As Filed with the
Commission on July 31, 1997
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. 19 X
Registration Statement Under the Investment Company Act
of 1940 X
Amendment No. 22
Mosaic 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, Secretary
Mosaic Equity Trust
1655 Fort Myer Drive
Arlington, Virginia 22209
(Name and Address of Agent for Service)
Copies to:
John Rashke, Esquire
DeWitt Ross & Stevens, LC
8000 Excelsior Drive
Madison, Wisconsin 53717
David Leahy, 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:
__X__ immediately upon filing pursuant to Rule 485(b)
_____ on ________________ pursuant to Rule 485(b)
_____ 60 days after filing pursuant to Rule 485(a)(1)
_____ on ________________ 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, 1997 was filed on May 28, 1997.
<PAGE>
Cross-Reference Sheet
Form N1-A
Part A, Information Required in a Prospectus
Item 1 Inside cover Page
Item 2 Expense Summary
Item 3 Financial Highlights
Item 4 Inside cover, About Mosaic Equity Trust,
Investment Objective, Investment
Policies, Specialized Investment Techniques,
Investment Risks
Item 5 Management of the Trust
Item 5A Incorporated by reference in the
Registrant's annual report
Item 6 The Trust and Its Shares, Dividends,
Performance Information, Taxes
(including Federal Tax Considerations
and State Tax Considerations), Net
Asset Value, How to Purchase Shares and
How to Redeem Shares) and rear cover page
Item 7 How to Purchase Shares
Item 8 How to Redeem Shares
(Additional Charges and Closing An Account)
Item 9 Not applicable
Part A applicable to the Trust's other portfolios,
effective June 13, 1997, was previously filed and
is incorporated herein by reference.
Part B, Items Required in a Statement of
Additional Information
Item 10 Cover page
Item 11 Table of Contents (Cover page)
Item 12 Introductory Information
Item 13 Supplemental Investment Policies,
Investment Limitations
Item 14 The Investment Advisor, Trustees and
Officers
Item 15 Organization of the Trust, Trustees and
Officers
Item 16 The Investment Advisor, Administrative
and Other Expenses, Custodians and
Special Custodians,
Item 17 Portfolio Transactions
Item 18 Organization of the Trust
Item 19 Share Purchases, Share Redemptions,
Declaration of Dividends, Determination
of Net Asset Value
Item 20 Additional Tax Matters
Item 21 Not applicable
Item 22 Yield and Total Return Calculations
Item 23 Annual and Semi-Annual Reports are
incorporated by reference and discussed
in Financial Statements and Independent
Auditors' Report, Legal Matters & Inde-
pendent Auditors, Additional Information
Part C, Other Information
Items 24 through 32 follow Part B
<PAGE>
Prospectus/July 31, 1997
1655 Fort Myer Drive, Arlington, Virginia 22209-3108
Mosaic Equity Trust
Worldwide Growth Fund
Mosaic Equity Trust Worldwide Growth Fund (the "Fund") 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 Mosaic mutual funds
Purchases and redemptions by mail or by wire
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, NOR HAS THE COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
BANKERS FINANCE ADVISORS, LLC
Investment Advisor
TABLE OF CONTENTS
About Mosaic Equity Trust 2
Expense Summary 3
Financial Highlights 3
Investment Objective 4
Investment Policies 4
Specialized Investment Techniques 4
Investment Risks 4
Management of the Trust 5
The Trust and its Shares 6
Dividends 6
Performance Informations 6
Taxes 6
Net Asset Value 6
Shareholder Account Transactions 7
How to Open a New Account 7
How to Purchase Additional Shares 8
How to Redeem Shares 8
Other Fees and Services 9
CUSTODIAN
Star Bank, N.A.
Cincinnati, OH 45202
INDEPENDENT AUDITORS
Ernst & Young LLP
TELEPHONE NUMBERS
Shareholder Services
Washington, DC area: 703-528-6500
Toll-free Nationwide: 888-670-3600
Mosaic Tiles (24-hour automated information)
Toll-free Nationwide: 800-336-3063
About Mosaic Equity Trust
Mosaic 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 "Advisor") of the same address as the Trust. Only
shares in the Trust's Worldwide Growth Fund (the "Fund") are offered by
means of this prospectus. The Trust may offer additional funds which
are managed independently. Currently there are three such additional
funds offered by a separate prospectus: the Investors Fund, the Balanced
Fund, and the Mid-Cap Growth Fund.
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 2.00%
Total Fund Operating Expenses 2.50%
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
period: $25 $78 $133 $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 Fund'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 (fees for certain wire transfers, stop payments on checks,
bounced investment checks, and retirement plans are described on pages
7-9).
For the year ending March 31, 1997, the Advisor waived a portion of its
management fees of 1.00%. Had it not done so, the total fund operating
expenses would have been 3.00%.
Financial Highlights
The financial highlights data for a share outstanding and other
performance information for the fiscal years ending March 31, 1997,
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 Year ended Period ended*
Mar. 31, 1997# March 31, 1996 March 31, 1995 March 31, 1994
<C> <C> <C> <C>
Net asset value beginning
of period $ 9.862 $ 8.501 $12.511 $10.000
Net investment income (loss) 0.012 0.044 0.022 (0.035)
Net realized and unrealized
gains (losses) on securities 1.094 1.387 (2.491) 2.546
Total from investment
operations 1.106 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 $10.968 9.862 $8.501 12.511
Total return 11.21% 16.88% (22.20)% 26.19%2
Net assets at end of
period (thousands) 2,582 3,116 3,319 3,526
Expenses to average net assets 2.50% 2.38% 2.05% 1.81%2
Net income to average net
assets 0.10% 0.43% 0.21% (0.48)%2
Portfolio turnover 47% 78% 65% 83%
Average commission paid rate5 $0.0035
* For the period from April 16, 1993 (inception) to March 31, 1994.
2 Annualized.
3 Had the Advisor not waived advisory fees, the Fund's ratios of
expenses and net investment income (loss) to average net assets would
have been 3.00% and (0.40)%, respectively, for the year ended March 31,
1997; 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 the Advisor not waived the advisory fee and deferred a portion
of the operating expenses, the Fund'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.
Ratio of expenses to average net assets includes fees paid indirectly
for the year ended March 31, 1996 and thereafter.
# Effective July 31, 1996, the investment advisory services transferred
to Bankers Finance Advisors, LLC from Bankers Finance Investment
Management Corp.
5 Required disclosure for fiscal years beginning after September 1,
1995 pursuant to SEC regulations.
Investment Objective
The Worldwide Growth Fund's objective is capital appreciation. The
Fund'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 Fund's investment objective
will be achieved.
Investment Policies
Under normal circumstances, the Fund 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 Fund will emphasize investments that, in the opinion of the Advisor,
are likely to benefit from the world's rapidly growing economies and
newly formed capital markets. The Fund may invest in the securities of
issuers located anywhere in the world, in companies of all sizes and
industries. The Fund will normally maintain investments in at least
three countries. In addition to common stocks, the Fund's foreign
equity securities investments may include convertible debt securities,
preferred stocks, warrants and American Depository Receipts. To the
extent that the Fund's assets are not invested in foreign equity
securities, the Fund 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
Fund 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 Fund's assets.
To meet redemption requirements, the Fund 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 Advisor determines that market conditions warrant the adoption of
a temporary defensive investment position, as much as 100 percent of the
Fund 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 Fund is not invested in foreign
equity securities, it is not invested in accordance with policies
designed to achieve its stated investment objective.
The Fund'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
Fund's total assets as of the date of purchase. Additionally, the Fund
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 Fund's 15 percent limitation on
investments in illiquid securities, the Fund may invest in Rule 144A
securities which are determined to be liquid based on guidelines adopted
by the Trustees for making such determinations. The Fund 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 Fund 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 Fund 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 Fund
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 Fund 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 Fund 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
Advisor will follow procedures to ensure that all repurchase agreements
acquired by the Fund are always at least 100 percent collateralized as
to principal and interest.
When investing in repurchase agreements, the Fund relies on the other
party to complete the transaction on the scheduled date. Should the
other party fail to do so, the Fund would hold securities it did not
intend to own. Were it to sell such securities, the Fund might incur a
loss. In the event of insolvency or bankruptcy of the other party to a
repurchase agreement, the Fund could encounter difficulties and might
incur losses upon the exercise of its rights under the repurchase
agreement.
The Fund 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 Fund. 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 Fund 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 Advisor 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 Find's net asset value is
computed in U.S. dollars, the Fund'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
Fund will incur gains from currency fluctuations, losses are also
possible. In addition to the risk of loss due to currency fluctuations,
the Fund 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 Fund 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 Advisor's ability to manage the Fund 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 Fund'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 Fund'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 Advisor. Bankers Finance Advisors, LLC is a division of Madison
Investment Advisors, Inc., 6411 Mineral Point Road, Madison, Wisconsin,
53705. Bankers Finance Advisors, LLC manages assets of approximately
$200 million in assets in the Mosaic family of mutual funds, which
includes stock, bond and money market portfolios. Madison Investment
Advisors, Inc., a registered investment advisory firm for over 23 years,
provides professional portfolio management services to a number of
clients, including stock and bond mutual funds, and has approximately $3
billion under management.
The Advisor is responsible for the day-to-day administration of the
Trust's activities. Investment decisions regarding each of the Trust's
funds can be influenced in various manners by a number of individuals.
The individuals primarily responsible for the management of the
Worldwide Growth Fund are Jay R. Sekelsky and Frank E. Burgess. Mr.
Sekelsky, vice president of the Advisor, has served as a principal of
Madison Investment Advisors, Inc. since 1990. Prior to joining Madison,
he was vice president for Wellington Management Group of Boston,
Massachusetts. Mr. Burgess, President and founder of Madison, began
managing the Fund after July 31, 1996.
The Advisor is controlled by Madison Investment Advisors, Inc. The
Advisor purchased the investment management assets of Bankers Finance
Investment Management Corp. effective July 31, 1996. The Advisor has
the same address as the Trust.
Compensation. For its services to the Fund under its investment advisory
agreement with the Trust, the Advisor receives a fee, payable monthly,
calculated as one percent per annum of the average daily net assets of
the Worldwide Growth Fund. Due to the more complex management demands
of international investing, this fee is higher than that paid by most
investment companies. The Advisor may compensate certain financial
organizations for services resulting in purchases of Fund shares.
Distributor. GIT Investment Services, Inc. of the same address as the
Trust, acts as the Trust's Distributor.
Services Agreement. Under a separate Services Agreement with the Trust,
the Advisor provides certain operational and other support services for
which it receives a fee intended to be at or below the cost of providing
such services. Such fee is subject to review and approval at least
annually by the Trustees (see "Expense Summary").
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 Advisor, 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, 1997, the
Fund paid expenses of $70,878.
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 Mosaic Equity Trust funds are currently authorized by the
Trustees: Worldwide Growth Fund, Mid-Cap Growth Fund, Investors Fund and
Balanced Fund. The shares of each fund 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 fund 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 Fund's net income, if any, is declared as dividends and distributed
to shareholders annually at the end of the year. Any net realized
capital gains also will be paid to shareholders annually as capital
gains distributions.
Distributions are paid in the form of additional shares credited to
investor accounts, unless a shareholder elects in writing to receive
dividend checks.
Performance Information
From time to time, the Fund 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 Fund 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 the Fund as
reported in the public media or by independent performance measurement
firms. The Fund'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 Fund 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, if
any, by the end of its fiscal year. The Code also requires the Fund to
distribute at least 98 percent of its 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 Fund'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.
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 advisors
concerning the impact of mutual fund ownership in their own tax
jurisdictions.
Income received by the Fund may be subject to withholding or taxation by
foreign governments. If more than 50 percent of the value of the Fund's
assets at the close of a taxable year consists of securities of foreign
corporations, the Fund 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 Fund and the foreign
taxes paid by the Fund. Shareholders could then take a credit (or, if
more advantageous, a deduction), for foreign income taxes paid by the
Fund, subject to limitations imposed by the Code. The Fund 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 Fund 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
Fund.
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 Fund 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 4 p.m.,
London, England 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
Advisor 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.
Shareholder Account Transactions
Please call a Mosaic Account Executive if you have any questions. Our
local number in the Washington, DC area is (703) 528-6500 and our toll-
free nationwide number is (888) 670-3600.
Confirmations and Statements
Daily Transaction Confirmation. All purchases and redemptions are
confirmed in writing with a transaction confirmation. Transaction
confirmations are usually mailed within a day or two after the
transaction is posted to the account.
Quarterly Statement. Quarterly statements are mailed at the end of each
calendar quarter. The statements reflect account activity for the most
recent quarter. At the end of the calendar year, the statement will
reflect account activity for the entire year.
It is strongly recommended that shareholders retain all daily
transaction confirmations until they receive their quarterly statements.
Likewise, shareholders should retain all of the quarterly statements
until they receive the year-end statement showing the activity for the
entire year.
Changes to an Account
To make any changes to an account, it is recommended that shareholders
call an Account Executive to discuss the changes to be made and inquire
about any necessary documentation. Though some changes may be made by
phone, generally, in order to make any changes to an account, Mosaic may
require a written request signed by all of the shareholders with their
signatures guaranteed.
Telephone Transactions. The options to initiate exchanges and certain
redemptions and to obtain account balance information by telephone are
available automatically to all shareholders. Mosaic will employ
reasonable security procedures to confirm that instructions communicated
by telephone are genuine; and 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 transactions. Certain
transactions, including account registration changes, must be authorized
in writing.
Certificates. Certificates will not be issued to represent shares in
the Funds.
How to Open a New Account
Minimum Initial Investment
$5,000 for a regular account
$500 for an IRA account
By Check
New accounts may be opened by completing an application and forwarding
it along with a check payable to Mosaic Funds to:
Mosaic Funds
1655 Fort Myer Drive, Suite 1000
Arlington, VA 22209-3108
By Wire
Please call Mosaic before money is wired to ensure proper and timely
credit.
When a new account is opened by wire, the shareholder is required to
submit a signed application promptly thereafter. Payment of redemption
proceeds is not permitted until a signed application is received in
proper form by Mosaic. Please wire money to:
Star Bank, NA
Cinti/Trust
ABA # 0420-0001-3
Credit Mosaic Acct # 48038-8883
(Shareholder name and account number)
Wire Fee. There may be a charge of $6.00 for processing incoming wires
of less than $1,000.
By Exchange
Shareholders may open a new account by exchange from an existing account
when the account registration and tax identification number will remain
the same. A new account application is required only when 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 sold in the shareholder's state of residence.
How to Purchase Additional Shares
Purchase Price. Share prices (net asset values) are determined every day that the NY Stock Exchange is open.
Purchases are priced at the next share price determined after the
purchase request is received in proper form by Mosaic.
Purchases and Uncollected Funds. To protect shareholders from loss or
dilution resulting from deposit items that are returned unpaid, the
proceeds of any redemption may be delayed 10 days or more until it can
be determined that the check or other deposit item (including purchases
by Electronic Funds Transfer "EFT") used for purchase of the shares has
cleared. Such deposit items are considered "uncollected," until Mosaic
has determined that they have actually been paid by the bank on which
they were drawn. Purchases made by federal funds wire or U.S. Treasury
check are considered collected when received and not subject to the 10
day hold. All purchases earn dividends from the day after the day of
credit to a shareholder's account, even while not collected.
By Check
Subsequent investments may be made for $50 or more. Please make check
payable to Mosaic Funds and mail it along with an investment slip or an
indication as to which fund and account it should be credited.
Mosaic Funds
PO Box 640393
Cincinnati, OH 45264-0393
By Wire
Shareholders should call Mosaic before the money is wired to ensure
proper and timely credit.
Please wire money to:
Star Bank, NA
Cinti/Trust
ABA # 0420-0001-3
Credit Mosaic Acct # 48038-8883
(Shareholder name and account number)
Wire Fee. There may be a charge of $6.00 for processing incoming wires
of less than $1,000.
By Automatic Investment Plan
Shareholders may elect to have an automatic investment plan whereby
Mosaic will automatically initiate a credit to their Mosaic account and
debit the bank account they designate each month. The automatic
investment is processed as an electronic funds transfer (EFT). To
establish an automatic investment plan, complete the appropriate section
of the application or call an Account Executive for information. The
minimum monthly amount for an EFT is $100. Shareholders may change the
amount or discontinue the automatic investment plan any time.
How to Redeem Shares
Redemption Price. Share prices (net asset values) are determined every
day that the NY Stock Exchange is open. Redemptions are priced at the
next share price determined after the redemption request is received in
proper form by Mosaic.
Signature Guarantees. To protect shareholder investments, Mosaic
requires signature guarantees for certain redemptions.
A signature guarantee helps Mosaic ensure the identity of the authorized
shareholder(s). Shareholders who anticipate the need to transact large
amounts of money are encouraged to establish pre-authorized bank wire
instructions on their account. Redemptions by wire to a pre-authorized
bank and account may be in any amount and do not require a signature
guarantee. Pre-authorized bank wire instructions can be established by
completing the appropriate section of a new application or by calling an
Account Executive to inquire about any necessary documents. A signature
guarantee may be required to add or change bank wire instruction on an
account. A signature guarantee is required for any redemption when (1)
the proceeds are to be greater than $50,000 (unless proceeds are being
wired to a pre-authorized bank and account), (2) the proceeds are to be
delivered to someone other than the shareholder of record, (3) the
proceeds are to be delivered to an address other than the address of
record, or (4) there has been any change to the registration or account
privilege within the last 15 days.
Mosaic accepts 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.
Redemptions and Uncollected Funds. To protect shareholders from loss or
dilution resulting from deposit items that are returned unpaid, the
proceeds of any redemption may be delayed 10 days or more until it can
be determined that the check or other deposit item (including EFT) used
for purchase of the shares has cleared. Such deposited items are
considered "uncollected," until Mosaic has determined that they have
actually been paid by the bank on which they were drawn. Purchases made
with cash, federal funds wire or U.S. Treasury check are considered
collected when received and not subject to the 10 day hold.
By Telephone or By Mail
Upon request by telephone or in writing, a redemption check up to $50,000
may be sent to the shareholder and address of record only. A redemption
request for more than $50,000 or for proceeds to be sent to anyone or
anywhere other than the shareholder and address of record, must be made in
writing, signed by all shareholders with their signatures guaranteed. See
section <i>Signature Guarantees</i> above.
Redemption requests in proper form received by mail and telephone are
normally processed within one business day.
Stop Payment Fee. To stop payment on a check issued by Mosaic, call our
Shareholder Service department. Normally, the Fund charges a fee of
$28.00, or the cost of stop payment, if greater, for stop payment
requests on a check issued by Mosaic on behalf of a shareholder.
Certain documents may be required before such a request can be
processed.
By Wire
With one business day's notice, funds can be sent by wire transfer to
the bank and account designated on the account application or by
subsequent written authorization.
Shareholders who anticipate the need to transact large amounts of
money are encouraged to establish pre-authorized bank wire instructions
on their account. Redemptions by wire to a pre-authorized bank and
account may be in any amount and do not require a signature guarantee.
Pre-authorized bank wire instructions can be established by completing
the appropriate section of a new application or by calling an Account
Executive to inquire about any necessary documents. A signature
guarantee may be required to add or change bank wire instructions on an
account.
Redemption by wires can be arranged by calling the telephone
numbers on the cover of this prospectus. Requests for wire transfer
must be made by 4:00 p.m. Eastern time the day before the wire will be
sent.
Wire Fee. There will be a $10 fee for redemptions by wire to domestic
banks. Wire transfers sent to a foreign bank for any amount will be
processed for a fee of $30 or the cost of the wire if greater.
By Exchange
Shareholders may redeem shares from one Mosaic account and concurrently
invest the proceeds in another Mosaic account by telephone when the
account registration and tax identification number remain the same.
There is no charge for this service.
By Systematic Withdrawal Plan
Shareholders may elect to have a systematic withdrawal plan whereby
Mosaic will automatically redeem share in their Mosaic account and send
proceeds to a designated recipient. To establish a systematic
withdrawal plan, complete the appropriate section of the application or
call an Account Executive for information. The minimum amount for a
systematic withdrawal is $100. Shareholders may change the amount or
discontinue the systematic withdrawal plan anytime.
Electronic Funds Transfer Systematic Withdrawal. A systematic
withdrawal can be processed as an electronic funds transfer, commonly
known as EFT, to credit a bank account or financial institution.
Check Systematic Withdrawal. Or it can be processed as a check which is
mailed to anyone designated by the shareholder.
How to Close an Account
To close an account, shareholders should call an Account Executive and
request that the account be closed. When an account is closed, shares
will be redeemed at the next determined net asset value. An account may
be closed by telephone, wire transfer or by mail as explained above in
the section "How To Redeem Shares."
Other Fees and Services
Returned Investment Check Fee.
Shareholders will be charged (by redemption of shares) $10.00 for items
deposited for investment that are returned unpaid for any reason.
Minimum Balance. Mosaic reserves the right to involuntarily redeem
accounts with balances of less than $700. Prior to closing any such
account, the shareholder will be given 30 days written notice, during
which time the shareholder may increase the balance to avoid having the
account closed.
Other Fees. Mosaic 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, international wire
transfers, research and processes for retrieval of documents or copies
of documents.
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.
Annual IRA Fee. Mosaic currently charges an annual fee of $12 per
shareholder (not per IRA account) invested in an IRA at Mosaic. This
fee may be prepaid by the shareholder. A separate application is
required for IRA accounts.
Keogh Plans
Mosaic 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.
Annual Keogh Fee. Currently Mosaic charges an annual fee of $15 per
shareholder (not per Keogh account) invested in a Keogh at Mosaic.
Mosaic also offers SEP IRAs, SIMPLEs, 401(k) and 403(b) retirement
plans. Further information on the retirement plans available through
Mosaic, including minimum investments, may be obtained by calling
Mosaic's shareholder service department.
<PAGE>
Telephone Numbers
Shareholder Service
Washington, DC area: 703/528-6500
Toll-free nationwide: 888/670-3600
The Mosaic Family of Mutual Funds
Mosaic Equity Trust
Investors Fund
Balanced Fund
Mid-Cap Growth Fund
Worldwide Growth Fund
Mosaic Income Trust
Maximum Income Fund
Government Fund
Mosaic Bond Fund
Mosaic Tax-Free Trust
Arizona Fund
Maryland Fund
Missouri Fund
Virginia Fund
National Fund
Money Market
Mosaic Government Money Market
For more complete information on any Mosaic 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.
Mosaic Funds
1655 Fort Myer Drive
Arlington Virginia 22209
http://www.mosaicfunds.com
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
Dated July 31, 1997
For use with the prospectus of the Mid-Cap Growth, Investors
and Balanced Funds dated June 13, 1997 and with the
prospectus of the Worldwide Growth Fund dated July 31, 1997.
MOSAIC 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 Mosaic 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 Mosaic Equity Trust") 2
Supplimental Investment Policies
("Investment Objectives" and "Investment Policies") 2
Investment Limitations
("Investment Policies") 6
The Investment Advisor
("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
Shareholder Transactions
("How to Purchase Shares") 12
Share Redemptions
("How to Redeem Shares") 13
Retirement Plans
("Other Fees and Services") 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>
Introductory Information
Mosaic Equity Trust (the "Trust") currently issues four series of
shares: Worldwide Growth Fund shares, Mid-Cap Growth Fund shares
(known as Special Growth Fund shares prior to May 12, 1997),
Investors Fund shares (known as Select Growth Fund shares
prior to May 12, 1997) and Balanced Fund shares. These
four series of shares correspond, respectively, to three separate
portfolios consisting primarily of equity securities: the
Worldwide Growth Fund, the Mid-Cap Growth Fund, and the
Investors Fund, and one portfolio investing in a combination of
fixed income and equity securities: the Balanced Fund. These
portfolios are described more fully below (see "Supplemental
Investment Policies"). Prior to June 13, 1997, the Balanced
Fund was known as the Equity Income Fund.
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 Mid-Cap Growth, Investors and Worldwide Growth
Funds of the Trust seek to achieve their investment objectives
through diversified investment by each of its portfolios principally
in equity securities, while the Balanced Fund seeks to
achieve its investment objective through diversified
investment in a combination of equity and fixed-income
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 Fund 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 Mid-Cap Growth Fund 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 Investors Fund 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 Balanced Fund 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.
The Advisor believes that capital growth and production of
income can best be achieved through flexibility of
investment strategies. Although the careful selection of
common stocks and bonds is a primary factor affecting
the investment return of the portfolio, the percentage of
the portfolio's assets which may be invested at any
particular time in common stocks or bonds will depend
upon management's judgment regarding the risks present in
the stock and fixed income markets. When management
believes that market risks are high and the prices of common
stocks or bonds may decline, the portfolio may move
substantial assets out of common stocks or bonds and into
short-term fixed income instruments such as U.S. Treasury
Bills, U.S. Treasury Notes, U.S. Agency Notes or highly
rated commercial paper or money market funds.
While investments in the Balanced Fund 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 Mid-Cap, Select
or Balanced Fund and up to 15% of the Worldwide Growth
Fund 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 Mid-Cap Growth,
Investors and Worldwide Growth Funds of 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 Fund 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
Advisor's judgment, the characteristics of investment grade
securities. The Trust is permitted to invest in foreign debt
securities which are speculative and, in the Advisor'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
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 Fund
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 Mid-Cap
Growth, Investors or Balanced Fund's respective
total assets and limited to 15% of the Worldwide Growth
Fund'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.
The Balanced Fund may invest in the Debt Instruments
described above and in the investment grade fixed-income securities
described more fully in the Prospectus (see "Additional Information
About the Balanced Fund").
Specialized Investment Techniques. In order to achieve its
investment objectives, the Trust may use, when the Advisor 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").
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 Fund 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.
Furthermore, 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 Advisor 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.
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 Advisor 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 Fund 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 Fund 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.
8. Closed-end funds. The Worldwide Growth Fund 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.
9. Convertible securities. In addition to other equity
securities, the Balanced Fund may invest in
"convertible securities." Securities convertible into
common stocks and securities having equity characteristics
are bonds that are convertible into a specific number of
shares of the common stock of the issuer either at any time
or usually at a specific future date at a determined price
per share of common stock. Such bonds tend to participate in
a substantial portion of the price appreciation of the
underlying common stock while enjoying some protection
against depreciation due to higher interest rates afforded
most bonds and because of the anticipation of the bond's
maturity. The portfolio anticipates that convertible
securities will represent less than 25% of it's total
assets. All convertible bonds must meet the same quality
ratings required of corporate bonds, as described in the
following paragraph. The risks involved in investment in
convertible securities are similar to the risks of
investment in the underlying common stocks.
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
Mid-Cap Growth, Investors or Balanced Funds' net
assets would be so invested and not more than 15% of the
Worldwide Growth Fund'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 Advisor'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 Fund 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 Advisor who
beneficially hold one-half percent or more of such securities,
together exceed 5% of such outstanding securities.
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 Advisor 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 Advisor
Bankers Finance Advisors, LLC, 1655 Fort Myer
Drive, Arlington, Virginia 22209-3108, is the investment adviser
to the Trust and is called the "Advisor" throughout this
Statement of Additional Information and the Prospectus. The
Advisor 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
Advisor 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 Advisor is a Wisconsin limited liability company, wholly
owned by Madison Investment Advisors, Inc.
("Madison"), 6411 Mineral Point Road, Madison, Wisconsin.
Madison was founded in 1973 and is an independent, registered
investment adviser which has numerous advisory clients.
The investment advisory agreement between the Trust, on behalf
of the portfolios, and the Advisor 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 Advisor, upon sixty days'
written notice to the other party. The investment advisory
agreement may not be assigned by the Advisor, and will
automatically terminate upon any assignment.
Background of the Advisor. The Advisor was formed in 1996 by
Madison for the purpose of providing investment management
services to the Mosaic family of mutual funds, including the Trust.
The Advisor 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 "Advisor" refer to Bankers Finance Investment
Management Corp. The Advisor also serves as the investment adviser to
Government Investors Trust, Mosaic Income Trust and Mosaic Tax-Free
Trust.
Management. Frank E. Burgess is President, Treasurer and
Director of Madison and Vice President of the Advisor.
Mr. Burgess owns the controlling interest in Madison,
which, in turn, controls the Advisor. Mr. Burgess is also a Trustee and
Vice President of the Trust. Mr. Burgess holds the same positions
with Government Investors Trust, Mosaic Income Trust and
Mosaic Tax-Free Trust. Katherine L. Frank is President and Treasurer
of the Advisor and Vice President of Madison. Ms. Frank holds the
same positions with Government Investors Trust, Mosaic Income Trust and
Mosaic Tax-Free Trust.
Advisory Fee and Expense Limitations. For its services under the
investment advisory agreement, the Advisor receives a fee,
payable monthly, calculated as 3/4 percent per annum of the
average daily net assets of the Mid-Cap Growth, Investors and
Balanced Funds during the month and as one percent per
annum of the average daily net assets of the Worldwide Growth
Fund during the month. Such fees do not decrease as net
assets increase. The Advisor may waive or reduce such fees during
any period; the Advisor 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.
In addition, the Advisor 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 Advisor, 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
Advisor 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 Advisor to make
payments out of its fee to other persons. During the fiscal year
ended March 31, 1997, the Advisor received fees of $113,760 with
respect to the Mid-Cap Growth Fund; and for the fiscal year ended
December 31, 1996, $99,818 with respect to the Investors Fund, and
$91,311 with respect to the Balanced Fund. During the fiscal year
ended March 31, 1996, for the Mid-Cap Fund and December 31, 1995
for the Investors and Balanced Funds, the Advisor received advisory fees of
$219,111 with respect to the Mid-Cap Growth Fund, $91,637
with respect to the Investors Fund, and $88,169 with
respect to the Balanced Fund. During the fiscal years ended March 31,
1995 for the Mid-Cap Fund and December 31, 1994 for the Investors and
Balanced Funds, the Advisor received advisory fees of
$264,829 with respect to the Mid-Cap Growth Fund, $78,454
with respect to the Investors Fund, and $93,783 with
respect to the Balanced Fund. During prior fiscal years
the Advisor has waived portions or all of its advisory fees with respect
to each of the Trust's portfolios. During the fiscal years ended March
31, 1997 and 1996, the Advisor received advisory fees of $14,176 and
$14,252, respectively, with regard to the Worldwide Growth Fund.
No advisory fees were paid with respect to the Worldwide Growth
Fund 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
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 June 26, 1997, the shareholders which
held five percent or more of the Mid-Cap Growth Fund were:
Charles Schwab & Co., 101 Montgomery St., San
Fransisco, CA (6%) and Robert Geroch, 12325 Algonquin Road,
Palos Park, IL (5%); of the Investors Fund: none;
of the Balanced Fund, none; and of the Worldwide
Growth Fund: Wenonah Development Company, 1019 Park
Street, Peekskill, NY 10566 (11%).
Shareholder votes relating to the election of Trustees, approval
of the Trust's selection of independent auditors 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 Advisor'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 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 Advisor 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
The Trustees and executive officers of the
Trust and their principal occupations during the past five years
are shown below:
Frank E. Burgess*
6411 Mineral Point Road, Madison, WI 53705
Trustee and Vice President
President and Director of Madison Investment
Advisors, Inc., the entity which controls the Advisor. 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
Chairman and CEO of First Weber Group, Inc. of Madison, WI,
a residential real estate company; Chairman of the Wisconsin
Real Estate Board of the Department of Regulation and
Licensing; Director to the University of Wisconsin School of
Business, Center for Urban Land Economics Research; Director
of the Park Bank, Wisconsin; formerly President of the
Wisconsin Realtors Association and the Greater Madison Board
of Realtors and Director of the National Association of
Realtors. An alumnus of the Marquette University School of
Business. b. 5/20/44.
Lorence D. Wheeler***
P.O. Box 431, Madison, WI 53701
Trustee
President of Credit Union Benefits Services, Inc., a
provider of retirement plans and related services for credit
union employees nationwide. Previously a shareholder of the
law firm of Bell, Metzner & Gierart, SC. Mr. Wheeler
received his law degree from the University of Wisconsin.
b. 1/31/38.
Katherine L. Frank
6411 Mineral Point Road, Madison, WI 53705
President
President of Mosaic Investment Funds, Vice President
of Madison Investment Advisors, Inc. A graduate
of Macalester College, St. Paul, Minnesota.
Julia M.Nelson
1655 Fort Myer Drive, Arlington, VA 22209-3108
Vice President
Vice President of Mosaic Investment Funds.
Jay R. Sekelsky
6411 Mineral Point Road, Madison, WI 53705
Vice President
Vice President of Mosaic 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 Mosaic 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 Mosaic Investment Funds, Mosaic 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.
*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 Advisor or Madison (see "the Investment Advisor") totalling
$15,000. Mr. Imhoff and Mr. Wheeler will receive annual
compensation from the Trust and from other investment companies
managed by the Advisor or Madison totalling $18,000 though June 13,
1997, and thereafter will be compensated in the same amount as Mr.
Kleppe.
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 1,000 0 0 15,000
James R. Imhoff, Jr.(b)1,000 0 0 18,000
Lorence D. Wheeler(b) 1,000 0 0 18,000
(a) Prior to the effective date of this Statement of Additional
Information, the complex was comprised of 4 trusts and three
corporations with a total of 16 funds and/or series. As of the
effective date of this Statement of Additional Information,
the complex is comprised of 4 trusts with a total of 15 funds
and/or series.
(b) Messrs. Imhoff and Wheeler joined the Board of Trustees on
July 31, 1996.
***
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 June 27, 1997 the Trustees and officers directly or
indirectly owned less than one percent of the outstanding shares
in the Mid-Cap and Worldwide Growth Funds, while 7% of the Investors
Fund and 1% of the Balanced Fund was held directly or
indirectly by the Trustees and officers.
Adminstrative and Other Expenses
Except for certain expenses assumed by the Advisor (see "The
Investment Advisor"), 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
Advisor'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 Advisor 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 Advisor are
rendered at a flat percentage fee reviewed and approved at least
annually by the Trustees. Such fee is expected to approximate
the cost of providing such services. The term "cost"
includes both direct expenditures and the related overhead
costs, such as depreciation, employee supervision, rent and the like;
reimbursements to the Advisor pursuant to the Services Agreement
are in addition to and independent of payments made pursuant to
the Investment Advisory Agreement. The Advisor provides
such services to Mosaic Income Trust, Mosaic Tax-Free Trust and
Mosaic Government Money Market. The Trust will also pay certain direct expenses (including custody,
brokerage, bluesky, legal and audit). To the extent that costs must be allocated between the Trust and
other activities of the Advisor, such allocations may be made on the basis of reasonable approximations
calculated by the Advisor 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 Advisor, subject to review by the officers and Trustees of
the Trust.
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 Advisor may take into account a dealer's
operational and financial capabilities, the type of transaction
involved, the dealer's general relationship with the Advisor, and
any statistical, research or other services provided by the
dealer to the Advisor, including payment for the use by the
Advisor of electronic research services. Research and statistical
information regarding securities may be used by the Advisor for
the benefit of all members of the Mosaic family of
mutual funds and by other clients of Madison. 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 Advisor.
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: $132,000
for the fiscal year ending March 31, 1997; $156,680 for the fiscal
year ending March 31, 1996; and $126,777 for
the fiscal year ending March 31, 1995.
The Advisor 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 Advisor, 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
Advisor 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").
Shareholder Transactions
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.
Minimum Initial Investment and Balance. 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.
Special Service Charges. The Trust further reserves the right,
after 30 days written notification to shareholders, to impose
special charges for services provided to individual
shareholders that are not regularly afforded to shareholders
generally. Such service charges may include but are not limited
to 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.
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. 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 Advisor, 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 Advisor 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
shareholder 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 Advisor or the distributor. As a condition of
the Trust's public offering, (which the shareholder will be deemed
to have agreed by submitting an order for the purchase of the
Trust's shares) the distributor shall have the shareholder's power
of attorney coupled with an interest, authorizing the distributor
to redeem sufficient shares from any fund of the shareholder for
which it acts as a principal underwriter or distributor, or to
liquidate sufficient other assets held in any brokerage account
of the shareholder with the distributor, and to apply the proceeds
thereof to the payment of all amounts due to the Trust from the
shareholder 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 shareholder and an opportunity
for the shareholder 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.
Funds Received by Wire. Wires are normally converted into shares
in the Trust at the net asset value next determined, provided the
Trust is notified of the wire.
Checks. 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.
Purchase Orders From Brokers. 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. Shareholders who invest in the Trust through a broker may be
charged a commission for the handling of the transaction, if the
broker so elects. A shareholder may deal directly
with the Trust without a fee.
Share Redemptions
The value of shares redeemed 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 redemption
request may not be deemed to be in proper form unless a signed
account application has been submitted to the Trust by the
shareholder or such an application is submitted with the redemption
request. Shareholders 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.
The Trust will use its best efforts in normal
circumstances to handle redemptions within the times previously
given. However, it may, for any reason, 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 redemptionsshall 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, the Trust may require signed written
instructions to process redemptions and account closings. In
response to verbal requests, however, redemption proceeds will
normally be mailed to the shareholder 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.
Inter-Fund Exchanges. Funds exchanged between shareholder accounts
will earn dividends on the account being credited beginning with the
day the exchange is made. 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
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 "Retirement Plans").
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, SIMPLE, 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, Mid-Cap Growth and
Investors Funds once a year at the end of the Trust's December 31
fiscal year. The Trust intends to declare and pay regular Balanced
Fund 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, will be declared as a capital gains
dividend on or before December 31.
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 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, 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 net
income for the calendar year and capital gains determined as of October 31
each year before the calendar year end in order to avoid a 4% excise tax.
Each portfolio intends to distribute all taxable income to the extent it is
realized and avoid imposition of Federal income and excise taxes.
To qualify as a regulated investment company under the Code, 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 a portfolio 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 (except the Balanced Fund) 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 Advisor 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 Advisor 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
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. The following
representative total return quotations for the Investors
Fund and the Balanced Fund represent the
performance of their economic predecessors, Bascom Hill
Investors, Inc. and Bascom Hill BALANCED Fund, Inc.
For the year ended June 30, 1997, the average annualized
total return of the Mid-Cap Growth Fund was 10.68%; of the
Investors Fund was 29.59%; of the Balanced
Fund was 22.08%; and of the Worldwide Growth Fund
was 21.97%. For the period beginning April 16, 1993
(commencement date and public offering) through December
31, 1996, the average annualized total return for the Worldwide
Growth Fund was 8.95%. For the calendar quarter ending
June 30, 1997 the non-annualized aggregate total return
of the Mid-Cap Growth Fund was 15.03%;
of the Investors Fund was 12.96%; of the Balanced
Fund was 9.68%; and of the Worldwide Growth Fund was
13.37%.
For the year-to-date ending June 30, 1997 the non-annualized aggregate
total return of the Mid-Cap Growth Fund was 6.78%; of the Investors Fund
was 14.47% ; of the Balanced Fund was 10.62%; and of the Worldwide
Growth Fund was 21.83%.
The 10-year average annualized total return through June 30,
1997, and the 5-year average annualized total return of the
Mid-Cap Growth Fund through such date was 8.68% and 11%,
respectively. Its non-annualized aggregate total return for
ten years and since inception on July 21, 1983 were 129.83%
and 347.55%, respectively.
The 10-year average annualized total return through June 30,
1997 and the 5-year average annualized total
return of the Investors Fund through such date was
10.79% and 16.51%, respectively, and its non-annualized aggregate
total returns for ten years and since inception on November 1, 1978
were 178.67% and 1,186.13%, respectively.
The 10-year average annualized total return through June 30,
1997 and the 5-year average annualized total return of the Balanced
Fund through such date was 9.68% and 12.68%,
respectively, and its non-annualized aggregate total returns for
ten years and since inception on December 18, 1986 were 152.03%
and 159.71%, respectively.
The aggregate total return since inception on April 16, 1993
through June 30, 1997 for the Worldwide Growth Fund was
42.10%.
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 Russell Company,
SCI and CDA Investment Technologies.
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
Mid-Cap Growth Fund compared to mutual funds with total net
assets ranging from $25 million to $50 million categorized as
"Mid-Cap Company Growth funds"; the performance of the Equity
Income Fund is compared to mutual funds with total net
assets ranging from $0.1 million to $10 million categorized as
"Balanced funds"; and the performance of the Investors
Fund 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 Fund 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 Fund, 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 Advisor 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
DeWitt Ross & Stevens, S.C., 8000 Excelsior Drive, Madison,
Wisconsin, 53708, acts as legal counsel to the Trust.
Sullivan & Worcester LLP, 1025 Connecticut Avenue, NW,
Washington, DC, 20036, acts as review counsel to the Trust's
independent Trustees.
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 the Trust,
together with the Report of Ernst & Young LLP, Independent
Auditors for the fiscal year ended March 31, 1997, appear in the
respective Annual Report to shareholders for the Trust for
the fiscal year ended March 31, 1997, which is incorporated
herein by reference.
Audited Financial Statements for Bascom Hill Investors, Inc. and
Bascom Hill BALANCED Fund, Inc., the economic survivors of the
mergers with the Investors Fund and Balanced Fund, respectively,
together with the reports of Williams, Young & Associates, LLC,
Independent Auditors for their fiscal years ended December 31, 1996,
appear in the respective Annual Report to Shareholders for such funds
for the fiscal year ended December 31, 1996, incorporated herein by reference.
They have been filed with the SEC and are furnished to investors with this
Statement of Additional Information.
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, 1997
Mosaic 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 June 5, 1997, and incorporated herein by
reference is the Trust's Annual Report to Shareholders for the
fiscal year ended March 31, 1997.
Included in such Reports to Shareholders are: Statement
of Assets and Liabilities, Statement of Operations, Statement
of Changes in Net Assets, Financial Highlights, Fund 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 Not Applicable
5 Investment Advisory Agreement*
6 Distribution Agreement*
7 Not Applicable
8 Custodian Agreement with Fee Schedule*
9 Services Agreement*
10 Consent of Counsel*
11 Consent of Independent Auditors (Filed Herewith)
12 Not Applicable
13 Not Applicable
14 Prototype Retirement Plan*
15 Not Applicable
16 Computation of Performance Data (Filed Herewith)
17 Financial Data Schedules (Filed Herewith)
18 Not Applicable
* Previously filed by Mosaic Equity Trust.
# An EDGAR version is filed herewith.
25. Persons Controlled by or Under Common Control with Registrant.
None
26. Number of Holders of Securities.
The number of holders of record of securities of the
Registrant as of March 12, 1997 is as follows:
Title of Class Number of Holders of Record
Shares of Beneficial Interest 3,009
27. Indemnification
Previously Filed
28. Business and Other Connections of Investment Advisor effective
July 24, 1997.
Name Position with Other Business
Advisor
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
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 Mosaic
Investment Services, Inc.
of the same
address as the Trust.
Julia M. Nelson Vice President None
29. Principal Underwriters
(a) GIT Investment Services, Inc., the principal underwriter
of the Trust, also acts as principal underwriter to Government
Investors Trust, Mosaic Tax-Free Trust and Mosaic 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 Secretary
1655 Ft. Myer Dr.
Arlington, VA 22209
(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. Certain records may be maintained at
the offices of the Advisor's parent, Madison Investment
Advisors, Inc., 6411 Mineral Point Road, Madison, WI 53705.
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 30 day of July,
1997.
Mosaic Equity Trust
By: (signature)
Katherine L. Frank
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.
Trustee (Date)
Frank E. Burgess*
Trustee
Lorence Wheeler* (Date)
Trustee
Thomas S. Kleppe * (Date)
Trustee
James Imhoff* (Date)
*(Signature), Attorney-In-Fact, 7/30/97
John Rashke, Esquire
</TABLE>
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 19 to registration
Statement Number 2-80805 (Form N-1A) of our reports dated May 2, 1997,
on the financial statements and financial highlights of Mosaic Equity
Trust (formerly GIT Equity Trust) for the year ended March 31, 1997,
included in the 1997 Annual Reports to Shareholders.
(signature)
Ernst and Young LLP
Washington, DC
July 28, 1997
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the
registrant's current Form NSAR, Annual Report and prospectus and is qualified in
its entirety by reference to such source documents.
</LEGEND>
<CIK> 0000710977
<NAME> MOSAIC EQUITY TRUST
<SERIES>
<NUMBER> 4
<NAME> WORLDWIDE GROWTH FUND
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> MAR-31-1997
<INVESTMENTS-AT-COST> 2,400
<INVESTMENTS-AT-VALUE> 2,575
<RECEIVABLES> 7
<ASSETS-OTHER> 1
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,582
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2,946
<SHARES-COMMON-STOCK> 235
<SHARES-COMMON-PRIOR> 316
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (539)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 175
<NET-ASSETS> 2,582
<DIVIDEND-INCOME> 58
<INTEREST-INCOME> 16
<OTHER-INCOME> 0
<EXPENSES-NET> 71
<NET-INVESTMENT-INCOME> 3
<REALIZED-GAINS-CURRENT> 54
<APPREC-INCREASE-CURRENT> 229
<NET-CHANGE-FROM-OPS> 283
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 53
<NUMBER-OF-SHARES-REDEEMED> 133
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (81)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (600)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 28
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 71
<AVERAGE-NET-ASSETS> 2,840
<PER-SHARE-NAV-BEGIN> 9.862
<PER-SHARE-NII> 0.012
<PER-SHARE-GAIN-APPREC> 1.094
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.968
<EXPENSE-RATIO> 2.499
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a trustee of
Mosaic Equity Trust, a Massachusetts business trust, does
hereby constitute and appoint JOHN RASHKE and CHRISTOPHER DANIELS, and
each of them, his true and lawful attorney and agent to do any and all
acts and things and to execute any and all instruments which said
attorney and agent may deem necessary or advisable: (1) to enable the
said Trust to comply with the Securities Act of 1933, as amended, and
any rules, regulations and requirements of the Securities and Exchange
Commission in respect thereof, in connection with the registration under
said Securities Act of the shares of beneficial interest of said Trust
(the "Securities"), including, specifically, but without limiting the
generality of the foregoing, the power and authority to sign for and on
behalf of the undersigned the name of the undersigned as Trustee of said
Trust to a Registration Statement or to any amendment thereto filed with
the Securities and Exchange Commission in respect of said Securities and
to any instrument or document filed as part of, an exhibit to or in
connection with said Registration Statement or amendment; (2) to enable
said Trust to comply with the Investment Company Act of 1940, as
amended, and any rules, regulations and requirements of the Securities
and Exchange Commission in respect thereof, in connection with the
registration under said Investment Company Act of the Trust, including
specifically, but without limiting the generality of the foregoing, the
power an authority to sign for and on behalf of the undersigned the name
of the undersigned as Trustee of said Trust to a Registration Statement
or of any amendment thereto filed with the Securities and Exchange
Commission in respect of said Trust and to any instrument or document
filed as part of, as an exhibit to or in connection with said
Registration Statement or amendment; and (3) to register or qualify said
Securities for sale and to register or license said Trust as a broker or
dealer in said Securities under the securities or Blue Sky laws of all
such states as may be necessary or appropriate to permit therein the
offering and sale of said Securities as contemplated by said
Registration Statement, including specifically, but without limiting the
generality of the foregoing, the power and authority to sign for and on
behalf of the undersigned the name of the undersigned as Trustee of said
Trust to any application, statement, petition, prospectus, notice or
other instrument or document, or to any amendment thereto, or to any
exhibit filed as a part thereof or in connection therewith, which is
required to be signed by the undersigned and to be filed with the public
authority or authorities administering said securities or Blue Sky laws
for the purpose of so registering or qualifying said Securities or
registering or licensing said Trust, and the undersigned does hereby
ratify and confirm as his own act and deed all that said attorney and
agent shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has subscribed these presents this
22 day of July, 1997.
(signature)
Thomas S. Kleppe
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a trustee of
Mosaic Equity Trust, a Massachusetts business trust, does
hereby constitute and appoint JOHN RASHKE and CHRISTOPHER DANIELS, and
each of them, his true and lawful attorney and agent to do any and all
acts and things and to execute any and all instruments which said
attorney and agent may deem necessary or advisable: (1) to enable the
said Trust to comply with the Securities Act of 1933, as amended, and
any rules, regulations and requirements of the Securities and Exchange
Commission in respect thereof, in connection with the registration under
said Securities Act of the shares of beneficial interest of said Trust
(the "Securities"), including, specifically, but without limiting the
generality of the foregoing, the power and authority to sign for and on
behalf of the undersigned the name of the undersigned as Trustee of said
Trust to a Registration Statement or to any amendment thereto filed with
the Securities and Exchange Commission in respect of said Securities and
to any instrument or document filed as part of, an exhibit to or in
connection with said Registration Statement or amendment; (2) to enable
said Trust to comply with the Investment Company Act of 1940, as
amended, and any rules, regulations and requirements of the Securities
and Exchange Commission in respect thereof, in connection with the
registration under said Investment Company Act of the Trust, including
specifically, but without limiting the generality of the foregoing, the
power an authority to sign for and on behalf of the undersigned the name
of the undersigned as Trustee of said Trust to a Registration Statement
or of any amendment thereto filed with the Securities and Exchange
Commission in respect of said Trust and to any instrument or document
filed as part of, as an exhibit to or in connection with said
Registration Statement or amendment; and (3) to register or qualify said
Securities for sale and to register or license said Trust as a broker or
dealer in said Securities under the securities or Blue Sky laws of all
such states as may be necessary or appropriate to permit therein the
offering and sale of said Securities as contemplated by said
Registration Statement, including specifically, but without limiting the
generality of the foregoing, the power and authority to sign for and on
behalf of the undersigned the name of the undersigned as Trustee of said
Trust to any application, statement, petition, prospectus, notice or
other instrument or document, or to any amendment thereto, or to any
exhibit filed as a part thereof or in connection therewith, which is
required to be signed by the undersigned and to be filed with the public
authority or authorities administering said securities or Blue Sky laws
for the purpose of so registering or qualifying said Securities or
registering or licensing said Trust, and the undersigned does hereby
ratify and confirm as his own act and deed all that said attorney and
agent shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has subscribed these presents this
22 day of July, 1997.
(signature)
Frank E. Burgess
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a trustee of
Mosaic Equity Trust, a Massachusetts business trust, does
hereby constitute and appoint JOHN RASHKE and CHRISTOPHER DANIELS, and
each of them, his true and lawful attorney and agent to do any and all
acts and things and to execute any and all instruments which said
attorney and agent may deem necessary or advisable: (1) to enable the
said Trust to comply with the Securities Act of 1933, as amended, and
any rules, regulations and requirements of the Securities and Exchange
Commission in respect thereof, in connection with the registration under
said Securities Act of the shares of beneficial interest of said Trust
(the "Securities"), including, specifically, but without limiting the
generality of the foregoing, the power and authority to sign for and on
behalf of the undersigned the name of the undersigned as Trustee of said
Trust to a Registration Statement or to any amendment thereto filed with
the Securities and Exchange Commission in respect of said Securities and
to any instrument or document filed as part of, an exhibit to or in
connection with said Registration Statement or amendment; (2) to enable
said Trust to comply with the Investment Company Act of 1940, as
amended, and any rules, regulations and requirements of the Securities
and Exchange Commission in respect thereof, in connection with the
registration under said Investment Company Act of the Trust, including
specifically, but without limiting the generality of the foregoing, the
power an authority to sign for and on behalf of the undersigned the name
of the undersigned as Trustee of said Trust to a Registration Statement
or of any amendment thereto filed with the Securities and Exchange
Commission in respect of said Trust and to any instrument or document
filed as part of, as an exhibit to or in connection with said
Registration Statement or amendment; and (3) to register or qualify said
Securities for sale and to register or license said Trust as a broker or
dealer in said Securities under the securities or Blue Sky laws of all
such states as may be necessary or appropriate to permit therein the
offering and sale of said Securities as contemplated by said
Registration Statement, including specifically, but without limiting the
generality of the foregoing, the power and authority to sign for and on
behalf of the undersigned the name of the undersigned as Trustee of said
Trust to any application, statement, petition, prospectus, notice or
other instrument or document, or to any amendment thereto, or to any
exhibit filed as a part thereof or in connection therewith, which is
required to be signed by the undersigned and to be filed with the public
authority or authorities administering said securities or Blue Sky laws
for the purpose of so registering or qualifying said Securities or
registering or licensing said Trust, and the undersigned does hereby
ratify and confirm as his own act and deed all that said attorney and
agent shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has subscribed these presents this
22 day of July, 1997.
(signature)
James R. Imhoff, Jr.
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a trustee of
Mosaic Equity Trust, a Massachusetts business trust, does
hereby constitute and appoint JOHN RASHKE and CHRISTOPHER DANIELS, and
each of them, his true and lawful attorney and agent to do any and all
acts and things and to execute any and all instruments which said
attorney and agent may deem necessary or advisable: (1) to enable the
said Trust to comply with the Securities Act of 1933, as amended, and
any rules, regulations and requirements of the Securities and Exchange
Commission in respect thereof, in connection with the registration under
said Securities Act of the shares of beneficial interest of said Trust
(the "Securities"), including, specifically, but without limiting the
generality of the foregoing, the power and authority to sign for and on
behalf of the undersigned the name of the undersigned as Trustee of said
Trust to a Registration Statement or to any amendment thereto filed with
the Securities and Exchange Commission in respect of said Securities and
to any instrument or document filed as part of, an exhibit to or in
connection with said Registration Statement or amendment; (2) to enable
said Trust to comply with the Investment Company Act of 1940, as
amended, and any rules, regulations and requirements of the Securities
and Exchange Commission in respect thereof, in connection with the
registration under said Investment Company Act of the Trust, including
specifically, but without limiting the generality of the foregoing, the
power an authority to sign for and on behalf of the undersigned the name
of the undersigned as Trustee of said Trust to a Registration Statement
or of any amendment thereto filed with the Securities and Exchange
Commission in respect of said Trust and to any instrument or document
filed as part of, as an exhibit to or in connection with said
Registration Statement or amendment; and (3) to register or qualify said
Securities for sale and to register or license said Trust as a broker or
dealer in said Securities under the securities or Blue Sky laws of all
such states as may be necessary or appropriate to permit therein the
offering and sale of said Securities as contemplated by said
Registration Statement, including specifically, but without limiting the
generality of the foregoing, the power and authority to sign for and on
behalf of the undersigned the name of the undersigned as Trustee of said
Trust to any application, statement, petition, prospectus, notice or
other instrument or document, or to any amendment thereto, or to any
exhibit filed as a part thereof or in connection therewith, which is
required to be signed by the undersigned and to be filed with the public
authority or authorities administering said securities or Blue Sky laws
for the purpose of so registering or qualifying said Securities or
registering or licensing said Trust, and the undersigned does hereby
ratify and confirm as his own act and deed all that said attorney and
agent shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has subscribed these presents this
22 day of July, 1997.
(signature)
Lorence D. Wheeler
Declaration of Trust
Mosaic Equity Trust
<PAGE>
Article I. Name and Definitions 1
1. Name............................. 1
2. Definitions
(a) 1940 Act.................... 1.
(b) Commission................... I.
(c) Affiliated Person, Assignment,
Interested Person,
Principal Underwriter,
Majority Shareholder Vote............ 1
(d) Trust..................................... 2
(e) Accumulated Net Income................... 2
(f) Trustees.................................. 2
(g) Shares.................................... 2
(h) Shareholder............................... 2
(i) Business Day.............................. 2
Article II Purpose of Trust................................... 2
Article III Beneficial Interest................................ 2
1. Shares of Beneficial Interest 2
2. Ownership of Shares...........................
3. Investment in the Trust....................... 3
4. No Pre-emptive Rights......................... 3
5. Provisions Relating to Series
of Shares..................................... 4
Article IV The Trustees....................................... 5
1. Management of the Trust....................... 5
2. Election of Trustees.......................... 5
3. Term of Office of Trustees.................... 5
4. Termination Services and
Appointment of Trustees....................... 5
5. Temporary Absence of Trustees............ 6
6. Number of Trustees........................... 6
7. Effect of Death, Resignation,
Etc., of a Trustee............................ 6
8. Ownership of the Trust........................ 6
Article V Powers of the Trustees.............................. 6
1. Powers........................................ 6
2. Principal Transactions........................ 9
3. Trustees and Officers as Share-
Article VI Trustees' Expenses and Compensation.. 10
1. Trustee Reimbursement.......... 10
2. Trustee Compensation........... 11
Article VII Investment Adviser, Administrative
Services, Principal Underwriter and
Transfer Agent................... 11
1. Investment Adviser.............. 11
2. Administrative Services......... 12
3. Principal Underwriter........... 12
4. Transfer Agent.................. 12
5. Provisions and Amendments....... 12
Article VIII Shareholders' Voting Powers and
Meetings............................ 13
1. Voting Powers................... 13
2. Meetings........................ 13
3. Quorum and Required Vote........ 13
4. Proxies......................... 14
5. Additional Provisions........... 14
Article IX Custodians.......................... 14
1. Appointment of Custodian
and Duties...................... 14
2. Central Certificate System...... 15
3. Special Custodians.............. 15
4. Special Depositaries............ 15
Article X Distributions and Redemptions....... 16
1. Distributions................... 16)
2. Redemptions and Repurchases..... 16
3. Determination of Accumulated Net Income....................... 17
4. Net Asset Value of Shares....... 17
5. Suspension of the Right of Redemption...................... 18
6. Trust's Right to Redeem Shares 19
Article XI Limitation of Liability and
Indemnification..................... 19
1. Limitation of Personal Liability
and Indemnification of Share-
holders......................... 19
2. Limitation of Personal Liability
of Trustees, Officers, Employees
or Agents of the Trust.......... 20
3. Express Exculpatory Clauses and Instruments...............20
4. Mandatory Indemnification....... 20
Article XII Miscellaneous....................... 21
1. Trust is not a Partnership...... 21
2. Trustee's Good Faith Action,
Expert Advice, No Bond or
Surety.......................... 21
3. Establishment of Record Dates... 22
4. Termination of Trust............ 22
5. offices of the Trust, Filing of Copies, References, Headings...23
6. Applicable Law.................. 23
7. Amendments...................... 23
8. Conflicts with Law or
Regulations..................... 24
9. Use of Name..................... 24
GIT EQUITY TRUST
DECLARATION OF TRUST
This DECLARATION OF TRUST is made November 18, 1982, by A. Bruce
Cleveland, Michael D. Goth, Robert W. Dudley, Thomas S. Kleppe, and
Gerald W. Nensel, as Trustees.
WHEREAS the Trustees desire to establish a trust fund for the investment
and reinvestment of funds contributed thereto;
NOW, THEREFORE, the Trustees declare that all money and property
contributed to the trust fund hereunder shall be held and managed under
this Declaration of Trust IN TRUST as herein set forth below.
ARTICLE I
NAME AND DEFINITIONS
Section 1. Name. This Trust shall be known as "GIT Equity Trust."
Should the Trustees determine that the use of such name is not advisable
or otherwise cease using such name, then they may hold the property of
the Trust and conduct its business under another name of their choosing,
and shall undertake to change the name of the Trust accordingly.
Section 2. Definitions. Wherever used herein, unless otherwise required
by the context or specifically provided:
I
(a) The "1940 Act" refers to the Investment Company Act of 1940, as
amended from time to time;
(b ) The "Commission" refers to the Commission described in the 1940
Act and to any succeeding governmental authority;
(c ) The terms "affiliated person," "assignment," "interested person,"
and "principal underwriter" shall have the meanings given them in the
1940 Act. A "Majority Shareholder Vote" shall have the same meaning as
"the vote of a majority of the outstanding voting securities," as used
in the 1940 Act, and shall apply to either the 50% or 67% requirement
described therein, Whichever may be applicable;
(d) The "Trust" refers to GIT Equity Trust;
(e) "Accumulated Net Income" means the accumulated
net income of the Trust determined in the manner provided or authorized
in Article X, Section 3;
(f ) The "Trustees" refers to the individual trustees in their capacity
as trustees of the Trust hereunder and their successor or successors for
the time in office as such Trustees;
(g) "Shares" means the equal proportionate units of interest into
which the beneficial interest in the Trust shall be divided from time to
time and includes fractions of shares as well as whole Shares;
(h) "Shareholder" means a record owner of Shares of the Trust; and
(i) A "business day" means a day when the New York Stock Exchange is
open for trading and the Trustees have not determined that the Trust
shall be closed for business in observance of a holiday observed
generally by banks in New York City, Washington, D. C. , or the State of
Virginia, or by the offices of the Federal Government in Washington,
D.C.
ARTICLE II
PURPOSE OF TRUST
The purpose of this Trust is to provide investors a continuous source of
managed investments primarily in securities.
ARTICLE III
BENEFICIAL INTEREST
Section I Shares of Beneficial Interest. The beneficial
interest in the Trust shall at all times be divided into transferable
Shares, without par value, each of which shall represent an equal
proportionate interest in the Trust with each other Share outstanding,
none having priority or preference over another, except to the extent
modified by the Trustees under the provisions of this section. The
number of Shares which may be issued is unlimited. The Trustees may
from time to time divide or combine the outstanding Shares into a
greater or lesser number without thereby changing the proportionate
beneficial interest in the Trust. Contributions to the Trust may be
accepted for, and Shares shall be redeemed as, whole Shares and/or
fractions. Shares may be represented by certificates or by suitable
entries in the books of the Trust.
From time to time as they deem appropriate, the Trustees may create
additional Classes and/or Series of Shares in addition to the single
Series and Class of Shares created under this instrument, which shall be
deemed the original Series of Shares and may be designated by any other
name the Trustees determine. References in this Declaration of
Trust to Shares shall apply to each such Series of Shares and (to the
extent not inconsistent with the rights and restrictions of a Class) to
each Class of Shares.
Any additional Series of Shares created hereunder shall represent the
beneficial interest in the assets (and related liabilities) allocated by
the Trustees to such Series of Shares and acquired by the Trust only
after creation of the respective Series of Shares and only on the
account of such Series. Upon creation of each Series of Shares, the
Trustees may designate it appropriately and determine the investment
policies with respect to the assets allocated to such Series of Shares,
redemption rights, dividend policies, conversion rights, liquidation
rights, voting rights, and such other rights and restrictions as the
Trustees deem appropriate, to the extent not inconsistent with the
provisions of this Declaration of Trust.
The Trustees may divide any Series (including the original Series) into
more than one Class of Shares. Upon any creation of an additional
Class of Shares, the Trustees may designate it appropriately and
determine its rights and restrictions (including redemption rights,
dividend rights, conversion rights, liquidation rights, voting rights,
and such other rights and restrictions as the Trustees deem
appropriate).
Section 2. Ownership of Shares. The ownership of Shares shall be
recorded in the books of the Trust or a transfer agent. The Trustees
may make such rules as they consider appropriate for the transfer of
shares and similar matters. The record books of the Trust or any
transfer agent, as the case may be, shall be conclusive as to who are
the holders of Shares and as to the number of Shares held from time to
time by each.
Section 3. Investment in the Trust. The Trustees may accept
investments in the Trust from such persons and on such terms as they may
from time to time authorize and may cease offering Shares to the public
at any time. After the date of the initial contribution of capital to
the Trust, the number of Shares determined by the Trustees to represent
the initial contribution shall be considered as outstanding and the
amount received by the Trustees on account of the contribution shall be
treated as an asset of the Trust. Subsequent to such initial
contribution of capital, Shares (including Shares which may have been
redeemed or repurchased by the Trust) may be issued or sold at a price
which will net the Trust, before paying any taxes in connection with
such issue or sale, not less than the net asset value (as defined in
Article X, Section 4) thereof; provided, however, that the Trustees may
in their discretion impose a sales charge upon investments in the Trust.
Section 4. No Pre-emptive Rights. Shareholders shall have no
pre-emptive or other right to subscribe to any additional Shares or
other securities issued by the Trust or the Trustees.
Section 5. Provisions Relating to Series of Shares.
Whenever no Shares of a Series are outstanding, then the Trustees may
abolish such Series (or any Class of Shares of a Series for which there
are no outstanding Shares). Whenever more than one Series or Class
of Shares is outstanding, then the following provisions shall apply:
(a) Assets Belonging to Each Series. All consideration received by
the Trust for the issue or sale of Shares of a particular Series,
together with all assets in which such consideration is invested or
reinvested, all income, earnings, and proceeds thereof, and any funds
derived from any reinvestment of such proceeds, shall irrevocably belong
to that Series for all purposes, subject only to the rights of
creditors, and shall be so recorded upon the books of the Trust. In the
event there are assets, income, earnings, and proceeds thereof which are
not readily identifiable as belonging to a particular Series, then the
Trustees shall allocate such items to the various Series then existing,
in such manner and on such basis as they, in their sole discretion, deem
fair and equitable. The amount of each such item allocated to
a particular Series by the Trustees shall then belong to that Series,
and each such allocation shall be conclusive and binding upon the
Shareholders of all Series for all purposes.
(b) Liabilities Belonging to Each Series. The assets belonging to
each particular series shall be charged with the liabilities, expenses,
costs and reserves of the Trust attributable to that Series; and any
general liabilities, expenses, costs and reserves of the Trust which are
not readily identifiable as attributable to a particular Series shall be
allocated by the Trustees to the various Series then existing, in such
manner and on such basis as they, in their sole discretion, deem fair
and equitable. Each such allocation shall be conclusive and binding
upon the Shareholders of all Series for all purposes.
(c) Series Shares, Dividends, and Liquidation. Each
Share of a Class within a Series shall have the same rights and pro-rata
beneficial interest in the assets and earnings of the Series as any
other Share of the same Class, but the rights and interests of the
Classes within a Series may differ as the Trustees provide. Any
dividends paid on the Shares within a Series shall only be payable from
and to the extent of the assets (net of liabilities) belonging to that
Series. In the event of liquidation of a Series, only the assets
(less provision for liabilities) of that Series shall be distributed to
holders of the Shares of that Series.
(d) Voting by Series. Except as provided in this section or as
limited by the rights of any Class, each Share of the Trust may vote
with and in the same manner as any other Share on matters submitted to a
vote of the Shareholders, without differentiation among votes from the
separate Series and/or Classes; provided, however, that (i) as to any
matter with respect to which a separate vote of any Series or Class is
required by the 1940 Act or would be required under Massachusetts
Business Corporation Law if the Trust were a Massachusetts business
corporation, such requirements as to the separate vote by the Series or
Class shall apply in lieu of the voting described immediately above;
(ii) in the event that the separate vote requirements referred to in (i)
above apply with respect to one or more Series or Classes, then, subject
to (iii) below, the Shares of all other Series and Classes shall vote
without differentiation among their votes; and (iii) as to any matter
which does not affect the interest of a particular Series or Class, only
the holders of Shares of the one or more affected Series or Classes
shall be entitled to vote.
ARTICLE IV
THE TRUSTEES
Section 1. Management of the Trust. The business and affairs of
the Trust shall be managed by the Trustees, and they shall have all
powers necessary and desirable to carry out that responsibility. The
Trustees first named above (or their successors appointed hereunder)
shall serve until the election of Trustees at the first meeting of
Shareholders of the Trust.
Section 2. Election of Trustees. During the year following the end of
the Trust's first fiscal year subsequent to its initial public offering
of Shares, the Shareholders shall elect, at a meeting called by the
initial Trustees of the Trust, the Trustees who will serve for such
regular terms as may be provided in the By-Laws of the Trust.
The Shareholders of the Trust shall thereafter elect, at Shareholder
meetings called for the purpose in the manner provided herein, Trustees
to succeed those Trustees whose terms expired since the last such
meeting. If re-elected, a Trustee may succeed himself.
Section 3. Term of Office of Trustees. The Trustees shall hold office
during the lifetime of this Trust, and until the expiration of the term
of office for which each was elected; except (a) that any Trustee may
resign his trust by written instrument signed by him and delivered to
the other Trustees, which shall take effect upon such delivery or upon
such later date as is specified therein; (b) that any Trustee may be
removed at any time by written instrument signed by at least two-thirds
of the number of Trustees prior to such removal, specifying the date
when such removal shall become effective; (c) that any Trustee who
requests in writing to be retired or who has become mentally or
physically incapacitated may be retired by written instrument signed by
a majority of the other Trustees, specifying the date of his retirement;
and (d) a Trustee may be removed at any special meeting of Shareholders
of the Trust by a vote of two-thirds of the outstanding Shares.
Section 4. Termination of Services and Appointment of Trustees. In case
of the death, resignation, retirement, removal or mental or physical
incapacity of any of the Trustees, or in case a vacancy shall by reason
of an increase in number, or for any other reason, exist, the remaining
Trustees shall fill such vacancy by appointing for the remaining term of
the predecessor Trustee such other person as they in their discretion
shall see fit. Such appointment shall be effected by the signing of
a written instrument by the majority of the Trustees in office. Within
three months of such appointment, the Trustees shall cause notice of
such appointment to be mailed to each Shareholder at his address as
recorded on the books of the Trust. An appointment of a Trustee may be
made by the Trustees then in office and notice thereof mailed to
Shareholders as aforesaid in anticipation of a vacancy to occur by
reason of retirement, resignation or increase in number of Trustees
effective only at or after the effective date of said retirement,
resignation or increase in the number of Trustees. As soon as any
Trustee so appointed shall have accepted this Trust, the Trust estate
shall vest in the new Trustee or Trustees, together with the continuing
Trustees, without any further act or conveyance, and he shall be deemed
a Trustee hereunder. Any appointment authorized by this Section 4 is
subject to the provisions of Section 16 (a) of the 1940 Act.
Section 5. Temporary Absence of Trustees. Any Trustee may, by
power of attorney, delegate his power for a period not exceeding six
months at any one time to any other Trustee or Trustees, provided that
in no case shall less than two of the Trustees personally exercise their
power hereunder except as herein otherwise expressly provided.
Section 6. Number of Trustees. The number of Trustees serving
hereunder at any time shall be determined by the Trustees themselves,
but shall not be less than three (3) nor more than fifteen (15).
Whenever a vacancy in the Board of Trustees shall occur, until such
vacancy is filled or while any Trustee is absent from the Commonwealth
of Massachusetts or, if not a domiciliary of Massachusetts, is absent
from his state of domicile, or is physically or mentally incapacitated,
the other Trustees shall have all the powers hereunder and the
certificates signed by a majority of the other Trustees of such vacancy,
absence or incapacity, shall be conclusive, provided, however, that no
vacancy which reduces the number of Trustees below three (3) shall
remain unfilled for a period longer than six calendar months.
Section 7. Effect of Death, Resignation, Etc., of a Trustee.
The death, resignation, retirement, removal, or mental or
physical incapacity of the Trustees, or any one of them, shall not
operate to annul the Trust or to revoke any existing agency created
pursuant to the terms of this Declaration of Trust.
Section 8. ownership of the Trust. The assets of the Trust shall be
held separate and apart from any assets now or hereafter held in any
capacity other than as Trustee hereunder by the Trustees or by any
successor Trustee. All of the assets of the Trust shall at all times be
considered as vested in the Trustees. No Shareholder shall be deemed to
have a severable ownership in any individual asset of the Trust or any
right of partition or possession thereof, but each Shareholder shall
have a proportionate undivided beneficial interest in the Trust.
ARTICLE V
POWERS OF THE TRUSTEES
Section 1. Powers. The Trustees in all instances shall act
as principals , and are and shall be free from the control of the
Shareholders. The Trustees shall have full power and authority to do
any and all acts and to make and execute any and all contracts and
instruments that they may consider necessary or appropriate in
connection with the management of the Trust. The Trustees shall not
be bound or limited by present or future laws or customs in regard to
investment by trustees or fiduciaries, but shall have full authority and
power to make any and all investments which they, in their uncontrolled
discretion, shall deem proper to accomplish the purpose of this Trust.
Without limiting the foregoing, the Trustees shall have the following
specific powers and authority, subject to any applicable limitation in
the Declaration of Trust or in the By-Laws of the Trust:
(a ) To buy, and invest funds of the Trust in, securities including,
but not limited to, common stocks, preferred stocks, bonds, debentures,
warrants and rights to purchase securities, certificates of beneficial
interest, money market instruments, notes or other evidences of
indebtedness issued by corporations, trusts, associations, or banking
institutions, domestic or foreign, or issued or guaranteed by the United
States of America or any agency or instrumentality thereof, by the
government of any foreign country, by any State of the United States, or
by any political subdivision or agency or instrumentality of any State
or foreign country, or in "when-issued" or "delayed-delivery" contracts
for any such securities, or in any repurchase agreement (agreements
under which the seller agrees at the time of sale to repurchase the
security at an agreed time and price); or retain Trust assets in cash,
and from time to time change the investments constituting the assets of
the Trust;
(b) To adopt By-Laws not inconsistent with the Declaration of Trust and
to amend and repeal them to the extent that they do not reserve that
right to the Shareholders;
(c) To elect and remove such officers and appoint and terminate such
agents as they consider appropriate;
(d) To appoint or otherwise engage one or more banks or trust
companies or member firms of any national securities exchange registered
under the Securities Exchange Act of 1934 as custodian of any assets of
the Trust, subject to any conditions set forth in this Declaration of
Trust or in the By-Laws;
(e) To appoint or otherwise engage custodial agents, transfer agents,
dividend distributing agents, Shareholder servicing agents, investment
advisers, sub-investment advisers, principal underwriters,
administrative service agents, and such other agents as the Trustees may
from time to time appoint or otherwise engage;
(f) To provide for the distribution of interests of the Trust either
through a principal underwriter in the manner hereinafter provided for
or by the Trust itself or both;
(g) To set record dates in the manner hereinafter provided for;
(h) To delegate such authority as they consider Desirable to a
committee or committees composed of Trustees, including without
limitation, an Executive Committee, or to any officers of the Trust and
to any agent, custodian or underwriter;
(i ) To sell or exchange any or all of the assets of the Trust, subject
to the provisions of Article XII, Section 4 (b) hereof;
(j ) To vote or give assent, or exercise any rights of ownership, with
respect to stock or other securities or property; and to execute and
deliver powers of attorney to such person or persons as the Trustees
shall deem proper, granting to such person or persons such powers and
discretion with relation to securities or property as the Trustees shall
deem proper;
(k) To exercise powers and rights of subscription or otherwise which
in any manner arise out of ownership of securities;
(1 ) To hold any security or property in a form not indicating any
trust, whether in bearer, unregistered or other negotiable form; or
either in its own name or in the name of a custodian or a nominee or
nominees, subject in either case to proper safeguards according to the
usual practice of Massachusetts trust companies or investment companies;
(m) To consent to or participate in any plan for the reorganization,
consolidation or merger of any corporation or concern, any security of
which is held in the Trust; to consent to any contract, lease, mortgage,
purchase, or sale of property by such corporation or concern, and to pay
calls or subscriptions with respect to any security held in the Trust;
(n) To engage in and to prosecute, compound, compromise, abandon, or
adjust, by arbitration, or otherwise, any actions, suits, proceedings,
disputes, claims, demands, and things relating to the Trust; and out of
the assets of the Trust to pay, or to satisfy, any debts, claims or
expenses incurred in connection therewith, including those of
litigation, upon any evidence that the Trustees may deem sufficient
(such powers shall include without limitation any actions, suits,
proceedings, disputes, claims, demands and things relating to the Trust
wherein any of the Trustees may be named individually and the subject
matter of which arises by reason of business for or on behalf of the
Trust);
(o) To make distribution of income and of capital gains to
Shareholders in the manner hereinafter provided for;
(p) To borrow money and enter into reverse repurchase agreements
(agreements in which the Trust sells assets concurrently with agreeing
to repurchase such assets at a later date at a specific price) for the
purposes of the Trust, if in the opinion of the Trustees such
transactions may be advantageously made to increase the earning power of
the Trust, but only up to twenty-five percent of the gross assets of the
Trust taken at market value as determined by the Trustees at the time
the transactions are entered into. The Trustees may also borrow
if such borrowings are made temporarily for extraordinary or emergency
purposes or to permit redemptions of Shares without selling portfolio
securities, but only to an amount that the aggregate of all borrowings
and reverse Repurchase agreements of the Trust shall not exceed one-
third of the gross assets of the Trust taken at market value as
determined by the Trustees at the time the transactions are entered
into. Any borrowings hereunder may be made with or without collateral
security and the Trustees may, in their discretion, pledge, mortgage,
charge or hypothecate or otherwise encumber the gross assets of the
Trust as security for any loans or reverse repurchase agreements,
subject to the limitations provided herein;
(q) To lend portfolio securities of the Trust, provided that such
loans are made according to the guidelines of the Commission and
pursuant to policies established by the Trustees and provided that such
loans are fully secured by the maintenance of collateral satisfactory to
the Trustees at all times at least equal to the market value of the
securities loaned;
(r) To invest in securities having legal or contractual restrictions
on their resale or for which no readily available market exists;
(s) From time to time to issue and sell the Shares of the Trust either
for cash or for property whenever and in such amounts as the Trustees
may deem desirable, but subject to the limitations set forth in Section
3 of Article III;
(t ) To purchase insurance of any kind, including, without limitation,
insurance on behalf of any person who is or was a Trustee, officer,
employee or agent of the Trust, or is or was serving at the request of
the Trust as a Trustee, Director, officer, agent or employee of another
corporation, partnership, joint venture, trust or other enterprise
against any liability asserted against him and incurred by him in any
such capacity or arising out of his status as such;
(u) To purchase, hold or sell commodities or contracts for the
purchase or sale of commodities, including contracts for the purchase or
sale of financial assets or contracts denominated in terms of a
financial index, which are traded on a commodities exchange or
otherwise; and
(v) To use any of the assets of the Trust to finance activities
primarily intended to result in the sale or distribution of its Shares.
No one dealing with the Trustees shall be under any obligation to make
any inquiry concerning the authority of the Trustees, or to see to the
application of any payments made or property transferred to the Trustees
or upon their order.
Section 2. Principal Transactions. The Trustees shall not on
behalf of the Trust buy any securities (other than Shares of the Trust)
from or sell any securities (other than Shares of the Trust) to, or lend
any assets of the Trust to, any Trustee or officer or employee of the
Trust or any firm of which such Trustee or officer is a member acting as
principal unless permitted by the 1940 Act, but the Trust may employ any
such other party or any such person or firm or company in which any such
person is an interested person in any capacity not prohibited by the
1940 Act.
Section 3. Trustees and Officers as Shareholders. Any Trustee, officer
or other agent of the Trust may acquire, own and dispose of shares of
the Trust to the same extent as if he were not a Trustee, officer or
agent; and the Trustees may issue and sell or cause to be issued or sold
Shares of the Trust to and buy such Shares from any such person or any
firm or company in which he is an interested person subject only to the
general limitations herein contained as to the sale and purchase of such
Shares; and all subject to any restrictions which may be contained in
the By-Laws.
Section 4. Parties to' Contracts. The Trustees may enter into
any contract of the character described in Section 1, 2, 3, or 4 of
Article VII or in Article IX hereof or any other capacity not prohibited
by the 1940 Act with any corporation, firm, trust, or association,
although one or more of the Shareholders, Trustees, officers, employees
or agents of the Trust or their affiliates may be an officer, director,
trustee, shareholder or interested person of such other party to the
contract, and no such contract shall be invalidated or rendered voidable
by reason of the existence of any such relationship, nor shall any
person holding such relationship be liable merely by reason of such
relationship for any loss or expense to the Trust under or by reason of
said contract or accountable for any profit realized directly or
indirectly therefrom, in the absence of actual fraud. The same
person (including a firm, corporation, trust or association) may be the
other party to contracts entered into pursuant to Sections 1, 2, 3, and
4 of Article VII or Article IX or in any other capacity deemed legal
under the 1940 Act, and any individual person may be financially
interested or otherwise an interested person of persons who are parties
to any or all of the contracts mentioned in this Section 4.
ARTICLE VI
TRUSTEES' EXPENSES AND COMPENSATION
Section 1. Trustee Reimbursement. The Trustees shall be
reimbursed from the Trust estate for all of their expenses and
disbursements not otherwise reimbursed, including, without limitation,
expenses of organizing the Trust and continuing its existence; fees and
expenses of Trustees and officers of the Trust; fees for investment
advisory services, administrative services and principal underwriting
services provided for in Article VII, Sections 1, 2 and 3; fees and
expenses for preparing and printing its Registration Statements under
the Securities Act of 1933 and the Investment Company Act of 1940 and
any amendments thereto; expenses of registering and qualifying the Trust
and its shares under Federal and state laws and regulations; expenses of
preparing, printing and distributing prospectuses and any amendments
thereof sent to Shareholders, underwriters, broker-dealers and to
investors who may be considering the purchase of shares; expenses of
registering, licensing or other authorization of the Trust as a broker-
dealer and of its officers as agents and salesmen under Federal and
state laws and regulations; interest expenses, taxes, fees and
commissions of every kind; expenses of issue (including cost of share
certificates), repurchase and redemption of shares, including expenses
attributable to a program of periodic issue; charges and expenses of
custodians, transfer agents, dividend disbursing agents, shareholder
servicing agents and registrars; printing and mailing costs; auditing,
accounting and legal expenses; reports to Shareholders and governmental
officers and commissions; expenses of meetings of Shareholders and proxy
solicitations therefor; insurance expenses; association membership dues;
expenses incurred in connection with the financing of activities
intended primarily to result in the sale or distribution of the Trust's
shares; and such nonrecurring items as may arise, including all losses
and liabilities by them incurred in administering the Trust, including
expenses incurred in connection with litigation, proceedings and claims
and the obligations of the Trust under Article XI hereof to indemnify
its Trustees, officers, employees, Shareholders and agents; and for the
payment of such expenses, disbursements, losses and liabilities, the
Trustees shall have a lien on the Trust estate prior to any rights or
interests of the Shareholders thereto. This section shall not
preclude the Trust from directly paying any of the aforementioned fees
and expenses.
Section 2. Trustee Compensation. The Trustees shall be
entitled to compensation from the Trust f6-r their respective services
as Trustees, to be determined from time to time by vote of the Trustees,
and the Trustees shall also determine the compensation of all officers,
consultants and agents whom they may elect or appoint. The Trust may
pay any Trustee or any corporation, firm, trust or association of which
a Trustee is an interested person for services rendered to the Trust in
any capacity not prohibited by the 1940 Act, and such payments shall not
be deemed compensation for services as a Trustee under the first
sentence of this Section 2 of Article VI.
ARTICLE VII
INVESTMENT ADVISER, ADMINISTRATIVE SERVICES,
PRINCIPAL UNDERWRITER AND TRANSFER AGENT
Section 1 . Investment Adviser. Subject to a Majority
Shareholder Vote as required by Section 15 of the 1940 Act, the Trustees
may in their discretion from time to time enter into an investment
advisory contract whereby the other party to such contract shall
undertake to furnish the Trustees investment advisory services upon such
terms and conditions and for such compensation as the Trustees may in
their discretion determine. Subject to a Majority Shareholder
Vote, the investment adviser may enter into a sub-investment advisory
contract to receive investment advice, statistical and factual
information from the sub-investment adviser upon such terms and
conditions and for such compensation as the Trustees may in their
discretion agree to.
Notwithstanding any provisions of this Declaration of Trust, the
Trustees may authorize the investment adviser or sub-investment adviser
or any person furnishing administrative personnel and services as set
forth in Article VII, Section 2 (subject to such general or specific
instructions as the Trustees may from time to time adopt) to effect
purchases, sales or exchanges of portfolio securities of the Trust on
behalf of the Trustees or may authorize any officer or Trustee to effect
such purchases, sales, or exchanges pursuant to recommendations of the
investment adviser (and all without further action by the Trustees).
Any such purchases, sales and exchanges shall be deemed to have been
authorized by the Trustees. The Trustees may also authorize the
investment adviser to determine what firms shall be employed to effect
transactions in securities for the account of the Trust and to determine
what firms shall participate in any such transactions or shall share in
commissions or fees charged in connection with such transactions.
Section 2. Administrative Services. The Trustees may in their
discretion from time to time contract for administrative personnel and
services whereby the other party shall agree to provide the Trustees
administrative personnel and services to operate the Trust on a daily
basis, on such terms and conditions as the Trustees may in their
discretion determine. Such services may be provided by one or more
entities.
Section 3. Principal Underwriter. The Trustees may in their
discretion from time to time enter into an exclusive or non-exclusive
contract or contracts providing for the sale of the Shares of the Trust
to net the Trust not less than the amount provided in Article III,
Section 3 hereof, whereby the Trust may either agree to sell its Shares
to the other party to the contract or appoint such other party its sales
agent for such Shares. In either case, the contract shall be on such
terms and conditions as the Trustees may in their discretion determine
not inconsistent with the provisions of this Article VII; and such
contract may also provide for the repurchase or sale of Shares of the
Trust by such other party as principal or as agent of the Trust and may
provide that the other party may maintain a market for Shares of the
Trust.
Section 4. Transfer Agent. The Trustees may in their
discretion from time to t@6-e-FE-@-into transfer agency and shareholder
services contracts whereby the other party shall undertake to furnish
the Trustees transfer agency and shareholder services. The contracts
shall be on such terms and conditions as the Trustees may in their
discretion determine not inconsistent with the provisions of this
Declaration of Trust or of the By-Laws. Such services may be
provided by one or more entities.
Section 5. Provisions and Amendments. Any contract entered
into pursuant to Sections 1 or 3 of this Article VII shall be consistent
with and subject to the requirements of Section 15 of the 1940 Act
(including any amendments thereof or other applicable Acts of Congress
hereafter enacted) with respect to its continuance in effect, its
termination, and the method of authorization and approval of such
contract, or renewal thereof.
ARTICLE VIII
SHAREHOLDERS' VOTING POWERS AND MEETINGS
Section 1. Voting Powers. The Shareholders shall have power to vote:
(i) for the election of Trustees as provided in Article IV, Section 2;
(ii) for the removal of Trustees as provided in Article IV, Section
3(d); (iii) with respect to any investment adviser or sub-investment
adviser as provided in Article VII, Section 1; (iv) with respect to the
amendment of this Declaration of Trust as provided in Article XII,
Section 7; (v) to the same extent as the Shareholders of a Massachusetts
business corporation as to whether or not a court action, proceeding or
claim should be brought or maintained derivatively or as a class action
on behalf of the Trust or the Shareholders; and (vi) with respect to
such additional matters relating to the Trust as may be required by law,
by this Declaration of Trust, or the By-Laws of the Trust or any
regulation of the Trust by the Commission or any State, or as the
Trustees may consider desirable. Each whole Share shall be entitled
to one vote as to any matter on which it is entitled to vote, and each
fractional Share shall be entitled to a proportionate fractional vote.
There shall be no cumulative voting in the election of Trustees. If the
Trust issues more than one Series or Class of Shares, the Shareholders
of each Series and Class shall vote separately to the extent provided in
Article III, Section 5; in the election of Trustees all Shareholders
shall vote without differentiation among votes from the separate Series
and Classes of Shares. Until Shares are issued, the Trustees may
exercise all rights of Shareholders and may take any action required or
permitted by law, this Declaration of Trust or any By-Laws of the Trust
to be taken by Shareholders.
Section 2. Meetings. Shareholder meetings shall be held as
specified in Section 2 of Article IV and in the By-Laws at the principal
office of the Trust or at such other place as the Trustees may
designate. Special meetings of the Shareholders may be called by the
Trustees or by officers of the Trust given such authority in the By-
Laws, and shall be called by the Trustees at a place designated by them
upon the written request of Shareholders owning at least one-tenth of
the outstanding Shares entitled to vote. Shareholders shall be
entitled to at least fifteen days' notice of any meeting.
Section 3. Quorum and Required Vote. Except as otherwise
provided by law, to constitute a quorum for the transaction of any
business at any meeting of Shareholders there must be present, in person
or by proxy, holders of one-fourth of the total number of Shares of the
Trust then outstanding and entitled to vote at such meeting. If a
quorum, as above defined, shall not be present for the purpose of any
vote that may properly come before the meeting, the Shareholders present
in person or by proxy and entitled to vote at such meeting on such
matter holding a majority of the Shares present entitled to vote on such
matter may by vote adjourn the meeting from time to time to be held at
the same place without further notice than by announcement to be given
at the meeting, until a quorum, as above defined , entitled to vote on
such matter shall be present, whereupon any such matter may be voted
upon at the meeting as though held when originally convened.
Subject to any applicable requirement of law or of this Declaration of
Trust or the By-Laws, a plurality of the votes cast shall elect a
Trustee and all other matters shall be decided by a majority of the
votes cast entitled to vote thereon.
Section 4. Proxies. Any vote by a Shareholder of the Trust may be made
in person or by proxy, provided that no proxy shall be voted at any
meeting unless it shall have been placed on file with the Trustees or
their designate prior to the time the vote is taken. Pursuant
to a resolution of a majority of the Trustees, proxies may be solicited
in the name of one or more Trustees or one or more officers of the
Trust. Only Shareholders of record shall be entitled to vote. A proxy
purporting to be executed by or on behalf of a Shareholder shall be
deemed valid unless challenged at or prior to its exercise, and the
burden or proving invalidity shall rest on the challenger.
Section 5. Additional Provisions. The By-Laws may include further
provisions for Shareholders' votes and meetings and related matters.
ARTICLE IX
CUSTODIANS
Section 1. Appointment of Custodian and Duties. The Trustees
shall appoint or otherwise engage a bank or trust company having an
aggregate capital, surplus and undivided profits (as shown in its last
published report) of at least two million dollars ($2,000,000) as its
Custodian with authority as its agent, but subject to such restrictions,
limitations and other requirements, if any, as may be contained in the
By-Laws of the Trust:
(1) To receive and hold securities owned by the Trust and deliver the
same upon written order;
(2) To receive and receipt for any moneys due to the Trust and deposit
the same in its own banking department or elsewhere as the Trustee may
direct;
(3) To disburse such funds upon orders or vouchers;
(4) To keep the books and accounts of the Trust and furnish clerical
and accounting services; and
(5 ) To compute , if authorized to do so by the Trustees, the
Accumulated Net Income of the Trust and the net asset value of the
Shares in accordance with the provisions hereof; all upon such basis of
compensation as may be agreed upon between the Trustees and the
Custodian. If so directed by a Majority Shareholder Vote, the
Custodian shall deliver and pay over the property of the Trust held by
it as specified in such vote.
The Trustees may also authorize the Custodian to employ one or ore sub-
custodians from time to time to perform such of the acts and services of
the Custodian and upon such terms and conditions, as may be agreed upon
between the Custodian and such sub-custodian and approved by the
Trustees, provided that in every case such sub-custodian shall be a bank
or trust company organized under the laws of the United States or one of
the States thereof and having an aggregate capital, surplus and
undivided profits (as shown in its last published report) of at least
two million dollars ($2,000,000) or a member firm of a national
securities exchange registered under the Securities Exchange Act of
1934.
Section 2. Central Certificate System. Subject to such rules,
regulations and orders as the Commission may adopt, the Trustees
may direct the Custodian to deposit all or any part of the securities
owned by the Trust in a system for the central handling of securities
established by a national securities exchange or a national securities
association registered with the Commission under the Securities Exchange
Act of 1934, or such other person as may be permitted by the Commission
or otherwise in accordance with the 1940 Act as from time to time
amended, pursuant to which system all securities of any particular class
s or series of any issuer deposited within the system are treated as
fungible and may be transferred or pledged by bookkeeping entry without
physical delivery of such securities, provided that all such deposits
shall be subject to withdrawal only upon the order of the Custodian at
the direction of the Trustees.
Section 3. Special Custodians. The Trustees may appoint or
otherwise engage any institution which would be permitted to act as
a sub-custodian hereunder to act as a Special Custodian of the Trust.
Any Special Custodian shall have custody only of securities owned by the
Trust and shall not hold any of its cash. Special Custodians shall be
appointed pursuant to a written agreement approved and thereafter at
least annually ratified by the Trustees, and any such written agreement
shall also require that the Special Custodian shall deliver to the
Custodian its receipt, evidencing that it holds the specific securities
in question on behalf of the Trust in its safekeeping, before any
payment can be made for such securities by the Trust. Special
Custodians shall be used by the Trust only for purposes of safekeeping
specialized kinds of securities for periods of limited duration in cases
where, in the opinion of the Trustees, officers of the Trust, its
investment adviser or other authorized agent, such safekeeping services
would be more appropriate or convenient to the Trust than the
safekeeping of such securities with the Custodian.
Section 4. Special Depositories. The Trustees may by resolution
appoint as Special Depositories any commercial banks insured by the
Federal Deposit Insurance Corporation having aggregate capital, surplus
and undivided profits (as shown in their respective last published
reports) of at least two million dollars ($2,000,000). The Trust may
maintain with a Special Depository only demand deposit accounts and shall
not permit the aggregate balances in such accounts to exceed the
amount of any fidelity bond covering any officer of the -.rust
authorized by the Trustees to have signature authority over such demand
deposit accounts.
ARTICLE X
DISTRIBUTIONS AND REDEMPTIONS
Section 1. Distributions.
(a) The Trustees may from time to time declare and pay dividends, and
the amount of such dividends and the payment of them shall be wholly in
the discretion of the Trustees.
(b) The Trustees may, on each day Accumulated Net Income of the Trust
(as defined in Section 3 of this Article X) is determined, declare such
Accumulated Net Income as a dividend to Shareholders of record at such
time as the Trustees shall designate, payable in additional full and
fractional Shares or in cash. The Trustees may, if they deem it
advisable, declare a negative dividend on any day when the Accumulated
Net Income of the Trust is negative and deduct such amount from the
previously accumulated dividends of each Shareholder or from such
Shareholder's interest in the Trust.
(c) The Trustees may distribute in respect of any fiscal year as
ordinary dividends and as capital gains distributions, respectively,
amounts sufficient to enable the Trust as a regulated investment company
to avoid any liability for federal income taxes in respect of that year.
(d) The decision of the Trustees as to what, in accordance with good
accounting practice, is income and what is principal shall be final, and
except as specifically provided herein the decision of the Trustees as
to what expenses and charges of the Trust shall be charged against
principal and what against the income shall be final. In the event more
than one Series or Class of Shares is outstanding, the Trustees shall
separately allocate income and expense to each such Series and Class as
they, in their discretion, deem fair and equitable, and their decisions
as to such allocations shall be conclusive and binding upon all
Shareholders. Any income not distributed in any year may be invested
from time to time in the same manner as the principal funds of the
Trust.
(e) The Trustees shall have power, to the fullest extent permitted by
the laws of Massachusetts, at any time, or from time to time, to declare
and cause to be paid dividends, which dividends, at the election of the
Trustees, may be accrued, automatically reinvested in additional Shares
(or fractions thereof) of the Trust or paid 'in cash or in additional
Shares, all upon such terms and conditions as the Trustees may
prescribe.
(f) Anything in this instrument to the contrary notwithstanding, the
Trustees may at any time declare and distribute a dividend consisting of
shares of the Trust.
Section 2. Redemptions and Repurchases.
(a) In case any Shareholder of record of the Trust at any time
desires or authorizes the disposition of Shares recorded in his name, he
or his authorized agent may deposit a written request (or such other
form of request as the Trustees may from time to time authorize)
requesting that the Trust purchase his Shares, together with such other
instruments or authorizations to effect the transfer as the Trustees may
from time to time require, at the principal office of the Trust, or at
the office of the Custodian if authorized by the Trustees, and the Trust
shall purchase his said Shares, but only at the net asset value of such
Shares (as defined in Section 4 of this Article X) determined by or on
behalf of the Trustees next after said request is received in the form
and manner prescribed by the Trustees. Payment for such Shares shall be
made by the Trust to the Shareholder of record under procedures
determined from time to time by the Trustees.
(b) The Trust may purchase Shares of the Trust by agreement with the
owner thereof (1) at a price not exceeding the net asset value per share
determined next after the purchase or contract of purchase is made or
(2) at a price not exceeding the net asset value per Share determined at
some later time.
(c) Shares purchased by the Trust either pursuant to paragraph
(a) or paragraph (b) of this Section 2 shall be deemed treasury Shares
and may be resold by the Trust, unless the Trustees determine to
extinguish such shares.
(d) If the Trustees determine that economic conditions would make it
seriously detrimental to the best interests of the remaining
Shareholders of the Trust to make payment wholly or partly in cash, the
Trust may pay the redemption price in whole or in part by a distribution
in kind of securities and other assets from the portfolio or portfolios
of the Trust, in lieu of cash, in conformity with applicable rules of
the Securities and Exchange Commission, taking such securities and other
assets at the same value employed in determining net asset value, and
selecting the securities in such manner as the Trustees may deem fair
and equitable.
Section 3. Determination of Accumulated Net Income. The
Accumulated Net Income of the Trust shall be determined by or on behalf
of the Trustees daily or more frequently at the discretion of the
Trustees, on each business day at such time as the Trustees shall in
their discretion determine. Such determination shall be made in
accordance with generally accepted accounting principles and practices
and the accounting policies established by the Trustees, and may include
realized and/or unrealized gains from the sale or other disposition of
securities or other property of the Trust. The power and duty to
determine Accumulated Net Income may be delegated by the Trustees from
time to time to one or more of the Trustees or officers of the Trust, to
the other party to any contract entered into pursuant to Section 1 or 2
of Article VII, or to the Custodian or to a transfer agent.
Section 4. Net Asset Value of Shares. The net asset value of
each Share of the Trust outstanding shall be determined at least once on
each business day by or on behalf of the Trustees. The power and duty
to determine net asset value may be delegated by the Trustees from time
to time to one or more of the Trustees or officers of the Trust, to the
other party to any contract entered into pursuant to Section 1 or 2 of
Article ,I, or to the Custodian or to a transfer agent.
The net asset value of each Share of the Trust as of any particular time
shall be the quotient (adjusted to the number of significant digits
determined by the Trustees) obtained by dividing the value, as of such
time, of the net assets of the respective portfolio of the Trust ( i e .
, the value of the assets of the Trust , less its liabilities exclusive
of capital and surplus, applicable to such Shares) by the total number
of such Shares outstanding (exclusive of treasury Shares) at such time
in accordance with the requirements of the 1940 Act and applicable
provisions of the By-Laws of the Trust in conformity with generally
accepted accounting practices and principles.
The Trustees may declare a suspension of the determination of net asset
value for the whole or any part of any period (a) during which the New
York Stock Exchange 'is closed other than customary weekend and holiday
closings, (b) during which trading on the New York Stock Exchange is
restricted, (c) during which an emergency exists as a result of which
disposal by the Trust of securities owned by it is not reasonably
practicable, or it is not reasonably practicable for the -Trust fairly
to determine the value of its net assets, or (d) during such other
periods as the Commission may by order permit for the protection of
security holders of the Trust; provided that applicable rules and
regulations of the Commission shall govern as to whether the conditions
prescribed in (b) or (c) exist. Such suspension shall take effect at
such times as the Trustees shall specify but not later than the close of
business on a business day next following the declaration, and
thereafter there shall be no determination of net asset value until the
Trustees shall declare the suspension at an end, except that the
suspension shall terminate in any event on the first day on which said
stock exchange shall have reopened or the period specified in (b) or (c)
shall have expired (as to which, in the absence of an official ruling by
the Commission, the determination of the Trustees shall be conclusive).
Section 5. Suspension of the Right of Redemption. The Trustees may
declare a suspension of the right of redemption or postpone the date
of payment for the whole or any part of any period (i) during which the
New York Stock Exchange is closed other than customary weekend and
holiday closings, (ii) during which trading on the New York Stock
Exchange is restricted, (iii) during which an emergency exists as a
result of which disposal by the Trust of securities owned by it is not
reasonably practicable or it is not reasonably practicable for the Trust
fairly to determine the value of its net assets, or (iv) during any
other period when the Commission may by order permit for the protection
of security holders of the Trust suspension of the right of redemption
or postponement of the date of payment on redemption; provided that
applicable rules and regulations of the Commission shall govern as to
whether the conditions prescribed in (ii) or (iii) exist. Such
suspension shall take effect at such time as the Trustees shall specify
but not later than the close of business on the business day next
following the declaration of suspension, and thereafter there shall be
no right of redemption or payment until the Trustees shall declare the
suspension at an end, except that the suspension shall terminate in any
event on the first day on which said stock exchange shall have reopened
or the period specified in (ii) or (iii) shall have expired (as to
which, in the absence of an official ruling by the Commission, the
determination of the Trustees shall be conclusive).
Section 6. Trust's Right to Redeem Shares. The Trust shall
have the right to cause the redemption of Shares in any Shareholder's
account for their then current net asset value (which will be promptly
paid to the Shareholder in cash) if at any time the total investment in
the Shareholder's account with the Trust does not have a minimum dollar
value determined from time to time by the Trustees in their sole
discretion. Shares of the Trust are also redeemable at the option of
the Trust if, in the opinion of the Trustees, ownership of Trust Shares
has or may become concentrated to an extent which would cause the Trust
to be a personal holding company within the meaning of the federal
Internal Revenue Code (and thereby disqualified under Sub-chapter M of
said Code); in such circumstances the Trust may compel the redemption of
Shares, reject any order for the purchase of Shares or refuse to give
effect to the transfer of Shares.
ARTICLE XI
LIMITATION OF LIABILITY AND INDEMNIFICATION
Section 1. Limitation of Personal Liability and Indemnification of
Shareholders. The Trustees, officers, employees or agents of the Trust
shall have no power to bind any Shareholder personally or to call upon
any Shareholder for the payment of any sum of money or assessment
whatsoever, other than such as the Shareholder may at any time agree to
pay by way of subscription to any Shares or otherwise.
No Shareholder or former Shareholder of the Trust shall be liable solely
by reason of his being or having been a Shareholder for any debt, claim,
action, demand, suit, proceeding, judgment, decree, liability or
obligation of any kind, against, or with respect to the Trust arising
out of any action taken or omitted for or on behalf of the Trust, and
the Trust shall be solely liable therefor ' and resort shall be had
solely to the Trust property for the payment or performance thereof.
Each Shareholder or former Shareholder of the Trust (or their heirs,
executors, administrators or other legal representatives or, in case of
a corporate entity, its corporate or general successor) shall be
entitled to indemnity and reimbursement out of the Trust property to the
full extent of such liability and the costs of any litigation or other
proceedings in which such liability shall have been determined,
including, without limitation, the fees and disbursements of counsel if,
contrary to the provisions hereof, such Shareholder or former
Shareholder of the Trust shall be held to personal liability.
The Trust shall, upon request by the Shareholder or former Shareholder,
assume the defense of any claim made against any Shareholder for any act
or obligation of the Trust and satisfy any judgment thereon.
Section 2. Limitation of Personal Liability of Trustees, Officers,
Employees or Agents of the Trust. No Trustee, officer, employee )r
agent of the Trust shall have the power to bind any other Trustee,
officer, employee or agent of the Trust personally. The Trustees,
officers, employees or agents of the Trust incurring any debts,
liabilities or obligations, or in taking or omitting any other actions
for or in connection with the Trust are, and each shall be deemed to be,
acting as Trustee, officer, employee or agent of the Trust and not in
his own individual capacity.
Provided they have acted under the belief that their actions are in the
best interest of the Trust, the Trustees and officers shall not be
responsible for or liable in any event for neglect or wrongdoing by them
or any officer, agent, employee, investment adviser or principal
underwriter of the Trust or of any entity providing administrative
services for the Trust, but nothing herein contained shall protect any
Trustee or officer against any liability to which he would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his office.
Section 3. Express Exculpatory Clauses and Instruments. The
Trustees shall Use every reasonable means to assure that all persons
having dealings with the Trust shall be informed that the property of
the Shareholders and the Trustees, officers, employees and agents of the
Trust shall not be subject to claims against or obligations of the Trust
to any extent whatsoever. The Trustees shall cause to be inserted in
any written agreement, undertaking or obligation made or issued on
behalf of the Trust (including certificates for Shares of the Trust) an
appropriate reference to this Declaration, providing that neither the
Shareholders, the Trustees, the officers, the employees nor any agent of
the Trust shall be liable thereunder, and that the other parties to such
instrument shall look solely to the Trust property for the payment of
any claim thereunder or for the performance thereof; but the omission of
such provisions from any such instrument shall not render any
Shareholder, Trustee, officer, employee or agent liable, nor shall any
Trustee, or any officer, agent or employee of the Trust be liable to
anyone for such omission. If, notwithstanding this
provision, any Shareholder, Trustee, officer, employee or agent shall be
held liable to any other person by reason of the omission of such
provision from any such agreement, undertaking or obligation, the
Shareholder, Trustee, officer, employee or agent shall be entitled to
indemnity and reimbursement out of the Trust property, as provided in
this Article XI.
Section 4. Mandatory Indemnification.
(a) Subject only to the provisions hereof , every person who is or has
been a Trustee, officer, employee or agent of the Trust and every person
who serves at the Trust's request as director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise shall be indemnified by the Trust to the fullest extent
permitted by law against all liabilities and against all expenses
reasonably incurred or paid by him in connection with any debt, claim,
action, demand, suit, proceeding, judgment, decree, liability or
obligation of any kind in which he becomes involved as a party or
otherwise or is threatened by virtue of his being or having been a
Trustee, officer, employee or agent of the Trust or of another
corporation, partnership, joint venture, trust or other enterprise at
the request of the Trust, and against amounts paid or incurred by him in
the compromise or settlement thereof.
(b) The words "claim," "action," "suit," or "proceeding" shall apply
to all claims, actions, suits or proceedings (civil, criminal,
administrative, legislative, investigative or other, including appeals),
actual or threatened, and the words "liabilities" and "expenses" shall
include, without limitation, attorneys' fees, costs, judgments, amounts
paid in settlement, fines, penalties and other liabilities.
(c) No indemnification shall be provided hereunder against any
liabilities to the Trust or its Shareholders adjudicated to have been
incurred by reason of willful misfeasance, bad faith, gross negligence,
or reckless disregard of the duties involved in the conduct of a
person's office.
(d) The rights of indemnification herein provided may be insured
against by policies maintained by the Trust, shall be severable, shall
not affect any other rights to which any Trustee, officer, employee or
agent may now or hereafter be entitled, shall continue as to a person
who has ceased to be such Trustee, officer, employee, or agent and shall
inure to the benefit of the heirs, executors and administrators of such
a person; provided, however, that no person may satisfy any right of
indemnity or reimbursement granted herein except out of the property of
the Trust, and no other person shall be personally liable to provide
indemnity or reimbursement hereunder (except an insurer or surety or
person otherwise bound by contract).
(e ) Expenses in connection with the preparation and presentation of a
defense to any claim, action, suit or proceeding of the character
described in paragraph (a) of this Section 4 may be paid by the Trust
prior to final disposition thereof upon receipt of a written undertaking
by or on behalf of the Trustee, officer, employee or agent to reimburse
to the Trust if it is ultimately determined under this Section 4 that he
is not entitled to indemnification.
ARTICLE XII
MISCELLANEOUS
Section 1. Trust is not a Partnership. It is hereby expressly
declared that a trust and not a partnership is created hereby.
Section 2. Trustees' Good Faith Action, Expert Advice, No Bond or
Surety. The exercise by the Trustees of their powers and discretions
hereunder in good faith and with reasonable care under the circumstances
then prevailing, shall be binding upon everyone interested. Subject to
the provisions of Article XI, the Trustees shall not be liable for
errors of judgment or mistakes of fact or law. The Trustees may take
advice of counsel or other experts with respect to the meaning and
operation of this Declaration of Trust, and subject to the provisions of
Article XI, shall be under no liability for any act or omission in
accordance with such advice or for failing to follow such advice. The
Trustees shall not be required to give any bond as such, nor any surety
if a bond is required.
Section 3. Establishment of Record Dates. The Trustees may
close the Share transfer books of the Trust for a period not exceeding
sixty (60) days preceding the date of any meeting of Shareholders, or
the date for the payment of any dividend or the making of any
distribution to Shareholders, or the date for the allotment of rights,
or the date when any change or conversion or exchange of Shares shall go
into effect; or in lieu of closing the Share transfer books as
aforesaid, the Trustees may f ix in advance a date, not exceeding sixty
(60) days preceding the date of any meeting of Shareholders, or the date
for the payment of any dividend or the making of any distribution to
Shareholders, or the date for the allotment of rights, or the date when
any change or conversion or exchange of Shares shall go into effect, or
the last day on which the consent or dissent of Shareholders may be
effectively expressed for any purpose, as a record date for the
determination of the Shareholders entitled to notice of, and, to vote
at, any such meeting and any adjournment thereof, or entitled to receive
payment of any such dividend or distribution, or to any such allotment
or rights, or to exercise the rights in respect of any such change,
conversion or exchange of shares, or to exercise the right to give such
consent or dissent, and in such case such Shareholder and only such
Shareholder as shall be Shareholders of record on the date so fixed
shall be entitled to such notice of, and to vote at, such meeting, or to
receive payment of such dividend or distribution, or to receive such
allotment or rights, or to exercise such rights, as the case may be,
notwithstanding any transfer of any Shares on the books of the Trust
after any such date fixed as aforesaid.
Section 4. Termination of Trust.
(a) This Trust shall continue without limitation of time but subject
to the provisions of paragraphs (b) , (c) and (d) of this Section 4.
(b) The Trustees, with the approval of a Majority Shareholder Vote,
may by unanimous action, merge, consolidate, or sell and convey the
assets of the Trust including its good will to another trust or
corporation organized under the laws of any state of the United States,
which is a diversified open-end management investment company as defined
in the 1940 Act, for an adequate consideration which may include the
assumption of all outstanding obligations, taxes and other liabilities,
accrued or contingent, of the Trust and which may include shares of
beneficial interest or stock of such trust or corporation. Upon making
provision for the payment of all such liabilities, by such assumption or
otherwise, the Trustees shall distribute the net proceeds of the
transaction ratably among the holders of the Shares of the Trust then
outstanding.
(c) Subject to a Majority Shareholder Vote, the Trustees may at any
time sell and convert into money all the assets of the Trust. Upon
making provision for the payment of all outstanding obligations, taxes
and other liabilities, accrued or contingent, of the Trust, the Trustees
shall distribute the remaining assets of the Trust ratably among the
holders of the outstanding Shares.
(d) Upon completion of the distribution of the remaining proceeds or
the remaining assets as provided in paragraphs (b) and (c), the Trust
shall terminate and the Trustees shall be discharged of any and all
further liabilities and duties hereunder and the right, title and
interest of all parties shall be canceled and discharged.
Section 5. offices of the Trust, Filing of Copies, References,
Headings. The Trust shall maintain, a usual place of business in
Massachusetts, which, initially, shall be one Post office Square,
Boston, Massachusetts, and shall continue to maintain an office at such
address unless changed by the Trustees, or by their representative, to
another location in Massachusetts. The Trust may maintain other
offices as the Trustees may from time to time determine. The original
or a copy of this instrument and of each declaration of trust
supplemental hereto shall be kept at the office of the Trust where it
may be inspected by any Shareholder. A copy of this instrument and
of each supplemental declaration of trust shall be filed by the Trustees
with the Massachusetts Secretary of State and the Boston City Clerk, as
well as any other governmental office where such filing may from time to
time be required. Anyone dealing with the Trust may rely on a
certificate by an officer of the Trust as to whether or not any such
supplemental declaration of trust has been made and as to any matters in
connection with the Trust hereunder, and with the same effect as if it
were the original, may rely on a copy certified by an office of the
Trust to be a copy of this instrument or of any such supplemental
declaration of trust. In this instrument or in any such supplemental
declaration of trust, references to this instrument, and all expressions
like "herein," "hereof" and "hereunder," shall be deemed to refer to
this instrument as amended or affected by any such supplemental
declaration of trust. Headings are placed herein for convenience of
reference only and in case of any conflict, the text of this instrument,
rather than the headings, shall control. This instrument may be
executed in any number of counterparts each of which shall be deemed an
original.
Section 6. Applicable Law. The Trust set forth in this
instrument is created under and is to be governed by and construed and
administered according to the laws of the Commonwealth of Massachusetts.
The Trust shall be of the type commonly called a Massachusetts business
trust, and without limiting the provisions hereof, the Trust may
exercise all powers which are ordinarily exercised by such a trust.
Section 7. Amendments. Prior to the initial issuance of Shares pursuant
to the second sentence of Section 3 of Article III, a majority of the
Trustees then in office may amend or otherwise supplement this
instrument by making a Declaration of Trust supplemental hereto, which
thereafter shall form a part hereof. Subsequent to such initial
issuance of Shares, if authorized by a majority of the Trustees then in
office and by a Majority Shareholder Vote, or by any larger vote which
may be required by applicable law or this Declaration of Trust in any
particular case, the Trustees shall amend or otherwise supplement this
instrument, by making a declaration of trust supplemental hereto, which
thereafter shall form a part hereof. Any such supplemental
declaration of trust shall be signed by at least a majority of the
Trustees then in office. Copies of the supplemental declaration of
trust shall be filed as specified in Section 5 of this Article XII.
Section 8. Conflicts with Law or Regulations-
(a) The provisions of this Declaration of Trust are severable, and if
the Trustees determine, with the advice of counsel, that any such
provision is in unresolvable conflict with the 1940 Act, with the
provisions of the Internal Revenue Code relating to the tax exemption or
other matters concerning regulated investment companies, or with other
applicable laws or regulations, the conflicting provision shall be
deemed never to have constituted a part of this Declaration of Trust;
provided, however, that such determination shall not affect any of the
remaining provisions hereof nor render invalid or improper any action
taken or omitted prior to such determination.
(b) If any provision of this Declaration of Trust shall be held
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not attach to such provision in any other
jurisdiction or any other provision hereof in any jurisdiction.
Section 9. Use of Name. The Trustees of the Trust acknowledge that,
in consideration of its assumption of certain expenses of formation of
the Trust, Bankers Finance Investment Management Corp. has reserved for
itself the rights to the name "GIT Equity Trust' (or any similar name),
that the Trust's rights to use the "GIT" portion of its name are non-
exclusive, and that use by the Trust of such name shall continue only
with the continuing consent of Bankers Finance Investment Management
Corp., which consent may be withdrawn at any time, effective immediately
or at a specified time, upon written notice thereof to the Trust.
IN WITNESS WHEREOF, the undersigned have executed this
instrument on this date first written above.
(signature)
A. Bruce Cleveland
(signature)
Michael D. Goth
(signature).
Robert W. Dudley
(signature)
Thomas S. Kleppe
(signature)
Gerald W. Nensel
<PAGE>
GIT EQUITY TRUST
SUPPLEMENTAL DECLARATION OF TRUST
Amendment No. 1 to Declaration of Trust
This SUPPLEMENTAL DECLARATION OF TRUST is made 1983, by A. Bruce
Cleveland, Michael D. Goth, Robert W. Dudley, Thomas S. Kleppe, and
Gerald W. Nensel, as Trustees.
WHEREAS the Trustees desire to amend the Declaration of Trust of GIT
Equity Trust as provided below;
WHEREAS the Shareholders of record of all outstanding Shares of the
Trust have consented to such amendment;
NOW, THEREFORE, the Trustees declare that the Article IV, Section 3, of
the Declaration of Trust of GIT Equity Trust shall be amended and
restated as herein set forth below.
ARTICLE IV
THE TRUSTEES
Section 3. Term of Office of Trustees. The Trustees shall hold off ice
during the lifetime of this Trust and until any expiration of the term
of office for which each was elected; except that: (a) a Trustee may
resign his trust by written instrument signed by him and delivered to
the other Trustees, which shall take effect upon such delivery or upon
such later date as is specified therein; (b) a Trustee may be removed at
any time by written instrument signed by at least two-thirds of the
number of Trustees prior to such removal, specifying the date when such
removal shall become effective; (c) a Trustee who requests in writing to
be retired or who has become mentally or physically incapacitated may be
retired by written instrument signed by a majority of the other
Trustees, specifying the date of and reason for his retirement; and (d)
a Trustee may be removed either by filing with the Trust's Custodian
written declarations by two-thirds of the outstanding Shares after
solicitation of such declarations by a Shareholder in the same manner as
proxies are solicited, or by a vote of two-thirds of the outstanding
Shares cast in person or by proxy at a special meeting of Shareholders
called for the purpose.
The Trustees shall promptly call a meeting of Shareholders for the
purpose of voting on the 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 an aggregate net asset value of at least
$25,000 or, if less, with a net asset value of 1% of the Trust's
aggregate net assets, may apply to the Trustees in writing for the
purpose of communicating with other Shareholders to solicit their
signatures requesting such a Shareholder meeting to remove a Trustee;
provided, that a copy of the proposed form of communication to
Shareholders and accompanying signature request is submitted by such
Shareholders with such application to the Trustees. Within five (5)
business days of the receipt of such an application the Trustees shall
either: (a) provide the applicants access to a list of the names and
addresses of all Shareholders as shown on the books of the Trust, or (b)
inform the applicants as to the approximate number of Shareholders of
record and the approximate cost of mailing to them the proposed form of
communication and signature request. If the Trustees act pursuant to
the course described in clause (b) immediately above, the applicants may
thereafter request in writing that the Trustees mail the proposed
communication and signature request to Shareholders, provided such
request is accompanied by delivery to the Trustees of all materials to
be so mailed and payment to the Trust of the amount reasonably estimated
by the Trustees as the cost of the mailing.
Upon receipt of any such request, delivery and payment, the Trustees
shall either mail such materials with reasonable promptness to all
Shareholders of record at their addresses as shown on the books of the
Trust or within five (5) business days thereafter mail to the applicants
and file with the Commission copies of the tendered materials and a
written statement, signed by at least a majority of the Trustees, to the
effect that in the opinion of such Trustees such materials contain
untrue statements of fact, omit to state facts necessary to make the
statements contained therein not misleading, or would be in violation of
applicable law, together with a statement by such Trustees of the basis
of their opinion as stated therein and any other related information
they deem appropriate. If, subsequent to the submission of such
statement and full consideration thereof by the Commission, the
Commission declines to issue an order sustaining the Trustee's
objections or otherwise preventing mailing of the tendered materials,
then the Trustees shall mail such materials to Shareholders as
aforesaid.
IN WITNESS WHEREOF, the undersigned have executed this instrument on
this date first written above.
(signature)
A. Bruce Cleveland
(signature)
Michael D. Goth
(signature)
Robert W. Dudley
(signature)
Thomas S. Kleppe
(signature)
Gerald W. Nensel
<PAGE>
Supplemental Declaration of Trust of
GIT Equity Trust
WHEREAS, Section 1 of the Declaration of Trust states the name of the
Trust and provides that the Trustees may hold the property of the Trust
and conduct its business under another name of their choosing; and
WHEREAS, effective May 12, 1997, the Trustees have chosen to hold the
property of the Trust and conduct its business under the name Mosaic
Equity Trust:
NOW THEREFORE, the first sentence of Section 1 of the Declaration of
Trust shall be and hereby is revised to read as follows:
This Trust shall be known as "Mosaic Equity Trust."
In Witness Whereof, the undersigned have executed this instrument
effective as of the date first written above.
(Signature)
Frank Burgess
(signature)
James Imhoff
(signature)
Thomas Kleppe
(signature)
Lorence Wheeler
GIT EQUITY TRUST
BY-LAWS
ARTICLE I
SHAREHOLDER MEETINGS
Section 1. Annual Meetings. The Trustees shall call an annual
meeting of the Shareholders of the Trust at least once, after the close
of the Trust's first fiscal year, to review the results of the previous
fiscal year, to elect the Trustees to serve until the next annual
meeting of Shareholders, if any, and to transact such other business as
may be brought before the meeting. Thereafter, the Trustees shall
review at least annually after the close of each fiscal year whether
there is sufficient business to be brought before an annual meeting of
Shareholders, in their judgment, to justify an annual meeting for that
year. In the event the Trustees determine to hold such a meeting,
they shall by resolution call an annual meeting for the fiscal year then
ended.
Section 2. Special Meetings. A special meeting of the Shareholders
shall be called by the Secretary whenever ordered by the Trustees, the
Chairman, the President, or requested in writing by the holders of
at least one-tenth of the outstanding shares entitled to vote. If the
Secretary, when so ordered or requested, refuses or neglects for more
than two days to call such special meeting, the Trustees, Chairman,
President or the Shareholders so requesting may, in the name of the
Secretary, call the meeting by giving notice thereof in the manner
required when notice is given by the Secretary.
Section 3. Notices. Except as above provided, notices of all
meetings of the Shareholders shall be given by the Secretary by
delivering or mailing, postage prepaid, to each Shareholder entitled to
vote at said meeting, a written or printed notification of such meeting,
at least fifteen days before the meeting, to such address as may be
registered with the Trust by the Shareholder. No notice need be
given to a Shareholder who has failed to inform the Trust of his current
address or if a written waiver of notice is executed before or after the
meeting by the Shareholder or his authorized representative and filed
with the records of the meeting. Any adjourned meeting may be held
as adjourned without further notice.
Section 4. Place of Meeting. Meetings of the Shareholders of the
Trust shall be held in Arlington, Virginia, at the principal offices of
the Trust, or another place designated by the Trustees, or at such place
within or without the Commonwealth of Massachusetts as may be fixed
from time to time by resolution of the Trustees.
Section 5. Chairman. The Chairman, if any, shall act as chairman
at all meetings of the Shareholders; in his absence, the President
shall act as chairman; and in the absence of the Chairman and
the President, the Trustee or Trustees present at each meeting may elect
a temporary chairman for the meeting, who may be one of themselves.
Section 6. Proxies; Voting. Shareholders may vote either in person or
by duly executed proxy. No proxy shall be valid after
eleven (11) months from the date of its execution, unless a longer
period is expressly stated in such proxy. Any proxy shall be deemed
valid unless challenged before its exercise and proven otherwise.
Any share held jointly may be voted by any joint owner, but may not be
voted at all if the joint owners notify the meeting that they disagree
as to how the vote shall be cast.
Section 7. Closing of Transfer Books and Fixing Record Dates. For
the purpose of determining the Shareholders who are entitled to notice
of or to vote or act at any meeting, including any adjournment thereof,
or who are entitled to participate in any dividends, or for any other
proper purpose, the Trustees may from time to time close the transfer
books or fix a record date. If the Trustees do not prior to any
meeting of Shareholders so fix a record date or close the transfer
books, then the date of mailing notice of the meeting or the date upon
which the dividend resolution is adopted, as the case may be, shall be
the record date. No record date for a meeting of Shareholders shall be
more than sixty (60) days preceding the date of the meeting.
Section 8. Inspectors of Election. In advance of any meeting
of Shareholders, the Trustees may appoint Inspectors of Election to act
at the meeting or any adjournment thereof. If Inspectors of Election
are not so appointed, the chairman, if any, of any meeting of
shareholders may, and on the request of any Shareholder or his proxy
shall, appoint Inspectors of Election of the meeting. The number of
Inspectors shall be either one or three. If appointed at the meeting on
the request of one or more Shareholders or proxies, a majority of shares
present (in person or by proxy) shall determine whether one or three
Inspectors are to be appointed, but failure to allow such determination
by the Shareholders shall not affect the validity of the appointment of
Inspectors of Election. In case any person appointed as Inspector
fails to appear or fails or refuses to act, the vacancy may be filled by
appointment made by the Trustees in advance of the convening of the
meeting or at the meeting by the person acting as chairman. The
Inspectors of Election shall determine the number of shares outstanding,
the shares represented at the meeting, the existence of a quorum, the
authenticity, validity and effect of proxies, shall receive votes,
ballots or consents, shall hear and determine all challenges and
questions in any way arising in connection with the right to vote, shall
count and tabulate all votes or consents, determine the results, and do
such other acts as may be proper to conduct the election or vote with
fairness to all Shareholders. If there are three Inspectors of
Election, the decision, act or certificate of a majority is effective in
all respects as the decision, act or certificate of all. on request of
the chairman, if any, of the meeting, or of any Shareholder or of his
proxy, the Inspectors of Election shall make a report in writing of any
challenge or question or matter determined by them and shall execute a
certificate of any facts found by them.
Section 9. Action by Consent. Any action required or permitted to be
taken at any meeting of Shareholders may be taken without a meeting, if
a consent in writing, setting forth such action, is signed
by all the Shareholders entitled to vote on the subject matter thereof,
and such consent is filed with the records of the Trust.
ARTICLE II
TRUSTEES
Section 1. The Trustees. The Trust shall have five (5) Trustees, unless
such number be changed by amendment of the By-Laws or by resolution of
the Trustees. The Trustees shall be responsible for the management of
the Trust; they may retain such authority to direct the business affairs
of the Trust as they deem advisable, but they may delegate any of the
various functions involved in the management of the Trust to its
officers and/or agents as they deem fit. The term of office of each
Trustee shall expire upon the election of a successor Trustee at any
annual meeting of Shareholders of the Trust subsequent to the
commencement of the Trustee's term of office. All persons to serve as
Trustees of the Trust shall be elected at each annual meeting of
Shareholders held by the Trust.
Section 2. Meetings of Trustees. The Trustees shall hold at least
one meeting annually or the transaction of such business as may come
before the meeting. Regular meetings of the Trustees may be held without
call or notice at such place or places and times as the Trustees may
provide from time to time by resolution.
Section 3. Special Meetings. Special meetings of the Trustees
shall be held upon the call of the Chairman, if any, the President, the
Secretary or any two Trustees, at such time, on such day, and at such
place, as shall be designated in the notice of the meeting.
Section 4. Notice. Notice of a meeting shall be given by mail or by
telegram (which Term shall include a cablegram or mailgram) or delivered
personally. If notice is given by mail, it shall be mailed not later
than 48 hours preceding the meeting and if given by telegram or
personally, such telegram shall be sent or delivery made not later than
48 hours preceding the meeting. Notice by telephone shall constitute
personal delivery for these purposes. Notice of a meeting of Trustees
may be waived before or after any meeting by signed written waiver.
Neither the business to be transacted at, nor the purpose of, any
meeting of the Trustees need be stated in the notice or waiver of notice
of such meeting, and no notice need be given of action proposed to be
taken by unanimous written consent. The attendance of a Trustee
at a meeting shall constitute a waiver of notice of such meeting except
where a Trustee attends a meeting for the express purpose of objecting
to the transaction of any business on the ground that the meeting has
not been lawfully called or convened.
Section 5. Chairman; Records. The Chairman, if any, shall act as
chairman at all meetings of the Trustees; in his absence the President
(if a Trustee) shall act as chairman; and, in the absence of the
Chairman and the President, the Trustees present shall elect one of
their number to act as temporary chairman. The results of all actions
taken at a meeting of the Trustees, or by unanimous written consent
of the Trustees, shall be recorded by the Secretary, or by an Assistant
Secretary in the absence of the Secretary or at his direction.
Section 6. Quorum and Vote. A majority of the Trustees shall
constitute a quorum for the transaction of business. The act of a
majority of the Trustees present at any meeting at which a quorum is
present shall be the act of the Trustees unless a greater proportion is
required by the Declaration of Trust or these By-Laws or applicable law.
In the absence of a quorum, a majority of the Trustees present may
adjourn the meeting from time to time until a quorum shall be present.
Notice of any adjourned meeting need not be given.
Section 7. Place of Meeting. Meetings of the Trustees shall be held at
the principal place of business of the Trust in Arlington, Virginia, or
at such place within or without the Commonwealth of Massachusetts
as fixed from time to time by resolution of the Trustees, or as the
person or persons requesting said meeting to be called may designate, or
as designated in the notice of the meeting, but any meeting may
adjourn to any other place.
Section 8. Telephonic Meetings. Subject to compliance with
Sections 15 and 32 of the Investment Company Act of 1940, if it is
impractical for the Trustees to meet in person, the Trustees may meet by
means of a telephone conference circuit to which all Trustees who
constitute the meeting are connected, which meeting shall be deemed a
valid meeting of the Trustees to the same degree as if it were held in
person. Such a telephonic meeting shall be deemed to have been held at
a place designated by the Trustees at the meeting, or if there be no
such designation, at the principal place of business of the Trust
in Arlington, Virginia.
Section 9. Special Action. When all the Trustees shall be present at
any meeting, however called, or whenever held, or shall assent to the
holding of the meeting without notice, or after the meeting shall sign
a written assent thereto on the record of such meeting, the acts of such
meeting shall be valid as if such meeting had been regularly held. When
by a motion duly made, seconded and adopted the Trustees approve the
minutes of a prior Trustees' meeting, the acts of such meeting as
recorded in the minutes shall be deemed valid whether or not the meeting
was regularly held.
Section 10. Action by Consent. Any action by the Trustees may be
taken without a meeting in which a written consent thereto is signed by
all the Trustees and filed with the records of the Trustees' meetings.
Such consent shall be treated as a vote of the Trustees for all
purposes.
Section 11. Compensation of Trustees. The Trustees may receive a
stated salary for their services as Trustees, and by resolution of
Trustees a fixed fee and expense of attendance may also be allowed for
attendance at each meeting. Nothing herein contained shall be construed
to preclude any Trustee from serving the Trust in any other capacity, as
an officer, agent or otherwise, and receiving compensation therefor.
ARTICLE III
OFFICERS
Section 1. Officers of the Trust. The officers of the Trust shall
consist of a Chairman, President, a Secretary, a Treasurer and such
other officers or assistant officers, including Vice-Presidents, as may
be elected by the Trustees. Any two or more of the offices may be held
by the same person, except that the same person may not be both
President and Secretary. The Trustees may designate any Vice-President
as an Executive Vice-President, or as a Senior Vice Presidents, and may
designate the order in which the Vice-Presidents may act. The Chairman,
or if none, the President shall be a Trustee, but no other officer of
the Trust need be a Trustee.
Section 2. Election and Tenure. At the initial organization meeting
and thereafter when they deem appropriate, the Trustees shall elect the
Chairman, if any, President, Secretary, Treasurer and such other
officers as the Trustees shall deem necessary or appropriate in order to
carry out the business of the Trust. Such officers shall hold office
until their successors have been duly elected and qualified. The
Trustees may fill any vacancy in office or add any additional officers
at any time.
Section 3. Removal of officers. Any officer may be removed at any
time, with or without cause, by action of a majority of the Trustees.
This provision shall not prevent the making of a contract of employment
for a definite term with any officer and shall have no effect upon any
cause of action which any officer may have as a result of removal in
breach of a contract of employment. Any officer may resign at any time
by notice in writing signed by such officer and delivered or mailed to
the Chairman, if any, President, or Secretary, and such resignation
shall take effect immediately upon receipt by the Chairman, if any,
President, or Secretary, or at a later date according to the terms of
such notice in writing.
Section 4. Bonds and Surety. Any officer may be required by the
Trustees to be bonded for the faithful performance of his duties in such
amount and with such sureties as the Trustees may determine.
Section 5. Chairman, President, and Vice-Presidents. The Chairman,
if any, if present, preside at all meetings of the Shareholders and of
the Trustees and shall exercise and perform such other powers and duties
as may be from time to time assigned to him by the Trustees. Subject to
such supervisory powers, as may be given by the Trustees to the
Chairman, if any, the President shall be the chief executive officer of
the Trust, unless the Trustees have by resolution designated the
Chairman as chief executive officer, and, subject to the control of the
Trustees, the President shall have general supervision, direction and
control of the business of the Trust and of its employees and shall
exercise such general powers of management as are usually vested in the
office of President of a corporation. In the absence of the Chairman, if
any, the President shall preside at all meetings of the Shareholders
and, if he is a Trustee, of the Trustees. Subject to the direction of
the Trustees, the Chairman, if any, and the President shall each have
power in the name and on behalf of the Trust to execute any and all loan
documents, contracts, agreements, deeds, mortgages, and other
instruments in writing, and to employ and discharge employees and agents
of the Trust. Unless otherwise directed by the Trustees, the Chairman,
if any, and the President shall each have full authority and power, on
behalf of all of the Trustees, to attend and to act and to vote, on
behalf of the Trust at any meetings of business organizations in which
the Trust holds an interest, or to confer such powers upon any other
persons, by executing any proxies duly authorizing such persons. The
Chairman, if any, and the President shall have such further authorities
and duties as the Trustees shall from time to time determine.
In the absence or disability of the President , the Vice-Presidents in
order of their rank as provided in these By-Laws or as fixed by the
Trustees, or otherwise the Vice-President designated by the Trustees,
shall perform all of the duties of the President, and when so acting
shall have all the powers of and be subject to all of the restrictions
upon the President. Subject to the direction of the Trustees, of the
Chairman, if any, and of the President, each Vice-President shall have
the power in the name and on behalf of the Trust to execute any and all
loan documents, contracts, agreements, deeds, mortgages and other
instruments in writing, and, in addition, shall have such other duties
and powers as shall he designated from time to time by the Trustees or
by the Chairman, if any, or by the President. Officers of the Trust
shall have rank or precedence in the following declining order: the
Chairman, the President, Executive Vice Presidents, Senior Vice
Presidents, Vice Presidents, and Assistant Vice Presidents; unless
otherwise directed by the Trustees, or by a higher ranking officer,
officers of the same rank shall have precedence in order of their
seniority with the Trust or with any of its affiliates.
Section 6. Secretary. The Secretary shall keep the minutes of all
meetings of, and record all votes of, Shareholders, Trustees and the
Executive Committee, if any. He shall be custodian of the seal of the
Trust, if any, and he (and any other person so authorized by the
Trustees) shall affix the seal or, if permitted, a facsimile thereof, to
any instrument executed by the Trust and shall attest the seal and the
signature or signatures of the officer or officers executing such
instrument on behalf of the Trust. The Secretary shall have such other
authorities and duties as the Trustees may from time to time determine.
Any Assistant Secretary shall have full authority to perform the
functions of the Secretary in his absence or as he may direct.
Section 7. Treasurer. Except as otherwise directed by the Trustees, the
Treasurer shall have the general supervision of the monies, funds,
securities, notes receivable and other valuable assets of the
Trust, and shall have and exercise under supervision of the Trustees and
of the President all powers and duties normally incident to his office.
He may endorse for deposit or collection all notes, checks and other
instruments payable to the Trust or to its order. He shall deposit all
funds of the Trust in such depositories as the Trustees shall designate.
He shall be responsible for such disbursement of the funds of the Trust
as may be ordered by the Trustees or the President. He shall keep
accurate account of the books of the Trust's transactions which shall be
tile property of the Trust, and which, together with all other property
of the Trust in his possession, shall be subject at all times to the
inspection and control of the Trustees. Unless the Trustees shall
otherwise determine, the Treasurer shall be the principal accounting
officer of the Trust and shall also be the principal financial officer
of the Trust. He shall have such other duties and authorities as the
Trustees shall from time to time determine.
Section 8. Minor Positions. Unless otherwise provided by the
Trustees, the President shall have authority to designate persons as
Assistant Treasurers and as Account Officers of the Trust; these
persons, despite their titles, shall not be deemed officers of the
Trust. Such persons shall be authorized to represent the Trust to
members of the public in connection with the sale of its securities, and
subject to the direction of the Trustees and officers of the Trust; but
neither they nor any Assistant Secretary shall have any other authority,
except as otherwise directed or provided herein, over the affairs of the
Trust or any of its officers and employees.
Section 9. Other Officers and Duties. The Trustees may elect such
other officers and assistant officers as they shall from time to time
determine to be necessary or desirable in order to conduct the business
of the Trust. Assistant officers, except as otherwise provided herein
or by the Trustees, shall act generally in the absence of the officer
whom they assist and shall assist that officer in the duties of his
office. Each officer, employee and agent of the Trust shall have such
other duties and authority as may be conferred upon him by the Trustees
or delegated to him by the President.
Section 10. Salaries. The salaries of the officers shall
be fixed from time to time by the Trustees. No officer shall be
prevented from receiving such salary by reason of the fact that
he is also a Trustee.
ARTICLE IV
POWERS AND DUTIES OF THE
EXECUTIVE AND OTHER COMMITTEES
Section 1. Executive, Nominating and Other Committees. The Trustees
may elect from their own number an Executive Committee to consist of not
less than three members, which number shall include either the Chairman
or, if a Trustee, the President. The Executive Committee shall be
elected by a resolution passed by a vote of at least a majority of the
Trustees then in office. Each of the Trustees who is not an "interested
person" as that term is defined in the Investment Company Act of 1940
shall be a member of the Nominating Committee of the Trust. The
selection and nomination of those future Trustees who are not
"interested persons" shall be committed to the discretion of the
Nominating Committee. The Trustees may also elect from their own number
other committees from time to time, the number composing such committees
and the powers conferred upon the same to be determined by vote of
the Trustees.
Section 2. Vacancies in Executive Committee. Vacancies occurring in the
Executive Committee shall be filled by the Trustees by a resolution
passed by the vote of at least a majority of the Trustee then in office.
Section 3. Executive Committee to Report to Trustees. All action by the
Executive Committee shall be reported to the Trustees at their meeting
next succeeding such action.
Section 4. Procedure of Executive Committee. The Executive Committee
shall fix its own rules of procedure not inconsistent with these By-Laws
or with any directions of the Trustees. It shall meet at such times and
places and upon such notice as shall be provided by such rules or by
resolution of the Trustees. The presence of a majority shall constitute
a quorum for the transaction of business, and in every case an
affirmative vote of a majority of all the members of the Committee
present shall be necessary for the taking of any action.
Section 5. Powers of Executive Committee. During the intervals between
the meetings of the Trustees, the Executive Committee, except as limited
by the By-Laws of the Trust or by specific directions of the Trustees,
shall possess and may exercise all the powers of the Trustees in the
management and direction of the business and conduct of the affairs of
the Trust in such manner as the Executive Committee shall deem for the
best interests of the Trust, and shall have power to authorize the seal
of the Trust to be affixed to all instruments and documents requiring
the same. Notwithstanding the foregoing, the Executive Committee shall
not have the power to elect Trustees, increase or decrease the number of
Trustees, elect or remove any officer, declare dividends, issue shares,
take action required by law to be taken at a meeting of all of the
Trustees, or to recommend to Shareholders any action requiring
Shareholder approval.
Section 6. Compensation. The members of any duly appointed committee
of the Trustees shall receive such additional compensation and/or fees,
if any, as from time to time may be fixed by the Trustees.
Section 7. Informal Action by Executive Committee or Other Committee.
Any action required or permitted to be taken at any meeting of the
Executive Committee or any other duly appointed committee may be taken
without a meeting if a consent in writing setting forth such action is
signed by all members of such committee and such consent is filed with
the records of the Trust.
ARTICLE V
SHARES OF BENEFICIAL INTEREST
Section 1. Beneficial Interest. The beneficial interest in the Trust
shall at all times be divided into an unlimited number of shares without
par value. The shares of beneficial interest shall have one vote per
share at any meeting of the Shareholders and a fractional vote for each
fraction of a share. The net asset value of each share shall be
determined according to regular procedures adopted by the Trustees.
Section 2. Series and Classes of Shares. The Trust shall have at
least one series of its shares of beneficial interest of a single class,
which, unless provided otherwise by the Trustees, shall be called the
Original Series of shares. By resolution the Trustees may create any
number of additional series of shares, which, unless provided otherwise
by the Trustees, shall all be of the same class, each having the same
rights as any other share within the same series. By resolution the
Trustees may create any number of separate classes of shares within any
series, each having such rights and privileges with respect to that
series as the Trustees provide. By resolution the Trustees may
designate the name of any series or class of the Trust's shares.
Each series of shares shall .represent the beneficial interest in a
separate, independently managed portfolios of securities, within which
all proceeds of the sale of the series of shares shall be managed.
Section 3. Book Entry Shares. Unless specifically requested over the
signature of the Shareholder, no certificates will be issued to
represent shares in the Trust. The Trust shall maintain adequate
records to determine the holdings of each Shareholder of record, and
such records shall be deemed the equivalent of a certificate
representing the shares for all purposes.
Section 4. Certificates. All certificates for shares shall be
signed by the Chairman, President or any Vice-President and by the
Treasurer or Secretary or any Assistant Secretary and sealed with the
seal of the Trust. The signatures may be either manual or facsimile
signatures and the seal may be either facsimile or any other form of
seal. Certificates for shares for which the Trust has appointed an
independent transfer agent and registrar shall not be valid unless
countersigned by such transfer agent and registered by such registrar.
In case any officer who has signed any certificate ceases to be an
officer of the Trust before the certificate is issued, the certificate
may nevertheless be issued by the Trust with the same effect as if the
officer had not ceased to be such officer as of the date of its
issuance. Share certificates shall be in such form not inconsistent with
law or the Declaration of Trust or these By-Laws as may be determined by
the Trustees.
Section S. Transfer of Shares. The shares of the Trust shall be
transferable, so as to affect the rights of the Trust, only by transfer
recorded on the books of the Trust, in person or by attorney.
Section 6. Equitable Interest not Recognized. The Trust shall be
entitled to treat the holder of record of any share or shares as the
absolute owner thereof and shall not be bound to recognize any equitable
or other claim or interest in such share or shares on the part of any
other person except as may be otherwise expressly provided by law.
Section 7. Lost, Destroyed or Mutilated Certificates. In case any
certificate for shares is lost, mutilate or destroyed, the Trustees may
issue a new certificate in place thereof upon indemnity to the Trust
against loss and upon such other terms and conditions as the Trustees
may deem advisable.
Section 8. Transfer Agent and Registrar; Regulations. The Trustees
shall have power and authority to make all such rules and regulations as
they may deem expedient concerning the issuance, transfer and
registration of certificates for shares and may appoint a transfer agent
and/or registrar of certificates for shares, and may require all such
share certificates to bear the signature of such transfer agent and/or
of such registrar.
ARTICLE VI
INSPECTION OF BOOKS
The Trustees shall from time to time determine whether and to what
extent, and at what times and places, and under what conditions and
regulations the accounts and books of the Trust or any of them shall be
open to the inspection of the Shareholders; and no Shareholder shall
have any right of inspecting an account or book or document of the
Trust, except as conferred by laws or authorized by the Trustees or
by resolution of the Shareholders.
ARTICLE VII
AGREEMENTS, CHECKS, DRAFTS, ENDORSEMENTS, ETC.
Section 1. Agreement, Etc. The Trustees or the Executive Committee
may authorize any officer or officers, or agent or agents of the Trust
to enter into any agreement or execute and deliver any instrument in the
name of and on behalf of the Trust, and such authority may he general or
confined to specific instances; and, unless so authorized by the
Trustees or by the Executive Committee or by these By-Laws, no officer,
agent or employees shall have any power or authority to bind the Trust
by any agreement or engagement or to pledge its credit or to render it
liable pecuniarily for any purpose or to any amount.
Section 2. Checks, Drafts, Etc. All checks, drafts, or orders
for the payment of money, notes and other evidences of indebtedness
shall be signed by such officer or officers, employee or employees, or
agent or agents, as shall from time to time be designated by the
Trustees or the Executive Committee, or as may be specified in or
pursuant to the agreement between the Trust and any bank or trust
company appointed as custodian or depository pursuant to the provisions
of the Declaration of Trust.
Section 3. Endorsements , Assignments and Transfer of Securities.
All endorsements, assignments and instruments of transfer of securities
standing in the name of the Trust or its nominee or directions for
the transfer of securities belonging to the Trust shall be made by such
officer or officers, employee or employees, or agent or agents as may be
authorized by the Trustees or the Executive Committee.
Section 4. Evidence of Authority. Anyone dealing with the Trust shall
be fully justified in relying on a copy of a resolution of the Trustees
or of any committee thereof empowered to act in the circumstances,
which is certified as true by the Secretary or an Assistant Secretary
under the seal of the Trust.
ARTICLE XVIII
SEAL
The seal of the Trust shall be circular in form, bearing the
inscription: GIT Equity Trust - 1982 - Massachusetts
ARTICLE IX
FISCAL YEAR
The fiscal year of the Trust shall be the period of twelve calendar
months ending with the last day of a calendar quarter which is
designated as the end of the fiscal year by resolution of the Trustees.
ARTICLE X
AMENDMENTS
These By-Laws may be amended by a majority vote of all of the Trustees.
ARTICLE XI
WAIVERS OF NOTICE
Whenever any notice whatever is required to be given under the
provisions of any statute of the Commonwealth of Massachusetts, or under
the provisions of the Declaration of Trust or these By-Laws, a waiver
thereof in writing, signed by the person or persons entitled to said
notice whether before or after the time stated therein, shall be deemed
equivalent thereto. Notice shall be deemed to have been given if
telegraphed, cabled, or sent by wireless or mailgram when it has been
delivered to a representative of any telegraph, cable, wireless or
electronic mail company with' instructions that it be telegraphed,
cabled or sent by wireless or mailgram. Any notice shall be deemed to
be given if mailed at the time when the same shall be deposited in the
mail.
ARTICLE XII
REPORTS TO SHAREHOLDERS
The Trustees shall at least semi-annually submit to the Shareholders a
written financial report of the transactions of the Trust, including financial
statements which shall at least annually be certified by
independent certified public accountants selected pursuant to Section 32
of the Investment Company Act of 1940.
ARTICLE XIV
BOOKS AND RECORDS
The books and records of the Trust, including the share transfer ledger
or ledgers, may be kept in or outside the Commonwealth of Massachusetts
at such office or agency of the Trust as may be from time to time
determined by the Trustees.
Performance Calculation Data
<TABLE>
<S> <C> <C> <C> <C>
Mid-Cap Growth Investors Balanced Worldwide Growth
Total Return
6/30/97 Factor 4,475.539 12,861.276 2,597.122 1,434.237
3/31/97 Factor 3,890.731 11,385.709 2,367.974 1,265.137
6/30/96 Factor 4,043.687 9,924.349 2,127.457 1,175.858
6/30/92 Factor 2,656.297 5,991.164 1,429.623
6/30/87 Factor 1,947.295 4,615.082 1,030.502
Inception Factor 1,000.000 1,000.000 1,000.000 1,000.000
Aggregate Returns
Quarterly Return 15.03% 12.96% 9.68% 13.37%
One-Year Return 10.68% 29.59% 22.08% 21.97%
Ten-Year Return 129.83% 178.68% 152.02% n/a
Since Inception 347.55% 1186.13% 159.71% 43.42%
Annualized Returns
Five-Year Return 11.00% 16.51% 12.68% n/a
Ten-Year Return 8.68% 10.79% 9.68% n/a
</TABLE>
