As filed with the Securities and Exchange Commission on October 25, 2000
Registration No. 33-; 811-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
And
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
(Check appropriate box or boxes)
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Working Equity Funds
(Exact Name of Registrant as specified in Charter)
300 First Stamford Place
Stamford, Connecticut 06902
(Address of Principal Executive Offices, including Zip Code)
Registrant's telephone number, including area code: (203)356-1203
Investors Bank & Trust Company
200 Clarendon Street
LEG13
Boston, MA 02116
(Name and Address of Agent for Service)
With a copy to:
Ronald M. Feiman, Esq.
Mayer, Brown & Platt
1675 Broadway, 19th Floor
New York, New York 10019-5820
Approximate Date of Proposed Public Offering: As soon as practicable after the
effectiveness of the registration under the Securities Act of 1933.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to Section 8(a), may
determine.
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WORKING EQUITY FUNDS
PROSPECTUS MARCH 1, 2001
WORKING EQUITY S&P 500 INDEX FUND
The Fund seeks to approximate as closely as practicable, before fees and
expenses, the capitalization-weighted total rate of return of the S&P 500
Index.
Table of Contents
2 Fund Summary
2 Investment Objective
2 Principal Investment Strategies
3 Principal Risk Factors
3 Investment Returns
5 Fees and Expenses
6 More About the Fund
8 Management of the Fund
9 Shareholder Information
13 Shareholder Inquiries
Please read this prospectus carefully. It provides important information about
the Fund that an investor needs to know before investing in the Fund. The Fund
is offered exclusively to on-line investors who participate in the vanteq
Working Equity Account and requires investors to consent to receive all
information about the Fund electronically. If an investor rescinds this consent
at any time or no longer maintains a vanteq Working Equity Account, the Fund
will redeem all of the investor's shares in the investor's Fund account.
THIS SECURITY HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
VANTEQ INVESTMENT ADVISORS INC.
[logo]
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Fund Summary
Investment Objective
The Working Equity S&P 500 Index Fund seeks to approximate as closely as
practicable, before fees and expenses, the capitalization-weighted total rate
of return of the S&P 500 Index.* The S&P 500 Index, a widely recognized
benchmark for large cap U.S. stocks, includes common stocks of 500 major
companies representing different sectors of the U.S. economy and accounts for
nearly three quarters of the value of all U.S. stocks.
"CAPITALIZATION-WEIGHTED TOTAL RATE OF RETURN" MEANS THAT EACH STOCK IN THE
INDEX CONTRIBUTES TO THE INDEX IN THE SAME PROPORTION AS THE VALUE OF ITS
SHARES. THUS, IF THE SHARES OF COMPANY A ARE WORTH TWICE AS MUCH AS THE SHARES
OF COMPANY B, COMPANY A'S TOTAL RETURN WILL COUNT TWICE AS MUCH AS COMPANY B'S
IN CALCULATING THE INDEX'S TOTAL RETURN.
Principal Investment Strategies
The Fund pursues its objective by investing in all of the securities that
make up the S&P 500 Index in proportions that match their weight within the
Index. The Fund invests in these securities indirectly through a separate
mutual fund, called the Master Portfolio. In a master/feeder fund structure,
the master fund invests directly in the securities, and the feeder fund invests
exclusively in shares of the master fund. Under this arrangement, the Master
Portfolio and the Fund have substantially identical investment objectives and
strategies, and are subject to substantially the same investment risks. For
that reason, this discussion of the Fund's investment objectives, strategies
and risks refers to the objectives, strategies and risks of the Master
Portfolio, unless otherwise indicated.
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* "Standard & Poor's(R)" "S&P(R)" and "S&P 500(R)" are trademarks of McGraw-
Hill Inc. S&P does not sponsor, endorse, sell or promote the Working Equity S&
P 500 Fund, and makes no representation regarding the advisability of investing
in the Fund.
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Principal Risk Factors
As with any investment in a mutual fund, your investment in the Fund could
lose money, or the Fund's performance could be lower than that of alternative
investments. An investment in the Fund has a level of risk that usually
correlates with the potential for return. The principal risks of investing in
the Fund are:
o The risk that prices of the stocks in which the Master Portfolio invests may
fall because of changes within the corporate entities issuing the stock.
o The risk that prices of the stocks in which the Master Portfolio invests may
fall in response to political or economic events or trends in foreign,
national or local arenas.
o The risk that cash balances maintained by the Fund to meet redemption
requests may result in lower overall Fund performance.
o The risk that investments in the Master Portfolio are based a formula that
replicates stocks that make up the S&P 500 Index, and are not based on
individual stock selection. A security may be held in the Master Portfolio's
schedule of investments because it is part of the S&P 500 Index, without
implying that it is an attractive investment.
The Fund may not achieve its investment objective, and does not in itself
constitute a balanced investment program. Diversifying your portfolio of
investments with other investment vehicles may improve your long-term return as
well as reduce short-term volatility.
AN INVESTMENT IN THE FUND IS NOT A DEPOSIT OF A BANK AND IS NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC) OR ANY OTHER
GOVERNMENT AGENCY.
Investment Returns
The Fund commenced operations on March 1, 2001. Therefore, performance
information for the Fund (including annual total return and average annual
total returns) is not available for this prospectus. The bar chart and table
below show the returns of a comparable feeder fund that invests in the Master
Portfolio, the BGI S&P 500 Stock Fund, and how its performance has varied from
year to year. The bar chart shows the returns for the BGI S&P 500 Stock Fund
for each full year since that fund's inception. The average annual total return
table compares the BGI S&P 500 Stock Fund's average annual total return with
the return of the Fund's benchmark index for one year, five year and since
inception periods. The annual total return and average annual total return for
the Working Equity S&P 500 Index Fund will be lower because the Fund has higher
expenses than the BGI S&P 500 Stock Fund. How a fund has performed in the past
is no indication of how it will perform in the future.
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[Bar Graph]
CALENDAR YEAR ANNUAL RETURN (DECEMBER 31, 2000)
2000 %
1999 %
1998 %
1997 %
1996 %
1995 %
1994 %
The highest quarterly return for the BGI S&P 500 Stock Fund for the periods
covered by the bar chart above was % for the quarter ending ,
. ---- -----------
----
The lowest quarterly returns for the BGI S&P 500 Stock Fund for the periods
covered by the bar chart above was % for the quarter ending ,
---- -------------
.
----
AVERAGE ANNUAL TOTAL RETURNS (AS OF DECEMBER 31, 1999)
1 YEAR 5 YEAR SINCE INCEPTION*
BGI S&P 500 STOCK FUND % % %
S&P 500 INDEX % % %
* The BGI S&P 500 Stock Fund, a feeder fund similar to the Working Equity S&P
500 Index Fund and used in the chart for purposes of comparison, commenced
operations on July 2, 1993. The performance of the S&P 500 Index is computed
from June 30, 1993.
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Fees and Expenses
The table below describes the fees and expenses that you may pay if you
buy and hold shares in the Working Equity S&P 500 Index Fund.
SHAREHOLDER FEES
(FEES PAID DIRECTLY FROM YOUR INVESTMENT)
Maximum Sales Charge (Load) Imposed on Purchases None
Maximum Deferred Sales Charge (Load) None
Maximum Sales Charge (Load) Imposed on None
Reinvested Dividends and Other Distributions
Redemption Fee (as a percentage of redemption 2.00%*
proceeds, payable if shares are redeemed within
5 years of purchase)
ANNUAL FUND OPERATING EXPENSES**
(EXPENSES DEDUCTED FROM FUND ASSETS)
Management Fees*** 0.40%
Distribution (12b-1) Fees 0.25%
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Total Annual Fund Operating Expenses 0.65%
* The Fund assesses a 2.00% fee on the redemption of shares held for less than
two years. This fee is reduced to 1.50% for shares held for more than two
years but less than three years, to 1.00% for shares held for more than
three years but less than four years, and to 0.50% for shares held for more
than four years but less than five years. No fee is charged for shares
held for more than five years. Any additional shares purchased after the
five year period described above will not be subject to a redemption fee.
The redemption fee is withheld from redemption proceeds and retained by the
Fund. Because the Fund is intended for long-term investors, the redemption
fee ensures that the transaction costs associated with short-term trading
are borne by the investors making the transactions, and not by the long-
term shareholders who do not generate the costs.
** Total Annual Fund Operating Expenses reflect the expenses at both the Fund
and Master Portfolio levels.
***Management Fees represent a "unified" management fee payable by the Fund to
vanteq Investment Advisors Inc. (the "Manager"), which includes a fee equal
to 0.05% of the Fund's daily net assets payable at the Master Portfolio
level to its investment adviser, Barclays Global Funds Advisors ("BGFA").
Example
The example below is intended to help you compare the Fund's costs with
those of other mutual funds. The example illustrates the costs you would incur
on an initial $10,000 investment in the Fund over the time periods shown. It
assumes your investment earns an annual return of 5% each year, that the Fund's
operating expenses remain the same, and that you redeem your shares at the end
of each period. Although your actual costs may be higher or lower, based on
these assumptions, your costs would be:
1 YEAR* 3 YEARS*
$ $
5
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You would pay the following expenses if you did not redeem your shares:
1 YEAR* 3 YEARS*
$ $
* Reflects costs at both the Fund and Master Portfolio levels.
Investors are responsible for the expenses associated with an e-mail
account and internet access.
More about the Fund
Additional Discussion of Investment Objectives and Strategies
The Fund is an index fund, and as such, seeks to match an index's
performance (before fees and expenses are paid out of the fund), by buying and
selling all of the securities that comprise the index in the same proportion as
they are reflected in the index.
The Fund invests in the S&P 500 Index Master Portfolio (the "Master
Portfolio"), a series of Master Investment Portfolio, a registered open-end
management investment company. The Master Portfolio seeks to come within 95% of
the S&P 500 Index's total return (before fees and expenses are paid out of the
Portfolio), regardless of the market climate. It does not seek to out-perform
the market it tracks and does not employ temporary defensive strategies when
the market appears to be, or is, overvalued. Under normal market conditions,
the Master Portfolio is, or is close to being, fully invested in those
securities which make up the S&P 500 Index, and futures and options on stock
index futures, covered by liquid assets. It may also invest up to 10% of its
total assets in high quality money market instruments for purposes of
liquidity.
The Master Portfolio is managed through an indexing investment approach.
To the extent possible, computerized investment programs analyze the investment
characteristics of the S&P 500 Index, and identify those securities which will
most likely result in the Master Portfolio's duplication of the Index's
investment performance. Both the Master Portfolio and Working Equity S&P 500
Index Fund's ability to match their investment performance to the performance
of the S&P 500 Index may be affected by a number of factors, such as each
Fund's expenses, the cash and cash equivalents held by the Master Portfolio,
the manner in which the total return is calculated for the S&P 500 Index, and
the timing and amounts of shareholder purchases and redemptions in each Fund.
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Additional Discussion of Investment Risk
An investment in the Working Equity S&P 500 Index Fund is subject to
investment risks, including the loss of principal amount invested. This may be
due, in part, to any number of risks, or a combination of risks, some of which
are discussed below.
MARKET RISK:
Market risk is the risk that the performance of the Fund will change
daily, depending upon changes in the value of the stocks held by the Master
Portfolio. Changes in value to common stock prices can rise or fall daily as
conditions in the market change. These changes may occur as a result of
national or international economic or political conditions, as well as general
market trends.
INDEX FUND RISK:
Closely tied to market risk, but specific to index funds because of their
investment style, is index fund risk. Index fund risk arises because an index
fund's Master Portfolio is not actively managed, but is passively managed
through an indexing investment approach which seeks to track an Index,
regardless of that Index's performance. The Fund (through its investments in
the Master Portfolio) invests in the stocks included in the S&P 500 Index. The
Fund will not change its investment strategy to counteract falling prices in
the stock market. Thus, when the stock market is "down," the Fund will not ,
except to a minor degree, employ defensive investment strategies to offset the
decline in stock values.
INVESTMENT ADVISER RISK:
Both the Master Portfolio and the Fund are subject to Investment
Adviser-risk. The Investment Adviser of the Master Portfolio, Barclays Global
Funds Advisors ("BGFA"), selects stocks for the Master Portfolio utilizing an
indexing investment management approach, which relies on sophisticated computer
software that is more technological and quantitative than traditional means of
stock selection. There is a possibility that these techniques may not
completely replicate the investment portfolio of the S&P 500 Index, or that the
Investment Adviser might interpret the information in a manner which does not
best duplicate the Index. If this occurs, the Fund's performance may perform
differently than the Index it seeks to track.
OTHER INVESTMENT RISKS:
In addition to the risks discussed above, the Master Portfolio and the
Fund are subject to other risks, such as the risk associated with investments
in derivatives. A derivative is a financial contract whose value depends on, or
is derived from, the value of an underlying asset such as a security or an
index.
One type of derivative the Master Portfolio may invest in is an index
futures contract. An index futures contract is an agreement between a buyer and
a seller that obligates the respective parties to buy and sell a predetermined
quantity of a market index at an established price on or before a stipulated
date. The seller does not actually deliver shares in the process of the sale.
Rather, the parties complete the contract with the net cash value
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of the securities; the difference between the contract price and the market
price of the securities on the stipulated date of sale. The Master Portfolio
may be able to reduce the costs associated with investing directly in a
security by investing in a forward futures contract instead. It also enables
the Master Portfolio to approach the returns of a fully invested portfolio
while maintaining some cash in its holdings. Derivatives are sensitive to
changes in interest rates or to sudden fluctuations in market prices and can be
more volatile than other securities. For this reason, they can affect the value
and performance of the Master Portfolio and of the Fund.
FOR ADDITIONAL DISCUSSION REGARDING THE FUND'S RISKS, PLEASE REFER TO THE
FUND'S STATEMENT OF ADDITIONAL INFORMATION (SAI).
In addition, investment in the Fund is made available as a component of the
on-line Working Equity Account program offered by vanteq ("vanteq").
Participation in that program is subject to risks separate and apart from
investment in the Fund. You are urged to consult the brokerage agreement and
other disclosures provided to you by vanteq in connection with your
participation in that account.
Management of the Fund
The Fund's Trustees oversee the general business of the Fund. They have
retained vanteq Investment Advisors Inc. (the "Manager") to serve as the
Manager of the Fund. The Manager is located at 300 First Stamford Place,
Stamford, Connecticut, 06902. The Manager is a wholly owned subsidiary of
vanteq. The Manager has overall responsibility for the investment operation and
administration of the Fund and agrees to provide or arrange to be provided to
the Fund investment advisory, administrative, transfer agency, pricing,
custodial, auditing and legal services. For its services, the Manager receives
a fee based on an annual rate of 0.40% of the Fund's average daily net assets.
Out of that fee the Manager bears all operating expenses of the Fund except for
distribution (12b-1) fees, investment advisory fees and other operating
expenses paid by the Master Portfolio (but which the Manager will bear through
a dollar-for-dollar reduction of its fee), brokerage fees, taxes, interest and
extraordinary expenses.
Advisor Services
The Manager has, with the approval of the Trustees, determined to invest
the Fund's assets in the Master Portfolio. The Master Portfolio's investment
adviser is BGFA, a subsidiary of Barclays Global Investors ("BGI"). BGI
provides research to BGFA, where a team of investment professionals evaluates
the data through a series of quantitative models before making decisions to buy
or sell securities for the Master Portfolio. BGFA does not apply economic,
financial or market analysis when making investment management decisions for
the Master Portfolio. Its criteria for selecting securities is based on
matching the performance results of the S&P 500 Index. BGFA is located at 45
Fremont Street, San Francisco, California 94105.
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For its services to the Master Portfolio BGFA receives a fee based on an
annual rate of 0.05% of the Fund's average daily net assets which is paid by
the Manager.
Shareholder Information
Calculating the Fund's Share Price
The Fund's share price (also known as a Fund's net asset value, or "NAV")
is determined in accordance with the standard formula for valuing mutual fund
shares, and is calculated at the close of regular trading (normally 4 p.m.
Eastern time) each day the New York Stock Exchange (NYSE) is open. The NAV per
share equals the total value of the Fund's assets (market value of securities
the Fund holds, plus its cash reserves), less its liabilities, the result of
which is divided by the number of outstanding shares. The Fund anticipates
holding shares of the Master Portfolio, the net asset value of which is
calculated as of the same time each day as that of the Fund. The securities
held by the Master Portfolio and the Fund's other holdings are valued at their
current market prices, except that debt securities maturing within 60 days are
valued at amortized cost. If a current market price is not available for a
security, then the security's fair value is determined in accordance with
guidelines approved by the Trustees of the Master Portfolio or the Fund, as the
case may be.
The price at which a shareholder's purchase into, or redemption from, the
Fund is made will be the NAV calculated for the business day, ending at the
close of normal trading on NYSE, in which the shareholder's order is received
in proper form. If a shareholder's order is received after the close of normal
trading on the NYSE on any given business day, the purchase order or redemption
request will be deemed to have been received the next business day, and the
order will be processed based upon the NAV calculated for the next business
day. Please see the Fund's SAI for more information regarding the purchase and
sale of Fund Shares.
How to Buy Fund Shares
The Fund is offered exclusively to on-line investors who participate in
vanteq's Working Equity Account. The minimum investment is $1,000. Shares in
the Fund may be purchased through a shareholder's vanteq Working Equity Account
at www.vanteq.com on any day that the NYSE is open for trading.
The Fund may close to new investments at any time, and reserves the right
to refuse any order to purchase shares if the Fund determines that doing so
would be in the best interests of the Fund and its shareholders.
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Distribution (12b-1) Plan
The Fund has adopted a plan under Rule 12b-1 that allows the Fund to pay
distribution fees for the sale and distribution of its shares. The plan
provides for payment of 0.25% of the Fund's average net assets. Because these
fees are paid out of the Fund's assets on an on-going basis, over time this fee
will increase the cost of your investment and may cost you more than paying
other types of sales charges.
How to Sell Fund Shares
Investors may redeem shares through their vanteq Working Equity Account at
www.vanteq.com as of the close of normal trading on the NYSE next to occur
after the redemption order is received in proper form.
The Fund assesses a 2.00% fee on the redemption of shares held for less
than two years. This fee is reduced to 1.50% for shares held for more than two
years but less than three years, to 1.00% for shares held for more than three
years but less than four years, and to 0.50% for shares held for more than four
years but less than five years. No fee is charged for shares held for more than
five years. Any additional shares purchased after the five year period
described above will not be subject to a redemption fee. The redemption fee is
withheld from redemption proceeds and retained by the Fund. Because the Fund is
intended for long-term investors, the redemption fee ensures that the
transaction costs associated with short-term trading are borne by the investors
making the transactions, and not by the long- term shareholders who do not
generate the costs.
The Fund is offered exclusively to on-line investors participating in the
vanteq Working Equity Account. If an investor rescinds consent to receive all
information about the Fund electronically, the Fund will redeem all of the
investor's shares in the Fund.
Generally, redemption requests will be processed within [two] business
days from the business day that the request is received in good order by the
Fund. There are situations where payment may be delayed. Please see the SAI for
additional information regarding redemptions.
Dividends and Distributions
The Fund pays out any dividends of net investment income to shareholders
each quarter and distributes any capital gains to shareholders at least
annually. Unless otherwise indicated, dividends and distributions payable to
the shareholder will automatically be reinvested as shares of the Fund.
Shareholders will not receive interest on any uncashed distribution or
redemption checks. If a shareholder fails to deposit or cash a distribution
check within a specified time period, the Fund will stop the check and reinvest
the distribution in the Fund.
Taxes
Shareholders may be required to pay taxes on the Fund's net investment
income and capital gains distributed by the Fund. Shareholders will owe taxes
on distributions of net investment income or capital gains whether they are
received in cash or reinvested in the Fund.
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The amount of taxes owed by a shareholder on Fund income and gains will
depend upon the distributions the Fund pays out and a shareholder's tax rate.
Normally, dividends and distributions are taxable to shareholders when paid.
However, when dividends and distributions are declared in the last three months
of a year and paid in January of the next year, they are taxable as if paid on
December 31 of the prior year.
Dividends and capital gain distributions usually create the following tax
liability:
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TRANSACTION TAX STATUS
-------------------------------------------------------------------------------
Income dividends Ordinary income
-------------------------------------------------------------------------------
Short-term capital gain distribution Ordinary income
-------------------------------------------------------------------------------
Long-term capital gain distribution Capital gain
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A portion of dividends paid to corporate shareholders of the Working
Equity S&P 500 Index Fund may qualify for the dividends-received deduction
available to corporations.
In addition, when a shareholder sells Fund shares, the shareholder may
have a taxable gain or loss, depending on the price paid for the shares at
purchase, and the price received for the shares at redemption.
-------------------------------------------------------------------------------
TRANSACTION TAX STATUS
-------------------------------------------------------------------------------
You sell shares owned for more than one year Long-term capital gain or loss
-------------------------------------------------------------------------------
You sell shares owned for one year or less Short-term capital gain or loss
-------------------------------------------------------------------------------
Other tax considerations arise in the timing of the purchase of Fund
shares. If a shareholder buys Fund shares shortly before the Fund makes a
distribution, the shareholder will effectively receive part of the purchase
back in the distribution, and will be subject to tax on that distribution.
Similarly, if a shareholder buys shares of the Fund, and the Fund is holding
securities that have appreciated in value, then the shareholder will
effectively receive part of the purchase back in a taxable distribution, if the
Fund sells the securities and realizes gain on the sale. Because of the nature
of the Fund's investment strategy, the Fund has the potential to build up high
levels of unrealized appreciation in its investments.
The Fund will notify each shareholder of the dividends and distributions
issued to the shareholder during the year and the federal tax status of these
distributions. Shareholders could also be subject to foreign, state and local
taxes on such dividends and distributions.
The Fund is required to withhold 31% as "backup withholding" on any
payments made to shareholders (including amounts deemed paid in the case of
exchanges) who have not certified to the Fund that their Taxpayer
Identification Number (TIN) is correct and that they are not subject to back up
withholding. The Fund may also be required to withhold backup withholding if
the Internal Revenue Service (IRS) notifies the Fund that a shareholder's TIN
as given is incorrect or that a shareholder is otherwise subject to
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backup withholding. The IRS may also subject shareholders who have supplied the
Fund with an incorrect TIN to IRS penalties.
The Fund is also required to withhold 30% from dividends paid to foreign
shareholders.
TAX CONSIDERATIONS FOR TAX-DEFERRED ACCOUNTS, SUCH AS BENEFIT PLANS OR
NON-TAXABLE ENTITIES, WILL BE DIFFERENT.
BECAUSE EACH INVESTOR'S TAX CIRCUMSTANCES ARE UNIQUE AND BECAUSE TAX LAWS ARE
SUBJECT TO CHANGE, WE RECOMMEND THAT YOU CONSULT YOUR TAX ADVISOR ABOUT YOUR
INVESTMENT.
Master/Feeder Mutual Fund Structure
Feeder Fund Expenses
The Fund, as a feeder Fund, invests all of its assets in the Master
Portfolio. Other feeder Funds may invest in the same Master Portfolio. The Fund
bears expenses of the Master Portfolio in proportion to the amount of assets it
invests in the Master Portfolio. The feeder fund sets its own transaction
minimums and investment conditions, and has its own fund-specific expenses.
Feeder Fund Rights
The Fund's Board of Trustees has the right to withdraw Fund assets from
the Master Portfolio if the Board believes that doing so is in the
shareholders' best interests. In the event the Fund's Trustees withdrew assets
from the Master Portfolio, the Trustees would then consider options for
managing the Fund's assets, including but not limited to, hiring its own
investment manager or investing in another master portfolio.
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Shareholder Inquiries
For more detailed information on the Working Equity S&P 500 Fund,
shareholders may request a copy of the Fund's Statement of Additional
Information (SAI). The SAI, which provides detailed information on the Fund, is
incorporated by reference into this prospectus. If you have any questions about
the Fund, or wish to obtain the SAI and any reports to be issued by the Fund
free of charge, please call the Fund's toll free number, 1-8[ ] or access
Working Equity Funds at its website: www.vanteq.com.
Fund information, including copies of this prospectus and the SAI, can be
obtained from the Securities and Exchange Commission ("SEC"). Investors can
access the information from the SEC's Website: http://www.sec.gov, or they can
request copies of the documents, upon payment of a duplicating fee, through the
SEC's Public Reference Section, Washington D.C. 20549-0102 or by electronic
request at: [email protected]. Shareholders can also review and copy documents
at the SEC's Public Reference Room in Washington D.C. Shareholders should call
1-202-942-8090 for additional details regarding operation of the SEC's public
reference room.
All requests for information on this Fund may require the Fund's file
number: 811-xxxx
WORKING EQUITY FUNDS
[ADDRESS]
[PHONE]
[WEBSITE]
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WORKING EQUITY FUNDS
WORKING EQUITY S&P 500 INDEX FUND
STATEMENT OF ADDITIONAL INFORMATION
March 1, 2001
This Statement of Additional Information ("SAI") is not a prospectus and is
only authorized for distribution when accompanied or preceded by the prospectus
of the Fund dated March 1, 2001, as revised from time to time. This SAI
contains information that may be useful to investors but that is not included
in the prospectus. The SAI should be read together with the applicable
prospectus. All terms used in this SAI that are defined in the Prospectus will
have the meanings assigned in the Prospectus.
A copy of the Prospectus and any reports issued by the Fund may be obtained
without charge by accessing vanteq's Website online (www.vanteq.com). Other
information on the Website is not incorporated by reference into this SAI. Only
investors participating in the vanteq Working Equity Account who consent to
receive all information about the Fund electronically may invest in the Fund.
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TABLE OF CONTENTS
PAGE
----
Fund History ................................................... 1
Description of the Fund and its Investments and Risks .......... 1
Investment Restrictions ........................................ 8
Management ..................................................... 12
Control Persons and Principal Holders of Securities ............ 14
Investment Adviser and Other Service Providers ................. 14
Portfolio Transactions and Brokerage Selection ................. 16
Capital Stock and Voting Rights ................................ 16
Purchase, Redemption and Pricing of Shares ..................... 17
Dividends, Distributions and Taxes ............................. 19
Performance Information ........................................ 22
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FUND HISTORY
The Working Equity S&P 500 Index Fund (the "Fund") is a series of Working
Equity Funds (the "Trust"). The Trust is organized as a Massachusetts business
trust and was formed on October 6, 2000.
DESCRIPTION OF THE FUND AND ITS INVESTMENTS AND RISKS
The Fund is a diversified open-end management investment company under the
Investment Company Act of 1940. The Fund's investment objective is to provide
total returns that attempt to match the total return of the stocks that
comprise the Standard & Poor's 500 Composite Stock Price Index (the "S&P 500
Index"). The Fund seeks its investment objective by investing in a master
portfolio that invests in stocks and other assets and attempts to match the
total return of the S&P 500 Index.
In addition to the investment strategies and risks described in the prospectus,
the Fund through its investment in the Master Portfolio may employ other
investment practices and may be subject to other risks, which are described
below.
Equity Securities. The stock investments of the Fund are subject to equity
------------------
market risk. Equity market risk is the possibility that common stock prices
will fluctuate or decline over short or even extended periods. The U.S. stock
market tends to be cyclical, with periods when stock prices generally rise and
periods when prices generally decline. Although the U.S. stock market has
generally performed well over recent periods, there can be no guarantee that
these performance levels will continue.
Stock Index Futures and Options on Stock Index Futures. The Master Portfolio
------------------------------------------------------
may invest in stock index futures and options on stock index futures as a
substitute for a comparable market position in the underlying securities. A
stock index future obligates the seller to deliver (and the purchaser to take),
effectively, an amount of cash equal to a specific dollar amount times the
difference between the value of a specific stock index at the close of the last
trading day of the contract and the price at which the agreement is made. No
physical delivery of the underlying stocks in the index is made. With respect
to stock indices that are permitted investments, the Master Portfolio intends
to purchase and sell futures contracts on the stock index for which it can
obtain the best price with consideration also given to liquidity. There can be
no assurance that a liquid market will exist at the time when the Master
Portfolio seeks to close out a futures contract or a futures option position.
Lack of a liquid market may prevent liquidation of an unfavorable position.
Futures Contracts and Options Transactions. A futures contract is an
----------------------------------------------
agreement between two parties, a buyer and a seller, to exchange a particular
commodity at a specific price on a specific date in the future. An option
transaction generally involves a right, which may or may not be exercised, to
buy or sell a commodity or financial instrument at a particular price on a
specified future date. At the time it enters into a futures transaction, the
Master Portfolio is required to make a performance deposit (initial margin) of
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cash or liquid securities in a segregated account in the name of the futures
broker. Subsequent payments of "variation margin" are then made on a daily
basis, depending on the value of the futures position that is continually
"marked to market."
The Master Portfolio may engage only in futures contract transactions
involving (i) the sale of a futures contract (i.e., short positions) to hedge
the value of securities held by the Master Portfolio; (ii) the purchase of a
futures contract when the Master Portfolio holds a short position having the
same delivery month (i.e., a long position offsetting a short position); or
(iii) the purchase of a futures contract to permit the Master Portfolio to, in
effect, participate in the market for the designated securities underlying the
futures contract without actually owning such designated securities. When the
Master Portfolio purchases a futures contract, it will create a segregated
account consisting of cash or other liquid assets in an amount equal to the
total market value of such futures contract, less the amount of initial margin
for the contract.
If the Master Portfolio enters into a short position in a futures contract
as a hedge against anticipated adverse market movements and the market then
rises, the increase in the value of the hedged securities will be offset, in
whole or in part, by a loss on the futures contract. If instead the Master
Portfolio purchases a futures contract as a substitute for investing in the
designated underlying securities, the Master Portfolio experiences gains or
losses that correspond generally to gains or losses in the underlying
securities. The latter type of futures contract transactions permits the Master
Portfolio to experience the results of being fully invested in a particular
asset class, while maintaining the liquidity needed to manage cash flows into
or out of the Master Portfolio. Under normal market conditions, futures
contract positions may be closed out on a daily basis. The Master Portfolio
expects to apply a portion of its cash or cash equivalents maintained for
liquidity needs to such activities.
Transactions by the Master Portfolio in futures contracts involve certain
risks. One risk in employing futures contracts as a hedge against cash market
price volatility is the possibility that futures prices will correlate
imperfectly with the behavior of the prices of the securities in the Master
Portfolio's investment portfolio. Similarly, in employing futures contracts as
a substitute for purchasing the designated underlying securities, there is a
risk that the performance of the futures contract may correlate imperfectly
with the performance of the direct investments for which the futures contract
is a substitute. In addition, commodity exchanges generally limit the amount of
fluctuation permitted in futures contract prices during a single trading day,
and the existence of such limits may prevent the prompt liquidation of futures
positions in certain cases. Limits on price fluctuations are designed to
stabilize prices for the benefit of market participants; however, there could
be cases where the Master Portfolio could incur a larger loss due to the delay
in trading than it would have if no limit rules had been in effect.
Futures contracts and options are standardized and traded on exchanges,
where the exchange serves as the ultimate counterparty for all contracts.
Consequently, the primary credit risk on futures contracts is the
creditworthiness of the exchange. Futures contracts are subject to market risk
(i.e., exposure to adverse price changes). Although the Master Portfolio
intends to purchase or sell futures contracts only if there is an active market
for such contracts, no assurance can be given that a liquid market will exist
for any particular contract at any particular time. Many futures exchanges and
boards of trade limit the amount of fluctuation permitted in futures contract
prices during a single trading day. Once the daily limit has been reached in a
particular contract, no trades may be made that day at a price beyond that
limit or trading may be suspended for specified periods during the trading day.
Futures contract prices could move to the limit for several consecutive trading
days with little or no trading, thereby preventing prompt liquidation of
futures positions and potentially subjecting the Master Portfolio to
substantial losses. If it is not possible, or if the Master Portfolio
determines not to close a futures position in anticipation of adverse price
movements, the Master Portfolio will be required to make daily cash payments on
variation margin.
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<PAGE>
In order to comply with undertakings made by the Master Portfolio pursuant
to Commodity Futures Trading Commission ("CFTC") Regulation 4.5, the Master
Portfolio will use futures and option contracts solely for bona fide hedging
purposes within the meaning and intent of CFTC Reg. 1.3(z); provided, however,
that in addition, with respect to positions in commodity futures or commodity
option contracts that do not come within the meaning and intent of CFTC Reg.
1.3(z), the aggregate initial margin and premiums required to establish such
positions will not exceed five percent of the liquidation value of the Master
Portfolio's portfolio, after taking into account unrealized profits and
unrealized losses on any such contract it has entered into; and provided
further, that in the case of an option that is in-the-money at the time of
purchase, the in-the-money amount as defined in CFTC Reg. 190.01(x) may be
excluded in computing such five percent.
Repurchase Agreements. The Master Portfolio may engage in a repurchase
----------------------
agreement with respect to any security in which it is authorized to invest,
although the underlying security may mature in more than thirteen months. The
Master Portfolio may enter into repurchase agreements wherein the seller of a
security to the Master Portfolio agrees to repurchase that security from the
Master Portfolio at a mutually agreed-upon time and price that involves the
acquisition by the Master Portfolio of an underlying debt instrument, subject
to the seller's obligation to repurchase, and the Master Portfolio's obligation
to resell, the instrument at a fixed price usually not more than one week after
its purchase. The period of maturity is usually quite short, often overnight or
a few days, although it may extend over a number of months. The Master
Portfolio may enter into repurchase agreements only with respect to securities
that could otherwise be purchased by the Master Portfolio, and all repurchase
transactions must be collateralized. The Master Portfolio may participate in
pooled repurchase agreement transactions with other funds advised by Barclays
Global Fund Advisors ("BGFA"), the investment adviser of the Master Portfolio.
The Master Portfolio's custodian has custody of, and holds in a segregated
account, securities acquired as collateral by the Master Portfolio under a
repurchase agreement. The Master Portfolio may enter into repurchase agreements
only with respect to securities of the type in which it may invest, including
government securities and mortgage-related securities, regardless of their
remaining maturities, and requires that additional securities be deposited with
the custodian if the value of the securities purchased should decrease below
resale price. BGFA monitors on an ongoing basis the value of the collateral to
assure that it always equals or exceeds the repurchase price. Certain costs may
be incurred by the Master Portfolio in connection with the sale of the
underlying securities if the seller does not repurchase them in accordance with
the repurchase agreement. In addition, if bankruptcy proceedings are commenced
with respect to the seller of the securities, disposition of the securities by
the Master Portfolio may be delayed or limited. While it does not presently
appear possible to eliminate all risks from these transactions (particularly
the possibility of a decline in the market value of the underlying securities,
as well as delay and costs to the Master Portfolio in connection with
insolvency proceedings), it is the policy of the Master Portfolio to limit
repurchase agreements to selected creditworthy securities dealers or domestic
banks or other recognized financial institutions. The Master Portfolio
considers on an ongoing basis the creditworthiness of the institutions with
which it enters into repurchase agreements. Repurchase agreements are
considered to be loans by the Master Portfolio under the 1940 Act.
Forward commitment, when-issued securities and delayed-delivery
----------------------------------------------------------------------------
transactions. The Master Portfolio may purchase or sell securities on a
------------
when-issued or delayed-delivery basis and make contracts to purchase or sell
securities for a fixed price at a future date beyond customary settlement time.
Securities purchased or sold on a when-issued, delayed delivery or forward
commitment basis involve a risk of loss if the value of the security to be
purchased declines, or the value of the security to be sold increases, before
the settlement date. Although the Master Portfolio will generally purchase
securities with the intention of actually acquiring them, the Master Portfolio
may sell securities purchased on a when-issued, delayed delivery or a forward
commitment basis before the settlement date if it is deemed appropriate by the
Master Portfolio's investment advisor.
3
<PAGE>
Investment Company Securities. The Master Portfolio may invest in securities
-----------------------------
issued by other investment companies that principally invest in securities of
the type in which the Master Portfolio invests. Under the 1940 Act, the Master
Portfolio's investment in such securities currently is limited to, subject to
certain exceptions, (i) 3% of the total voting stock of any one investment
company, (ii) 5% of the Master Portfolio's net assets with respect to any one
investment company and (iii) 10% of the Master Portfolio's net assets in the
aggregate. Investments in the securities of other investment companies
generally will involve duplication of advisory fees and certain other expenses.
The Master Portfolio may also purchase shares of exchange listed closed-end
funds.
Illiquid Securities. The Master Portfolio may invest up to 15% of the value
-------------------
of its net assets in securities as to which a liquid trading market does not
exist, provided such investments are consistent with its investment objective.
Such securities may include securities that are not readily marketable, such as
certain securities that are subject to legal or contractual restrictions on
resale, participation interests that are not subject to the demand feature
described above, floating- and variable-rate demand obligations as to which the
Master Portfolio cannot exercise the related demand feature described above on
not more than seven days notice and as to which there is no secondary market
and repurchase agreements providing for settlement more than seven days after
notice.
Short-Term Instruments and Temporary Investments. The Master Portfolio may
-------------------------------------------------
invest in high-quality money market instruments on an ongoing basis to
provide liquidity, for temporary purposes when there is an unexpected level of
shareholder purchases or redemptions or when "defensive" strategies are
appropriate. The instruments in which the Master Portfolio may invest include:
(i) short-term obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities (including government-sponsored enterprises);
(ii) negotiable certificates of deposit ("CDs"), bankers' acceptances, fixed
time deposits and other obligations of domestic banks (including foreign
branches) that have more than $1 billion in total assets at the time of
investment and that are members of the Federal Reserve System or are examined
by the Comptroller of the Currency or whose deposits are insured by the FDIC;
(iii) commercial paper rated at the date of purchase "Prime-1" by Moody's or
"A-1+" or "A-1" by S&P, or, if unrated, of comparable quality as determined by
BGFA ; (iv) nonconvertible corporate debt securities (e.g., bonds and
debentures) with remaining maturities at the date of purchase of not more than
one year that are rated at least "Aa" by Moody's or "AA" by S&P; (v) repurchase
agreements; and (vi) short-term, U.S. dollar-denominated obligations of foreign
banks (including U.S. branches) that, at the time of investment have more than
$10 billion, or the equivalent in other currencies, in total assets and in the
opinion of BGFA are of comparable quality to obligations of U.S. banks that may
be purchased by the Master Portfolio.
Bank Obligations. The Master Portfolio may invest in bank obligations,
-----------------
including certificates of deposit, time deposits, bankers' acceptances and
other short-term obligations of domestic banks, foreign subsidiaries of
domestic banks, foreign branches of domestic banks, and domestic and foreign
branches of foreign banks, domestic savings and loan associations and other
banking institutions. Certificates of deposit are negotiable certificates
evidencing the obligation of a bank to repay funds deposited with it for a
specified period of time. Time deposits are non-negotiable deposits maintained
in a banking institution for a specified period of time at a stated interest
rate. Time deposits that may be held by the Master Portfolio will not benefit
from insurance from the Bank Insurance Fund or the Savings Association
Insurance Fund administered by the FDIC. Bankers' acceptances are credit
instruments evidencing the obligation of a bank to pay a draft drawn on it by a
customer. These instruments reflect the obligation both of the bank and of the
drawer to pay the face amount of the instrument upon maturity. The other
short-term obligations may include uninsured, direct obligations, bearing
fixed, floating- or variable-interest rates.
4
<PAGE>
Investment in Warrants. The Master Portfolio may invest up to 5% of its net
----------------------
assets at the time of purchase in warrants (other than those that have been
acquired in units or attached to other securities), including not more than 2%
of each of their net assets in warrants that are not listed on the New York or
American Stock Exchange. A warrant is an instrument issued by a corporation
that gives the holder the right to subscribe to a specified amount of the
corporation's capital stock at a set price for a specified period of time. The
prices of warrants do not necessarily correlate with the prices of the
underlying securities. The Master Portfolio may only purchase warrants on
securities in which the Master Portfolio may invest directly.
U.S. Government Obligations. The Master Portfolio may invest in various
-----------------------------
types of U.S. Government obligations. U.S. Government obligations include
securities issued or guaranteed as to principal and interest by the U.S.
Government, its agencies or instrumentalities. Payment of principal and
interest on U.S. Government obligations (i) may be backed by the full faith and
credit of the United States (as with U.S. Treasury obligations and GNMA
certificates) or (ii) may be backed solely by the issuing or guaranteeing
agency or instrumentality itself (as with FNMA notes). In the latter case, the
investor must look principally to the agency or instrumentality issuing or
guaranteeing the obligation for ultimate repayment, which agency or
instrumentality may be privately owned. There can be no assurance that the U.S.
Government would provide financial support to its agencies or instrumentalities
where it is not obligated to do so. As a general matter, the value of debt
instruments, including U.S. Government obligations, declines when market
interest rates increase and rises when market interest rates decrease. Certain
types of U.S. Government obligations are subject to fluctuations in yield or
value due to their structure or contract terms.
Loans of Portfolio Securities. The Master Portfolio may lend securities from
-----------------------------
its portfolio to brokers, dealers and financial institutions (but not
individuals) if cash, U.S. Government securities or other high-quality debt
obligations equal to at least 100% of the current market value of the
securities loan (including accrued interest thereon) plus the interest payable
to the Master Portfolio with respect to the loan is maintained with the Master
Portfolio. In determining whether to lend a security to a particular broker,
dealer or financial institution, the Master Portfolio's investment adviser will
consider all relevant facts and circumstances, including the size,
creditworthiness and reputation of the broker, dealer, or financial
institution. Any loans of portfolio securities will be fully collateralized
based on values that are marked to market daily. The Master Portfolio will not
enter into any portfolio security lending arrangement having a duration of
longer than one year. Any securities that the Master Portfolio may receive as
collateral will not become part of the Master Portfolio's investment portfolio
at the time of the loan and, in the event of a default by the borrower, the
Master Portfolio will, if permitted by law, dispose of such collateral except
for such part thereof that is a security in which the Master Portfolio is
permitted to invest. During the time securities are on loan, the borrower will
pay the Master Portfolio any accrued income on those securities, and the Master
Portfolio may invest the cash collateral and earn income or receive an
agreed-upon fee from a borrower that has delivered cash-equivalent collateral.
The Master Portfolio will not lend securities having a value that exceeds
one-third of the current value of its total assets. Loans of securities by the
Master Portfolio will be subject to termination at the Master Portfolio's or
the borrower's option. The Master Portfolio may pay reasonable administrative
and custodial fees in connection with a securities loan and may pay a
negotiated portion of the interest or fee earned with respect to the collateral
to the borrower or the placing broker. Borrowers and placing brokers may not be
affiliated, directly or indirectly, with the Master Portfolio, its investment
advisor or its distributor.
The principal risk of portfolio lending is potential default or insolvency
of the borrower. In either of these cases, the Master Portfolio could
experience delays in recovering securities or collateral or could lose all or
part of the value of the loaned securities. The Master Portfolio may pay
reasonable administrative and custodial fees in connection with loans of
portfolio securities and may pay a portion of the interest or fee earned
thereon the borrower or a placing broker.
5
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Borrowing Money. As a fundamental policy, the Master Portfolio is permitted
---------------
to borrow to the extent permitted under the 1940 Act. However, the Master
Portfolio currently intends to borrow money only for temporary or emergency
(not leveraging) purposes, and may borrow up to one-third of the value of its
total assets (including the amount borrowed) valued at the lesser of cost or
market, less liabilities (not including the amount borrowed) at the time the
borrowing is made. While borrowings exceed 5% of the Master Portfolio's total
assets, the Master Portfolio will not make any investments.
Floating- and Variable-Rate Obligations. The Master Portfolio may purchase
----------------------------------------
debt instruments with interest rates that are periodically adjusted at
specified intervals or whenever a benchmark rate or index changes. The
floating- and variable-rate instruments that the Master Portfolio may purchase
include certificates of participation in such instruments. These adjustments
generally limit the increase or decrease in the amount of interest received on
the debt instruments. Floating- and variable-rate instruments are subject to
interest-rate risk and credit risk.
The Master Portfolio may purchase floating- and variable-rate demand notes
and bonds, which are obligations ordinarily having stated maturities in excess
of thirteen months, but which permit the holder to demand payment of principal
at any time, or at specified intervals not exceeding thirteen months.
Variable-rate demand notes include master demand notes that are obligations
that permit the Master Portfolio to invest fluctuating amounts, which may
change daily without penalty, pursuant to direct arrangements between the
Master Portfolio, as lender, and the borrower. The interest rates on these
notes fluctuate from time to time. The issuer of such obligations ordinarily
has a corresponding right, after a given period, to prepay in its discretion
the outstanding principal amount of the obligations plus accrued interest upon
a specified number of days' notice to the holders of such obligations. The
interest rate on a floating-rate demand obligation is based on a known lending
rate, such as a bank's prime rate, and is adjusted automatically each time such
rate is adjusted. The interest rate on a variable-rate demand obligation is
adjusted automatically at specified intervals. Frequently, such obligations are
secured by letters of credit or other credit support arrangements provided by
banks. Because these obligations are direct lending arrangements between the
lender and borrower, it is not contemplated that such instruments generally
will be traded, and there generally is no established secondary market for
these obligations, although they are redeemable at face value. Accordingly,
where these obligations are not secured by letters of credit or other credit
support arrangements, the Master Portfolio's right to redeem is dependent on
the ability of the borrower to pay principal and interest on demand. Such
obligations frequently are not rated by credit rating agencies and the Master
Portfolio may invest in obligations that are not so rated only if BGFA
determines that at the time of investment the obligations are of comparable
quality to the other obligations in which the Master Portfolio may invest.
BGFA, on behalf of the Master Portfolio, considers on an ongoing basis the
creditworthiness of the issuers of the floating- and variable-rate demand
obligations in the Master Portfolio's portfolio. The Master Portfolio will not
invest more than 10% of the value of its total net assets in floating- or
variable-rate demand obligations whose demand feature is not exercisable within
seven days. Such obligations may be treated as liquid, provided that an active
secondary market exists.
Letters of Credit. Certain of the debt obligations (including municipal
------------------
securities, certificates of participation, commercial paper and other
short-term obligations) that the Master Portfolio may purchase may be backed by
an unconditional and irrevocable letter of credit of a bank, savings and loan
association or insurance company that assumes the obligation for payment of
principal and interest in the event of default by the issuer. Only banks,
savings and loan associations and insurance companies that, in the opinion of
BGFA, as investment adviser to the Master Portfolio, are of comparable quality
to issuers of other permitted investments of the Master Portfolio may be used
for letter of credit-backed investments.
Commercial Paper and Short-Term Corporate Debt Instruments. The Master
---------------------------------------------------------------
Portfolio may invest in commercial paper (including variable amount master
demand notes), which consists of short-term,
6
<PAGE>
unsecured promissory notes issued by corporations to finance short-term credit
needs. Commercial paper is usually sold on a discount basis and has a maturity
at the time of issuance not exceeding nine months. Variable amount master
demand notes are demand obligations that permit the investment of fluctuating
amounts at varying market rates of interest pursuant to arrangements between
the issuer and a commercial bank acting as agent for the payee of such notes
whereby both parties have the right to vary the amount of the outstanding
indebtedness on the notes. The investment adviser to the Master Portfolio
monitors on an on-going basis the ability of an issuer of a demand instrument
to pay principal and interest on demand. The Master Portfolio also may invest
in non-convertible corporate debt securities (e.g., bonds and debentures) with
not more than one year remaining to maturity at the date of settlement. The
Master Portfolio will invest only in such corporate bonds and debentures that
are rated at the time of purchase at least "Aa" by Moody's or "AA" by S&P.
Subsequent to its purchase by the Master Portfolio, an issue of securities may
cease to be rated or its rating may be reduced below the minimum rating
required for purchase by the Master Portfolio. The investment adviser to the
Master Portfolio will consider such an event in determining whether the Master
Portfolio should continue to hold the obligation. To the extent the Portfolio
continues to hold such obligations, it may be subject to additional risk of
default.
Unrated, Downgraded and Below Investment Grade Investments. The Master
---------------------------------------------------------------
Portfolio may purchase instruments that are not rated if, in the opinion of its
investment adviser, BGFA, such obligation is of investment quality comparable
to other rated investments that are permitted to be purchased by the Master
Portfolio. After purchase by the Master Portfolio, a security may cease to be
rated or its rating may be reduced below the minimum required for purchase by
the Master Portfolio. Neither event will require a sale of such security by the
Master Portfolio provided that the amount of such securities held by the Master
Portfolio does not exceed 5% of the Master Portfolio's net assets. To the
extent the ratings given by Moody's or S&P may change as a result of changes in
such organizations or their rating systems, the Master Portfolio will attempt
to use comparable ratings as standards for investments in accordance with the
investment policies contained in this SAI.
Because the Master Portfolio is not required to sell downgraded securities,
the Master Portfolio could hold up to 5% of its net assets in debt securities
rated below "Baa" by Moody's or below "BBB" by S&P or if unrated, low quality
(below investment grade) securities. Although they may offer higher yields than
do higher rated securities, low rated and unrated low quality debt securities
generally involve greater volatility of price and risk of principal and income,
including the possibility of default by, or bankruptcy of, the issuers of the
securities. In addition, the markets in which low rated and unrated low quality
debt is traded are more limited than those in which higher rated securities are
traded. The existence of limited markets for particular securities may diminish
the Master Portfolio's ability to sell the securities at fair value either to
meet redemption requests or to respond to changes in the economy or in the
financial markets and could adversely affect and cause fluctuations in the
daily net asset value of the Master Portfolio's shares.
Adverse publicity and investor perceptions, whether or not based on
fundamental analysis, may decrease the values and liquidity of low rated or
unrated low quality debt securities, especially in a thinly traded market.
Analysis of the creditworthiness of issuers of low rated or unrated low quality
debt securities may be more complex than for issuers of higher rated
securities, and the ability of the Master Portfolio to achieve its investment
objective may, to the extent it holds low rated or unrated low quality debt
securities, be more dependent upon such creditworthiness analysis than would be
the case if the Master Portfolio held exclusively higher rated or higher
quality securities.
Low rated or unrated low quality debt securities may be more susceptible to
real or perceived adverse economic and competitive industry conditions than
investment grade securities. The prices of such debt securities have been found
to be less sensitive to interest rate changes than higher rated or higher
quality investments, but more sensitive to adverse economic downturns or
individual corporate developments. A
7
<PAGE>
projection of an economic downturn or of a period of rising interest rates, for
example, could cause a decline in low rated or unrated low quality debt
securities prices because the advent of a recession could dramatically lessen
the ability of a highly leveraged company to make principal and interest
payments on its debt securities. If the issuer of the debt securities defaults,
the Master Portfolio may incur additional expenses to seek recovery.
Securities of Non-U.S. Issuers. The Master Portfolio may invest in certain
-------------------------------
securities of non-U.S. issuers as discussed below. OBLIGATIONS OF FOREIGN
GOVERNMENTS, BANKS AND CORPORATIONS - The Master Portfolio may invest in U.S.
dollar-denominated short-term obligations issued or guaranteed by one or more
foreign governments or any by BGFA to be of comparable quality to the other
obligations in which the Master Portfolio may invest. The Master Portfolio may
also invest in debt obligations of supranational entities. Supranational
entities include international organizations designated or supported by
governmental entities to promote economic reconstruction or development and
international banking institutions and related government agencies. Examples
include the International Bank for Reconstruction and Development (the World
Bank), the European Coal and Steel Community, the Asian Development Bank and
the InterAmerican Development Bank. The percentage of the Master Portfolio's
assets invested in obligations of foreign governments and supranational
entities will vary depending on the relative yields of such securities, the
economic and financial markets of the countries in which the investments are
made and the interest rate climate of such countries. The Master Portfolio may
invest a portion of its total assets in high-quality, short-term (one year or
less) debt obligations of foreign branches of U.S. banks or U.S. branches of
foreign banks that are denominated in and pay interest in U.S. dollars. The
Master Portfolio also may invest in U.S. dollar-denominated debt obligations
issued by foreign corporations.
INVESTMENT RESTRICTIONS
The Fund has adopted investment policies that may be fundamental or
non-fundamental. Fundamental policies cannot be changed without approval by the
holders of a majority (as defined in the Investment Company Act of 1940, as
amended (the "1940 Act")) of the outstanding voting securities of the Fun.
Non-fundamental policies may be changed without shareholder approval by vote of
a majority of the Trustees of the Trust, as the case may be, at any time.
FUNDAMENTAL INVESTMENT RESTRICTIONS OF THE FUND. The Fund is subject to the
following investment restrictions, all of which are fundamental policies.
The Fund may not:
(1) purchase the securities of issuers conducting their principal business
activity in the same industry if, immediately after the purchase and as a
result thereof, the value of the Fund's investments in that industry would be
25% or more of the current value of the Fund's total assets, provided that
there is no limitation with respect to investments in (i) obligations of the
U.S. Government, its agencies or instrumentalities; (ii) any industry in which
the S&P 500 Index becomes concentrated to the same degree during the same
period and provided further, that the Fund may invest all its assets in a
diversified open-end management investment company, or series thereof, with
substantially the same investment objective, policies and restrictions as the
Fund, without regard for the limitations set forth in this paragraph (1);
(2) purchase or sell real estate or real estate limited partnerships (other
than securities secured by real estate or interests therein or securities
issued by companies that invest in real estate or interests therein);
(3) purchase commodities or commodity contracts (including futures
contracts), except that the Fund may purchase securities of an issuer that
invests or deals in commodities or commodity contracts, and
8
<PAGE>
except that the Fund may enter into futures and options contracts in accordance
with its respective investment policies;
(4) purchase interests, leases, or limited partnership interests in oil,
gas, or other mineral exploration or development programs;
(5) purchase securities on margin (except for short-term credits necessary
for the clearance of transactions and except for margin payments in connection
with options, futures and options on futures) or make short sales of
securities;
(6) underwrite securities of other issuers, except to the extent that the
purchase of permitted investments directly from the issuer thereof or from an
underwriter for an issuer and the later disposition of such securities in
accordance with the Fund's investment program may be deemed to be an
underwriting and provided further, that the purchase by the Fund of securities
issued by a diversified, open-end management investment company, or a series
thereof, with substantially the same investment objective, policies and
restrictions as the Fund shall not cause the fund to be considered an
underwriter for purposes of this paragraph (6);
(7) make investments for the purpose of exercising control or management;
provided that the Fund may invest all its assets in a diversified, open-end
management investment company, or a series thereof, with substantially the same
investment objective, policies and restrictions as the Fund, without regard to
the limitations set forth in this paragraph (7);
(8) borrow money or issue senior securities as defined in the 1940 Act,
except that the Fund may borrow up to 20% of the current value of its net
assets for temporary purposes only in order to meet redemptions, and these
borrowings may be secured by the pledge of up to 20% of the current value of
its net assets (but investments may not be purchased while any such outstanding
borrowing in excess of 5% of its net assets exists);
(9) write, purchase or sell puts, calls, straddles, spreads, warrants,
options or any combination thereof, except that the Fund may enter into futures
and options contracts in accordance with its respective investment policies,
and except that the Fund may invest up to 5% of its net assets in warrants in
accordance with its investment policies;
(10) purchase securities of any issuer (except securities issued or
guaranteed by the U.S. Government, its agencies and instrumentalities) if, as a
result, with respect to 75% of its total assets, more than 5% of the value of
the Fund's total assets would be invested in the securities of any one issuer
or, with respect to 100% of its total assets the Fund's ownership would be more
than 10% of the outstanding voting securities of such issuer; provided that the
Fund may invest all its assets in a diversified, open-end management investment
company, or a series thereof, with substantially the same investment objective,
policies and restrictions as the Fund, without regard to the limitations set
forth in this paragraph (10); or
(11) make loans, except that the Fund may purchase or hold debt instruments
or lend their portfolio securities in accordance with their investment
policies, and may enter into repurchase agreements.
NON-FUNDAMENTAL INVESTMENT RESTRICTIONS OF THE FUND. The Fund is subject to
the following investment restrictions, all of which are non-fundamental
policies.
(1) The Fund may invest in shares of other open-end management investment
companies, subject to the limitations of Section 12(d)(1) of the 1940 Act.
Under the 1940 Act, the Fund's investment in such securities currently is
limited, subject to certain exceptions, to (i) 3% of the total voting stock of
any one
9
<PAGE>
investment company, (ii) 5% of such Fund's net assets with respect to any one
investment company, and (iii) 10% of such Fund's net assets in the aggregate.
Other investment companies in which the Fund invests can be expected to charge
fees for operating expenses, such as investment advisory and administration
fees, that would be in addition to those charged by the Fund.
(2) The Fund may not invest more than 15% of its net assets in illiquid
securities. For this purpose, illiquid securities include, among others, (i)
securities that are illiquid by virtue of the absence of a readily available
market or legal or contractual restrictions on resale, (ii) fixed time deposits
that are subject to withdrawal penalties and that have maturities of more than
seven days, and (iii) repurchase agreements not terminable within seven days.
(3) The Fund may lend securities from its portfolio to brokers, dealers and
financial institutions, in amounts not to exceed (in the aggregate) one-third
of the Fund's total assets. Any such loans of portfolio securities will be
fully collateralized based on values that are marked to market daily. The Fund
will not enter into any portfolio security lending arrangement having a
duration of longer than one year.
Notwithstanding any other investment policy or limitation (whether or not
fundamental), the Fund may invest all of its assets in the securities of a
single open-end management investment company with substantially the same
fundamental investment objective, policies and limitations as the Fund. A
decision to so invest all of its assets may, depending on the circumstances
applicable at the time, require approval of shareholders.
The Master Portfolio is subject to the
following investment restrictions. Fundamental Investment Restrictions of the
Master Portfolio. The Master Portfolio is subject to the following investment
restrictions, all of which are fundamental policies.
The Master Portfolio may not:
(1) invest more than 5% of its assets in the obligations of any single
issuer, except that up to 25% of the value of its total assets may be invested,
and securities issued or guaranteed by the U.S. Government, or its agencies or
instrumentalities may be purchased, without regard to any such limitation.
(2) hold more than 10% of the outstanding voting securities of any single
issuer. This Investment Restriction applies only with respect to 75% of its
total assets.
(3) invest in commodities, except that the Master Portfolio may purchase and
sell (i.e., write) options, forward contracts, futures contracts, including
those relating to indexes, and options on futures contracts or indexes.
(4) purchase, hold or deal in real estate, or oil, gas or other mineral
leases or exploration or development programs, but the Master Portfolio may
purchase and sell securities that are secured by real estate or issued by
companies that invest or deal in real estate.
(5) borrow money, except that the Master Portfolio may borrow up to 20% of
the current value of its net assets for temporary purposes only in order to
meet redemptions, and these borrowings may be secured by the pledge of up to
20% of the current value of its net assets (but investments may not be
purchased while any such outstanding borrowing in excess of 5% of its net
assets exists). For purposes of this investment restriction, the Master
Portfolio's entry into options, forward contracts, futures contracts, including
those relating to indexes, and options on futures contracts or indexes shall
not constitute
10
<PAGE>
borrowing to the extent certain segregated accounts are established and
maintained by the Master Portfolio.
(6) make loans to others, except through the purchase of debt obligations
and the entry into repurchase agreements. However, the Master Portfolio may
lend its portfolio securities in an amount not to exceed one-third of the value
of its total assets. Any loans of portfolio securities will be made according
to guidelines established by the SEC and the Trust's Board of Trustees.
(7) act as an underwriter of securities of other issuers, except to the
extent that the Master Portfolio may be deemed an underwriter under the
Securities Act of 1933, as amended, by virtue of disposing of portfolio
securities.
(8) invest 25% or more of its total assets in the securities of issuers in
any particular industry or group of closely related industries except that,
there shall be no limitation with respect to investments in (i) obligations of
the U.S. Government, its agencies or instrumentalities; and (ii) any industry
in which the S&P 500 Index becomes concentrated to the same degree during the
same period.
(9) issue any senior security (as such term is defined in Section 18(f) of
the 1940 Act), except to the extent the activities permitted in the Master
Portfolio's fundamental policies (3) and (5) may be deemed to give rise to a
senior security.
(10) purchase securities on margin, but the Master Portfolio may make margin
deposits in connection with transactions in options, forward contracts, futures
contracts, including those related to indexes, and options on futures contracts
or indexes.
NON-FUNDAMENTAL INVESTMENT RESTRICTIONS OF THE MASTER PORTFOLIO. The Master
Portfolio is subject to the following non-fundamental policies.
(1) The Master Portfolio may invest in shares of other open-end management
investment companies, subject to the limitations of Section 12(d)(1) of the
1940 Act. Under the 1940 Act, the Master Portfolio's investment in such
securities currently is limited, subject to certain exceptions, to (i) 3% of
the total voting stock of any one investment company, (ii) 5% of the Master
Portfolio's net assets with respect to any one investment company, and (iii)
10% of the Master Portfolio's net assets in the aggregate. Other investment
companies in which the Master Portfolio invests can be expected to charge fees
for operating expenses, such as investment advisory and administration fees,
that would be in addition to those charged by the Master Portfolio.
(2) The Master Portfolio may not invest more than 15% of its net assets in
illiquid securities. For this purpose, illiquid securities include, among
others, (i) securities that are illiquid by virtue of the absence of a readily
available market or legal or contractual restrictions on resale, (ii) fixed
time deposits that are subject to withdrawal penalties and that have maturities
of more than seven days, and (iii) repurchase agreements not terminable within
seven days.
(3) The Master Portfolio may lend securities from its portfolio to brokers,
dealers and financial institutions, in amounts not to exceed (in the aggregate)
one-third of the Master Portfolio's total assets. Any such loans of portfolio
securities will be fully collateralized based on values that are marked to
market daily. The Master Portfolio will not enter into any portfolio security
lending arrangement having a duration of longer than one year.
11
<PAGE>
THE FUND AND MASTER PORTFOLIO
Neither the Fund nor the Master Portfolio is sponsored, endorsed, sold or
promoted by Standard & Poor's ("S&P"). S&P makes no representation or warranty,
express or implied, to the Fund, the Master Portfolio or any member of the
public regarding the advisability of investing in securities generally or in
the Fund particularly or the ability of the S&P 500 Index to track general
stock market performance. S&P's only relationship to the Fund is the licensing
of certain trademarks and trade names of S&P and of the S&P 500 Index that is
determined, composed and calculated by S&P without regard to the Fund. S&P has
no obligation to take the needs of the Fund into consideration in determining,
composing or calculating the S&P 500 Index. S&P is not responsible for and has
not participated in the determination of the prices and amount of the Fund's
shares or the timing of the issuance or sale of the Fund's shares or in the
determination or calculation of the equation by which the Fund's shares are to
be converted into cash. S&P has no obligation or liability in connection with
the administration, marketing or trading of the Fund's shares.
S&P does not guarantee the accuracy and/or the completeness of the S&P 500
Index or any data included therein and S&P shall have no liability for any
errors, omissions, or interruptions therein. S&P makes no warranty, express or
implied, as to results to be obtained by the Fund, or any other person or
entity from the use of the S&P 500 Index or any data included therein. S&P
makes no express or implied warranties, and expressly disclaims all warranties
of merchantability or fitness for a particular purpose or use with respect to
the S&P 500 Index or any data included therein. Without limiting any of the
foregoing, in no event shall S&P have any liability for any special, punitive,
indirect, or consequential damages (including lost profits), even if notified
of the possibility of such damages.
MANAGEMENT
The Board of Trustees has the responsibility for the overall management of
the Fund under the laws of the Commonwealth of Massachusetts.
Trustees and officers of the Company, together with information as to their
principal business occupations during the last five years, are shown below. The
address of each, unless otherwise indicated, is c/o Working Equity Funds, 300
First Stamford Place, Suite 500, Stamford, CT 06902. Trustees who are deemed to
be an "interested person" of the Company, as defined in the 1940 Act, are
indicated by an asterisk.
PRINCIPAL OCCUPATIONS
NAME, ADDRESS AND AGE POSITION(S) DURING PAST 5 YEARS
--------------------- ----------- ---------------------
[Trustee,
Chairman
and President]
[Vice President]
[Secretary]
12
<PAGE>
PRINCIPAL OCCUPATIONS
NAME, ADDRESS AND AGE POSITION(S) DURING PAST 5 YEARS
--------------------- ----------- ---------------------
[Asst. Secretary]
[Treasurer]
[Asst. Treasurer]
Trustee
Trustee
Trustee
COMPENSATION TABLE
The following table provides an estimate of each Trustee's compensation
received from the Trust for the fiscal year ending December 31, 2001.
TOTAL COMPENSATION
NAME AND POSITION FROM REGISTRANT
$
$
$
$
--------------------
Trustees of the Trust are compensated annually by the Trust for their
services as indicated above and also are reimbursed for all out-of-pocket
expenses relating to attendance at board meetings. Currently the Trustees do
not receive any retirement benefits or deferred compensation from the Trust.
The Trustees have an audit committee consisting of _______, _______ and
_______. As of the date of this SAI, Trustees and officers of the Trust as a
group beneficially owned less than 1% of the outstanding shares of the Trust.
Code of Ethics. Pursuant to Rule 17j-1 of the 1940 Act, Working Equity
---------------
Funds, the Manager and vanteq Securities, Inc., the Fund's principal
underwriter, have adopted [a joint] code of ethics. Each code of ethics permits
personal trading by covered personnel, including securities that may be
purchased or held by the Fund, subject to certain reporting requirements and
restrictions.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As of December 31, 2000, the Fund had no shareholder, other than [vanteq],
which owned 100% of its outstanding shares.
13
<PAGE>
For purposes of the 1940 Act, any person who owns directly or through one or
more controlled companies more than 25% of the voting securities of a company
is presumed to "control" such company. [vanteq and its controlling persons] may
be deemed to control the Fund.
INVESTMENT MANAGER AND OTHER SERVICES PROVIDERS
Investment Manager. Under an Investment Management Agreement with the Fund,
------------------
vanteq Investment Advisors Inc. (the "Manager") provides investment advisory
and management services to the Fund. The Manager is wholly owned by vanteq,
Inc., located at 300 First Stamford Place, Stamford, CT 06902. The Manager was
formed in September, 2000 and has no history of operations.
Subject to the general supervision of the Working Equity Funds' Trustees,
the Manager provides the Fund with ongoing investment guidance, policy
direction and monitoring of the Master Portfolio. The Manager also manages,
supervises and conducts the other affairs and business of the Fund, furnishes
office space and equipment, provides bookkeeping and clerical services. For its
advisory and related services, the Fund currently pays the Manager a unified
fee at an annual rate equal to 0.40% of the Fund's average daily assets less
the fees and expenses of the Fund's independent Trustees.
Barclays Global Fund Advisors ("BGFA") provides investment advisory services
to the Master Portfolio pursuant to a separate Investment Advisory Contract
("BGFA Advisory Contract") with the Master Portfolio. BGFA is a direct
subsidiary of Barclays Global Investors, N.A. (which, in turn, is an indirect
subsidiary of Barclays Bank PLC) and is located at 45 Fremont Street, San
Francisco, California 94105. BGFA has provided asset management, administration
and advisory services for over 25 years. Pursuant to the BGFA Advisory
Contract, BGFA provides the Master Portfolio with investment advisory services
and furnishes to the Master Portfolio's Board of Trustees periodic reports on
the investment strategy and performance of the Master Portfolio. BGFA is
entitled to receive monthly fees at the annual rate of 0.05% of the average
daily net assets of the Master Portfolio as compensation for its advisory
services. This advisory fee is an expense of the Master Portfolio borne
proportionately by its interestholders, including the Fund and is computed
daily and paid monthly.
Principal Underwriter. The principal underwriter of the Fund is vanteq
----------------------
Securities, Inc., a wholly owned subsidiary of vanteq. vanteq bears all
expenses, including the cost of maintaining a web site for the distribution of
the Fund's prospectuses, and otherwise incident to marketing of the Funds'
shares, except for such distribution expenses as are paid out of Fund assets
under the Fund's Plan of Distribution (the "Plan"), which has been adopted
pursuant to Rule 12b-1 under the Investment Company act of 1940.
Administrator. Investors Bank & Trust Company ("IBT") performs
-------------
administrative duties for the Fund pursuant to an Administration Agreement with
the Fund, such as management of the Fund's non-investment operations,
preparation of reports for the Fund's Board of Directors, preparation of
registration statements and reports required by the Securities and Exchange
Commission and required filings with state securities commissions, and
preparation of proxy statements and shareholder reports. IBT is located at 200
Clarendon Street, Boston, Massachusetts 02116. For its services under the
Administration Agreements, IBT receives fees, which are computed daily and paid
monthly at the annual rate of ___% of the Fund's average daily net assets.
[Co-Administrators. The Master Portfolio has engaged Stephens Inc.
------------------
("Stephens") and Barclays Global Investors, N.A. ("BGI") to provide certain
administration services to the Master Portfolio. Pursuant to a
Co-Administration Agreement with the Master Portfolio, Stephens and BGI provide
administration services, among other things: (i) general supervision of the
operation of the Master Portfolio, including coordination of the services
performed by the Master
14
<PAGE>
Portfolio's investment adviser, transfer and dividend disbursing agent,
custodian, shareholder servicing agent, independent auditors and legal counsel;
(ii) general supervision of regulatory compliance matters, including the
compilation of information for documents such as reports to, and filings with,
the SEC and state securities commissions, and preparation of proxy statements
and shareholder reports for the Master Portfolio; and (iii) general supervision
relative to the compilation of data required for the preparation of periodic
reports distributed to the Master Portfolio's officers and Board of Directors.
Stephens also furnishes office space and certain facilities required for
conducting the business of the Master Portfolio together with those ordinary
clerical and bookkeeping services that are not being furnished by the Master
Portfolio's investment adviser. Stephens also pays the compensation of the
Master Portfolio's Directors, officers and employees who are affiliated with
Stephens. In addition, except for advisory fees, extraordinary expenses,
brokerage and other expenses connected to the execution of portfolio
transactions and certain expenses that are borne by the Master Portfolio,
Stephens and BGI have agreed to bear all costs of the Master Portfolio's
operations including, but not limited to, transfer and dividend disbursing
agency fees, shareholder servicing fees and expenses of preparing and printing
prospectuses, SAIs and other materials. For providing such services, Stephens
and BGI are entitled to 0.15% of the average daily net assets of the Master
Portfolio. Effective October 21, 1996, BGI contracted with IBT to provide
certain sub-administration services.]
Custodian. IBT serves as custodian to the Fund and Master Portfolio. The
---------
custodian, among other things, maintains a custody account or accounts in the
name of the Fund and Master Portfolio; receives and delivers all assets for the
Fund and Master Portfolio upon purchase and upon sale or maturity; collects and
receives all income and other payments and distributions on account of the
assets of the Fund and Master Portfolio and pays all expenses of the Fund and
Master Portfolio. IBT is compensated for its services to the Fund by the
Manager.
Transfer and Dividend Disbursing Agent. IBT has been retained to act as the
---------------------------------------
transfer and dividend disbursing agent for the [Fund] and Master Portfolio. For
its services as transfer and dividend disbursing agent to the [Fund] and Master
Portfolio, IBT is entitled to receive an annual maintenance fee computed on the
basis of the number of shareholder accounts that it maintains for the [Fund]
and Master Portfolio and to be reimbursed for out-of-pocket expenses or
advances incurred by it in performing its obligations under the agreement.
[Stephens and BGI as co-administrators have agreed to pay these fees and
expenses out of the fees each receives for co-administration services.] IBT is
compensated for its services to the Fund by vanteq Asset Management.
Independent Auditors. KPMG LLP, 99 High Street, Boston MA 02110, serves as
---------------------
independent auditors for the Fund.
Legal Counsel. Mayer, Brown and Platt, 1675 Broadway, 19th Floor, New York,
-------------
NY 10019-5820, serves as counsel to the Fund.
15
<PAGE>
PORTFOLIO TRANSACTIONS AND BROKERAGE SELECTION
Purchases and sales of equity securities in the Master Portfolio are
supervised by BGFA. BGFA uses its best judgment when allocating brokerage
transactions to brokers and dealers for execution, so that all manner of these
transactions are considered fair and reasonable to shareholders. BGFA considers
the market and price of the security, the experience, financial stability and
execution capabilities of the broker or dealer, the amount of the commission to
be paid for the transaction and on an ongoing basis, and the timeliness of
execution, to ensure that the order is executed under the best terms. BGFA may
also combine the purchase and sale of securities for the Master Portfolio with
orders of other accounts that BGFA manages if it results in the best overall
terms for execution for the transaction.
Some of the brokers and dealers who may execute orders for the Master
Portfolio offer commission rebates to the Master Portfolio. BGFA will consider
these rebate offers in its assessment of determining the best terms for a
transaction. In other cases, a broker or dealer may charge a higher commission
for a transaction than would be charged by some other broker or dealer, because
it provides additional research services, such as reports and statistics on
companies or industries, general summaries of particular equity securities, or
broad overviews of markets and the economy. The research provided may be used
by BGFA for the benefit of the Master Portfolio, or for the benefit of other
Portfolios as well. BGFA may determine, in good faith, that these higher
brokerage fees are fair and reasonable, in light of the information provided
and the value of that information to the particular transaction or other
transactions over which BGFA has investment discretion. In all cases, BGFA's
primary consideration in equitably selecting brokers or dealers for Portfolio
transactions is prompt execution at a fair and reasonable price.
The number of executions transacted on the Master Portfolio may vary
significantly every year. Generally, as transactions within the Master
Portfolio increase, and Portfolio turnover goes up, brokerage costs increase as
well.
As of the date of this SAI, the Fund had not yet commenced operations. As
such, no brokerage fees in connection with any Portfolio transactions have been
paid out by the Fund.
CAPITAL STOCK AND VOTING RIGHTS
The authorized capital stock of the Fund consists of an unlimited number of
shares having a par value of $.01 per share. As of the date of this SAI, the
Fund's Board of Trustees has authorized the issuance of one series of shares,
consisting of one class of shares. The Board of Trustees may, in the future,
authorize the issuance of other series and classes of capital stock
representing shares and classes of additional investment portfolios or funds.
Although the Fund is not required to hold regular annual shareholder
meetings, occasional annual or special meetings may be required for purposes
such as electing and removing Trustees, approving advisory contracts, and
changing the Fund's investment objective or fundamental investment policies.
The Fund will call a special meeting of its shareholders if requested in
writing by shareholders of at least 10% of the Fund's outstanding voting
securities, for the purpose of voting on the question to remove a Trustee or
Trustees from the Board of Trustees.
Voting Rights as to the Fund. All shares of the Fund have equal voting
-----------------------------
rights and can vote on each matter presented to shareholders. Shareholders of
the Fund are entitled to one vote for each share owned and fractional votes for
fractional shares owned. There are no preemptive, conversion, cumulative or
subscription rights attached to any of the Fund's shares. All issued shares
will be fully paid and non-assessable by the Fund. The Trustees of the Company
or their designeees will vote shares for which they receive no voting
instructions in the same proportion as the shares for which they do receive
voting instructions.
16
As used in this SAI, the term "majority," when referring to approvals to be
obtained from shareholders of the Fund, means the vote of the lesser of (i) 67%
of the shares of the Fund represented at a meeting if the holders of more than
50% of the outstanding shares of the Fund are present in person or by proxy, or
(ii) more than 50% of the outstanding shares of the Fund.
Voting Rights as to the Master Portfolio. Whenever the Fund, as an
----------------------------------------------
interestholder of the Master Portfolio, is requested to vote on any matter
submitted to interestholders of the Master Portfolio, the Fund will hold a
meeting of its shareholders to consider such matters. The Fund will cast its
votes in proportion to the votes received from its shareholders. Shares for
which the Fund receives no voting instructions will be voted in the same
proportion as the votes received from the other Fund shareholders. If the
Master Portfolio's investment objective or policies are changed, the Fund may
elect to change its objective or policies to correspond to those of the Master
Portfolio. The Fund may also elect to redeem its interests in the Master
Portfolio and either seek a new investment company with a matching objective in
which to invest or retain its own investment adviser to manage the Fund's
portfolio in accordance with its objective. In the latter case, the Fund's
inability to find a substitute investment company in which to invest or
equivalent management services could adversely affect shareholders' investments
in the Fund.
Dividend Rights. Each share of the Fund represents an equal proportional
----------------
interest in the Fund with each other share and is entitled to such dividends
and distributions out of the income earned on the assets belonging to the Fund
as are declared at the discretion of the Trustees. If the Fund is liquidated or
dissolved, shareholders of the Fund are entitled to receive the assets of the
Fund that are available for distribution, and any general assets not
attributable to a particular investment portfolio that are available for
distribution in such manner and on such basis as the Trustees in their sole
discretion may determine.
Obligations and Liabilities. Under the Declaration of Trust, Shareholders of
---------------------------
the Fund are generally not liable for the debts and obligations of the Fund.
Shareholders' financial liability is limited to the price paid for their
shares. In addition, the Declaration of Trust provides that obligations of the
Trust and Fund are not binding upon the Trustees, though nothing in the
Declaration of Trust protects a Trustee against liability to which the Trustee
would otherwise be subject because of willful misfeasance, bad faith, gross
negligence or reckless disregard in the performance of the Trustee's fiduciary
duty.
PURCHASES, REDEMPTION AND PRICING OF SHARES
Purchase of Shares. Shares of the Fund can be purchased on any date that the
------------------
New York Stock Exchange ("NYSE") is open up to the close of normal trading. The
NYSE is generally open for normal trading Monday through Friday, 9:30 am to
4:00 pm Eastern Time, except on those weekdays on which a national holiday
recognized by NYSE is celebrated. Currently these holidays are: New Year's Day,
Martin Luther King Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
Purchases of shares of the Fund are limited to investors who participate
in the Working Equity Account, and are sold directly through their website at
www.vanteq.com. The minimum initial investment in the Fund is $1,000, although
such minimum may be waived at the discretion of vanteq Investment Advisors Inc.
Subsequent investments may be in any amount.
Price of Fund Shares. There are no front or back end sales loads associated
--------------------
with the purchase of shares of the Fund. The Fund's share price will be its net
asset value, or NAV, and shall be calculated at the close of trading each
business day that they NYSE is open for trading. The NAV per share is
17
<PAGE>
calculated by adding the market value of all of the Fund's assets plus its cash
reserves, subtracting out the Fund's liabilities, dividing by the number of the
Fund's out-standing shares, and adjusting that figure to the nearest cent. Debt
securities maturing within 60 days are valued at amortized cost. Investors who
purchase shares before the close of NYSE normal trading on a business day will
receive that day's NAV, if the order to purchase is received in good form. For
purchase orders in good form received after the close of NYSE normal trading on
a business day, shares will be purchased at the NAV next calculated after the
order is received.
Additional shares of the Fund that are purchased as a result of dividend
reinvestment will be purchased on the [ex-dividend date], at that date's NAV.
In determining its NAV, the Fund will value all of its investments at their
market price, usually the last reported sales price or bid price. If a market
price is unavailable for a particular security, then the security's fair value
is determined in accordance with guidelines approved by the Board of Trustees.
Due to the global nature of investing, the value of the Fund's assets may
change during times when the NYSE is not open, and shareholders of the Fund are
unable to purchase into or redeem out of the Fund.
12b-1 Plan. The Fund has adopted a Plan and Agreement of Distribution (the
----------
"Plan") with respect to its shares, which provides that the Fund will make
monthly payments to vanteq computed at an annual rate no greater than 0.25% of
average net assets attributable to the shares. These payments permit vanteq, at
its discretion, to engage in certain activities and provide services for the
purpose of financing any activity that is primarily intended to result in the
sale of the Fund's shares. Payments by the Fund under the Plan, for any month,
may be made to compensate vanteq for permissible activities engaged in and
services provided. Activities appropriate for financing under the Plan include,
but are not limited to, the following: making available to investors other than
existing shareholders prospectuses and statements of additional information and
reports, preparation and distribution of advertising material and sales
literature; expenses of organizing on-line sales materials, supplemental
payments to dealers and other institutions such as asset-based sales charges;
and costs of administering the Plan.
The Plan provides that they shall continue in effect Fund as long as such
continuance is approved at least annually by the vote of the Fund's board of
trustees cast in person at a meeting called for the purpose of voting on such
continuance, including the vote of a majority of the Independent Trustees. The
Plan can also be terminated at any time by the Fund, without penalty, if a
majority of the Independent Trustees, or shareholders of the Fund, vote to
terminate the Plan. The Fund may, in its absolute discretion, suspend,
discontinue or limit the offering of its shares at any time. In determining
whether any such action should be taken, the board of trustees intends to
consider all relevant factors including, without limitation, the size of the
Fund, the investment climate for the Fund, general market conditions, and the
volume of sales and redemptions of the Fund's shares. The Plan may continue in
effect and payments may be made under the Plan following any temporary
suspension or limitation of the offering of Fund shares; however, the Fund is
not contractually obligated to continue the Plan for any particular period of
time. Suspension of the offering of the Fund's shares would not, of course,
affect a shareholder's ability to redeem his or her shares. So long as the Plan
is in effect, the selection and nomination of persons to serve as Independent
Trustees of the Fund shall be committed to the Independent Trustees then in
office at the time of such selection or nomination. The Plan may not be amended
to increase the amount of the Fund's payments under the Plan without approval
of the shareholders, and all material amendments to the Plan must be approved
by the board of trustees of the Fund, including a majority of the Independent
Trustees. Under the agreement implementing the Plan, vanteq or the Fund, the
latter by vote of a majority of the Independent Trustees, or a majority of the
holders of the relevant class of the Fund's outstanding voting securities, may
terminate such agreement without penalty upon 30 days' written notice to the
other party. No further payments will be made by a Fund under the Plan in the
event of its termination. To the extent
18
<PAGE>
that the Plan constitutes a plan of distribution adopted pursuant to Rule 12b-1
under the 1940 Act, it shall remain in effect as such, so as to authorize the
use of Fund assets in the amounts and for the purposes set forth therein,
notwithstanding the occurrence of an assignment, as defined by the 1940 Act,
and rules thereunder. To the extent it constitutes an agreement pursuant to a
plan, the Fund's obligation to make payments to vanteq shall terminate
automatically, in the event of such "assignment." In this event, the Fund may
continue to make payments pursuant to the Plan only upon the approval of new
arrangements regarding the use of the amounts authorized to be paid by the Fund
under the Plan. Such new arrangements must be approved by the trustees,
including a majority of the Independent Trustees, by a vote cast in person at a
meeting called for such purpose. These new arrangements might or might not be
with vanteq. On a quarterly basis, the directors review information about the
distribution services that have been provided to the Fund and the 12b-1 fees
paid for such services. On an annual basis, the trustees consider whether the
Plan should be continued and, if so, whether any amendment to the Plan,
including changes in the amount of 12b-1 fees paid, should be made. The only
Fund directors and interested persons, as that term is defined in Section
2(a)(19) of the 1940 Act, who have a direct or indirect financial interest in
the operation of the Plan are the officers and directors of the Fund who are
also officers either of vanteq or other companies affiliated with vanteq. The
benefits which the Fund believes will be reasonably likely to flow to the Fund
and its shareholders under the Plan include the following:
o Enhanced marketing efforts, if successful, should result in an increase in
net assets through the sale of additional shares and afford greater
resources with which to pursue the investment objectives of the Fund; and
o The sale of additional shares reduces the likelihood that redemption of
shares will require the liquidation of securities of the Fund in amounts
and at times that are disadvantageous for investment purposes;
The positive effect which increased Fund assets will have on vanteq's
revenues could allow vanteq and its affiliated companies:
o To have greater resources to make the financial commitments necessary to
improve the quality and level of the Fund's shareholder services (in both
systems and personnel);
o To increase the number and type of mutual funds available to investors
from vanteq and its affiliated companies (and support them in their
infancy), and thereby expand the investment choices available to all
shareholders; and
o To acquire and retain talented employees who desire to be associated with
a growing organization.
Redemptions. Shareholders may redeem their shares from the Fund any time the
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NYSE is open for trading. Redemption requests received in good form prior to
the close of trading will receive that day's NAV, which will be calculated at
the close of trading that business day. Redemption requests in good form
received after the close of trading on a business day will receive the NAV
calculated on the next business day. Redemptions will be processed within seven
calendar days, but generally [two] business days following the shareholder's
redemption request. The Fund may suspend the right of redemption, or postpone
payment longer than seven days if the NYSE is closed for periods other than
weekends or holidays, an emergency exists which makes it impracticable for the
Fund to sell or fairly value its securities, trading on the NYSE is restricted,
or when permitted by the SEC. The Fund may also redeem shares involuntarily.
19
<PAGE>
Shareholders may submit redemption requests to the Fund through the
Internet. The Fund has implemented security procedures to authenticate
shareholders requesting transactions through telephone and Internet access.
These procedures include identifying shareholders through personal
identification numbers, providing confirmations of transactions, recording
telephone instructions and archiving Internet transactions. Although these
procedures are reasonably designed to identify shareholders and prevent
fraudulent use, the Fund may not be liable for losses due to unauthorized or
fraudulent instructions received or acted upon.
The Fund assesses a 2% fee on the redemption of shares held for less than
two years. This fee is reduced to 1.5% for shares held for more than two years
but less than three years, to 1.0% for shares held for more than three years
but less than four years, and to 0.5% for shares held for more than four years
but less than five years. No fee is charged for shares held for more than five
years. Any additional shares purchased after the five year period described
above will not be subject to a redemption fee. The redemption fee is withheld
from redemption proceeds and retained by the Fund. Because the Fund is intended
for long-term investors, the redemption fee ensures that the transaction costs
associated with short-term trading are borne by the investors making the
transactions, and not by the long- term shareholders who do not generate the
costs.
DIVIDENDS, DISTRIBUTIONS AND TAXES
General. The following in formation supplements and should be read in
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conjunction with the Prospectus, which generally describes the tax treatment of
distributions by the Fund. This section of the SAI includes additional
information concerning federal income taxes. It does not purport to be complete
or deal with all tax issues that might arise as a result of holding shares in
the Fund. Prospective and current shareholders should consult their tax
advisors with regard to federal, state and local tax consequences resulting
from investment in the Fund.
The Fund intends to qualify as a regulated investment company under
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code). As a
regulated investment company, the Fund will not be taxed on its net income and
gains distributed to its shareholders.
To meet this qualification under the Code, the Fund must, (i) derive at
least 90% of its annual gross income from dividends, interest, certain payments
with respect to securities loans, gains from the sale or other disposition of
stock or securities or foreign currencies (to the extent such currency gains
are directly related to the regulated investment company's principal business
of investing in stock or securities) and other income (including, but not
limited to, gains from options, futures or forward contracts) derived with
respect to its business of investing in such stock, securities or currencies;
(ii) diversify its holdings so that, at the end of each quarter of the taxable
year, (a) at least 50% of the market value of the Fund's assets is represented
by cash, government securities and other securities limited in respect of any
one issuer to an amount not greater than 5% of the Fund's assets and 10% of the
outstanding voting securities of such issuer, and (b) not more than 25% of the
value of its assets is invested in the securities of any one issuer (other than
U.S. Government obligations and the securities of other regulated investment
companies), or in two or more issuers that the Fund controls and which are
determined to be engaged in the same or similar trades or businesses.
The Fund must also distribute to its shareholders at least 90% of the
aggregate of its ordinary income, net short-term capital gain and certain other
items earned in each taxable year. In general, these distributions must made in
the taxable year. However, in certain circumstances, such distributions may be
made in the twelve months following the taxable year. Furthermore,
distributions declared in October, November or December of one taxable year and
paid by January 31 of the following taxable year will be treated as paid by
December 31 of the previous taxable year. The Fund intends to pay out
substantially all of its net income and gains (if any) for each year.
Excise Tax. A 4% nondeductible excise tax will be imposed on the Fund (other
----------
than to the extent of its tax-exempt interest income) to the extent it does not
meet certain minimum distribution requirements of its income and gains by the
end of each calendar year. To avoid application of the excise tax, the Fund
intends to distribute substantially all of its income and gains (if any) by the
end of each calendar year.
20
<PAGE>
Distributions. Distributions of the Fund's investment income (including
-------------
short-term gains) to U.S. shareholders is taxable as ordinary income whether
paid in cash or reinvested in shares. Dividends paid to corporate shareholders
may be eligible for the dividend received deduction, although this may be
offset by the alternative minimum tax applicable to corporations. Distributions
of the Fund's net capital gains will usually be taxable to shareholders as
long-term gains, regardless of the length of time the shareholder has held
shares. The Fund will notify shareholders of the federal tax status of the
distributions made in cash or reinvested shares annually. Distributions are
taxed for the calendar year in which they are distributed, except that
distributions declared by the Fund in October, November or December of the
year, and paid before January 31 of the following year, will be taxable as if
paid in the year declared. Distributions are taxable even though they may
represent a return of invested capital. Purchases of shares in the period prior
to a distribution by the Fund have certain tax implications, because the amount
of the distribution is reflected in the NAV of the shares. Investors should
consider the fact that they will pay taxes on the distribution even if they
reinvest such distributions in additional shares.
Dispositions. The sale of Fund shares by a shareholder is a taxable event.
------------
There will be a taxable gain or loss, depending on the shareholder's cost basis
at the time of purchase. Taxable gains may be long or short term, depending on
the amount of time the shareholder held the shares. Any loss realized on the
sale will be disallowed if the substantially identical shares are acquired
within a period of 61 days, beginning 30 days prior to, and continuing 30 days
after the date the shares are sold. In this case, the cost basis of the shares
re-purchased will be adjusted to reflect the disallowed loss. If a shareholder
holds Fund shares for six months or less, and receives a distribution taxable
as a long-term capital gain during that period, then any loss realized on the
sale of the shares within that six month period would be a long term capital
loss to the extent of such distribution. This loss disallowance rule does not
apply to losses realized under a periodic redemption plan.
Master Portfolio. Under the Code, the Master Portfolio will be treated as a
----------------
partnership rather than as a regulated investment company or a corporation. As
a partnership, any interest, dividends, gains and losses of the Master
Portfolio shall be deemed to have been "passed through" to the corresponding
Fund (and the Master Portfolio's other investors) in proportion to the Fund's
ownership interest in the Master Portfolio. Therefore, to the extent that the
Master Portfolio were to accrue but not distribute any interest, dividends or
gains, the Fund would be deemed to have realized its proportionate share of
such income without receipt of any corresponding distribution. However, the
Master Portfolio will seek to minimize recognition by the Fund of interest,
dividends and gains without a corresponding distribution.
Except as otherwise provided herein, gains and losses realized by the Master
Portfolio on the sale of portfolio securities generally will be capital gains
and losses. Such gains and losses ordinarily will be long-term capital gains
and losses if the securities have been held by the Master Portfolio for more
than one year at the time of disposition of the securities.
If an option granted by the Master Portfolio lapses or is terminated through
a closing transaction, such as a repurchase by the Master Portfolio of the
option from its holder, the Master Portfolio will realize a short-term capital
gain or loss, depending on whether the premium income is greater or less than
the amount paid by the Master Portfolio in the closing transaction. Some
realized capital losses may be deferred if they result from a position that is
part of a "straddle," discussed below. If securities are sold by the Master
Portfolio pursuant to the exercise of a call option granted by it, the Master
Portfolio will add the premium received to the sale price of the securities
delivered in determining the amount of gain or loss on the sale. If securities
are purchased by the Master Portfolio pursuant to the exercise of a put option
written by it, the Master Portfolio will subtract the premium received from its
cost basis in the securities purchased.
21
<PAGE>
Under Section 1256 of the Code, the Master Portfolio will be required to
"mark to market" its positions in "Section 1256 contracts," which generally
include regulated futures contracts and listed non-equity options. In this
regard, Section 1256 contracts will be deemed to have been sold at market value
at the end of each taxable year. Under Section 1256 of the Code, sixty percent
(60%) of any net gain or loss realized on all dispositions of Section 1256
contracts, including deemed dispositions under the mark-to-market regime,
generally will be treated as long-term capital gain or loss, and the remaining
forty percent (40%) will be treated as short-term capital gain or loss.
Transactions that qualify as designated hedges are excepted from the
mark-to-market and 60%/40% rules.
Under Section 988 of the Code, the Master Portfolio generally will recognize
ordinary income or loss to the extent that gain or loss realized on the
disposition of portfolio securities is attributable to changes in foreign
currency exchange rates. In addition, gain or loss realized on the disposition
of a foreign currency forward contract, futures contract, option or similar
financial instrument, or of foreign currency itself, will generally be treated
as ordinary income or loss. The Master Portfolio will attempt to monitor
Section 988 transactions, where applicable, to avoid adverse federal income tax
impact.
Offsetting positions held by the Master Portfolio involving certain
financial forward, futures or options contracts may be considered, for tax
purposes, to constitute "straddles." "Straddles" are defined to include
"offsetting positions" in actively traded personal property. The tax treatment
of "straddles" is governed by Section 1092 of the Code, which, in certain
circumstances, overrides or modifies the provisions of Section 1256 of the
Code, described above. If the Master Portfolio were treated as entering into
"straddles" by engaging in certain financial forward, futures or option
contracts, such straddles could be characterized as "mixed straddles" if the
futures, forwards, or options comprising a part of such straddles were governed
by Section 1256 of the Code. The Master Portfolio may make one or more
elections with respect to "mixed straddles." Depending upon which election is
made, if any, the results with respect to the Master Portfolio may differ.
Generally, to the extent the straddle rules apply to positions established by
the Master Portfolio, losses realized by the Master Portfolio may be deferred
to the extent of unrealized gain in any offsetting positions. Moreover, as a
result of the straddle and the conversion transaction rules, short-term capital
loss on straddle positions may be recharacterized as long-term capital loss,
and long-term capital gain may be characterized as short-term capital gain or
ordinary income.
If the Master Portfolio enters into a "constructive sale" of any appreciated
position in stock, a partnership interest, or certain debt instruments, the
Master Portfolio must recognize gain (but not loss) with respect to that
position. For this purpose, a constructive sale occurs when the Master
Portfolio enters into one of the following transactions with respect to the
same or substantially identical property: (i) a short sale; (ii) an offsetting
notional principal contract; (iii) a futures or forward contract, or (iv) other
transactions identified in future Treasury Regulations.
Foreign Shareholders. Under the Code, distributions attributable to ordinary
--------------------
income, net short-term capital gain and certain other items realized by the
Fund and paid to a nonresident alien individual, foreign trust (i.e., trust
that a U.S. court is able to exercise primary supervision over administration
of that trust and one or more U.S. persons have authority to control
substantial decisions of that trust), foreign estate (i.e., the income of which
is not subject to U.S. tax regardless of source), foreign corporation, or
foreign partnership (each, a "foreign shareholder") will be subject to federal
withholding tax (at a rate of 30% or, if an income tax treaty applies, at the
lower treaty rate, if any). Such tax withheld generally is not refundable.
Withholding will not apply if a distribution paid by the Fund to a foreign
shareholder is "effectively connected" with a U.S. trade or business (or, if an
income tax treaty applies, is attributable to a U.S. permanent establishment of
the foreign shareholder), in which case the reporting and withholding
requirements applicable to U.S. persons will apply. Gain on the disposition of
Fund shares and capital gain distributions generally are not subject to tax
withholding applicable to foreign shareholders.
22
<PAGE>
Other Matters. Investors should be aware that the investments made by the
-------------
Master Portfolio may involve sophisticated tax rules that may result in income
or gain recognition by the Fund without corresponding current cash receipts.
Although the Fund will seek to avoid significant non-cash income, such non-cash
income could be recognized by the Fund, in which case the Fund may distribute
cash derived from other sources in order to meet the minimum distribution
requirements described above.
PERFORMANCE INFORMATION
For purposes of advertising, the performance of the Fund may be calculated
on the basis of average annual total return and/or cumulative total return of
shares. Average annual total return of shares is calculated pursuant to a
standardized formula that assumes that an investment in shares of the Fund was
purchased with an initial payment of $1,000 and that the investment was
redeemed at the end of a stated period of time, after giving effect to the
reinvestment of dividends and distributions during the period. The return of
shares is expressed as a percentage rate that, if applied on a compounded
annual basis, would result in the redeemable value of the investment in shares
at the end of the period. Advertisements of the performance of shares of the
Fund include the Fund's average annual total return of shares for one, five and
ten year periods, or for shorter time periods depending upon the length of time
during which such Fund has operated. Cumulative total return of shares is
computed on a per share basis and assumes the reinvestment of dividends and
distributions. Cumulative total return of shares generally is expressed as a
percentage rate that is calculated by combining the income and principal
charges for a specified period and dividing by the NAV per share at the
beginning of the period.
Advertisements may include the percentage rate of total return of shares or
may include the value of a hypothetical investment in shares at the end of the
period that assumes the application of the percentage rate of total return.
PERFORMANCE FIGURES ARE BASED ON HISTORICAL RESULTS AND ARE NOT INTENDED TO
INDICATE FUTURE PERFORMANCE. Investors should remember that performance is a
function of the type and quality of portfolio securities held by the Master
Portfolio in which the Fund invests and is affected by operating expenses.
Performance information, such as that described above, may not provide a basis
for comparison with other investments or other investment companies using a
different method of calculating performance.
To the extent required by the SEC, an average annual compound rate of return
("T") will be computed by using the value at the end of a specified period
("ERV") of a hypothetical initial investment ("P") over a period of years ("n")
according to the following formula: P(1+T)n = ERV. The Fund may also calculate
total return based on net asset value per share (rather than the public
offering price) in which case the figures would not reflect the effect of any
sales charge that would have been paid by an investor.
23
<PAGE>
PART C
OTHER INFORMATION
ITEM 23. EXHIBITS
(a) ARTICLES OF INCORPORATION
(1) Declaration of Trust, dated October 6, 2000, is filed
herein as Exhibit a(1).
(b) BYLAWs
(1) By-laws of the Trust filed herein as Exhibit b(1).
(c) Instruments Defining Rights of Security Holders
Not applicable
(d) INVESTMENT ADVISORY AGREEMENT
(1) Form of Investment Manager Agreement between vanteq
Investment Advisors, Inc. and the Registrant is filed
herein as Exhibit d(1).
(e) DISTRIBUTION/UNDERWRITING AGREEMENT
(1) Investment Distribution Agreement between Working
Equity Funds, vanteq Securities, Inc. and the
Registrant is filed herein as Exhibit e(1).
(f) BONUS OR PROFIT SHARING AGREEMENT
Not applicable
(g) CUSTODIAN AGREEMENT
(1) Custodian Agreement to be filed in a subsequent
amendment.
(h) OTHER MATERIAL AGREEMENTS
(1) Administration Agreement to be filed in a subsequent
amendment.
(2) Transfer Agency Agreement to be filed in a subsequent
amendment.
(3) Third Party Feeder Fund Agreement to be filed in a
subsequent amendment.
(i) OPINION AND CONSENT OF COUNSEL
Not Applicable
(j) CONSENT OF INDEPENDENT AUDITORS
Not Applicable
(k) OMITTED FINANCIAL STATEMENTS
Not Applicable
(l) INITIAL CAPITAL AGREEMENTS
(1) Capital Agreement to be filed in a subsequent
amendment.
(m) RULE 12B-1 PLAN
(1) Form of Rule 12b-1 Plan between Working Equity Funds,
vanteq Securities, Inc. and the Registrant is filed
herein as Exhibit m(1).
<PAGE>
(n) FINANCIAL DATA SCHEDULES
Not applicable
(o) RULE 18F-3 PLAN
Not applicable
(p) POWERS OF ATTORNEY AND CODE OF ETHICS
(1) Power of Attorney, dated October 20, 2000 for Graham
Bolton is filed herein as Exhibit p(1).
(2) Codes of Ethics to be filed in a subsequent amendment.
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
No person is controlled by or under common control with the Registrant.
ITEM 25. Indemnification
Reference is made to Article Ninth of the Registrant's Declaration of
Trust.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to trustees, officers and controlling persons of
the Registrant by the Registrant pursuant to the Declaration of Trust or
otherwise, the Registrant is aware that in the opinion of the Securities and
Exchange Commission, such indemnification is against public policy as expressed
in the Act and, therefore, is unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by trustees, officers or controlling
persons of the Registrant in connection with the successful defense of any act,
suit or proceeding) is asserted by such trustees, officers or controlling
persons in connection with the shares being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issues.
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
vanteq Investment Advisors, Inc. (the "Investment Manager") offers
investment advisory services. The Investment Manager's offices are located at
300 First Stamford Place, Stamford, Connecticut, 06902. The directors and
officers of the Investment Manager and their business and other connections are
as follows:
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Name Title/Status with Investment Other Business Connections
---- ---------------------------- --------------------------
Manager
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<PAGE>
ITEM 27. PRINCIPAL UNDERWRITERS
vanteq Securities, Inc., located at 300 First Stamford Place, Stamford, CT
06902
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS
The account books and other documents required to be maintained by
Registrant pursuant to Section 31(a) of the Investment Company Act of 1940 and
the Rules thereunder will be maintained at the offices of vanteq, Inc., located
at 300 First Stamford Place, Stamford, CT 06902.
ITEM 29. MANAGEMENT SERVICES
Not applicable
ITEM 30. UNDERTAKINGS
Not applicable
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this
Registration Statement to be signed on its behalf by the undersigned, duly
authorized, in the City of Boston in the Commonwealth of Massachusetts on the
25th day of October, 2000.
WORKING EQUITY FUNDS
(Registrant)
By: /s/ Graham Bolton
----------------
Name: Graham Bolton
Title: Trustee and President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
Signature Title Date
--------- ----- ----
/s/ Graham Bolton* Trustee and President October 25, 2000
-----------------
Graham Bolton
*By: /s/ Jill Grossberg
-------------------
Jill Grossberg,
Attorney-in-Fact, pursuant to
Power of Attorney filed herein.
<PAGE>
EXHIBIT INDEX
(a)(1) Articles of Incorporation
(b)(1) Bylaws
(d)(1) Form of Investment Advisory Agreement
(e)(1) Form of Distribution Agreement
(m)(1) Form of Rule 12b-1 Plan
(p)(1) Power of Attorney
