securities
may be higher than costs for domestic securities and such costs
may be non-negotiable. Foreign security trading practices,
including settlement procedures where Trust assets may be
released prior to payment, may expose the portfolios invested in
foreign securities to increased risk.
The Trust reserves the right to purchase portfolio securities
through an affiliated broker, when deemed in the Trust's best
interests by the Adviser, provided that: (1) the transaction is
in the ordinary course of the broker's business; (2) the
transaction does not involve a purchase from another broker or
dealer; (3) compensation to the broker in connection with the
transaction is not in excess of one percent of the cost of the
securities purchased; and (4) the terms to the Trust for
purchasing the securities, including the cost of any commissions,
are not less favorable to the Trust than terms concurrently
available from other sources. Any compensation paid in connection
with such a purchase will be in addition to fees payable to the
Adviser under the investment advisory agreement. The Trust does
not anticipate that any such purchases through affiliates will
represent a significant portion of its total activity; no such
transactions took place during the Trust's most recent fiscal
year.
The Trust does not expect to engage in a significant amount of
short-term trading, but securities may be purchased and sold in
anticipation of market fluctuations, as well as for other
reasons. The Trust anticipates that annual portfolio turnover for
each of its portfolios generally will not exceed 100%, but the
actual turnover rate will not be a limiting factor if the Trust
deems it desirable to conduct purchases and sales of portfolio
securities. Reference should be made to the Prospectuses for
actual rates of portfolio turnover (see "Financial Highlights").
Share Purchases
The Prospectuses describe the basic procedures for investing in
the Trust (see "How to Purchase and Redeem Shares"). The
following information concerning other investment procedures is
presented to supplement the information contained in the
Prospectuses.
Shareholder Service Policies. The Trust's policies concerning
shareholder services are subject to change from time to time. The
Trust reserves the right to change its minimum initial investment
requirement, or the minimum account size below which an account
is subject to a monthly service charge, or involuntary closing by
the Trust. The Trust may also institute a minimum amount for
subsequent investments, if it so chooses, by 30 days' written
notice to its shareholders. The Trust further reserves the right,
after 30 days' written notification to shareholders, to impose
special service charges for services provided to individual
shareholders that are not regularly afforded to shareholders
generally; such service charges may include special custodian
bank processing charges such as fees for stop payment orders and
returned checks. The Trust's standard service charges are also
subject to adjustment from time to time.
Share Certificates. Unless an investor specifically requests in a
signed instruction to the Trust that share certificates be
issued, no certificates will be issued to represent shares in the
Trust nor will share certificates be issued until payment for the
shares has become "collected funds," as described in the
Prospectuses (see "How to Purchase and Redeem Shares"). In the
event share certificates are issued, then before any redemption
request can be honored, the certificate must be returned to the
Trust, properly endorsed, and the Trust may further require that
the shareholder's signature be guaranteed by a commercial bank
insured by the Federal Deposit Insurance Corporation or by a
member firm of the New York Stock Exchange. The Trust also
reserves the right to decline to open any account for which the
issuance of share certificates is or has been requested, if it
deems such action would be in the Trust's best interests.
Subaccounting Services. The Trust offers subaccounting services
to institutions. The Trustees reserve the right to determine from
time to time such guidelines as they deem appropriate to govern
the level of subaccounting service that can be provided to
individual institutions in differing circumstances. Normally, the
Trust's minimum initial investment to open an account will not
apply to subaccounts; however, the Trust reserves the right to
impose the same minimum initial investment requirement that would
apply to regular accounts, if it deems that the cost of carrying
a particular subaccount or group of subaccounts is otherwise
likely to be excessive. The Trust may provide and charge for sub-
accounting services which it determines exceed those services
which can be provided without charge; the availability and cost
of such additional services will be determined in each case by
negotiation between the Trust and the parties requesting the
additional services. The Trust is not presently aware of any such
services for which a charge will be imposed.
Crediting of Investments. All items submitted to the Trust for
investment are accepted only when submitted in proper form. They
are credited to shareholder accounts one or two business days
following receipt. normally, items received by the Trust prior
to 1 p.m. Washington, DC time will be converted into shares of
the Trust at the applicable net asset value determined at the end
of the next business day. Items received by the Trust after 1
p.m. Washington, DC time will be converted into shares of the
Trust at the applicable net asset value determined at the end of
the second business day after receipt. Funds received by wire
are normally converted into shares in the Trust at the net asset
value next determined, provided the Trust is notified of the wire
by 1 p.m. Washington, DC time. If the Trust is not notified by
such time, the investment by wire will be converted into shares
of the Trust at the net asset value determined at the end of the
next business day.
Checks drawn on foreign banks will not be considered received
until the Trust has actual receipt of payment in U.S. dollars
after submission of the check for collection; collection of such
checks through the international banking system may require 30
days or more.
<PAGE>
Statement of Additional Information Page 13
GIT Equity Trust July 31, 1996
An order to purchase shares which is received by the Trust from a
securities broker will be considered received in proper form for
the net asset value per share determined as of the close of the
New York Stock Exchange on the day of the order, provided the
broker received the order from its customer prior to that time
and transmitted it to the Trust prior to 4 p.m. Washington, DC
time. Those who invest in the Trust through a broker may be
charged a commission for the handling of the transaction, if the
broker so elects; however, any investor is free to deal directly
with the Trust in any transaction.
The Trust reserves the right to reject any investment in the
Trust for any reason and may at any time suspend all new
investment in the Trust. The Trust may also, in its discretion or
at the instance of the Adviser, decline to give recognition as an
investment to funds wired for credit to any account, until such
funds are actually received by the Trust. Under present federal
regulatory guidelines, the Adviser may be responsible for any
losses resulting from changes in the Trust's net asset values
which are incurred by the Trust as a result of failure to receive
funds from an investor to whom recognition for investment was
given in advance of receipt of payment.
If shares are purchased to be paid for by wire and the wire is
not received by the Trust or if shares are purchased by a check
which, after deposit, is returned unpaid or proves uncollectible,
then the share purchase may be canceled immediately. The
investor that gave notice of the intended wire or submitted the
check will be held fully responsible for any losses so incurred
by the Trust, the Adviser or the distributor. As a condition of
the Trust's public offering, (which the investor will be deemed
to have agreed by submitting an order for the purchase of the
Trust's shares) the distributor shall have the investor's power
of attorney coupled with an interest, authorizing the distributor
to redeem sufficient shares from any fund of the investor for
which it acts as a principal underwriter or distributor, or to
liquidate sufficient other assets held in any brokerage account
of the investor with the distributor, and to apply the proceeds
thereof to the payment of all amounts due to the Trust from the
investor arising from any such losses. Any such redemptions or
liquidations will be limited to the amount of the actual loss
incurred by the Trust at the time the share purchase is canceled
and will be preceded by notice to the investor and an opportunity
for the investor to make restitution of the amount of the loss.
The Trust will retain any profits resulting from such
cancellations or redemptions and, if the purchase payment was by
a check actually received, will absorb any such losses unless
they prove recoverable.
Share Redemptions
The value of shares redeemed to meet all withdrawal requests will
be determined according to the share net asset value next
calculated after the request has been received in proper form.
(See "Determination of Net Asset Value.") Thus, any such request
received in proper form prior to the close of the New York Stock
Exchange (normally 4 p.m. Washington, DC time) on a business day
will reflect the net asset value calculated at that time; later
withdrawal requests will be processed to reflect the share net
asset value figure calculated on the next day the calculation is
made. The Trust calculates net asset values each day the New York
Stock Exchange is open for trading.
Net asset value determinations will apply as of the day the
redemption order is submitted in proper form. A withdrawal
request may not be deemed to be in proper form unless a signed
account application has been submitted to the Trust by the
investor or such an application is submitted with the withdrawal
request. Investors should be aware that it is possible, should
the share net asset value of the respective portfolio fall as a
result of normal market value changes, that amounts available for
withdrawal from an account could be less than the amount of the
original investment. All withdrawals from the Trust will be
effected by the redemption of the appropriate number of whole and
fractional shares having a net asset value equal to the amount
withdrawn.
The Trust will use its best efforts in normal circumstances to
handle withdrawals within the times previously given. However, it
may for any reason it deems sufficient suspend the right of
redemption or postpone payment for any shares in the Trust for
any period up to seven days. The Trust's sole responsibility with
regard to withdrawals shall be to process, within the
aforementioned time period, redemption requests in proper form.
Neither the Trust, its affiliates, nor the Custodian can accept
responsibility for any act or event which has the effect of
delaying or preventing timely transfers of payment to or from
shareholders. By law, payment for shares in the Trust may be
suspended or delayed for more than seven days only during any
period when the New York Stock Exchange is closed, other than
customary weekend and holiday closings; when trading on such
Exchange is restricted, as determined by the Securities and
Exchange Commission; or during any period when the Securities and
Exchange Commission has by order permitted such suspension.
Unless the shareholder's current address is on file with the
Trust on the original account application or by means of
subsequent written notice signed by the authorized signers for
the account, then the Trust may require signed written
instructions to process withdrawals and account closings. In
response to verbal requests, however, withdrawal proceeds will
normally be mailed to the investor at the address shown on the
Trust's records, provided an original signed application has been
received. When an account is closed, the Trust reserves the right
to make payment by check of any final dividends declared to the
date of the redemption to close the account, but not yet paid, on
the same day such dividends are paid to other shareholders,
rather than at the time the account is closed. Payments of
redemption proceeds may normally be wired in response to verbal
requests by any party in accordance with preauthorized written
wire instructions.
Funds exchanged between investor accounts will earn dividends
from the account being credited beginning with the day the
exchange is made. Same day exchanges can only be made in
circumstances that would permit same-day wire withdrawals from
the account being debited. All exchanges will be effected at the
net asset value per share of the respective accounts next
determined after the exchange request is received in proper form.
If an exchange is to be made between investor accounts that are
not held in the same name and tax identification number or do not
<PAGE>
Statement of Additional Information Page 14
GIT Equity Trust July 31, 1996
have the same mailing address or signatories, then the Trust may
require any transfer between them to be made by making a
withdrawal from one account and a corresponding investment in the
other using the same procedures that would apply to any other
withdrawal or investment.
The Trust reserves the right, when it deems such action necessary
to protect the interests of its shareholders, to refuse to honor
withdrawal requests made by individuals purporting to act with
the authority of another person or on behalf of a corporation or
other legal entity or whose identity has not been established to
the Trust's satisfaction. Each such individual must provide a
corporate resolution or other appropriate evidence of his
authority or identity satisfactory to the Trust. The Trust
reserves the right to refuse any third party redemptions.
If, in the opinion of the Trustees, extraordinary conditions
exist which make cash payments undesirable, payments for any
shares redeemed may be made in whole or in part in securities and
other property of the Trust; except, however, that the Trust has
elected, pursuant to rules of the Securities and Exchange
Commission, to permit any shareholder of record to make
redemptions wholly in cash to the extent the shareholder's
redemptions in any 90-day period do not exceed the lesser of one
percent of the aggregate net assets of the Trust or $250,000. Any
property of the Trust distributed to shareholders will be valued
at its net asset value. In disposing of any such property
received from the Trust, an investor might incur commission costs
or other transaction costs; there is no assurance that an
investor attempting to dispose of any such property would
actually receive the full net asset value for it. Except as
described herein, however, the Trust intends to pay for all share
redemptions in cash.
Retirement Plans
General information on retirement plans offered by the Trust is
provided in the Prospectus (see "How to Purchase and Redeem
Shares"). Additional information concerning these retirement
plans is provided below.
IRAs. The minimum initial contribution for an IRA plan with the
Trust is $500. Spousal IRAs are accepted by creating two
accounts, one for each spouse. For IRAs opened in connection with
a payroll deduction or SEP plan, the Trust may waive the initial
investment minimum on a case-by-case basis.
The Trust's annual account maintenance fee is deducted from the
account at the end of each year or at the time of the account's
closing unless prepaid by the shareholder.
Other Retirement Plans or Retirement Plan Accounts. The Trust
does not intend to impose any monthly minimum balance charge with
respect to retirement plan accounts. The Trust offers prototype
Keogh, SEP IRA, SARSEP, 401(k) and 403(b) retirement plans. The
Trust may waive the initial investment minimum for prototype or
other retirement plan accounts on a case by case basis.
Declaration of Dividends
Substantially all of the Trust's accumulated net investment
income will be declared as dividends and distributed to the
shareholders of the Worldwide Growth, Special Growth and Select
Growth Portfolios twice a year, once during the last two months
of the calendar year and once at the end of the Trust's March 31
fiscal year. The Trust intends to declare and pay regular Equity
Income Portfolio dividends quarterly. The amount of the Trust's
net investment income will reflect the Trust's dividend income,
any premiums earned for writing call options, any interest income
(plus any discount earned less premium amortized), less expenses
accrued with respect to each portfolio for the period. All items
of income and expense which apply solely to one of the Trust's
portfolios will be wholly allocated to that portfolio; such items
which are not clearly applicable to one portfolio will be
allocated between portfolios pro-rata on the basis of their
relative net assets or upon such other basis as the Trustees
determine is equitable.
Net capital gains, if any, for the period from the Trust's fiscal
year end to October 31 will be declared as a capital gains
dividend on or before December 31; net capital gains determined
for the period from November 1 through the end of the Trust's
March 31 fiscal year will be declared no later than sixty days
following the end of the fiscal year.
Any declaration of dividends with respect to a portfolio is
dependent upon the level of income and capital gains earned by
the portfolio during the fiscal year. No historical rate of
dividend payments will be indicative of future dividends.
Notice of dividends will be mailed to each shareholder when the
dividends are paid; for tax purposes each shareholder will also
receive an annual summary of dividends paid by the Trust and the
extent to which they constitute capital gains dividends (see
"Additional Tax Matters").
Determination of Net Asset Value
The net asset value of each portfolio of the Trust, and of the
respective shares, is calculated once each day the New York Stock
Exchange is open for trading. The net asset value of the Trust is
not calculated on New Year's Day, the observance of Washington's
Birthday (President's Day), Good Friday, the observance of Memorial Day,
Independence Day, Labor Day, Thanksgiving Day, Christmas Day and
on other days the New York Stock Exchange is closed for trading.
The net asset value calculation is made as of the close of the
New York Stock Exchange, as described in the Prospectus.
Net asset value per share of each portfolio is determined by
adding the value of all its securities and other assets,
subtracting its liabilities and dividing the result by the total
number of outstanding shares that represent an interest in the
portfolio. These calculations are performed by the Trust and for
its account, pursuant to the Services Agreement (see
"Administrative and Other Expenses"). The Trust does not charge a
"sales load," and accordingly its shares are both offered and
redeemed at net asset value.
Securities traded on a securities exchange are valued at their
closing sales price on the principal market on which such
securities are traded, if available, and if not available, such
securities are valued at the mean between the bid and ask prices.
Other
<PAGE>
Statement of Additional Information Page 15
GIT Equity Trust July 31, 1996
securities for which current market quotations are readily
available are valued at the mean between their bid and ask
prices; securities for which current market quotations are not
readily available are valued at their fair value as determined in
good faith by the Trustees. The Trustees may authorize reliance
upon an independent pricing service for the determination of
securities values. An independent pricing service may price
securities with reference to market transactions in comparable
securities and to historical relationships among the prices of
comparable securities; such prices may also reflect an allowance
for the impact upon prices of the larger transactions typical of
trading by institutions. The Trust's shares will be priced by
rounding their value to the nearest one-tenth of one cent.
Valuation of Covered Call Options. When call options are written,
the premium received is reflected on the Trust's books as a cash
asset offset by a deferred credit liability, so the premium has
no impact on net asset value at that time. The deferred credit
amount is then marked to the market value of the outstanding
option contract daily. If the option contract is exercised, the
Trust reflects a sale of the appropriate securities (which may be
either the underlying portfolio securities or corresponding
securities purchased in the open market to deliver against the
option contract) at a price equal to the option strike price plus
the option premium received, and the deferred credit liability is
then extinguished. If the option expires without being exercised
(or if it is offset by a closing purchase transaction), then the
Trust recognizes the deferred credit as a gain (reduced by the
cost of any closing purchase transaction).
Additional Tax Matters
Shareholders are urged to consult their tax advisors regarding
the application of foreign, federal, state and local taxes to an
investment in the Trust. The following is a general and
abbreviated summary of the applicable statutes and regulations
currently in effect. These rules are subject to legislative and
administrative change which may be prospective or retroactive.
To qualify as a "regulated investment company" and avoid Trust-
level federal income tax under the Internal Revenue Code
(the "Code"), each Trust portfolio must, among other things, in
each taxable year distribute 100% of its net income and net
capital gains in the fiscal year in which it is earned. The Code
also requires the distribution of at least 98% of undistributed
net income for the calendar year and capital gains determined as
of October 31 each year before the calendar year end. Taxable
income not distributed as required is subject to a 4% excise tax.
The Trust intends to distribute all taxable income to the extent
it is realized and avoid imposition of the excise tax.
Each Trust portfolio must derive at least 90% of its gross income
from dividends, interest, gains from the sale or disposition of
securities, and certain other types of income, and derive less
than 30% of its gross income from the sale or disposition of
securities held for less than three months. Should it fail to
qualify as a "regulated investment company" under the Code, the
portfolio would be taxed as a corporation with no allowable
deduction for the distribution of dividends.
Shareholders of the portfolio, however, will be subject to
federal income tax on any ordinary net income and net capital
gains realized by the portfolio and distributed to shareholders
as regular or capital gains dividends, whether distributed in
cash or in the form of additional shares. Generally, dividends
declared by a portfolio during October, November or December of
any calendar year and paid to shareholders prior to February 1 of
the following year will be treated for tax purposes as received
in the year the dividend was declared. Since normally at least
65% of each portfolio's assets will be invested in equity
securities, some of which may pay eligible dividends, a
substantial portion of the regular dividends paid by the
portfolio is expected to be eligible for the dividends received
deduction for corporate shareholders (70% of dividends received).
Foreign securities held by a portfolio may be subject to
withholding or taxation by foreign governments on their interest
or dividends. Such withholding or taxation may be reduced or
eliminated by tax conventions between certain countries and the
U.S. However, as long as more than 50% of the value of any
portfolio's assets at the close of a taxable year consists of
securities of foreign corporations, the Trust may elect to treat
its shareholders as having paid the foreign tax directly, and not
deduct the taxes itself. If such an election is made, these
shareholders will be required to include their proportionate
share of such withholding or taxes in their U.S. income tax
returns as gross income, treat such proportionate share as taxes
paid by them, and deduct such proportionate share in computing
their taxable incomes or, alternatively, use them as foreign tax
credits against their U.S. income taxes. The Trust will annually
report to shareholders the amount per share of foreign
withholding or taxes paid by their portfolio, if applicable. The
Trust cannot assure shareholders that they will be eligible for
the foreign tax credit.
The Adviser does not anticipate that any portfolio will invest in
securities issued by a passive foreign investment company
("PFIC"). For federal income tax purposes, a PFIC is any foreign
corporation where 75% or more of its gross income for the taxable
year is passive income (foreign personal holding company income
as defined in Section 954(c) of the Code), or the average
percentage of its assets (by value) held by the corporation which
produce passive income or which are held for the production of
passive income is at least 50%. Foreign securities held by any
portfolio nevertheless may be determined to be issued by a PFIC.
In the event of such classification, the portfolio holding PFIC
securities may be subject to a liability for interest on taxes
deferred as a result of the PFIC's failure to distribute
dividends. This liability could reduce the portfolio's net asset
value and total performance. In the event any portfolio is
determined to hold PFIC securities, the Adviser may make any
reasonable election permitted by Treasury regulations regarding
PFIC securities.
Shareholders who fail to comply with the interest and dividends
"backup" withholding provisions of the Code (by filing Form W-9
or its equivalent, when required) or who have been determined
<PAGE>
Statement of Additional Information Page 16
GIT Equity Trust July 31, 1996
by the Internal Revenue Service to have failed to properly report
dividend or interest income, may be subject to a 31% withholding
requirement on transactions with the Trust.
For tax purposes, the Trust will send shareholders an annual
notice of dividends paid during the prior year. Investors are
advised to retain all statements received from the Trust to
maintain accurate records of their investment. Shareholders of
each portfolio of the Trust will be subject to federal income tax
on the net capital gains, if any, realized by each portfolio and
distributed to shareholders as capital gains dividends.
Shareholders should carefully consider the tax implications of
buying the Trust's shares just prior to declaration of a regular
or capital gains dividend. Prior to the declaration, the value of
the distribution will be reflected in net asset value per share
and thus will be paid for by the shareholder when the shares are
purchased; when the dividend is declared the amount to be
distributed will be deducted from net asset value, lowering the
value of the shareholder's investment by the same amount, but the
shareholder nevertheless will be taxed on the amount of the
dividend without any offsetting deduction for the drop in share
value until the shares are ultimately redeemed. A loss on the
sale of shares held for six months or less will be treated as a
long-term capital loss to the extent of any capital gains
dividend received.
The Trust reserves the right to involuntarily redeem any of its
shares if, in its judgment, ownership of the Trust's shares has
or may become so concentrated as to make the Trust a personal
holding company under the code.
State and Local Taxes. Dividends paid by the Trust are generally
expected to be subject to any state or local taxes on income.
Shareholders should consult their tax advisers about the status
of distributions from the Trust in their own tax jurisdictions.
Total Return Calculations
In order to provide a basis for comparisons of the Trust's
portfolios with similar funds, with comparable market indices,
and with investments such as savings accounts, savings
certificates, taxable and tax-free bonds, common stocks, money
market funds and money market instruments, the Trust calculates
total return for each of its portfolios.
Total Return. Average annual total return is calculated by
finding the compounded annual rate of return over a given period
that would be required to equate an assumed initial investment in
the portfolio to the ending redeemable value the investment would
have had at the end of the period, raking into account the effect
of the changes in the portfolio's share price during the period
and any recurring fees charged to shareholder accounts, and
assuming the reinvestment of all dividends and other
distributions at the applicable share price when they were paid.
Non-annualized aggregate total returns may also be calculated by
computing the simple percentage change in value that equates an
assumed initial investment in the portfolio with its redeemable
value at the end of a given period, determined in the same manner
as for average annual total return calculations.
Representative Total Return Quotations. For the year ended March
31, 1996, the average annualized total return of the Special
Growth Portfolio was 21.22%; of the Select Growth Portfolio was
31.63; of the Equity Income Portfolio was 27.56%;
and of the Worldwide Growth Portfolio was 16.88%. For the
period beginning April 16, 1993 (commencement date and public
offering) through March 31, 1996, the average annualized total
return for the Worldwide Growth Portfolio was 4.46%. For the
calendar quarter ending March 31, 1995 the non-annualized
aggregate total return of the Special Growth Portfolio was 4.38%;
of the Select Growth Portfolio was 5.50%; of the Equity Income
Portfolio was 3.86%; and of the Worldwide Growth Portfolio was
5.58%.
The 10-year average annualized total return through March 31,
1996, and the 5-year average annualized total return of the
Special Growth Portfolio through such date was 9.07% and 9.59%,
respectively. Its non-annualized aggregate total return for
ten years and since inception on July 21, 1983 were 138.27%
and 312.13%, respectively.
The 10-year average annualized total return through March 31,
1996 and the 5-year average annualized total
return of the Select Growth Portfolio through such date was
9.79% and 9.01%, respectively, and its non-annualized aggregate
total returns for ten years and since inception on July 21, 1983
were 154.35% and 303.78%, respectively.
The 10-year average annualized total return through March 31,
1996 and the 5-year average annualized total return of the Equity
Income Portfolio through such date was 9.34% and 10.23%,
respectively, and its non-annualized aggregate total returns for
ten years and since inception on July 21, 1983 were 144.15%
and 285.53%, respectively.
The aggregate total return since inception on April 16, 1993
through March 31, 1996 for the Worldwide Growth Portfolio was
13.76%.
Performance Comparisons. From time to time, in advertisements or
in reports to shareholders and others, the Trust may compare the
performance of its portfolios to that of recognized market
indices or may cite the ranking or performance of its portfolios
as reported in recognized national periodicals, financial
newsletters, reference publications, radio and television news
broadcasts, or by independent performance measurement firms.
The Trust may also compare the performance of its portfolios to
that of other funds managed by the same Advisor. It may compare
its performance to that of other types of investments,
substantiated by representative indices and statistics for those
investments.
Market indices which may be used include those compiled by major
securities firms, such as Salomon Brothers, Shearson Lehman
Hutton, the First Boston Corporation, and Merrill Lynch; other
indices compiled by securities rating or valuation services, such
as Ryan Financial Corporation and Standard and Poor's Corporation
may also be used. Periodicals which report market averages and
indices, performance information, and/or rankings may include:
The Wall Street Journal, Investors Daily, The New York Times, The
Washington Post, Barron's, Financial World Magazine, Forbes
Magazine, Money Magazine, Kiplinger's Personal Finance, and the
Bank Rate Monitor. Independent performance measurement firms
include Lipper Analytical Services, Inc., Frank Russel Company,
SCI and CDA Investment Technologies.
<PAGE>
Statement of Additional Information Page 17
GIT Equity Trust July 31, 1996
In addition, a variety of newsletters and reference publications
provide information on the performance of mutual funds, such as
the Donoghue's Money Fund Report, No-Load Fund Investor,
Wiesenberger Investment Companies Service, the Mutual Fund Source
Book, the Mutual Fund Directory, the Switch Fund Advisory, Mutual
Fund Investing, the Mutual Fund Observer, Morningstar, and the
Bond Fund Survey. Financial news is broadcast by the Financial
News Network, Cable News Network, Public Broadcasting System, and
the major television networks as well as by numerous independent
radio and television stations.
The Trust may also disclose the contents of each of its portfolios as
frequently as daily in advertisements and elsewhere.
Lipper Analytical Services, Inc. measures the performance of the
Special Growth Portfolio compared to mutual funds with total net
assets ranging from $25 million to $50 million categorized as
"Small Company Growth funds"; the performance of the Equity
Income Portfolio is compared to mutual funds with total net
assets ranging from $0.1 million to $10 million categorized as
"Equity Income funds"; and the performance of the Select Growth
Portfolio is compared to mutual funds with total net assets
ranging from $0.1 million to $10 million categorized as "Growth
funds." As of the date of this Statement of Additional
Information, the Worldwide Growth Portfolio is expected to be
compared to mutual funds categorized as "Emerging Markets funds."
If any of these categories should be changed by Lipper Analytical
Services, Inc., including the final categorization of the
Worldwide Growth Portfolio, comparisons will be made thereafter
based on the revised categories.
It should be noted that the investment results of the Trust's
portfolios will tend to fluctuate over time, so historical total
returns should not be considered representations of what an
investment may earn in any future period. Actual distributions to
shareholders will tend to reflect changes in portfolio income,
and will also depend upon the level of the Trust's expenses,
realized or unrealized investment gains and losses, and the
relative results of the Trust's investment policies. Thus, at any
point in time future total returns may be either higher or lower
than past results, and there is no assurance that any historical
performance record will continue.
Custodians and Special Custodians
StarBank, N.A., 425 Walnut Street, Cincinnati, OH 45202, is
Custodian for the cash and securities of the Trust. The Custodian
maintains custody of the Trust's cash and securities, handles its
securities settlements and performs transaction processing for
cash receipts and disbursements in connection with the purchase
and sale of the Trust's shares.
The Trust may appoint as Special Custodians, from time to time,
certain banks, trust companies, and firms which are members of
the New York Stock Exchange and trade for their own account in
the types of securities purchased by the Trust. Such Special
Custodians will be used by the Trust only for the purpose of
providing custody and safekeeping services of relatively short
duration for designated types of securities which, in the opinion
of the Trustees or of the Adviser would most suitably be held by
such Special Custodians rather than by the Custodian. In the
event any such Special Custodian is used, it shall serve the
Trust only in accordance with a written agreement with the Trust
meeting the requirements of the Securities and Exchange
Commission for custodians and approved and reviewed at least
annually by the Trustees, and, if a securities dealer, only if it
delivers to the Custodian its receipt for the safekeeping of each
lot of securities involved prior to payment by the Trust for such
securities.
The Trust has approved the appointment by the Custodian of
certain eligible foreign custodians to serve as Special
Custodians to hold foreign securities as necessary. These
eligible custodians have entered into a written agreement with
the Custodian for this purpose. The written agreement and the
eligible foreign custodians are approved annually by the
Trustees.
The Trust may also maintain deposit accounts for the handling of
cash balances of relatively short duration with various banks, as
the Trustees or officers of the Trust deem appropriate, to the
extent permitted by the Investment Company Act of 1940.
Legal Matters and Independent Auditors
Sullivan & Worcester LLP, 1025 Connecticut Avenue, NW,
Washington, DC, 20036, acts as legal counsel to the Trust.
Ernst & Young LLP, 1225 Connecticut Avenue, NW, Washington, DC
20036 serves as independent auditors to the Trust.
From time to time the Trust may be or become involved in
litigation in the ordinary conduct of its business. Material
items of litigation having consequences of possible or
unspecified damages, if any, are disclosed in the notes to the
Trust's financial statements (see "Financial Statements and
Report of Independent Auditors)."
Additional Information
The Trust issues semi-annual and annual reports to its
shareholders and may issue other reports, such as quarterly
reports, as it deems appropriate; the annual reports are audited
by the Trust's independent auditors.
Statements contained in this Statement of Additional Information
and in the Prospectuses as to the contents of contracts and other
documents are not necessarily complete. Investors should refer to
the documents themselves for definitive information as to their
detailed provisions. The Trust will supply copies of its
Declaration of Trust and By-Laws to interested persons upon
request.
The Trust and shares in the Trust have been registered with the
Securities and Exchange Commission in Washington, DC, by the
filing of a registration statement. The registration statement
contains certain information not included in the Prospectuses or
not included in this Statement of Additional Information and is
available for public inspection and copying at the offices of
such Commission.
Financial Statements and Report of Independent Auditors
Audited Financial Statements for each of the trust's portfolios,
together with the Report of Ernst & Young LLP, Independent
Auditors for the fiscal year ended March 31, 1996, appear in the
respective Annual Report to shareholders for such portfolios for
the fiscal year ended March 31, 1996, which is incorporated
herein by reference.
<PAGE>
Statement of Additional Information Page 18
GIT Equity Trust July 31, 1996
Excluded from such incorporation by reference is the Trust's
letter to shareholders appearing in each semi-annual Report.
Such Report has been filed with the Securities and Exchange
Commission and the latest Annual Report is furnished to investors
in such portfolios with this Statement of Additional Information.
Additional copies of such Annual Report are available upon
request at no charge by writing or calling the Trust at the
address and telephone number shown on the cover page.
<PAGE>
Part C
July 31, 1996
GIT Equity Trust
Cross Reference Sheet
Pursuant to Rule 495(a)
24(a) Financial Statements
Included in Part A: Financial Highlights
Included in Part B: Filed with the Securities and Exchange
Commission pursuant to Section 30 of the Investment Company
Act of 1940 on May 31, 1996, and incorporated herein by
reference is the Trust's Annual Report to Shareholders for the
fiscal year ended March 31, 1996.
Included in such Annual Report to Shareholders are: Statement
of Assets and Liabilities, Statement of Operations, Statement
of Changes in Net Assets, Financial Highlights, Portfolio of
Investments, Notes to Financial Statements and Report of Ernst
& Young LLP, Independent Auditors.
Included in Part C: Consent of Independent Auditors
24(b) Exhibits
Exhibit No. Description of Exhibit
1 Declaration of Trust*
2 By-Laws*
3 Not Applicable
4 Specimen Share Certificate*
5 Investment Advisory Agreement (Filed herewith)***
6 Distribution Agreement (Filed herewith)**
7 Not Applicable
8 Custodian Agreement with Fee Schedule (Filed herewith)**
9 Services Agreement (Filed herewith)***
10 Consent of Counsel*
11 Consent of Independent Auditors (Filed Herewith)
12 Not Applicable
13 Agreements Relating to Initial Capital*
14 Not Applicable
15 Plan of Distribution and Share Sales Agreement*
16 Computation of Performance Data*
17 Power of Attorney*
* Previously filed by GIT Equity Trust.
** Previously filed by GIT Equity Trust in hard copy.
*** Current agreement previously filed. Agreement effective July 31, 1996
filed herewith.
25. Persons Controlled by or Under Common Control with Registrant.
None
<PAGE>
26. Number of Holders of Securities.
The number of holders of record of securities of the
Registrant as of May 22, 1996 is as follows:
Title of Class Number of Holders of Record
Shares of Beneficial Interest 2,755
27. Indemnification
Previously Filed
28. Business and Other Connections of Investment Adviser effective
July 31, 1996.
Name Position with Other Business
Adviser
Frank E. Burgess Director President and Director of
Madison Investment Advisors,
Inc., 6411 Mineral Point
Road, Madison, WI 53705
Katherine L. Frank President Vice President of Madison
Investment Advisors, Inc.
6411 Mineral Point
Road, Madison, WI 53705
Charles J. Tennes Vice President Director of Presidential
Savings Bank, FSB, and
Presidential Service
Corporation, 4600 East-West
Highway, Bethesda, MD
20814; Executive Vice
President of GIT Investment
Services, Inc. of the same
address as the Trust.
<PAGE>
Jay R. Sekelsky Vice President Vice President of Madison
Investment Advisors, Inc.
6411 Mineral Point
Road, Madison, WI 53705
Chris Berberet Vice President Vice President of Madison
Investment Advisors, Inc.
6411 Mineral Point
Road, Madison, WI 53705
W. Richard Mason Secretary Secretary of Presidential
Savings Bank, FSB and
Presidential Service
Corporation, 4600 East-West
Highway, Bethesda, MD
20814; Secretary of GIT
Investment Services, Inc.
of the same
address as the Trust.
Julia M. Nelson Vice President Vice President of GIT
Investment Services, Inc.,
of the same address as the
Trust
29. Principal Underwriters
(a) GIT Investment Services, Inc., the principal underwriter
of the Trust, also acts as principal underwriter to Government
Investors Trust, GIT Tax-Free Trust and GIT Income Trust.
(b)
Name and Principal Position and Offices Position and Offices
Business Address with Underwriters with Registrant
A. Bruce Cleveland Chairman, President None
1655 Ft. Myer Dr.
Arlington, VA 22209
W. Richard Mason Secretary Asst. Secretary
1655 Ft. Myer Dr.
Arlington, VA 22209
Charles J. Tennes Executive Vice Secretary
1655 Ft. Myer Dr. President
Arlington, VA 22209
Edward J. Karpowicz Treasurer None
1655 Ft. Myer Dr.
Arlington, VA 22209
Julia W. Nelson Vice President None
1655 Ft. Myer Dr.
Arlington, VA 22209
<PAGE>
(c) Not Applicable
30. Location of Accounts and Records
The books, records and accounts of the Registrant will be
maintained at 1655 Ft. Myer Drive, Arlington, VA 22209, at
which address are located the offices of the Registrant and
of Bankers Finance Investment Management Corp. Additional
records and documents relating to the affairs of the
Registrant are maintained by the Star Bank, N.A. of
Cincinnati, OH, the Registrant's Custodian, at the
Custodian's offices located at 425 Walnut Street,
Cincinnati, OH 45202. Pursuant to the Custodian Agreement
(see Article IX, Section 12), such materials will remain the
property of the Registrant and will be available for
inspection by the Registrant's officers and other duly
authorized persons.
31. Management Services
Discussed in Parts A and B
32. Undertakings
(a) Not Applicable
(b) Not Applicable
(c) The Registrant shall furnish to each person to whom a
prospectus is delivered a copy of the Registrant's latest
Annual Report to shareholders upon such person's request and
without charge.
<PAGE>
Signatures
Pursuant to the requirements of the Securities Act of 1933
and the Investment Company Act of 1940, the Registrant has
duly caused this Post-Effective Amendment to the
Registration Statement to be signed on its behalf by the
undersigned, thereto duly authorized, in the County of
Arlington, Commonwealth of Virginia, on the 14 day of June,
1996.
GIT Equity Trust
By: (signature)
A. Bruce Cleveland
President
Pursuant to the requirements of the Securities Act of 1933,
this Post-Effective Amendment to the Registration Statement
has been signed below by the following persons in the
capacities and on the date indicated.
(Signature), Trustee, President 6/14/96
A. Bruce Cleveland and Treasurer
(Principal Executive
Officer, Principal
Financial Officer)
Trustee
John D. Reilly <FN> (Date)
Trustee
Thomas S. Kleppe <FN> (Date)
Trustee
Smith T. Wood <FN> (Date)
(Signature), <FN> <FN1> Attorney-In-Fact </FN> 6/14/96
John A. Dudley, Esquire
</TABLE>
Investment Advisory Agreement
This Agreement is made by and between Bankers Finance
Advisors, LLC, a Wisconsin limited liability company having
its principal place of business in Arlington, Virginia (the
"Advisor"), and GIT Equity Trust, a Massachusetts business
trust created pursuant to a Declaration of Trust filed with
the Clerk of the City of Boston, Massachusetts (the
"Trust").
The parties hereto, intending so to be legally bound,
agree with each other as follows:
1. Appointment and Acceptance. The Trust hereby
appoints the Advisor to manage the investment of its assets
and to administer its affairs; and the Advisor hereby
accepts such appointment. The Advisor shall employ its best
efforts to supervise the investment management of the Trust.
2. Discretion of the Advisor. In the performance of
its duties hereunder the Advisor shall have full authority
to act as it deems advisable, except that it shall be bound
by the terms of the Declaration of Trust and By-Laws of the
Trust, and by any written direction given by the Trustees of
the Trust not inconsistent with this Agreement; and it shall
be guided by the investment policies of the Trust from time
to time duly in effect. Subject only to the foregoing, the
Advisor shall have full authority to purchase and sell
securities for the Trust; the Advisor may determine the
persons with whom such securities transactions are to be
made and the terms thereof.
3. Other Activities of the Advisor. The Advisor and
any of its affiliates shall be free to engage in any other
lawful activity, including the rendering to others of
services similar to those rendered to the Trust hereunder;
and the Advisor or any interested person thereof shall be
free to invest in the Trust as a shareholder, to become an
officer or Trustee of the Trust if properly elected, or to
enter into any other relationship with the Trust approved by
the Trustees and in accordance with law.
The Advisor agrees that it will not deal with itself or
with any affiliated person or promoter or principal
underwriter of the Trust (or any affiliated person of the
foregoing) acting as a principal, in effecting securities
transactions for the account of the Trust. It is further
agreed that in effecting any such transaction with such a
person acting as a broker or agent, compensation to such
person shall be permitted, provided that the transaction is
in the ordinary course of such person's business and the
amount of such compensation does not exceed one percent of
the purchase or sale price of the securities involved.
If the Advisor or any affiliate thereof provides any
other goods or services which otherwise would be paid for by
the Trust pursuant to this Agreement, then the Trust shall
pay the Advisor or such affiliate the cost reasonably
allocated by the Advisor or affiliate to such goods or
services.
4. Investment by Advisor. The Advisor shall not take,
and shall not permit any of its shareholders, officers,
directors or employees to take long or short positions in
the shares of the Trust, except for the purchase of shares
of the Trust for investment purposes at the same price as
<PAGE>
is available to the public at the time of purchase, or in
connection with the original capitalization of the Trust.
In connection with purchases or sales of portfolio
securities for the account of the Trust neither the Advisor
nor any officer, director or employee of the Advisor shall
act as a principal or receive any commission therefor.
5. Expenses of the Trust. The Trust shall pay all of
its expenses not expressly assumed by the Advisor herein.
Without limitation, the expenses of the Trust, assumed by
the Trust hereby, shall include the following:
a. Expenses related to the continued existence of the
Trust.
b. Fees and expenses of the Trustees (except those
affiliated with the Advisor), the officers and the
administrative employees of the Trust.
c. Fees paid to the Advisor hereunder.
d. Fees and expenses of preparing, printing and
distributing official filings, reports, prospectuses and
documents required pursuant to applicable state and Federal
securities law and expenses of reports to shareholders.
e. Fees and expenses of custodians, transfer agents,
dividend disbursing agents, shareholder servicing agents,
registrars, and similar agents.
f. Expenses related to the issuance, registration,
repurchase, exchange and redemption of shares and
certificates representing shares.
g. Auditing, accounting, legal, insurance, portfolio
administration, association membership, printing, postage,
and other administrative expenses.
h. Expenses relating to qualification or licensing of
the Trust, shares in the Trust, or officers, employees and
agents of the Trust under applicable state and Federal
securities law.
i. Expenses related to shareholder meetings and proxy
solicitations and materials.
j. Interest expense, taxes and franchise fees, and all
brokerage commissions and other costs related to purchase
and sales of portfolio securities.
In addition, the Trust shall assume all losses and
liabilities incurred in the administration to the Trust and
of its investment portfolio; and it shall pay such non-
recurring expenses as may arise through litigation,
administrative proceedings, claims against the Trust, the
indemnification of Trustees, officers, employees,
shareholders and agents, or otherwise.
6. Compensation to the Advisor. For its services
hereunder, the Trust shall pay to the Adviser a management
fee equal to three-quarters (3/4) percent per annum of the
average daily net assets of the portfolios comprising the
Special Growth Fund series of shares and the Equity Income
Fund series of shares and a management fee equal to one (1)
percent per annum of the average daily net assets of the
portfolio comprising the Worldwide Growth Fund series of
shares. Such fee shall be payable quarterly as of the last
day of the month and shall be the sum of the daily fees
<PAGE>
calculated as one-three hundred sixty-fifth (1/365), except
in leap years one-three hundred sixty-sixth (1/366), of the
annual fee based upon each portfolio's net assets calculated
for the day.
With respect to any portfolio of the Trust subsequently
authorized by the Trustees, the management fee provided
herein may be revised upward or downward by mutual agreement
between the parties at the time the additional portfolio is
authorized, provided such revision is approved by the
Trustees, including the vote of a majority of those Trustees
who are not interested persons of the Trust, cast in person
at a meeting called for that purpose. The Advisor shall
have the right to waive any portion of its management fee
during any period, and it may permanently reduce the amount
of the fee under such terms as it may determine by written
notice thereof to the Trust. The Advisor shall have the
right to share its management fee with others or make
payments out of its management fee to others, as it solely
determines.
7. Limitation of Expenses of the Trust. In addition
to investment management expenses related to the Trust, the
Advisor shall pay the fees and expenses of any Trustees and
officers of the Trust affiliated with the Advisor, all
promotional expenses of the Trust to the extent not paid for
by the Trust pursuant to a Plan of Distribution, the rent
expense of the Trust's principal executive office premises,
and the expenses of formation of the Trust.
The Advisor shall further reimburse the Trust for all
of its expenses, excluding securities transaction
commissions and expenses, taxes, interest, share
distribution expenses, and extra-ordinary and non-recurring
expenses, which exceed during any fiscal year the applicable
expense limitation in any State or other jurisdiction in
which the Trust, during the fiscal year, becomes subject to
regulation by qualification or sale of its shares. Any such
required reimbursement shall be made within a reasonable
period following the close of the fiscal year to which it
relates; and the Advisor may elect to pay all or a portion
of any such reimbursement it anticipates will be required at
any time or from time to time during the fiscal year to
which the reimbursement relates.
8. Limitation of Advisor's Liability. The Advisor
shall not be liable for any loss incurred in connection with
its duties hereunder, nor for any action taken, suffered or
omitted and believed by it to be advisable or within the
scope of its authority or discretion, except for acts or
omissions involving willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties assumed by it
under this Agreement.
9. Limitation of Trust's Liability. The Advisor
acknowledges that it has received notice of and accepts the
limitations upon the Trust's liability set forth in its
Declaration of Trust. The Advisor agrees that the Trust's
obligations hereunder in any case shall be limited to the
Trust and to its assets and that the Advisor shall not seek
satisfaction of any such obligation from the shareholders of
the Trust nor from any Trustee, officer, employee or agent
of the Trust.
10. Term of Agreement. This Agreement shall continue
in effect for two years from the date of its execution; and
it shall continue in force thereafter (but subject to the
termination provisions below), provided that it is
specifically approved at least annually by the Trustees of
the Trust or by a majority vote of the outstanding
securities of each series and class of the Trust's shares
with respect to which it is to continue in effect, and in
either case by the vote of a majority of the Trustees who
are not interested persons of the Trust, cast in person at a
meeting called for that purpose.
<PAGE>
11. Termination by Notice. Notwithstanding any
provision of this Agreement, it may be terminated at any
time, without penalty, by the Trustees of the Trust or, with
respect to any series or class of the Trust's shares, by the
vote of a majority of the outstanding voting securities of
such series or class, or by the Advisor, upon sixty days
written notice to the other party.
12. Termination Upon Assignment. This Agreement may
not be assigned by the Adviser and shall automatically
terminate immediately upon any assignment. Nothing herein
shall prevent the Advisor from employing any other persons
or agents, including Madison Investment Advisors, Inc., at
its own expense, to assist it in the performance of its
duties hereunder.
13. Name of the Trust. In consideration of its
formation of the Trust and the related expenses, the Advisor
has retained the rights to the name "GIT Equity Trust" (and
any similar name), which rights the Trust hereby
acknowledges. The Trust, however, shall have the exclusive
right to the use of the name "GIT Equity Trust" (although
its rights to the "GIT" portion of such name shall be non-
exclusive) so long as this contract shall remain in force,
except that the Advisor may withdraw such rights from the
Trust at any time, effective immediately or at a time
specified, upon written notice to the Trust. In the event
of such notice, the Trust agrees that it will cause the
question of continuation of this Agreement to be put to a
vote of the shareholders of the Trust as soon as practicable
after such notice has been given.
14. Use of Terms. The terms "affiliated person",
"interested person", "assignment", "broker", and "majority
of the outstanding voting securities" as used herein, shall
have the same meanings as in the Investment Company Act of
1940 and any applicable regulations thereunder.
15. Control of Advisor. Bankers Finance Advisors, LLC
is controlled by Madison Investment Advisors, Inc. a
registered investment advisor located in Madison, Wisconsin.
As such, it is expected that Bankers Finance Advisors, LLC
and Madison Investment Advisors, Inc. will work closely
together in the management of the portfolios including but
not limited to portfolio management, research, securities
trading, and other investment management responsibilities.
<PAGE>
In Witness Whereof, the parties have caused this
Agreement to be signed on their behalf by their respective
officers duly authorized and their respective seals to be
affixed hereto, this day of 1996.
Bankers Finance Advisors, LLC
By
Katherine L. Frank, President
Attest:
___________________, Vice President
GIT Equity Trust
By
By
By
By
Attest:
Services Agreement
This Agreement is made by and between Bankers Finance
Advisors, LLC, a Wisconsin limited liability company
having its principal place of business in Arlington, Virginia
("BFA"), and GIT Equity Trust, a Massachusetts business
trust created pursuant to a Declaration of Trust filed with the
Clerk of the City of Boston, Massachusetts (the "Trust").
The parties hereto, intending so to be legally bound, agree
with each other as follows:
1. Provision of Services. BFA hereby undertakes to provide
the Trust with such operational support services as it may
require in the conduct of its business, to extent which BFA
(or any other person), acting as the Trust's investment
adviser, has not undertaken to provide such services. Such
services may include the functions of shareholder servicing
agent and transfer agent, bookkeeping and portfolio
accounting services, the handling of telephone inquires,
cash withdrawals and other customer service functions
(including processing and monitoring wire transfers), and
providing to the Trust appropriate supplies, equipment and
ancillary services necessary to the conduct of its affairs.
Such services may also include providing or arranging for
and making reimbursable expenditures with respect to any
activities intended to be financed by the Trust pursuant to
its Plan of Distribution. The Trust hereby engages BFA to
provide it with such services.
2. Scope of Authority. BFA shall be at all times, in the
performance of its functions hereunder, subject to any
direction and control of the Trustees of the Trust and of
its officers, and to the terms of its Declaration of Trust
and By-Laws, except only that it shall have no obligation to
provide to the Trust any services that are clearly outside
the scope of those contemplated in this Agreement. In the
performance of its duties hereunder, BFA shall be authorized
to take such action not inconsistent with the express
provisions hereof as it deems advisable. It may contract
with other persons to provide to the Trust any of the
services contemplated herein under such terms as it deems
reasonable and shall have the authority to direct the
activities of such other persons in the manner it deems
appropriate.
3 Other Activities of BFA. BFA and any of its affiliates
shall be free to engage in any other lawful activity,
including the rendering to others services similar to those
to be rendered to the Trust hereunder; and BFA or any
interested person thereof shall be free to invest in the
Trust as a shareholder, to become an officer or Trustee
thereof if properly elected, or to enter into any other
relationship with the Trust approved by the Trustee and in
accordance with law.
BFA agrees that it will not deal with the Trust in any
transaction in which BFA acts as a principal, except to the
extent as may be permitted by the terms of this Agreement.
The records BFA maintains on behalf of the Trust are the
sole property of the Trust and will be surrendered promptly
to the Trust upon its request pursuant to Rule 31a-3 of the
Investment Company Act of 1940.
4. Compensation to BFA. BFA shall have no responsibility
hereunder to bear at its own expense any costs or expenses
of the Trust. The Trust shall reimburse to BFA monthly all
of BFA's costs involved in the provision of services to the
Trust hereunder, as the term "cost" is more fully described
herein. The "cost" of services provided to the Trust
hereunder shall be deemed to include both the relevant
direct expenditures by BFA (including the cost of goods and
services obtained from others) and the related overhead
costs, such as depreciation, interest, employee supervision,
rent and like cost. Where only a portion of a specific
expenditure by BFA is related to services provided to the
Trust hereunder, then BFA may allocate such amount between
the Trust and the other activities of BFA on a reasonable
basis, which may involve the use of assumptions and
approximations not subject to precise verification without
undue cost, provided that a majority of the Trustees,
including a majority of the Trustees who are not interested
persons of the Trust approve the basis upon which such
allocations are made. BFA may, in its discretion, defer
billing to and payment by the Trust of any costs which are
reimbursable to it hereunder, and no such deferment shall
affect the right of BFA to receive reimbursement from the
Trust when the cost are billed.
5. Relationship to Investment Adviser. It is understood by
the parties hereto that concurrently with the execution of
this Agreement, the Trust has entered into an Investment
Advisory Agreement with Bankers Finance Advisors, LLC,
in its separate capacity as the investment
adviser to the Trust (the "Adviser") pursuant to which the
Adviser will provide management services to the Trust and
administer its affairs. BFA has entered into this Agreement
to perform certain services at its cost in consideration of
the Trust's employment of it as the Adviser as aforesaid.
If at any time the Adviser ceases to act as investment
adviser to the Trust under terms substantially those of the
Investment Advisory Agreement or if at any time the Adviser
ceases to be a subsidiary owned at least 50% (in terms of
voting rights) under common control with BFA, then this
Agreement shall immediately terminate as of a date 30 days
from the date of such event, unless within such 30-day
period BFA gives written notice to the Trust that it waives
such termination. The Trust specifically acknowledges and
accepts the relationship between separate capacities of BFA
hereunder and as the Adviser.
6. Limitation of BFA's Liability. BFA shall not be liable
for any loss incurred in connection with any of its services
hereunder, nor for any action taken, suffered or omitted and
believed by it to be advisable or within the scope of its
authority of discretion, except for acts or omissions
involving willful misfeasance, bad faith, gross negligence
or reckless disregard of the duties assumed by it under this
Agreement.
7. Force Majeure. It is specifically agreed by the parties
that if BFA is delayed in the performance of any of the
services to be performed by it hereunder or prevented
entirely or in part from performing such services due to
causes or events beyond its control, then such delay or non-
performance may either be excused and the reasonable time
for performance thereby extended as necessary, or if such
delay or non-performance continues for 30 days then the
Trust may cancel this Agreement immediately thereafter or at
any time prior to the cessation of delay or resumption of
performance by BFA; but BFA shall not otherwise be liable
for and the Trust shall otherwise hold it harmless from any
such delay or non-performance. "Causes or events beyond
control" shall include, without limitation, the following:
Acts of God; interruption of power or other utility,
transportation or communications services; malfunction of
computer equipment; acts of civil or military authority;
sabotage national emergencies, war, explosion, flood,
accident, earthquake, fire, or other catastrophe; strike or
other labor problem; shortage of suitable parts, material,
labor or transportation; or present or future law,
governmental order, rule, regulations or official policy.
8. Limitation of Trust's Liability. BFA acknowledges that
it has received notice of and accepts the limitations upon
the Trust's liability set forth in its Declaration of Trust.
BFA agrees that the Trust's obligations hereunder in any
case shall be limited to the Trust and to its assets and
that BFA shall not seek satisfaction of any such obligation
from the shareholders of the Trust nor from any Trustee,
officer, employee or agent of the Trust.
9. Term of Agreement. This Agreement shall continue in
effect for two years from the date of its execution; and it
shall continue in force thereafter (but subject to the
termination provisions below), provided that it is
specifically approved at least annually by the Trustees of
the Trust or a majority vote of the outstanding securities
of each series and class of the Trust's shares with respect
to which it is to continue in effect, and in either case by
either case by the vote of a majority of the Trustees who
are not interested persons of the Trust, cast in person at a
meeting called for that purpose.
10. Termination by Notice. Notwithstanding any provision of
this Agreement, it may be terminated at any time without
penalty, by the Trustees of the Trust or, with respect to
any series or class of the Trust's shares, by the vote of
the majority of the outstanding voting securities of such
series or class, or by BFA, upon thirty days written notice
to the other party.
11. Termination upon Assignment. This Agreement may not be
assigned by BFA and shall automatically terminate upon any
such assignment; except that BFA may assign or transfer its
interest herein to a wholly-owned subsidiary of BFA, or to
another entity operated substantially under common control
with BFA, provided BFA represents to the Trust that
substantial continuity of management, personnel and services
previously available to the Trust will be maintained
following such assignment or transfer and that the Trustees
of the Trust (including a majority of the Trustees who are
not interested persons of the Trust) accept such
representation. Nothing herein shall limit the right of BFA
to obtain goods and services from other persons as described
in Section 2 above.
12. Use of Terms. The terms "affiliated person," "interested
persons," "assignment," and "majority of the outstanding
voting securities," as used herein, shall have the same
meanings as in the Investment Company Act of 1940 and any
applicable regulations thereunder. In Witness Whereof, the
parties have caused this Agreement to be signed in their
behalf by their respective officers duly authorized and
their respective seals to affixed hereto, this ____ day of
___________, 1996
Bankers Finance Advisors LLC
by _________________________
GIT Equity Trust
by _________________________
4
4
3
3
Consent of Ernst & Young LLP, Independent Auditors
We consent to the references to our firm under the captions
"Financial Highlights" in the Prospectuses and "Legal
Matters and Independent Auditors" and "Financial Statements
and Report of Independent Auditors" in the Statement of
Additional Information and to the incorporation by reference
in this Post-Effective Amendment Number 17 to Registration
Statement Number 2-80805 (Form N-1A) of our reports dated May
3, 1996, on the financial statements and financial
highlights of GIT Equity Trust (comprising the Special
Growth, Select Growth, Equity Income and Worldwide Growth
Portfolios) for the year ended March 31, 1996, included in
the 1996 Annual Reports to Shareholders.
(signature)
Ernst and Young LLP
Washington, DC
June 11, 1996
GIT Equity Trust
Special Growth Portfolio
Select Growth Portfolio
Equity Income Portfolio
Annual Report
March 31, 1996/Audited
GIT
GIT Investment Funds
<PAGE>
Management's Discussion of Fund Performance
Dear Fellow Shareholder:
Driven by strong growth in corporate earnings, low inflation, and
declining interest rates, returns from U.S. equities for the year
ended March 31, 1996 were exceptional. The S&P 500 returned 32.2%
during this period, more than double the average annual total
return for the last ten years. Across a wide range of industries,
U.S. companies are positioned well to benefit from the growth of
the global economy, and the stock market acknowledged this trend
with 1995's broad based rally.
For the year ended March 31, 1996, the Select Growth Portfolio
returned 31.6%, which places it in the top third of all domestic
growth funds, as compiled by Morningstar, Inc. The portfolio's
returns were driven by core holdings in the technology and
financial sectors, including Cisco Systems and Green Tree
Financial. Both these sectors offer companies with high operating
margins and return on equity, robust earnings growth, and
excellent balance sheets, and we believe that they will continue
to grow at a faster rate than the economy as a whole.
Select Growth's performance for the past six months has been
dragged down somewhat by the semiconductor sector, which remained
weak through the end of March. We used the sharp price declines
in semiconductor capital equipment stocks in January and March to
accumulate shares of several companies at depressed levels.
The more conservative Equity Income Portfolio returned 27.6% for
the year ended March 31, 1996, placing it in the top 36% of all
equity income funds, as compiled by Morningstar, Inc. The
portfolio achieved this return while maintaining a high degree of
price stability. Several of the fund's largest holdings, such as
Monsanto, Williams Companies, and Federal Home Loan Mortgage
Association, grew earnings to record levels. The portfolio's high
dividend paying equities also benefited from declining interest
rates during the period of this report. Although interest rates
have recently reversed this trend and headed upwards, the Equity
Income Portfolio appears well positioned to benefit from an
easing of inflationary concerns.
The Special Growth Portfolio's one year total return of 21.2% was
its best since 1991. Throughout the fiscal year, the portfolio
achieved its returns with a high degree of price stability
relative to other small company funds. As we announced in
December, this portfolio is now managed by the same team as the
Select Growth and Equity Income portfolios. The new management
is placing a higher emphasis on rapid earnings growth than was
applied to this portfolio in the past. This shift in emphasis has
already begun to yield positive results. As of May 20, 1996, the
Special Growth Portfolio has returned 11.7% in 1996, ahead of the
S&P 500.
In closing, while we are pleased with the results of the past
year, our focus continues to be on the future, and on identifying
the best investment opportunities for the coming years. We thank
you for your continued confidence in GIT Investment Funds.
Sincerely,
A. Bruce Cleveland
President
<PAGE>
Management's Discussion of Fund Performance (continued)
Comparison of Changes in the Value of a $10,000 Investment
and the S&P 500
Depicted herein is a graphic presentation consisting of two
charts comparing the values of a $10,000 investment made to
each of the portfolios against the S&P 500. Through the use of
line graphs, the following information is presented:
Value (as of March 31, 1996) of a $10,000 investment made on
March 31, 1986 in the Special Growth Portfolio: $23,826.
Average Annual Total Returns:
1 year - 21.22 percent
5 year - 9.59 percent
10 year - 9.07 percent.
Value (as of March 31, 1996) of a $10,000 investment made on
March 31, 1986 in the Select Growth Portfolio: $25,434.
Average Annual Total Returns:
1 year - 31.63 percent
5 year - 9.01 percent
10 year - 9.79 percent.
Value (as of March 31, 1996) of a $10,000 investment made on
March 31, 1986 in the Equity Income Portfolio: $24,415.
Average Annual Total Returns:
1 year - 27.56 percent
5 year - 10.23 percent
10 year - 9.34 percent.
Corresponding value of the S&P 500: $36,814
Past performance is not predictive of future performance.
<PAGE>
Report of Ernst & Young LLP, Independent Auditors
To the Board of Trustees and Shareholders, Special Growth
Portfolio, Select Growth Portfolio and Equity Income Portfolio,
GIT Equity Trust:
We have audited the accompanying statements of assets and
liabilities, including the portfolios of investments, of GIT
Equity Trust (comprising, respectively, the Special Growth,
Select Growth and Equity Income Portfolios) as of March 31, 1996,
and the related statements of operations for the year then ended,
the statements of changes in net assets for each of the two years
in the period then ended, and the financial highlights for each
of the five years in the period then ended. These financial
statements and financial highlights are the responsibility of the
Trust's management. Our responsibility is to express an opinion
on these financial statements and financial highlights based on
our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements and financial highlights are free of
material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements. Our procedures included confirmation of
securities owned as of March 31, 1996, by correspondence with the
custodian and brokers. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the
financial position of each of the respective portfolios
constituting GIT Equity Trust at March 31, 1996, the results of
their operations for the year then ended, the changes in their
net assets for each of the two years in the period then ended,
and the financial highlights for each of the five years in the
period then ended, in conformity with generally accepted
accounting principles.
Ernst & Young LLP
Washington, DC
May 3, 1996
<PAGE>
Special Growth Portfolio
Portfolio of Investments - March 31, 1996
Number
Company of
Description Shares Value
COMMON STOCKS AND EQUIVALENTS:
94.1% of Net Assets
BUILDING AND CONSTRUCTION: 13.4%
*Central Sprinkler
Corporation Manufactures fire
sprinklers for
commercial,
industrial and
residential
properties 30,000 $ 907,500
*Koala Corporation Manufactures and
markets child
protection products 22,000 401,500
McGrath Rentcorp Leases temporary
modular offices 50,000 981,250
COMPUTER HARDWARE: 4.2%
*Adaptec, Inc. Supplies high-performance
microcomputer
input/output
products 15,000 725,625
COMPUTER SOFTWARE: 2.3%
*Datastream Systems,
Inc. Develops, markets,
sells and supports
plant-maintenance
software 10,000 221,250
*IKOS Systems, Inc. Supplies high-performance,
mixed-level hardware
and software 10,000 167,500
DATA SERVICES: 18.1%
American List
Corporation Compiles computerized
lists of high school
and college students 46,400 1,461,600
*CUC International, Inc. Operates database programs
that provide marketing
services to members 7,000 204,750
*Data Research
Associates, Inc. Provides libraries with
automation systems
and electronic networking
services 28,000 577,500
Fair Issac & Company,
Inc. Develops statistical tools
and scoring
algorithms 20,000 612,500
*IPC Information
Systems, Inc. Designs, manufactures,
markets and services
telecommunications
systems 10,000 231,250
FINANCIAL SERVICES: 9.2%
Advanta Corporation Originates credit cards
and mortgages 17,000 881,875
Green Tree Financial
Corporation Originates conditional
sales contracts for
manufactured homes 20,000 687,500
GAMING EQUIPMENT: 1.0%
*Paul-Son Gaming
Corporation Manufactures gaming
tables and related
supplies 20,000 178,750
HEALTHCARE INFORMATION SYSTEMS: 0.8%
*Physician Computer
Network, Inc. Publishes and licenses
medical practice management
software products 10,000 137,500
INSURANCE: 11.5%
Amwest Insurance Group,
Inc. Underwrites surety
bonds 45,000 635,625
Frontier Insurance
Group, Inc. Underwrites general
liability, workers'
compensation and property
insurance 25,000 765,625
*20th Century Industries Markets auto insurance on
the west coast 33,900 567,825
MEDICAL SUPPLIES: 4.8%
*Utah Medical Products,
Inc. Manufactures disposable
medical products 49,000 826,875
See Notes to Portfolios of Investments
<PAGE>
Special Growth Portfolio
Portfolio of Investments - March 31, 1996 (continued)
Number
Company of
Description Shares Value
OFFICE PRODUCTS: 2.7%
Newell Company Manufactures and markets
consumer hardware and
housewares 17,000 $454,750
OILFIELD EQUIPMENT: 2.9%
*Input/Output, Inc. Designs and manufactures
3-dimensional seismic
data acquisition
systems 16,200 502,200
REAL ESTATE: 5.0%
BRE Properties, Inc. Real estate investment
trust 11,400 404,700
Western Investment Real
Estate Trust West coast real estate
investment trust 40,000 445,000
RETAIL AND SPECIAL LINES: 1.0%
*Leslie's Poolmart Retails swimming pool
supplies and related
products 12,500 167,188
SEMICONDUCTORS: 8.0%
*Credence Systems
Corporation Designs, manufactures,
sells and services
automatic test
equipment 10,000 168,750
*Electroglas, Inc. Develops, produces
and services automatic
wafer probing
equipment 5,000 75,937
*KLA Instruments
Corporation Manufactures yield management
and process monitoring
systems 20,000 451,250
*Lam Research
Corporation Manufactures, markets and
services semiconductor
processing equipment 13,000 453,375
*Oak Technology, Inc. Designs, develops and markets
multimedia semiconductor and
related software 10,000 211,250
TELECOMMUNICATIONS: 6.3%
*IFR Systems, Inc. Manufactures communications
test equipment 80,000 1,080,000
TOURISM: 2.9%
Carnival Corporation,
Class A Operates cruise
ships 18,000 495,000
TOTAL COMMON STOCKS
AND EQUIVALENTS (Cost $10,998,930)= 16,083,200
REPURCHASE AGREEMENT: 4.5% of Net Assets
With Donaldson, Lufkin & Jenrette Securities
Corporation issued 3/29/96 at 5.3%, due 4/1/96,
collateralized by $790,831 in Federal National
Mortgage Association Medium-Term Notes due 3/19/03.
Total proceeds at maturity are $773,341.
(Cost $773,000) 773,000
TOTAL INVESTMENTS (Cost $11,771,930)+ $16,856,200
See Notes to Portfolios of Investments.
<PAGE>
Select Growth Portfolio
Portfolio of Investments - March 31, 1996
Number
of
Shares Value
COMMON STOCKS: 93.3% of Net Assets
AUTOMOTIVE: 3.5%
Borg-Warner Automotive, Inc. 2,500 $83,125
Chrysler Corporation 2,000 124,500
General Motors Corporation 1,000 53,250
BANKING AND FINANCIAL SERVICES: 23.7%
American Express Company 3,000 148,125
Chemical Banking Corporation 2,500 176,250
Citicorp 1,200 96,000
Countrywide Credit Industries, Inc. 5,000 110,625
Dean Witter Discover and Company 3,500 200,375
Federal National Mortgage Association 4,000 127,500
First USA, Inc. 4,000 226,500
Green Tree Financial Corporation 7,400 254,375
Merrill Lynch & Company, Inc. 1,500 91,125
Norwest Corporation 3,000 110,250
Travelers Group, Inc. 3,200 211,200
BEVERAGES - SOFT DRINKS: 1.7%
PepsiCo, Inc. 2,000 126,500
BUSINESS SERVICES: 2.7%
*American Business Information, Inc. 5,000 81,875
Olsten Corporation 3,750 120,937
CAPITAL GOODS: 3.4%
Case Corporation 1,000 50,875
Eaton Corporation 800 48,200
General Electric Company 2,000 155,750
CHEMICALS: 2.2%
Chemed Corporation 3,000 111,375
Rexene Corporation 4,000 53,500
COMPUTERS - HARDWARE AND PERIPHERALS: 8.7%
*Adaptec, Inc. 3,700 178,987
*Cisco Systems, Inc. 4,000 185,750
*Sun Microsystems, Inc. 2,000 87,625
*3Com Corporation 1,500 59,719
*U.S. Robotics Corporation 1,000 129,750
COMPUTERS - SOFTWARE AND SERVICES: 8.7%
*Applix, Inc. 2,000 70,500
*Business Objects S.A., ADR 1,000 85,500
Computer Associates International,
Inc. 2,000 143,250
Reynolds & Reynolds Company 3,500 143,500
*Sungard Data Systems, Inc. 6,000 203,250
CONSUMER PRODUCTS: 1.4%
Procter & Gamble Company 1,200 101,700
ELECTRONICS - GENERAL: 1.4%
*Teradyne, Inc. 6,000 100,500
Number
of
Shares Value
ELECTRONICS - SEMICONDUCTORS: 9.2%
*Applied Materials, Inc. 4,800 $167,100
Intel Corporation 2,000 113,625
*KLA Instruments Corporation 7,000 157,937
*Lam Research Corporation 4,000 139,500
*Ultratech Stepper, Inc. 6,000 105,000
FOREST PRODUCTS - PAPER: 1.1%
Stone Container Corporation 6,000 84,000
HOUSING AND CONSTRUCTION: 8.7%
Clayton Homes, Inc. 8,812 183,951
Continental Homes Holding Corporation 6,500 149,500
Oakwood Homes Corporation 4,200 208,425
Shelter Components Corporation 7,000 98,000
INSURANCE: 1.0%
American International Group, Inc. 750 70,219
MEDICAL SUPPLIES AND SERVICES: 4.0%
ADAC Laboratories 6,000 105,000
*Safeskin Corporation 7,000 188,125
METALS AND MINING: 1.4%
Phelps Dodge Corporation 1,500 102,937
RAILROADS: 0.9%
Union Pacific Corporation 1,000 68,625
RESTAURANTS: 1.9%
McDonald's Corporation 3,000 144,000
RETAIL-SPECIAL LINES: 3.6%
Callaway Golf Company 2,500 66,875
*General Nutrition Companies, Inc. 8,000 201,500
TELECOMMUNICATIONS: 3.9%
AT&T Corporation 1,000 61,250
*GST Telecommunications, Inc. 3,000 25,313
*Intervoice, Inc. 5,000 143,750
MCI Communications Corporation 1,900 57,594
TOTAL COMMON STOCKS
(Cost $5,298,887) 6,894,469
REPURCHASE AGREEMENT: 8.6% of Net Assets
With Donaldson, Lufkin & Jenrette Securities
Corporation issued 3/29/96 at 5.3%, due 4/1/96,
collateralized by $652,717 in Federal National
Mortgage Association Medium-Term Notes due 3/19/03.
Total proceeds at maturity are $638,282.
(Cost $638,000) 638,000
TOTAL INVESTMENTS
(Cost $5,936,887)+ $7,532,469
See Notes to Portfolios of Investments.
<PAGE>
Equity Income Portfolio
Portfolio of Investments - March 31, 1996
Number
of
Shares Value
COMMON STOCKS AND EQUIVALENTS:
92.8% of Net Assets
AUTOMOTIVE: 0.8%
Ford Motor Company 1,000 $34,375
BANKING AND FINANCIAL SERVICES: 13.5%
Bank of New York Company, Inc. 2,000 103,000
Crestar Financial Corporation 1,000 57,500
Federal Home Loan Mortgage Corporation 1,500 127,875
J.P. Morgan & Company, Inc. 1,800 149,400
NationsBank Corporation 2,000 160,250
CHEMICALS: 9.0%
Chemed Corporation 2,500 92,813
Monsanto Company 1,200 184,200
WD-40 Company 2,600 124,475
ELECTRONICS: 2.0%
Diebold, Inc. 2,250 89,156
HOUSEHOLD PRODUCTS: 3.3%
Clorox Company 1,700 146,413
INSURANCE: 4.3%
Cigna Corporation 700 79,975
St. Paul Companies, Inc. 2,000 111,000
LEASING: 2.4%
GATX Corporation 2,300 105,800
MANUFACTURING: 2.9%
Minnesota Mining & Manufacturing
Company 2,000 129,750
METALS - DIVERSIFIED: 2.3%
Phelps Dodge Corporation 1,500 102,937
NATURAL GAS: 6.0%
Tenneco, Inc. 2,000 111,750
Williams Companies, Inc. 3,046 153,442
OFFICE AND BUSINESS EQUIPMENT: 2.2%
Pitney-Bowes, Inc. 2,000 98,000
PETROLEUM: 6.4%
Amoco Corporation 2,000 144,500
Royal Dutch Petroleum Company 1,000 141,250
PHARMACEUTICALS: 4.6%
American Home Products Corporation 1,000 108,375
Pfizer, Inc. 1,400 93,800
PUBLISHING AND PRINTING: 1.4%
Dun & Bradstreet Corporation 1,000 60,625
REAL ESTATE: 2.9%
Post Properties, Inc. 1,500 48,750
Sun Communities, Inc. 3,000 81,750
Number
of
Shares Value
TELECOMMUNICATION: 13.3%
Ameritech Corporation 1,800 $98,100
Bell Atlantic Corporation 1,000 61,750
Pacific Telesis Group 2,000 55,250
Royal PTT Nederland NV, ADR 1,000 39,500
SBC Communications, Inc. 2,500 131,562
Sprint Corporation 2,000 76,000
Telecom Corporation of New Zealand
Limited, ADR 1,600 114,600
*360 Communications Company 666 15,901
TRANSPORTATION: 3.6%
CSX Corporation 2,000 91,250
Norfolk Southern Corporation 800 68,000
UTILITIES - ELECTRIC: 5.6%
Baltimore Gas and Electric Company 4,600 127,075
Central & South West Corporation 1,500 42,750
Scana Corporation 2,800 77,000
UTILITIES - GAS: 6.3%
Brooklyn Union Gas Company 3,000 80,250
Northwest Natural Gas Company 3,500 112,000
Washington Gas Light Company 4,000 87,500
TOTAL COMMON STOCKS AND EQUIVALENTS
(Cost $2,745,651) 4,119,649
PREFERRED STOCKS: 1.2% of Net Assets
Chase Manhattan Corporation,
9.08% Series J 1,000 25,875
Sears, Roebuck and Company Depository
Shares, 8.88% Series 1ST 1,000 25,438
TOTAL PREFERRED STOCKS (Cost $50,000) 51,313
REPURCHASE AGREEMENT: 5.9% of Net Assets
With Donaldson, Lufkin & Jenrette Securities
Corporation issued 3/29/96 at 5.3%, due 4/1/96
collateralized by $268,044 in Federal National
Mortgage Association Medium-Term Notes due 3/19/03.
Total proceeds at maturity are $262,116.
(Cost $262,000) 262,000
TOTAL INVESTMENTS (Cost $3,057,651)+ $4,432,962
Notes to the Portfolios of Investments:
ADR American Depository Receipt
* Non-income producing
+ Aggregate cost for federal income tax purposes and net
unrealized appreciation of investments is as follows:
Special Select Equity
Growth Growth Income
Portfolio Portfolio Portfolio
Aggregate cost $11,771,930 $5,936,887 $3,057,651
Gross unrealized
appreciation $5,609,882 $1,906,083 $1,375,311
Gross unrealized
depreciation 525,612 310,501 0
Net unrealized
appreciation $5,084,270 $1,595,582 $1,375,311
The Notes to Financial Statements are an integral part of these
statements.
<PAGE>
Statements of Assets and Liabilities
March 31, 1996
Special Select Equity
Growth Growth Income
Portfolio Portfolio Portfolio
ASSETS
Investments, at cost $11,771,930 $5,936,887 $3,057,651
Investments, at value
(Notes 1 and 2)
Investment securities $16,083,200 $6,894,469 $4,170,962
Repurchase agreement 773,000 638,000 262,000
Total investments 16,856,200 7,532,469 4,432,962
Cash 598 786 714
Receivables
Investment securities sold 523,125 -- --
Share subscriptions 50 50 4,000
Dividends and interest 6,542 6,145 11,077
Other assets 71 9 28
Total assets 17,386,586 7,539,459 4,448,781
LIABILITIES
Payables
Investment securities
purchased -- 142,125 --
Dividends 3 -- --
Capital shares redeemed 295,268 2,321 5,243
Shares reserved for
subscription 50 50 4,000
Other liabilities 261 6,297 22
Total liabilities 295,582 150,793 9,265
NET ASSETS (Note 5) $17,091,004 $7,388,666 $4,439,516
CAPITAL SHARES OUTSTANDING 834,197 336,008 229,674
NET ASSET VALUE PER SHARE $20.488 $21.990 $19.330
Statements of Operations
For the Year Ended March 31, 1996
Special Select Equity
Growth Growth Income
Portfolio Portfolio Portfolio
INVESTMENT INCOME (Note 1)
Interest income $196,272 $32,401 $15,225
Dividend income (net of
foreign tax of $0, $238,
and $2,075, respectively) 379,969 57,839 146,764
Total investment income 576,241 90,240 161,989
EXPENSES (Notes 3 and 4)
Investment advisory fee 219,111 44,041 29,875
Custodian fees 10,028 2,659 1,969
Professional fees 22,933 8,037 6,879
Salaries and related expenses 94,597 25,150 18,645
Securities registration
and blue sky expenses 7,913 6,565 5,757
Telephone expense 5,737 1,535 1,135
Data processing and office
equipment expenses 30,408 9,908 7,232
Office and miscellaneous
expenses 19,161 6,801 4,689
Depreciation and amortization 2,706 711 528
Total expenses 412,594 105,407 76,709
NET INVESTMENT INCOME (LOSS) 163,647 (15,167) 85,280
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS
Net realized gain on
investments 7,936,809 370,742 26,354
Net unrealized appreciation
(depreciation) of
investments (2,310,916) 1,182,208 851,075
NET GAIN ON INVESTMENTS 5,625,893 1,552,950 877,429
TOTAL INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $5,789,540 $1,537,783 $962,709
The Notes to Financial Statements are an integral part of these
statements.
<PAGE>
Statements of Changes in Net Assets
For the Years Ended March 31
Special Growth Portfolio
1996 1995
INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS
Net investment income (loss) $163,647 $266,540
Net realized gain on investments 7,936,809 2,872,581
Net unrealized appreciation
(depreciation) of investments (2,310,916) (2,105,062)
Total increase in net assets
resulting from operations 5,789,540 1,034,059
NET EQUALIZATION CREDIT (Note 1) -- --
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income (148,514) (266,540)
From net capital gains (1,629,234) (5,447,258)
CAPITAL SHARE TRANSACTIONS (Note 7) (18,510,504) 1,337,943
TOTAL INCREASE (DECREASE)IN NET ASSETS (14,498,712) (3,341,796)
NET ASSETS
Beginning of year 31,589,716 34,931,512
End of year $17,091,004 $31,589,716
UNDISTRIBUTED NET INVESTMENT INCOME
INCLUDED IN NET ASSETS AT THE END
OF YEAR (Note 5) $15,132 --
Select Growth Portfolio
1996 1995
INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS
Net investment income (loss $(15,167) $(8,924)
Net realized gain on investments 370,742 445,885
Net unrealized appreciation
(depreciation) of investments 1,182,208 (216,078)
Total increase in net assets
resulting from operations 1,537,783 220,883
NET EQUALIZATION
CREDIT (Note 1) -- --
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income -- --
From net capital gains -- (455,760)
CAPITAL SHARE TRANSACTIONS (Note 7) 1,102,287 223,748
TOTAL INCREASE (DECREASE) IN NET ASSETS 2,640,070 (11,129)
NET ASSETS
Beginning of year 4,748,596 4,759,725
End of year $7,388,666 $4,748,596
UNDISTRIBUTED NET INVESTMENT INCOME
INCLUDED IN NET ASSETS AT THE END
OF YEAR (Note 5) -- --
Equity Income Portfolio
1996 1995
INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS
Net investment income (loss) $85,280 $88,298
Net realized gain on investments 26,354 65,516
Net unrealized appreciation (depreciation)
of investments 851,075 47,919
Total increase in net assets resulting
from operations 962,709 201,733
NET EQUALIZATION
CREDIT (Note 1) 133 (427)
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income (66,947) (111,973)
From net capital gains -- (170,493)
CAPITAL SHARE TRANSACTIONS (Note 7) 131,112 (130,962)
TOTAL INCREASE (DECREASE) IN NET ASSETS 1,027,007 (212,122)
NET ASSETS
Beginning of year 3,412,509 3,624,631
End of year $4,439,516 $3,412,509
UNDISTRIBUTED NET INVESTMENT INCOME
INCLUDED IN NET ASSETS AT THE END
OF YEAR (Note 5) $18,466 --
The Notes to Financial Statements are an integral part of these
statements.
<PAGE>
Financial Highlights
Selected data for a share outstanding throughout each year:
1992 1993 1994 1995 1996
Special Growth Portfolio
Net asset value
beginning of
year $18.047 $19.099 $19.970 $21.110 $18.092
Net investment
income $ 0.175 $ 0.092 $ 0.171 $ 0.152 $ 0.133
Net realized &
unrealized
gains
(losses) on
securities $ 1.245 $ 1.031 $ 2.125 $ 0.190 $ 3.621
Total from
investment
operations $ 1.420 $ 1.123 $ 2.296 $ 0.342 $ 3.754
Distributions
from net
investment
income $(0.159) $(0.121)$(0.170)$0.152) $(0.115)
Distributions
from capital
gains $(0.209) $(0.131)$(0.986)$(3.208) $(1.243)
Total
distribu-
tions $(0.368) $(0.252)$(1.156)$(3.360) $(1.358)
Net asset
value end
of year $19.099 $19.970 $21.110 $18.092 $20.488
Total return 7.92% 5.90% 11.57% 2.27% 21.22%
Net assets end
of year
(thousands)$58,867 $38,911 $34,931 $31,590 $17,091
Ratio of
expenses
to average
net assets 1.39% 1.35% 1.45% 1.30% 1.41%
Ratio of net
investment
income to
average net
assets 0.95% 0.44% 0.75% 0.76% 0.56%
Portfolio
turnover 24% 13% 7% 4% 21%
Select Growth Portfolio
Net asset value
beginning of
year $18.884 $19.670 $18.486 $17.706 $16.706
Net investment
income $ 0.268 $ 0.137 $(0.053) $(0.032) $(0.045)
Net realized &
unrealized
gains
(losses) on
securities $ 0.736 $ 1.410 $(0.318) $ 0.741 $ 5.329
Total from
investment
operations $1.004 $ 1.547 $(0.371) $0.709 $5.284
Distributions
from net
investment
income $(0.218) $(0.175) $(0.007) -- --
Distributions
from capital
gains -- $(2.556) $(0.402) $(1.709) --
Total
distribu-
tions $(0.218) $(2.731) $(0.409) $(1.709) --
Net asset
value end
of year $19.670 $18.486 $17.706 $16.706 $21.990
Total return 5.28% 8.45% (2.05)% 4.55% 31.63%
Net assets end
of year
(thousands)$5,483 $5,742 $4,760 $4,749 $7,389
Ratio of
expenses
to average
net assets 2.00% 2.00% 2.02% 1.90% 1.79%
Ratio of net
investment
income to
average net
assets 1.44% 0.70% (0.27)% (0.19)% (0.26)%
Portfolio
turnover 60% 125% 48% 82% 56%
Equity Income Portfolio
Net asset value
beginning of
year $14.805 $15.117 $16.814 $15.809 $15.411
Net investment
income $ 0.499 $ 0.416 $ 0.382 $ 0.504 $ 0.373
Net realized &
unrealized
gains
(losses) on
securities $ 0.203 $ 1.961 $(0.543) $ 0.364 $ 3.839
Total from
investment
operations $ 0.702 $ 2.377 $(0.161) $ 0.868 $ 4.212
Distributions
from net
investment
income $(0.390) $(0.449) $(0.352) $(0.504)$(0.293)
Distributions
from capital
gains -- $(0.231) $(0.492) $(0.762) --
Total
distribu-
tions $(0.390) $(0.680) $(0.844) $(1.266) $(0.293)
Net asset
value end
of year $15.117 $16.814 $15.809 $15.411 $19.330
Total return 4.74% 16.11% (1.08)% 6.04% 7.56%
Net assets end
of year
(thousands)$2,838 $3,315 $3,625 $3,413 $4,440
Ratio of
expenses
to average
net assets 2.15% 2.19% 2.17% 2.07% 1.92%
Ratio of net
investment
income to
average net
assets 3.47% 2.58% 2.27% 2.53% 2.13%
Portfolio
turnover 32% 55% 34% 29% 7%
The Notes to Financial Statements are an integral part of
these statements.
GIT Equity Trust
Notes to Financial Statements
March 31, 1996
1. Summary of Significant Accounting Policies. GIT Equity Trust
(the "Trust") is registered with the Securities and Exchange
Commission under the Investment Company Act of 1940 as an open-
end, diversified investment management company. The Trust offers
shares in four separate portfolios which invest in differing
securities . The Special Growth Portfolio is invested primarily
in smaller companies that may offer rapid growth potential. The
Select Growth Portfolio is invested primarily in established
companies that may be undervalued or may offer good management
and significant growth potential. The Equity Income Portfolio is
invested primarily in relatively stable, high-yielding
securities. The Worldwide Growth Portfolio invests primarily in
foreign equity securities emphasizing companies that are likely
to benefit from the growth of the world's smaller and emerging
capital markets. The Worldwide Growth Portfolio issues separate
semi-annual and annual financial reports to shareholders.
Securities Valuation: Securities traded on a national
securities exchange are valued at their closing sale price,
if
<PAGE>
Notes to Financial Statements (continued)
available, and if not available such securities are valued at the
mean between their bid and asked prices. Other securities, for
which current market quotations are readily available, are valued
at the mean between their bid and asked prices. Securities for
which current market quotations are not readily available are
valued at their fair value as determined in good faith by the
Trustees. Investment transactions are recorded on the trade date.
The cost of investments sold is determined on the identified cost
basis for financial statement and federal income tax purposes.
Repurchase agreements are valued at amortized cost, which
approximates market value.
Investment Income: Interest and other income (if any) is accrued
as earned. Dividend income is recorded on the ex-dividend date.
Dividends: Substantially all of the Trust's accumulated net
investment income, if any, determined as gross investment income
less accrued expenses, is declared as a regular dividend and
distributed to shareholders at least twice annually at calendar
and fiscal year ends. The Trust intends to declare and pay
regular Equity Income Portfolio dividends quarterly. Capital
gains distributions reflecting net realized gains of each
portfolio (if any) are declared and paid twice annually at
calendar and fiscal year end. Additional distributions will be
made if necessary.
Income Tax: In accordance with the provisions of Subchapter M of
the Internal Revenue Code applicable to regulated investment
companies, all of the taxable income of each portfolio is
distributed to its shareholders, and therefore no federal income
tax provision is required. As of March 31, 1996, the Equity
Income Portfolio had available for federal income tax purposes
unused capital loss carryovers of $26,296 expiring March 31,
2004.
Equalization: The Trust uses an accounting practice known as
equalization for the Equity Income Portfolio, by which a portion
of the proceeds from sales and costs of redemption of capital
shares, equivalent on a per share basis to the amount of
undistributed net investment income on the date of the
transaction, is credited or charged to undistributed net
investment income. As a result, undistributed net investment
income per share is unaffected by sales or redemptions of capital
shares.
Share Subscriptions: Shares purchased by check or otherwise not
paid for in immediately available funds are accounted for as
share subscriptions receivable and shares reserved for
subscriptions.
Use of Estimates: The preparation of the financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and reported amounts
of increases and decreases in net assets from operations during
the reporting period. Actual results could differ from those
estimates.
2. Investments in Repurchase Agreements. When the Trust
purchases securities under agreements to resell, the securities
are held for safekeeping by the Trust's custodian bank as
collateral. Should the market value of the securities purchased
under such an agreement decrease below the principal amount to be
received at the termination of the agreement plus accrued
interest, the counterparty is required to place an equivalent
amount of additional securities in safekeeping with the Trust's
custodian bank. Repurchase agreements may be terminated within
seven days. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the Trust, along with other
registered investment companies having Advisory and Services
Agreements with Bankers Finance Investment Management Corp.
("BFIMC"), transfers uninvested cash balances into a joint
trading account. The aggregate balance in this joint trading
account is invested in one or more consolidated repurchase
agreements whose underlying securities are U.S. Treasury or
federal agency obligations.
3. Investment Advisory Fees and Other Transactions with
Affiliates. The Investment Adviser to the Trust, BFIMC, earns an
advisory fee equal to 0.75% per annum of the average net assets
of each of the Special Growth, Select Growth and Equity Income
Portfolios; the fees accrue daily and are payable monthly. BFIMC
had retained Cramblit & Carney, Incorporated, investment
counselors, as a sub-adviser with respect to the Special Growth
Portfolio. For the
<PAGE>
Notes to Financial Statements (continued)
year ended March 31, 1996, the sub-adviser received fees from
BFIMC of $90,238. The sub-advisory agreement was terminated as of
the close of business on December 31, 1995. In order to meet the
securities registration requirements of certain states, BFIMC has
undertaken to reimburse the Trust by the amount, if any, by which
the total expenses of the Trust (less certain excepted expenses)
exceed the applicable expense limitation in any state or other
jurisdiction in which the Trust is subject to regulation during
the fiscal year. The Trust believes the current applicable
expense limitation is 2.5% per annum of the average net assets
of each portfolio up to $30 million, 2% of any amount of such
net assets exceeding $30 million but not exceeding $100 million,
and 1.5% per annum of such amount in excess of $100 million.
BFIMC is responsible for the fees and expenses of trustees who
are affiliated with BFIMC, the rent expense of the Trust's
principal executive office premises and certain promotional
expenses. For the year ended March 31, 1996, outside trustee fees
were $3,250 for each portfolio. At March 31, 1996, certain
officers, trustees, companies and individuals affiliated with the
Trust have investments in the Trust aggregating 1.2% of the
Special Growth Portfolio shares outstanding, 0.9% of the Select
Growth Portfolio shares outstanding and 0.2% of the Equity Income
Portfolio shares outstanding.
4. Other Expenses. With the exception of certain expenses of the
Trust payable by it directly, all operational support services
are provided to the Trust under a services agreement between the
Trust and BFIMC, pursuant to which such services are to be
provided for amounts not exceeding the cost to BFIMC of the
support provided. Common expenses incurred by the Trust are
allocated among the portfolios based on the ratio of net assets
of each portfolio to the combined net assets. For the year
ended March 31, 1996, operating expenses of $193,483 for the
Special Growth Portfolio, $61,366 for the Select Growth
Portfolio, and $46,834 for the Equity Income Portfolio have been
reimbursed to BFIMC under the Services Agreement. As of March
31, 1996, expenses of $1,277 for the Special Growth Portfolio,
$10,817 for the Select Growth Portfolio, and $38,046 for the
Equity Income Portfolio have been incurred by BFIMC on behalf of
the portfolios, the billings of which have been deferred.
5. Net Assets. At March 31, 1996, net assets included the
following:
Special Growth Select Growth Equity Income
Portfolio Portfolio Portfolio
Net paid in capital
on shares of
beneficial
interest $5,684,027 $5,433,320 $3,072,035
Undistributed net
investment income 15,133 -- 18,466
Accumulated net
realized gains
(losses) 6,307,575 359,764 (26,296)
Net unrealized
appreciation of
investments 5,084,270 1,595,582 1,375,311
Total net assets $17,091,004 $7,388,666 $4,439,516
The Select Growth Portfolio reclassified $15,167 from accumulated
net investment losses to paid in capital as a result of permanent
book and tax basis differences. This reclassification had no
impact on net asset value.
6. Investment Transactions. Purchases and sales of securities
other than short-term securities for the year ended March 31,
1996, were as follows:
Special Growth Select Growth Equity Income
Portfolio Portfolio Portfolio
Purchases $5,299,214 $3,999,942 $322,703
Sales 21,708,608 3,052,028 242,191
<PAGE>
Notes to Financial Statements (continued)
7. Capital Share Transactions. An unlimited number of capital
shares, without par value, are authorized. Transactions in
capital shares for the years ended March 31 were as follows:
Special Growth Portfolio
1996 1995
In Dollars
Shares sold $63,271,505 $164,683,514
Shares issued in reinvestment
of dividends 1,559,202 5,232,976
Total shares issued 64,830,707 169,916,490
Shares redeemed (83,341,211) (168,578,547)
Net increase (decrease) $(18,510,504) $1,337,943
In Shares
Shares sold 3,260,611 8,581,112
Shares issued in reinvestment
of dividends 80,463 284,944
Total shares issued 3,341,074 8,866,056
Shares redeemed (4,252,958) (8,774,708)
Net increase (decrease) (911,884) 91,348
Special Growth Portfolio
1996 1995
In Dollars
Shares sold $2,853,388 $1,165,448
Shares issued in reinvestment
of dividends -- 443,606
Total shares issued 2,853,388 1,609,054
Shares redeemed (1,751,101) (1,385,306)
Net increase (decrease) $1,102,287 $223,748
In Shares
Shares sold 141,259 68,987
Shares issued in reinvestment
of dividends -- 28,074
Total shares issued 141,259 97,061
Shares redeemed (89,489) (81,565)
Net increase (decrease) 51,770 15,496
Special Growth Portfolio
1996 1995
In Dollars
Shares sold $904,364 $297,518
Shares issued in reinvestment
of dividends 59,319 269,709
Total shares issued 963,683 567,227
Shares redeemed (832,571) (698,189)
Net increase (decrease) $131,112 $(130,962)
In Shares
Shares sold 52,804 19,179
Shares issued in reinvestment
of dividends 3,417 18,114
Total shares issued 56,221 37,293
Shares redeemed (47,985) (45,132)
Net increase (decrease) 8,236 (7,839)
GIT Equity Trust
Special Tax Information (Unaudited)
March 31, 1996
Corporate shareholders should note that the percentages of
ordinary dividend income resulting from the fiscal year ended
March 31, 1996, that qualify for the corporate dividends-received
deduction are as follows:
Select Growth Portfolio 100%
Special Growth Portfolio 35%
Equity Income Portfolio 100%
Pursuant to Section 852 of the Internal Revenue Code, the Special
Growth and Select Growth Portfolios designate $7,345,286 and
$317,324, respectively, as capital gain dividends for the fiscal
year ended March 31, 1996.
<PAGE>
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<PAGE>
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<PAGE>
Telephone Numbers
Shareholder Service
Washington, DC area: 703/528-6500
Toll-free nationwide: 800/336-3063
24-Hour ACCESS
Toll-free nationwide: 800/448-4422
The GIT Family of Mutual Funds
GIT Equity Trust
Special Growth Portfolio
Select Growth Portfolio
Equity Income Portfolio
Worldwide Growth Portfolio
GIT Income Trust
Maximum Income Portfolio
Government Portfolio
GIT Tax-Free Trust
Arizona Portfolio
Maryland Portfolio
Missouri Portfolio
Virginia Portfolio
National Portfolio
Money Market Portfolio
Government Investors Trust
For more complete information on any GIT Investment Fund,
including charges and expenses, request a prospectus by
calling the numbers above. Read it carefully before you
invest or send money. This prospectus does not constitute an
offering by the distributor in any jurisdiction in which such
offering may not be lawfully made.
GIT
GIT Investment Funds
1655 Fort Myer Drive
Arlington Virginia 22209
http://www.gitfunds.com
<PAGE>
GIT Equity Trust
Worldwide Growth Portfolio
Annual Report
March 31, 1996
Management's Discussion of Fund Performance
May 10, 1996
Dear Shareholder:
Emerging market funds have found a more favorable investment
climate during the past twelve months, as evidenced by the
one year total return of 16.88% achieved by our Worldwide
Growth Portfolio. When the fiscal year began in April 1995,
emerging markets equities were just beginning to rebound
from the crisis triggered by the Mexican currency
devaluation in December 1994. During the year that followed,
the majority of the emerging markets continued a gradual
recovery, with periodic short setbacks.
Some of the most impressive turnarounds were achieved in
Asia, after major declines in the prior year. During the
year ended March 31, Hong Kong's Heng Seng Index returned
32.2% and Malaysia's KLSE Composite returned 18.5%. These
rallies were partly in response to declining interest rates
in the U.S. U.S. rates affect the Hong Kong market because
Hong Kong's currency is pegged to the U.S. dollar.
Furthermore, Malaysia's current account deficit makes its
domestic economy sensitive to international interest rates.
Since U.S. interest rates have risen considerably since
January, we have taken a more skeptical view of Hong Kong
and Malaysia, and reduced our holdings there.
Elsewhere in the Pacific region, rapid economic growth in
Thailand and Indonesia has led to a tightening of monetary
policy. While we are cautious on these markets due to the
restrictive stance by their respective central banks, we
remain enthusiastic about infrastructure-related companies
which continue to grow their earnings at double digit rates.
We are also enthusiastic about the prospects for South
Korea. Stock valuations there are among the lowest in the
region, while growth prospects are among the best. An
overweight position in South Korea hurt fund performance in
recent months, but we believe that our investments there
represent outstanding potential for long-term capital
appreciation.
In contrast to market rallies reflecting Asia's high growth
prospects, the recovery in Latin American equities has been
more tentative. In 1995, the Mexican economy experienced one
of the worst economic contractions of the 20th century, and
many companies with high levels of debt saw their share
prices collapse. At the same time, Mexican companies
involved in exports have been able to take advantage of a
weak currency to bolster sales, and we have focused on these
stocks to limit the fund's exposure to currency risk and a
sluggish domestic economy.
Stock market conditions in the rest of Latin America
continue to improve gradually. Stocks that have performed
particularly well over the past year include CPT, the
Peruvian national telecommunications concern, and Petrobras,
Brazil's state owned oil corporation. Falling behind in the
region have been smaller, less liquid private sector stocks,
as investors in recent months have preferred the more
liquid, well capitalized issues.
In recent months, we have diversified the portfolio across
more regions and countries, resulting in greater exposure to
Eastern Europe and the Middle East. Companies in Eastern
European markets such as Poland and the Czech Republic have
shown accelerated earnings growth recently, while Greece and
Turkey offer equities at low earnings per share multiples.
<PAGE>
Management's Discussion of Fund Performance (continued)
We remain optimistic that this steady recovery in emerging
markets equities has laid a foundation for continued gains.
Valuations remain at attractive levels in many markets, and
many of the blue chip companies in Asia, Eastern Europe and
elsewhere continue to grow their profits at rates faster
than comparable companies in developed countries. While we
expect periodic setbacks, we believe that our investments
are well positioned for the future.
Sincerely,
A. Bruce Cleveland
President
Comparison of change in value of $10,000 investment in the
GIT Equity Trust Worldwide Growth Portfolio and the Morgan
Stanley European Australian and Far East Index
Depicted herein is a graphic presentation consisting of two
charts comparing the values of a $10,000 investment made to
the portfolios against the Morgan Stanley European
Australian Far East Index. Through the use of a line graph,
the following information is presented:
Value (as of March 31, 1996) of a $10,000 investment made on
March 31, 1986 in the Worldwide Growth Portfolio: $11,385.
Average Annual Total Returns:
1 year - 16.88 percent
Since inception (April 16, 1993) - 4.46 percent.
Corresponding value of the Morgan Stanley European
Australian Far East Index: $12,688
Past performance is not predictive of future performance
<PAGE>
Report of Ernst & Young LLP, Independent Auditors
To the Board of Trustees and Shareholders, Worldwide Growth
Portfolio, GIT Equity Trust:
We have audited the accompanying statement of assets and
liabilities, including the portfolio of investments, of
Worldwide Growth Portfolio (one of the portfolios comprising
GIT Equity Trust) as of March 31, 1996, and the related
statement of operations for the year then ended, the
statements of changes in net assets for each of the two
years in the period then ended, and the financial highlights
for each of the two years in the period then ended and for
the period from inception (April 16, 1993) to March 31,
1994. These financial statements and financial highlights
are the responsibility of the Portfolio's management. Our
responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that we
plan and perform the audit to obtain reasonable assurance
about whether the financial statements and financial
highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of
March 31, 1996, by correspondence with the custodian and
brokers. An audit also includes assessing the accounting
principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial
highlights referred to above present fairly, in all material
respects, the financial position of Worldwide Growth
Portfolio at March 31, 1996, the results of its operations
for the year then ended, the changes in its net assets for
each of the two years in the period then ended, and the
financial highlights for each of the two years in the period
then ended and for the period from inception (April 16,
1993) to March 31, 1994, in conformity with generally
accepted accounting principles.
Ernst & Young LLP
Washington, DC
May 3, 1996
<PAGE>
Worldwide Growth Portfolio
Portfolio of Investments - March 31, 1996
Number
of
Company Description Shares Value
COMMON STOCKS:
74.0% of Net Assets
ARGENTINA: 4.8%
Inversiones y Representacion
S.A., Class B Engineering and
construction 20,576 $57,613
Telecom Argentina
Stet-France
Telecom S.A., ADR Telecommunications 500 20,750
Telefonica de Argentina
S.A., Class B Telecommunications 10,600 27,242
YPF Sociedad Anonima,
ADR Oil and gas 2,200 44,275
COLOMBIA: 1.3%
Banco Ganadero S.A.,
ADR Banking and financial
services 2,000 39,500
CZECH REPUBLIC: 2.0%
*Komercni Banka A.S.,
GDR (144A) Banking and financial
services 2,500 62,300
GREECE: 3.2%
Alpha Credit Bank Banking and financial
services 800 57,463
Athens Medical Center
S.A. Hospital management 6,000 42,350
HONG KONG/CHINA: 8.8%
Consolidated Electric
Power Asia Ltd. Electric utility 20,000 33,101
First Pacific Company
Ltd. Diversified 84,774 120,573
Guangdong Investment
Limited Diversified 46,000 29,144
HSBC Holdings Plc. Banking and financial
services 6,000 89,992
HUNGARY: 2.7%
Egis Gyogyszergyar
Reszvnytarsas A.G. Pharmaceuticals 2,000 84,992
INDIA: 2.1%
*The India Fund, Inc. Multi-industry 3,000 30,375
*The Morgan Stanley
India Investment
Fund, Inc. Multi-industry 1,500 16,688
Sanghi Polyesters Ltd.,
GDR (144A) Textiles 6,000 18,475
INDONESIA: 3.7%
P.T. Indorama
Synthetics Textiles 15,000 51,348
P.T. Pabrik Kertas
Tjiwi Kimia Forest and paper
products 23,427 22,805
P.T. Semen Cibinong Building Materials 15,000 42,362
ISRAEL: 3.0%
ECI Telecommunications
Limited Telecommunications 2,500 55,938
Koor Industries Limited,
ADR Telecommunications 2,000 38,750
MALAYSIA: 6.6%
Malaysian Assurrance
Alliance Berhad Financial Services 13,500 84,308
O.Y.L. Industries
Berhad Real Estate 8,000 69,565
Westmont Industries
Berhad Diversified 24,000 51,225
See Notes to Portfolio of Investments
<PAGE>
Worldwide Growth Portfolio
Portfolio of Investments - March 31, 1996 (continued)
Number
of
Company Description Shares Value
MEXICO: 5.5%
Alfa, S.A. de C.V. Manufacturing 2,000 $26,551
*Cemex, S.A. de C.V.,
Series B Building materials 10,000 38,538
*Desc, S.A. de C.V.,
ADR Diversified 2,500 42,500
*Grupo Financiero
Banamex Accival
S.A. de C.V.,
Series L Banking and financial
services 10,920 21,187
Transportacion Maritima
Mexicana, S.A.
de C.V., ADR Marine transportation 5,300 43,725
PERU: 3.3%
Compania Goodyear
del Peru Rubber products 20,000 29,711
CPT Telefonica del
Peru S.A., B shares Telecommunications 36,112 72,040
POLAND: 4.7%
*Bank Gdanski S.A.,
GDR (144A) Banking and financial
services 3,500 38,500
Polifarb Wroclaw S.A. Building materials 10,000 41,747
Zaklady Przemyslu
Cukierniczego
Jutrzenka S.A. Food processing 4,000 67,105
PORTUGAL: 0.7%
Espirito Santo Financial
Holding S.A., ADR Banking and financial
services 2,000 24,000
SINGAPORE: 3.6%
Sunright Limited Electronics 80,000 84,659
Venture Manufacturing
Ltd. Electronics 8,000 28,409
SOUTH AFRICA: 4.6%
Barlow Limited, ADR Diversified 4,000 50,300
South African Breweries
Limited, ADR Brewery 1,000 31,750
The Southern Africa
Fund, Inc. Multi-industry 3,500 59,938
SOUTH KOREA: 3.8%
*Korea Housing Bank,
1st New Banking and financial
services 2,250 59,180
Samsung Electronics
Company Electronics 490 57,839
TAIWAN: 2.0%
*ROC Taiwan Fund Multi-industry 6,000 62,250
THAILAND: 2.2%
*Bangkok Bank Company
Ltd. Banking 5,800 52,352
Singer Thailand Public
Company Limited Home appliances 1,800 15,107
TURKEY: 3.8%
Erciyas Biracilik Ve
Malt Sanayii Brewery 96,000 58,231
Kerevitas Gida Foods 700,000 59,247
UNITED STATES: 0.4%
Capco Automotive
Products Corporation Automotive parts 1,000 12,375
See Notes to Portfolio of Investments
<PAGE>
Worldwide Growth Portfolio
Portfolio of Investments - March 31, 1996 (continued)
Number
of
Company Description Shares Value
VENEZUELA: 1.2%
C.A. La Electricidad
de Caracas Electric utility 56,023 $38,416
TOTAL COMMON STOCKS (Cost $2,331,826) 2,306,791
PREFERRED STOCKS: 13.0% of Net Assets
BRAZIL: 10.8%
Companhia Acos
Especiais Itabira,
ADR Steel 5,325 60,168
*Compania Siderurgica
Paulista, Series B Steel 45,000 61,488
Petroleo Brasileiro
S.A. Oil and gas 930,000 111,073
*Randon Participacoes
S.A. Diversified 50,000,000 29,858
Telecomunicacoes
Brasileiras, S.A.,
ADR Telecommunications 1,500 74,625
SOUTH KOREA: 2.2%
Samsung Electronics
Company Electronics 940 68,142
TOTAL PREFERRED STOCKS (Cost $426,706) 405,354
CONVERTIBLE CORPORATE BONDS: 1.5% of Net Assets
PHILIPPINES: 1.5%
Bacnotan Consolidated
Industries, Inc., 5.5%,
6/21/04 (144A)
(Cost $50,000) Building materials 50,000 46,000
REPURCHASE AGREEMENT: 9.7% of Net Assets
With Donaldson, Lufkin & Jenrette Securities
Corporation issued 3/29/96 at 5.3%, due 4/1/96
collateralized by $308,966 in Federal National
Mortgage Association Medium-Term Notes due
3/19/03. Total proceeds at maturity are
$302,133. (Cost $302,000) 302,000
TOTAL INVESTMENTS (Cost $3,110,532)+ $3,060,145
Notes to the Portfolio of Investments:
* Non-income producing
+ Aggregate cost for federal income tax purposes is
$3,110,532 at March 31, 1996, and the net
unrealized depreciation is $50,387 comprised
of gross unrealized appreciation of $382,297
and gross unrealized depreciation of $432,684.
ADR American Depository Receipt
GDR Global Depository Receipt
144A Securities exempt from registration under Rule 144A of
the Securities Act of 1933. These securities may be
resold in transactions exempt from registration,
normally to qualified institutional buyers.
At March 31, 1996 these securities amounted to
$165,275 or 5.3% of net assets.
The Notes to Financial Statements are an integral part of
these statements.
<PAGE>
Worldwide Growth Portfolio
Statement of Assets and Liabilities
March 31, 1996
ASSETS
Investments, at cost $3,110,532
Investments, at value (Notes 1 and 2)
Investment securities 2,758,145
Repurchase agreement 302,000
Total investments 3,060,145
Cash and foreign currency 2,184
Receivables
Investment securities sold 57,856
Dividends and interest 10,778
Other assets 2
Total assets 3,130,965
LIABILITIES
Payables
Capital shares redeemed 8,908
Investment securities purchased 6,324
Other liabilities 24
Total liabilities 15,256
NET ASSETS (Note 5) $3,115,709
CAPITAL SHARES OUTSTANDING 315,944
NET ASSET VALUE PER SHARE $9.862
Worldwide Growth Portfolio
Statement of Operations
For the Year Ended March 31, 1996
INVESTMENT INCOME (Note 1)
Interest income $30,223
Dividend income (Net of foreign tax of $5,700) 67,477
Total income 97,700
EXPENSES (Notes 3 and 4)
Investment advisory fee 34,933
Custodian fees 23,555
Professional fees 4,792
Salaries and related expenses 11,799
Securities registration and blue sky expense 7,581
Telephone expense 717
Data processing and office equipment expense 15,084
Office and miscellaneous expenses 4,752
Depreciation and amortization 338
Investment advisory fee waived (20,681)
Total expenses 82,870
NET INVESTMENT INCOME 14,830
REALIZED AND UNREALIZED GAIN (LOSS)
FROM INVESTMENTS AND FOREIGN CURRENCY
Net realized loss on investments (581,432)
Net realized loss on foreign currency
transactions (3,488)
Capital gain distributions from regulated
investment companies 3,505
Net unrealized appreciation of investments 1,103,450
Net unrealized depreciation on foreign
currency transactions (3,053)
NET GAIN FROM INVESTMENTS AND FOREIGN CURRENCY 518,982
TOTAL INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $533,812
The Notes to Financial Statements are an integral part of
these statements.
<PAGE>
Worldwide Growth Portfolio
Statements of Changes in Net Assets
For the Years Ended March 31
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS
Net investment income $14,830 $8,510
Net realized gain (loss) on investments (577,927) 12,222
Net realized loss on foreign currency
transactions (3,488) (4,875)
Net unrealized appreciation
(depreciation) of investments 1,103,450 (1,056,140)
Net unrealized depreciation on foreign
currency transactions (3,053) --
Total increase (decrease) in net
assets resulting from operations 533,812 (1,040,283)
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income (22,834) (9,688)
From net capital gains -- (431,663)
CAPITAL SHARE TRANSACTIONS (Note 7) (714,253) 1,274,473
TOTAL DECREASE IN NET ASSETS (203,275) (207,161)
NET ASSETS
Beginning of year 3,318,984 3,526,145
End of year $3,115,709 $3,318,984
Worldwide Growth Portfolio
Financial Highlights
Selected data for a share outstanding throughout each
period:
<TABLE>
<CAPTION>
Period ended Year ended Year ended<F1>
March 31, 1996 March 31, 1995 March 31, 1994
<C> <C> <C>
Net asset value beginning
of period $ 8.501 $12.511 $10.000
Net investment income (loss) 0.044) 0.022 (0.035)
Net realized and unrealized
gains (losses) on securities 1.387 (2.491) 2.546
Total from investment
operations 1.431 (2.469) 2.511
Distributions from net
investment income (0.070) (0.025) --
Distributions from capital
gains -- (1.516) --
Total distributions (0.070) (1.541) --
Net asset value end of
period $ 9.862 $8.501 12.511
Total return 16.88% (22.20)% 26.19%<F2>
Net assets at end of
period (thousands) 3,116 3,319 3,526
Ratio of expenses
to average net assets<F3> 2.38% 2.05% 1.81%<F2>
Ratio of ne income
to average net assets<F3> 0.43% 0.21% (0.48)%<F2>
Portfolio turnover 78% 65% 83%
<FN>
<F1>
April 16, 1993 (inception) to March 31, 1994
<F2>
Annualized
<F3>
Had BFIMC not waived advisory fees, the Portfolio's ratios
of expenses and net investment loss to average net assets
would have been 2.97% and (0.17)%, respectively, for the
year ended March 31, 1996, and 3.05% and (0.79)%,
respectively, for the year ended March 31, 1995. Had BFIMC
not waived the advisory fee and deferred a portion of the
operating expenses, the Portfolio's annualized ratios of
expenses and net investment loss to average net assets
would have been 4.24% and (2.92)%, respectively, for the
period from inception to March 31, 1994.
</FN>
</TABLE>
The Notes to Financial Statements are an integral part of
these statements.
Worldwide Growth Portfolio
Notes to Financial Statements
March 31, 1996
1. Summary of Significant Accounting Policies. GIT Equity
Trust (the "Trust") is registered with the Securities and
Exchange Commission under the Investment Company Act of 1940
as an open-end, diversified investment management company.
The Trust offers shares in four separate portfolios which
invest in differing securities. The Worldwide Growth
Portfolio (the "Portfolio") invests primarily in foreign
equity securities, emphasizing companies that are likely to
benefit from the growth of the world's smaller and emerging
capital markets. The Special Growth, Select Growth and
Equity Income Portfolios are managed independently from the
Worldwide Growth Portfolio and issue separate semi-annual
and annual financial reports to shareholders.
Securities Valuation: Securities traded on a securities
exchange are valued at their closing sale price, if
available, and if not available, such securities are valued
at the mean between their bid and asked prices. Other
securities, for which current market quotations are readily
available, are valued at the mean between their bid and
asked prices. Securities for which current market
quotations are not readily available are valued at their
fair value as determined in good faith by the Trustees.
Securities whose prices are quoted in foreign currency are
normally translated into U.S. dollars based on exchange
rates at 1 p.m., Washington, D.C. time. The portfolio does
not isolate that portion of the results of operations
resulting from changes in foreign exchange rates on
investments from the fluctuations arising from changes in
market prices of securities held. Such fluctuations are
included with net realized and unrealized gain or loss on
investments. Investment transactions are recorded on the
trade date. The cost of investments sold is determined on
the identified cost basis for financial statement and
federal income tax purposes. Repurchase agreements are
valued at amortized cost, which approximates market value.
Foreign Currency Translations: The books and records of the
Portfolio are maintained in U.S. dollars. Foreign currency
amounts are translated into U.S. dollars on the following
basis:
(i) market value of investment securities, assets and
liabilities at the daily rates of exchange, and
(ii) purchase and sales of investment securities, dividend
and interest income and certain expenses at the rates
of exchange prevailing on the respective dates of such
transactions.
The Portfolio does not isolate that portion of the results
of operations resulting from changes in foreign exchange
rates on investments from the fluctuations arising from
changes in market prices of securities held. Such
fluctuations are included with the net realized and
unrealized gain or loss from investments.
Reported net realized gains or losses from foreign currency
transactions arise from sales and maturities of short-term
securities, sales of foreign currencies, currency gains or
losses realized between the trade and settlement dates on
securities transactions, the difference between the amounts
of dividends, interest, and foreign withholding taxes
recorded on the Portfolio's books, and the U.S. dollar
equivalent of the amounts actually received or paid. Net
unrealized gains and losses from foreign currency
transactions arise from changes in the value of assets and
liabilities other than investments in securities at the end
of the fiscal period, resulting from changes in exchange
rates.
Forward Foreign Currency Contracts: The Portfolio may enter
into forward foreign currency contracts in order to hedge
against foreign currency risk. Such contracts have been
used solely to establish a rate of exchange for settlement
of transactions. Forward foreign currency contracts are
valued at the forward rate and are marked-to-market daily.
The change in market value is recorded by the Portfolio as
an unrealized gain or loss. Realized gains or losses are
recognized when contracts settle. Although forward foreign
currency contracts limit the risk of loss due to a decline
in the value of the hedged currency, they also limit any
potential gain that might result should the value of the
currency increase. In addition, the Portfolio could be
exposed to risks if the counter parties to the contracts are
unable to meet the terms of their contracts.
Investment Income: Interest and other income (if any) is
accrued as earned. Dividend income is recorded on the ex-
dividend date, except that if the ex-dividend date has
passed, certain dividends from foreign securities are
recorded as soon as the Portfolio is informed of the ex-
dividend date.
Dividends: Substantially all of the Trust's accumulated net
investment income, determined as gross investment income
less accrued expenses, is declared as a regular dividend and
distributed to shareholders at least twice annually at
calendar and fiscal year end. Capital gains distributions
reflecting net realized gains of the portfolio, if any, are
declared and paid twice annually at calendar and fiscal year
end. Additional distributions will be made if necessary.
<PAGE>
Notes to Financial Statements (continued)
Income Tax: In accordance with the provisions of Subchapter
M of the Internal Revenue Code applicable to regulated
investment companies, all of the taxable income of each
portfolio is distributed to its shareholders, and therefore
no federal income tax provision is required. As of March
31, 1996, the Portfolio had available for federal income tax
purposes unused capital loss carryovers of $600,026 expiring
March 31, 2004.
Share Subscriptions: Shares purchased by check or otherwise
not paid for in immediately available funds are accounted
for as share subscriptions receivable and shares reserved
for subscriptions.
Use of Estimates: The preparation of the financial
statements in conformity with generally accepted accounting
principles requires management to make estimates and
assumptions that affect the reported amounts of assets and
liabilities and reported amounts of increases and decreases
in net assets from operations during the reporting period.
Actual results could differ from those estimates.
2. Investments in Repurchase Agreements. When the Trust
purchases securities under agreements to resell, the
securities are held for safekeeping by the Trust's custodian
bank as collateral. Should the market value of the
securities purchased under such an agreement decrease below
the principal amount to be received at the termination of
the agreement plus accrued interest, the counterparty is
required to place an equivalent amount of additional
securities in safekeeping with the Trust's custodian bank.
Repurchase agreements may be terminated within seven days.
Pursuant to an Exemptive Order issued by the Securities and
Exchange Commission, the Trust, along with other registered
investment companies having Advisory and Services Agreements
with Bankers Finance Investment Management Corp. ("BFIMC"),
transfers uninvested cash balances into a joint trading
account. The aggregate balance in this joint trading
account is invested in one or more consolidated repurchase
agreements whose underlying securities are U.S. Treasury or
federal agency obligations.
3. Investment Advisory Fees and Other Transactions with
Affiliates. The Investment Adviser to the Trust, BFIMC,
earns an advisory fee equal to 1.00% per annum of the
average net assets of the Portfolio; the fee accrues daily
and is payable monthly. For the year ended March 31, 1996,
BFIMC waived $20,681 of such fee from the Portfolio. In
order to meet the securities registration requirements of
certain states, BFIMC has undertaken to reimburse the
Portfolio by the amount, if any, by which the total expenses
of the Portfolio (less certain excepted expenses) exceed the
applicable expense limitation in any state or other
jurisdiction in which the Trust is subject to regulation
during the fiscal year. The Trust believes the current
applicable expense limitation is 2.50% per annum of the
average net assets of each portfolio up to $30 million,
2.00% of any amount of such net assets exceeding $30
million but not exceeding $100 million, and 1.50% per annum
of such amount in excess of $100 million. BFIMC is
responsible for the fees and expenses of trustees who are
affiliated with BFIMC, the rent expense of the Trust's
principal executive office premises and certain promotional
expenses. For the year ended March 31, 1996, outside
trustees fees of $2,250 were paid by the Portfolio. Certain
officers, trustees, companies and individuals affiliated
with the Trust have investments in the Trust aggregating
9.2% of net assets.
4. Other Expenses. With the exception of certain expenses of
the Trust payable by it directly, all support services are
provided to the Trust under a services agreement between the
Trust and BFIMC, pursuant to which such services are to be
provided for amounts not exceeding the cost to BFIMC of the
support provided. For the year ended March 31, 1996,
expenses of $68,618 have been reimbursed to BFIMC under the
services agreement. As of March 31, 1996, expenses of
$7,605 have been incurred by BFIMC on behalf of the
Portfolio, the billing of which has been deferred.
5. Net Assets. At March 31, 1996, net assets include the
following:
Net paid in capital on shares
of beneficial interest $3,769,174
Accumulated net realized loss on investments (600,026)
Net unrealized depreciation of investments
and foreign currency (53,439)
Total net assets $3,115,709
The Portfolio reclassified $8,004 from accumulated net
investment losses and $5,995 from accumulated net losses on
foreign currency transactions to paid in capital as a result
of permanent book and tax basis differences. These
reclassifications had no impact on net asset value.
<PAGE>
Notes to Financial Statements (continued)
6. Investment Transactions. Purchases and sales of
securities other than short-term securities for the year
ended March 31, 1996 were $2,338,269 and $2,929,237,
respectively.
7. Capital Share Transactions. An unlimited number of
capital shares, without par value, are authorized.
Transactions in capital shares for years ended March 31 were
as follows:
1996 1995
In Dollars
Shares sold $960,967 $3,109,192
Shares issued in reinvestment
of dividends 18,767 399,120
Total shares issued 979,734 3,508,312
Shares redeemed (1,693,987) (2,233,839)
Net increase (decrease) $(714,253) $1,274,473
In Shares
Shares sold 100,911 275,640
Shares issued in reinvestment
of dividends 2,009 37,227
Total shares issued 102,920 312,867
Shares redeemed (177,403) (204,278)
Net increase (decrease) (74,483) 108,589
Worldwide Growth Portfolio
Special Tax Information (Unaudited)
March 31, 1996
Corporate shareholders should note that 1% of ordinary
dividend income resulting from the fiscal year ended March
31, 1996 qualifies for the corporate dividends-received
deduction.
For the year ended March 31, 1996, the Portfolio paid
foreign taxes of $5,700. The Portfolio intends to make a
distribution in December 1996, and it will make an election
under Section 853 of the Internal Revenue Code to allow
shareholders to treat their proportionate share of foreign
taxes paid by the fund as having been paid directly by them.
The Notes to Financial Statements are an integral part of
these statements
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXRACTED FROM FORM
NSAR, THE REGISTRANT'S ANNUAL REPORT AND ITS PROSPECTUS AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH SOURCE DOCUMENTS.
</LEGEND>
<CIK> 0000710977
<NAME> GIT EQUITY TRUST
<SERIES>
<NUMBER> 1
<NAME> SPECIAL GROWTH PORTFOLIO
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> MAR-31-1996
<INVESTMENTS-AT-COST> 11,771,930
<INVESTMENTS-AT-VALUE> 16,856,200
<RECEIVABLES> 529,788
<ASSETS-OTHER> 598
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 17,386,586
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 295,582
<TOTAL-LIABILITIES> 295,582
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 5,685,901
<SHARES-COMMON-STOCK> 834,197
<SHARES-COMMON-PRIOR> 1,746,081
<ACCUMULATED-NII-CURRENT> 15,133
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 6,307,575
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 5,082,395
<NET-ASSETS> 17,091,004
<DIVIDEND-INCOME> 379,969
<INTEREST-INCOME> 196,272
<OTHER-INCOME> 0
<EXPENSES-NET> 412,594
<NET-INVESTMENT-INCOME> 163,647
<REALIZED-GAINS-CURRENT> 7,936,809
<APPREC-INCREASE-CURRENT> (2,310,916)
<NET-CHANGE-FROM-OPS> 5,625,893
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 148,514
<DISTRIBUTIONS-OF-GAINS> 1,629,234
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 63,271,505
<NUMBER-OF-SHARES-REDEEMED> 83,341,211
<SHARES-REINVESTED> 1,559,202
<NET-CHANGE-IN-ASSETS> (18,510,504)
<ACCUMULATED-NII-PRIOR> (23,917)
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 219,111
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 412,594
<AVERAGE-NET-ASSETS> 29,298,850
<PER-SHARE-NAV-BEGIN> 18.092
<PER-SHARE-NII> 0.133
<PER-SHARE-GAIN-APPREC> 3.621
<PER-SHARE-DIVIDEND> (0.115)
<PER-SHARE-DISTRIBUTIONS> (1.243)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 20.488
<EXPENSE-RATIO> 1.408
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM
NSAR, THE REGISTRANT'S ANNUAL REPORT AND ITS PROSPECTUS AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH SOURCE DOCUMENTS.
</LEGEND>
<CIK> 0000710977
<NAME> GIT EQUITY TRUST
<SERIES>
<NUMBER> 2
<NAME> SELECT GROWTH PORTFOLIO
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> MAR-31-1996
<INVESTMENTS-AT-COST> 5,936,887
<INVESTMENTS-AT-VALUE> 7,532,469
<RECEIVABLES> 6,204
<ASSETS-OTHER> 786
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 7,539,459
<PAYABLE-FOR-SECURITIES> 142,125
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 8,668
<TOTAL-LIABILITIES> 150,793
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 5,433,320
<SHARES-COMMON-STOCK> 336,008
<SHARES-COMMON-PRIOR> 284,238
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 359,764
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,595,582
<NET-ASSETS> 7,388,666
<DIVIDEND-INCOME> 57,839
<INTEREST-INCOME> 32,401
<OTHER-INCOME> 0
<EXPENSES-NET> 105,407
<NET-INVESTMENT-INCOME> (15,167)
<REALIZED-GAINS-CURRENT> 370,742
<APPREC-INCREASE-CURRENT> 1,182,208
<NET-CHANGE-FROM-OPS> 1,552,950
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,853,388
<NUMBER-OF-SHARES-REDEEMED> 1,751,101
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 1,102,287
<ACCUMULATED-NII-PRIOR> (23,157)
<ACCUMULATED-GAINS-PRIOR> (10,978)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 44,041
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 105,407
<AVERAGE-NET-ASSETS> 5,894,977
<PER-SHARE-NAV-BEGIN> 16.706
<PER-SHARE-NII> (0.045)
<PER-SHARE-GAIN-APPREC> 5.329
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 21.990
<EXPENSE-RATIO> 1.788
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORMS
NSAR, THE REGISTRANT'S ANNUAL REPORT AND ITS PROSPECTUS AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH SOURCE DOCUMENTS.
</LEGEND>
<CIK> 0000710977
<NAME> GIT EQUITY TRUST
<SERIES>
<NUMBER> 3
<NAME> EQUITY INCOME PORTFOLIO
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> MAR-31-1996
<INVESTMENTS-AT-COST> 3,057,651
<INVESTMENTS-AT-VALUE> 4,432,962
<RECEIVABLES> 15,105
<ASSETS-OTHER> 714
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 4,448,781
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 9,265
<TOTAL-LIABILITIES> 9,265
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3,072,035
<SHARES-COMMON-STOCK> 229,674
<SHARES-COMMON-PRIOR> 221,438
<ACCUMULATED-NII-CURRENT> 18,466
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (26,296)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,375,311
<NET-ASSETS> 4,439,516
<DIVIDEND-INCOME> 146,764
<INTEREST-INCOME> 15,225
<OTHER-INCOME> 0
<EXPENSES-NET> 76,709
<NET-INVESTMENT-INCOME> 85,280
<REALIZED-GAINS-CURRENT> 26,354
<APPREC-INCREASE-CURRENT> 851,075
<NET-CHANGE-FROM-OPS> 877,429
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 66,947
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 904,364
<NUMBER-OF-SHARES-REDEEMED> 832,571
<SHARES-REINVESTED> 59,319
<NET-CHANGE-IN-ASSETS> 131,112
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (52,650)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 29,875
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 76,709
<AVERAGE-NET-ASSETS> 3,996,168
<PER-SHARE-NAV-BEGIN> 15.411
<PER-SHARE-NII> 0.373
<PER-SHARE-GAIN-APPREC> 3.839
<PER-SHARE-DIVIDEND> (0.293)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 19.330
<EXPENSE-RATIO> 1.920
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORMS
NSAR, THE REGISTRANT'S ANNUAL REPORT AND ITS PROSPECTUS AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH SOURCE DOCUMENTS.
</LEGEND>
<CIK> 0000710977
<NAME> GIT EQUITY TRUST
<SERIES>
<NUMBER> 4
<NAME> WORLDWIDE GROWTH PORTFOLIO
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> MAR-31-1996
<INVESTMENTS-AT-COST> 3,110,532
<INVESTMENTS-AT-VALUE> 3,060,145
<RECEIVABLES> 68,636
<ASSETS-OTHER> 2,184
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3,130,965
<PAYABLE-FOR-SECURITIES> 6,324
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 8,932
<TOTAL-LIABILITIES> 15,256
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3,769,174
<SHARES-COMMON-STOCK> 315,944
<SHARES-COMMON-PRIOR> 390,427
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (600,026)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (53,439)
<NET-ASSETS> 3,115,709
<DIVIDEND-INCOME> 67,477
<INTEREST-INCOME> 30,223
<OTHER-INCOME> 0
<EXPENSES-NET> 82,870
<NET-INVESTMENT-INCOME> 14,830
<REALIZED-GAINS-CURRENT> (581,415)
<APPREC-INCREASE-CURRENT> 1,100,397
<NET-CHANGE-FROM-OPS> 518,982
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 22,834
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 960,967
<NUMBER-OF-SHARES-REDEEMED> 1,693,987
<SHARES-REINVESTED> 18,767
<NET-CHANGE-IN-ASSETS> (714,253)
<ACCUMULATED-NII-PRIOR> (13,453)
<ACCUMULATED-GAINS-PRIOR> (22,099)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 34,933
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 82,870
<AVERAGE-NET-ASSETS> 3,483,080
<PER-SHARE-NAV-BEGIN> 8.501
<PER-SHARE-NII> 0.044
<PER-SHARE-GAIN-APPREC> 1.387
<PER-SHARE-DIVIDEND> (0.070)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.862
<EXPENSE-RATIO> 2.379
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
Distribution Agreement
This Agreement is made by and between GIT Investment
Services, Inc., a Virginia corporation having its principal
place of business in Arlington, Virginia (the
"Distributor"),and GIT Equity Trust, a Massachusetts
business trust created pursuant to a Declaration of Trust
filed with the Clerk of the City of Boston, Massachusetts
(the "Trust").
In consideration of the mutual covenants contained herein
and for other good and valuable consideration, the parties
hereto, intending so to be legally bound, agree with each
other as follows:
1. Appointment of Distributor. Except as otherwise provided
herein, the Trust hereby appoints the Distributor its
exclusive agent to sell and distribute shares of the Trust
at the public offering price thereof described and set forth
in the Trust's current prospectus. The Distributor hereby
accepts such appointment. The Distributor shall have no
obligation to sell, distribute or redeem any specific amount
of the Trust's shares.
<PAGE>
2. Scope of Authority. The Distributor is authorized act as
the Trust's agent to make sales of the Trust's shares
directly to the public or distribute such shares to the
public through securities brokers, dealers or other
intermediaries. The Distributor is also authorized to act
as an agent of the Trust in connection with any redemption
of the Trust's shares, either directly or through securities
brokers, dealers or other intermediaries. In the
performance of its activities hereunder, the Distributor
shall be authorized to take such action not inconsistent
with the express provisions hereof as it deems advisable.
The Distributor agrees that in offering, selling or
redeeming shares of the Trust it will duly conform to all
applicable State and Federal laws and the rules and
regulations of any self-regulatory organization established
pursuant to Federal law to which the Distributor may belong.
The Distributor is authorized by the Trust only to give
information or make representations regarding the Trust's
shares to the extent such information or representations are
contained in the Trust's current prospectus or in its
registration statement filed with the Securities and
Exchange Commission or in supplemental information to such
prospectus approved by the Trust. The Distributor agrees
that any other such information or representations it
provides shall be given entirely without liability or
recourse to the Trust.
<PAGE>
3. Discretion of the Trust. Notwithstanding any other
provision hereof and in its sole discretion with or without
prior notice thereof to the Distributor, the Trust may
distribute its own shares directly to any person, may
suspend any or all sales of its shares, and may decline to
make any particular sale of its shares By notice thereof to
the Distributor, the Trust may appoint additional non-
exclusive agents for the sale and distribution of its
shares, but in the absence of such notice the Distributor
shall remain the Trust's exclusive agent for such sales.
4. Other Activities of the Distributor. The Distributor and
any of its affiliates shall be free to engage in any other
lawful activity, including the rendering to others of
services similar to those to be rendered to the Trust
hereunder; and the Distributor or any interested person
thereof shall be free to invest in the Trust as a
shareholder, to become an officer or Trustee thereof if
properly elected, or to enter into any other relationship
with the Trust approved by the Trustees and in accordance
with law.
5. Compensation to the Distributor. Unless a current
prospectus of the Trust provides for compensation to
underwriters or to persons who distribute its shares, the
Distributor shall receive no direct compensation in
connection with the activities authorized hereby. Except to
any extent specifically otherwise authorized by the terms of
a current prospectus of the Trust, the Distributor shall
sell and redeem shares of the Trust at their current net
asset value.
<PAGE>
The Trust shall reimburse to the Distributor
monthly for any reimbursable costs incurred by the
Distributor in connection with the affairs of the Trust.
Such "reimbursable cost" shall be limited to the reasonable
costs incurred by the Distributor in connection with
services rendered to the Trust's existing shareholders
approved by the Trustees of the Trust or in connection with
registration under State or Federal securities laws, taxes
or other out-of-pocket charges incurred by reason of sales
or are redemptions of the Trust's shares, but only to the
extent the Distributor is not otherwise directly compensated
for such services, sales or redemptions.
The "costs" which are reimbursable hereunder shall be deemed
to include both the relevant direct expenditures by the
Distributor (including the cost of goods and services
obtained from other) and the related overhead costs, such as
depreciation, interest, employee supervision, rent and like
costs. Where only a portion of a specific expenditure by
the Distributor is related to reimbursable costs hereunder,
then the Distributor may allocate such amount between the
Trust and other activities of the Distributor on a
reasonable basis, which may involve the use of assumptions
and approximations not subject to precise verification
without undue cost, provided that majority of the Trustees,
including a majority of the Trustees who are not interested
persons of the Trust, approve the basis upon which such
allocations are made. The Distributor may, in its
discretion, defer billing to and payment by the Trust of any
reimbursable costs hereunder, and no such deferment shall
affect the right of the Distributor to receive reimbursement
from the Trust when the
<PAGE>
reimbursable costs are billed.
6. Relationship to Investment Adviser. It is understood by
the parties hereto that concurrently with the execution of
Agreement or previously, the Trust has also entered into an
Investment Advisory Agreement with Bankers Finance
Investment Management Corp., as the investment adviser to
the Trust (the "Adviser"), pursuant to which the Adviser
will provide management services to the Trust and administer
its affairs. The voting securities of the Adviser and of
the Distributor has entered into this Agreement to perform
certain services partially in consideration of the Trust's
ongoing employment of the Adviser as aforesaid. If at any
time the Adviser ceases to act as investment adviser to the
Trust under terms substantially those of the Investment
Advisory Agreement or if at any time the Adviser ceases to
be an entity at least 50% (in terms of voting rights) under
common control with the Distributor, then this Agreement
shall immediately terminate as of a date 30 days from the
date of such event, unless within such 30-day period the
Distributor gives written notice to the Trust that it waives
such termination. The Trust specifically acknowledges and
accepts the relationship between the Distributor hereunder
and the Adviser.
7. Limitation of the Distributor's Liability. The
Distributor shall not be liable for any loss incurred in
connection with any of its activities hereunder, nor for any
action taken, suffered or omitted and believed by it to be
advisable or within the scope of its authority or
discretion, except for acts or omissions involving willful
misfeasance, bad faith, gross negligence or reckless
disregard of the responsibilities
<PAGE>
assumed by it under this Agreement.
8. Limitation of Trust's Liability. The Distributor
acknowledges that it has received notice of and accepts the
limitations upon the Trust's liability set forth in its
Declaration of Trust. The Distributor agrees that the
Trust; obligations hereunder in any case shall be limited to
the Trust and to its assets and that the Distributor shall
not seek satisfaction of any such obligation from the
shareholders of the Trust nor from any Trustee, officer,
employee or agent of the Trust.
9. Term of Agreement. This Agreement shall continue in
effect for two years from the date of its execution; and it
shall continue in force thereafter (but subject to the
termination provisions below), provided that it is
specifically approved at least annually by the Trustees of
the Trust or by a majority vote of the outstanding
securities of the Trust (without regard to series or classes
of shares), and in either case by the vote of a majority of
the Trustees who are not interested persons of the Trust,
cast in person at a meeting called for that purpose.
10. Termination by Notice. Notwithstanding any provision of
this Agreement, it may be terminated at any time, without
penalty, by the Trustees of the Trust or by the Distributor,
upon 30 day's written notice to the other party.
<PAGE>
11. Termination Upon Assignment. This Agreement may not be
assigned by the Distributor and shall automatically
terminate immediately upon any assignment. Noting herein
shall prevent the Distributor from employing any other
persons or agents, as its own expense, to assist it in the
performance of its duties hereunder.
12 Amendments. This Agreement may be amended at any time by
mutual agreement in writing by the parties hereto, provided
that such amendment is approved by Trustees of the Trust,
including a majority of the Trustees who are not interested
persons of the Trust, cast in person at a meeting called for
that purpose.
13. Governing Law. This Agreement shall be construed in
accordance with and governed by the laws of the Commonwealth
of Virginia.
14. Use of Terms. The terms "interested person," assignment
and "majority of the outstanding voting securities," as used
herein, shall have the same meanings as in the Investment
Company Act of 1940 and any applicable regulations
thereunder.
<PAGE>
In Witness Whereof, the parties have caused this amended and
restated Agreement to be signed on their behalf by their
respective officers duly authorized and their respective
seals to be affixed hereto, this 11th day of January, 1983.
GIT Investment Services, Inc.
(Seal)(Signature)
By A. Bruce Cleveland, President
(signature)
Attest: Fredda E. Mays, Assistant Secretary
GIT Equity Trust
(Seal)
(signature)
By A. Bruce Cleveland, Trustee
(signature)
By Michael D. Goth, Trustee
(signature)
By Robert W. Dudley, Trustee
(signature)
By Thomas S. Kleppe, Trustee
(signature)
By Gerald W. Nensel, Trustee
(signature)
Attest: Thomas C. Miller, Secretary
.
Custody Agreement
Agreement made as of the 8th day of September 1993,
between Government Investors Trust, GIT Equity Trust, GIT Income
Trust and GIT Tax-Free Trust (the "Trusts"), business trusts
organized under the laws of Massachusetts and having their office
at 1655 Fort Myer Drive, Arlington, Virginia 22209, acting for
and on behalf of all mutual fund portfolios as are currently
authorized and issued by the Trusts or may be authorized and
issued by any of the Trusts subsequent to the date of this
Agreement (the "Funds"), which are operated and maintained by
their respective Trusts for the benefit of the holders of shares
of the Funds, and Star Bank, N.A. (the "Custodian"), a national
banking association having its principal office and place of
business at Star Bank Center, 425 Walnut Street, Cincinnati, Ohio
45202, which Agreement provides for the furnishing of custodian
services to the Funds.
W I T N E S S E T H :
that for and in consideration of the mutual promises hereinafter
set forth the Trusts, on behalf of the Funds, and the Custodian
agree as follows:
Article I
Definitions
Whenever used in this Agreement, the following words and
phrases, unless the context otherwise requires, shall have the
following meanings:
1. "Authorized Person" shall be deemed to include the
Chairman, President, Secretary, Treasurer, and the Executive Vice
<PAGE>
President, or any other person, whether or not any such person is
an officer or employee of the Trusts, duly authorized by the
Board of Trustees of the Trusts to give Oral Instructions and
Written Instructions on behalf of the Funds and listed in the
Certificate annexed hereto as Appendix A or such other
Certificate as may be received by the Custodian from time to
time, subject in each case to any limitations on the authority of
such person as set forth in Appendix A or any such Certificate.
Authorized Persons shall also include the President, Executive
Vice President, Secretary and such other officers employed by
Bankers Finance Investment Management Corp. (the "Adviser") as
are designated in writing by the Adviser pursuant to the terms of
the services agreements between the Trusts and the Adviser
regarding day-to-day management of the Funds.
2. "Book-Entry System" shall mean the Federal
Reserve/Treasury book-entry system for United States and federal
agency securities, its successor or successors and its nominee or
nominees, provided the Custodian has received a certified copy of
a resolution of Board of Trustees of the Trusts specifically
approving deposits in the Book-Entry System.
3. "Certificate" shall mean any notice, instruction, or
other instrument in writing, authorized or required by this
Agreement to be given to the Custodian which is signed on behalf
of the Funds by an Officer of the Trusts and is actually received
by the Custodian.
4. "Depository" shall mean The Depository Trust Company
("DTC"), a clearing agency registered with the Securities and
<PAGE>
Exchange Commission, its successor or successors and its nominee
or nominees. The term "Depository" shall further mean and include
any other person or clearing agency authorized to act as a
depository under the Investment Company Act of 1940, its
successor or successors and its nominee or nominees, provided
that the Custodian has received a certified copy of a resolution
of the Board of Trustees of the Trusts specifically approving
such other person or clearing agency as a depository.
5. "Dividend and Transfer Agent" shall mean the dividend
and transfer agent active, from time to time, in such capacity
pursuant to a written agreement with the Funds, changes in which
the Trusts shall immediately report to the Custodian in writing.
6. "Money Market Security" shall be deemed to include,
without limitation, debt obligations issued or guaranteed as to
principal and/or interest by the government of the United States
or agencies or instrumentalities thereof, commercial paper,
obligations (including certificates of deposit, bankers'
acceptances, repurchase and reverse repurchase agreements with
respect to the same) and bank time deposits of domestic banks
that are members of Federal Deposit Insurance Trust, and short-
term corporate obligations where the purchase and sale of such
securities normally require settlement in federal funds or their
equivalent on the same day as such purchase or sale.
7. "Officers" shall be deemed to include the Chairman, the
President, the Secretary, the Treasurer, and Executive Vice
President of the Trusts listed in the Certificate annexed hereto
<PAGE>
as Appendix A or such other Certificate as may be received by the
Custodian from time to time.
8. "Oral Instructions" shall mean oral instructions
actually received by the Custodian from an Authorized Person (or
from a person which the Custodian reasonably believes in good
faith to be an Authorized Person) and confirmed by Written
Instructions from Authorized Persons in such manner so that such
Written Instructions are received by the Custodian on the next
business day.
9. "Prospectus" or "Prospectuses" shall mean the Funds'
currently effective prospectuses and statements of additional
information.
10. "Security or Securities" shall mean Money Market
Securities, common or preferred stocks, options, bonds,
debentures, corporate debt securities, notes, mortgages or other
obligations, and any certificates, receipts, warrants or other
instruments representing rights to receive, purchase or subscribe
for the same, or evidencing or representing any other rights or
interest therein, or any property or assets.
11. "Written Instructions" shall mean communication
actually received by the Custodian from one Authorized Person or
from one person which the Custodian reasonably believes in good
faith to be an Authorized Person in writing, telex or any other
data transmission system whereby the receiver of such
communication is able to verify by codes or otherwise with a
reasonable degree of certainty the authenticity of the senders of
such communication.
<PAGE>
Article II
Appointment of Custodian
1. The Trusts, acting for and on behalf of their respective
Funds, hereby constitute and appoint the Custodian as custodian
of Securities and monies owned by the Funds during the period of
this Agreement ("Fund Assets").
2. The Custodian hereby accepts appointment as such
Custodian and agrees to perform the duties thereof as hereinafter
set forth.
Article III
Documents to be Furnished by the Trust
Each Trust hereby agrees to furnish to the Custodian the
following documents within a reasonable time after the effective
date of this Agreement:
1. A copy of its Declaration of Trust (the "Declaration of
Trust") certified by its Secretary.
2. A copy of its By-Laws certified by its Secretary.
3. Copies of the most recent Prospectuses of the Trust.
4. A Certificate of the President and Secretary setting
forth the names and signatures of the present Officers of the
Trust.
<PAGE>
Article IV
Custody of Cash and Securities
1. Each Trust will deliver or cause to be delivered to the
Custodian Fund Assets, including cash received for the issuance
of its shares. The Custodian will not be responsible for such
Fund Assets until actually received by it. Upon such receipt, the
Custodian shall hold in safekeeping and physically segregate at
all times from the property of any other persons, firms or
corporations all Fund Assets received by it from or for the
accounts of the Funds. The Custodian will be entitled to reverse
any credits made on the Funds' behalf where such credits have
been previously made and monies are not finally collected within
90 days of the making of such credits. The Custodian is hereby
authorized by the Trusts, acting on behalf of the Funds, to
actually deposit any Fund Assets in the Book-Entry System or in a
Depository, provided, however, that the Custodian shall always be
accountable to the Trusts for the Fund Assets so deposited. Funds
Assets deposited in the Book-Entry System or the Depository will
be represented in accounts which include only assets held by the
Custodian for customers, including but not limited to accounts in
which the Custodian acts in a fiduciary or representative
capacity.
2. The Custodian shall credit to a separate account or
accounts in the name of each respective Fund all monies received
by it for the account of such Fund, and shall disburse the same
only:
<PAGE>
(a) In payment for Securities purchased for the account of such
Fund, as provided in Article V;
(b) In payment of dividends or distributions, as provided in
Article VI hereof;
(c) In payment of original issue or other taxes, as provided
in Article VII hereof;
(d) In payment for shares of such Fund redeemed by it, as
provided in Article VII hereof;
(e) Pursuant to Certificates (i) directing payment and setting
forth the name and address of the person to whom the payment is
to be made, the amount of such payment and the purpose for which
payment is to be made (the Custodian not being required to
question such direction) or (ii) if reserve requirements are
established for a Fund by law or by valid regulation, directing
the Custodian to deposit a specified amount of collected funds in
the form of U. S. dollars at a specified Federal Reserve Bank and
state the purpose of such deposit; or
(f) In reimbursement of the expenses and liabilities of the
Custodian, as provided in paragraph 10 of Article IX hereof.
3. Promptly after the close of business on each day the
Funds are open and valuing their portfolios, the Custodian shall
furnish the respective Trusts with a detailed statement of monies
held for the Funds under this Agreement and with confirmations
and a summary of all transfers to or from the account of the
Funds during said day. Where Securities are transferred to the
account of the Funds without physical delivery, the Custodian
shall also identify as belonging to the Funds a quantity of
<PAGE>
Securities in a fungible bulk of Securities registered in the
name of the Custodian (or its nominee) or shown on the
Custodian's account on the books of the Book-Entry System or the
Depository. At least monthly and from time to time, the Custodian
shall furnish the Trusts with a detailed statement of the
Securities held for the Funds under this Agreement.
4. All Securities held for the Funds, which are issued or
issuable only in bearer form, except such Securities as are held
in the Book-Entry System, shall be held by the Custodian in that
form; all other Securities held for the Funds may be registered
in the name of the Funds, in the name of any duly appointed
registered nominee of the Custodian as the Custodian may from
time to time determine, or in the name of the Book-Entry System
or the Depository or their successor or successors, or their
nominee or nominees. Each Trust agrees to furnish to the
Custodian appropriate instruments to enable the Custodian to hold
or deliver in proper form for transfer, or to register in the
name of its registered nominee or in the name of the Book-Entry
System or the Depository, any Securities which it may hold for
the account of the Funds and which may from time to time be
registered in the name of the Funds. The Custodian shall hold all
such Securities which are not held in the Book-Entry System by
the Depository or a Sub-Custodian in a separate account or
accounts in the name of the Funds segregated at all times from
those of any other fund maintained and operated by the Trust and
from those of any other person or persons.
<PAGE>
5. Unless otherwise instructed to the contrary by a
Certificate, the Custodian shall with respect to all
Securities held for the Funds in accordance with this
Agreement:
(a) Collect all income due or payable to the Funds with
respect to each Fund's Assets;
(b) Present for payment and collect the amount payable
upon all Securities which may mature or be called, redeemed,
or retired, or otherwise become payable;
(c) Surrender Securities in temporary form for definitive
Securities;
(d) Execute, as Custodian, any necessary declarations or
certificates of ownership under the Federal income tax laws
or the laws or regulations of any other taxing authority,
including any foreign taxing authority, now or hereafter in
effect; and
(e) Hold directly, or through the Book-Entry System or
the Depository with respect to Securities therein deposited,
for the account of the Funds all rights and similar
securities issued with respect to any Securities held by the
Custodian hereunder.
6. Upon receipt of Written Instructions and not
otherwise, the Custodian directly or through the use of the
Book-Entry System or the Depository shall:
(a) Execute and deliver to such persons as may be
designated in such Written Instructions proxies, consents,
authorizations, and any other instruments whereby the
authority of the Funds as owner of any Securities may be
exercised;
(b) Deliver any Securities held for the Funds in exchange
for other Securities or cash issued or paid in connection
<PAGE>
with the liquidation, reorganization, refinancing, merger,
consolidation or recapitalization of any corporation, or the
exercise of any conversion privilege;
(c) Deliver any Securities held for the account of the
Funds to any protective committee, reorganization committee
or other person in connection with the reorganization,
refinancing, merger, consolidation, recapitalization or sale
of assets of any corporation, and receive and hold under the
terms of this Agreement such certificates of deposit,
interim receipts or other instruments or documents as may be
issued to it to evidence such delivery; and
(d) Make such transfers or exchanges of the assets of the
Funds and take such other steps as shall be stated in a
Certificate to be for the purpose of effectuating any duly
authorized plan of liquidation, reorganization, merger,
consolidation or recapitalization of the Funds.
7. The Custodian shall promptly deliver to each
respective Trust all notices, proxy material and executed
but unvoted proxies pertaining to shareholder meetings of
Securities held by the Funds. The Custodian shall not vote
or authorize the voting of any Securities or give any
consent, waiver or approval with respect thereto unless so
directed by a Certificate or Written Instruction.
8. The Custodian shall promptly deliver to the Trusts
all material and notices received by the Custodian and
pertaining to Securities held by the Funds with respect to
tender or exchange offers, calls for redemption or purchase,
expiration of rights, <PAGE>name changes, stock splits and stock
dividends, or any other activity involving ownership rights
in such Securities.
9. The Custodian shall conduct such periodic physical
inspection of Securities held by it under this Agreement as
it deems advisable to verify the accuracy of its inventory.
The Custodian shall promptly report to the Trusts any
discrepancies or shortages revealed by such inspections and
shall make every effort promptly to remedy such
discrepancies or shortages.
Article V
Purchase and Sale of Investments of the Funds
1. Promptly after each purchase of Securities by the
Funds, the respective Trust shall deliver to the Custodian
(i) with respect to each purchase of Securities which are
not Money Market Securities, a Certificate or Written
Instructions, and (ii) with respect to each purchase of
Money Market Securities, Written Instructions, a Certificate
or Oral Instructions, specifying with respect to each such
purchase: (a) the name of the issuer and the title of the
Securities, (b) the principal amount purchased and accrued
interest, if any, (c) the date of purchase and settlement,
(d) the purchase price per unit, (e) the total amount
payable upon such purchase and (f) the name of the person
from whom or the broker through whom the purchase was made.
The Custodian shall upon receipt of Securities purchased by
or for the Funds, pay out of the monies held for the account
of the Funds the total amount payable to the person from
whom or the broker through whom the purchase was made,
provided that the same <PAGE>conforms to the total amount
payable as set forth in such Certificate, Written
Instructions or Oral Instructions.
2. Promptly after each sale of Securities by the
respective Trust for the account of the Funds, such Trust shall
deliver to the Custodian (i) with respect to each sale of
Securities which are not Money Market Securities, a Certificate
or Written Instructions, and (ii) with respect to each sale of
Money Market Securities, Written Instructions, a Certificate or
Oral Instructions, specifying with respect to each such sale: (a)
the name of the issuer and the title of the Security, (b) the
principal amount sold, and accrued interest, if any, (c) the date
of sale, (d) the sale price per unit, (e) the total amount
payable to the Funds upon such sale and (f) the name of the
broker through whom or the person to whom the sale was made. The
Custodian shall deliver the Securities upon receipt of the total
amount payable to the Funds upon such sale, provided that the
same conforms to the total amount payable as set forth in such
Certificate, Written Instructions or Oral Instructions. Subject
to the foregoing, the Custodian may accept payment in such form
as shall be satisfactory to it, and may deliver Securities and
arrange for payment in accordance with the customs prevailing
among dealers in Securities.
3. Promptly after the time as of which a Trust, on behalf
of a Fund, either -
(a) writes an option on Securities or writes a covered put
option in respect of a Security, or
<PAGE>
(b) notifies the Custodian that its obligations in respect
of any put or call option, as described in such Trust's
Prospectus, require that the Fund deposit Securities or
additional Securities with the Custodian, specifying the type and
value of Securities required to be so deposited, or
(c) notifies the Custodian that its obligations in respect
of any other Security, as described in each Fund's respective
Prospectus, require that the Fund deposit Securities or
additional Securities with the Custodian, specifying the type and
value of Securities required to be so deposited, the Custodian
will cause to be segregated or identified as deposited, pursuant
to the Fund's obligations as set forth in such Prospectus,
Securities of such kinds and having such aggregate values as are
required to meet the Fund's obligations in respect thereof.
The Trust will provide to the Custodian, as of the end of
each trading day, the market value of each Fund's option
liability, if any, and the market value of its portfolio of
common stocks.
4. On contractual settlement date, the account of each
respective Fund will be charged for all purchases settling on
that day, regardless of whether or not delivery is made. On
contractual settlement date, sale proceeds will likewise be
credited to the account of such Fund irrespective of delivery.
In the case of "sale fails", the Custodian may request the
assistance of the Trusts in making delivery of the failed
Security.
<PAGE>
Article VI
Payment of Dividends or Distributions
1. Each Trust shall furnish to the Custodian Written
Instructions to release or otherwise apply cash insofar as
available for the payment of dividends or other distributions to
Fund shareholders entitled to payment as determined by the
Dividend and Transfer Agent of the Funds. The Custodian may rely
on any such Written Instructions so received, and shall be
indemnified by the Trust providing such instructions for such
reliance.
2. Upon the payment date specified in such Written
Instructions, the Custodian shall arrange for such payments to be
made by the Dividend and Transfer Agent out of monies held for
the accounts of the Funds.
Article VII
Sale and Redemption of Shares of the Funds
1. The Custodian shall receive and credit to the account
of each Fund such payments for shares of such Fund issued or sold
from time to time as are received from the distributor for the
Fund's shares, from the Dividend and Transfer Agent of the Fund,
or from the Trust.
2. Upon receipt of Written Instructions, the Custodian
shall arrange for payment of redemption proceeds to be made by
the Dividend and Transfer Agent out of the monies held for the
account of the respective Funds in the total amount specified in
the Written Instructions.
<PAGE>
3. Notwithstanding the above provisions regarding the
redemption of any shares of the Funds, whenever shares of the
Funds are redeemed pursuant to any check redemption privilege
which may from time to time be offered by the Funds, the
Custodian, unless otherwise subsequently instructed by Written
Instructions shall, upon receipt of any Written Instructions
setting forth that the redemption is in good form for redemption
in accordance with the check redemption procedure, or pursuant to
preauthorized Written Instructions or procedures established with
regard thereto, honor the check presented as part of such check
redemption privilege out of the money held in the account of the
Funds for such purposes.
Article VIII
Indebtedness
In connection with any borrowings, each Trust, on behalf of
its respective Funds, will cause to be delivered to the Custodian
by a bank or broker (including the Custodian, if the borrowing is
from the Custodian), requiring Securities as collateral for such
borrowings, a notice or undertaking in the form currently
employed by any such bank or broker setting forth the amount
which such bank or broker will loan to the Funds against delivery
of a stated amount of collateral. Each Trust shall promptly
deliver to the Custodian a Certificate specifying with respect to
each such borrowing: (a) the name of the bank or broker, (b) the
amount and terms of the borrowing, which may be set forth by
incorporating by reference an attached promissory note, duly
endorsed by the Trust, acting on behalf of a Fund, or other loan
<PAGE>
agreement, (c) the date and time, if known, on which the loan is
to be entered into, (d) the date on which the loan becomes due
and payable, (e) the total amount payable to the Fund on the
borrowing date, (f) the market value of Securities
collateralizing the loan, including the name of the issuer, the
title and the number of shares or the principal amount of any
particular Securities and (g) a statement that such loan is in
conformance with the Investment Company Act of 1940 and the
Fund's then current Prospectus. The Custodian shall deliver on
the borrowing date specified in a Certificate the specified
collateral and the executed promissory note, if any, against
delivery by the lending bank or broker of the total amount of the
loan payable provided that the same conforms to the total amount
payable as set forth in the Certificate. The Custodian may, at
the option of the lending bank or broker, keep such collateral in
its possession, but such collateral shall be subject to all
rights therein given the lending bank or broker, by virtue of any
promissory note or loan agreement. The Custodian shall deliver in
the manner directed by the Trust from time to time such
Securities as additional collateral as may be specified in a
Certificate to collateralize further any transaction described in
this paragraph. Such Trust shall cause all Securities released
from collateral status to be returned directly to the Custodian
and the Custodian shall receive from time to time such return of
collateral as may be tendered to it. In the event that a Trust
fails to specify in a Certificate the name of the issuer, the
title and number of shares or the principal amount of any
<PAGE>
particular Securities to be delivered as collateral by the
Custodian, the Custodian shall not be under any obligation to
deliver any Securities. The Custodian may require such reasonable
conditions with respect to such collateral and its dealings with
third-party lenders as it may deem appropriate.
Article IX
Concerning the Custodian
1. Except as otherwise provided herein, the Custodian
shall not be liable for any loss or damage, including counsel
fees, resulting from its action or omission to act or otherwise,
except for any such loss or damage arising out of its own
negligence or willful misconduct. Each Trust, on behalf of its
Funds and only from applicable Fund Assets (or insurance
purchased by a Trust with respect to its liabilities on behalf of
its Funds hereunder), shall defend, indemnify and hold
harmless the Custodian, its officers, employees and agents,
with respect to any loss, claim, liability or cost
(including reasonable attorneys' fees) arising or alleged to
arise from or relating to each Trust's duties with respect
to its Funds hereunder or any other action or inaction of
the respective Trust or its Trustees, Officers, employees or
agents as to the Funds, except such as may arise from the
negligent action, omission or willful misconduct of the
Custodian, its officers, employees or agents. The Custodian
shall defend, indemnify and hold harmless each Trust and its
Trustees, Officers, employees or agents with respect to any
loss, claim, liability or cost (including reasonable
attorneys' fees) arising or alleged to arise from or relating to
<PAGE>
the Custodian's duties with respect to the Funds hereunder
or any other action or inaction of the Custodian or its
Trustees, Officers, employees, agents, nominees or Sub-
Custodians as to the Funds, except such as may arise from
the negligent action, omission or willful misconduct of the
Trust, its Trustees, Officers, employees or agents. The
Custodian may, with respect to questions of law apply for
and obtain the advice and opinion of counsel to the Trusts
at the expense of the Funds, or of its own counsel at its
own expense, and shall be fully protected with respect to
anything done or omitted by it in good faith in conformity
with the advice or opinion of counsel to the Trusts, and
shall be similarly protected with respect to anything done
or omitted by it in good faith in conformity with the advice
or opinion of its counsel, unless counsel to the Funds
shall, within a reasonable time after being notified of
legal advice received by the Custodian, have a differing
interpretation of such question of law. The Custodian shall
be liable to the Trusts for any proximate loss or damage
resulting from the use of the Book-Entry System or any
Depository arising by reason of any negligence, misfeasance
or misconduct on the part of the Custodian or any of its
employees, agents, nominees or Sub-Custodians but not for
any special, incidental, consequential, or punitive damages;
provided, however, that nothing contained herein shall
preclude recovery by a Trust, on behalf of its Funds, of
principal and of interest to the date of recovery on,
Securities incorrectly omitted from or included in a Fund's
<PAGE>
accounts or penalties imposed on the Trusts, in connection
with the Funds, therefrom or for any failures to deliver
Securities.
In any case in which one party hereto may be asked to indemnify the other
or hold the other harmless, the party from
whom indemnification is sought (the "Indemnifying Party") shall
be advised of all pertinent facts concerning the situation in
question, and the party claiming a right to indemnification (the
"Indemnified Party") will use reasonable care to identify and
notify the Indemnifying Party promptly concerning any situation
which presents or appears to present a claim for indemnification
against
the Indemnifying Party. The Indemnifying Party shall have
the option to defend the Indemnified Party against any claim
which may be the subject of the indemnification, and in the event
the Indemnifying Party so elects, such defense shall be conducted
by counsel chosen by the Indemnifying Party and satisfactory to
the Indemnified Party and the Indemnifying Party will so notify
the Indemnified Party and thereupon such Indemnifying Party shall
take over the complete defense of the claim and the Indemnifying
Party shall sustain no further legal or other expenses in such
situation for which indemnification has been sought under this
paragraph, except the expenses of any additional counsel retained
by the Indemnified Party. In no case shall any party claiming the
right to indemnification confess any claim or make any compromise
in any case in which the other party has been asked to indemnify
such party (unless such confession or compromise is made with such
other party's prior written consent).
<PAGE>
The Custodian acknowledges the limitation of liability
provisions of Article XI of each Trust's Declaration of Trust and
agrees that the obligations and liabilities of each Trust under
this Agreement shall be limited by and to the extent of the Trust
and its assets and that the Custodian shall not be entitled to
seek satisfaction of any such obligation or liability from the
Trusts' shareholders, Trustees, Officers, employees or agents.
The obligations of the parties hereto under this
paragraph shall survive the termination of this Agreement.
2. Without limiting the generality of the foregoing,
the Custodian, acting in the capacity of Custodian
hereunder, shall be under no obligation to inquire into, and
shall not be liable for:
(a) The validity of the issue of any Securities purchased
by or for the account of the Funds, the legality of the
purchase
thereof, or the propriety of the amount paid therefor;
(b) The legality of the sale of any Securities by or for
the account of the Funds, or the propriety of the amount for
which the same are sold;
(c) The legality of the issue or sale of any shares of the
Funds, or the sufficiency of the amount to be received
therefor;
(d) The legality of the redemption of any shares of the
Funds, or the propriety of the amount to be paid therefor;
(e) The legality of the declaration or payment of any
dividend by the Trust in respect of shares of the Funds;
(f) The legality of any borrowing by the Trust, on behalf
of the Funds, using Securities as collateral;
<PAGE>
(g) The sufficiency of any deposit made pursuant to a
Certificate described in clause (ii) of paragraph 2(e) of
Article IV hereof.
3. The Custodian shall not be liable for any money or
collected funds in U.S. dollars deposited in a Federal
Reserve Bank other than the Custodian in accordance with a
Certificate described in clause (ii) of paragraph 2(e) of
Article IV hereof, nor be liable for or considered to be the
Custodian of any money, whether or not represented by any
check, draft, or other instrument for the payment of money,
received by it on behalf of the Funds until the Custodian
actually receives and collects such money directly or by the
final crediting of the account representing the Funds'
interest at the Book-Entry System or Depository.
4. The Custodian shall not be under any duty or
obligation to take action to effect collection of any amount
due to the Funds from the Dividend and Transfer Agent of the
Funds nor to take any action to effect payment or
distribution by the Dividend and Transfer Agent of the Funds
of any amount paid by the Custodian to the Dividend and
Transfer Agent of the Funds in accordance with this
Agreement.
5. Income due or payable to the Funds with respect to
Funds Assets will be credited to the account of the Funds as
follows:
(a) Dividends will be credited on the first business day
following payable date irrespective of collection.
<PAGE>
(b) Interest on fixed rate municipal bonds and debt
securities issued or guaranteed as to principal and/or
interest by the government of the United States or agencies
or instrumentalities thereof (excluding securities issued by
the Government National Mortgage Association) will be
credited on payable date irrespective of collection.
(c) Interest on fixed rate corporate debt securities will
be credited on the first business day following payable date
irrespective of collection.
(d) Interest on variable and floating rate debt securities
and debt securities issued by the Government National
Mortgage Association will be credited upon the Custodian's
receipt of funds.
(e) Proceeds from options will be credited upon the
Custodian's receipt of funds.
6. Notwithstanding paragraph 5 of this Article IX, the
Custodian shall not be under any duty or obligation to take
action to effect collection of any amount, if the Securities
upon which such amount is payable are in default, or if
payment is refused after due demand or presentation, unless
and until (i) it shall be directed to take such action by a
Certificate and (ii) it shall be assured to its satisfaction
of reimbursement of its costs and expenses in connection
with any such action or, at the Custodian's option,
prepayment.
7. The Custodian may appoint one or more financial or
banking institutions, as Depository or Depositories or as Sub-
Custodian or Sub-Custodians, including, but not limited to,
<PAGE>
banking institutions located in foreign countries, of
Securities and monies at any time owned by the Funds, upon
terms and conditions approved in a Certificate. Current
Depository(s) and Sub-Custodian(s) are noted in Appendix B.
The Custodian shall not be relieved of any obligation or
liability under this Agreement in connection with the
appointment or activities of such Depositories or Sub-
Custodians.
8. The Custodian shall not be under any duty or
obligation to ascertain whether any Securities at any time
delivered to or held by it for the account of the Funds are
such as properly may be held by the Funds under the
provisions of the Declarations of Trust and the Trusts' By-
Laws.
9. The Custodian shall treat all records and other
information relating to the Trusts, the Funds and the Funds'
Assets as confidential and shall not disclose any such
records or information to any other person unless (a) the
respective Trust shall have consented thereto in writing or
(b) such disclosure is compelled by law.
10. The Custodian shall be entitled to receive and the
Trusts agree to pay to the Custodian such compensation as shall
be determined pursuant to Appendix C attached hereto, or as shall
be determined pursuant to amendments to such Appendix approved by
the Custodian and the Trust, on behalf of the Funds. The
Custodian shall be entitled to charge against any money held by
it for the account of the Funds the amount of any loss, damage,
liability or expense, including counsel fees, for which it shall
be entitled to reimbursement under the provisions of this
<PAGE>
Agreement as determined by agreement of the Custodian and
the applicable Trust or by the final order of any court or
arbitrator having jurisdiction and as to which all rights of
appeal shall have expired. The expenses which the Custodian
may charge against the accounts of the Funds include, but
are not limited to, the expenses of Sub-Custodians incurred
in settling transactions involving the purchase and sale of
Securities of the Funds.
Notwithstanding the above, to the extent such compensation
and expenses of the Custodian are paid to the Custodian by the
Adviser pursuant to the services agreements between the Trusts
and the Adviser, no charges shall be made against the accounts of
the Funds by the Custodian.
11. The Custodian shall be entitled to rely upon any
Certificate. The Custodian shall be entitled to rely upon any
Oral Instructions and any Written Instructions actually received
by the Custodian pursuant to Article IV or V hereof. Each Trust
agrees to forward to the Custodian Written Instructions from
Authorized Persons confirming Oral Instructions in such manner so
that such Written Instructions are received by the Custodian,
whether by hand delivery, telex or otherwise, on the first
business day following the day on which such Oral Instructions
are given to the Custodian. Each Trust agrees that the fact that
such confirming instructions are not received by the Custodian
shall in no way affect the validity of the transactions or
enforceability of the transactions hereby authorized by the
Trust. Each Trust agrees that the Custodian shall incur no
<PAGE>
liability to the Funds in acting upon Oral Instructions given to
the Custodian hereunder concerning such transactions.
12. The Custodian will (a) set up and maintain proper
books of account and complete records of all transactions in
the accounts maintained by the Custodian hereunder in such
manner as will meet the obligations of the Funds under the
Investment Company Act of 1940, with particular attention to
Section 31 thereof and Rules 31 a-1 and 31 a-2 thereunder,
and (b) preserve for the periods prescribed by applicable
Federal statute or regulation all records required to be so
preserved. The books and records of the Custodian shall be
open to inspection and audit at reasonable times and with
prior notice by officers and auditors employed by the
Trusts.
13. The Custodian and its Sub-Custodians shall
promptly send to the Trusts, for the account of the Funds,
any report received on the systems of internal accounting
control of the Book-Entry System or the Depository and with
such reports on their own systems of internal accounting
control as the Trusts may reasonably request from time to
time.
14. The Custodian performs only the services of a
custodian and shall have no responsibility for the
management, investment or reinvestment of the Securities
from time to time owned by the Funds. The Custodian is not a
selling agent for shares of the Funds and performance of its
duties as a custodial agent shall not be deemed to be a
recommendation to the Custodian's depositors or others of
shares of the Funds as an investment.
<PAGE>
Article X
Termination
1. The Custodian or any of the Trusts may terminate this
Agreement for any reason by giving to the other party a notice in
writing specifying the date of such termination, which shall be
not less than ninety (90) days after the date of giving of such
notice. If such notice is given by any Trust, on behalf of any of
its Funds, it shall state in writing that the Trust is electing
to terminate this Agreement and shall designate a successor
custodian or custodians, each of which shall be a bank or trust
company having not less than $2,000,000 aggregate capital,
surplus and undivided profits. In the event such notice is given
by the Custodian, the Trusts shall, on or before the termination
date, deliver to the Custodian a copy of a resolution of their
Board of Trustees, certified by the Secretary or Assistant
Secretary, designating a successor custodian or custodians to act
on behalf of the Funds. In the absence of such designation by the
Trusts, the Custodian may designate a successor custodian which
shall be a bank or trust company having not less than $2,000,000
aggregate capital, surplus, and undivided profits. Upon the date
set forth in such notice this Agreement shall terminate, and the
Custodian, provided that it has received a notice of acceptance
by the successor custodian, shall deliver, on that date, directly
to the successor custodian all Securities and monies then owned
by the Funds and held by it as Custodian. Upon termination of
this Agreement, the Trusts shall pay to the Custodian on behalf
of the Funds such compensation as may be due as of the date of
<PAGE>
such termination. The Trusts agree on behalf of the Funds that
the Custodian shall be reimbursed for its reasonable costs in
connection with the termination of this Agreement.
2. If a successor custodian is not designated by the
Trusts, on behalf of the Funds, or by the Custodian in accordance
with the preceding paragraph, or the designated successor cannot
or will not serve, each Trust shall upon the delivery by the
Custodian to each Trust of all Securities (other than Securities
held in the Book-Entry System which cannot be delivered to the
Trust) and monies then owned by its Funds, other than monies
deposited with a Federal Reserve Bank pursuant to a Certificate
described in clause (ii) of paragraph 2(e) of Article IV, be
deemed to be the custodian for its Funds, and the Custodian shall
thereby be relieved of all duties and responsibilities pursuant
to this Agreement, other than the duty with respect to Securities
held in the Book-Entry System which cannot be delivered to the
Trust to hold such Securities hereunder in accordance with this
Agreement.
Article XI
Miscellaneous
1. Appendix A sets forth the names and the signatures of
all Authorized Persons. Each Trust agrees to furnish to the
Custodian, on behalf of its Funds, a new Appendix A in form
similar to the attached Appendix A, if any present Authorized
Person ceases to be an Authorized Person or if any other or
additional Authorized Persons are elected or appointed. Until
such new Appendix A shall be received, the Custodian shall be
<PAGE>
fully protected in acting under the provisions of this Agreement
upon Oral Instructions or signatures of the present Authorized
Persons as set forth in the last delivered Appendix A.
2. No recourse under any obligation of this Agreement or
for any claim based thereon shall be had against any organizer,
shareholder, Officer, Trustee, past, present or future as such,
of the Trusts or of any predecessor or successor, either directly
or through the Trusts or any such predecessor or successor,
whether by virtue of any constitution, statute or rule of law or
equity, or by the enforcement of any assessment or penalty or
otherwise; it being expressly agreed and understood that this
Agreement and the obligations thereunder are enforceable solely
against Fund Assets, and that no such personal liability whatever
shall attach to, or is or shall be incurred by, the organizers,
shareholders, Officers, Trustees of the Trusts or of any
predecessor or successor, or any of them as such, because of the
obligations contained in this Agreement or implied therefrom and
that any and all such liability is hereby expressly waived and
released by the Custodian as a condition of, and as a
consideration for, the execution of this Agreement.
3. The obligations set forth in this Agreement as having
been made by the Trusts have been made by each Trust for and on
behalf of its Funds, pursuant to the authority vested in the
Trusts under the laws of the Commonwealth of Massachusetts, the
Declarations of Trust and the By-Laws of the Trusts. This
Agreement has been executed by Officers of the Trusts as
officers, and not individually, and the obligations contained
<PAGE>
herein are not binding upon any of the Trustees, Officers, Agents
or holders of shares, personally, but bind only the Trusts and
then only to the extent of the respective Trust's Fund Assets.
4. Such provisions of the Prospectuses of the Funds and any
other documents (including advertising material) specifically
mentioning the Custodian (other than merely by name and address)
shall be reviewed with the Custodian by the Trust.
5. Any notice or other instrument in writing, authorized or
required by this Agreement to be given to the Custodian, shall be
sufficiently given if addressed to the Custodian and mailed or
delivered to it at its offices at Star Bank Center, 425 Walnut
Street, M. L. 5127, Cincinnati, Ohio 45202, attention Mutual
Funds Custody Department, or at such other place as the Custodian
may from time to time designate in writing.
6. Any notice or other instrument in writing, authorized or
required by this Agreement to be given to any Trust shall be
sufficiently given if addressed to the Trust and mailed or
delivered to it at its office at 1655 Fort Myer Drive, 10th
Floor, Arlington, Virginia 22209, or at such other place as the
Trusts may from time to time designate in writing.
7. This Agreement with the exception of Appendices A & B
may not be amended or modified in any manner except by a written
agreement executed by all parties provided that no amendment
shall be in contravention of or inconsistent with any federal or
state law or regulation or the Declarations of Trust or By-Laws
of the Trusts.
<PAGE>
8. This Agreement shall extend to and shall be binding upon
the parties hereto, and their respective successors and assigns;
provided, however, that this Agreement shall not be assignable by
the Trusts or by the Custodian, and no attempted assignment by
the Trusts or the Custodian shall be effective without the
written consent of the other party hereto.
9. This Agreement shall be construed in accordance with the
laws of the State of Ohio.
10. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original,
but such counterparts shall, together, constitute only one
instrument.
11. Where applicable and required based upon the context
used, the singular of any term used in this Agreement shall
include the plural and the plural may refer to the singular.
In Witness Whereof, the parties hereto have caused this Agreement
to be executed by their respective Officers, thereunto duly
authorized as of the day and year first above written.
Attest: Government Investors Trust
GIT Equity Trust, GIT Income
Trust and GIT Tax-Free Trust
(signature) (signature)
W. Richard Mason By: C.J. Tennes
Attest: Star Bank, N.A.
(signature) (signature)
Stephen J. Black By: Lynette C. Gibson
Senior Trust Officer
<PAGE>
Appendix A
Authorized Persons Specimen Signatures
Fund Officers:
Charles J. Tennes (signature)
W. Richard Mason (signature)
Adviser Employees:
Julia Mailliard (signature)
John Edwards* (signature)
Jason L. Michel* (signature)
T. Daniel Gillespie* (signature)
See Signature Cards for Additional Adviser Employees Authorized To
Sign Checks on Fund Accounts
* Denotes authority restricted to securities trades.
Amendment Dated: February 13, 1995
<PAGE>
Appendix B
The following Depository(s) and Sub-Custodian(s) are employed
currently by Star Bank, N.A. for securities processing and control
The Depository Trust Company (New York)
7 Hanover Square
New York, NY 10004
The Federal Reserve Bank
Cincinnati and Cleveland Branches
Bankers Trust Company
16 Wall Street
New York, NY 10005
<PAGE>
Schedule C
Star Bank, N.A. as Custodian, will receive monthly compensation
for services according to the terms of the following Schedule:
I. Portfolio Transaction Fees:
(a) For each repurchase agreement transaction $7.00
(b) For each portfolio transaction processed
through DTC or Federal Reserve $10.00
(c) For each portfolio transaction processed
through our New York custodian $25.00
(d) For each GNMA/Amortized Security purchase$40.00
(e) For each GNMA/Prin/Int Paydown, GNMA
Sales $8.00
(f) For each option/future contract written,
exercised or expired $40.00
(g) For each Cedel/Euro clear transaction $100.00
(h) For each Disbursement (Fund expenses only)$5.00
A transaction is a purchase/sale of a security, free receipt/
free delivery (excludes initial conversion), maturity, tender
or exchange:
II. Monthly Market Value Fee
Based upon Month-end at a rate of: Million
.0002 (2 Basis Points) on First $50
.0001 (1 Basis Points) on Next $25
.000075 (3/4 Basis Point) on Balance
III. Out-of-Pocket Expenses
The only out-of-pocket expenses charged to your account
will be shipping fees or transfer fees.
IV. IRA Documents
Per Shareholder/year to hold each IRA Document $8.00
V. Earnings Credits
On a monthly basis any earnings credits generated from univested
custody balances will be first applied against any cash management
service fees and then to custody transaction fees (as referenced
in item #1 above). Earnings credits are based on the average yield
on the 91 day U.S. Treasury Bill for the preceding thirteen weeks
less the 10% reserve.
<PAGE>
Amendment To Agreement
This Amendment is made effective the 15th day of November,
1993 to the Custody Agreement made as of September 8, 1993
by and between Government Investors Trust, GIT Equity Trust,
GIT Income Trust and GIT Tax-Free Trust (the "Trust") and
Star Bank, N.A. (the "Custodian") to provide custodian
services to the Funds.
The Trusts and the Custodian agree to amend the Agreement as
follows:
1. This sentence shall be added to the first paragraph:
Custodian agrees to retain custody of U.S. Government
Securities and securities issued and sold primarily in the
United States. Pursuant to Paragraph 7 of Article IX of
this Agreement, Custodian hereby appoints Bankers Trust
Company as Sub-Custodian to retain custody of foreign
securities in accordance with the terms and conditions of
the Agreement dated as November 15, 1993 between Bankers
Trust Company and Star Bank, N.A. attached hereto as
Appendix D (the "Sub-Custodian Agreement"). The Trust
hereby acknowledges such appointment and expressly agrees to
the terms and conditions set forth in the Sub-Custodian
Agreement.
2. A new Paragraph 12 shall be added to Article I,
Definitions as follows.
"Foreign Securities" include securities issued and sold
primarily outside of the United States by a foreign
government, a national of any foreign country or a
corporation or other organization incorporated or organized
under the laws of any foreign country and securities issued
or guaranteed by the Government of the United States or by
any state or any political subdivision thereof or by any
agency thereof by any entity organized under the laws of the
United States or of any state thereof which have been issued
and sold primarily outside the United States.
In Witness Whereof, the parties hereby ratify and affirm the
Agreement in its entirety as amended by this Amendment.
Attest:
(signature) W. Richard Mason
Government Investors Trust,
GIT Equity Trust, GIT Income Trust
and GIT Tax-Free Trust
By: (signature) C. J. Tennes
Attest:
(signature) Stephen J Blackwell, Trust Officer
Star Bank, N.A.
By: (signature) Lynnette C. Gibson, Senior Trust Officer
<PAGE>
Appendix D
Custodian Agreement
Agreement dated as of 11/15, 1993, between Bankers Trust
Company (the "Custodian") and Star Bank, N.A. (the
"Customer"). Customer represents and Custodian acknowledges
that it is entering into this Agreement solely as Custodian
of GIT Equity Trust Worldwide Growth Portfolio, (the
"Portfolio"), its client, with whom Customer has a Custody
Agreement, and, Portfolio is a third party beneficiary of
this Agreement between Customer and Custodian.
1. Employment of Custodian. The Customer hereby employs
the Custodian as custodian of all assets of the Customer
which are delivered to and accepted by the Custodian or any
of its subcustodians (as that term is defined in Section 5)
anywhere in the world (the "Property") pursuant to the terms
and conditions set fort herein. Without limitation, such
Property shall include stocks and other equity interests of
every type, evidences of indebtedness, other instruments
representing same or rights or obligations to received,
purchase, deliver or sell same and other non-cash investment
property of the Customer ("Securities") and cash from
whatever source and in whatever currency ("Cash"). The
Custodian shall not be responsible for any property of the
Customer held or received by the Customer or others and not
delivered to the Custodian or any of its subcustodian.
2. Custody Account. The Custodian agrees to establish and
maintain a custody account in the name of the Customer (the
"Account") for any and all Property from time received and
accepted by the Custodian or nay of its subcustodians for
the account of the Customer. The Customer acknowledges its
responsibility as a principal for all of its obligations to
the Custodian arising under or in connection with this
Agreement, notwithstanding that it may be acting on behalf
of Portfolio and warrants its authority to deposit in the
Account and Property received therefor by the Custodian
shall not be subject to, nor shall its rights and
obligations under this Agreement or with respect to the
Account be affected by, any agreement between the Customer
and other person.
The Custodian shall hold, keep safe and protect as custodian
in the Account, on behalf of the Customer, all Property.
All transactions, including, but not limited to, foreign
exchange transactions, involving the Property shall be
executed or settled solely in accordance with Instructions
(as that term is defied in Section 10), except that until
the Custodian receives Instructions to the contrary, the
Custodian will:
(a) collect all interest and dividends and all other income
payments whether paid in cash or in kind, on the Property,
as the same become payable and credit the same to the
Account;
(b) present for payment all Securities held in the Account
which are called, redeemed or retired or otherwise become
payable and all coupons and other income items which call
for payment upon presentation and hold the cash received in
the Account pursuant to this Agreement;
<PAGE>
(c) exchange Securities where the exchange is purely
ministerial (including, without limitation, the exchange of
temporary securities for those in definitive form and the
exchange of warrants, or other documents of entitlement to
securities, for the Securities themselves);
(d) whenever notification of a rights entitlement or a
fractional interest resulting from a rights issue, stock
dividend or stock split is received for the Account and such
rights entitlement or fractional interest bears and
expiration date, if after endeavoring to obtain the
Custodian's Instructions such Instructions are not received
in time for the Custodian to take timely action, sell in the
discretion of the Custodian (which sale the Customer hereby
authorizes the Custodian to make) such rights entitlement or
fractional interest and credit the Account with the net
proceeds of such sale;
(e) executed in the Customer's name for the Account,
whenever the Custodian deems it appropriate, such ownership
and other certificates as may be required to obtain the
payment of income from the Property; and
(f) pay for the Account, any and all taxes and levies in the
nature of taxes imposed on income on the Property by any
governmental authority. In the event there is insufficient
Cash available in the Account to pay such taxes and levies,
the Custodian shall notify the Customer of the amount of the
shortfall and the Customer, at its option, may deposit
additional Cash in the Account or take steps to have
sufficient Cash available. The Customer agrees, when and if
requested by the Custodian and required in connection with
the payment of any such taxes to cooperate with the
Custodian in furnishing information, executing documents or
otherwise.
The Custodian shall deliver, subject to Section 12 below,
and all Property in the Account in accordance with
instructions and in connection therewith, the Customer will
accept delivery of Securities of the same class and
denomination in place of those contained in the Account.
Neither the Custodian nor any subcustodian shall have any
duty or responsibility to see to the application of any
Property withdrawn from the Account upon Instructions.
Except as otherwise may be agreed upon by the parties
hereto, the Custodian shall not be required to comply with
any Instructions to settle the purchase of any Securities
for the Account unless there is sufficient Cash in the
Account at the time or to settle the sale of any Securities
form the Account unless such Securities are in deliverable
form. Notwithstanding the foregoing, if the purchase price
of such Securities exceeds the amount of Cash in the Account
at the time of such purchase, the Custodian may, in its sole
discretion, advance the amount of the difference in order to
settle the purchase of such Securities. The amount of any
such advance shall be deemed a loan from the Custodian to
the Customer payable on demand and bearing interest accruing
from the date such loan is made to but not including the
date such loan is repaid at a rate per annum customarily
charged by the Custodian on similar loans.
3. Records, Ownership of Property and Statements. The
ownership of the Property whether Securities, Cash and/or
other property, and whether held by the Custodian or a
subcustodian or in a securities depository or clearing
agency as hereinafter authorized, shall be clearly recorded
on the
<PAGE>
Custodian's books as belonging to the Account and not for
the Custodian's own interest. The Custodian shall keep
accurate and detailed accounts of all investments, receipts,
disbursements and other transactions for the Account. All
account, books and records of the Custodian relating thereto
shall be open to inspection and audit at all reasonable
times during normal business hours by any person designated
by the Customer. The Custodian will supply to the Customer
from time to time, as mutually agreed upon, a statement in
respect to any Property in the Account held by the Custodian
or by a subcustodian. In the absence of the filing in
writing with the Custodian by the Customer of exceptions or
objections to any such statement within sixty (60) days of
the mailing thereof, the Customer shall be deemed to have
approved such statement; and in such case or upon written
approval of the Customer of any such statement, the
Custodian shall, to the extent permitted by law, be
released, relieved and discharged with respect to all
matters and things set forth in such statement as though
such statement had been settled by the decree of a court of
competent jurisdiction in any action in which the Customer
and all persons having any equity interest in the Customer
were parties.
4. Maintenance of Property Outside of the United States.
Property in the Account may be held in a country or other
jurisdiction outside of the United States; provided that (a)
with respect to Securities, such country or other
jurisdiction shall be one in which the principal trading
market for such Securities is located or the country or
other jurisdiction in which such Securities are to be
presented for payment or acquired for the Account and (b)
with respect to cash, the amount thereof to be maintained in
any country or other jurisdiction shall be an amount which
is deemed necessary to settle transactions relating to
Securities purchased for the Account in such country or
jurisdiction or which is received in connection with the
holding of such Securities in the Account.
5 Subcustodians and Securities Depositories. The Custodian
may employ, directly or in directly, one or more
subcustodians to assist in the performance of its
obligations hereunder; provided however, that the employment
of any such subcustodians (other than any such subcustodian
which is a securities depository or clearing agency) the
Custodian shall only be responsible or liable for loses
arising from such employment caused by the Custodian's own
failure to exercise reasonable care.
The Customer authorizes and instructs the Custodian to hold
the Property in the Account in custody accounts which have
been established by the Custodian with one of its branches,
a branch of another U.S. bank, a foreign bank or trust
company acting as custodian or a securities depository in
which the Custodian participants. Hereinafter, the term
"subcustodian" will refer to any third-party agent referred
to in the first sentence of this paragraph which has entered
into an agreement with the Custodian of the type
contemplated hereunder regarding Securities and/or Cash held
in or to be acquired for the Account. In addition the
Customer also authorizes the Custodian to authorize any
subcustodian to hold the Property in the Account in one or
more accounts with securities depositories or clearing
agencies in which such subcustodian participates subject to
the provisions set forth below. The Custodian shall select
in its sole discretion the entity or entities in the custody
of which any of the Securities may be so maintained or with
which any Cash may be so deposited. Furthermore, any entity
so selected in authorized to hold such Securities or Cash in
its account with any securities depository or clearing
agency in which it participates.
6. Use of Subcustodian. With respect to Securities in the
Account which are maintained by the Custodian in the custody
of a subcustodian pursuant to Section 5,
<PAGE>
(a) The Custodian will identify on its books as belonging to
the Customer any Securities held by such subcustodian.
(b) In the event that a subcustodian permits any of the
Securities placed in its care to be held in a securities
depository or clearing agency, such subcustodian will be
required by its agreement with the Custodian to identify on
its books such Securities as being held for the account of
the Custodian for its customers.
(c) Any Securities in the Account held by a subcustodian
will be subject only to the instructions of the Custodian or
its agents unless specifically otherwise authorized by the
Custodian on an exception basis; and any Securities held in
a securities depository or clearing agency for the account
of the Custodian or a subcustodian will be subject only to
the instructions of the Custodian or such subcustodian, as
the case may be.
(d) Securities deposited with a subcustodian will be
maintained in an account holding only assets for customers
of the Custodian
(e) Any agreement the Custodian shall enter into with a
subcustodian with respect to the holding of securities shall
require that (i) the Securities are not subject to any
right, charge, security interest lien or claim of any kind
in favor of such subcustodian except a claim for payment in
accordance with such agreement for their safe custody or
administration and expenses related thereto and (ii)
beneficial ownership of such Securities be freely
transferable without the payment of money or value other
than for safe custody or administration and expenses related
thereto.
(f) Upon request by the Customer, the Custodian will
identify the name, address and principal place of business
of any subcustodian and the name and address of the
governmental agency or other regulatory authority that
supervises or regulates such subcustodian.
7. Holding of Securities, Nominees, etc. Securities in the
Account which are held by the Custodian or any subcustodian
may be held by such entity in the name of the Customer, in
its own name, in the name of its nominee or in bearer form.
Securities which are held with a subcustodian or are
eligible for deposit in a securities depository as provided
above may be maintained with the subcustodian or depository,
as the case may be, in an account for the Custodian's or
subcustodian's customers. The Custodian or subcustodian, as
the case may be, may combine certificates of the same issue
held by it as fiduciary or as a custodian. In the event
that any Securities in the name of the Custodian or its
nominee or held by one of its subcustodians and registered
in the name of such subcustodian or its nominee are called
for partial redemption by the issuer or such Security, the
Custodian may, subject to the rules or regulations
pertaining to allocation of any securities depository in
which such Securities have been deposited, allot, or cause
to allotted, the called portion to the respective beneficial
holders of such class of security in any manner the
Custodian deems to fair and equitable.
<PAGE>
8. Proxies, etc. With respect to any proxies, notices,
reports other communications relative to any of the
Securities in the Account, the Custodian shall perform such
services relative thereto as may be agreed upon between the
Custodian and the Customer. Neither the Custodian nor its
nominees or agents shall vote upon or in respect of any of
the Securities in the Account, execute any form of proxy to
vote thereon, or give any consent or take any action (except
as provided in Section 2) with respect the thereto except
upon the receipt of Instructions from the Customer relative
thereto.
9. Settlement Procedures Settlement and payment for
Securities received for the Account and delivery of
Securities maintained for the Account may be effected in
accordance with the customary or established securities
trading or securities processing practices and procedures in
the jurisdiction or market in which the transaction occurs,
including, without limitation, delivering Securities to the
purchase thereof or to a dealer therefor (or an agent for
such purchaser or dealer) against a receipt with the
expectation of receiving later payment for such Securities
from such purchaser or dealer, and in accordance with the
standard operating procedures of the Custodian in effect
from time to time for that jurisdiction or market.
10. Instructions. The term "Instruction" means instructions
from the Customer in respect of any of the Custodian's
duties hereunder which have been received by the Custodian
at its address set forth in Section 15 below in writing or
by tested telex signed or given by such one or more person
or persons as the Customer shall have from time to time
authorized to give the particular class of Instructions in
question and whose name ad (if applicable) signature and
office address have been filed with the Custodian, or upon
receipt of such other form of instructions as the Customer
may from time to time authorized in writing and which the
Custodian agrees to accept. The Custodian shall have the
right to assume in the absence of notice to the contrary
from the Customer that any person whose name is on file with
the Custodian pursuant to this Section 10 has been
authorized by the Customer to give the Instructions in
question and that such authorization has not been revoked.
11. Standard of Care. The Custodian shall be responsible
for the performance of only such duties as are set forth
herein or contained in Instructions given to he Custodian
which are not contrary to the provisions of this Agreement.
The Custodian will use reasonable care with respect to the
safekeeping of Securities in the Account and in carrying out
its obligations under the Agreement. So long as and to the
extent that it has exercised reasonable care, the Custodian
shall not be responsible for the title, validity or
genuineness of any Property or other property or evidence or
title thereto received by it or delivered by it pursuant to
this Agreement and shall be held harmless in acting upon,
and may conclusively rely on, without liability for any loss
resulting therefrom, any notice, request, consent,
certificate or other instrument reasonably believed by it to
be genuine and to be signed or furnished by the proper party
or parties, including, without limitation, Instructions, and
shall be indemnified by the Customer for any losses,
damages, costs and expenses (including, without limitation,
the fees and expenses of counsel) incurred by the Custodian
and arising out of action take or omitted in good faith by
the Custodian hereunder or under any Instructions. The
Custodian shall be liable to the Customer for any loss which
shall occur directly as the result of the failure of a
subcustodian (other than any subcustodian which is a
securities depository or clearing agency the actions or
omissions for which the Custodian's liability and
responsibility is set forth in the last proviso of the first
paragraph of Section 5) to exercise reasonable care with
respect to the safekeeping of such Securities. In the event
of any loss to the Customer by reason of the failure of the
Custodian or its subcustodian to utilize reasonable care,
the Custodian shall be liable to the Customer to the extent
of the Customer's actual damages at the time such loss was
discovered without reference to any special conditions or
circumstances. In no event shall the
<PAGE>
Custodian be liable for any consequential or special
damages. The Custodian shall be entitled to rely, and may
act, on advice of counsel (who may be counsel for the
Customer) on all matters and shall be without liability for
any action reasonably taken or omitted pursuant to such
advice.
All collections of funds or other property paid or
distributed in respect of Securities in the Account,
including funds involved in third-party foreign exchange
transactions, shall be made at the risk of the Customer.
The Custodian shall have no liability for any loss
accessioned by delay in the actual receipt of notice by the
Custodian or by its subcustodian of any payment, reception
or other transaction regarding Securities in the Accounting
respect of which the Custodian has agreed to take action as
provided in Section 2 hereof. The Custodian shall not be
liable for any loss resulting from, or caused by, or
resulting from acts of governmental authorities (whether de
jur or de facto), including, without limitation,
nationalization, expropriation, and the imposition of
currency restrictions; acts of war, terrorism, insurrection
or revolution; strikes or work stoppages; the inability of a
local clearing and settlement system to settle transactions
for reasons beyond the control of the Custodian; hurricane,
cyclone, earthquake, volcanic eruption, nuclear fusion,
radioactivity or other acts of God.
The provisions of this Section shall survive termination of
this Agreement.
12. Fees and Expenses. The Customer agrees to pay to the
Custodian such compensation for its services pursuant to
this Agreement as may be mutually agreed upon in writing
from time to time and the Custodian's out-of-pocket or
incidental expenses, including (but not limitation) legal
fees. The Customer hereby agrees to hold the Custodian
harmless from any liability or loss resulting from any taxes
or other governmental charges, and any expense related
thereto, which may be imposed, or assessed with respect to
any Property in the Account and also agrees to hold the
Custodian, its subcustodians, and their respective nominees
harmless from any liability as a record holder of Property
in the Account. The Custodian is authorized to charge any
account of the Customer for such items. The provisions of
this Section shall survive the termination of this
Agreement.
13. Amendment, Modifications, etc. No provisions of this
Agreement may amended, modified or waived except in writing
signed by the parties hereto.
14. Termination. This Agreement may be terminated by the
Customer or the Custodian by ninety (90) days' notice to the
other; provided that notice by the Customer shall specify
the names of the persons to who the Custodian shall deliver
the Securities in the Account and to whom the Cash in the
Account shall be paid. If notice of termination is given by
the Custodian, the Customer shall, within ninety (90) days
following the giving of such notice, deliver to the
Custodian a written notice specifying the names of the
persons to whom the Custodian shall deliver the Securities
in the Account and to whom the Cash in the Account shall be
paid. In either case, the Custodian will deliver such
Securities and Cash to the persons so specified, after
deducting therefrom any amounts which the Custodian
determines to be owed to it under Section 12. In addition,
the Custodian may in its discretion withhold from such
delivery such Cash and Securities as may be necessary to
settle transactions pending at the time of such delivery.
If within ninety (90) days following the giving of a notice
of termination by the Custodian, the Custodian does not
receive from the Customer a written notice specifying the
names of the persons to whom the Cash in the Account shall
be paid, the Custodian, at its election, may deliver such
Securities and pay such Cash to a ban or trust company doing
business in the State of New York to be held and disposed of
pursuant to the provisions of this Agreement, or may
continue to hold such Securities and Cash until a written
notice as aforesaid is delivered to the Custodian.
<PAGE>
15. Notices. Expect as otherwise provided in this Agreement,
all requests, demands or other communications between the
parties or notices in connection herewith (a) shall be in
writing, had delivered or sent by telex, telegram, facsimile
or cable, addressed, if to the Customer, its address set
forth on the signature page hereof and, if to the Custodian,
to c/o BTNY Services, Inc., 34 Exchange Place, Jersey City,
New Jersey 07302, Attention: Global Securities Services.
(Telex No. 420066 Area 19 Answerback: BANTRUS) (Facsimile
No.201-860-7290), or in either case such other address as
shall have been furnished to the receiving party pursuant to
the provisions hereof and (b) shall be deemed effective when
received, or, in the case of a telex, when sent to the
proper number and acknowledged by a proper answerback.
16. Security for Payment. To secure payment of all fees and
expenses payable to Custodian hereunder, including but not
limited to amounts payable pursuant to indemnification
provisions and to the last paragraph of Section 2, the
Customer hereby grants to Custodian a continuing security
interest in and right to setoff against the Account and all
Property held therein from time to time in the full amount
of such obligations; provided that, if the Account consists
of more than one portfolio and the obligations secured
pursuant to this Section 16 can be allocated to a specific
portfolio, such security interest and right of setoff will
be limited to any amounts owned hereunder, Custodian shall
be entitled to use available Cash in the Account or such
applicable portion thereof held for a specific portfolio, as
the case may be, and to dispose of Securities in the Account
or such applicable portion thereof as is necessary. In the
event Securities in the Account or such applicable portion
thereof are insufficient to discharge such obligations, the
Customer hereby grants Custodian a continuing security
interest in and right of setoff against the balance from
time to time in any non-custodian account of the Customer
(the "Pledged Balances"), and Custodian may, at any time or
from time to time at Custodian's sole option and without
notice appropriate and apply toward the payment of such
obligations, the Pledged Balances. If at any time Property
in the Account or such applicable portion thereof and the
Pledge Balances are insufficient to fully collateralize such
obligations, Customer shall provide to Custodian additional
collateral in form and amount satisfactory to Custodian and
shall grant to Custodian a continuing security interest in
and right of setoff against such collateral. In any such
case and without limiting the foregoing, Custodian shall be
entitled to take such other action(s) or exercise such other
options, powers and rights as Custodian now or hereafter has
a secured creditor under the New York Uniform Commercial
Code or any other applicable law.
17. Governing Law and Successors and Assigns. This
Agreement shall be governed by the law of the State of New
York and shall not be assignable by either party, but shall
bind the successors in interest of the Customer and
Custodian.
18. Publicity Customer shall furnish to Custodian at its
office referred to in Section 15, above, prior to any
distribution thereof, copies of any material prepared for
distribution to any persons who not parties hereto that
refer in any way Custodian. Customer shall not distribute
or permit the distribution of such materials if Custodian
reasonable objects in writing within ten (10) business days
(or such other time as may be mutually agreed) after receipt
thereof. The provisions of this Section shall survive the
termination of this Agreement.
19. Submission to Jurisdiction. To the extent, if any, to
which the Customer or any of its respective properties may
be deemed to have or hereafter to acquire immunity, on the
ground of sovereignty or otherwise, from any judicial
process or proceeding to enforce this Agreement or to collect
<PAGE>
amounts due hereunder (including, without limitation,
attachment proceedings prior to judgment or in aid of
execution) in any jurisdiction, the Customer hereby waives
such immunity and agrees not to claim the same. Any suit,
action or proceedings arising out of this Agreement may be
instituted in any State or Federal court sitting in the City
of New York, State of New York, United States of America,
and the Customer irrevocably submits to the non-exclusive
jurisdiction of any such court in any such suit, action or
proceeding and waives, to the fullest extent permitted by
law, any objection which it may now or hereafter have to
laying of venue of such suit, action or proceeding brought
in such a court and any claim that such suit, action or
proceeding brought in an inconvenient forum. The Customer
hereby irrevocably designates, appoints and empowers, as its
authorized agent to receive, for and on behalf of actions or
proceedings may be brought in any of the aforementioned
courts, and such service of process shall be deemed complete
upon the date of delivery thereof to such agent whether or
not such agent gives notice thereof to the Customer or upon
the earliest of any other date permitted by applicable law.
The Customer further irrevocably consents to the service of
process out of any of the aforementioned courts in any such
action or proceeding by the mailing of copies thereof by
certified air mail, postage prepaid, to the Customer at its
address set forth below or in any other manner permitted by
law, such service to become effective upon the earlier of
(i) the date fifteen (15) days after such mailing or (ii)
any earlier of date permitted by applicable law. The
Customer agrees that it will at all times continuously
maintain an agent to receive service of process in the City
and State of New York on behalf of itself and its properties
with respect to this Agreement and in the event that, for
any reason, the agent named above or its successor shall no
longer serve as agent of the Customer to receive service of
process in the City and State of New York on its behalf, the
Customer shall promptly appoint a successor to so serve and
shall advise the Custodian thereof.
20. Headings. The headings of the paragraphs hereof are
included for convenience of reference only and do not form a
part of this Agreement.
Star Bank, N.A.
By: (signature)
Title:
Address:
Bankers Trust Company
By: (signature)
Title:
