Gannett Welsh & Kotler, Inc.
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Re: Advisory Agreement
Ladies and Gentlemen:
The Gannett Welsh & Kotler Funds (the "Trust") is a diversified
open-end management investment company registered under the Investment Company
Act of 1940, as amended (the "Act"), and subject to the rules and regulations
promulgated thereunder. The Trust's shares of beneficial interest are divided
into two separate series, the GW&K Equity Fund and the GW&K Government
Securities Fund (the "Funds"). Each such share of a Fund represents an undivided
interest in the assets, subject to the liabilities, allocated to that Fund. Each
Fund has a separate investment objective and separate investment policies.
1. APPOINTMENT AS ADVISER. The Trust being duly
authorized hereby appoints and employs Gannett Welsh & Kotler,
Inc. ("Adviser") as discretionary portfolio manager, on the terms
and conditions set forth herein, of the Funds.
2. ACCEPTANCE OF APPOINTMENT; STANDARD OF PERFORMANCE.
Adviser accepts the appointment as discretionary portfolio
manager and agrees to use its best professional judgment to make
timely investment decisions for the Funds in accordance with the
provisions of this Agreement.
3. PORTFOLIO MANAGEMENT SERVICES OF ADVISER. Adviser is hereby
employed and authorized to select portfolio securities for investment by
the Trust on behalf of the Funds, to purchase and sell securities of the Funds,
and upon making any purchase or sale decision, to place orders for the execution
of such portfolio transactions in accordance with paragraphs 5 and 6 hereof. In
providing portfolio management services to the Funds, Adviser shall be subject
to such investment restrictions as are set forth in the Act and the rules
thereunder, the Internal Revenue Code of 1986, applicable state securities laws,
the supervision and control of the Trustees of the Trust, such specific
instructions as the Trustees may adopt and communicate to Adviser and the
investment objectives, policies and restrictions of the Trust applicable to the
Funds furnished pursuant to paragraph 4. Adviser is not authorized by the Trust
to take any action, including the purchase or sale of securities for the Funds,
in contravention of any restriction, limitation, objective, policy or
instruction described in the previous sentence. Adviser shall maintain on behalf
of the Trust the records listed in Schedule A hereto (as amended from time to
time). At the Trust's reasonable request, Adviser will consult with the Trust
with respect to any decision made by it with respect to the investments of the
Funds.
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4. INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS. The
Trust will provide Adviser with the statement of investment objectives, policies
and restrictions applicable to the Funds as contained in the Trust's
registration statements under the Act and the Securities Act of 1933, and any
instructions adopted by the Trustees supplemental thereto. The Trust will
provide Adviser with such further information concerning the investment
objectives, policies and restrictions applicable thereto as Adviser may from
time to time reasonably request. The Trust retains the right, on written notice
to Adviser from the Trust, to modify any such objectives, policies or
restrictions in any manner at any time.
5. TRANSACTION PROCEDURES. All transactions will be consummated
by payment to or delivery by Investors Bank & Trust Company or any successor
custodian (the "Custodian"), or such depositories or agents as may be designated
by the Custodian in writing, as custodian for the Trust, of all cash and/or
securities due to or from the Funds, and Adviser shall not have possession or
custody thereof. Adviser shall advise Custodian and confirm in writing to the
Trust and to MGF Service Corp., or any other designated agent of the Trust, all
investment orders for the Funds placed by it with brokers and dealers. Adviser
shall issue to the Custodian such instructions as may be appropriate in
connection with the settlement of any transaction initiated by the Adviser.
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6. ALLOCATION OF BROKERAGE. Adviser shall have authority and
discretion to select brokers and dealers to execute portfolio transactions
initiated by Adviser and to select the markets on or in which the transactions
will be executed.
In doing so, the Adviser will give primary consideration to securing
the most favorable price and efficient execution. Consistent with this policy,
the Adviser may consider the financial responsibility, research and investment
information and other services provided by brokers or dealers who may effect or
be a party to any such transaction or other transactions to which other clients
of the Adviser may be a party. It is understood that neither the Trust nor the
Adviser has adopted a formula for allocation of the Trust's investment
transaction business. It is also understood that it is desirable for the Trust
that the Adviser have access to supplemental investment and market research and
security and economic analyses provided by certain brokers who may execute
brokerage transactions at a higher commission to the Trust than may result when
allocating brokerage to other brokers on the basis of seeking the lowest
commission. Therefore, the Adviser is authorized to place orders for the
purchase and sale of securities for the Funds with such certain brokers, subject
to review by the Trust's Trustees from time to time with respect to the extent
and continuation of this practice. It is understood that the services provided
by such brokers may be useful to the Adviser in connection with its services to
other clients.
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On occasions when the Adviser deems the purchase or sale of a security
to be in the best interest of the Funds as well as other clients, the Adviser,
to the extent permitted by applicable laws and regulations, may, but shall be
under no obligation to, aggregate the securities to be sold or purchased in
order to obtain the most favorable price or lower brokerage commissions and
efficient execution. In such event, allocation of the securities so purchased or
sold, as well as expenses incurred in the transaction, will be made by the
Adviser in the manner it considers to be the most equitable and consistent with
its fiduciary obligations to the Trust and to such other clients.
For each fiscal quarter of the Trust, Adviser shall prepare and render
reports to the Trust's Trustees of the total brokerage business placed and the
manner in which the allocation has been accomplished. Such reports shall set
forth at a minimum the information required to be maintained by Rule 31a-1(b)(9)
under the Act.
7. PROXIES. The Trust will vote all proxies solicited by
or with respect to the issuers of securities in which assets of the Funds
may be invested from time to time. At the request of the Trust, Adviser shall
provide the Trust with its recommendations as to the voting of such proxies.
8. REPORTS TO ADVISER. The Trust will provide Adviser with such
periodic reports concerning the status of the Funds as Adviser may
reasonably request.
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9. FEES FOR SERVICES. For all of the services to be rendered and
payments made as provided in this Agreement, the GW&K Equity Fund will pay the
Adviser a fee, computed and accrued daily and paid monthly, at the annual rate
of 1.00% of the Fund's average daily net assets and the GW&K Government
Securities Fund will pay the Adviser a fee, computed and accrued daily and paid
monthly, at the annual rate of .75% of the Fund's average daily net assets.
10. ALLOCATION OF CHARGES AND EXPENSES. Adviser shall employ or
provide and compensate the executive, administrative, secretarial and
clerical personnel necessary to provide the services set forth herein, and shall
bear the expense thereof. Adviser shall compensate all Trustees, officers and
employees of the Trust who are also partners or employees of Adviser. Adviser
will pay all expenses incurred in connection with the sale or distribution of
the Funds' shares to the extent such expenses are not assumed by the Funds under
the Trust's Distribution Expense Plan.
The Funds will be responsible for the payment of all operating expenses
of the Trust, including fees and expenses incurred by the Trust in connection
with membership in investment company organizations, brokerage fees and
commissions, legal, auditing and accounting expenses, expenses of registering
shares under federal and state securities laws, insurance expenses, taxes or
governmental fees, fees and expenses of the custodian, the transfer, shareholder
service and dividend disbursing agent
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and the accounting and pricing agent of the Funds, expenses including clerical
expenses of issue, sale, redemption or repurchase of shares of the Funds, the
fees and expenses of Trustees of the Trust who are not interested persons of the
Trust, the cost of preparing, printing and distributing prospectuses,
statements, reports and other documents to shareholders, expenses of
shareholders' meetings and proxy solicitations, and such extraordinary or
non-recurring expenses as may arise, including litigation to which the Trust may
be a party and indemnification of the Trust's officers and Trustees with respect
thereto, or any other expense not specifically described above incurred in the
performance of the Trust's obligations. All other expenses not expressly assumed
by Adviser herein incurred in connection with the organization, registration of
shares and operations of the Funds will be borne by the Funds.
11. OTHER INVESTMENT ACTIVITIES OF ADVISER. The Trust
acknowledges that Adviser or one or more of its affiliates may have
investment responsibilities or render investment advice to or perform other
investment advisory services for other individuals or entities and that Adviser,
its affiliates or any of its or their directors, officers, agents or employees
may buy, sell or trade in any securities for its or their respective accounts
("Affiliated Accounts"). Subject to the provisions of paragraph 2 hereof, the
Trust agrees that Adviser or its affiliates may give advice or exercise
investment responsibility and take such other action with respect to other
Affiliated
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Accounts which may differ from the advice given or the timing or nature of
action taken with respect to the Funds, provided that Adviser acts in good
faith, and provided further, that it is Adviser's policy to allocate, within its
reasonable discretion, investment opportunities to the Funds over a period of
time on a fair and equitable basis relative to the Affiliated Accounts, taking
into account the investment objectives and policies of the Funds and any
specific investment restrictions applicable thereto. The Trust acknowledges that
one or more of the Affiliated Accounts may at any time hold, acquire, increase,
decrease, dispose of or otherwise deal with positions in investments in which
the Funds may have an interest from time to time, whether in transactions which
involve the Funds or otherwise. Adviser shall have no obligation to acquire for
the Funds a position in any investment which any Affiliated Account may acquire,
and the Trust shall have no first refusal, co- investment or other rights in
respect of any such investment, either for the Funds or otherwise.
12. CERTIFICATE OF AUTHORITY. The Trust and the Adviser shall
furnish to each other from time to time certified copies of the resolutions
of their Trustees or Board of Directors or executive committees, as the case may
be, evidencing the authority of officers and employees who are authorized to act
on behalf of the Trust, the Funds and/or the Adviser.
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13. LIMITATION OF LIABILITY. Adviser shall not be liable for
any action taken, omitted or suffered to be taken by it in its reasonable
judgment, in good faith and believed by it to be authorized or within the
discretion or rights or powers conferred upon it by this Agreement, or in
accordance with (or in the absence of) specific directions or instructions from
the Trust, provided, however, that such acts or omissions shall not have
resulted from Adviser's willful misfeasance, bad faith or gross negligence, a
violation of the standard of care established by and applicable to Adviser in
its actions under this Agreement or breach of its duty or of its obligations
hereunder. Nothing in this paragraph 13 shall be construed in a manner
inconsistent with Sections 17(h) and (i) of the Act.
14. CONFIDENTIALITY. Subject to the duty of Adviser and the
Trust to comply with applicable law, including any demand of any regulatory
or taxing authority having jurisdiction, the parties hereto shall treat as
confidential all information pertaining to the Funds and the actions of Adviser
and the Trust in respect thereof.
15. ASSIGNMENT. No assignment of this Agreement shall be made
by Adviser, and this Agreement shall terminate automatically in the event
of such assignment. Adviser shall notify the Trust in writing sufficiently in
advance of any proposed change of control, as defined in Section 2(a)(9) of the
Act, as will enable the Trust to consider whether an assignment will occur, and
to take the steps necessary to enter into a new contract with Adviser.
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16. REPRESENTATION, WARRANTIES AND AGREEMENTS OF THE TRUST.
The Trust represents, warrants and agrees that:
A. Adviser has been duly appointed by the Trustees of
the Trust to provide investment services to the Funds as contemplated hereby.
B. The Trust will deliver to Adviser true and complete copies
of its then current prospectuses and statements of additional information as
effective from time to time and such other documents or instruments governing
the investments of the Funds and such other information as is necessary for
Adviser to carry out its obligations under this Agreement.
C. The Trust is currently in compliance and shall at all
times comply with the requirements imposed upon the Trust by
applicable law and regulations.
17. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF ADVISER.
Adviser represents, warrants and agrees that:
A. Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940.
B. Adviser will maintain, keep current and preserve on behalf
of the Trust, in the manner and for the time periods required or permitted by
the Act, the records identified in Schedule A. Adviser agrees that such records
(unless otherwise indicated on Schedule A) are the property of the Trust, and
will be surrendered to the Trust promptly upon request.
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C. Adviser will complete such reports concerning purchases or
sales of securities on behalf of the Funds as the Trust may from time to time
require to ensure compliance with the Act, the Internal Revenue Code of 1986 and
applicable state securities laws.
D. Adviser has adopted a written code of ethics complying with
the requirements of Rule 17j-1 under the Act and will provide the Trust with a
copy of the code of ethics and evidence of its adoption. Within forty-five (45)
days of the end of the last calendar quarter of each year while this Agreement
is in effect, a partner of Adviser shall certify to the Trust that Adviser has
complied with the requirements of Rule 17j-1 during the previous year and that
there has been no violation of the Adviser's code of ethics or, if such a
violation has occurred, that appropriate action was taken in response to such
violation. Upon the written request of the Trust, Adviser shall permit the
Trust, its employees or its agents to examine the reports required to be made to
Adviser by Rule 17j-1(c)(1).
E. Adviser will, promptly after filing with the Securities
and Exchange Commission an amendment to its Form ADV, furnish a copy of such
amendment to the Trust.
F. Upon request of the Trust, Adviser will provide assistance
to the Custodian in the collection of income due or payable to the Funds.
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G. Adviser will immediately notify the Trust of the occurrence
of any event which would disqualify Adviser from serving as an investment
adviser of an investment company pursuant to Section 9(a) of the Act or
otherwise.
18. AMENDMENT. This Agreement may be amended at any time, but
only by written agreement between Adviser and the Trust, which amendment,
other than amendments to Schedule A, is subject to the approval of the Trustees
and the shareholders of the Funds in the manner required by the Act and the
rules thereunder, subject to any applicable exemptive order of the Securities
and Exchange Commission modifying the provisions of the Act with respect to
approval of amendments to this Agreement.
19. EFFECTIVE DATE; TERM. This Agreement shall become
effective on the date of its execution and shall remain in force for a
period of two (2) years from such date, and from year to year thereafter but
only so long as such continuance is specifically approved at least annually by
the vote of a majority of the Trustees who are not interested persons of the
Trust or the Adviser, cast in person at a meeting called for the purpose of
voting on such approval, and by a vote of the Board of Trustees or of a majority
of the outstanding voting securities of the Funds. The aforesaid requirement
that this Agreement may be continued "annually" shall be construed in a manner
consistent with the Act and the rules and regulations thereunder.
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20. TERMINATION. This Agreement may be terminated by either
party hereto, without the payment of any penalty, immediately upon written
notice to the other in the event of a breach of any provision thereof by the
party so notified, or otherwise upon sixty (60) days' written notice to the
other, but any such termination shall not affect the status, obligations or
liabilities of any party hereto to the other.
21. LIMITATION OF LIABILITY. It is expressly agreed that the
obligations of the Trust hereunder shall not be binding upon any of the
trustees, shareholders, nominees, officers, agents or employees of the Trust,
personally, but bind only the trust property of the Trust. The execution and
delivery of this Agreement have been authorized by the trustees of the Trust and
signed by an officer of the Trust, acting as such, and neither such
authorization by such trustees nor such execution and delivery by such officer
shall be deemed to have been made by any of them individually or to impose any
liability on any of them personally, but shall bind only the trust property of
the Trust.
22. USE OF NAME. The names "Gannett Welsh & Kotler" and
"GW&K" are property rights of the Adviser. The Adviser may use the names
"Gannett Welsh & Kotler" and "GW&K" in other connections and for other purposes,
including without limitation in the name of other investment companies,
corporations or business that it may manage, advise, sponsor or own, or in which
it may have a financial interest. The Trust will discontinue any use of the
names "Gannett Welsh & Kotler" or "GW&K" if the Adviser ceases to be employed as
the Trust's portfolio manager.
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23. DEFINITIONS. As used in paragraphs 15 and 19 of this
Agreement, the terms "assignment," "interested person" and "vote of a
majority of the outstanding voting securities" shall have the meanings set forth
in the Act and the rules and regulations thereunder.
24. APPLICABLE LAW. To the extent that state law is not
preempted by the provisions of any law of the United States heretofore or
hereafter enacted, as the same may be amended from time to time, this Agreement
shall be administered, construed and enforced according to the laws of the State
of Ohio.
THE GANNETT WELSH & KOTLER FUNDS
By: /s/Xxxxxx X. Xxxxxx
Title: President
Date: December 4, 1996
ACCEPTANCE
The foregoing Agreement is hereby accepted.
GANNETT WELSH & KOTLER, INC.
By: /s/ Xxxxxxxx X. Xxxxxxx
Title: Exec. V.P. and Treas.
Date: December 4, 1996
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SCHEDULE A
RECORDS TO BE MAINTAINED BY THE ADVISER
1. (Rule 31a-1(b)(5) and (6)) A record of each brokerage order, and all
other portfolio purchases or sales, given by the Adviser on behalf of
the Funds for, or in connection with, the purchase or sale of
securities, whether executed or unexecuted. Such records shall include:
A. The name of the broker;
B. The terms and conditions of the order and of any
modification or cancellation thereof;
C. The time of entry or cancellation;
D. The price at which executed;
E. The time of receipt of a report of execution; and
F. The name of the person who placed the order on behalf
of the Trust.
2. (Rule 31a-1(b)(9)) A record for each fiscal quarter, completed within
ten (10) days after the end of the quarter, showing specifically the
basis or bases upon which the allocation of orders for the purchase and
sale of portfolio securities to named brokers or dealers was effected,
and the division of brokerage commissions or other compensation on such
purchase and sale orders. Such record:
A. Shall include the consideration given to:
(i) The sale of shares of the Trust by brokers or
dealers.
(ii) The supplying of services or benefits by brokers
or dealers to:
(a) The Trust;
(b) The Adviser; and,
(c) Any person affiliated with the foregoing
persons.
(iii) Any other consideration other than the technical
qualifications of the brokers and dealers as
such.
B. Shall show the nature of the services or benefits made
available.
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C. Shall describe in detail the application of any general or
specific formula or other determinant used in arriving at such
allocation of purchase and sale orders and such division of
brokerage commissions or other compensation.
D. The name of the person responsible for making the
determination of such allocation and such division of
brokerage commissions or other compensation.
3. (Rule 31a-1(b)(10)) A record in the form of an appropriate
memorandum identifying the person or persons, committees or
groups authorizing the purchase or sale of portfolio
securities. Where an authorization is made by a committee
or group, a record shall be kept of the names of its members
who participate in the authorization. There shall be
retained as part of this record any memorandum,
recommendation or instruction supporting or authorizing the
purchase or sale of portfolio securities and such other
information as is appropriate to support the authorization.*
4. (Rule 31a-1(f)) Such accounts, books and other documents as are
required to be maintained by registered investment advisers by rule
adopted under Section 204 of the Investment Advisers Act of 1940, to
the extent such records are necessary or appropriate to record the
Adviser's transactions with respect to the Funds.
-----------------------
* Such information might include: the current Form 10-K, annual and
quarterly reports, press releases, reports by analysts and from
brokerage firms (including their recommendation; i.e., buy, sell, hold)
or any internal reports or portfolio adviser reviews.
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