As filed with the Securities and Exchange Commission on April 30, 1998
File No. 2-64715
File No. 811-1447
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------------
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |X|
Pre-Effective Amendment No. ___ |_|
Post-Effective Amendment No. 25 |X|
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |X|
Amendment No. 30 |X|
WPG GROWTH AND INCOME FUND
--------------------------
(Exact name of Registrant as Specified in Charter)
ONE NEW YORK PLAZA, NEW YORK, NEW YORK 10004
--------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number: 800-223-3332
------------
JAY C. NADEL, WEISS, PECK & GREER
ONE NEW YORK PLAZA, NEW YORK, NEW YORK 10004
--------------------------------------------
(Name and Address of Agent for Service)
Copies to:
Ernest V. Klein, Esq.
Hale and Dorr LLP
60 State Street
Boston, MA 02109
It is proposed that this filing will become effective:
___ immediately upon filing pursuant to paragraph (b) of Rule 485
_X_ on May 1, 1998 pursuant to paragraph (b) of Rule 485
___ 60 days after filing pursuant to paragraph (a)(1) of Rule 485
___ on ___________ pursuant to paragraph (a)(1) of Rule 485
___ 75 days after filing pursuant to paragraph (a)(2) of Rule 485
___ on ___________ pursuant to paragraph (a)(2) of Rule 485
<PAGE>
WPG GROWTH AND INCOME FUND
CROSS REFERENCE SHEET
---------------------
N-1A ITEM NO. LOCATION:
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PART A PROSPECTUS
- ------ ----------
1. Cover Page..................... Cover Page
2. Synopsis....................... Cover Page; Description of the
Funds; Expense Information
3. Condensed Financial
Information.................. Financial Highlights; The Funds'
Investment Performance
4. General Description of
Registrant................... Description of the Funds;
Organization and Capitalization;
Risk Considerations and Other
Investment Practices and Policies
of the Funds
5. Management of the Fund......... Management of the Funds; How
to Purchase Shares; Portfolio
Brokerage
6. Capital Stock and Other
Securities................... Organization and Capitalization;
Dividends, Distributions and
Taxes; Shareholder Services
7. Purchase of Securities
Being Offered................ How to Purchase Shares;
Shareholder Services; How Each
Fund's Net Asset Value is
Determined
8. Redemption or Repurchase....... How to Redeem Shares
9. Pending Legal Proceedings...... Not Applicable
10. Cover Page..................... Cover Page
-i-
<PAGE>
11. Table of Contents............... Table of Contents
N-1A ITEM NO. LOCATION:
- ------------- ---------
PART B STATEMENT OF
- ------ ------------
ADDITIONAL INFORMATION
----------------------
12. General Information
and History................... Organization
13. Investment Objectives and
Policies Investment Objective and
Policies; Investment Restrictions
14. Management of the Fund.......... Advisory and Administrative
Services; Trustees and Officers;
Custodian
15. Control Persons and Principal
Holders of Securities......... Trustees and Officers
16. Investment Advisory and Other
Services...................... Advisory and Administrative
Services; Investor Services
17. Brokerage Allocation and
Other Practices............... Portfolio Brokerage; Portfolio
Turnover
18. Capital Stock and Other
Securities.................... Organization
19. Purchase, Redemption and
Pricing of Securities
Being Offered................. How to Purchase Shares;
Redemption of Shares; Net Asset
Value
20. Tax Status...................... Dividends, Distributions and Tax
Status
21. Underwriters.................... Not Applicable
-ii-
<PAGE>
22. Calculations of Yield
Quotations of Money Market
Funds......................... Performance Information; Fund
Performance Summary
23. Financial Statements............ Financial Statements
-iii-
<PAGE>
WEISS, PECK & GREER, L.L.C.
MUTUAL FUNDS
NO-LOAD OPEN-END FUNDS
One New York Plaza
New York, New York 10004
1-800-223-3332
WPG GOVERNMENT MONEY MARKET FUND
WPG TAX FREE MONEY MARKET FUND
WPG INTERMEDIATE MUNICIPAL BOND FUND
WPG CORE BOND FUND
WPG GROWTH AND INCOME FUND
WPG TUDOR FUND
WEISS, PECK & GREER INTERNATIONAL FUND
WPG GROWTH FUND
WPG QUANTITATIVE EQUITY FUND
ALTHOUGH THE GOVERNMENT MONEY MARKET FUND AND THE TAX FREE MONEY MARKET
FUND ARE MONEY MARKET FUNDS AND ATTEMPT TO MAINTAIN A STABLE $1.00 NET ASSET
VALUE PER SHARE, INVESTMENT IN THESE FUNDS IS NEITHER INSURED NOR GUARANTEED BY
THE U.S. GOVERNMENT. THERE CAN BE NO ASSURANCE THAT EITHER FUND WILL BE ABLE TO
MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR ENDORSED OR
GUARANTEED BY, ANY BANK OR OTHER INSURED DEPOSITORY INSTITUTION AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD
OR ANY OTHER GOVERNMENT AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
This Prospectus sets forth concisely the information that a prospective investor
should know before investing in any of the Funds. It should be retained for
future reference. A combined Statement of Additional Information ("SAI") about
each Fund, dated May 1, 1998, has been filed with the Securities and Exchange
Commission ("SEC") and is available, without charge, by writing to the Funds at
the address for the Funds shown above. The SAI is incorporated by reference into
this Prospectus. The SEC maintains a Web site (http://www.sec.gov) that contains
the SAI and other information regarding the Funds.
All of the Funds are open-end management investment companies registered under
the Investment Company Act of 1940, as amended ("1940 Act"). All the Funds are
no-load mutual funds, which means you pay no sales commission or other
transaction charges when you purchase or redeem shares of the Funds.
PROSPECTUS DATED MAY 1, 1998
<PAGE>
WPG GOVERNMENT MONEY MARKET FUND (THE "GOVERNMENT MONEY MARKET FUND") is a money
market fund that seeks to provide high current income, consistent with
preservation of capital and liquidity, through investment primarily in a
portfolio of short-term securities issued or guaranteed by the U.S. Government,
its agencies, or instrumentalities and repurchase agreements collateralized by
such securities.
WPG TAX FREE MONEY MARKET FUND (THE "TAX FREE MONEY MARKET FUND") seeks to
provide high current income exempt from regular federal income tax, consistent
with preservation of capital and liquidity, through investment primarily in high
quality, tax-exempt money market instruments.
WPG INTERMEDIATE MUNICIPAL BOND FUND (THE "MUNICIPAL BOND FUND") seeks to
provide a high level of current income exempt from regular federal income tax,
consistent with relative stability of principal, through investment primarily in
a diversified portfolio of investment grade municipal securities.
WPG CORE BOND FUND (THE "CORE BOND FUND") seeks to provide high current income
consistent with capital preservation, through investment primarily in investment
grade bonds of all types that are quoted or denominated in U.S. dollars.
WPG GROWTH AND INCOME FUND (THE "GROWTH AND INCOME FUND") seeks long-term growth
of capital, a reasonable level of current income, and an increase in future
income through investment primarily in a diversified portfolio of
income-producing equity securities that have prospects for growth of capital and
increasing dividends.
WPG TUDOR FUND (THE "TUDOR FUND") seeks capital appreciation through investment
primarily in a diversified portfolio of common stocks, securities convertible
into common stocks, and "special situations."
WEISS, PECK & GREER INTERNATIONAL FUND (THE "INTERNATIONAL FUND") seeks
long-term capital growth through investment primarily in a diversified portfolio
of non-U.S. equity securities. Current income is a secondary objective.
WPG GROWTH FUND (THE "GROWTH FUND") seeks maximum capital appreciation through a
diversified portfolio that emphasizes investments in common stocks and
securities convertible into common stocks of small and medium capitalization
companies with superior growth potential and "special situations."
WPG QUANTITATIVE EQUITY FUND (THE "QUANTITATIVE EQUITY FUND") seeks to provide
investment results that exceed the performance of publicly traded common stocks
in the aggregate, as represented by the Capitalization Weighted Standard &
Poor's 500 Composite Stock Price Index.
- 2 -
<PAGE>
TABLE OF CONTENTS
PAGE
----
Expense Information................................................ 4
Financial Highlights............................................... 5
Overview........................................................... 9
Description of the Funds........................................... 9
How to Purchase Shares............................................. 17
Shareholder Services............................................... 19
How Each Fund's Net Asset Value is Determined...................... 22
How to Redeem Shares............................................... 23
Management of the Funds............................................ 24
Dividends, Distributions and Taxes................................. 28
Portfolio Brokerage................................................ 30
Organization and Capitalization.................................... 31
Risk Considerations and Other Investment Practices
and Policies of the Funds................. ..................... 32
The Funds' Investment Performance.................................. 42
- 3 -
<PAGE>
EXPENSE INFORMATION
The Table and Examples below are included in this Prospectus to assist your
understanding of all the fees and expenses to which an investment in each Fund
would be subject. Shown below are all fees and expenses incurred by each Fund
during its most recently completed fiscal year as revised to reflect any current
expense limitations. Actual fees and expenses for the Funds in the future may be
greater or less than those shown below. A more complete description of all fees
and expenses for the Funds is included in this Prospectus under "Management of
the Funds."
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSE
TAX
GOVERNMENT FREE GROWTH
MONEY MONEY MUNICIPAL CORE AND INTER- QUANTITATIVE
MARKET MARKET BOND BOND INCOME TUDOR NATIONAL GROWTH EQUITY
FUND FUND FUND FUND FUND FUND FUND FUND FUND
---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Sales Load Imposed
on Purchase None None None None None None None None None
Sales Load Imposed
on Reinvested
Dividends None None None None None None None None None
Deferred Sales Load
Imposed on
Redemptions None None None None None None None None None
Redemption Fee (1) None None None None None None None None None
Exchange Fee None None None None None None None None None
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees 0.50% 0.50% 0.19%(2) 0.24%(2) 0.75% 0.90% 0.50% 0.75% 0.75%
Rule 12b-1 Fees 0.00% 0.00% 0.00% 0.00%(3) 0.00% 0.00% 0.00% 0.00% 0.00%
Other Expenses 0.31% 0.24% 0.66%(2) 0.26%(2) 0.31% 0.34% 1.39% 0.37% 0.28%
---- ---- ---- -- ---- -- ---- ---- ---- ---- ----
Total Fund Operating
Expenses 0.81% 0.74% 0.85%(2) 0.50%(2) 1.06% 1.24% 1.89% 1.12% 1.03%
==== ==== ==== == ==== == ==== ==== ==== ==== ====
<FN>
(1) There are no charges imposed upon redemption, although the Transfer Agent
will charge a fee (currently $9.00) for transfers of redemption proceeds by
wire. For further information regarding wire fees, please call toll free
1-800-223-3332.
(2) After expense limitation. Weiss, Peck & Greer, L.L.C. ("WPG" or the
"Adviser") voluntarily agreed to limit certain other expenses. These
agreements are voluntary and temporary and may be revised or terminated by
WPG at any time although it has no current intention to do so. Absent any
expense limitation, Management Fees, Other Expenses and Total Fund
Operating Expense ratios for the fiscal year ended December 31, 1997 would
have been 0.46%, 0.69% and 1.15%, respectively, for the Municipal Bond Fund
and 0.60%, 0.26% and 0.86%, respectively, for the Core Bond Fund. See
"Management of the Funds."
(3) Rule 12b-1 fees paid by Core Bond Fund represented less than 0.01% of
average daily net assets for the fiscal year ended December 31, 1997.
</FN>
</TABLE>
- 4 -
<PAGE>
EXAMPLES: An investor in each Fund would pay the following expenses on a
hypothetical $1,0001 investment, assuming (1) 5% annual return and (2)
redemption at the end of each future time period:
FUND 1 YEAR 3 YEARS 5 YEARS 10 YEARS
---- ------ ------- ------- --------
Government Money Market $ 9 $26 $ 45 $100
Tax Free Money Market $ 8 $24 $ 41 $ 92
Municipal Bond $ 8 $27 $ 47 $105
Core Bond $ 9 $27 $ 48 $106
Growth and Income $11 $34 $ 58 $129
Tudor $13 $39 $ 68 $150
Growth $11 $36 $ 62 $136
International $19 $59 $102 $220
Quantitative Equity $11 $33 $ 57 $126
- ------------------
1 Unless waived by the Funds, the minimum initial investment required for
each Fund is $2,500, except for the Core Bond Fund and the Growth Fund whose
minimum initial investments are $25,000 and $250,000 , respectively.
These examples should not be considered a representation of past or future
expenses for any Fund. Actual expenses may be greater or less than those shown
above. Similarly, the annual rate of return assumed in the examples is not an
indication or guarantee of future investment performance. The payment of Rule
12b-1 fees by Core Bond Fund and International Fund may result in a long-term
shareholder paying more than the economic equivalent of the maximum front-end
sales charges permitted under the rules of the National Association of
Securities Dealers, Inc.
FINANCIAL HIGHLIGHTS
The following tables represent a condensed financial history for each Fund
and use each Fund's taxable year (which ends on December 31 except for certain
periods for the International Fund as noted below). The tables express the
information for each of the Funds in terms of a single share for the Fund
outstanding throughout each period. This condensed financial information has
been derived from the Funds' financial statements , which have been audited by
the Funds' independent auditors, KPMG Peat Marwick LLP, independent certified
public accountants, whose unqualified reports thereon are incorporated by
reference into the Funds' Statement of Additional Information. The Funds' 1997
Annual Report includes more information about the Funds' performance and is
available free of charge by writing to the Funds at the address shown on the
cover of this Prospectus.
- 5 -
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
$ PER SHARE
- -----------------------------------------------------------------------------------------------------------------------------
Net Total
Realized Income/(Loss)
Net and From Dividends Distri- Net Net
Asset Net Unrealized invest- From butions Tax Asset Assets at
Value at Invest- Gains or ment Net From Return Total Contri- Value at End of
Beginning ment (Losses) on Opera- Investment Capital of Distri- butions to End of Total Period
of Period Income Securities tions Income Gains Capital butions Capital Period Return ($000's)
--------- ------ ---------- ----- ------ ----- ------- ------- ------- ------ ------ --------
GOVERNMENT MONEY MARKET
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997 $1.00 $0.05 $0.00 $0.05 $(0.05) $0.00 $0.00 $(0.05) $0.00 $1.00 4.76% $207,817
1996 1.00 0.04 0.00 0.04 (0.04) 0.00 0.00 (0.04) 0.00 1.00 4.56 152,786
1995 1.00 0.05 0.00 0.05 (0.05) 0.00 0.00 (0.05) 0.00 1.00 5.16 131,210
1994 1.00 0.04 (0.01) 0.03 (0.04) 0.00 0.00 (0.04) 0.01 1.00 3.58 188,197
1993 1.00 0.03 0.00 0.03 (0.03) 0.00 0.00 (0.03) 0.00 1.00 2.80 140,926
1992 1.00 0.03 0.00 0.03 (0.03) 0.00 0.00 (0.03) 0.00 1.00 2.95 103,109
1991 1.00 0.05 0.00 0.05 (0.05) 0.00 0.00 (0.05) 0.00 1.00 5.33 94,553
1990 1.00 0.07 0.00 0.07 (0.07) 0.00 0.00 (0.07) 0.00 1.00 7.74 129,076
1989 1.00 0.09 0.00 0.09 (0.09) 0.00 0.00 (0.09) 0.00 1.00 8.84 112,626
1988(a) 1.00 0.06 0.00 0.06 (0.06) 0.00 0.00 (0.06) 0.00 1.00 6.56 80,230
TAX FREE MONEY MARKET
1997 1.00 0.03 0.00 0.03 (0.03) 0.00 0.00 (0.03) 0.00 1.00 3.23 130,083
1996 1.00 0.03 0.00 0.03 (0.03) 0.00 0.00 (0.03) 0.00 1.00 3.14 117,423
1995 1.00 0.04 0.00 0.04 (0.04) 0.00 0.00 (0.04) 0.00 1.00 3.63 121,754
1994 1.00 0.03 0.00 0.03 (0.03) 0.00 0.00 (0.03) 0.00 1.00 2.61 152,501
1993 1.00 0.02 0.00 0.02 (0.02) 0.00 0.00 (0.02) 0.00 1.00 2.32 136,889
1992 1.00 0.03 0.00 0.03 (0.03) 0.00 0.00 (0.03) 0.00 1.00 2.95 125,622
1991 1.00 0.05 0.00 0.05 (0.05) 0.00 0.00 (0.05) 0.00 1.00 4.63 106,512
1990 1.00 0.06 0.00 0.06 (0.06) 0.00 0.00 (0.06) 0.00 1.00 5.70 96,912
1989 1.00 0.06 0.00 0.06 (0.06) 0.00 0.00 (0.06) 0.00 1.00 6.23 74,620
1988(a) 1.00 0.04 0.00 0.04 (0.04) 0.00 0.00 (0.04) 0.00 1.00 4.17 17,053
INTERMEDIATE MUNICIPAL BOND
1997 10.14 0.47 0.31 0.78 (0.47) 0.00 0.00 (0.47) 0.00 10.45 7.85 23,508
1996 10.20 0.48 (0.06) 0.42 (0.48) 0.00 0.00 (0.48) 0.00 10.14 4.20 15,214
1995 9.51 0.44 0.69 1.13 (0.44) 0.00 0.00 (0.44) 0.00 10.20 12.05 12,730
1994 10.15 0.41 (0.64) (0.23) (0.41) 0.00 0.00 (0.41) 0.00 9.51 (2.29) 14,005
1993(c) 10.00 0.19 0.15 0.34 (0.19) 0.00 0.00 (0.19) 0.00 10.15 3.48 12,334
CORE BOND
1997 9.19 0.51 0.15 0.66 (0.51) 0.00 0.00 (0.51) 0.00 9.34 7.37 108,443
1996 9.38 0.64 (0.29) 0.35 (0.54) 0.00 0.00 (0.54) 0.00 9.19 3.85 120,804
1995 8.83 0.60 0.54 1.14 (0.59) 0.00 0.00 (0.59) 0.00 9.38 13.25 171,578
1994 10.37 0.68 (1.56) (0.88) (0.64) (0.02) 0.00 (0.66) 0.00 8.83 (8.70) 216,364
1993 10.38 0.79 0.14 0.93 (0.79) (0.15) 0.00 (0.94) 0.00 10.37 8.96 334,904
1992 10.54 0.70 0.01 0.71 (0.70) (0.17) 0.00 (0.87) 0.00 10.38 7.90 263,407
1991 10.22 0.80 0.57 1.37 (0.80) (0.25) 0.00 (1.05) 0.00 10.54 13.96 193,616
1990 10.18 0.82 0.04 0.86 (0.82) 0.00 0.00 (0.82) 0.00 10.22 8.95 130,897
1989 9.74 0.86 0.44 1.30 (0.86) 0.00 0.00 (0.86) 0.00 10.18 13.94 90,778
1988 9.77 0.78 (0.03) 0.75 (0.78) 0.00 0.00 (0.78) 0.00 9.74 7.90 79,254
GROWTH AND INCOME
1997 29.32 0.24 10.30 10.54 (0.24) (4.51) 0.00 (4.75) 0.00 35.11 36.27 117,146
1996 26.02 0.24 6.11 6.35 (0.39) (2.66) 0.00 (3.05) 0.00 29.32 24.42 82,937
1995 21.36 0.51 6.44 6.95 (0.53) (1.76) 0.00 (2.29) 0.00 26.02 32.73 67,357
1994 23.34 0.56 (1.83) (1.27) (0.62) (0.09) 0.00 (0.71) 0.00 21.36 (5.47) 61,045
1993 23.89 0.56 1.71 2.27 (0.89) (1.93) 0.00 (2.82) 0.00 23.34 9.53 62,714
1992 24.07 0.45 2.82 3.27 (0.43) (3.02) 0.00 (3.45) 0.00 23.89 13.80 49,304
1991 18.53 0.29 7.23 7.52 (0.31) (1.67) 0.00 (1.98) 0.00 24.07 40.72 41,538
1990 22.05 0.26 (2.51) (2.25) (0.33) (0.94) 0.00 (1.27) 0.00 18.53 (10.38) 29,948
1989 19.95 0.25 5.25 5.50 (0.24) (3.16) 0.00 (3.40) 0.00 22.05 27.64 33,410
1988 18.73 0.17 1.70 1.87 (0.17) (0.48) 0.00 (0.65) 0.00 19.95 8.89 34,115
</TABLE>
<TABLE>
<CAPTION>
RATIOS/SUPPLEMENTAL DATA
- -------------------------------------------------------------------------------
Ratio of Ratio of Average
Expenses Net Income Portfolio Commission
To Average To Average Turnover Per
Net Assets Net Assets Rate Share
---------- ---------- ---- -----
GOVERNMENT MONEY MARKET
<S> <C> <C> <C> <C>
1997 0.81% 4.68% N/A N/A
1996 0.83 4.48 N/A N/A
1995 0.82 5.06 N/A N/A
1994 0.80 3.54 N/A N/A
1993 0.81 2.75 N/A N/A
1992 0.92 2.92 N/A N/A
1991 0.88 5.35 N/A N/A
1990 0.75 7.47 N/A N/A
1989 0.76 8.46 N/A N/A
1988(a) 0.82(b) 6.78(b) N/A N/A
TAX FREE MONEY MARKET
1997 0.74 3.17 N/A N/A
1996 0.72 3.10 N/A N/A
1995 0.76 3.56 N/A N/A
1994 0.73 2.59 N/A N/A
1993 0.74 2.29 N/A N/A
1992 0.76 2.92 N/A N/A
1991 0.78 4.52 N/A N/A
1990 0.75 5.56 N/A N/A
1989 0.68 6.20 N/A N/A
1988(a) 1.01(b) 4.44(b) N/A N/A
INTERMEDIATE MUNICIPAL BOND
1997 0.85 4.55 39.8% N/A
1996 0.85 4.72 44.4 N/A
1995 0.85 4.38 51.2 N/A
1994 0.85 4.20 30.9 N/A
1993(c) 0.84(b) 3.86(b) 17.0(b) N/A
CORE BOND
1997 0.86* 5.56 330.3 N/A
1996 0.81 5.87 333.1 N/A
1995 0.82 6.52 375.0 N/A
1994 0.80 7.18 115.9 N/A
1993 0.81 7.43 97.5 N/A
1992 0.78 7.36 137.2 N/A
1991 0.81 7.64 189.8 N/A
1990 0.75 8.13 183.6 N/A
1989 0.76 8.64 158.7 N/A
1988 0.82 7.97 130.3 N/A
GROWTH AND INCOME
1997 1.06 0.88 69.6 $0.062
1996 1.15 1.50 75.8 0.062
1995 1.22 2.10 79.4 N/A
1994 1.23 2.49 71.9 N/A
1993 1.26 2.15 86.4 N/A
1992 1.34 1.79 75.5 N/A
1991 1.48 1.28 88.6 N/A
1990 1.56 1.21 91.0 N/A
1989 1.41 1.04 66.6 N/A
1988 1.53 0.82 42.2 N/A
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
$ PER SHARE
- -----------------------------------------------------------------------------------------------------------------------------
Net Total
Realized Income/(Loss)
Net and From Dividends Distri- Net Net
Asset Net Unrealized invest- From butions Tax Asset Assets at
Value at Invest- Gains or ment Net From Return Total Contri- Value at End of
Beginning ment (Losses) on Opera- Investment Capital of Distri- butions to End of Total Period
of Period Income Securities tions Income Gains Capital butions Capital Period Return ($000's)
--------- ------ ---------- ----- ------ ----- ------- ------- ------- ------ ------ --------
TUDOR
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997 $23.28 $0.06 $2.46 $2.52 $0.00 $(3.90) $0.00 $(3.90) $0.00 $21.90 11.11% $166,459
1996 22.95 (0.14) 4.41 4.27 0.00 (3.94) 0.00 (3.94) 0.00 23.28 18.82 181,370
1995 19.34 (0.10) 8.03 7.93 0.00 (4.32) 0.00 (4.32) 0.00 22.95 41.18 165,534
1994 23.40 (0.13) (2.14) (2.27) 0.00 (1.79) 0.00 (1.79) 0.00 19.34 (9.81) 144,207
1993 24.85 (0.22) 3.51 3.29 0.00 (4.74) 0.00 (4.74) 0.00 23.40 13.38 242,067
1992 24.76 (0.16) 1.40 1.24 0.00 (1.15) 0.00 (1.15) 0.00 24.85 5.13 273,394
1991 17.85 (0.02) 8.14 8.12 (0.23) (0.98) 0.00 (1.21) 0.00 24.76 45.84 263,703
1990 22.21 0.21 (1.32) (1.11) (0.21) (3.04) 0.00 (3.25) 0.00 17.85 (5.16) 162,202
1989 20.90 0.18 5.07 5.25 (0.19) (3.75) 0.00 (3.94) 0.00 22.21 25.05 156,551
1988 18.82 0.04 2.82 2.86 (0.03) (0.75) 0.00 (0.78) 0.00 20.90 15.11 157,293
INTERNATIONAL
1997 10.29 0.01 0.29 0.30 (0.01) (0.43) 0.00 (0.44) 0.00 10.15 2.89 8,555
1996 11.01 (0.07) 0.57 0.50 (0.04) (1.18) 0.00 (1.22) 0.00 10.29 4.64 13,161
1995 10.93 0.04 1.15 1.19 (0.15) (0.96) 0.00 (1.11) 0.00 11.01 10.92 14,194
1994 11.72 0.01 (0.75) (0.74) 0.00 (0.05) 0.00 (0.05) 0.00 10.93 (6.32) 17,102
1993 8.54 (0.02) 3.20 3.18 0.00 0.00 0.00 0.00 0.00 11.72 37.24 15,996
1992 9.04 0.07 (0.57) (0.50) 0.00 0.00 0.00 0.00 0.00 8.54 (5.53) 8,311
1991 8.99 0.06 0.02 0.08 0.00 0.00 (0.03) (0.03) 0.00 9.04 0.90 9,443
1990(g) 9.53 0.02 (0.40) (0.38) (0.06) (0.10) 0.00 (0.16) 0.00 8.99 (4.04) 11,751
1990(f) 10.40 0.05 (0.61) (0.56) (0.03) (0.28) 0.00 (0.31) 0.00 9.53 (5.48) 14,064
1989(e) 10.00 (0.01) 0.41 0.40 0.00 0.00 0.00 0.00 0.00 10.40 4.00 11,288
GROWTH
1997 118.47 0.54 10.73 11.27 0.00 (16.00) 0.00 (16.00) 0.00 113.74 9.67 46,557
1996 125.17 (10.76) 22.90 22.14 0.00 (28.84) 0.00 (28.84) 0.00 118.47 17.99 62,839
1995 94.45 (0.22) 37.70 37.48 0.00 (6.76) 0.00 (6.76) 0.00 125.17 39.72 60,453
1994 116.62 (0.29) (15.96) (16.25) 0.00 (5.92) 0.00 (5.92) 0.00 94.45 (14.03) 87,942
1993 126.68 (0.78) 19.42 18.64 0.00 (28.70) 0.00 (28.70) 0.00 116.62 14.87 169,302
1992 132.06 (0.47) 8.24 7.77 (0.02) (13.13) 0.00 (13.15) 0.00 126.68 6.27 208,384
1991 95.28 0.00 54.03 54.03 0.00 (17.25) 0.00 (17.25) 0.00 132.06 56.80 160,586
1990 111.13 0.61 (14.76) (14.15) (0.68) (1.02) 0.00 (1.70) 0.00 95.28 (12.80) 117,847
1989 93.79 0.13 23.25 23.38 (0.59) (5.45) 0.00 (6.04) 0.00 111.13 24.95 130,148
1988 83.91 0.16 9.83 9.99 (0.10) (0.01) 0.00 (0.11) 0.00 93.79 11.50 117,894
QUANTITATIVE EQUITY
1997 5.89 0.08 1.42 1.50 (0.08) (1.47) 0.00 (1.55) 0.00 5.84 25.47 96,055
1996 6.85 0.16 1.13 1.29 (0.15) (2.10) 0.00 (2.25) 0.00 5.89 18.51 102,450
1995 5.44 0.13 1.70 1.83 (0.12) (0.30) 0.00 (0.42) 0.00 6.85 33.37 133,201
1994 5.58 0.13 (0.11) 0.02 (0.11) (0.05) 0.00 (0.16) 0.00 5.44 0.34 73,484
1993 5.00 0.08 0.62 0.70 (0.08) (0.04) 0.00 (0.12) 0.00 5.58 13.90 46,921
</TABLE>
<TABLE>
<CAPTION>
RATIOS/SUPPLEMENTAL DATA
- ------------------------------------------------------------------
Ratio of Ratio of Average
Expenses Net Income Portfolio Commission
To Average To Average Turnover Per
Net Assets Net Assets Rate Share
---------- ---------- ---- -----
TUDOR
<S> <C> <C> <C> <C>
1997 1.24% (0.44%) 106.3% $ 0.060
1996 1.25 (0.57) 105.4 0.058
1995 1.30 (0.47) 123.1 N/A
1994 1.28 (0.62) 109.1 N/A
1993 1.25 (0.76) 118.2 N/A
1992 1.21 (0.71) 88.8 N/A
1991 1.17 (0.11) 89.8 N/A
1990 1.11 0.84 73.2 N/A
1989 1.10 0.76 93.9 N/A
1988 1.14 0.22 89.2 N/A
INTERNATIONAL
1997 1.89 0.02 55.1 $ 0.027
1996 1.71 0.31 85.2 0.019
1995 1.74 0.39 55.9 N/A
1994 1.95 0.12 69.8 N/A
1993 2.12 (0.13) 75.9 N/A
1992 2.28 0.71 96.8 N/A
1991 2.38 0.58 76.5 N/A
1990(g) 2.56(b) 0.99(b) 47.1(b) N/A
1990(f) 2.28 0.52 74.7 N/A
1989(e) 2.74(b) (0.17)(b) 38.9(b) N/A
GROWTH
1997 1.12 (0.12) 84.3 0.054
1996 1.08 (0.07) 122.4 0.064
1995 1.07 (0.21) 119.0 N/A
1994 0.95 (0.27) 99.3 N/A
1993 0.98 (0.54) 126.6 N/A
1992 0.95 (0.57) 84.3 N/A
1991 0.96 0.00 83.6 N/A
1990 1.05 0.55 81.6 N/A
1989 1.00 0.50 91.3 N/A
1988 1.05 0.16 90.3 N/A
QUANTITATIVE EQUITY
1997 1.03 1.03 77.7 $ 0.054
1996 0.95 1.52 60.8 0.034
1995 1.00 2.00 26.1 N/A
1994 1.14 2.36 46.8 N/A
1993 1.32 2.01 20.6 N/A
<FN>
* Effective January 1, 1998 WPG has voluntarily agreed to limit the total
expenses of the Core Bond Fund to 0.50% of average daily net assets.
(a) From January 22, 1988 (commencement of operations) to December 31, 1988.
(b) Annualized
(c) The Fund commenced operations on July 1, 1993.
(e) From June 1, 1989 (commencement of operations) to October 31, 1989.
(f) From November 1, 1989 to October 31, 1990.
(g) Effective November 1, 1990 the International Fund changed its fiscal year
end from October 31 to December 31. The data presented are for the
resulting two month fiscal period ending December 31, 1990.
</FN>
</TABLE>
<PAGE>
The Adviser agreed to limit other operating expenses and not to impose its full
fee for certain periods. Had the Adviser not so agreed, and had the Funds not
received a custody fee earnings credit, the total return would have been lower
and the ratio of operating expenses to average net assets and the ratio of net
income to average net assets would have been:
RATIO OF
OPERATING NET
EXPENSES INCOME
TO AVERAGE TO AVERAGE
NET ASSETS NET ASSETS
---------- ----------
GOVERNMENT MONEY MARKET
1988 0.84% A 6.75% A
TAX FREE MONEY MARKET
1989 0.83% 6.05%
1988 1.28%A 4.17% A
INTERMEDIATE MUNICIPAL BOND
1997 1.15% 4.25%
1996 1.01% 4.56%
1995 0.97% 4.25%
1994 1.45% 3.60%
1993** 2.00%A 2.70%A
GROWTH AND INCOME
1988 1.56% (0.79%)
GROWTH
1995 1.08% (0.21%)
TUDOR
1990 1.13% 0.82%
1988 1.17% 0.19%
INTERNATIONAL
1997 1.92% (0.01%)
1996 1.76% 0.26%
1995 1.76% 0.39%
1994 2.35% (0.28%)
1993 2.89% (0.64%)
1992 3.23% (0.24%)
1991 3.02% (0.06%)
1990+ 3.22% A 0.33%) A
1990++ 3.05% (0.25%)
1989* 3.74% A (1.17%) A
QUANTITATIVE EQUITY
1993 1.41% 1.92%
For the Tudor, Growth and Income, Quantitative Equity, Core Bond, Intermediate
Municipal Bond, Government Money Market and Tax Free Money Market Funds the
custody fee earnings credit had an effect of less than 0.01% per share on the
above ratios.
Notes:
+ Two month period ended December 31, 1990
++ For the year ended October 31, 1990
* From June 1, 1989 (commencement of operations) to December 31, 1989
** From July 1, 1993 (commencement of operations) to December 31, 1993
A Annualized
<PAGE>
OVERVIEW
Weiss, Peck & Greer, L.L.C. ("WPG" or the "Adviser") serves as investment
adviser to the Funds.
WPG is a privately held limited liability company with over 27 years'
experience as an investment adviser to individual and institutional clients. WPG
seeks to maintain a balance between being large enough to offer a fully
diversified range of investment alternatives and small enough to focus on
providing the quality investment advice and services needed to achieve each
client's investment objectives. WPG is a member firm of the New York Stock
Exchange and, together with its affiliates, has approximately $14 billion under
management.
DESCRIPTION OF THE FUNDS
GOVERNMENT MONEY MARKET FUND
INVESTMENT OBJECTIVE. The Government Money Market Fund is a money market fund
that seeks to provide high current income, consistent with preservation of
capital and liquidity, through investment primarily in a diversified portfolio
of short-term securities issued or guaranteed by the U.S. Government, its
agencies or instrumentalities and repurchase agreements collateralized by such
securities.
INVESTMENT PROGRAM. To seek to achieve its objective, the Government Money
Market Fund invests, under normal circumstances, at least 65% of its total
assets in short-term obligations of the U.S. Government, its agencies (such as
the Government National Mortgage Association) and instrumentalities (such as the
Federal National Mortgage Association). See "U.S. Government Securities" in this
Prospectus for a more complete description of these securities. All of the
Fund's investments consist of U.S. dollar-denominated money market instruments
that present minimal credit risks and that at the time of acquisition are
eligible securities. Eligible securities are securities rated in one of the two
highest rating categories for short-term debt obligations by any two nationally
recognized statistical rating organizations ("NRSROs") or by one NRSRO if only
one has rated the securities ("Requisite NRSROs") or, if unrated, are determined
to be of equivalent investment quality. The Fund invests at least 95% of its
total assets in eligible securities that are rated in the highest rating
category for short-term debt obligations by the Requisite NRSROs or unrated
securities of equivalent investment quality.
In addition, the Fund may invest up to 35% of its total assets in other
securities, including the following types of eligible money market instruments:
(1) Short-term obligations, including certificates of deposit, loan
participations, bankers' acceptances and time deposits of banks and savings
and loan associations whose deposits are federally insured and that have
total assets in excess of $1 billion (except that obligations of smaller
institutions may be held in amounts not exceeding federal insurance
coverage);
(2) Short-term corporate obligations, including notes and bonds with remaining
actual or effective maturities of 13 months or less;
(3) Commercial paper (unsecured promissory notes having maturities of nine
months or less) issued by corporations and finance companies;
(4) Repurchase agreements;
(5) U.S. dollar-denominated obligations of foreign issuers. Up to 20% of the
Fund's assets may be invested in obligations of foreign branches of U.S.
banks (Eurodollar obligations) and U.S. branches of foreign banks (Yankee
dollar obligations), if in the opinion of WPG such obligations are of
comparable quality to obligations of domestic banks the Fund may purchase;
and
(6) Privately issued obligations collateralized by a portfolio of U.S.
Government securities or by a portfolio of privately issued asset-backed
securities.
Certain of these money market securities may have adjustable or floating
rates of interest or periodic demand features. The Fund
-9-
<PAGE>
may lend its portfolio securities and purchase securities on a when-issued or
forward commitment basis. For further information concerning the securities in
which the Fund may invest and the Fund's investment techniques, policies and
risks, see "Risk Considerations and Other Investment Practices and Policies of
the Funds" in this Prospectus.
MATURITY. The Fund invests in eligible money market securities with remaining
actual or effective maturities of 13 months or less and maintains a
dollar-weighted average portfolio maturity of 90 days or less. These practices
are designed to minimize any price fluctuation in the Fund's portfolio
securities.
PRICE. The Fund seeks to maintain a constant net asset value of $1.00 per share.
The Fund uses the amortized cost method of valuing its portfolio securities.
PORTFOLIO MANAGEMENT. WPG actively manages the Fund, adjusting the composition
of investments and the average maturity of the Fund's portfolio according to
its outlook for short-term interest rates.
TAX FREE MONEY MARKET FUND
INVESTMENT OBJECTIVE. The Tax Free Money Market Fund seeks to provide high
current income exempt from regular federal income taxes, consistent with
preservation of capital and liquidity, through investment primarily in a
diversified portfolio of high quality money market instruments, the interest on
which is not included in gross income for federal income tax purposes and may be
exempt from state income taxes in certain cases ("tax-exempt money market
instruments").
INVESTMENT PROGRAM. To seek to achieve its objective, the Tax Free Money Market
Fund invests, under normal market conditions, at least 80% of its net assets in
a diversified portfolio of tax-exempt money market instruments. All of the
Fund's investments consist of instruments that present minimal credit risks and
that at the time of acquisition are eligible securities. Eligible securities are
securities rated in one of the two highest rating categories by the Requisite
NRSROs or, if unrated, determined to be of equivalent investment quality. The
Tax Free Money Market Fund intends to satisfy certain federal tax requirements
so that the dividends it pays to its shareholders that are attributable to
interest income on such tax-exempt securities will be exempt from regular
federal income tax, but such dividends may be subject to state or local taxes.
The eligible tax-exempt money market securities in which the Fund may invest
include:
(1) Short-term municipal debt obligations issued by or on behalf of states,
territories and possessions of the United States and the District of
Columbia and their political subdivisions, agencies and instrumentalities.
Such municipal debt securities include: (a) municipal notes such as tax
anticipation notes, revenue anticipation notes, bond anticipation notes and
construction loan notes, and (b) short-term municipal bonds such as (i)
general obligation bonds, which are secured by the issuer's pledge of its
faith, credit and taxing power for payment of principal and interest, (ii)
revenue bonds, which are paid from the revenues of a particular facility, a
specific tax or other sources, and (iii) pre-refunded tax-exempt bonds and
escrowed tax-exempt bonds;
(2) Tax-exempt commercial paper; and
(3) Variable or floating rate tax-exempt instruments.
Although it has no current intention of doing so, the Tax Free Money Market
Fund may, under normal market circumstances, invest up to 20% of its net assets
in obligations the interest on which is subject to regular federal income tax.
To the extent the Fund invests in these securities, a portion of the income the
Fund receives and distributes to share holders would be subject to regular
federal, as well as state and local, income tax. The Fund's distributions from
its tax-exempt interest income may also be subject to alternative minimum tax
and/or state and local income taxes. See "Dividends, Distributions and Taxes"
for additional information. Such taxable short-term obligations will be of the
same type as are permissible investments for the Government Money Market Fund.
The Fund may also
-10-
<PAGE>
enter into repurchase agreements, purchase securities on a when-issued or
forward commitment basis and lend its portfolio securities. For further
information concerning the securities in which the Fund may invest and the
Fund's investment techniques, policies and risks, see "Risk Considerations and
Other Investment Practices and Policies of the Funds" in this Prospectus.
MATURITY. The Fund invests in eligible money market securities with remaining
actual or effective maturities of 13 months or less and maintains a
dollar-weighted average portfolio maturity of 90 days or less. These practices
are designed to minimize any price fluctuation in the Fund's portfolio
securities.
PRICE. The Fund seeks to maintain a constant net asset value of $1.00 per share.
The Fund uses the amortized cost method of valuing its portfolio securities.
PORTFOLIO MANAGEMENT. WPG actively manages the Fund, adjusting the composition
of investments and the average maturity of the Fund's portfolio according to
its outlook for short-term interest rates.
MUNICIPAL BOND FUND
INVESTMENT OBJECTIVE. The Municipal Bond Fund seeks to provide a high level of
current income exempt from regular federal income tax, consistent with relative
stability of principal, through investment primarily in a diversified portfolio
of investment grade municipal securities.
INVESTMENT PROGRAM. To seek to achieve its objective, the Municipal Bond Fund
invests primarily in investment grade municipal securities. Municipal securities
include bonds, notes and other instruments issued by or on behalf of the
states, territories and possessions of the U.S. (including the District of
Columbia) and their political subdivisions, agencies and municipalities. These
securities may be issued in a number of forms, including general obligation and
revenue bonds, tax exempt commercial paper, variable and floating rate
instruments (including variable rate demand obligations), auction rate
securities, tender option bonds, zero coupon and capital appreciation bonds, and
municipal leases and participations therein, pre-refunded tax-exempt and
escrowed tax-exempt bonds. The Fund may also invest in other types of municipal
securities that currently exist or which may be developed in the future, the
interest on which is, or will be, in the opinion of counsel (when available)
excluded from gross income for federal income tax purposes, i.e., exempt from
regular federal income tax; provided that investing in such securities is
otherwise consistent with the Fund's investment objective and policies. See
"Municipal Securities" in this Prospectus for a more complete description of
these securities and their risks.
The average dollar-weighted effective maturity of the Fund's portfolio will
generally range between four and ten years. When, in the opinion of WPG, market
conditions warrant, the Fund's average effective portfolio maturity may be
shorter than four years. As a matter of fundamental policy, the Municipal Bond
Fund invests, under normal circumstances, at least 80% of its net assets in
securities whose interest income is exempt from regular federal income tax. See
"Dividends, Distributions and Taxes."
As a temporary defensive measure during times of adverse market conditions,
the Fund may invest up to 50% of its assets in (a) corporate commercial paper
and other short-term commercial obligations rated Prime-1 or MIG by Moody's
Investors Service, Inc. ("Moody's") or A-1 or AAA by Standard & Poors Ratings
Group ("S&P"); (b) obligations of banks (including certificates of deposit,
bankers' acceptances and repurchase agreements) with $1 billion or more of
assets; (c) U.S. Government securities; and (d) other taxable investment grade
securities. Distributions from the income earned on those investments would be
taxable to shareholders.
QUALITY OF INVESTMENTS. The Municipal Bond Fund's investments in municipal
securities are limited to securities of "investment grade" quality, at the time
of investment, as rated by any NRSRO or, if not rated, judged to be of
comparable credit quality by WPG. Investment grade municipal securities eligible
for purchase by the Fund include
-11-
<PAGE>
(i) municipal bonds rated BBB or higher by S&P or Baa or higher by Moody's, (ii)
municipal notes (including variable rate demand obligations) rated SP-2/A-2 or
higher by S&P or MIG-2/VMIG-2 or higher by Moody's and (iii) tax-exempt
commercial paper rated A-2 or higher by S&P or Prime-2 or higher by Moody's.
Comparable ratings by other NRSROs may be used. If a security is rated
differently by two or more NRSROs, WPG uses the highest rating to determine the
securities rating category.
Obligations in the lowest investment grade (I.E., BBB or Baa), referred to
as "medium grade" obligations, have speculative characteristics, and changes
in economic conditions and other factors are more likely to lead to weakened
capacity to make interest payments and repay principal on these obligations
than is the case for higher rated securities. In the event that a municipal
security purchased by the Fund is subsequently downgraded below investment
grade, WPG will consider such event in its determination of whether the Fund
should continue to hold the security. However, at no time may the Fund have more
than 5% of its net assets invested in securities rated below investment grade as
a result of such downgrades.
To seek to enhance the liquidity, stability or quality of a municipal
obligation, the Fund may acquire the right to sell the security to another party
for a guaranteed price and term. These rights are commonly referred to as puts,
demand features or standby commitments. In addition, the Municipal Bond Fund may
lend portfolio securities, enter into repurchase agreements, purchase securities
on a forward commitment or when-issued basis and invest in money market funds
which invest in municipal securities.
There are market risks inherent in all investments in securities, and the
value of the Fund's investments and, consequently, of an investment in the Fund
will fluctuate over time. Generally, the value of the Fund's investments varies
inversely with changes in interest rates. For example, as interest rates rise,
the value of the Fund's investments will tend to decline and, as interest rates
fall, the value of the Fund's investments will tend to increase. For further
information concerning the securities in which the Fund may invest and the
Fund's investment techniques, policies and risks, see "Risk Considerations and
Other Investment Practices and Policies of the Funds" in this Prospectus.
CORE BOND FUND
INVESTMENT OBJECTIVE. The Core Bond Fund seeks to provide high current income,
consistent with capital preservation.
INVESTMENT PROGRAM. To seek to achieve its objective, the Core Bond Fund
invests under normal market conditions substantially all, and at least 80%, of
its total assets in bonds. Bonds include debt obligations of all types, such as:
notes, bills, bonds, commercial paper, mortgage-backed securities, asset-backed
securities, convertible securities, and money market instruments. These
securities may be issued by the U.S. Government, its agencies or
instrumentalities
-12-
<PAGE>
or by corporate issuers. The Fund will only invest in securities that are
denominated or quoted in U.S. dollars. The bonds in which the Fund will invest
may pay interest on a fixed, variable, floating, deferred, contingent or
in-kind basis.
WPG intends to allocate the Fund's investments among corporate securities,
U.S. Treasury securities, U.S. Government agency securities, mortgage-backed
securities and asset-backed securities in a manner similar to the allocations by
its benchmark index, the Lehman Brothers Aggregate Index, among those classes
of securities. As of December 31, 1997, the Lehman Brothers Aggregate Index
allocations (which change from time to time) were as follows: 43% --U.S.
Treasury securities; 7% -- U.S. Government agency securities; 30% --
mortgage-backed securities; 19% -- corporate securities; and 1% -- asset-backed
securities. The Fund is not, however, an "index" fund and the Fund's investments
may vary significantly from such allocations when, in the WPG's opinion, the
potential return on a particular class or classes of securities outweighs the
potential return on the other classes of securities.
There are market risks inherent in all investments in securities, and the
value of the Core Bond Fund's investments and, consequently, of an investment
in the Fund will fluctuate over time. Generally, the value of the Fund's
investments varies inversely with changes in interest rates. For example, as
interest rates rise, the value of the Fund's investments will tend to decline
and, as interest rates fall, the value of the Fund's investments will tend to
increase. In addition, the potential for appreciation in the event of a decline
in interest rates may be limited or negated by increased principal payments
with respect to certain mortgage-backed securities in which the Fund may invest
(E.G., obligations issued or guaranteed by the Government National Mortgage
Association ("Ginnie Mae")). Prepayment of high interest rate mortgage-backed
securities during times of declining interest rates will generally tend to lower
the return of the Fund, and may even result in losses to the Fund, if some
securities were acquired at a premium.
-13-
<PAGE>
To seek to enhance current income or reduce market interest rate risks, the Fund
may engage in a variety of strategies involving the use of options and futures
contracts. For example, the Fund may (i) purchase and sell call and put options
on securities and securities indices, (ii) purchase and sell interest rate
futures contracts and (iii) purchase and sell call and put options on interest
rate futures contracts. In addition, the Fund may lend portfolio securities,
enter into repurchase agreements, enter into mortgage dollar roll transactions,
purchase securities on a forward commitment or when -issued basis and invest in
other investment companies and in illiquid securities. For further information
concerning the securities in which the Fund may invest and the Fund's
investment techniques, policies and risks, see "Risk Considerations and Other
Investment Practices and Policies of the Funds" in this Prospectus.
QUALITY OF INVESTMENTS. The securities in which the Core Bond Fund invests will,
at the time of investment, be rated investment grade (i.e., at least Baa by
Moody's, BBB by S&P or comparable ratings of other NRSROs) or, if unrated,
determined by WPG to be of comparable credit quality. If a security is rated
differently by two or more NRSROs, the Adviser uses the highest rating to
determine the security's rating category.
Obligations in the lowest investment grade (I.E., Baa or BBB), referred to
as "medium grade" obligations, have speculative characteristics, and changes in
economic conditions and other factors are more likely to lead to weakened
capacity to make interest payments and repay principal on these obligations
than is the case for higher rated investment grade securities. If a security is
down graded below investment grade, WPG will deter mine whether to retain that
security in the Fund's portfolio.
DURATION. Under normal market conditions, the average dollar-weighted duration
of the Core Bond Fund's portfolio will vary from three to seven years. Duration
of an individual portfolio security is a measure of the security's price
sensitivity taking into account expected cash flow and prepayments under a wide
range of interest rate scenarios.
GROWTH AND INCOME FUND
INVESTMENT OBJECTIVE. The Growth and Income Fund seeks long-term growth of
capital, a reason able level of current income and an increase in future income
through investment primarily in a diversified portfolio of income-producing
equity securities that have prospects for growth of capital and increasing
dividends.
INVESTMENT PROGRAM. To seek to achieve its objective, the Growth and Income Fund
invests, under normal circumstances, in common stocks and other equity-related
securities (including preferred stocks, securities convertible into or
exchangeable for common stocks, warrants and shares of real estate investment
trusts) that offer the prospect of capital appreciation and growth of income,
while paying current income. The common stocks and equity-related securities
selected by WPG will typically be those of companies believed by WPG either (i)
to possess better than average prospects for long-term growth of capital or (ii)
to be growing faster than the U.S. economy at the time of purchase. While WPG's
selection of equity securities emphasizes current income, the Fund may purchase
equity securities that do not pay current dividends but offer prospects for
growth of capital and future income.
Although the Growth and Income Fund will ordinarily invest in common stocks
and equity-related securities, the Fund may also (i) invest in other
securities, including corporate debt and U.S. Government securities (including
U.S. Treasury bonds and notes), asset-backed securities, and structured or
hybrid notes, (ii) write call options on securities and securities indices and
enter into
-14-
<PAGE>
closing purchase transactions on such options, (iii) invest in securities of
non-U.S. issuers and to the extent it so invests, engage in forward foreign
currency exchange transactions, (iv) invest in domestic and U.S.
dollar-denominated foreign money market investments (including repurchase
agreements and Eurodollar and Yankee Dollar obligations) and (v) invest in
securities of other investment companies.
The Fund may invest up to 35% of its total assets in debt obligations rated
as low as BB or B (or their equivalent) by any NRSRO or, if unrated, of
equivalent investment quality as determined by WPG. Such securities, commonly
referred to as "junk bonds," are regarded as predominantly speculative with
respect to the issuer's capacity to make interest payments and repay principal
in accordance with the terms of the obligation. The Fund may also lend its
portfolio securities and purchase securities on a forward commitment or
when-issued basis. For temporary or defensive purposes, the Growth and Income
Fund may invest in money market instruments and U.S. Government securities
without limitation. For further information concerning the securities in which
the Fund may invest and the Fund's investment techniques, policies and risks,
see "Risk Considerations and Other Investment Practices and Policies of the
Funds" in this Prospectus.
TUDOR FUND
INVESTMENT OBJECTIVE. The Tudor Fund seeks capital appreciation through
investment in a diversified portfolio of common stocks, securities convertible
into common stocks and special situations. The Fund intends to focus its
investments in common stocks of companies with market capitalizations of less
than $2 billion.
INVESTMENT PROGRAM. To seek to achieve its investment objective, the Tudor Fund
invests, under normal circumstances, in common stocks or equity-related
securities (including preferred stocks, securities convertible into or
exchangeable for common stocks, shares of real estate investment trusts,
warrants and rights) of companies believed by WPG to offer the potential for
capital appreciation. In selecting securities for the Fund's portfolio, WPG's
primary focus is companies with prospects for sustainable above average growth
in earnings per share, revenues, cash flow, asset value and/or other appropriate
measures.
In addition, the Fund may invest in "special situations." Special
situations refer to unusual and possibly unique developments for a company which
may create a special opportunity for significant returns. Developments that may
be considered special situations include: significant technological
improvements or important discoveries; a reorganization, recapitalization, or
other significant security exchange or conversion; a merger, liquidation, or
distribution of cash, securities, or other assets; a breakup or workout of a
holding company; litigation which, if resolved favorably, would enhance the
value of the company's stock; a new or changed management; or material changes
in management policies. The Fund may also invest up to 5% of its total assets in
debt securities rated as low as B or its equivalent by any NRSRO or, if unrated,
of equivalent investment quality as determined by WPG.
Although the Tudor Fund will invest primarily in common stocks and
equity-related securities, the Fund may also utilize other investment practices
and invest in other securities, including: (i) purchasing and selling call or
put options on securities and stock indices, (ii) investing in securities of
non-U.S. issuers; and (iii) investing in domestic and U.S. dollar-denominated
foreign money market instruments. To a limited extent the Fund may also purchase
and sell futures contracts on securities and securities indices, purchase and
sell options on such futures contracts and engage in forward foreign currency
exchange contracts. The Fund may also lend its portfolio securities, enter into
repurchase agreements, invest in securities of other investment companies and
purchase securities on a forward commitment or when-issued basis. For temporary
or defensive purposes the Fund may invest in money market instruments without
limitation. For further information concerning the securities in which the Fund
may invest and the Fund's investment techniques, policies and risks, see "Risk
Considerations and Other Investment Practices and Policies of the Funds" in this
Prospectus.
Because the Fund selects portfolio securities on
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the basis of their potential for capital appreciation, no consideration is given
to possible dividend or interest income and, therefore, the Fund may realize
little, if any, such income. The Fund is not intended as a complete investment
program and is not suitable for those investors whose objective is income or
preservation of capital.
INTERNATIONAL FUND
INVESTMENT OBJECTIVES. The International Fund seeks long-term capital growth
primarily through investment in a diversified portfolio of non-U.S. equity
securities. Current income is a secondary objective.
INVESTMENT PROGRAM. To seek to achieve its investment objectives, the
International Fund invests, under normal circumstances, at least 65% of its
total assets in common stocks and equity-related securities (I.E., securities
convertible into or exchangeable for common stocks, preferred stocks, rights
and warrants) of issuers, wherever organized, which do business primarily
outside the U.S. and whose securities are traded primarily in non-U.S. markets.
In analyzing equity investments, WPG, or the Fund's subadviser, Hill Samuel
Asset Management Limited ("HSAM"), 10 Fleet Place, London, England, generally
consider the following factors, among others: the company's overall growth
prospects, strong competitive advantages, management strength, earnings growth,
government regulations which may favorably affect the company, and the company's
overall financial strength and capital re sources. Investments in
preferred stock and convertible and fixed income securities will be selected
on the basis of a consistent record of payment of dividends or interest.
Although the Fund invests principally in securities of established larger
capitalization companies, the Fund may also purchase securities of medium and
small capitalization companies when, in the judgment of WPG or HSAM, such
securities offer above-average appreciation potential. The Fund generally
invests in equity securities listed on non-U.S. stock exchanges or in
established non-U.S. over-the-counter markets. The Fund may invest in equity
securities of non-U.S. issuers through the purchase of American Depository
Receipts ("ADRs"), European Depository Receipts ("EDRs"), Global Depository
Receipts ("GDRs") and International Depository Receipts ("IDRs"), or other
similar securities representing interests in or convertible into securities of
foreign issuers.
The Fund intends to diversify its holdings with respect to the number of
issuers, the industries of such issuers, and the number of countries in which
the Fund invests. Under normal circumstances, the Fund has at least three
countries other than the U.S. represented in its portfolio. The Fund may also
invest in emerging countries if, in WPG's or HSAM's opinion, the opportunities
presented by such investments outweigh the related risks, taking into account
the quality of those securities markets and other factors relevant generally to
such investments.
Although the Fund intends to invest primarily in non-U.S. equity
securities, the Fund may also invest in other securities and instruments. For
example, the Fund may (i) invest in equity securities of U.S. issuers and in
investment grade debt securities of the U.S. and foreign governments and U.S.
and foreign corporations; (ii) invest in securities of other investment
companies; (iii) invest in domestic and foreign money market securities; and
(iv) purchase and sell call and put options on securities and stock indices.
For temporary or defensive purposes, the Fund may invest in money market
instruments without limitation. To a limited extent the Fund may also purchase
and sell futures contracts on securities and securities indices and may
purchase options on such futures. The Fund may also lend its portfolio
securities and purchase securities on a forward commitment or when-issued basis.
In addition, to seek to reduce risks associated with currency fluctuations, the
Fund may (i) enter into currency futures contracts and forward currency
contracts to purchase or sell selected currencies; and (ii) purchase and sell
call and put options on currencies and currency futures contracts. For further
information concerning the securities in which the Fund may invest and the
Fund's investment techniques, policies and risks, see "Risk Considerations and
Other Investment Practices and Policies of the Funds" in this Prospectus.
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GROWTH FUND
INVESTMENT OBJECTIVE. The Growth Fund seeks maximum capital appreciation by
emphasizing investments in common stocks and securities convertible into common
stocks of small and medium capitalization companies with prospects for
sustainable above average growth in earnings per share, revenues, cash flow,
asset value and/or other appropriate measures. The Fund also invests in special
situations. The Fund is designed especially for institutional investors.
INVESTMENT PROGRAM. To seek to achieve its objective, the Growth Fund invests,
under normal circumstances, at least 65% of its total assets in common stocks
and equity-related securities (including preferred stocks, securities
convertible into or ex changeable for common stocks, shares of real estate
investment trusts, warrants and rights) of small and medium capitalization
companies (i.e., $2 billion or less) with superior growth prospects and less
well-known companies, or companies that have been in business for a relatively
short time and offer superior growth potential. Special situations refer to
unusual and possibly unique developments for a company which may create a
special opportunity for significant returns. Developments that may be
considered special situations include: significant technological improvements or
important discoveries; a reorganization, recapitalization, or other significant
security exchange or conversion; a merger, liquidation, or distribution of cash,
securities or other assets; a breakup or workout of a holding company;
litigation which, if resolved favorably, would enhance the value of the
company's stock; a new or changed management; or material changes in management
policies.
While the Growth Fund invests primarily in common stocks and equity-related
securities of small and medium capitalization companies and special situations,
the Fund may also invest in other securities and instruments. For example, the
Fund may (i) invest in common stocks and equity-related securities of relatively
established, better-known companies in growth industries which, in the opinion
of WPG, have superior products, management, or other advantages over other
companies in those industries; (ii) invest in securities of non-U.S. issuers and
to the extent it so invests, engage in forward foreign currency ex change
transactions; (iii) purchase and sell call and put options on securities and
indices; and (iv) invest in high-quality domestic and U.S. dollar-denominated
foreign money market instruments rated within the two highest rating categories
assigned by any NRSRO or, if unrated, of equivalent investment quality as
determined by WPG. To a limited extent, the Fund may purchase and sell futures
contracts on securities and securities indices and may purchase and sell options
on such futures. The Fund may also lend its portfolio securities, enter into
repurchase agreements, invest in securities of other investment companies, and
purchase securities on a forward commitment or when-issued basis. The Fund may
also invest up to 5% of its net assets in debt securities rated as low as B or
its equivalent by any NRSRO or, if unrated, of equivalent investment quality as
determined by WPG.
For temporary or defensive purposes the Growth Fund may invest in money
market instruments without limitation. For further information concerning the
securities in which the Fund may invest and the Fund's investment techniques,
policies and risks, see "Risk Considerations and Other Investment Practices and
Policies of the Funds" in this Prospectus.
Current income is considered an incidental factor in the selection of
portfolio securities and, accordingly, the Fund may realize little, if any,
income from its investments. The Fund is not intended as a complete investment
program. In addition, there may be a greater degree of risk involved with an
investment in the Fund, as compared to investments in other mutual funds whose
investment programs seek capital appreciation, but who invest in better-known
or larger companies, and do not invest in special situations.
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QUANTITATIVE EQUITY FUND
INVESTMENT OBJECTIVE. The Quantitative Equity Fund seeks to provide investment
results that exceed the performance of publicly traded common stocks in the
aggregate, as represented by the capitalization weighted Standard & Poor's 500
Composite Stock Price Index (the "S&P 500 Index").
INVESTMENT PROGRAM. To seek to achieve its investment objective, the
Quantitative Equity Fund invests, under normal market conditions, in a portfolio
of stocks that is considered by WPG to be more "efficient" than the S&P 500
Index. An efficient portfolio is one that has the maximum expected return for
any level of risk. The efficient mix of such a portfolio's investments is
established quantitatively, taking into account the expected return and
volatility of returns for each security in a given universe.
To implement this strategy, WPG compiles the historical market data for
over 1,000 stocks, comprised of the S&P 500 Index and 500 other large
capitalization stocks. WPG then derives expected returns for each stock and
seeks to maximize the expected return for a given level of risk.
Using a sophisticated software program incorporating risk reduction
techniques that have been developed by investment professionals of WPG, a
portfolio is constructed that is believed to have optimized risk/reward ratio.
WPG selects the combination of stocks, together with their appropriate
weightings, that WPG believes will comprise the optimal portfolio for the Fund.
It is expected that the Fund's optimal portfolio will consist of between
100 and 180 stocks. This optimal portfolio is designed to have a return greater
than, but highly correlated to, the return of the S&P 500 Index.
After the optimal portfolio is constructed, the portfolio will be
rebalanced from time to time to maintain the optimal risk/reward trade-off. WPG
continually assesses each stock's changing characteristics relative to its
contribution to portfolio risk.
The S&P 500 Index is a market weighted compilation of 500 common stocks
selected on a statistical basis by S&P. The S&P 500 Index is typically composed
of issues in the following sectors: industrial, financial, public utilities and
transportation. Most of the stocks that comprise the Index are traded on the New
York Stock Exchange, although some are traded on the American Stock Exchange and
in the over-the-counter market.
While the Quantitative Equity Fund will generally be substantially fully
invested in equity securities, it may invest up to 35% of its total assets in
fixed income obligations maturing in one year or less that are rated at least AA
by S&P or Aa by Moody's, or their equivalents, or unrated securities determined
by WPG to be of comparable quality. The Fund may also purchase and sell futures
contracts on securities and securities indices and options on such futures
contracts, as well as purchase and sell (write) put and call options on
securities and securities indices. The Fund also may lend its portfolio
securities to generate additional income, enter into repurchase agreements,
invest in securities of other investment companies, warrants and ADRs, and
purchase securities on a forward commitment or when-issued basis. The
realization of current income is not a significant part of the Fund's investment
strategy, and any income generated will be incidental to the Fund's objective of
out performing the S&P 500 Index.
WPG's research personnel will monitor and occasionally make changes in the
way the portfolio is constructed or traded. Such changes may include:
determining better ways to derive expected returns, improving the manner in
which each stock's contribution to risk is determined, altering constraints in
the optimization process, and effecting changes in trading procedure (to reduce
transaction costs or enhance the effects of rebalancing). Any such changes are
intended to be consistent with the Fund's basic philosophy of seeking higher
returns than those that could be obtained by investing directly in all of the
stocks in the S&P 500 Index. There can be no assurance that the Fund will
achieve its investment objective. For further information concerning the
securities in which the Fund may invest and the Fund's investment techniques,
policies and risks, see "Risk Considerations and Other Investment Practices and
Policies of the Funds" in this Prospectus.
HOW TO PURCHASE SHARES
INITIAL INVESTMENT MINIMUM: $2,500 PER
FUND ($250 FOR RETIREMENT ACCOUNTS AND UNIFORM
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GIFTS TO MINORS); $25,000 FOR THE CORE BOND FUND; $250,000 FOR THE GROWTH FUND .
The Funds may waive the minimum for initial investment in their discretion.
OPENING AN ACCOUNT. You may make an initial purchase of shares of any Fund
by mail, by wire, or through any authorized securities dealer. Shares of the
Funds may be purchased on any day on which the New York Stock Exchange is open
for business.
YOU WILL FIND AN APPLICATION INCLUDED WITH THIS PROSPECTUS. A COMPLETED
AND SIGNED APPLICATION IS REQUIRED FOR EACH NEW ACCOUNT YOU OPEN WITH ANY FUND
REGARDLESS OF HOW YOU CHOOSE TO MAKE YOUR INITIAL PURCHASE.
BY MAIL. You may purchase shares of the Funds by mailing the completed
Application, with your check(s) or money order(s) made payable to the particular
Fund(s) in which you have chosen to invest, to the Funds' Transfer Agent, First
Data Investor Services Group, Inc., Attention: WPG Mutual Funds, 4400 Computer
Drive, Westboro, Massachusetts 01581-5120.
BY WIRE. You may also purchase shares of a Fund by wiring funds to the wire
bank account for such Fund with the Fund's Custodian. Before wiring funds,
please call WPG toll free at 1-800-223-3332 to receive instructions as to how
and where to wire your investment. Please remember to return your completed
Application to First Data Investor Services Group, Inc., as described in the
prior paragraph.
THROUGH AN AUTHORIZED SECURITIES DEALER. Securities dealers approved by WPG
are authorized to sell you shares of the Funds. You also may obtain copies of
the Application from any such authorized securities dealer. Shares purchased
through such securities dealers may be subject to transaction fees, no part of
which will be received by the Funds or WPG.
WPG, at its own expense, provides compensation to Charles Schwab & Co.,
Inc. whose customers become shareholders of the Municipal Bond Fund or
Quantitative Equity Fund for introducing such customers to the Funds and
responding to certain customer inquiries. Such compensation is paid at the
annual rate of 0.10% of the average daily net assets of the Equity Funds and the
Income Funds, respectively (as defined in "Share Price" below) attributable to
shares held by such customers. Such compensation does not represent an
additional expense to any Fund or its shareholders, since it will be paid from
the assets of WPG or its affiliates, including amounts received by WPG under its
Investment Advisory Agreements with the Funds.
SUBSEQUENT INVESTMENT MINIMUM: $100 PER FUND; $5,000 FOR THE CORE BOND
FUND; $25,000 FOR THE GROWTH FUND . Subsequent purchases of shares of the Funds
may be made by mail, wire, through an authorized securities dealer, or by means
of certain services available to share holders of the Funds, such as the
Exchange Privilege and Automatic Investment Plan described below under
"Shareholder Services." The minimum subsequent investment under the Automatic
Investment Plan is $50 per Fund (not available for the Growth Fund or the
Quantitative Equity Fund) The Funds may waive the subsequent investment
minimum in their discretion.
SHARE PRICE. Your shares in each Fund will be priced at the net asset value
per share of that Fund next determined after your purchase order has been
received in good order by the Fund or its agents.
With respect to the Government Money Market Fund, the Tax Free Money Market
Fund, the Core Bond Fund and the Municipal Bond Fund (the "WPG Income Funds"),
if your purchase payment is transmitted by federal funds wire, the purchase
order will be considered in good order upon receipt of the wire payment by
Boston Safe Deposit and Trust Company, the Funds' Custodian. If your purchase
payment as transmitted to the Funds' Transfer Agent is not in federal funds
(I.E., monies credited to the Funds' Custodian by a Federal Reserve Bank), your
payment must first be converted to federal funds before your purchase order
will be considered in "good order." If your purchase payment is by a check drawn
on a member bank of the Federal Reserve System, conversion to federal funds
usually occurs within one business day after the check is deposited by the
Funds' Custodian. Checks drawn on banks which are not members of the
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Federal Reserve System may take longer to convert into federal funds. During the
period prior to receipt of federal funds by the Funds' Custodian, your money
will not be invested in the WPG Income Funds. You will begin to earn dividends
on the business day following the date on which your purchase order is converted
to federal funds (I.E., the trade date). With respect to Government Money
Market Fund and Tax Free Money Market Fund, for a purchase by federal funds
wire, you may qualify for a dividend on the date the purchase order is received
if your federal funds wire is received prior to 12:00 noon Eastern Time.
With respect to the other Funds in the WPG family of funds (the "WPG Equity
Funds"), receipt of federal funds by the Funds' Custodian is not necessary for
a purchase order to be considered in good order when received by the Funds'
Transfer Agent.
If you purchase shares through an authorized securities dealer, the dealer
must receive your order before the close of regular trading on the New York
Stock Exchange and transmit it to the Fund(s) or their agents by 4:00 p.m.
Eastern Time to receive that day's net asset value. (Each Fund's per share net
asset value is computed as described under "How Each Fund's Net Asset Value is
Determined" in this Prospectus.)
CONDITIONS OF YOUR PURCHASE. Each Fund reserves the right to reject any
purchase for any reason and to cancel any purchase due to nonpayment. Purchase
orders are not binding on the Funds nor considered received until such purchase
orders are received in good order as described above. All purchases must be made
in U.S. dollars and, to avoid fees and delays, all checks must be drawn only on
U.S. banks. No cash will be accepted. As a condition of this offering, if your
purchase is cancelled due to nonpayment or because your check does not clear
(and, therefore, your account is required to be redeemed), you will be
responsible for any loss incurred by the Fund(s) affected.
SHARE CERTIFICATES. The Government Money Market Fund, Tax Free Money Market
Fund, Municipal Bond Fund, Core Bond Fund and Quantitative Equity Fund will not
issue share certificates. With respect to the other Funds, share certificates
will not be issued for shares unless you have been a shareholder of the Fund in
question for at least 30 days and you specifically request share certificates
in writing. The Funds will issue certificates only for full shares. Most
shareholders elect not to receive share certificates. If you lose a share
certificate you may incur an expense to replace it.
RETIREMENT PLAN ACCOUNTS. If you are a participant in a corporate or
institutional retirement plan account (including any deferred compensation
plan), you must contact your Plan Administrator regarding purchase and
redemption procedures, including limitations thereon, contained in your
retirement plan. Requests for redemptions from retirement plan accounts must be
in writing.
IN-KIND PURCHASES. Shares of the Funds may be purchased in whole or in part
by delivering to the Funds' Custodian securities determined by WPG to be
suitable for that Fund's portfolio. Investors interested in making "in-kind"
purchases should refer to the SAI for the terms, conditions and tax
consequences of these transactions.
SHAREHOLDER SERVICES
SHAREHOLDER INQUIRIES AND SERVICES OFFERED. If you have any questions about
the Funds or the shareholder services described below, please call the Funds at
1-800-223-3332. Written inquiries should be sent to First Data Investor Services
Group, Inc., Attention: WPG Mutual Funds, 4400 Computer Drive, Westboro,
Massachusetts 01581- 5120. The Funds reserve the right to amend the shareholder
services described below or to change the terms or conditions relating to such
services upon 60 days' notice to shareholders. You may discontinue any service
you select, provided that with respect to the Automatic Investment and
Systematic Withdrawal Plans described below, the Funds' Transfer Agent receives
your notification to discontinue such service(s) at least ten days before the
next scheduled investment or withdrawal date.
CONFIRMATIONS, SHAREHOLDER STATEMENTS, AND REPORTS. Each time you buy or
sell shares you will receive a confirmation statement with respect to such
transaction. In addition, following each distribution for each Fund in which
you are a shareholder, you will receive a shareholder
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statement reflecting any reinvestment of a dividend or distribution in the Fund
including your current share balance with the Fund. These statements will be
sent to you monthly if you are a shareholder in a WPG Income Fund. The Funds
also will send you shareholder reports no less frequently than semi-annually.
You also will receive year-end tax information about your account(s) with each
Fund.
TELEPHONE EXCHANGE PRIVILEGE. For your convenience, the Funds provide a
Telephone Exchange Privilege that enables you by telephone to authorize the
exchange of shares from your account in one Fund for shares in any other WPG
Mutual Fund described in this Prospectus provided all accounts are identically
registered.
In addition, certain qualified retirement plans (I.E., 401(k) and 403(b)
plans and other plans but NOT Individual Retirement Accounts) may exchange their
Fund shares for shares of the Tomorrow Funds, consisting of Tomorrow Long-Term
Retirement Fund, Tomorrow Medium-Term Retirement Fund and Tomorrow Short-Term
Retirement Fund. Please call 1-800-223-3332 to obtain a free copy of the
Tomorrow Funds' prospectus, including fees and expenses. You should read the
prospectus carefully before requesting any exchange into the Tomorrow Funds.
The telephone exchange privilege is not available to shareholders
automatically; to authorize this Telephone Exchange Privilege, please mark the
appropriate boxes on the Application and supply us with the information
required. To ex change shares by telephone, simply call 1-800-223-3332 between
9:00 a.m. and 4:00 p.m. Eastern Time on any day that the Funds are open. Shares
exchanged will be valued at their respective net asset values next determined
after the telephone exchange request is received. Telephone exchange requests
made after 4:00 p.m. Eastern Time will not be accepted. At the time of any
telephone exchange request, please notify the Funds of all current shareholder
service privileges you wish to continue to utilize in any new account opened. To
confirm that telephone exchange requests are genuine, the Funds will employ
reasonable procedures such as providing written confirmation of telephone
exchange transactions and tape recording of telephone exchange requests. If a
Fund does not employ such reasonable procedures, it may be liable for any loss
incurred by a share holder due to a fraudulent or other unauthorized telephone
exchange request. Otherwise, neither the Funds nor their agents will be liable
for any loss incurred by a shareholder as a result of following instructions
communicated by telephone that they reasonably believe to be genuine. The Funds
re serve the right to refuse any request made by telephone and may limit the
amount involved or the numbers of telephone requests made by any shareholder.
(Such exchange requests may, however, be made in writing in accordance with
procedures described in this Prospectus.) During periods of extreme economic
conditions or market changes, requests by telephone may be difficult to make due
to heavy volume. During such times, please consider placing your order by mail.
The telephone exchange privilege is not available with respect to (i)
shares for which certificates have been issued or (ii) redemptions for accounts
requiring supporting legal documents. See "Written Exchange Privilege" below for
further information concerning exchanges and "Excessive Trading" below for
information concerning the Funds' policy limiting excessive exchanges and
purchase/redemption transactions.
WRITTEN EXCHANGE PRIVILEGE. The Written Ex change Privilege is a convenient
way to change your investment mix in the WPG Mutual Funds in order to respond to
changes in your investment goals or market conditions. In addition to using the
Telephone Exchange Privilege described above, shareholders in any of the Funds
may exchange their shares for shares in any other Fund by submitting a written
request, in proper form, to the Transfer Agent. Such shares exchanged will be
valued at their respective net asset values next determined after the receipt of
the written exchange request. When making a written exchange request, please
provide your current Fund's name, your account
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name(s) and number(s), and the dollar or share amount you wish to exchange, and
specify all current plans or shareholder service privileges you wish to continue
to utilize in your new account (e.g. Automatic Investment Plans). For written
exchange requests, the signatures of all registered owners (or executed powers
of attorney) are required. Signature guarantees are also required if the
account in the Fund whose shares are being purchased will not be identically
registered. See "How to Redeem Shares" below for a discussion of acceptable
signature guarantors. If share certificates were issued for the shares being
exchanged, such certificates, properly endorsed, must accompany the written ex
change request. No sales charge is imposed on exchanges. Please note that an
exchange involves a redemption of the shares exchanged and may therefore result
in a tax liability for you. Unless waived by the Funds, the minimum initial
investment in each Fund, whether by exchange or purchase, is $2,500 for each
Fund ($25,000 for the Core Bond Fund; $250,000 for the Growth Fund). Unless
waived by the Funds, all subsequent amounts ex changed must be a minimum of $100
for each Fund ($5,000 for the Core Bond Fund; $25,000 for the Growth Fund).
Exchange requests will not be accepted for shares purchased by check within 15
days of the request. The exchange privilege is available to shareholders in all
states where it is legally permitted. Currently all states permit such
exchanges. See "Excessive Trading" below for information concerning the Funds'
policy limiting excessive exchanges and purchase/redemption transactions.
CHECKWRITING SERVICE. Checkwriting is avail able for shareholders of the
Government Money Market Fund and Tax Free Money Market Fund. There is no charge
for this service. The minimum amount of each check must be $500. The
checkwriting service may not be used for a complete redemption of your account.
If the amount of the check is greater than the value of your account, the check
will be returned unpaid. In addition, checks written on amounts subject to the
15-day check clearing period, described below under "How to Redeem Shares," also
will be returned unpaid. The Application for this service is included with this
Prospectus. All notices with respect to checks must be given to the Funds'
Transfer Agent. The checkwriting service is not available for Individual
Retirement Accounts or other retirement accounts.
AUTOMATIC INVESTMENT AND SYSTEMATIC WITHDRAWAL PLANS. For your
convenience, the Funds provide plans that enable you to add to your investment
or withdraw from your account(s) with a minimum of paperwork. The Application
for these plans is included with this Prospectus.
(1) AUTOMATIC INVESTMENT PLAN. The Automatic Investment Plan is a convenient
way for you to purchase shares of the Funds at regular monthly or quarterly
intervals selected by you. The Automatic Investment Plan enables you to
achieve dollar-cost averaging with respect to investments in Funds with
fluctuating net asset values through regular purchases of a fixed dollar
amount of shares in the Funds. Dollar-cost averaging brings discipline to
your investing. Dollar-cost averaging results in more shares being
purchased when a Fund's net asset value is relatively low and fewer shares
being purchased when a Fund's net asset value is relatively high, thereby
helping to decrease the average price of your shares. Through the Automatic
Investment Plan, Fund shares are purchased by transferring funds (minimum
of $50 per transaction per Fund) from your designated checking, NOW, or
bank account. Your automatic investment in the Fund(s) designated by you
will be processed on a regular basis beginning on or about the first
business day of the month or quarter you select. This Plan is not available
to shareholders of the Growth Fund or the Quantitative Equity Fund.
(2) SYSTEMATIC WITHDRAWAL PLAN. The Systematic Withdrawal Plan provides a
convenient way for you to receive regular cash payments while maintaining
an investment in the Funds. The Systematic Withdrawal Plan permits you to
have payments of
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$50 or more automatically transferred from your account(s) in the Fund(s)
to you or your designated bank account on a monthly or quarterly basis. In
order to start this Plan, you must have a minimum balance of $15,000 in any
Fund account utilizing this feature. Your systematic withdrawals will be
processed on a regular basis beginning on or about the first business day
of the month or quarter you select.
SWEEP PROGRAM. The Sweep Program is a convenient way for you to invest
automatically excess credit balances in any of your brokerage accounts with WPG
in shares of the Government Money Market Fund or the Tax Free Money Market Fund.
Under the Sweep Program, if you have a brokerage account with WPG you may elect
to have credit balances automatically invested in shares of the Government Money
Market Fund or Tax Free Money Market Fund. WPG will transmit orders for the
purchase of a Fund's shares on the same day that excess credit balances are
available in your brokerage account. To obtain further information concerning
this service, please call 1-800-223-3332.
TAX-SHELTERED RETIREMENT PLANS. Investors in the Funds (other than the
Growth Fund, the Tax Free Money Market Fund and the Municipal Bond Fund) may
make use of a variety of retirement plans, including Individual Retirement
Accounts, simplified employee pension plans, money purchase pension and profit
sharing plans, and 401(k) Plans.
(1) INDIVIDUAL RETIREMENT ACCOUNTS ("IRAS"), ROTH INDIVIDUAL RETIREMENT
ACCOUNTS ("ROTH IRAS") AND SIMPLIFIED EMPLOYEE PENSION PLANS ("SEP-IRAS").
You may save for your retirement and shelter your investment income from
current taxes by either: (i) establishing a new IRA; or (ii) "rolling-
over" or transferring to an IRA invested in the Funds monies from other IRA
accounts or qualified distributions from a plan. An IRA is an attractive
retirement-savings vehicle for qualified individuals. Using your IRA, you
can invest, on a tax-favored basis, up to $2,000 per year in the Funds. Up
to $2,000 per year may also be invested for your spouse, subject to certain
limits and conditions. If you satisfy certain requirements, you may be
eligible to contribute to a Roth IRA. A Roth IRA, like a Traditional IRA,
is a retirement program in which you may obtain certain income tax benefits
by accumulating funds to provide retirement income. Unlike a Traditional
IRA, contributions to a Roth IRA are never deductible. However, the Roth
IRA is a tax-sheltered account and, if certain conditions are met,
distributions from the Roth IRA will be tax-free. In addition, your
employer may (i) establish new SEP-IRAs for its employees that can be used
to invest on a tax-favored basis in the Funds or (ii) use the Funds as
additional funding vehicles for existing SEP-IRAs.
(2) PROTOTYPE RETIREMENT PLANS. Both a prototype money purchase pension plan
and a profit sharing plan, which may be used alone or in combination, are
available to sole proprietors, partnerships and corporations to provide
retirement benefits for individuals and employees.
(3) 401(K) PLANS. Through the establishment of a 401(k) Plan by your company,
your employees can invest a portion of their wages in the Funds on a
tax-deferred basis for their retirement needs.
OTHER ACCOUNTS. The Funds also offer special services to meet the needs of
investors.
(1) UNIFORM GIFT TO MINORS. By establishing a Uniform Gift to Minors Account
with the Funds, you can build a fund for your children's education or a
nest egg for their future and, at the same time, potentially reduce your
own income taxes. (Not available for the Growth Fund.)
(2) CUSTODIAL AND FIDUCIARY ACCOUNTS. The Funds provide a convenient means of
establishing custodial and fiduciary accounts for investors with fiduciary
responsibilities.
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For further information regarding any of the above retirement plans and
accounts, please call toll free at 1-800-223-3332. Retirement investors should
consult with their own tax counsel or adviser.
HOW EACH FUND'S NET ASSET
VALUE IS DETERMINED
The net asset value per share of the Funds is calculated as of the close of
regular trading on the New York Stock Exchange ("Exchange"), normally 4:00 p.m.
Eastern Time, every day the Exchange is open for regular trading. In addition,
Government Money Market Fund and Tax Free Money Market Fund calculate their net
asset value per share as of 12:00 p.m. Eastern Time on those days on which the
Exchange is open for regular trading and on which a purchase order for Fund
shares and related federal funds wire is received prior to 12:00 p.m. Eastern
Time. The per share net asset value, calculated as described below, is
effective for all orders received in good order (as previously described) by the
Funds or their agents prior to the close of regular trading on the Exchange for
that day. Orders received by the Funds or their agents after the close of
regular trading on the Exchange or on a day when the Exchange is not open for
business will be priced at the net asset value per share next computed.
The net asset value of each Fund's shares is determined by adding the value
of all securities, cash and other assets of the Fund, subtracting liabilities
(including accrued expenses and dividends payable), and dividing the result by
the total number of outstanding shares in the Fund.
For purposes of calculating the net asset value per share of the Government
Money Market Fund and the Tax Free Money Market Fund, portfolio securities are
valued on the basis of amortized cost, which method does not take into account
unrealized gains or losses on the Funds' portfolio securities. Amortized cost
valuation involves initially valuing a security at its cost, and, thereafter,
assuming a constant amortization to maturity of any discount or premium,
regardless of the impact of fluctuating interest rates on the market value of
the security. While this method provides certainty in valuation, it may result
in periods during which the value of a security, as determined by amortized
cost, may be higher or lower than the price the Government Money Market Fund or
the Tax Free Money Market Fund would receive if the Fund sold the security. The
Board of Trustees has established procedures to monitor any such deviation
between amortized cost and market value and to take corrective action should
the deviation exceed specified amounts.
For purposes of calculating each other Fund's net asset value per share,
portfolio securities (other than certain money market instruments) are valued
primarily based on market quotations, or, if market quotations are not
available, by a valuation committee as appointed by the Board of Trustees. In
accordance with procedures approved by the Board of Trustees for each Fund, the
Funds may use pricing services to value bonds and other fixed income investments
of the Funds. Money market instruments with a remaining maturity of 60 days or
less at the time of purchase are generally valued at amortized cost.
HOW TO REDEEM SHARES
Subject to the restrictions outlined below, shareholders have the right to
redeem all or any part of their shares in the Funds at a price equal to the net
asset value of such shares next computed following receipt and acceptance of
the redemption request by the Funds or their agents, I.E., the Transfer Agent.
A redemption is a taxable transaction that may result in a tax liability for
you. In order to redeem shares of the Funds, a written request in "proper form"
(as explained below) must be sent directly to First Data Investor Services
Group, Inc., Attention: WPG Mutual Funds, 4400 Computer Drive, Westboro, MA
01581-5120. No charge is imposed on any redemption request processed by the
Funds' Transfer Agent or WPG. You may also, of course, transmit your redemption
request to the Funds through your broker-dealer, who may charge you a
transaction fee for such services. Please note that you cannot redeem shares by
telephone or telegram. In addition, the Funds cannot accept requests which
specify a particular date or price for redemption or which specify any other
special conditions.
PROPER FORM FOR ALL REDEMPTION REQUESTS. Your redemption request must be in
proper form. To be
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in proper form, your request must include: (1) your share certificates, if any,
endorsed by all shareholders for the account exactly as the shares are
registered or accompanied by executed power(s) of attorney and the signature(s)
must be guaranteed, as described below; (2) for written redemption re quests, a
"letter of instruction," which is a letter specifying the name of the Fund, the
number of shares to be sold, the name(s) in which the account is registered, and
your account number. The letter of instruction must be signed by all registered
shareholders for the account using the exact names in which the account is
registered or accompanied by executed power(s) of attorney; (3) any signature
guarantees that are required as described above in (1), or required by the Funds
if the redemption proceeds are to be sent to an address other than the address
of record or to a person other than the registered shareholder(s) for the
account; and (4) other supporting legal documents, as may be necessary, for
redemption requests by corporations, estates, trusts, guardianships,
custodianships, partnerships, and pension and profit sharing plans. Signature
guarantees, when required, must be obtained from any one of the following
institutions, provided that such institution meets credit standards established
by the Funds' Transfer Agent: (i) a bank; (ii) a securities broker or dealer,
including a government or municipal securities broker or dealer, that is a
member of a clearing corporation or has net capital of at least $100,000; (iii)
a credit union having authority to issue signature guarantees; (iv) a savings
and loan association, a building and loan association, a cooperative bank, or a
federal savings bank or association; or (v) a national securities exchange, a
registered securities ex change or a clearing agency.
YOUR REQUEST FOR REDEMPTION WILL NOT BE PROCESSED UNLESS IT IS IN PROPER
FORM, AS DESCRIBED ABOVE.
RECEIVING YOUR REDEMPTION PAYMENT. Except under certain emergency
conditions, your redemption payment will be sent to you (net of any required
withholding taxes) within three business days after receipt of your written
redemption request in proper form by the Funds or their agents, I.E., Transfer
Agent. If you wish to have your redemption proceeds wired to your checking or
bank account, you may so elect. Currently, the Transfer Agent for the Funds
charges a fee for wire transfers. If you make a redemption request within 15
days of the date you purchased shares by means of a personal, corporate or
government check, the redemption payment will be held until the purchase check
has cleared (up to 15 days). Nevertheless, the shares redeemed will be priced
for redemption at the price next determined after receipt of your redemption
request. You can avoid the inconvenience of this check clearing period by
purchasing shares with a certified, treasurer's or cashier's check, or with a
federal funds or bank wire.
MINIMUM ACCOUNT SIZE. Due to the relatively high cost of maintaining
smaller accounts, the Funds reserve the right to redeem shares in any account
if, as the result of redemptions, the value of that account drops below $100
($15,000 for the Core Bond Fund and the Growth Fund.) You will be allowed at
least 60 days, after written notice by the Funds, to make an additional
investment to bring your account value up to at least the specified minimum
before the redemption is processed.
EXCESSIVE TRADING. To prevent excessive transaction activity and to protect
shareholders, the Funds have adopted a policy ("Trading Policy") to limit the
number of exchanges and purchase/redemption transactions (as described below)
by any one shareholder account (or group of accounts under common management)
to a total of six such transactions per year. This Trading Policy applies to:
(i) exchanges into or out of any Fund described in this Prospectus (other than
between WPG Income Funds), and (ii) any pair of transactions involving a
purchase of shares of any one Fund followed by a redemption of an offsetting or
substantially equivalent dollar amount of shares of that same Fund. THIS TRADING
POLICY DOES NOT APPLY TO TRANSACTIONS SOLELY AMONG OR SOLELY INVOLVING THE WPG
INCOME FUNDS. If you violate
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this Trading Policy, your future purchases of, or exchanges into, the Funds may
be permanently refused. This Trading Policy does not prohibit you from redeeming
shares of any Fund. WPG reserves the right to waive the Trading Policy in its
discretion.
MANAGEMENT OF THE FUNDS
INVESTMENT ADVISER AND ADMINISTRATOR. As noted above, WPG, One New York Plaza,
New York, New York 10004, serves as the investment adviser to each Fund. HSAM
serves as subadviser to the International Fund pursuant to a Subadvisory
Agreement with the International Fund and WPG. HSAM is a wholly-owned indirect
subsidiary of Lloyds TSB Group plc, London, England.
Under the investment advisory agreements with the Funds, WPG manages the
Funds' portfolios. Subject to the general supervision of the Funds' Boards of
Trustees, WPG is responsible for the selection and management of all portfolio
investments of each Fund (other than as described below for the International
Fund) in accordance with each Fund's investment objective, investment program,
policies and restrictions.
With respect to the International Fund, WPG (i) is responsible for the
selection and management of the International Fund's U.S. securities, (ii)
oversees and assists in the management of the International Fund's assets by
HSAM and monitors on a continuous basis HSAM's selection and management of the
Fund's investments in non-U.S. securities, and (iii) determines, in
consultation with HSAM, the percentage allocation of the International Fund's
assets between U.S. and non-U.S. securities.
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<PAGE>
Each Fund pays WPG a fee equal on an annual basis to a percentage of such
Fund's average daily net assets as follows:
<TABLE>
<CAPTION>
ACTUAL RATE
PAID FOR THE
PRESENT YEAR ENDED
ANNUAL DECEMBER 31,
FUND FEE RATE 1997
---- -------- ----
<S> <C> <C>
Government Money Market Fund 0.50% of net assets up to $500 million 0.50%
and 0.45% of net assets $500 million to $1 billion
Tax-Free Money Market Fund 0.40% of net assets $1 billion to $1.5 billion
0.35% of net assets in excess of $1.5 billion
Municipal Bond Fund 0.00% of average daily net assets while net assets 0.19%
are less than $17 million and
0.50% of average daily net assets while net assets
are $17 million or more
Core Bond Fund 0.60% of net assets up to $300 million 0.60%(1)
0.55% of net assets $300 million to $500 million
0.50% of net assets in excess of $500 million
Growth and Income Fund 0.75% of net assets 0.75%
Tudor Fund 0.90% of net assets up to $300 million 0.90%
0.80% of net assets $300 million to $500 million
0.75% of net assets in excess of $500 million
International Fund(2) 0.50% of average daily net assets when net assets 0.50%
are less than $15 million
0.85% of average daily net assets when net
assets are $15 million or more but are
less than $20 million
1.00% of average daily net assets when net
assets are $20 million or more
Growth Fund 0.75% of net assets 0.75%
Quantitative Equity Fund 0.75% of net assets 0.75%
- ------------------
<FN>
(1) Although the Core Bond Fund paid investment advisory fees at the rate of
0.60% for the year ended December 31, 1997, WPG has voluntarily agreed,
effective January 1, 1998, to limit total operating expenses (including
investment advisory fees but excluding litigation, indemnification and other
extraordinary expenses) of the Core Bond Fund to 0.50% of average daily net
assets. See "Expenses" below.
(2) Pursuant to the International Fund's Subadvisory Agreement, WPG pays
HSAM, on a quarterly basis, a subadvisory fee equal on an annual basis to 40% of
the advisory fee actually received by WPG. The International Fund has no
responsibility to pay such subadvisory fee and pays only the advisory fee at the
rate set forth above.
</FN>
</TABLE>
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<PAGE>
Pursuant to separate administration agreements, WPG also acts as the
administrator of each Fund. As administrator, WPG provides personnel for
supervisory, administrative, accounting, shareholder services and clerical
functions; oversees the performance of administrative and professional services
to the Funds by others; provides office facilities, furnishings and office
equipment; and prepares, but does not pay for, reports to shareholders, the SEC
and other regulatory authorities. For all administrative services and
facilities provided by WPG under each administration agreement, WPG receives a
fee, computed daily and payable monthly, at an annual rate based on the average
net assets of each Fund as shown as follows: Tudor 0.05%, Growth and Income
0.06%, Growth 0.15%, Quantitative Equity 0.06%, International 0.00% while net
assets are $25 million and below, and 0.06% while assets exceed $25 million,
Core Bond 0.05%, Municipal Bond 0.00% while net assets are $50 million and
below, and 0.12% while assets exceed $50 million, Government Money Market 0.04%,
Tax Free Money Market 0.05%. See the SAI for the rates and amounts at which
administration fees were paid for the fiscal year ended December 31, 1997. The
administrative fee of each Fund is reviewed and approved annually by the Board
of Trustees.
PORTFOLIO MANAGERS. The following is a list of the portfolio managers of the
Funds and their business experience during the past five years. Each portfolio
manager is responsible for the day-to-day management of his or her Fund.
WPG GOVERNMENT MONEY MARKET FUND. Daniel S. Vandivort and Thomas J. Girard are
co-portfolio managers of the Fund. Mr. Vandivort has been a Managing Director of
WPG since November 1994. From 1989 to 1994, Mr. Vandivort served in various
capacities with CS First Boston Investment Management, including Managing
Director and Head of U.S. Fixed Income and Senior Portfolio Manager and
Director, Global Product Development and Marketing. Mr. Girard has been a
Principal of WPG since March, 1996. From 1994 to 1996, Mr. Girard served as a
Vice President and portfolio manager with Bankers Trust Company and was a Vice
President of J.P. Morgan-Morgan Guaranty Trust Company prior thereto.
WPG TAX FREE MONEY MARKET FUND. Janet A. Fiorenza has been a portfolio manager
of the Fund since its inception. Ms. Fiorenza is a Managing Director of WPG.
WPG INTERMEDIATE MUNICIPAL BOND FUND. S. Blake Miller has been a portfolio
manager of the Fund since its inception. Mr. Miller is a Principal of WPG.
WPG CORE BOND FUND. Daniel S. Vandivort and Sid Bakst serve as the Fund's
co-portfolio managers. Mr. Vandivort has been the portfolio manager of the Fund
since February 1995. Please see "WPG Government Money Market Fund" above for a
description of Mr. Vandivort's business experience during the past five years.
Mr. Bakst has been a portfolio manager to the Fund since January 1998 and has
been a Principal of WPG since 1997. Prior thereto, Mr. Bakst served as vice
president and portfolio manager for New York Life Asset Management with respect
to corporate bonds for annuity and insurance products.
WPG GROWTH AND INCOME FUND. A. Roy Knutsen has been the portfolio manager of the
Fund since 1992. Mr. Knutsen has been a Managing Director of WPG for over 5
years.
WPG TUDOR FUND. Adam Starr, who has 20 years of investment experience, has been
the portfolio manager of the Fund since December 1997. Mr. Starr has been a
Managing Director and research analyst for the Large Cap Growth and Small Cap
Growth Divisions of WPG since 1996. Mr. Starr was an analyst and portfolio
manager for
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<PAGE>
the Farber Fund from 1993 to 1996.
WPG INTERNATIONAL FUND. An drew November has been the portfolio manager of the
Fund since February 1998 and has been a fund manager at HSAM since 1996, most
recently on HSAM's Global Strategy Team. Mr. November was a fund manager at
Lazard Brothers Asset Management from 1994 to 1996, and a fund manager for Far
East and Latin American countries at Confederation Life Insurance Company (UK)
prior thereto.
WPG GROWTH FUND. Adam Starr has been the portfolio manager of the Fund since
December 1997. Please see "WPG Tudor Fund' above for a description of Mr.
Starr's business experience during the past five years.
WPG QUANTITATIVE EQUITY FUND. Daniel J. Cardell has been the portfolio manager
of the Fund since May 1996. Mr. Cardell has been a Managing Director of WPG
since May 1996. Prior to joining WPG, Mr. Cardell was Senior Vice President and
Director of Equities for the Bank of America.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT. First Data Investor Services
Group, Inc., 4400 Computer Drive, Westboro, Massachusetts 01581- 5120 serves as
Transfer Agent and Dividend Disbursing Agent for the Funds. The Funds may also
enter into agreements with and compensate other transfer agents and financial
institutions who process shareholder transactions and maintain share holder
accounts.
PRINCIPAL UNDERWRITER. Shares of the Funds are offered directly to the public by
the Funds them selves. The Funds employ no principal underwriter or distributor.
EXPENSES. Each Fund bears all expenses of its operation. In particular, each
Fund pays: investment advisory fees; administration fees; custodian and transfer
agent fees and expenses; legal and accounting fees and expenses; expenses of
preparing, printing, and distributing Prospectuses and SAIs to existing
shareholders, and shareholder communications and reports, except as used to
market its shares; expenses of computing its net asset value per share; federal
and state registration fees and expenses with respect to its shares; proxy and
shareholder meeting expenses; expenses of issuing and redeeming its shares;
independent trustees' fees and expenses; expenses of bond, liability, and other
insurance coverage; brokerage commissions; taxes; trade association fees; and
certain non-recurring and extraordinary expenses. In addition, the expenses of
organizing the Municipal Bond Fund and initially registering and qualifying its
shares under federal and state securities laws are being charged to the Fund's
operations, as an expense, over a period not to exceed 60 months from the
Fund's inception date.
WPG has agreed to limit the total operating expenses (excluding litigation,
indemnification and other extraordinary expenses) of the Municipal Bond Fund and
the Core Bond Fund to 0.85% and 0.50% of the respective Fund's average daily net
assets. These agreements are voluntary and temporary and may be revised or
terminated by WPG at any time although it has no current intention to do so.
ADMINISTRATION AND SERVICE PLANS. Pursuant to Administration and Service Plans
(the "Plans"), the Core Bond Fund and the International Fund may each enter
into contracts ("Servicing Agreements") with banks, trust companies,
broker-dealers or other financial organizations ("Service Organizations") to
provide certain administrative and shareholder services for such Funds. As of
the date of this Prospectus, a Servicing Agreement is in effect with respect to
Core Bond Fund.
Administrative and shareholder servicing functions to be provided by the
Service Organizations may include, among other things: processing purchase and
redemption transactions; answering client inquiries regarding the applicable
Fund,
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<PAGE>
assisting clients in changing dividend and distribution options, account
designations and addresses; performing sub-accounting; establishing and
maintaining shareholder accounts and records; investing client cash account
balances automatically in shares in accordance with arrangements made by the
client; providing periodic statements of a client's account balance and
integrating such statements with those of other transactions and balances in the
client's other accounts serviced by the Service Organization; arranging for bank
wires; and such other services as the Funds may request, to the extent permitted
by applicable statute, rule or regulation.
Each Service Organization may receive a fee payable by the applicable Fund,
in respect of shares held by or through such Service Organization for its
customers, for services performed pursuant to the Plans and the applicable
Servicing Agreements. The schedule of fees and the basis upon which such fees
may be paid will be determined by the Trustees, and may be based on a flat fee,
a percentage of the average daily net assets attributable to the shares held by
the customers of the Service Organizations or other reasonable basis. Each Fund
may pay an aggregate amount of up to 0.05% per year of its average daily net
assets to Service Organizations under the Plans. For the fiscal year ended
December 31, 1997, Core Bond Fund paid Service Organizations fees of less than
0.01% of the Fund's average daily net assets. International Fund did not make
any payments to service organizations during the fiscal year ended December 31,
1997. For additional information on the Plans, see the Funds' SAI, "Investment
Adviser-Administration and Service Plans."
Service Organizations may impose certain additional or different conditions
on their clients, such as requiring their clients to invest more than the
minimum initial investment, and may charge their clients a direct fee for
services provided to their customers. These fees would be in addition to any
amounts which might be received from the Funds under the Plans. Shareholders are
urged to consult their Service Organizations to obtain a schedule of any such
fees.
The annualized ratios of operating expenses to average net assets for the
Funds for the year ended December 31, 1997 are set forth under the "Financial
Highlights" section.
YEAR 2000 ISSUE. The Funds' operations generally depend on the seemless
functioning of computer systems in the financial service industry, including
those of the Adviser, the Custodian and the Transfer Agent. Many computer
software systems in use today cannot properly process date-related information
after December 31, 1999 because of the method by which dates are encoded and
calculated. This failure, commonly referred to as the "Year 2000 Issue," could
adversely affect the handling of securities trades, pricing and account
servicing for the Funds. The Adviser has made compliance with the Year 2000
Issue a high priority and is taking steps that it believes are reasonably
designed to address the Year 2000 Issue with respect to its computer systems.
The Adviser has also been informed that comparable steps are being taken by the
Funds' other major service providers. The Adviser does not currently anticipate
that the Year 2000 Issue will have a material impact on its ability to continue
to fulfill its duties as investment adviser.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Each Fund has qualified and elected to be treated as a "regulated
investment company" ("RIC") under the Internal Revenue Code of 1986, as amended
("Code"), and intends to qualify as such for each taxable year. A Fund which
qualifies as a RIC will not be subject to federal income or excise tax on its
income and gains distributed to its share holders in accordance with the Code's
timing and other requirements. Each Fund intends to distribute all of its net
investment income and net capital gains each year.
Income dividends, if any, will be declared daily and distributed monthly
for the Government Money Market Fund, the Tax Free Money Market Fund, the Core
Bond Fund and the Municipal Bond Fund and at least annually for each other Fund.
Net capital gains of each Fund, if any, realized during the taxable year will be
distributed no less frequently than annually. Income dividends are derived from
each Fund's net investment income (including dividends, interest and recognized
market discount income), net short-term capital
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<PAGE>
gain in excess of net long-term capital loss, and certain net foreign currency
gains received by a Fund, and are taxable to you as ordinary income for federal
income tax purposes, except for exempt-interest dividends paid by the Tax-Free
Money Market Fund and the Municipal Bond Fund from tax-exempt interest they
receive as described below. Corporate shareholders may be entitled to take the
corporate dividends-received deduction for income dividends received from a Fund
that are attributable to dividends received by that Fund from a domestic
corporation, subject to certain restrictions under the Code. Distributions
designated by a Fund as from its net long-term capital gain in excess of net
short-term capital loss ("capital gain distributions") are taxable to you as
capital gain, regardless of how long you have held your shares. These capital
gain distributions may be taxable at different maximum rates for noncorporate
shareholders, depending usually upon a Fund's holding periods for the assets
that produce the gain. Income dividends and capital gain distributions declared
in October, November or December as of a record date in such a month and paid in
the following January are treated under the Code as if they were received on
December 31 of the year declared. Each Fund in which you are a shareholder will
mail to you tax information by the end of January indicating the federal tax
status of your income dividends and capital gain distributions for that Fund.
Such tax status is not affected by your choice to receive such distributions in
additional shares or in cash.
Provided that the Tax Free Money Market Fund and the Municipal Bond Fund
satisfy certain requirements of the Code, each such Fund may designate its
dividends derived from the interest earned on tax-exempt obligations as "exempt
interest dividends," which are not subject to regular federal income tax. The
Tax Free Money Market Fund and the Municipal Bond Fund anticipate that
substantially all of their income dividends will be exempt from regular federal
income tax, although they may be included in the tax base for determining
taxability of Social Security or railroad retirement benefits and may increase
a shareholder's liability, if any, for federal alternative minimum taxes
("AMT"). Distributions of interest income exempt for federal income tax purposes
may also be exempt under the tax laws of certain individual states or localities
if derived from obligations of such states or localities. You may wish to
consult your tax adviser concerning the status in your state or locality of
income dividends from the Tax Free Money Market Fund and the Municipal Bond
Fund, the impact, if any, of the AMT, and the possible taxability of
exempt-interest dividends for "substantial users" of facilities financed by
industrial revenue or certain private activity bonds.
If, as is anticipated, the International Fund or another Fund pays
withholding or other taxes to any foreign government during the year with
respect to its investment in foreign securities, such taxes paid (net of amounts
to be reclaimed) will reduce the Fund's dividends. If the International Fund
satisfies certain requirements of the Code, it may elect to pass through to you
your proportionate share of such foreign taxes that are treated as income taxes
under the Code, which would then be included in your taxable income. However,
you may be able to claim an offsetting credit or itemized deduction on your tax
return, subject to holding period requirements and certain limitations under
the Code. If this election is made, the Form 1099 you receive will indicate the
amount of foreign tax for which a credit or deduction may be available. Only the
International Fund may qualify to make this election. Please consult your tax
adviser if you have any questions.
If you invest in the Core Bond Fund or the Government Money Market Fund,
you should know that many states and local taxing authorities allow an exemption
from state or local income tax for distributions derived from interest received
by a fund from direct obligations of the U.S. Government, such as U.S. Treasury
obligations, or an exemption from intangible property taxes based on the extent
of a fund's investment in such direct U.S. Government obligations, subject in
some states to satisfaction of minimum holding thresholds and/or reporting
requirements. You may wish to consult your tax adviser concerning the possible
existence of such an exemption in the states and localities where you pay tax.
TAX WITHHOLDING AND CERTIFICATION INSTRUCTIONS
Each Fund is required by federal law to withhold as "backup withholding"
31% of reportable payments (which may include income dividends (other than
exempt-interest dividends), capital gain
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<PAGE>
distributions and, except for Funds that maintain a constant net asset value per
share, share redemption proceeds) paid to individuals and other non-exempt
shareholders who have not provided the Fund with their correct social security
number or other taxpayer identification number (TIN) and certain certifications
required by the IRS. In order to avoid such withholding and possible penalties,
you must certify under penalties of perjury on your Application, or on a
separate W-9 Form supplied by the Transfer Agent, that the TIN you provide is
your correct TIN (or that you have applied for such a number and are waiting for
it to be issued, in which case backup withholding may apply until you provide
your number and required certifications to the Fund) and that you are not
currently subject to backup withholding, or you are exempt from backup
withholding.
An individual's TIN is generally his social security number. Special rules
apply in determining the TIN an entity, including an exempt recipient, must
provide. Exempt recipients include corporations, tax exempt pension plans and
IRAs, govern mental agencies, financial institutions, registered securities and
commodities dealers and others. If you are unsure of the correct TIN to provide
or whether you are an exempt recipient, consult your tax adviser. A Fund may
nevertheless be required to impose backup withholding if it is notified by the
IRS or a broker that the TIN you have provided is incorrect or that you are
otherwise subject to such withholding. Any tax withheld may be credited against
taxes owed on your federal income tax return. For further information, see
Section 3406 of the Code and consult your tax adviser.
If you are not a U.S. person under the Code, you should provide the Funds
with an IRS Form W-8 to avoid backup withholding on capital gain distributions
and, except for Funds that maintain a constant net asset value per share,
redemption proceeds. You should consider the U.S. and foreign tax consequences
of your investment in a Fund, including the possible applicability of a U.S.
with holding tax at rates up to 30% on income dividends paid to non-U.S.
persons.
REINVESTMENT OF INCOME DIVIDENDS AND
CAPITAL GAIN DISTRIBUTIONS
Unless you elect otherwise, as permitted in the Account Application, income
dividends and capital gain distributions with respect to a particular Fund will
be reinvested in additional shares of that Fund and will be credited to your
account with that Fund at the net asset value per share next determined as of
the ex-dividend date. Both income dividends and capital gain distributions are
paid by the Fund on a per share basis. As a result, at the time of such payment,
the net asset value per share of the Funds (except the Core Bond Fund, the
Municipal Bond Fund, Government Money Market Fund and the Tax Free Money Market
Fund) will be reduced by the amount of such payment. Income dividends (other
than exempt-interest dividends of the Tax Free Money Market Fund or the
Municipal Bond Fund) and capital gain distributions are taxable to shareholders
of each Fund that are subject to federal income tax as described above,
regardless of whether they are taken in cash or reinvested in shares of the
Fund, unless the accounts of such shareholders are maintained as qualified
retirement plans, IRAs, SEP-IRAs and other tax-deferred plans or accounts or
such shareholders are otherwise exempt from federal income tax. Participants in
such retirement plans or accounts may be subject to tax on all or a portion of
their distributions from such plans or accounts under complex Code provisions
concerning which a tax adviser should be consulted. If you wish to change the
manner in which you receive income dividends and capital gains distributions,
your written notification of such change must be received by the Funds'
Transfer Agent at least ten days before the next scheduled distribution.
PORTFOLIO BROKERAGE
In effecting securities transactions, the Funds generally seek to obtain
the best price and execution of orders under the circumstances. Commission
rates are a component of price and are considered along with other factors,
including the ability of the broker-dealer to effect the transaction, and the
broker-dealer's facilities, reliability and financial responsibility. Subject to
the foregoing, the Funds intend to utilize WPG as their primary broker in
connection with the purchase and sale of exchange-traded portfolio securities.
As the Funds' primary broker, WPG will receive brokerage commissions from the
Funds, limited to the "usual and customary broker's commission" specified by the
1940 Act. The Funds intend to continue to use WPG as their primary broker-dealer
on
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exchange-traded securities, provided WPG is able to provide execution at least
as favorable as that provided by other qualified broker-dealers.
With respect to the International Fund, it is also contemplated that Lloyds
Bank Stockbrokers ("LBS") , a broker-dealer and an affiliate of HSAM, may serve
as a broker-dealer with respect to portfolio transactions effected on U.K.
securities exchanges and German securities exchanges, respectively, subject to
the limits specified by the 1940 Act, and provided further that LBS is able to
provide execution at least as favorable as that of other qualified
broker-dealers.
The Board of Trustees for each Fund has developed procedures to limit the
commissions received by WPG and LBS to the standard specified by the 1940 Act.
On a quarterly basis, each Fund's Board of Trustees reviews transactions of each
Fund with WPG and LBS to assure compliance with such procedures.
The Funds will also execute their portfolio transactions through qualified
broker-dealers other than WPG. In selecting such other broker-dealers, WPG will
also consider the quality and reliability of brokerage services, including
execution capability and performance and financial responsibility, and may
consider the research and other investment information provided by such
broker-dealers. Accordingly, the commissions paid to any such broker-dealer may
be greater than the amount another firm might charge, provided WPG determines in
good faith that the amount of such commission is reasonable in relation to the
value of the brokerage services and research information provided by such
broker-dealer. Such information may be used by WPG (and its affiliates) in
managing all of its accounts and not all of such information may be used by WPG
in managing the Funds. In selecting other broker-dealers for a Fund, WPG may
also consider the sale of shares of the Fund effected through such other
broker-dealers as a factor in the selection, provided the Fund obtains the best
price and execution of orders under the circumstances.
Money market securities and other fixed income securities in which the
Funds may invest are traded primarily in the over-the-counter ("OTC") market.
These securities generally trade on a net basis without the payment of brokerage
commissions but include a mark-up or "spread" by the securities broker-dealer.
For transactions effected in the OTC market, the Funds intend to deal with the
primary market-makers in the securities involved, unless a more favorable result
is obtainable elsewhere.
ORGANIZATION AND CAPITALIZATION
The Funds described in this Prospectus are separately managed investment
portfolios.
The Government Money Market Fund, the Tax Free Money Market Fund, the Core
Bond Fund, the Quantitative Equity Fund and the Municipal Bond Fund are each
separate portfolios of the Weiss, Peck & Greer Funds Trust ("WPG Funds Trust").
Each Fund in WPG Funds Trust represents a separate series of shares in the Trust
having different objectives, programs, policies, and restrictions. WPG Funds
Trust was organized as a business trust under the laws of the Commonwealth of
Massachusetts ("Massachusetts business trust") on September 11, 1985. Prior to
January 20, 1998, the Core Bond Fund was named WPG Government Securities Fund.
Each share of beneficial interest of each of these five Funds represents an
equal proportionate interest in that Fund with each other share in that Fund.
Each share of each of these five Funds is entitled to one vote on all matters
submitted to a vote of all shareholders of WPG Funds Trust, such as the election
of Trustees and ratification of the selection of auditors. Shares of a
particular Fund vote separately on matters affecting only that Fund, including
approval of an investment advisory agreement for a particular Fund and changes
in fundamental policies or restrictions of a particular Fund. WPG Funds Trust
is authorized to issue an unlimited number of full and fractional shares of
beneficial interest, having a par value of $.001 per share, in one or more
portfolios.
The Growth and Income Fund was organized as a Delaware corporation in
December 1966 and reorganized as a Massachusetts business trust on April 29,
1988. The Growth and Income Fund is authorized to issue an unlimited number of
full and fractional shares of beneficial interest, par value $1.00 per share.
The Tudor Fund was organized as a Delaware corporation in June 1968 and
reorganized as a Massachusetts business trust on April 29, 1988. The Tudor Fund
is authorized to issue an unlimited
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number of full and fractional shares of beneficial interest, par value $.33 1/3
per share.
The International Fund was organized as a Massachusetts business trust on
January 24, 1989. The International Fund is authorized to issue an unlimited
number of full and fractional shares of beneficial interest, par value $.01 per
share.
The Growth Fund was organized as a Delaware corporation in October 1985 and
reorganized as a Massachusetts business trust on April 29, 1988. The Growth Fund
is authorized to issue an unlimited number of full and fractional shares of
beneficial interest, par value $.001 per share.
Each Fund, including each of the five Funds in WPG Funds Trust offered
through this Prospectus, currently issues one class of shares all of which have
equal rights with regard to voting, redemptions, dividends and distributions.
Each Fund, subject to the authorization by its Board of Trustees, is
authorized to issue multiple classes of shares which may in the future be
marketed to different types of investors. The Boards currently do not intend to
authorize the issuance of multiple classes of shares. In addition, subject to
approval by its Board of Trustees, each Fund may pursue its investment objective
by investing all of its investable assets in a pooled fund. See "Risk
Considerations and Other Investment Practices and Policies of the Funds" below.
Shares in each Fund, when issued, will be fully paid and nonassessable. The
shares in each Fund have no preemptive or conversion rights. In the event of
liquidation of a Fund, shareholders in that Fund are entitled to share pro rata
in that Fund's net assets available for distribution to shareholders.
Each Fund's activities are supervised by the Board of Trustees for that
Fund or, as appropriate, WPG Funds Trust. The Board of Trustees for each Fund
has overall responsibility for the management of the business of each Fund.
Shareholders in each Fund have one vote for each share held on matters as to
which they are entitled to vote. The Funds are not required to hold and have no
current intention of holding annual shareholder meetings. Nevertheless, special
meetings may be called for purposes such as electing or removing Trustees,
changing fundamental policies, or approving an investment advisory agreement.
Shareholders will be assisted in communicating with other shareholders in
connection with removing a Trustee as if Section 16(c) of the 1940 Act were
applicable.
Although each Fund is offering only its own shares, since the Funds use a
combined Prospectus, it is possible that one Fund (or WPG Funds Trust) might
become liable for a misstatement or omission in this Prospectus regarding
another Fund. The Trustees for each Fund and WPG Funds Trust have considered
this factor in approving the use of a combined Prospectus.
RISK CONSIDERATIONS AND
OTHER INVESTMENT PRACTICES AND
POLICIES OF THE FUNDS
WRITING AND PURCHASING PUT AND CALL OPTIONS ON SECURITIES, STOCK INDICES, AND
CURRENCIES. To seek additional income or to seek to minimize anticipated
declines in the value of its securities, the Core Bond Fund, the Growth and
Income Fund, the Tudor Fund, the International Fund, the Growth Fund and the
Quantitative Equity Fund may each write (I.E., sell) call options on securities
and securities indices. The Core Bond Fund, the International Fund, the Tudor
Fund, the Growth Fund and the Quantitative Equity Fund may also write put
options on securities and securities indices. In addition, to earn additional
income or to seek to reduce risks associated with currency fluctuations, the
International Fund may purchase and sell call and put options on currencies. The
Tudor Fund, the International Fund, the Core Bond Fund, the Growth Fund and the
Quantitative Equity Fund may purchase call and put options on securities and
securities indices. These options may be traded on exchanges or in the OTC
markets.
In general, a call option on a security gives the holder (purchaser) the
right, in return for a premium paid, to buy and obligates the writer (seller) to
sell (if the option is exercised), the underlying security at the exercise price
during the option period. Conversely, a put option on a security gives the
holder the right, in return for a premium paid, to sell and obligates the writer
to purchase (if the option is exercised), the underlying security at the
exercise price during the option period. A call or put option on a currency
operates in a similar manner, except that delivery is made of the particular
currency. A securities index call or put option is, in economic effect, similar
to a call or put option on a security, except that the value of the option
depends on the weighted value of the group of securities comprising the
securities index, rather
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than a particular security, and settlements are made in cash rather than by
delivery of a particular security.
Although these investment practices will be used to seek to generate
additional income and to seek to reduce the effect of any adverse price movement
in the securities or currency subject to the option, they do involve certain
risks that are different in some respects from investment risks associated with
similar funds which do not engage in such activities. These risks include the
following: for writing call options, the inability to effect closing
transactions at favorable prices and the inability to participate in the
appreciation of the underlying securities or currencies above the exercise
price; for writing put options, the inability to effect closing transactions at
favorable prices and the obligation to purchase the specified securities or
currencies or to make a cash settlement on the securities index at prices which
may not reflect current market values or exchange rates; and for purchasing call
and put options-possible loss of the entire premium paid. In addition, the
effectiveness of hedging through the purchase or sale of securities index
options, including options on the S&P 500 Index, will depend upon the extent to
which price movements in the portion of the securities portfolio being hedged
correlate with the price movements in the selected securities index. Perfect
correlation may not be possible because the securities held or to be acquired by
a Fund may not exactly match the composition of the securities index on which
options are written. If the forecasts of WPG or HSAM regarding movements in
securities prices, interest rates or currency exchange rates are incorrect, a
Fund's investment results may have been better without the hedge transactions.
The ability of the Funds to terminate OTC options is more limited than with
exchange-traded options and may involve the risk that broker-dealers
participating in such transactions will not fulfill their obligations. A more
extensive description of these investment practices and their associated risks
is contained in the Funds' SAI.
SPECIAL SITUATIONS AND EMERGING GROWTH COMPANIES. The Tudor Fund and Growth
Fund may invest in special situations. Special situations refer to unusual and
possibly unique developments for a company which may create a special
opportunity for significant returns. Smaller, less well-known companies are
often more likely to present special situation investment opportunities;
however, such opportunities may also exist in larger, well-capitalized
companies. Since every special situation involves a departure from past
experience, uncertainties in the appraisal of the particular special situation
company's future value and the risk of possible loss tend to be greater than
with an investment in a well-established company carrying on business according
to long-established patterns. On the other hand, if an investment in a special
situation is made at the appropriate time and the anticipated development does
materialize, greater than average appreciation may be achieved by the Fund.
The Growth Fund may also invest in emerging growth companies. An emerging
growth company may be a smaller company (I.E., normally, a company having a
capitalization of $1 billion or less), a less well-known company, or a company
that has been in business for less than three years and offers superior growth
potential. While investment in emerging growth companies can provide opportu-
nities for rapid capital growth, it may also involve greater risk than is
customarily associated with investment in more established companies. Emerging
growth companies often have limited product lines, and lack established markets,
depth of experienced management, or the ability to generate necessary funds.
The securities of such companies may have limited marketability and may be
subject to greater price volatility than securities of larger companies or the
market averages in general.
FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS. To seek to hedge against
changes in interest rates, securities prices or currency exchange rates or for
non-hedging purposes, a Fund, subject to its investment objectives and policies,
may purchase and sell various kinds of futures contracts, and purchase and write
call and put options on any of such futures contracts. A Fund may also enter
into closing purchase and sale transactions with respect to any of such
contracts and options. The futures contracts may be based on various securities
(such as U.S. Government securities), securities indices, foreign currencies and
other financial instruments and indices. A Fund will not enter into futures
contracts or options thereon for non-hedging purposes if, immediately
thereafter, the aggregate initial margin and premiums required to establish
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non-hedging positions in futures contracts and options on futures will exceed 5%
of the net asset value of the Fund's portfolio, after taking into account
unrealized profits and losses on any such positions and excluding the amount by
which such options were in-the-money at the time of purchase.
The use of futures contracts entails certain risks, including but not
limited to the following: no assurance that futures contracts transactions can
be offset at favorable prices; possible reduction of the Fund's income due to
the use of hedging; possible reduction in value of both the securities hedged
and the hedging instrument; possible lack of liquidity due to daily limits on
price fluctuations; imperfect correlation between the contract and the
securities being hedged; and potential losses in excess of the amount initially
invested in the futures contracts themselves. If the expectations of WPG
regarding movements in securities prices, interest rates or currency exchange
rates are incorrect, the Fund may have experienced better investment results
without hedging. The use of futures contracts and options on futures contracts
requires special skills in addition to those needed to select portfolio
securities. A further discussion of futures contracts and their associated risks
is contained in the Funds' SAI.
SECURITIES OF FOREIGN ISSUERS. Subject to each Fund's investment objective,
investment program, policies and restrictions, each Fund (other than Core Bond
Fund, Municipal Bond Fund and Tax Free Money Market Fund) may invest in certain
types of U.S. dollar-denominated securities of foreign issuers. With respect to
certain foreign securities, the Funds may purchase ADRs, EDRs, GDRs and IDRs.
ADRs are U.S. dollar-denominated certificates issued by a U.S. bank or trust
company and represent the right to receive securities of a foreign issuer
deposited in a domestic bank or foreign branch of a U.S. bank. EDRs, GDRs and
IDRs are receipts issued in Europe, generally by a non-U.S. bank or trust
company, and evidence ownership of non-U.S. securities. ADRs are traded on
domestic exchanges or in the U.S. OTC market and, generally, are in registered
form. EDRs, GDRs and IDRs are traded on non-U.S. exchanges or in non-U.S. OTC
markets and, generally, are in bearer form. Investments in ADRs have certain
advantages over direct investment in the underlying non-U.S. securities because
(i) ADRs are U.S. dollar-denominated investments which are registered
domestically, easily transferable, and for which market quotations are readily
available, and (ii) issuers whose securities are represented by ADRs are subject
to the same auditing, accounting and financial reporting standards as domestic
issuers. To the extent a Fund acquires ADRs through banks which do not have a
contractual relationship with the foreign issuer of the security underlying the
ADR to issue and service such ADRs, there may be an increased possibility that
the Fund would not become aware of and be able to respond to corporate actions
such as stock splits or rights offerings involving the foreign issuer in a
timely manner.
In addition, the Growth and Income Fund, Tudor Fund, Growth Fund and
International Fund may invest in securities denominated in foreign currencies
("foreign denominated securities") in accordance with their specific investment
objectives, investment programs, policies and restrictions. Investing in foreign
denominated securities may involve advantages and disadvantages not present in
domestic investments. International diversification of a Fund's portfolio may
lower overall risk to the extent that it lessens the portfolio's susceptibility
to adverse conditions unique to domestic markets, while simultaneously expanding
investment opportunities. There may, however, be less publicly available
information about securities not registered domestically, or their issuers, than
is available about domestic issuers or their domestically registered
securities. Stock markets outside the U.S. may not be as developed as domestic
markets, and there may also be less government supervision of foreign exchanges
and brokers. Foreign denominated securities may be less liquid or more volatile
than U.S. securities. Trade settlements may be slower and could possibly be
subject to failure. In addition, brokerage commissions and custodial costs with
respect to foreign denominated securities may be higher than those for domestic
investments. Accounting, auditing, financial reporting, and disclosure
standards for foreign issuers may be different than those applicable to domestic
issuers. Foreign denominated securities may be affected favorably or unfavorably
by changes in currency exchange rates and exchange control regulations
(including currency blockage) and a Fund using such securities may incur costs
in connection with conversions between various currencies. Foreign denominated
securities may also involve risks due to changes in
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the political or economic conditions of such foreign countries, the possibility
of expropriation of assets or nationalization, and possible difficulty in
obtaining and enforcing judgments against foreign entities.
FOREIGN CURRENCY EXCHANGE TRANSACTIONS. Currency transactions may be utilized by
the Growth and Income Fund, Tudor Fund, Growth Fund and International Fund, in
connection with their purchase and sale of foreign currency denominated
securities. Such currency transactions may be either: (i) on the spot (I.E.,
cash) basis at the spot rate prevailing in the foreign exchange market, or (ii)
conducted through the use of forward foreign currency exchange contracts
("forward currency contracts"). A forward currency contract involves an
obligation to purchase or sell a specific currency at a future date, which may
be any fixed number of days from the date of the forward currency contract as
agreed upon by the parties, at a price set at the time of the contract. Forward
currency contracts are principally traded in the interbank market conducted
directly between currency traders (usually large commercial banks) and their
customers and are not guaranteed by a third party. Accordingly, each party to a
forward currency contract is dependent upon the creditworthiness and good faith
of the other party.
The Funds will enter into forward currency contracts only under two
circumstances. First, when a Fund enters into a contract to purchase or sell a
foreign denominated security, the Fund may be able to protect itself against a
possible loss between the trade date and settlement date for such security
resulting from a decline in the U.S. dollar against the foreign currency in
which such security is denominated by entering into a forward currency contract
in U.S. dollars for the purchase or sale of the amount of the foreign currency
involved in the underlying security transaction. This practice may limit the
potential gains that might result from a positive change in such currency
relationships. Second, if WPG, or HSAM in the case of the International Fund,
believes that the value of currency of a particular foreign country may
depreciate or appreciate substantially relative to the U.S. dollar (or other
currency), each Fund may enter into a forward currency contract to sell or buy
an amount of foreign currency approximating the value of some or all of that
Fund's portfolio securities denominated in such foreign currency. The
forecasting of short-term currency market movements is extremely difficult and
it is uncertain whether such short-term hedging strategies will be successful.
EURODOLLAR AND YANKEE DOLLAR INVESTMENTS. Certain Funds may invest in
obligations of foreign branches of U.S. banks (Eurodollars) and U.S. branches of
foreign banks (Yankee dollars) as well as foreign branches of foreign banks.
These investments involve risks that are different from investments in
securities of U.S. banks, including potential unfavorable political and
economic developments, different tax provisions, seizure of foreign deposits,
currency controls, interest limitations or other governmental restrictions which
might affect payment of principal or interest.
MUNICIPAL SECURITIES. Certain Funds, and in particular the Tax Free Money
Market Fund and the Municipal Bond Fund, may invest in municipal securities.
Municipal securities include bonds, notes and other instruments issued by or on
behalf of states, territories and possessions of the United States (including
the District of Columbia) and their political subdivisions, agencies or
instrumentalities, the interest on which is, in the opinion of bond counsel for
the issuers (when available), excluded from gross income for federal income tax
purposes, i.e. exempt from regular federal income tax. The two principal
classifications of municipal bonds are "general obligations" and "revenue
obligations." General obligations are secured by the issuer's pledge of its full
faith and credit for the payment of principal and interest, although the
characteristics and enforcement of general obligations may vary according to the
law applicable to the particular issuer. Revenue obligations are not backed by
the credit and taxing authority of the issuer, but are payable solely from the
revenues derived from a particular facility or class of facilities or, in some
cases, from the proceeds of a special excise tax or other specific revenue
source. In addition, revenue obligations may be backed by a letter of credit,
guarantee or insurance. Revenue obligations include private activity bonds,
resource recovery bonds, certificates of participation and certain municipal
notes.
A Fund may invest in variable, floating rate and other municipal securities
on which the interest may fluctuate based on changes in market rates.
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The interest rates payable on variable rate securities are adjusted at
designated intervals (e.g., daily, monthly, semi-annually) and the interest
rates pay able on floating rate securities are adjusted when ever there is a
change in the market rate of interest on which the interest payable is based.
The interest rate on variable and floating rate securities is ordinarily
determined by reference to or is a percentage of a bank's prime rate, the 90-day
U.S. Treasury bill rate, the rate of return on commercial paper or bank
certificates of deposit, an index of short-term interest rates, or some other
objective measure. The value of floating and variable rate securities generally
is more stable than that of fixed rate securities in response to changes in
interest rate levels. A Fund may consider the maturity of a variable or floating
rate municipal security to be shorter than its ultimate maturity if that Fund
has the right to demand prepayment of its principal at specified intervals prior
to the security's ultimate maturity.
Funds that may invest in municipal securities may invest in municipal
leases and certificates of participation in municipal leases. A municipal lease
is an obligation in the form of a lease or installment purchase which is issued
by a state or local government to acquire equipment and facilities. Certificates
of participation represent undivided interests in municipal leases, installment
purchase agreements or other instruments. The certificates are typically issued
by a trust or other entity which has received an assignment of the payments to
be made by the state or political subdivision under such leases or installment
purchase agreements. The primary risk associated with municipal lease
obligations and certificates of participation is that the governmental lessee
will fail to appropriate funds to enable it to meet its payment obligations
under the lease. Although the obligations may be secured by the leased equipment
or facilities, the disposition of the property in the event of nonappropriation
or foreclosure might prove difficult, time consuming and costly, and may result
in a delay in recovering, or the failure to fully recover, the Fund's original
investment. To the extent that a Fund invests in unrated municipal leases or
participates in such leases, the Adviser will monitor on an ongoing basis the
credit quality rating and risk of cancellation of such unrated leases. Certain
municipal lease obligations and certificates of participation may be deemed
illiquid for the purposes of the Funds' 15% limitation on investments in
illiquid securities.
ZERO COUPON AND CAPITAL APPRECIATION BONDS. Funds that may invest in debt
securities may invest in zero coupon and capital appreciation bonds. Zero coupon
and capital appreciation bonds are debt securities issued or sold at a discount
from their face value that do not entitle the holder to any payment of interest
prior to maturity or a specified redemption date (or cash payment date). The
amount of the discount varies depending on the time remaining until maturity or
cash payment date, prevailing interest rates, the liquidity of the security and
the perceived credit quality of the issuer. These securities also may take the
form of debt securities that have been stripped of their unmatured interest
coupons, the coupons themselves or receipts or certificates representing
interests in such stripped debt obligations or coupons. A portion of the
discount with respect to stripped tax-exempt securities or their coupons may be
taxable. The market prices of zero coupon and capital appreciation bonds
generally are more volatile than the market prices of interest-bearing
securities and are likely to respond to a greater degree to changes in interest
rates than interest-bearing securities having similar maturities and credit
quality.
A Fund may also invest in municipal securities in the form of notes which
generally are used to provide for short-term capital needs in anticipation of an
issuer's receipt of other revenues or financing, and typically have maturities
of up to three years. Such instruments may include tax anticipation notes,
revenue anticipation notes, bond anticipation notes and construction loan notes.
The obligations of an issuer of municipal notes are generally secured by the
anticipated revenues from taxes, grants or bond financing. An investment in such
instruments, however, presents a risk that the anticipated revenues will not be
received or that such revenues will be insufficient to satisfy the issuer's
payment obligations under the notes or that refinancing will be otherwise
unavailable.
Funds that may invest in municipal securities may invest in "pre-refunded
tax-exempt bonds" and "escrowed tax-exempt bonds." Pre-refunded tax-exempt bonds
and escrowed tax-exempt bonds are issued originally as general obligation or
revenue bonds of governmental entities, but are now secured until the call date
or maturity by an escrow fund consisting entirely of U.S. Government obligations
that are sufficient for paying the bondholders. A new issue of refunding bonds
is brought to the
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market and the proceeds are placed into an escrow account to defease and, at a
future date, to retire the old issue. The escrow account is typically invested
in direct U.S. Treasury obligations, other U.S. Government securities or a
combination of these securities. The principal and interest flow through the
escrow account to pay the investor the debt service on the refunded or escrowed
municipal bond.
REAL ESTATE INVESTMENT TRUSTS. Certain Funds may invest in shares of real estate
investment trusts ("REITs"). REITs are pooled investment vehicles which invest
primarily in income producing real estate or real estate related loans or
interests. REITs are generally classified as equity REITs, mortgage REITs or a
combination of equity and mortgage REITs. Equity REITs invest the majority of
their assets directly in real property and derive income primarily from the
collection of rents. Equity REITs can also realize capital gains by selling
properties that have appreciated in value. Mortgage REITs invest the majority of
their assets in real estate mortgages and derive income from the collection of
interest payments. Like investment companies such as the Funds, REITs are not
taxed on income distributed to shareholders provided they comply with several
requirements of the Code. Funds that invest in REITs will indirectly bear their
proportionate share of any expenses paid by such REITs in addition to the
expenses paid by the Funds.
Investing in REITs involves certain risks: equity REITs may be affected by
changes in the value of the underlying property owned by the REITs, while
mortgage REITs may be affected by the quality of any credit extended. REITs are
dependent upon management skills, are not diversified, and are subject to the
risks of financing projects. REITs are subject to heavy cash flow dependency,
default by borrowers, self-liquidation, and the possibilities of failing to
qualify for the exemption from tax for distributed income under the Code and
failing to maintain their exemptions from the 1940 Act. REITs whose underlying
assets include long-term health care properties, such as nursing, retirement and
assisted living homes, may be impacted by federal regulations concerning the
health care industry.
Investing in REITs may involve risks similar to those associated with
investing in small capitalization companies. REITs may have limited financial
resources, may trade less frequently and in a limited volume and may be subject
to more abrupt or erratic price movements than larger company securities.
Historically, small capitalization stocks, such as REITs, have been more
volatile in price than the larger capitalization stocks included in the S&P 500.
U.S. GOVERNMENT SECURITIES. U.S. Government securities are either (i) backed by
the full faith and credit of the U.S. Government (E.G., U.S. Treasury bills),
(ii) guaranteed by the U.S. Treasury (E.G., Ginnie Mae mortgage-backed
securities), (iii) supported by the issuing agency's or instrumentality's right
to borrow from the U.S. Treasury (E.G., Federal National Mortgage Association
("Fannie Mae") discount notes) or (iv) supported only by the issuing agency's or
instrumentality's own credit (E.G. securities of each of the Federal Home Loan
Banks). Such guarantees of U.S. Government securities held by a Fund do not, how
ever, guarantee the market value of the shares of the Fund. There is no
guarantee that the U.S. Government will continue to provide support to its
agencies or instrumentalities in the future.
MORTGAGE-BACKED SECURITIES. Certain Funds, and in particular the Government
Money Market Fund and the Core Bond Fund may invest in mortgage pass-through
certificates and multiple-class pass-through securities, such as real estate
mortgage investment conduits ("REMIC") pass-through certificates and
collateralized mortgage obligations ("CMOs").
GUARANTEED MORTGAGE PASS-THROUGH SECURITIES. Guaranteed mortgage pass-through
securities represent participation interests in pools of residential mortgage
loans and are issued by U.S. Governmental or private lenders and guaranteed by
the U.S. Government or one of its agencies or instrumentalities, including but
not limited to the Ginnie Mae, Fannie Mae and the Federal Home Loan Mortgage
Corporation ("Freddie Mac"). Ginnie Mae certificates are guaranteed
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by the full faith and credit of the U.S. Government for timely payment of
principal and interest on the certificates. Fannie Mae certificates are
guaranteed by Fannie Mae, a federally chartered and privately owned corporation,
for full and timely payment of principal and interest on the certificates.
Freddie Mac certificates are guaranteed by Freddie Mac, a corporate
instrumentality of the U.S. Government, for timely payment of interest and the
ultimate collection of all principal of the related mortgage loans.
MULTIPLE-CLASS PASS-THROUGH SECURITIES AND COLLATERALIZED MORTGAGE OBLIGATIONS.
CMOs and REMIC pass-through or participation certificates may be issued by,
among others, U.S. Government agencies and instrumentalities as well as private
lenders. CMOs and REMIC certificates are issued in multiple classes and the
principal of and interest on the mortgage assets may be allocated among the
several classes of CMOs or REMIC certificates in various ways. Each class of
CMOs or REMIC certificates, often referred to as a "tranche," is issued at a
specific adjustable or fixed interest rate and must be fully retired no later
than its final distribution date. Generally, interest is paid or accrues on all
classes of CMOs or REMIC certificates on a monthly basis.
Typically, CMOs are collateralized by Ginnie Mae, Fannie Mae or Freddie Mac
certificates but also may be collateralized by other mortgage assets such as
whole loans or private mortgage pass-through securities. Debt service on CMOs
is provided from payments of principal and interest on collateral of mortgaged
assets and any reinvestment income thereon.
A REMIC is a CMO that qualifies for special tax treatment under the Code
and invests in certain mortgages primarily secured by interests in real
property and other permitted investments. Investors may purchase "regular" and
"residual" interest shares of beneficial interest in REMIC trusts although the
Funds do not intend to invest in residual interests.
RISK FACTORS ASSOCIATED WITH MORTGAGE-BACKED SECURITIES. Investing in
Mortgage-Backed Securities involves certain risks, including the failure of a
counter-party to meet its commitments, adverse interest rate changes and the
effects of prepayments on mortgage cash flows. Further, the yield
characteristics of Mortgage-Backed Securities differ from those of traditional
fixed income securities. The major differences typically include more frequent
interest and principal payments (usually monthly), the adjustability of interest
rates, and the possibility that prepayments of principal may be made
substantially earlier than their final distribution dates.
Prepayment rates are influenced by changes in current interest rates and a
variety of economic, geographic, social and other factors and cannot be pre-
dicted with certainty. Both adjustable rate mortgage loans and fixed rate
mortgage loans may be subject to a greater rate of principal prepayments in a
declining interest rate environment and to a lesser rate of principal
prepayments in an increasing interest rate environment. Under certain interest
rate and prepayment rate scenarios, a Fund may fail to recoup fully its
investment in Mortgage-Backed Securities not withstanding any direct or indirect
governmental or agency guarantee. When a Fund reinvests amounts representing
payments and unscheduled prepayments of principal, it may receive a rate of
interest that is lower than the rate on existing adjustable rate mortgage
pass-through securities. Thus, Mortgage-Backed Securities, and adjustable rate
mortgage pass-through securities in particular, may be less effective than other
types of U.S. Government securities as a means of "locking in" interest rates.
Conversely, in a rising interest rate environment, a declining prepayment
rate will extend the average life of many Mortgage-Backed Securities. This
possibility is often referred to as extension risk. Extending the average life
of a Mortgage-Backed Security increases the risk of depreciation due to future
increases in market interest rates. The market for certain types of
Mortgage-Backed Securities (I.E., certain CMOs) may not be liquid under all
interest rate scenarios, which may prevent a Fund from selling such securities
held in its portfolio at times or prices that it desires.
RISKS ASSOCIATED WITH SPECIFIC TYPES OF DERIVATIVE DEBT SECURITIES. Different
types of derivative debt securities are subject to different combinations of
prepayment, extension and/or interest rate risk. Conventional mortgage
pass-through securities and sequential pay CMOs are subject to all of these
risks, but are typically not leveraged. Thus, the magnitude of exposure may be
less than for more leveraged Mortgage-Backed Securities.
Planned amortization class ("PAC") and target amortization class ("TAC")
CMO bonds involve less exposure to prepayment, extension and interest rate risk
than other Mortgage-Backed Securities, provided that prepayment rates remain
within expected pre-
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payment ranges or "collars." To the extent that prepayment rates remain within
these prepayment ranges, the residual or support tranches of PAC and TAC CMOs
assume the extra prepayment, extension and interest rate risk associated with
the underlying mortgage assets.
ASSET-BACKED SECURITIES. Certain Funds, and in particular the Government Money
Market Fund, Core Bond Fund and Growth and In come Fund, may invest in
asset-backed securities, which represent participations in, or are secured by
and payable from, pools of assets such as motor vehicle installment sale
contracts, installment loan contracts, leases of various types of real and
personal property, receivables from revolving credit (credit card) agreements
and other categories of receivables. Asset- backed securities may also be
collateralized by a portfolio of U.S. Government securities, but are not direct
obligations of the U.S. Government, its agencies or instrumentalities. Such
asset pools are securitized through the use of privately-formed trusts or
special purpose corporations. Payments or distributions of principal and
interest on asset-backed securities may be guaranteed up to certain amounts and
for a certain time period by a letter of credit or a pool insurance policy
issued by a financial institution unaffiliated with the trust or corporation, or
other credit enhancements may be present; however privately issued obligations
collateralized by a portfolio of privately issued asset- backed securities do
not involve any government- related guarantee or insurance. In addition to risks
similar to those associated with Mortgage-Backed Securities, asset-backed
securities present further risks that are not presented by Mortgage-Backed
Securities because asset-backed securities generally do not have the benefit of
a security interest in collateral that is comparable to mortgage assets.
CONVERTIBLE SECURITIES AND PREFERRED STOCKS. Certain Funds may invest in debt
securities or preferred stocks that are convertible into or exchangeable for
common stock. Preferred stocks are securities that represent an ownership
interest in a company and provide their owner with claims on the company's
earnings and assets prior to the claims of owners of common stock but after
those of bond owners. Preferred stocks in which the Funds may invest include
sinking fund, convertible, perpetual fixed and adjustable rate (including
auction rate) preferred stocks. There is no mini mum credit rating applicable to
a Fund's investment in preferred stocks and securities convertible into or
exchangeable for common stocks.
RISK FACTORS OF LOWER RATED DEBT SECURITIES. The Growth and Income Fund, Growth
Fund and Tudor Fund may invest in debt securities rated as low as B by Moody's
or B by S&P (and comparable unrated securities) (commonly known as "junk
bonds"). These securities are considered speculative and, while generally
providing greater income than investments in higher rated securities, will
involve greater risk of loss of principal and in come (including the possibility
of default or bankruptcy of the issuers of such securities) and may involve
greater volatility of price (especially during periods of economic uncertainty
or change) than securities in the higher rating categories. However, since
yields vary over time, no specific level of income can ever be assured. These
lower rated, high yielding debt securities generally tend to be affected by
economic changes and short-term corporate and industry developments to a greater
extent than higher rated securities, which react primarily to fluctuations in
the general level of interest rates. (These lower rated securities are also
affected by changes in interest rates as described below.) These debt securities
will also be affected by the market's perception of their credit quality
(especially during times of adverse publicity) and the outlook for economic
growth. In the past, economic downturns or an increase in interest rates have,
under certain circumstances, caused a higher incidence of default by the issuers
of these securities and may do so in the future, especially in the case of
highly leveraged issuers. The market for these lower rated debt securities may
be less liquid than the market for investment grade fixed income securities.
Therefore, judgment may at times play a greater role in valuing these securities
than in the case of investment grade debt securities, and it also may be more
difficult during certain adverse market conditions to sell these lower rated
securities to meet redemption requests or to respond to changes in the market.
The value of fixed-income securities in the Funds' portfolios generally varies
inversely with changes in interest rates.
FORWARD COMMITMENTS AND WHEN-ISSUED SECURITIES. Each Fund may purchase
securities on
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a when-issued, delayed delivery, or forward commitment basis. When such
transactions are negotiated, the price of such securities is fixed at the time
of the commitment, but delivery and payment for the securities may take place up
to 90 days after the date of the commitment to purchase. The securities so
purchased are subject to market fluctuation, and no interest accrues to the
purchaser during this period. When-issued securities or forward commitments
involve a risk of loss if the value of the security to be purchased declines
prior to the settlement date. When a Fund purchases securities on a forward
commitment or when-issued basis, the Fund's custodian will maintain in a
segregated account cash or liquid securities having a value (determined daily)
at least equal to the amount of the Fund's purchase commitment. A Fund may
close-out a position in securities purchased on a when-issued, delayed delivery
or forward commitment basis prior to the settlement date.
LENDING OF PORTFOLIO SECURITIES. Subject to its investment policies and
restrictions, each Fund may also seek to increase its income by lending
portfolio securities. Such loans may be made to institutions, such as certain
broker-dealers, and are required to be secured continuously by collateral in
cash, cash equivalents, or U.S. Government securities maintained on a current
basis at an amount at least equal to the market value of the securities loaned.
If WPG determines to make securities loans, the value of the securities loaned
would not exceed 33 1/3% of the value of the total assets of the Fund. A Fund
may experience a loss or delay in the recovery of its securities if the
borrowing institution breaches its agreement with the Fund.
ILLIQUID SECURITIES. Each Fund may invest up to 15% of its net assets (10% of
total assets in the case of the Government Money Market Fund and the Tax Free
Money Market Fund) in illiquid investments, which includes repurchase agreements
maturing in more than seven days, securities that are not readily marketable,
certain over-the-counter options and restricted securities, unless the Adviser
determines in accordance with procedures approved by the Board of Trustees that
such restricted securities are liquid. The Board of Trustees has adopted
guidelines and delegated to WPG the daily function of determining and moni-
toring liquidity of restricted securities. The Board, however, retains
sufficient oversight and is ultimately responsible for the determinations. Since
it is not possible to predict with assurance exactly how the market for
restricted securities sold and offered under Rule 144A under the Securities Act
of 1933 will develop, the Board of Trustees monitors each Fund's investments in
these securities, focusing on such important factors, among others, as
valuation, liquidity and availability of information. This investment practice
could have the effect of increasing the level of illiquidity in a Fund to the
extent that qualified institutional buyers become for a time uninterested in
purchasing these restricted securities.
MORTGAGE DOLLAR ROLL TRANSACTIONS. The Core Bond Fund may enter into mortgage
dollar roll transactions in which the Fund sells securities for delivery in the
current month and simultaneously contracts with the same counterparty to
repurchase similar (same type, coupon and maturity), but not identical
securities on a specified future date. During the roll period, the Core Bond
Fund will not receive principal and interest paid on the securities sold.
However, the Fund would benefit to the extent of any difference between the
price received for the securities sold and the lower forward price for the
future purchase (often referred to as the "drop") or fee income plus the
interest on the cash proceeds of the securities sold until the settlement date
of the forward purchase. Unless such benefits exceed the income, capital
appreciation and gain or loss due to mortgage prepayments that would have been
realized on the securities sold as part of the mortgage dollar roll, the use of
this technique will diminish the investment performance of the Core Bond Fund
compared with what such perfor-
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mance would have been without the use of mortgage dollar rolls. The Core Bond
Fund will hold and maintain in a segregated account until the settlement date
cash or liquid, high grade debt securities in an amount equal to the forward
purchase price. Any benefits derived from the use of mortgage dollar rolls may
depend upon mortgage prepayment assumptions, which will be affected by changes
in interest rates. There is no assurance that mortgage dollar rolls can be
successfully employed.
REPURCHASE AGREEMENTS. Subject to its investment policies and restrictions, each
Fund may utilize repurchase agreements through which the Fund may purchase a
security (the "underlying security") from a domestic securities dealer or bank
that is a member of the Federal Reserve System. Under the agreement, the seller
of the repurchase agreement (I.E., the securities dealer or bank) agrees to
repurchase the underlying security at a mutually agreed upon time and price. In
repurchase transactions, the underlying security, which must be a high-quality
debt security, is held by the Fund's custodian through the federal book-entry
system as collateral and marked-to-market on a daily basis to ensure full
collateralization of the repurchase agreement. For the Government Money Market
Fund and the Tax Free Money Market Fund, the underlying security must be either
a U.S. Government security or a security rated in the highest rating category by
the Requisite NRSROs. In the event of bankruptcy or default of certain sellers
of repurchase agreements, the Funds could experience costs and delays in
liquidating the underlying security held as collateral and might incur a loss if
such collateral declines in value during this period.
MARKET CHANGES. The market value of the Funds' investments, and thus the Funds'
net asset values, will change in response to market conditions affecting the
value of its portfolio securities. When interest rates decline, the value of
fixed rate obligations can be expected to rise. Conversely, when interest
rates rise, the value of fixed rate obligations can be expected to decline. In
contrast, as interest rates on adjustable rate loans are reset periodically,
yields on investments in such loans will gradually align themselves to reflect
changes in market interest rates, causing the value of such investments to
fluctuate less dramatically in response to interest rate fluctuations than would
investments in fixed rate obligations.
DIVERSIFICATION. All the Funds are diversified, as defined in the 1940 Act. As
such, each Fund has a fundamental policy that limits its investments so that,
with respect to 75% of the total assets of the Tudor Fund, Growth Fund,
Quantitative Equity Fund, International Fund and the Municipal Bond Fund and
100% of the total assets of each of the other Funds, (i) no more than 5% of that
Fund's total assets will be invested in the securities of a single issuer and
(ii) each will purchase no more than 10% of the outstanding voting securities of
a single issuer. These limitations do not apply to obligations issued or
guaranteed by the U.S. Government, its agencies or instrumentalities or repur-
chase agreements collateralized by U.S. Government securities. In addition, the
Government Money Market Fund and the Tax Free Money Market Fund will limit their
investment in any one issuer of securities that has received less than the
highest rating from the Requisite NRSROs (I.E., Second Tier Securities) to no
more than 1% of each Fund's total assets.
PORTFOLIO TURNOVER. Although no Fund purchases securities with a view to rapid
turnover, there are no limitations on the length of time that securities must be
held by any Fund and a Fund's annual portfolio turnover rate may vary
significantly from year to year. A high rate of portfolio turnover (100% or
more) involves correspondingly greater transaction costs which must be borne by
the applicable Fund and its shareholders . The actual portfolio turnover rates
for each Fund for the year ended December 31, 1997 are noted in the "Financial
Highlights" section of this Prospectus.
CERTAIN OTHER POLICIES TO REDUCE RISK. Each Fund has adopted certain fundamental
investment policies in managing its portfolio that are designed to reduce risk.
No Fund will (i) invest more than 25% of its total assets in securities of
companies in the same industry, except that the Government Money Market and Tax
Free Money Market Funds may invest a greater percentage in bank and bank
holding companies and the Quantitative Equity
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Fund may invest more of its total assets in securities of issuers in the same
industry to the extent that the optimal portfolio derived from the S&P 500 Index
is also so concentrated, (ii) issue senior securities except as permitted by the
1940 Act or borrow money except for certain temporary or emergency purposes and
then not in excess of 33% of its assets; (iii) engage in underwriting securities
of others except to the extent a Fund may be deemed to be an underwriter in
purchasing and selling portfolio securities; (iv) purchase real estate except
that a Fund may acquire office space for its principal office and may invest in
securities representing interests in real estate or companies engaged in the
real estate business and Municipal Bond Fund may acquire real estate as a result
of ownership of securities; (v) make loans except that a Fund may lend its
portfolio securities and enter into repurchase agreements; or (vi) invest in
commodities or commodities contracts other than financial futures contracts,
options on futures and forward commitment and when-issued securities. The
Municipal Bond Fund will not invest 25% or more of its total assets in
securities issued in any one state, territory or possession of the United States
(except U.S. Government securities and securities the payment of which is
secured by U.S. Government securities). To the extent that a Fund concentrates
its investments in one or more industries, the Fund may be more susceptible to
factors affecting those industries than are Funds not so concentrated. See the
Funds' SAI for further information concerning its investment policies and re-
strictions.
OTHER INVESTMENT COMPANIES. The shareholders of each Fund have approved a
fundamental policy authorizing each Fund, subject to authorization by its Board
of Trustees, and notwithstanding any other investment restriction, to invest all
of its assets in the securities of a single open-end investment company (a
"pooled fund"). If authorized by its Board, a Fund would seek to achieve its
investment objective by investing in a pooled fund which would invest in a
portfolio of securities that complies with the Fund's investment objective,
policies and restrictions. The Boards currently do not intend to authorize
investing in pooled funds.
Each Fund (other than Government Money Market Fund and Tax Free Money
Market Fund) may invest up to 10% of its total assets in the securities of other
investment companies . For example, the Quantitative Equity Fund may invest in
Standard & Poor's Depositary Receipts (commonly referred to as "Spiders"), which
are exchange-traded shares of a closed-end investment company that are designed
to replicate the price performance and dividend yield of the Standard & Poor's
500 Composite Stock Price Index. The Intermediate Municipal Bond Fund will only
invest in investment companies that are money market funds which invest in
municipal obligations. A Fund will indirectly bear its proportionate share of
any management fees and other expenses paid by investment companies in which it
invests in addition to the advisory and administration fees paid by the Fund.
FURTHER INFORMATION. Each Fund's investment program is subject to further
restrictions as described in the SAI. Each Fund's investment objectives and
investment program, unless otherwise specified, are not fundamental and may be
changed without shareholder approval by the Board of Trustees of each Fund. If
there is a change in a Fund's investment objective, shareholders should consider
whether the Fund remains an appropriate investment in light of their current
financial position and needs.
THE FUNDS' INVESTMENT PERFORMANCE
Each Fund may illustrate in advertisements and sales literature its average
annual total return, which is the rate of growth of the Fund that would be
necessary to achieve the ending value of an investment kept in the Fund for the
period specified and is based on the following assumptions: (1) all dividends
and distributions by the Fund are rein vested in shares of the Fund at net asset
value; and (2) all recurring fees are included for applicable periods.
Each Fund may also illustrate in advertisements its cumulative total return
for several time periods throughout the Fund's life based on an assumed initial
investment of $1,000. Any such cumulative total return for each Fund will assume
the rein vestment of all income dividends and capital gains distributions for
the indicated periods and will include all recurring fees.
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The Government Money Market Fund and the Tax Free Money Market Fund each
may illustrate in advertisements and sales literature its current yield and
effective yield. Current yield quotations of each of these Funds are based on
that Fund's investment income, less expenses, for a seven-day period. To
calculate the current yield quotations, this income is annualized, by assuming
that the amount of income generated during that seven-day period is generated
each week over a one-year period, and expressed as a percentage of the
investment. The effective yield for each of these Funds is calculated similarly
but, when annualized, income earned from an investment is assumed to be
reinvested. Effective yield for each of these Funds will be slightly higher than
its current yield because of the compounding effect of this assumed
reinvestment. The Tax Free Money Market Fund and the Municipal Bond Fund may
also illustrate a tax equivalent yield that compares the yield on a tax free
investment to the yield on a taxable investment. See the SAI for a sample of tax
able equivalent yields.
The Core Bond Fund and the Municipal Bond Fund each may also illustrate in
advertisements and sales literature its yield and effective yield. Yield for
each of these Funds is based on income generated by an investment in the Fund
during a 30-day (or one-month) period. To calculate yield, this income is
annualized, that is, the amount of income generated during the 30-day (or
one-month) period is assumed to be generated each 30-day (or one-month) period
over a one-year period, and expressed as an annual percentage rate. Effective
yield for these Funds is calculated in a similar manner but, when annualized,
the income earned from an investment is assumed to be rein vested. Effective
yield for each of these Funds will be slightly higher than its current yield
because of the compounding effect of this assumed reinvestment. For additional
information on the WPG Funds or for daily Fund prices, please call
1-800-223-3332.
The following table sets forth the historical total return performance of
all fee paying, domestic core bond portfolios under discretionary management by
the Adviser that have substantially similar investment objectives, policies and
strategies as the Core Bond Fund (the "Core Bond Portfolios") as measured by the
WPG Domestic Core Bond Composite (the "Composite"). As of December 31, 1997,
the composite consisted of 3 portfolios representing approximately $600 million
in assets. The performance data of the Core Bond Portfolios, as represented by
the Composite, has been computed in accordance with the SEC's standardized
formula. Because the gross performance data does not reflect the deduction of
investment advisory fees attributable to the Core Bond Portfolios, the net
performance data may be more relevant to potential investors in the Fund in
their analysis of the historical experience of the Adviser in managing domestic
core bond portfolios with investment objectives, policies and strategies
substantially similar to those of the Fund. The net performance data assumes
that the Core Bond Portfolios incurred fees and expenses of 0.50% per year,
which exceeds the actual amounts incurred by such portfolios and is equal to
the expense limitation voluntarily agreed to by the Adviser with respect to the
Fund. The fees and expenses paid by the Core Bond Portfolio generally differ in
type and amount to varying extents from the fees and expenses paid by the Core
Bond Fund, which will affect the relevance of the performance presented in the
Composite to investors in the Core Bond Fund.
WPG DOMESTIC CORE BOND
COMPOSITE PERFORMANCE
AVERAGE ANNUAL TOTAL RETURN
FOR THE PERIODS ENDED DECEMBER 31, 1997
THE COMPOSITE 1 YEAR 2.5 YEARS
- ------------- ------ ---------
Equal Weighted
(Gross) 10.29% 8.16%
Equal Weighted
(Net) 9.79% 7.66%
The performance of the Core Bond Portfolios is not that of the Core Bond
Fund or any other Fund, and is not necessarily indicative of the Core Bond
Fund's future results. (The Core Bond Fund's performance is set forth below.)
The Core Bond Fund's actual total return may vary significantly from the past
and future performance of these Core Bond Portfolios. Although the Adviser has
man aged Core Bond Portfolios for periods prior to June 30, 1995, the Adviser
considers its performance
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record for Core Bond Portfolios achieved prior to such date to be of less
relevance to potential investors in the Core Bond Fund because of differences
in personnel on the Adviser's domestic core bond portfolio team. While the Core
Bond Portfolios incur inflows and outflows of cash from clients, they do so less
frequently than mutual funds, such as the Funds. Accordingly, there can be no
assurance that the continuous offering of the Core Bond Fund's shares and the
Core Bond Fund's obligation to redeem its shares will not impact the Core Bond
Fund's performance relative to the Composite's performance. In the opinion of
the Adviser, so long as the Core Bond Fund has at least $25 million in net
assets, the relative difference in the size between the Core Bond Fund and the
Core Bond Portfolios should not affect the relevance of the performance of the
Core Bond Portfolios to a potential investor in the Core Bond Fund. Investment
returns and the net asset value of shares of the Core Bond Fund will fluctuate
in response to market and economic conditions as well as other factors and an
investment in the Core Bond Fund involves the risk of loss.
WPG CORE BOND FUND
PERFORMANCE(1)
AVERAGE ANNUAL TOTAL RETURN
FOR THE PERIODS ENDED
DECEMBER 31, 1997
1 YEAR 2.5 YEARS 5 YEARS 10 YEARS
------ --------- ------- --------
7.37% 6.37% 4.67% 7.54%
- ------------------
(1) Prior to January 20, 1998, the Core Bond Fund was subject to different
investment policies than those described in this prospectus which different
policies may affect the Core Bond Fund's performance.
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THIS PAGE LEFT INTENTIONALLY BLANK.
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May 1, 1998
PART B
STATEMENT OF ADDITIONAL INFORMATION
WPG GOVERNMENT MONEY MARKET FUND
WPG TAX FREE MONEY MARKET FUND
WPG INTERMEDIATE MUNICIPAL BOND FUND
WPG CORE BOND FUND
WPG GROWTH AND INCOME FUND
WPG TUDOR FUND
WEISS, PECK & GREER INTERNATIONAL FUND
WPG GROWTH FUND
WPG QUANTITATIVE EQUITY FUND
ONE NEW YORK PLAZA
NEW YORK, NEW YORK 10004
This Combined Statement of Additional Information is not a prospectus, but
expands upon and supplements the information contained in the combined
Prospectus dated May 1, 1998, as amended and/or supplemented from time to time
(the "Prospectus"), of WPG Government Money Market Fund, WPG Tax Free Money
Market Fund, WPG Intermediate Municipal Bond Fund, WPG Core Bond Fund, WPG
Growth and Income Fund, WPG Tudor Fund, Weiss, Peck & Greer International Fund,
WPG Growth Fund, and WPG Quantitative Equity Fund (each, a "Fund" and
collectively, the "Funds"). This Statement of Additional Information should be
read in conjunction with the Prospectus, a copy of which may be obtained without
charge by writing to Weiss, Peck & Greer, L.L.C., One New York Plaza, New York,
NY 10004.
THE STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND IS AUTHORIZED
FOR DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY IF PRECEDED OR ACCOMPANIED BY AN
EFFECTIVE PROSPECTUS.
<PAGE>
TABLE OF CONTENTS
PAGE
----
General Information and History..........................................1
The Funds' Investment Objectives, Policies and Techniques................1
Investment Restrictions ................................................23
Advisory, Subadvisory and Administrative Services ......................32
Trustees and Officers ..................................................41
How to Purchase Shares ................................................ 52
Redemption of Shares .................................................. 54
Net Asset Value ....................................................... 55
Investor Services ..................................................... 57
Dividends, Distributions and Tax Status ............................... 59
Portfolio Brokerage ................................................... 68
Portfolio Turnover .................................................... 72
Organization .......................................................... 73
Custodian ............................................................. 74
Transfer Agent ........................................................ 74
Legal Counsel ......................................................... 75
Independent Auditors .................................................. 75
Calculation of Performance Data ....................................... 75
Financial Statements .................................................. 80
Appendix A - Bond Ratings and Glossary .................................A-1
Appendix B - Investors Services.........................................B-1
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GENERAL INFORMATION AND HISTORY
Prior to January 20, 1998, the name of WPG Core Bond Fund, a series of
Weiss, Peck & Greer Funds Trust, was WPG Government Securities Fund.
THE FUNDS' INVESTMENT OBJECTIVES, POLICIES AND TECHNIQUES
The WPG Government Money Market Fund (the "Government Money Market Fund"),
WPG Tax Free Money Market Fund (the "Tax Free Money Market Fund"), WPG
Intermediate Municipal Bond Fund (the "Municipal Fund"), WPG Core Bond Fund (the
"Core Bond Fund"), WPG Growth and Income Fund (the "Growth and Income Fund"),
WPG Tudor Fund (the "Tudor Fund"), Weiss, Peck & Greer International Fund (the
"International Fund"), WPG Growth Fund (the "Growth Fund") and WPG Quantitative
Equity Fund (the "Quantitative Fund") each have their own investment objective
and investment policies. Tax Free Money Market Fund and Government Money Market
Fund are sometimes referred to herein as the "Money Market Funds".
Weiss, Peck & Greer, L.L.C. (the "Adviser") serves as each Fund's
investment adviser and administrator.
The investment objectives, policies and restrictions of each Fund may be
changed or altered by the Board of Trustees of their respective Fund (each, a
"Board" and collectively, the "Boards") without shareholder approval, except to
the extent such policies and restrictions have been adopted as fundamental. See
"Investment Restrictions." The securities in which each Fund may invest and
certain other investment policies are further described in the Prospectus. See
"Description of the Funds" and "Risk Considerations and Other Investment
Practices and Policies of the Funds" in the Prospectus. There can be no
assurance that any of the Funds' investment objectives will be achieved.
The Appendix to this Statement of Additional Information contains a
description of the quality categories of corporate bonds and municipal
obligations in which the Funds may invest and a Glossary describing some of the
Funds' investments.
"SPECIAL SITUATIONS"
The Tudor Fund and Growth Fund may invest in "Special Situations" as
defined in, and subject to, their respective fundamental investment restriction
set forth under "Investment Restrictions." Since every Special Situation
involves, to some extent, a break with past experience, the uncertainties in the
appraisal of future value and the risk of possible loss of capital are greater
than in the experienced, well-established companies carrying on business
according to long-established patterns. The market price of a Special Situation
may decline significantly if an anticipated development does not materialize.
For the very same reasons, however, the Tudor Fund and Growth Fund believe that
if a Special Situation is carefully studied by the Adviser and an investment is
made at the appropriate time, maximum appreciation may be achieved.
REPURCHASE AND REVERSE REPURCHASE AGREEMENTS
Subject to its investment restrictions and policies, each Fund may enter
into repurchase agreements with banks, broker-dealers or other financial
institutions in order to generate additional current income. A repurchase
agreement is an agreement under which a Fund acquires a security from a seller
subject to resale to the seller at an agreed upon price and date. The resale
price reflects an agreed upon interest rate effective for the time period the
security is held by a Fund. The repurchase price may be higher than the
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purchase price, the difference being income to the Fund, or the purchase and
repurchase price may be the same, with interest at a stated rate due to the Fund
together with the repurchase price on repurchase. In either case, the income to
the Fund is unrelated to the interest rate on the security. Typically,
repurchase agreements are in effect for one week or less, but may be in effect
for longer periods of time. Repurchase agreements of more than one week's
duration are subject to each Fund's respective limitation on investments in
illiquid securities.
Repurchase agreements are considered by the Securities and Exchange
Commission (the "SEC") to be loans by the purchaser collateralized by the
underlying securities. In an attempt to reduce the risk of incurring a loss on a
repurchase agreement, the Funds will generally enter into repurchase agreements
only with domestic banks with total assets in excess of one billion dollars or
primary U.S. Government securities dealers reporting to the Federal Reserve Bank
of New York, with respect to securities of the type in which the Funds may
invest. The Funds will monitor the value of the underlying securities throughout
the term of the agreement to ensure that their market value always equals or
exceeds the agreed-upon repurchase price to be paid to a Fund. Each Fund will
maintain a segregated account with the Custodian for the securities and other
collateral, if any, acquired under a repurchase agreement with a broker-dealer
for the term of the agreement.
In addition to the risk of the seller's default or a decline in value of
the underlying security (see "Risk Considerations and Other Investment Practices
and Policies of the Funds -- Repurchase Agreements" in the Prospectus), a Fund
also might incur disposition costs in connection with liquidating the underlying
securities. If the seller becomes insolvent and subject to liquidation or
reorganization under the Bankruptcy Code or other laws, a court may determine
that the underlying security is collateral for a loan by a Fund not within the
control of that Fund and therefore subject to sale by the seller's trustee in
bankruptcy. Finally, it is possible that a Fund may not be able to perfect its
interest in the underlying security and may be deemed an unsecured creditor of
the seller. While the Funds acknowledge these risks, it is expected that they
can be controlled through careful monitoring procedures.
The Core Bond Fund may enter into reverse repurchase agreements with
domestic banks or broker-dealers, subject to its policies and restrictions.
Under a reverse repurchase agreement, the Fund sells a security held by it and
agrees to repurchase the instrument on a specified date at a specified price,
which includes interest. The Fund will use the proceeds of a reverse repurchase
agreement to purchase other securities which either mature at a date
simultaneous with or prior to the expiration of the reverse repurchase agreement
or which are held under an agreement to resell maturing as of that time. The
Core Bond Fund will enter into reverse repurchase agreements only when the
Adviser believes the interest income and fees to be earned from the investment
of the proceeds of the transaction will be greater than the interest expense of
the transaction.
Under the Investment Company Act of 1940, as amended (the "1940 Act"),
reverse repurchase agreements may be considered borrowings by the seller. The
Core Bond Fund may not enter into a reverse repurchase agreement if as a result
its current obligations under such agreements would exceed one-third of the
current market value of its total assets (less its liabilities other than under
reverse repurchase agreements).
In connection with entering into reverse repurchase agreements, the Fund
will segregate U.S. Government securities, cash or cash equivalents with an
aggregate current value sufficient to repurchase the securities or equal to the
proceeds received upon the sale, plus accrued interest.
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FOREIGN SECURITIES
The International Fund invests primarily, and the Growth and Income Fund,
Tudor Fund and Growth Fund may invest, in securities of foreign issuers. The
Government Money Market Fund and the Core Bond Fund may also invest in
securities of foreign issuers that are denominated in U.S. dollars. Investment
in foreign issuers involves certain special considerations, including those set
forth below, which are not typically associated with investment in U.S. issuers.
Since foreign companies are not generally subject to uniform accounting,
auditing and financial reporting standards, practices and requirements
comparable to those applicable to U.S. companies, there may be less publicly
available information about a foreign company than about a domestic company.
Foreign stock markets, while growing in volume of trading activity, have
substantially less volume than the New York Stock Exchange, and securities of
some foreign companies are less liquid and more volatile than securities of
comparable U.S. companies. Similarly, volume and liquidity in most foreign bond
markets are less than in the United States and, at times, volatility of price
can be greater than in the United States. Although fixed commissions on foreign
stock exchanges are generally higher than negotiated commissions on U.S.
exchanges, the Funds will endeavor to achieve the most favorable net results on
their foreign portfolio transactions.
There is generally less government supervision and regulation of stock
exchanges, brokers and listed companies in foreign countries than in the United
States. In some foreign transactions there may be a greater risk of delayed
settlements of portfolio transactions or loss of certificates for portfolio
securities. In addition, with respect to certain foreign countries, there is the
possibility of expropriation or confiscatory taxation, political or social
instability, or diplomatic developments which could affect a Fund's investments
in those countries. Moreover, individual foreign economies may differ favorably
or unfavorably from the U.S. economy in such respects as growth of gross
national product, rate of inflation, capital reinvestment, resource
self-sufficiency and balance of payments position. In addition, it may be more
difficult to obtain and enforce a judgment against a foreign issuer or a foreign
custodian. The U.S. dollar value of foreign securities will be favorably or
adversely affected by exchange rate fluctuations between the dollar and the
applicable foreign currency. A Fund will incur costs in converting foreign
currencies into U.S. dollars.
INVESTING IN EMERGING MARKETS
The International Fund may invest in countries with emerging economies or
securities markets.
MARKET CHARACTERISTICS. Debt securities of most emerging markets issuers
may be less liquid and are generally subject to greater price volatility than
securities of issuers in the U.S. and other developed countries. The markets for
securities of emerging markets may have substantially less volume than the
market for similar securities in the U.S. and may not be able to absorb, without
price disruptions, a significant increase in trading volume or trade size.
Additionally, market making and arbitrage activities are generally less
extensive in such markets, which may contribute to increased volatility and
reduced liquidity of such markets. The less liquid the market, the more
difficult it may be for the Fund to accurately price its portfolio securities or
to dispose of such securities at the times determined to be appropriate. The
risks associated with reduced liquidity may be particularly acute to the extent
that the Fund needs cash to meet redemption requests, to pay dividends and other
distributions or to pay its expenses.
Securities markets of emerging markets may also have less efficient
clearance and settlement procedures than U.S. markets, making it difficult to
conduct and complete transactions. Delays in
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settlement could result in temporary periods when a portion of the Fund's assets
is uninvested and no return is earned thereon. Inability to make intended
security purchases could cause the Fund to miss attractive investment
opportunities. Inability to dispose of portfolio securities could result either
in losses to the Fund due to subsequent declines in value of the portfolio
security or, if the Fund has entered into a contract to sell the security, could
result in possible liability of the Fund to the purchaser.
Transaction costs, including brokerage commissions and dealer mark-ups,
in emerging markets may be higher than in the U.S. and other developed
securities markets. As legal systems in emerging markets develop, foreign
investors may be adversely affected by new or amended laws and regulations. In
circumstances where adequate laws exist, it may not be possible to obtain swift
and equitable enforcement of the law.
ECONOMIC, POLITICAL AND SOCIAL FACTORS. Emerging markets may be subject
to a greater degree of economic, political and social instability that could
significantly disrupt the principal financial markets than are the U.S., Japan
and most Western European countries. Such instability may result from, among
other things: (i) authoritarian governments or military involvement in political
and economic decision-making, including changes or attempted changes in
government through extra-constitutional means; (ii) popular unrest associated
with demands for improved economic, political and social conditions; (iii)
internal insurgencies; (iv) hostile relations with neighboring countries; and
(v) ethnic, religious and racial disaffection and conflict. Many emerging
markets have experienced in the past, and continue to experience, high rates of
inflation. In certain countries inflation has at times accelerated rapidly to
hyperinflationary levels, creating a negative interest rate environment and
sharply eroding the value of outstanding financial assets in those countries.
The economies of many emerging markets are heavily dependent upon international
trade and are accordingly affected by protective trade barriers and the economic
conditions of their trading partners. In addition, the economies of some
emerging markets may differ unfavorably from the U.S. economy in such respects
as growth of gross domestic product, rate of inflation, capital reinvestment,
resources, self-sufficiency and balance of payments position.
RESTRICTIONS ON INVESTMENT AND REPATRIATION. Certain emerging markets
require governmental approval prior to investments by foreign persons or limit
investments by foreign persons to only a specified percentage of an issuer's
outstanding securities or a specific class of securities which may have less
advantageous terms (including price) than securities of the issuer available for
purchase by nationals. Repatriation of investment income and capital from
certain emerging markets is subject to certain governmental consents. Even where
there is no outright restriction on repatriation of capital, the mechanics of
repatriation may affect the operation of the Fund.
RISK CONSIDERATIONS OF LOWER RATED SECURITIES
The Growth and Income Fund, Tudor Fund and Growth Fund may invest in fixed
income securities that are not investment grade but are rated as low as B by
Moody's Investors Service, Inc. ("Moody's") or B by Standard & Poor's Ratings
Group ("Standard & Poor's") (or their equivalents or, if unrated, determined by
the Adviser to be of comparable credit quality). In the case of a security that
is rated differently by two or more rating services, the higher rating is used
in connection with the foregoing limitation. In the event that the rating on a
security held in a Fund's portfolio is downgraded by a rating service, such
action will be considered by the Adviser in its evaluation of the overall
investment merits of that security, but will not necessarily result in the sale
of the security. The widespread expansion of government, consumer and corporate
debt within the U.S. economy has made the corporate sector, especially
cyclically sensitive industries, more vulnerable to economic downturns or
increased interest rates. An economic downturn could severally disrupt the
market for high yield fixed income securities and
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adversely affect the value of outstanding fixed income securities and the
ability of the issuers to repay principal and interest.
The prices of high yield fixed income securities have been found to be
less sensitive to interest rate changes than higher-rated investments, but more
sensitive to adverse economic changes or individual corporate developments.
Also, during an economic downturn or substantial period of rising interest
rates, highly leveraged issuers may experience financial stress which would
adversely affect their ability to service their principal and interest payment
obligations, to meet projected business goals, and to obtain additional
financing. If the issuer of a fixed income security owned by a Fund defaulted,
the Fund could incur additional expenses to seek recovery. In addition, periods
of economic uncertainty and changes can be expected to result in increased
volatility of market prices of high yield fixed income securities and a Fund's
net asset value, to the extent it holds such securities.
High yield fixed income securities also present risks based on payment
expectations. For example, high yield fixed income securities may contain
redemption or call provisions. If an issuer exercises these provisions in a
declining interest rate market, a Fund may, to the extent it holds such fixed
income securities, have to replace the securities with a lower yielding
security, which may result in a decreased return for investors. Conversely, a
high yield fixed income security's value will decrease in a rising interest rate
market, as will the value of a Fund's assets, to the extent it holds such fixed
income securities.
In addition, to the extent that there is no established retail secondary
market, there may be thin trading of high yield fixed income securities, and
this may have an impact on the Adviser's ability to accurately value such
securities and a Fund's assets and on the Fund's ability to dispose of such
securities. Adverse publicity and investor perceptions, whether or not based on
fundamental analysis, may decrease the values and liquidity of high yield fixed
income securities, especially in a thinly traded market.
New laws and proposed new laws may have an impact on the market for high
yield securities. For example, legislation requiring federally-insured savings
and loan associations to divest their investments in high yield securities could
have an adverse effect on a Fund's net asset value and investment practices, to
the extent it holds such securities.
Finally, there are risks involved in applying credit or dividend ratings
as a method for evaluating high yield securities. For example, ratings evaluate
the safety of principal and interest or dividend payments, not market value risk
of high yield securities. Also, since rating agencies may fail to timely change
the credit ratings to reflect subsequent events, a Fund will continuously
monitor the issuers of high yield securities in its portfolio, if any, to
determine if the issuers will have sufficient cash flow and profits to meet
required principal and interest payments, and to assure the security's liquidity
so the Fund can meet redemption requests.
FORWARD COMMITMENT AND WHEN-ISSUED TRANSACTIONS
Each Fund may purchase or sell securities on a when-issued or forward
commitment basis (subject to its investment policies and restrictions). These
transactions involve a commitment by a Fund to purchase or sell securities at a
future date (ordinarily one or two months later). The price of the underlying
securities (usually expressed in terms of yield) and the date when the
securities will be delivered and paid for (the settlement date) are fixed at the
time the transaction is negotiated. When-issued purchases and forward
commitments are negotiated directly with the other party, and such commitments
are not traded on exchanges. A Fund will not enter into such transactions for
the purpose of leverage.
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When-issued purchases and forward commitments enable a Fund to lock in
what is believed by the Adviser to be an attractive price or yield on a
particular security for a period of time, regardless of future changes in
interest rates. For instance, in periods of rising interest rates and falling
prices, a Fund might sell securities it owns on a forward commitment basis to
limit its exposure to falling prices. In periods of falling interest rates and
rising prices, a Fund might sell securities it owns and purchase the same or a
similar security on a when-issued or forward commitment basis, thereby obtaining
the benefit of currently higher yields.
The value of securities purchased on a when-issued or forward commitment
basis and any subsequent fluctuations in their value are reflected in the
computation of a Fund's net asset value starting on the date of the agreement to
purchase the securities, and the Fund is subject to the rights and risks of
ownership of the securities on that date. A Fund does not earn interest on the
securities it has committed to purchase until they are paid for and delivered on
the settlement date. When a Fund makes a forward commitment to sell securities
it owns, the proceeds to be received upon settlement are included in the Fund's
assets. Fluctuations in the market value of the underlying securities are not
reflected in the Fund's net asset value as long as the commitment to sell
remains in effect. Settlement of when-issued purchases and forward commitment
transactions generally takes place within two months after the date of the
transaction, but a Fund may agree to a longer settlement period.
A Fund will make commitments to purchase securities on a when-issued
basis or to purchase or sell securities on a forward commitment basis only with
the intention of completing the transaction and actually purchasing or selling
the securities. If deemed advisable as a matter of investment strategy, however,
a Fund may dispose of or renegotiate a commitment after it is entered into. A
Fund also may sell securities it has committed to purchase before those
securities are delivered to the Fund on the settlement date. A Fund may realize
a capital gain or loss in connection with these transactions, and its
distributions from any net realized capital gains will be taxable to
shareholders.
When a Fund purchases securities on a when-issued or forward commitment
basis, the Fund or the Custodian will maintain in a segregated account cash or
liquid securities having a value (determined daily)
at least equal to the amount of the Fund's purchase commitments. These
procedures are designed to ensure that the Fund will maintain sufficient assets
at all times to cover its obligations under when-issued purchases and forward
commitments.
LOANS OF PORTFOLIO SECURITIES
Subject to its investment restrictions, each Fund may seek to increase
its income by lending portfolio securities. Under present regulatory policies,
such loans may be made to financial institutions, such as broker-dealers, and
would be required to be secured continuously by collateral in cash, cash
equivalents or U.S. Government securities maintained on a current basis at an
amount at least equal to the market value of the securities loaned. See "Risk
Considerations and Other Investment Practices and Policies of the Funds --
Lending of Portfolio Securities" in the Prospectus. The rules of the New York
Stock Exchange, Inc. give a Fund the right to call a loan and obtain the
securities loaned at any time on five days' notice. For the duration of a loan,
a Fund would receive the equivalent of the interest or dividends paid by the
issuer on the securities loaned and would also receive compensation from the
investment of the collateral. A Fund would not, however, have the right to vote
any securities having voting rights during the existence of the loan, but the
Fund would call the loan in anticipation of an important vote to be taken among
holders of the securities or of the giving or withholding of their consent on a
material matter affecting the investment. As with other
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extensions of credit, there are risks of delay in recovery or even loss of
rights in the collateral should the borrower of the securities fail financially.
However, the loans would be made only to firms deemed by the Adviser to be of
good standing, and when, in the judgment of the Adviser, the consideration which
can be earned currently from securities loans of this type justifies the
attendant risk.
At the present time the staff of the SEC does not object if an investment
company pays reasonable negotiated fees to its custodian in connection with
loaned securities as long as such fees are pursuant to a contract approved by
the investment company's trustees.
OPTIONS ON SECURITIES AND SECURITIES INDICES
WRITING COVERED OPTIONS. The Core Bond Fund, Growth and Income Fund,
Tudor Fund, International Fund, Growth Fund and Quantitative Fund may each write
covered call and (except Growth and Income Fund) put options on any securities
in which it may invest or on any securities index based on securities in which
it may invest. In addition, International Fund may write call and put options on
currencies. A Fund may purchase and write such options on securities that are
listed on national domestic securities exchanges or foreign securities exchanges
or traded in the over-the-counter market. A call option written by a Fund
obligates the Fund to sell specified securities to the holder of the option at a
specified price if the option is exercised at any time before the expiration
date. All call options written by a Fund are covered, which means that the Fund
will own the securities subject to the option so long as the option is
outstanding or use the other methods described below. The purpose of a Fund in
writing covered call options is to realize greater income than would be realized
in portfolio securities transactions alone. However, in writing covered call
options for additional income, a Fund may forego the opportunity to profit from
an increase in the market price of the underlying security.
A put option written by a Fund obligates the Fund to purchase specified
securities from the option holder at a specified price if the option is
exercised at any time before the expiration date. The purpose of writing such
options is to generate additional income. However, in return for the option
premium, the Fund accepts the risk that it will be required to purchase the
underlying securities at a price in excess of the securities' market value at
the time of purchase.
All call and put options written by a Fund are covered. A written call
option or put option may be covered by (i) maintaining cash or liquid
securities, either of which, in the case of the International Fund, may be
quoted or denominated in any currency, in a segregated account noted on the
Fund's records or maintained by the Fund's custodian with a value at least equal
to the Fund's obligation under the option, (ii) entering into an offsetting
forward commitment and/or (iii) purchasing an offsetting option or any other
option which, by virtue of its exercise price or otherwise, reduces the Fund's
net exposure on its written option position.
A Fund may terminate its obligations under an exchange traded call or put
option by purchasing an option identical to the one it has written. Obligations
under over-the-counter options may be terminated only by entering into an
offsetting transaction with the counterparty to such option. Such purchases are
referred to as "closing purchase transactions."
A Fund may also write (sell) covered call and put options on any
securities index composed of securities in which it may invest. Options on
securities indices are similar to options on securities, except that the
exercise of securities index options requires cash settlement payments and does
not involve the actual purchase or sale of securities. In addition, securities
index options are designed to reflect price fluctuations in a group of
securities or segment of the securities market rather than price fluctuations in
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a single security.
The Funds may cover call options on a securities index by owning
securities whose price changes are expected to be similar to those of the
underlying index or by having an absolute and immediate right to acquire such
securities without additional cash consideration (or for additional cash
consideration held in a segregated account ) upon conversion or exchange of
other securities in its portfolio. A Fund may also cover call and put options on
a securities index by using the other methods described above.
PURCHASING OPTIONS. The Core Bond Fund, Tudor Fund, International Fund,
Growth Fund and Quantitative Fund may each purchase put and call options on any
securities in which it may invest or on any securities index based on securities
in which it may invest, and a Fund may enter into closing sale transactions in
order to realize gains or minimize losses on options it had purchased. In
addition, the International Fund may purchase put and call options on
currencies.
A Fund would normally purchase call options in anticipation of an
increase, or put options in anticipation of a decrease ("protective puts") in
the market value of securities of the type in which it may invest. The purchase
of a call option would entitle a Fund, in return for the premium paid, to
purchase specified securities at a specified price during the option period. A
Fund would ordinarily realize a gain on the purchase of a call option if, during
the option period, the value of such securities exceeded the sum of the exercise
price, the premium paid and transaction costs; otherwise the Fund would realize
either no gain or a loss on the purchase of the call option. The purchase of a
put option would entitle a Fund, in exchange for the premium paid, to sell
specified securities at a specified price during the option period. The purchase
of protective puts is designed to offset or hedge against a decline in the
market value of a Fund's securities. Put options may also be purchased by a Fund
for the purpose of affirmatively benefiting from a decline in the price of
securities which it does not own. A Fund would ordinarily realize a gain if,
during the option period, the value of the underlying securities decreased below
the exercise price sufficiently to cover the premium and transaction costs;
otherwise the Fund would realize either no gain or a loss on the purchase of the
put option. Gains and losses on the purchase of put options may be offset by
countervailing changes in the value of the underlying portfolio securities.
A Fund may purchase put and call options on securities indices for the
same purposes as it may purchase options on securities. Options on securities
indices are similar to options on securities, except that the exercise of
securities index options requires cash payments and does not involve the actual
purchase or sale of securities. In addition, securities index options are
designed to reflect price fluctuations in a group of securities or segment of
the securities market rather than price fluctuations in a single security.
Transactions by a Fund in options on securities and securities indices
will be subject to limitations established by each of the exchanges, boards of
trade or other trading facilities on which such options are traded governing the
maximum number of options in each class which may be written or purchased by a
single investor or group of investors acting in concert, regardless of whether
the options are written or purchased on the same or different exchanges, boards
of trade or other trading facilities or are held or written in one or more
accounts or through one or more brokers. Thus, the number of options which a
Fund may write or purchase may be affected by options written or purchased by
other investment advisory clients of the Adviser. An exchange, board of trade or
other trading facility may order the liquidation of positions found to be in
excess of these limits, and it may impose certain other sanctions.
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WRITING AND PURCHASING CURRENCY CALL AND PUT OPTIONS. The International
Fund may write covered put and call options and purchase put and call options on
foreign currencies to seek to protect against declines in the dollar value of
portfolio securities and against increases in the dollar cost of securities to
be acquired.
A call option written by the Fund obligates the Fund to sell specified
currency to the holder of the option at a specified price if the option is
exercised at any time before the expiration date. A put option written by the
Fund obligates the Fund to purchase specified currency from the option holder at
a specified price if the option is exercised at any time before the expiration
date. The writing of currency options involves a risk that the Fund will, upon
exercise of the option, be required to sell currency subject to a call at a
price that is less than the currency's market value or be required to purchase
currency subject to a put at a price that exceeds the currency's market value.
The Fund may terminate its obligations under a written call or put option
by purchasing an option identical to the one written. Such purchases are
referred to as "closing purchase transactions." The Fund would also be able to
enter into closing sale transactions in order to realize gains or minimize
losses on purchased options.
The Fund would normally purchase call options in anticipation of an
increase in the U.S. dollar value of currency in which securities to be acquired
by the Fund are denominated or quoted. The purchase of a call option would
entitle the Fund, in return for the premium paid, to purchase specified currency
at a specified price during the option period. The Fund would ordinarily realize
a gain if, during the option period, the value of such currency exceeded the sum
of the exercise price, the premium paid and transaction costs; otherwise the
Fund would realize either no gain or a loss on the purchase of the call option.
The Fund would normally purchase put options in anticipation of a decline
in the U.S. dollar value of currency in which securities in its portfolio are
denominated or quoted ("protective puts"). The purchase of a put option would
entitle the Fund, in exchange for the premium paid, to sell specified currency
at a specified price during the option period. The purchase of protective puts
is designed merely to offset or hedge against a decline in the U.S. dollar value
of the Fund's portfolio securities due to currency exchange rate fluctuations.
The Fund would ordinarily realize a gain if, during the option period, the value
of the underlying currency decreased below the exercise price sufficiently to
more than cover the premium and transaction costs; otherwise the Fund would
realize either no gain or a loss on the purchase of the put option. Gains and
losses on the purchase of protective put options would tend to be offset by
countervailing changes in the value of underlying currency.
RISKS ASSOCIATED WITH OPTIONS TRANSACTIONS. There is no assurance that a
liquid secondary market on a domestic or foreign options exchange will exist for
any particular exchange-traded option or at any particular time. If a Fund is
unable to effect a closing purchase transaction with respect to covered options
it has written, the Fund will not be able to sell the underlying securities or
currencies or dispose of assets held in a segregated account until the options
expire or are exercised. Similarly, if a Fund is unable to effect a closing sale
transaction with respect to options it has purchased, it would have to exercise
the options in order to realize any profit and will incur transaction costs upon
the purchase or sale of underlying securities or currencies.
Reasons for the absence of a liquid secondary market on an exchange
include the following: (i) there may be insufficient trading interest in certain
options; (ii) restrictions may be imposed by an exchange on opening transactions
or closing transactions or both; (iii) trading halts, suspensions or other
restrictions may be imposed with respect to particular classes or series of
options; (iv) unusual or unforeseen circumstances may interrupt normal
operations on an exchange; (v) the facilities of an exchange or the Options
Clearing
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Corporation may not at all times be adequate to handle current trading volume;
or (vi) one or more exchanges could, for economic or other reasons, decide or be
compelled at some future date to discontinue the trading of options (or a
particular class or series of options), in which event the secondary market on
that exchange (or in that class or series of options) would cease to exist
although outstanding options on that exchange that had been issued by the
Options Clearing Corporation as a result of trades on that exchange would
continue to be exercisable in accordance with their terms.
The Fund's ability to terminate over-the-counter options is more limited
than with exchange-traded options and may involve the risk that broker-dealers
participating in such transactions will not fulfill their obligations. The
Adviser will monitor the liquidity of over-the-counter options and, if it
determines that such options are not readily marketable, a Fund's ability to
enter such options will be subject to the Fund's limitation on investments on
illiquid securities.
The writing and purchase of options is a highly specialized activity
which involves investment techniques and risks different from those associated
with ordinary portfolio securities transactions. The successful use of options
for hedging purposes depends in part on the Adviser's ability to predict future
price fluctuations and the degree of correlation between the options and
securities markets.
FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS
To seek to increase total return or to hedge against changes in interest
rates, securities prices or, in the case of the International Fund, (but only
for hedging purposes) currency exchange rates, Core Bond Fund, Tudor Fund,
International Fund, Growth Fund and Quantitative Fund may purchase and sell
various kinds of futures contracts, and purchase and write call and put options
on any of such futures contracts. A Fund may also enter into closing purchase
and sale transactions with respect to any of such contracts and options. The
futures contracts may be based on various securities (such as U.S. Government
Securities), securities indices, foreign currencies (in the case of the
International Fund) and any other financial instruments and indices. A Fund will
engage in futures and related options transaction only for bona fide hedging
purposes as defined below or for purposes of seeking to increase total return to
the extent permitted by regulations of the Commodity Futures Trading Commission
("CFTC"). All futures contracts entered into by a Fund are traded on U.S.
exchanges or boards of trade that are licensed and regulated by the CFTC or on
foreign exchanges.
FUTURES CONTRACTS. A futures contract may generally be described as an
agreement between two parties to buy and sell particular financial instruments
or currencies for an agreed price during a designated month (or to deliver the
final cash settlement price, in the case of a contract relating to an index or
otherwise not calling for physical delivery at the end of trading in the
contract).
When interest rates are rising or securities prices are falling, a Fund
can seek to offset a decline in the value of its current portfolio securities
through the sale of futures contracts. When interest rates are falling or
securities prices are rising, a Fund, through the purchase of futures contracts,
can attempt to secure better rates or prices than might later be available in
the market when it effects anticipated purchases. The International Fund may
seek to offset anticipated changes in the value of a currency in which its
portfolio securities, or securities that it intends to purchase, are quoted or
denominated by purchasing and selling futures contracts on such currencies.
Positions taken in the futures markets are not normally held to maturity
but are instead liquidated through offsetting transactions which may result in a
profit or a loss. While futures contracts on securities or currency will usually
be liquidated in this manner, a Fund may instead make, or take, delivery of the
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underlying securities or currency whenever it appears economically advantageous
to do so. A clearing corporation associated with the exchange on which futures
on securities or currency are traded guarantees that, if still open, the sale or
purchase will be performed on the settlement date.
HEDGING STRATEGIES. Hedging, by use of futures contracts, seeks to
establish with more certainty than would otherwise be possible the effective
price or rate of return on portfolio securities or securities that a Fund
proposes to acquire or the exchange rate of currencies in which portfolio
securities are quoted or denominated. A Fund may, for example, take a "short"
position in the futures market by selling futures contracts to seek to hedge
against an anticipated rise in interest rates or a decline in market prices or
(in the case of the International Fund) foreign currency rates that would
adversely affect the U.S. dollar value of the Fund's portfolio securities. Such
futures contracts may include contracts for the future delivery of securities
held by a Fund or securities with characteristics similar to those of the Fund's
portfolio securities. Similarly, the International Fund may sell futures
contracts on any currencies in which its portfolio securities are quoted or
denominated or in one currency to hedge against fluctuations in the value of
securities denominated in a different currency if there is an established
historical pattern of correlation between the two currencies. If, in the opinion
of the Adviser, there is a sufficient degree of correlation between price trends
for a Fund's portfolio securities and futures contracts based on other financial
instruments, securities indices or other indices, the Fund may also enter into
such futures contracts as part of its hedging strategy. Although under some
circumstances prices of securities in a Fund's portfolio may be more or less
volatile than prices of such futures contracts, the Adviser will attempt to
estimate the extent of this volatility difference based on historical patterns
and compensate for any such differential by having the Fund enter into a greater
or lesser number of futures contracts or by seeking to achieve only a partial
hedge against price changes affecting the Fund's portfolio securities. When
hedging of this character is successful, any depreciation in the value of
portfolio securities will be substantially offset by appreciation in the value
of the futures position. On the other hand, any unanticipated appreciation in
the value of a Fund's portfolio securities would be substantially offset by a
decline in the value of the futures position.
On other occasions, a Fund may take a "long" position by purchasing
futures contracts. This would be done, for example, when a Fund anticipates the
subsequent purchase of particular securities when it has the necessary cash, but
expects the prices or currency exchange rates then available in the applicable
market to be less favorable than prices that are currently available.
OPTIONS ON FUTURES CONTRACTS. The acquisition of put and call options on
futures contracts will give a Fund the right (but not the obligation) for a
specified price to sell or to purchase, respectively, the underlying futures
contract at any time during the option period. As the purchaser of an option on
a futures contract, a Fund obtains the benefit of the futures position if prices
move in a favorable direction but limits its risk of loss in the event of an
unfavorable price movement to the loss of the premium and transaction costs.
The writing of a call option on a futures contract generates a premium
which may partially offset a decline in the value of a Fund's assets. By writing
a call option, a Fund becomes obligated, in exchange for the premium, (upon
exercise of the option) to sell a futures contract if the option is exercised,
which may have a value higher than the exercise price. Conversely, the writing
of a put option on a futures contract generates a premium which may partially
offset an increase in the price of securities that a Fund intends to purchase.
However, the Fund becomes obligated (upon exercise of the option) to purchase a
futures contract if the option is exercised, which may have a value lower than
the exercise price. Thus, the loss incurred by a Fund in writing options on
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futures is potentially unlimited and may exceed the amount of the premium
received. The Funds will incur transaction costs in connection with the writing
of options on futures.
The holder or writer of an option on a futures contract may terminate its
position by selling or purchasing an offsetting option on the same financial
instrument. There is no guarantee that such closing transactions can be
effected. A Fund's ability to establish and close out positions on such options
will be subject to the development and maintenance of a liquid market.
OTHER CONSIDERATIONS. The Funds will engage in futures and related
options transactions only for bona fide hedging or, except for purchases or
sales by the International Fund of futures on currencies, to seek to increase
total return as permitted by the CFTC regulations which permit principals of an
investment company registered under the Act to engage in such transactions
without registering as commodity pool operators. A Fund will determine that the
price fluctuations in the futures contracts and options on futures used for
hedging purposes are substantially related to price fluctuations in securities
held by the Fund or securities or instruments which it expects to purchase.
Except as stated below, a Fund's futures transactions will be entered into for
traditional hedging purposes -- i.e., futures contracts will be sold to protect
against a decline in the price of securities (or the currency in which they are
quoted or denominated) that the Fund owns or futures contracts will be purchased
to protect the Fund against an increase in the price of securities (or the
currency in which they are quoted or denominated) it intends to purchase. As
evidence of this hedging intent, each Fund expects that on 75% or more of the
occasions on which it takes a long futures or option position (involving the
purchase of futures contracts), the Fund will have purchased, or will be in the
process of purchasing, equivalent amounts of related securities (or assets
denominated in the related currency) in the cash market at the time when the
futures or option position is closed out. However, in particular cases, when it
is economically advantageous for a Fund to do so, a long futures position may be
terminated or an option may expire without the corresponding purchase of
securities or other assets.
As an alternative to compliance with the bona fide hedging definition, a
CFTC regulation permits a Fund to elect to comply with a different test under
which the aggregate initial margin and premiums required to establish positions
to seek to increase total return in futures contracts and options on futures
will not exceed 5% of the net asset value of the Fund's portfolio, after taking
into account unrealized profits and losses on any such positions and excluding
the amount by which such options were in-the-money at the time of purchase. Each
Fund will engage in transactions in currency forward contracts, futures
contracts and options only to the extent such transactions are consistent with
the requirements of the Internal Revenue Code of 1986, as amended (the "Code"),
for maintaining its qualification as a regulated investment company for federal
income tax purposes. See "Taxation."
Transactions in futures contracts and options on futures involve
brokerage costs, require margin deposits and, in the case of contracts and
options obligating the International Fund to purchase securities or currencies,
require the Fund to establish a segregated account consisting of cash or liquid
securities in an amount equal to the underlying value of such contracts and
options.
While transactions in futures contracts and options on futures may reduce
certain risks, such transactions themselves entail certain other risks. Thus,
while a Fund may benefit from the use of futures and options on futures,
unanticipated changes in interest rates or securities prices or currency
exchange rates may result in a poorer overall performance for the Fund than if
it had not entered into any futures contracts or options transactions. In the
event of an imperfect correlation between a futures position and a portfolio
position which is intended to be protected, the desired protection may not be
obtained and the Fund may be exposed to risk of loss. In addition, it is not
possible to hedge fully or protect against currency fluctuations affecting the
value of securities denominated in foreign currencies because the value of such
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securities is likely to fluctuate as a result of independent factors not related
to currency fluctuations.
Perfect correlation between a Fund's futures positions and portfolio
positions will be impossible to achieve. There are no futures contracts based
upon individual securities, except certain U.S. Government securities. The only
futures contracts available to hedge the Fund's portfolio are various futures on
Eurodollars, U.S. Government securities, securities indices and foreign
currencies.
FORWARD FOREIGN CURRENCY TRANSACTIONs
The International Fund, Growth and Income Fund, Tudor Fund and Growth
Fund may each, to the extent that it invests in foreign securities, enter into
forward foreign currency exchange contracts in order to protect against
uncertainty in the level of future foreign currency exchange rates. A Fund will
conduct its foreign currency exchange transactions either on a spot (i.e., cash)
basis at the spot rate prevailing in the foreign currency exchange market, or
through entering into forward contracts to purchase or sell foreign currencies.
A forward foreign currency exchange contract involves an obligation to purchase
or sell a specific currency at a future date, which may be any fixed number of
days (usually less than one year) from the date of the contract agreed upon by
the parties, at a price set at the time of the contract. These contracts are
traded in the interbank market conducted directly between traders (usually large
commercial banks) and their customers. A forward contract generally has no
deposit requirement, and no commissions are charged at any stage for trades.
Although foreign exchange dealers do not charge a fee for conversion, they do
realize a profit based on the difference (the spread) between the price at which
they are buying and selling various currencies.
The Funds are permitted to enter into forward contracts under two
circumstances. First, when a Fund enters into a contract for the purchase or
sale of a security quoted or denominated in a foreign currency, it may desire to
"lock in" the U.S. dollar price of the security. By entering into a forward
contract for the purchase or sale, for a fixed number of U.S. dollars, of the
amount of foreign currency involved in the underlying security transactions, the
Fund will be able to insulate itself from a possible loss resulting from a
change in the relationship between the U.S. dollar and the subject foreign
currency during the period between the date on which the security is purchased
or sold and the date on which payment is made or received.
Second, when the Adviser believes that the currency of a particular
foreign country may suffer a substantial decline against the U.S. dollar, it may
cause a Fund to enter a forward contract to sell, for a fixed U.S. dollar
amount, the amount of foreign currency approximating the value of some or all of
the Fund's portfolio securities quoted or denominated in such foreign currency.
The precise matching of the forward contract amounts and the value of the
securities involved will not generally be possible since the future value of
such securities in foreign currencies will change as a consequence of market
movements in the value of those securities between the date the forward contract
is entered into and the date it matures.
Although the Funds have no current intention to do so, the Funds may
engage in cross-hedging by using forward contracts in one currency to hedge
against fluctuations in the value in securities denominated or quoted in a
different currency if the Adviser determines that there is a pattern of
correlation between the two currencies. Cross-hedging may also include entering
into a forward transaction involving two foreign currencies, using one foreign
currency as a proxy for the U.S. dollar to hedge against variations in the other
U.S. foreign currency, if the Adviser determines that there is a pattern of
correlation between the proxy currency and the U.S. dollar.
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The Funds will not enter into forward contracts to sell currency or
maintain a net exposure to such contracts if the consummation of such contracts
would obligate the Funds to deliver an amount of foreign currency in excess of
the value of the Funds' respective portfolio securities or other assets quoted
or denominated in that currency. At the consummation of the forward contract, a
Fund may either make delivery of the foreign currency or terminate its
contractual obligation by purchasing an offsetting contract
obligating it to purchase at the same maturity date, the same amount of such
foreign currency. If a Fund chooses to make delivery of foreign currency, it may
be required to obtain such delivery through the sale of portfolio securities
quoted or denominated in such currency or through conversion of other assets of
the Fund into such currency. If a Fund engages in an offsetting transaction, the
Fund will realize a gain or a loss to the extent that there has been a change in
forward contract prices. Closing purchase transactions with respect to forward
contracts are usually effected with the currency trader who is party to the
original forward contract.
The Funds' transactions in forward contracts will be limited to those
described above. Of course, no Fund is required to enter into such transactions
with regard to its foreign currency quoted or denominated securities, and a Fund
will not do so unless deemed appropriate by the Adviser.
When entering into a forward contract, a Fund will segregate either cash
or liquid securities quoted or denominated in any currency in an amount equal to
the value of the Fund's total assets committed to the consummation of forward
currency exchange contracts which require the Fund to purchase a foreign
currency. If the value of the segregated securities declines, additional cash or
securities will be segregated by the Fund on a daily basis so that the value of
the segregated securities will equal the amount of the Fund's commitments with
respect to such contracts.
This method of protecting the value of a Fund's portfolio securities
against a decline in the value of a currency does not eliminate fluctuations in
the underlying prices of the securities. It simply establishes a rate of
exchange which can be achieved at some future point in time. The precise
projection of short-term currency market movements is not possible, and
short-term hedging provides a means of fixing the U.S. dollar value of only a
portion of a Fund's foreign assets. It also reduces any potential gain which may
have otherwise occurred had the currency value increased above the settlement
price of the contract.
While the Funds may enter into forward contracts to seek to reduce
currency exchange rate risks, transactions in such contracts involve certain
other risks. Thus, while a Fund may benefit from such transactions,
unanticipated changes in currency prices may result in a poorer overall
performance for a Fund then if it had not engaged in any such transactions.
Moreover, there may be imperfect correlation between a Fund's portfolio holdings
or securities quoted or denominated in a particular currency and forward
contracts entered into by the Fund. Such imperfect correlation may cause the
Fund to sustain losses which will prevent the Fund from achieving a complete
hedge or expose the Fund to the risk of foreign exchange loss.
Forward contracts are subject to the risks that the counterparty to such
contract will default on its obligations. Since a forward foreign currency
exchange contract is not guaranteed by an exchange or clearing house, a default
on the contract would deprive a Fund of unrealized profits, transaction costs or
the benefits of a currency hedge or force the Fund to cover its purchase or sale
commitments, if any, at the current market price.
The Funds' foreign currency transactions (including related options,
futures and forward contracts) may be limited by the requirements of Subchapter
M of the Code for qualification as a regulated investment company.
PRIVATELY ISSUED MORTGAGE-BACKED SECURITIES
Certain Funds, and in particular the Government Money Market Fund and the
Core Bond Fund, may invest in mortgage-backed securities issued by trusts or
other entities formed or sponsored by private originators of and institutional
investors in mortgage loans and other non-governmental entities (or
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representing custodial arrangements administered by such institutions). These
private originators and institutions include savings and loan associations,
mortgage bankers, commercial banks, insurance companies, investment banks and
special purpose subsidiaries of the foregoing.
Privately issued mortgage-backed securities are generally backed by pools
of conventional (i.e., non-government guaranteed or insured) mortgage loans.
Since such mortgage-backed securities normally are not guaranteed by an entity
having the credit standing of Ginnie Mae, Fannie Mae or Freddie Mac, in order to
receive a high quality rating from the rating organizations (e.g., Standard &
Poor's or Moody's), they often are structured with one or more types of "credit
enhancement." Such credit enhancement falls into two categories: (1) liquidity
protection and (2) protection against losses resulting after default by a
borrower and liquidation of the collateral (e.g., sale of a house after
foreclosure). Liquidity protection refers to the payment of cash advances to
holders of mortgage-backed securities when a borrower on an underlying mortgage
fails to make its monthly payment on time. Protection against losses resulting
after default and liquidation is designed to cover losses resulting when, for
example, the proceeds of a foreclosure sale are insufficient to cover the
outstanding amount on the mortgage. Such protection may be provided through
guarantees, insurance policies or letters of credit, through various means of
structuring the securities or through a combination of such approaches.
Examples of credit enhancement arising out of the structure of the
transaction include "senior-subordinated securities" (multiple class securities
with one or more classes entitled to receive payment before other classes, with
the result that defaults on the underlying mortgages are borne first by the
holders of the subordinated class), creation of "spread accounts" or "reserve
funds" (where cash or investments are held in reserve against future losses) and
"over-collateralization" (where the scheduled payments on the underlying
mortgages in a pool exceeds the amount required to be paid on the
mortgage-backed securities). The degree of credit enhancement for a particular
issue of mortgage-backed securities is based on the level of credit risk
associated with the particular mortgages in the related pool. Losses on a pool
in excess of anticipated levels could nevertheless result in losses to security
holders since credit enhancement rarely covers every dollar owed on a pool. See
the Funds' Prospectus for a further description of mortgage-backed securities.
RISKS ASSOCIATED WITH SPECIFIC TYPES OF DERIVATIVE SECURITIES
The Core Bond Fund may invest in floating rate securities based on the
Cost of Funds Index ("COFI floaters"), other "lagging rate" floating rate
securities, floating rate securities that are subject to a maximum interest rate
("capped floaters"), and Mortgage-Backed Securities purchased at a discount. The
primary risks associated with these derivative debt securities are the potential
extension of average life and/or depreciation due to rising interest rates.
STRUCTURED OR HYBRID NOTES
The Growth and Income Fund may invest in "structured" or "hybrid" notes.
The distinguishing feature of a structured or hybrid note is that the amount of
interest and/or principal payable on the note is based on the performance of a
benchmark asset or market other than fixed-income securities or interest rates.
Examples of these benchmarks include stock prices, currency exchange rates and
physical commodity prices. Investing in a structured note allows the Fund to
gain exposure to the benchmark market while fixing the maximum loss that the
Fund may experience in the event that market does not perform as expected.
Depending on the terms of the note, the Fund may forego all or part of the
interest and principal that would be payable on a comparable conventional note;
the Fund's loss cannot exceed this foregone interest and/or principal.
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It is expected that not more than 5% of the Fund's net assets will be at
risk as a result of investments in structured or hybrid notes. In addition to
the risks associated with a direct investment in the benchmark asset,
investments in structured and hybrid notes involve the risk that the issuer or
counterparty to the obligation will fail to perform its contractual obligations.
Certain structured or hybrid notes may also be leveraged to the extent that the
magnitude of any change in the interest rate or principal payable on the
benchmark asset is a multiple of the change in the reference price. Leverage
enhances the price volatility of the security and, therefore, the volatility of
the Fund's net asset value. Further, certain structured or hybrid notes may be
illiquid for purposes of the Fund's limitation on investments in illiquid
securities.
VARIABLE AMOUNT MASTER DEMAND NOTES
The Government Money Market Fund, Tax Free Money Market Fund and
Municipal Fund may invest in variable amount master demand notes, which are a
form of commercial paper. These are obligations that permit the investment of
fluctuating amounts at varying rates of interest pursuant to direct arrangements
between a Fund, as lender, and the borrower. These notes permit daily changes in
the amounts borrowed. The lender has the right to increase the amount under the
note at any time up to the full amount provided by the note agreement, or to
decrease the amount, and the borrower may prepay up to the full amount of the
note without penalty. Because variable amount master demand notes are direct
lending arrangements between the lender and borrower, it is not generally
contemplated that such instruments will be traded, and there is no secondary
market for these notes. However, they are redeemable (and thus immediately
repayable by the borrower) at face value, plus accrued interest, at any time. In
connection with master demand note arrangements, the Adviser will consider, on
an ongoing basis, the earning power, cash flow, and other liquidity ratios of
the borrower and its ability to pay principal and interest on demand. These
notes generally are not rated by Moody's or Standard & Poor's. A Fund may invest
in them only if the Adviser believes that, at the time of investment, the notes
are of comparable quality to the other commercial paper in which that Fund may
invest, including, in the case of the Government Money Market Fund and Tax Free
Money Market Fund, the requirements of the rules of the SEC applicable to the
use of the amortized cost method of securities valuation.
For the purpose of limitations on the maturities of the investments of a
Fund, variable amount master demand notes will be considered to have a maturity
of one day unless the Adviser has reason to believe that the borrower could not
make immediate repayment upon demand.
VARIABLE RATE DEMAND INSTRUMENTS
The Government Money Market Fund, Tax Free Money Market Fund and
Municipal Fund may purchase variable rate demand instruments that are tax-exempt
municipal obligations and other debt securities providing for a periodic
adjustment in the interest rate paid on the instrument according to changes in
interest rates generally. These instruments also permit a Fund to demand payment
of the unpaid principal balance plus accrued interest upon a specified number of
days' notice to the issuer or its agent. The demand feature may be backed by a
bank letter of credit or guarantee issued with respect to such instrument. A
bank that issues a repurchase commitment may receive a fee from a Fund for this
arrangement. The issuer of a variable rate demand instrument may have a
corresponding right to prepay in its discretion the outstanding principal of the
instrument plus accrued interest upon notice comparable to that required for the
holder to demand payment.
The variable rate demand instruments that these Funds may purchase are
payable on demand on not more than thirty calendar days' notice. The terms of
the instruments provide that interest rates are adjustable
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at intervals ranging from daily up to six months, and the adjustments are based
upon the prime rate of a bank or other appropriate interest rate adjustment
index as provided in the respective instruments. The Funds intend to exercise
the demand only (1) upon a default under the terms of the debt security, (2) as
needed to provide liquidity, or (3) to maintain the respective quality standards
of each Fund's investment portfolio. A Fund will determine the variable rate
demand instruments that it will purchase in accordance with procedures approved
by the Boards to minimize credit risks. The Adviser may determine that an
unrated variable rate demand instrument meets a Fund's quality criteria by
reason of being backed by a letter of credit or guarantee issued by a bank that
meets the quality criteria for the Fund. Thus, either the credit of the issuer
of the obligation or the guarantor bank or both will meet the quality standards
of a Fund. The Adviser will reevaluate each unrated variable rate demand
instrument held by a Fund on a quarterly basis to determine that it continues to
meet the Fund's quality criteria.
The value of the underlying variable rate demand instruments may change
with changes in interest rates generally, but the variable rate nature of these
instruments should decrease changes in value due to interest rate fluctuations.
Accordingly, as interest rates decrease or increase, the potential for capital
gain and the risk of capital loss on the disposition of portfolio securities are
less than would be the case with a comparable portfolio of fixed income
securities. The Funds may purchase variable rate demand instruments on which
stated minimum or maximum rates, or maximum rates set by state law, limit the
degree to which interest on such variable rate demand instruments may fluctuate;
to the extent a Fund purchases such instruments, increases or decreases in value
of such variable rate demand notes may be somewhat greater than would be the
case without such limits. Because the adjustment of interest rates on variable
rate demand instruments is made in relation to changes in the applicable rate
adjustment index, variable rate demand instruments are not comparable to
long-term fixed interest rate securities. Accordingly, interest rates on
variable rate demand instruments may be higher or lower than current market
rates for fixed rate obligations of comparable quality with similar final
maturities.
The maturity of the variable rate demand instruments held by the Funds
will ordinarily be deemed to be the longer of (1) the notice period required
before a Fund is entitled to receive payment of the principal amount of the
instrument or (2) the period remaining until the instrument's next interest rate
adjustment.
The acquisition of variable rate demand notes for the Government Money
Market Fund and the Tax Free Money Market Fund must also meet the requirements
of rules issued by the SEC applicable to the use of the amortized cost method of
securities valuation.
PARTICIPATION INTERESTS
Subject to their respective investment objective and policies, Government
Money Market Fund and Tax Free Money Market Fund may purchase from banks
participation interests in all or part of specific holdings of municipal or
other debt obligations. Each participation interest is backed by an irrevocable
letter of credit or guarantee of the selling bank that the Adviser has
determined meets the prescribed quality standards of each Fund. Thus, even if
the credit of the issuer of the debt obligation does not meet the quality
standards of a Fund, the credit of the selling bank will, subject in each
instance to the requirements of rules issued by the SEC applicable to the use by
these Funds of the amortized cost method of valuation. Each Fund will have the
right to sell the participation interest back to the bank after seven days'
notice for the full principal amount of a Fund's interest in the municipal or
debt obligation plus accrued interest, but only (1) as required to provide
liquidity to that Fund, (2) to maintain the quality standards of each Fund's
investment portfolio or (3) upon a default under the terms of the debt
obligation. The selling bank may receive a fee from a Fund in connection with
the arrangement. Tax Free Money Market Fund will not purchase participation
interests in municipal obligations unless it receives an opinion of issuer's
counsel or
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a ruling of the Internal Revenue Service (the "Service") satisfactory to its
Board that interest earned by the Fund on municipal obligations in which it
holds participation interests is excluded from gross income for Federal income
tax purposes in the hands of such Fund.
MUNICIPAL OBLIGATIONS
Tax Free Money Market Fund and Municipal Fund may invest in municipal
obligations. Municipal obligations are issued by or on behalf of states,
territories and possessions of the United States and their political
subdivisions, agencies and instrumentalities to obtain funds for various public
purposes. The interest on most of these obligations is generally exempt from
regular Federal income tax in the hands of most individual investors, although
it may be subject to the individual and corporate alternative minimum tax. The
two principal classifications of municipal obligations are "notes" and "bonds."
Municipal notes are generally used to provide for short-term capital
needs and generally have maturities of one year or less. Municipal notes include
tax anticipation notes, revenue anticipation notes, bond anticipation notes, and
construction loan notes. Tax anticipation notes are sold to finance working
capital needs of municipalities. They are generally payable from specific tax
revenues expected to be received at a future date. Revenue anticipation notes
are issued in expectation of receipt of other types of revenue such as federal
revenues available under the Federal Revenue Sharing Program. Tax anticipation
notes and revenue anticipation notes are generally issued in anticipation of
various seasonal revenues such as income, sales, use, and business taxes. Bond
anticipation notes are sold to provide interim financing. These notes are
generally issued in anticipation of long-term financing in the market. In most
cases, these monies provide for the repayment of the notes. Construction loan
notes are sold to provide construction financing. After the projects are
successfully completed and accepted, many projects receive permanent financing
through the Federal Housing Administration under "Fannie Mae" (the Federal
National Mortgage Association) or "Ginnie Mae" (the Government National Mortgage
Association). There are, of course, a number of other types of notes issued for
different purposes and secured differently from those described above.
Municipal bonds, which meet longer term capital needs and generally have
maturities of more than one year when issued, have two principal
classifications, "general obligation" bonds and "revenue" bonds. Issuers of
general obligation bonds include states, counties, cities, towns and regional
districts. The proceeds of these obligations are used to fund a wide range of
public projects including the construction or improvement of schools, highways
and roads, water and sewer systems and a variety of other public purposes. The
basic security of general obligation bonds is the issuer's pledge of its faith,
credit, and taxing power for the payment of principal and interest. The taxes
that can be levied for the payment of debt service may be limited or unlimited
as to rate or amount or special assessments.
The principal security for a revenue bond is generally the net revenues
derived from a particular facility or group of facilities or, in some cases,
from the proceeds of a special excise or other specific revenue source. Revenue
bonds have been issued to fund a wide variety of capital projects including:
electric, gas, water and sewer systems; highways, bridges and tunnels; port and
airport facilities; colleges and universities; and hospitals. Although the
principal security behind these bonds varies widely, many provide additional
security in the form of a debt service reserve fund whose monies may also be
used to make principal and interest payments on the issuer's obligations.
Housing finance authorities have a wide range of security including partially or
fully insured, rent subsidized and/or collateralized mortgages, and/or the net
revenues from housing or other public projects. In addition to a debt service
reserve fund, some authorities provide further security in the form of a state's
ability (without obligation) to make up
deficiencies in the debt service reserve fund. Lease rental revenue bonds issued
by a state or local
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authority for capital projects are secured by annual lease rental payments from
the state or locality to the authority sufficient to cover debt service on the
authority's obligations.
Industrial development bonds (now a subset of a class of bonds known as
"private activity bonds"), although nominally issued by municipal authorities,
are generally not secured by the taxing power of the municipality but are
secured by the revenues of the authority derived from payments by the industrial
user. Distributions by the Tax Free Money Market Fund and the Municipal Fund of
interest income from private activity bonds may subject certain investors to the
federal alternative minimum tax.
There is, in addition, a variety of hybrid and special types of municipal
obligations as well as numerous differences in the security of municipal
obligations both within and between the two principal classifications above.
An entire issue of municipal obligations may be purchased by one or a
small number of institutional investors such as one of the Funds. Thus, the
issue may not be said to be publicly offered. Unlike securities which must be
registered under the Securities Act of 1933, as amended (the "1933 Act"), prior
to offer and sale unless an exemption from such registration is available,
municipal obligations which are not publicly offered may nevertheless be readily
marketable. A secondary market exists for municipal obligations which were not
publicly offered initially.
The Adviser determines whether a municipal obligation is readily
marketable based on whether it may be sold in a reasonable time consistent with
the customs of the municipal markets (usually seven days) at a price (or
interest rate) which accurately reflects its value. The Adviser believes that
the quality standards applicable to the Tax Free Money Market Fund's investments
enhance marketability. In addition, stand-by commitments and demand obligations
also enhance marketability.
For the purpose of a Fund's investment restrictions, the identification
of the "issuer" of municipal obligations which are not general obligation bonds
is made by the Adviser on the basis of the characteristics of the obligation as
described above, the most significant of which is the source of funds for the
payment of principal of and interest on such obligations.
Yields on municipal obligations depend on a variety of factors, including
money market conditions, municipal bond market conditions, the size of a
particular offering, the maturity of the obligation and the quality of the
issue. High grade municipal obligations tend to have a lower yield than lower
rated obligations. Municipal obligations are subject to the provisions of
bankruptcy, insolvency and other laws affecting the rights and remedies of
creditors, such as the Federal Bankruptcy Code, and laws, if any, which may be
enacted by Congress or state legislatures extending the time for payment of
principal or interest, or both, or imposing other constraints upon enforcement
of such obligations or municipalities to levy taxes. There is also the
possibility that as a result of litigation or other conditions the power or
ability of any one or more issuers to pay when due principal of and interest on
its or their municipal obligations may be materially affected.
The Tax Free Money Market Fund expects that it will not invest more than
25% of its total assets in municipal obligations whose issuers are located in
the same state or more than 25% its total assets in municipal obligations the
security of which is derived from any one of the following categories: hospitals
and health facilities; turnpikes and toll roads; ports and airports; or colleges
and universities. The Tax Free Money Market Fund may invest more than 25% of its
total assets in municipal obligations of one or more of the following types:
public housing authorities; general obligations of states and localities; lease
rental obligations of states and local authorities; state and local housing
finance authorities; municipal
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utilities systems; bonds that are secured or backed by the Treasury or other
U.S. Government guaranteed securities to the extent such securities are
tax-exempt as defined in the Code; or industrial development and pollution
control bonds. The Municipal Fund will not invest 25% or more of its total
assets in municipal obligations whose issuers are located in the same state.
There could be economic, business or political developments, which might affect
all municipal obligations of a similar type. However, the Adviser believes that
the most important consideration affecting risk is the quality of particular
issues of municipal obligations rather than factors affecting all, or broad
classes of, municipal obligations.
The acquisition of municipal securities by the Tax Free Money Market Fund
will also be subject to the rules of the SEC applicable to use of the amortized
cost method of securities valuation.
MUNICIPAL LEASES. Funds that may invest in municipal securities may
invest in municipal leases and certificates of participation in municipal
leases. A municipal lease is an obligation in the form of a lease or installment
purchase which is issued by a state or local government to acquire equipment and
facilities. Certificates of participation represent undivided interests in
municipal leases, installment purchase agreements or other instruments. The
certificates are typically issued by a trust or other entity which has received
an assignment of the payments to be made by the state or political subdivision
under such leases or installment purchase agreements. The primary risk
associated with municipal lease obligations and certificates of participation is
that the governmental lessee will fail to appropriate funds to enable it to meet
its payment obligations under the lease. Although the obligations may be secured
by the leased equipment or facilities, the disposition of the property in the
event of nonappropriation or foreclosure might prove difficult, time consuming
and costly, and may result in a delay in recovering, or the failure to fully
recover, the Fund's original investment. To the extent that a Fund invests in
unrated municipal leases or participates in such leases, the Adviser will
monitor on an ongoing basis the credit quality rating and risk of cancellation
of such unrated leases. Certain municipal lease obligations and certificates of
participation may be deemed illiquid for the purposes of the Municipal Fund's
15% (10% with respect to the Money Market Funds) limitation on investments in
illiquid securities.
PRE-REFUNDED MUNICIPAL SECURITIES. Funds that invest in municipal
securities may invest in pre-refunded municipal securities. The principal of and
interest on pre-refunded municipal securities are no longer paid from the
original revenue source for the securities. Instead, the source of such payments
is typically an escrow fund consisting of U.S. Government securities. The assets
in the escrow fund are derived from the proceeds of refunding bonds issued by
the same issuer as the pre-refunded municipal securities. Issuers of municipal
securities use this advance refunding technique to obtain more favorable terms
with respect to securities that are not yet subject to call or redemption by the
issuer. For example, advance refunding enables an issuer to refinance debt at
lower market interest rates, restructure debt to improve cash flow or eliminate
restrictive covenants in the indenture or other governing instrument for the
pre-refunded municipal securities. However, except for a change in the revenue
source from which principal and interest payments are made, the pre-refunded
municipal securities remain outstanding on their original terms until they
mature or are redeemed by the issuer. Pre-refunded municipal securities are
usually purchased at a price which represents a premium over their face value.
STAND-BY COMMITMENTS
The Tax Free Money Market Fund and Municipal Fund may acquire stand-by
commitments. Acquisition of stand-by commitments by a Fund may improve portfolio
liquidity by making available same-day settlements on sales of portfolio
securities (and thus facilitate the same-day payments of redemption proceeds in
federal funds). A Fund may engage in such transactions subject to the
limitations in the rules under the 1940 Act. A stand-by commitment is a right
acquired by a Fund, when it purchases a
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municipal obligation from a broker, dealer or other financial institution
("seller"), to sell up to the same principal amount of such securities back to
the seller, at that Fund's option, at a specified price. Stand-by commitments
are also known as "puts." The exercise by a Fund of a stand-by commitment is
subject to the ability of the other party to fulfill its contractual commitment.
Stand-by commitments acquired by the Funds will generally have the
following features: (1) they will be in writing and will be physically held by
the Fund's custodian; (2) the Funds' rights to exercise them will be
unconditional and unqualified; (3) they will be entered into only with sellers
which in the Adviser's opinion present a minimal risk of default; (4) although
stand-by commitments will not be transferable, municipal obligations purchased
subject to such commitments may be sold to a third party at any time, even
though the commitment is outstanding; and (5) their exercise price will be (i) a
Fund's acquisition cost (excluding the cost, if any, of the stand-by commitment)
of the municipal obligations which are subject to the commitment (excluding any
accrued interest which the Fund paid on their acquisition), less any amortized
market premium or plus any amortized market or original issue discount during
the period the Fund owned the securities, plus (ii) all interest accrued on the
securities since the last interest payment date.
The Trust, on behalf of the Tax Free Money Market Fund and the Municipal
Fund, expects that stand-by commitments generally will be available without the
payment of any direct or indirect consideration. However, if necessary or
advisable, the Funds will pay for stand-by commitments, either separately in
cash or by paying a higher price for portfolio securities which are acquired
subject to the commitments. If the Fund pays additional consideration for a
stand-by commitment, the yield on the security to which the stand-by commitment
relates will, in effect, be lower than if the Fund had not acquired such
stand-by commitment.
It is difficult to evaluate the likelihood of use or the potential
benefit of a stand-by commitment. Therefore, it is expected that the Boards will
determine that stand-by commitments ordinarily have a "fair value" of zero,
regardless of whether any direct or indirect consideration was paid. When a Fund
has paid for a stand-by commitment, its cost will be reflected as unrealized
depreciation for the period during which the commitment is held.
The Adviser understands that the Service has issued a favorable revenue
ruling to the effect that, under specified circumstances, a registered
investment company will be the owner of tax-exempt municipal obligations
acquired subject to a put option. The Service has subsequently announced that it
will not ordinarily issue advance ruling letters as to the identity of the true
owner of property in cases involving the sale of securities or participation
interests therein if the purchaser has the right to cause the security, or the
participation interest therein, to be purchased by either the seller or a third
party. Each Fund intends to take the position that it is the owner of any
municipal obligations acquired subject to a stand-by commitment and that
tax-exempt interest earned with respect to such municipal obligations will be
tax-exempt in its hands. There is no assurance that the Service will agree with
this position in any particular case or that stand-by commitments will be
available to the Funds, nor have the Funds assumed that such commitments would
continue to be available under all market conditions.
A Fund, subject to its investment policies and restrictions, may also
enter into stand-by commitments in which the Fund may bind itself to accept
delivery of a municipal obligation with a stated price and fixed yield upon the
exercise of an option held by the other party to the agreement at a stated
future date. The Fund will receive a commitment fee in consideration of its
agreement to "stand-by" to purchase the municipal obligation. This stand-by
commitment may be deemed to be the sale by the Fund of a put. The stand-by
commitment agreement creates a risk of loss to the investment company and its
shareholders well in excess of the commitment fees the Fund would receive as
consideration for entering into the agreement.
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For example, if interest rates in the marketplace increase after the agreement
is made, it is likely that the contract price on the delivery date will exceed
the then current market value of the municipal obligation. The broker-dealer can
be expected to exercise its option and, in effect, pass the decline in the value
of the municipal obligation to the investment company. That decline in value may
significantly exceed the fee received by the investment company for entering
into the agreement. In accordance with the SEC's General Statement of Policy
(IC-10666), and in order to limit risk of loss, if a Fund engages in a stand-by
commitment transaction, such Fund will maintain in a segregated account,
commencing on the date the Fund enters into the stand-by commitment agreement,
liquid assets equal to the value of the purchase price under the stand-by
commitment.
RESTRICTED AND ILLIQUID SECURITIES
Each Fund may purchase securities that are not registered or offered in
an exempt non-public offering ("Restricted Securities") under the 1933 Act,
including securities eligible for resale to "qualified institutional buyers"
pursuant to Rule 144A under the 1933 Act. However, a Fund will not invest more
than 15% of its net assets (10% of total assets in the case of the Government
Money Market Fund and the Tax Free Money Market Fund) in illiquid investments,
which include repurchase agreements maturing in more than seven days, interest
rate, currency and mortgage swaps, interest rate caps, floors and collars,
certain SMBS, municipal leases, certain over-the-counter options, securities
that are not readily marketable and Restricted Securities, unless the Boards
determine, based upon a continuing review of the trading markets for the
specific Restricted Securities, that such Restricted Securities are liquid.
Certain commercial paper issued in reliance on Section 4(2) of the 1933 Act is
treated like Rule 144A Securities. The Boards have adopted guidelines and
delegated to the Adviser the daily function of determining and monitoring the
liquidity of the Fund's portfolio securities. The Boards, however, retain
sufficient oversight and are ultimately responsible for the determinations.
Since it is not possible to predict with assurance exactly how the market for
Restricted Securities sold and offered under Rule 144A or Section 4(2) will
develop, the Boards will carefully monitor the Funds' investments in these
securities, focusing on such important factors, among others, as valuation,
liquidity and availability of information. This investment practice could have
the effect of increasing the level of illiquidity in a Fund to the extent that
qualified institutional buyers become for a time uninterested in purchasing
these Restricted Securities.
The purchase price and subsequent valuation of Restricted Securities
normally reflect a discount from the price at which such securities trade when
they are not restricted, since the restriction makes them less liquid. The
amount of the discount from the prevailing market price is expected to vary
depending upon they type of security, the character of the issuer, the party who
will bear the expenses of registering the Restricted Securities and prevailing
supply and demand conditions.
OTHER INVESTMENT COMPANIES
Each Fund, subject to authorization by its Board, may invest all of its
investable assets in the securities of a single open-end investment company (a
"Portfolio"). If authorized by the Board, a Fund would seek to achieve its
investment objective by investing in a Portfolio, which Portfolio would invest
in a portfolio of securities that complies with the Fund's investment
objectives, policies and restrictions. The ability of the Funds to convert to
the so-called Master-Feeder fund structure does not require shareholder
approval. The Boards do not intend to authorize investing in this manner at this
time.
Each Fund may invest up to 10% of its total assets in the securities of
other investment companies not affiliated with WPG, but not invest more than 5%
of its total assets in the securities of any one investment company or acquire
more than 3% of the voting securities of any other investment company.
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For example, the Quantitative Fund may invest in Standard & Poor's Depositary
Receipts (commonly referred to as "Spiders"), which are exchange-traded shares
of a closed-end investment company that are designed to replicate the price
performance and dividend yield of the Standard & Poor's 500 Composite Stock
Price Index. The Municipal Fund will only invest in investment companies that
are money market funds which invest in municipal obligations. A Fund will
indirectly bear its proportionate share of any management fees and other
expenses paid by investment companies in which it invests in addition to the
advisory and administration fees paid by the Fund.
INVESTMENT RESTRICTIONS
Each Fund has adopted the following investment restrictions, which may
not be changed without approval of the holders of a majority of the outstanding
voting securities of the applicable Fund. As defined in the 1940 Act and as used
in the Prospectus and this Statement of Additional Information, "a majority of
the outstanding voting securities" of a Fund, means the lesser of (1) 67% of the
shares of the Fund present 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 (2) more
than 50% of the outstanding shares of the Fund. So long as these fundamental
restrictions are in effect, each Fund may not:
FOR THE GOVERNMENT MONEY MARKET FUND, TAX FREE MONEY MARKET FUND, MUNICIPAL FUND
AND CORE BOND FUND:
1. Purchase securities of an issuer if such purchase would result
in more than 10% of the voting securities of any one issuer
(except U.S. Government securities as defined in the
Prospectus), being held by the Fund; provided, however, that the
Fund may invest all or part of its investable assets in an
open-end investment company with substantially the same
investment objective, policies and restrictions as the Fund.
This restriction only applies to 75% of Municipal Fund's total
assets.
2. Purchase securities of an issuer if such purchase would result
in more than 5% of the Fund's total assets being invested in the
securities of any one issuer (except U.S. Government securities
and options thereon); provided, however, that the Fund may
invest all or part of its investable assets in an open-end
investment company with substantially the same investment
objective, policies and restrictions as the Fund. This
restriction only applies to 75% of Municipal Bond Fund's total
assets.
3. Purchase or sell real estate (other than securities secured by
real estate or interests therein, or issued by entities which
invest in real estate or interests therein or, for Municipal
Bond Fund, real estate acquired by the Fund as a result of the
ownership of securities), but it may lease office space for its
own use and invest up to 15% of its assets in publicly held real
estate investment trusts.
4. Borrow amounts in excess of 33% of its total assets (including
the amount borrowed) and then only as a temporary measure for
extraordinary or emergency purposes. This restriction shall not
apply to reverse repurchase agreements entered into in
accordance with a Fund's investment policies.
5. Make loans, except that this restriction shall not prohibit the
purchase of or investment in bank certificates of deposit or
bankers acceptances, the purchase and holding of all or a
portion of an issue of publicly distributed debt securities, the
lending of portfolio securities
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<PAGE>
and the entry into repurchase agreements.
6. Engage in the business of underwriting securities of others,
except to the extent that the Fund may be deemed to be an
underwriter under the 1933 Act, when it purchases or sells
portfolio securities in accordance with its investment
objectives and policies; provided, however, that the Fund may
invest all or part of its investable assets in an open-end
investment company with substantially the same investment
objective, policies and restrictions as the Fund.
7. Purchase securities, excluding U.S. Government securities, of
one or more issuers conducting their principal business activity
in the same industry, if immediately after such purchase the
value of its investments in such industry would exceed 25% of
its total assets (except securities of banks and bank holding
companies in the case of the Government Money Market Fund and
the Tax Free Money Market Fund and except municipal securities,
U.S. Government securities and securities the payment of which
is secured by U.S. Government securities in the case of the
Municipal Bond Fund); provided, however, that the Fund may
invest all or part of its investable assets in an open-end
investment company with substantially the same investment
objective, policies and restrictions as the Fund. In addition,
in the case of the Municipal Bond Fund, for purposes of this
restriction, state and municipal governments and their agencies
and instrumentalities are not deemed to be industries.
8. Issue senior securities, except as permitted under the 1940 Act
and except that the Fund may issue shares of beneficial interest
in multiple classes or series.
FOR THE QUANTITATIVE FUND:
1. Purchase or sell real estate, including securities of real
estate investment trusts or real estate limited partnerships,
but the Fund may lease office space for its own use as its
principal office and may invest in securities of companies
engaged in the real estate business.
2. Borrow amounts in excess of 33% of its total assets (including
the amount borrowed) and then only as a temporary measure for
extraordinary or emergency purposes.
3. Make loans, except that this restriction shall not prohibit the
purchase of or investment in bank certificates of deposits or
bankers acceptances, the purchase and holding of all or a
portion of an issue of publicly distributed debt securities, the
lending of portfolio securities and the entry into repurchase
agreements.
4. Engage in the business of underwriting securities of others,
except to the extent that the Fund may be deemed to be an
underwriter under the 1933 Act, when it purchases or sells
portfolio securities in accordance with its investment
objectives and policies; provided, however, that the Fund may
invest all or part of its investable assets in an open-end
investment company with substantially the same investment
objective, policies and restrictions as the Fund.
5. Purchase securities, excluding U.S. Government securities, of
one or more issuers conducting their principal business activity
in the same industry, if immediately after such purchase the
value of its investments in such industry would exceed 25% of
its total assets
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except that the Fund may concentrate its assets in securities of
issuers in any industry to the extent the S&P 500 Index is so
concentrated; provided, however, that the Fund may invest all or
part of its investable assets in an open-end investment company
with substantially the same investment objective, policies and
restrictions as the Fund.
6. Invest in commodities or in commodities contracts except that
the Fund may purchase and sell financial futures contracts on
securities, indices and currencies and options on such futures
contracts, and the Fund may purchase securities on a forward
commitment or when-issued basis.
7. Issue senior securities except as permitted under the 1940 Act
and except that the Fund may issue shares of beneficial interest
in multiple classes or series.
8. With respect to 75% of its total assets, the Fund may not
purchase securities of an issuer (other than the U.S.
Government, its agencies, instrumentalities or authorities or
repurchase agreements collateralized by U.S. Government
securities and other investment companies), if:
(a) such purchase would cause more than 5% of the Fund's total
assets taken at market value to be invested in the
securities of such issuer; or
(b) such purchase would at the time result in more than 10% of
the outstanding voting securities of such issuer being held
by the Fund;
provided, however, that the Fund may invest all or part of its
investable assets in an open-end investment company with
substantially the same investment objective, policies and
restrictions as the Fund.
FOR THE GROWTH AND INCOME FUND:
1. Purchase securities of an issuer if such purchase would result
in more than 10% of the voting securities of any one issuer,
other than the United States Government and its
instrumentalities, being held by the Fund; provided, however,
that the Fund may invest all or part of its investable assets in
an open-end investment company with substantially the same
investment objective, policies and restrictions as the Fund.
2. Purchase securities of an issuer if such purchase would result
in more than 5% of the Fund's total assets being invested in the
securities of any one issuer other than the United States
Government and its agencies and instrumentalities; provided,
however, that the Fund may invest all or part of its investable
assets in an open-end investment company with substantially the
same investment objective, policies and restrictions as the
Fund.
3. Purchase, sell or invest in commodities or commodity contracts
or real estate or interests in real estate, except futures
contracts on securities and securities indices and options on
such futures, forward foreign currency exchange contracts and
except that the Fund may purchase, sell or invest in marketable
securities of companies holding real estate or interests in real
estate, including real estate investment trusts.
4. Purchase securities of one or more issuers conducting their
principal business activity in the same industry, if immediately
after such purchase the value of its investments in such
industry would exceed 25% of its total assets, provided that
this restriction shall not apply to securities issued or
guaranteed as to principal and interest by the U.S. Government,
its agencies or instrumentalities; provided, however, that the
Fund may invest all or part of its investable assets in an
open-end investment company with substantially the same
investment objective, policies and restrictions as the Fund.
5. Lend its funds to other persons, except through the purchase of
all or a portion of an issue of debt securities publicly
distributed or other securities or debt obligations in
accordance with its objective or through entering into
repurchase agreements; provided that each such repurchase
agreement has a duration of no more than seven days and that the
value of all of the Fund's outstanding repurchase agreements,
together with the value of all illiquid investments of the Fund,
does not exceed 15% of the Fund's total assets at any time.
6. Lend its portfolio securities unless the borrower is a broker,
dealer or financial institution; provided that the terms, the
structure and the aggregate amount of such loans are not
inconsistent with the 1940 Act or the Rules and Regulations or
interpretations of the SEC thereunder.
7. Borrow money, except from banks as a temporary measure to
facilitate the meeting of redemption requests which might
otherwise require the untimely disposition of portfolio
investments or for extraordinary or emergency purposes, provided
that the aggregate amount of such borrowings may not exceed 33%
of the value of the Fund's total assets (including amounts
borrowed) at the time of borrowing, or mortgage, pledge or
hypothecate its assets, except in an amount sufficient to secure
any such borrowing.
8. Issue senior securities, except as permitted under the 1940 Act
and except that the Fund may issue shares of beneficial interest
in multiple classes or series.
9. Engage in the business of underwriting the securities of other
issuers (except as the Fund may be deemed an underwriter under
the 1933 Act in connection with the purchase and sale of
portfolio securities in accordance with its investment objective
and policies); provided, however, that the Fund may invest all
or part of its investable assets in an open-end investment
company with substantially the same investment objective,
policies and restrictions as the Fund.
FOR THE TUDOR FUND:
1. Purchase securities of one or more issuers conducting their
principal business activity in the same industry, if immediately
after such purchase the value of its investments in such
industry would exceed 25% of its total assets provided that this
restriction shall not apply to securities issued or guaranteed
as to principal and interest by the U.S. Government, its
agencies or instrumentalities; provided, however, that the Fund
may invest all or part of its investable assets in an open-end
investment company with substantially the same investment
objective, policies and restrictions as the Fund. In this
connection, the Fund may invest in "Special Situations." The
term "Special Situation" shall be deemed to refer to a security
of a company in which an unusual and possibly nonrepetitive
development is taking place which, in the opinion of the
investment adviser of the Fund, may cause the security to attain
a higher market value independently, to a degree, of the trend
in the securities market in general. The
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<PAGE>
particular development (actual or prospective) which may qualify
a security as a "Special Situation" may be one of many different
types. Such developments may include, among others, a
technological improvement or important discovery or acquisition
which, if the expectation for it materialized, would effect a
substantial change in the company's business; a reorganization;
a recapitalization or other development involving a security
exchange or conversion; a merger, liquidation or distribution of
cash, securities or other assets; a breakup or workout of a
holding company; litigation which, if resolved favorably, would
improve the value of the company's stock; a new or changed
management; or material changes in management policies. A
"Special Situation" may often involve a comparatively small
company which is not well known and which has not been closely
watched by investors generally, but it may also involve a large
company. The fact, if it exists, that an increase in the
company's earnings, dividends or business is expected, or that a
given security is considered to be undervalued, would not in
itself be sufficient to qualify as a "Special Situation." The
Fund may invest in securities (even if not "Special Situations")
which, in the opinion of the investment adviser of the Fund, are
appropriate investments for the Fund, including securities which
the investment adviser of the Fund believes are undervalued by
the market. The Fund shall not be required to invest any minimum
percentage of its aggregate portfolio in "Special Situations,"
nor shall it be required to invest any minimum percentage of its
aggregate portfolio in securities other than "Special
Situations."
2. With respect to 75% of its total assets, the Fund may not
purchase securities of an issuer (other than the U.S.
Government, its agencies, instrumentalities or authorities or
repurchase agreements collateralized by U.S. Government
securities and other investment companies), if:
(a) such purchase would cause more than 5% of the Fund's total
assets taken at market value to be invested in the
securities of such issuer; or
(b) such purchase would at the time result in more than 10% of
the outstanding voting securities of such issuer being held
by the Fund;
provided, however, that the Fund may invest all or part of its
investable assets in an open-end investment company with
substantially the same investment objective, policies and
restrictions as the Fund.
3. Lease, acquire, purchase, sell or hold real estate, but it may
lease office space for its own use and invest in marketable
securities of companies holding real estate or interests in real
estate, including real estate investment trusts.
4. Purchase or sell commodities or commodities contracts, except
futures contracts, including but not limited to contracts for
the future delivery of securities and contracts based on
securities indices and options on such futures contracts, and
forward foreign currency exchange contracts.
5. Lend money, except that it may (i) invest in all or a portion of
an issue of bonds, debentures and other obligations distributed
publicly or of a type commonly purchased by financial
institutions (e.g., certificates of deposit, bankers'
acceptances or other short-term debt obligations) or other debt
obligations in accordance with its objectives or (ii) enter into
repurchase agreements; provided that the Fund will not enter
into repurchase agreements of
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<PAGE>
more than one week's duration if
more than 15% of its net assets would be invested therein
together with other illiquid or not readily marketable
securities.
6. Lend its portfolio securities unless the borrower is a broker,
dealer, bank or other qualified financial institution; provided
that the terms, the structure and the aggregate amount of such
loans are not inconsistent with the 1940 Act or the Rules and
Regulations or interpretations of the SEC thereunder.
7. Engage in the business of underwriting the securities of others,
except to the extent that the Fund may be deemed to be an
underwriter under the 1933 Act when it purchases or sells
portfolio securities; provided, however, thatthe Fund may invest
all or part of its investable assets in an open-end investment
company with substantially the same investment objective,
policies and restrictions as the Fund.
8. Borrow money except as a temporary measure to facilitate the
meeting of redemption requests or for extraordinary or emergency
purposes, provided that the aggregate amount of such borrowings
may not exceed 33% of the value of the Fund's total assets
(including the amount borrowed), at the time of such borrowing.
9. Issue senior securities except as permitted under the 1940 Act
and except that the Fund may issue shares of beneficial interest
in multiple classes or series.
FOR THE GROWTH FUND:
1. Purchase securities of one or more issuers conducting their
principal business activity in the same industry, if immediately
after such purchase the value of the Fund's investments in such
industry would exceed 25% of the value of its total assets
provided that this restriction shall not apply to securities
issued or guaranteed as to principal and interest by the U.S.
Government, its agencies and instrumentalities and provided,
however, that the Fund may invest all or part of its investable
assets in an open-end investment company with substantially the
same investment objective, policies and restrictions as the
Fund. In this connection, the Fund may invest in "Special
Situations." The term "Special Situation" shall be deemed to
refer to a security of a company in which an unusual and
possibly nonrepetitive development is taking place which, in the
opinion of the investment adviser of the Fund, may cause the
security to attain a higher market value independently, to a
degree, of the trend in the securities market in general. The
particular development (actual or prospective) which may qualify
a security as a Special Situation may be one of many different
types. Such developments may include, among others, a
technological improvement or important discovery or acquisition
which, if the expectation for it materialized, would effect a
substantial change in the company's business; a reorganization;
a recapitalization or other development involving a security
exchange or conversion; a merger, liquidation or distribution of
cash, securities or other assets; a breakup or workout of a
holding company; litigation which, if resolved favorably, would
improve the value of the company's stock; a new or changed
management; or material changes in management policies. A
Special Situation may often involve a comparatively small
company which is not well known and which has not been closely
watched by investors generally, but it may also involve a large
company. An expectation of an increase in the company's
earnings, dividends or business or a judgment that a given
security is undervalued, would not be sufficient in itself to
qualify as a Special Situation. The Fund may invest in
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<PAGE>
securities (even if they are not Special Situations) which, in
the opinion of the investment adviser of the Fund, are
appropriate investments for the Fund, including securities which
the investment adviser of the Fund believes are undervalued by
the market.
2. With respect to 75% of its total assets, the Fund may not
purchase securities of an issuer (other than the U.S.
Government, its agencies, instrumentalities or authorities or
repurchase agreements collateralized by U.S. Government
securities and other investment companies), if:
(a) such purchase would cause more than 5% of the Fund's total
assets taken at market value to be invested in the
securities of such issuer; or
(b) such purchase would at the time result in more than 10% of
the outstanding voting securities of such issuer being held
by the Fund;
provided, however, that the Fund may invest all or part of its
investable assets in an open-end investment company with
substantially the same investment objective, policies and
restrictions as the Fund.
3. Lease, acquire, purchase, sell or hold real estate other than
securities secured by real estate or interests therein or issued
by entities which invest in real estate or interests therein,
but it may lease office space for its own use.
4. Purchase or sell commodities or commodities contracts, except
futures contracts, including but not limited to contracts for
the future delivery of securities and contracts based on
securities indices.
5. Lend money, except that it may (i) invest in all or a portion of
an issue of bonds, debentures and other obligations distributed
publicly or of a type commonly purchased by financial
institutions (e.g., certificates of deposit, bankers'
acceptances, or other short-term debt obligations) or (ii) enter
into repurchase agreements; provided that each such repurchase
agreement is with a broker-dealer, bank or other financial
institution and that the Fund will not enter into repurchase
agreements of more than one week's duration if more than 15% of
its net assets would be invested therein together with other
illiquid or not readily marketable securities.
6. Lend its portfolio securities unless the borrower is a
broker-dealer, bank or other qualified financial institution;
provided that the terms, the structure and the aggregate amount
of such loans are not inconsistent with the 1940 Act or the
rules and regulations or interpretations of the SEC thereunder.
7. Engage in the business of underwriting securities of others,
except to the extent that the Fund may be deemed to be an
underwriter under the 1933 Act when it purchases or sells
portfolio securities; provided, however, that the Fund may
invest all or part of its investable assets in an open-end
investment company with substantially the same investment
objective, policies and restrictions as the Fund.
8. Borrow money except as a temporary measure to facilitate the
meeting of redemption requests or for extraordinary or emergency
purposes, provided that the amount borrowed
-29-
<PAGE>
may not exceed 33% of the Fund's total assets at the time of
such borrowing; provided, however, that this restriction shall
not prohibit the Fund from entering into repurchase agreements
or option or futures contracts.
9. Issue senior securities except as permitted under the 1940 Act
and except that the Fund may issue shares of beneficial interest
in multiple classes or shares.
FOR THE INTERNATIONAL FUND:
1. With respect to 75% of its total assets, invest more than 5% of
its total assets in securities of any one issuer, excluding
securities issued or guaranteed by the United States Government
or by its agencies and instrumentalities except that the Fund
may invest up to 10% of its total assets in repurchase
agreements with any member bank of the Federal Reserve System or
member of the NASD which is a primary dealer in U.S. Government
securities; or purchase more than 10% of the voting securities
of any class of any issuer; provided, however, that the Fund may
invest all or part of its investable assets in an open-end
investment company with substantially the same investment
objective, policies and restrictions as the Fund.
2. Make an investment that would result in more than 25% of its
total assets being invested in securities of issuers in the same
industry, except U.S. Government securities; provided, however,
that the Fund may invest all or part of its investable assets in
an open-end investment company with substantially the same
investment objective, policies and restrictions as the Fund.
3. Purchase or sell commodities or commodities contracts, except
that the Fund may enter into or purchase futures contracts,
including but not limited to contracts for the future delivery
of securities, contracts based on securities indices, forward
foreign currency contracts, foreign currency futures and
options, and options on securities.
4. Lend money, except that it may (i) invest in all or a portion of
an issue of bonds, debentures and other obligations distributed
publicly or of a type commonly purchased by financial
institutions (e.g., certificates of deposit, bankers'
acceptances or other short-term debt obligations) or other debt
obligations in accordance with its objectives or (ii) enter into
repurchase agreements; provided that the Fund will not enter
into repurchase agreements of more than one week's duration if
more than 15% of its net assets would be invested therein
together with other illiquid or not readily marketable
securities.
5. Lend its portfolio securities unless the borrower is a broker,
dealer or financial institution; provided that the terms, the
structure and the aggregate amount of such loans are not
inconsistent with the 1940 Act or the Rules and Regulations or
interpretations of the SEC thereunder.
6. Engage in the business of underwriting the securities of other
issuers (except as the Fund may be deemed an underwriter under
the 1933 Act in connection with the purchase and sale of
portfolio securities in accordance with its investment objective
and policies); provided, however, that the Fund may invest all
or part of its investable assets in an open-end investment
company with substantially the same investment objective,
policies and restrictions as the Fund.
-30-
<PAGE>
7. Invest in the securities of an issuer for the purpose of
exercising control or management, but it may do so where it is
deemed advisable to protect or enhance the value of an existing
investment; provided, however, that the Fund may invest all or
part of its investable assets in an open-end investment company
with substantially the same investment objective, policies and
restrictions as the Fund.
8. Invest its assets in securities of other open-end investment
companies but the Fund may invest in closed-end investment
companies to the extent permitted by the 1940 Act or rules,
regulations or orders issued thereunder; provided, however, that
the Fund may invest all or part of its investable assets in an
open-end investment company with substantially the same
investment objective, policies and restrictions as the Fund.
9. Participate on a joint or joint and several basis in any
securities trading account; provided, however, that combining or
"bunching" of orders of other accounts under the investment
management of the Adviser or Hill Samuel Asset Management shall
not be considered participation in a joint securities trading
account.
10. Invest in or retain the securities of any issuer, if, to the
knowledge of the Fund, those officers and trustees of the Fund
who individually own in excess of 1/2 of 1% of the issuer's
securities own more than 5% of such securities in the aggregate.
11. Issue senior securities, except as permitted under the 1940 Act
and except that the Fund may issue shares of beneficial interest
in multiple classes or series.
12. Purchase securities on margin except as short-term credits may
be necessary for the clearance of transactions; provided,
however, that this restriction shall not prohibit the Fund from
entering into repurchase agreements or option contracts, nor
from entering into transactions pursuant to investment
restriction 14 below.
13. Make short sales of securities except short sales against the
box; provided, however, that this restriction shall not prohibit
the Fund from writing or entering into option contracts.
14. Borrow money, except as a temporary or emergency measure, and
then only from banks and trust companies in an aggregate amount
not exceeding 10% of the value of its total assets taken at
cost. The Fund may pledge, mortgage, or hypothecate no more than
15% of its total assets in connection with such borrowings.
15. Lease, acquire, purchase, sell or hold real estate (including
limited partnership interests which are not readily marketable),
but it may lease office space for its own use and invest in (1)
readily marketable interests of real estate investment trusts or
readily marketable securities of issuers whose business involves
the purchase and sale of real estate; and (2) securities secured
by real estate or interests therein.
Each Fund may, notwithstanding any other fundamental or non-fundamental
investment restriction or policy, invest all of its assets in the securities of
a single open-end investment company with substantially the same investment
objectives, restrictions and policies as that Fund.
For purposes of the above fundamental investment restrictions regarding
industry concentration, the Adviser generally classifies issuers by industry in
accordance with classifications set forth in the Standard & Poor's Stock Guide.
-31-
<PAGE>
In the absence of such classification or if the Adviser determines in good faith
based on its own information that the economic characteristics affecting a
particular issuer make it more appropriately considered to be engaged in a
different industry, the Adviser may classify an issuer according to its own
sources.
In addition to the fundamental policies mentioned above, the Board has
adopted the following non-fundamental policies which may be changed or amended
by action of the Board without approval of shareholders. So long as these
non-fundamental restrictions are in effect, the Fund may not:
(a) Invest in the securities of an issuer for the purpose of
exercising control or management, but it may do so where it
is deemed advisable to protect or enhance the value of an
existing investment.
(b) Purchase securities of any other investment company except
as permitted by the 1940 Act.
(c) Purchase securities on margin, except any short-term credits
which may be necessary for the clearance of transactions and
the initial or maintenance margin in connection with options
and futures contracts and related options.
(d) Invest more than 15% of its net assets in securities which
are illiquid (10% of total assets for Government Money
Market Fund and Tax Free Market Fund).
(e) Purchase additional securities if the Fund's borrowings
exceed 5% of its net assets.
All percentage limitations apply only at the time a transaction is
entered into. Accordingly, if a percentage restriction is adhered to at the time
of investment, a later increase or decrease in the percentage which results from
a relative change in values or from a change in a Fund's net assets will not be
treated as a violation. Under the 1940 Act, each Fund will be required to
maintain continuous asset coverage of at least 300% for borrowings from a bank.
In the event that such asset coverage is below 300%, the applicable Fund will be
required to reduce the amount of its borrowings to obtain 300% asset coverage,
within three days (not including Sundays and holidays) or such longer period as
the rules and regulations of the SEC prescribe.
ADVISORY, SUBADVISORY AND ADMINISTRATIVE SERVICES
INVESTMENT ADVISER
Weiss, Peck & Greer, L.L.C. (the "Adviser" or "WPG"), One New York Plaza,
New York, New York 10004, serves as investment adviser and administrator to each
Fund. See "Management of the Funds -- Investment Adviser and Administrator" and
"Portfolio Brokerage" in the Prospectus for a description of the duties of WPG
as investment adviser and administrator to the Funds.
On April 3, 1995, Weiss, Peck & Greer, the Funds' prior investment
adviser and administrator, was converted from a New York limited partnership to
a limited liability company organized under Delaware law. The conversion did not
result in any changes in the existing ownership, structure or business of the
firm. The conversion did not involve an increase in the advisory fee paid by any
Fund and did not result in a change in the employees, services and resources
utilized in managing the Funds' investments.
-32-
<PAGE>
The Funds' investment advisory agreements (the "Advisory Agreements")
were initially approved by the Board, including a majority of the Trustees of
the Funds who are not parties to such agreements or "interested persons" (as
such term is defined in the 1940 Act) of any party thereto (the "non-Interested
Trustees"), on January 20, 1993 and became effective May 1, 1993. On April 22,
1998, the Boards approved the continuation of the Advisory Agreements until
April 30, 1999.
Pursuant to the Advisory Agreements, the Adviser supervises and assists
in the management of the assets of each Fund and furnishes each Fund with
research, statistical and advisory services. In managing the assets of the
Funds, the Adviser furnishes continuously an investment program for each Fund
consistent with the investment objectives and policies of that Fund. More
specifically, the Adviser determines from time to time what securities shall be
purchased for the Fund, what securities shall be held or sold by the Fund and
what portion of the Fund's assets shall be held uninvested as cash, subject
always to the provisions of the applicable Fund's Declaration of Trust, By-Laws
and registration statement and to its investment objectives, policies and
restrictions, as each of the same shall be from time to time in effect, and
subject, further, to such policies and instructions as the applicable Fund's
Board may from time to time establish. To carry out such determinations, the
Adviser places orders for the investment and reinvestment of each Fund's assets.
(See "Portfolio Brokerage.")
For its investment advisory services under the Advisory Agreements, the
Adviser receives an annual fee, payable monthly, which varies in accordance with
the average daily net assets of the Funds under the management of the Adviser.
The advisory fee is accrued daily and will be prorated if the Adviser shall not
have acted as a Fund's investment adviser during any entire monthly period.
The annual fee rates under the Advisory Agreements and the advisory fees
paid to the Adviser or its predecessor in interest, as the case may be, for the
fiscal years ended December 31, 1995 , 1996 and 1997 are as follows:
ADVISORY FEES PAID
DECEMBER 31,
<TABLE>
<CAPTION>
ANNUAL
FUND FEE RATE 1995 1996 1997
- ---- -------- ----------- ---- ----
<S> <C> <C> <C> <C>
GOVERNMENT MONEY 0.50% of net assets up to $754,581 $684,845 $780,088
MARKET FUND AND $500 million
TAX FREE MONEY 0.45% of net assets 620,407 637,124 650,081
MARKET FUND $500,000 million to $1
billion
0.40% of net assets $1
billion to $1.5 billion
0.35% of net assets in
excess $1.5 billion
MUNICIPAL FUND 0.00% of average daily -0- -0- 39,8631
net assets while net
assets are less than
$17 million
0.50% of average
-33-
<PAGE>
daily net assets
while net assets are
$17 million or more
CORE BOND FUND 0.60% of net assets 1,117,390 864,402 702,166
up to $300 million
0.55% of net assets $30
million to $500
million
0.50% of net assets in
excess of $500 million
GROWTH AND INCOME 0.75% of net assets 490,867 551,520 759,489
FUND
TUDOR FUND 0.90% of net assets up 1,361,493 1,634,978 166,458,723
to $300 million
0.80% of net assets $300
million to $500
million
0.75% of net assets in
excess of $500 million
INTERNATIONAL FUND(2) 0.50% of net assets 73,504 66,670 61,731
while net assets are
less than $15 million
0.85% of net assets
while net assets are
between $15 million
and $20 million
1.00% of net assets
while net assets are
$20 million or more
GROWTH FUND 0.75% of net assets 494,164 471,606 474,629
QUANTITATIVE FUND 0.75% of net assets 765,319 1,097,250 783,469
<FN>
- ------------------
(1) During the fiscal year ended December 31, 1997, WPG agreed not to impose a
portion of its advisory fees and to assume certain other expenses. Had WPG not
so agreed, Municipal Fund would have paid advisory fees of $96,169.
(2) See "Subadviser to the International Fund" below for a discussion of the
subadvisory fees paid by the Adviser to the International Fund's subadviser.
</FN>
</TABLE>
Each Advisory Agreement provides that the Adviser will not be liable for
any loss sustained by a Fund by reason of the adoption or implementation of any
investment policy or the purchase, sale or retention of any security, whether or
not such purchase, sale or retention shall have been based upon the
investigation and research of the Adviser, or upon investigation and research
made by any other individual, firm or corporation if such recommendation shall
have been made and such other individual, firm or corporation shall have been
selected with due care and in good faith, except for a loss resulting from
willful misfeasance, bad faith, or gross negligence in the performance by the
Adviser of its duties or by reason of the Adviser's reckless disregard of its
obligations and duties thereunder.
-34-
<PAGE>
Each Advisory Agreement may be modified or amended only with the approval
of the holders of a majority of outstanding voting securities of the applicable
Fund and by a vote of the majority of the non-Interested Trustees of the Fund.
Each Advisory Agreement's continuance must be approved annually by a majority
vote of the Board or by a vote of the holders of a majority of the outstanding
voting securities of the applicable Fund, but in either event it also must be
approved by a vote of a majority of the non-Interested Trustees of the Fund,
cast in person at a meeting called for the purpose of voting on such approval.
Each Advisory Agreement may be terminated without penalty, by either party, upon
60 days' written notice and automatically will terminate in the event of its
assignment.
Officers and Trustees of the Funds who are also Managing Directors and
employees of WPG may receive indirect compensation by reason of investment
advisory fees paid by the Funds to WPG, in its capacity as the Adviser and
Administrator.
WPG has capital in excess of $71 million. WPG consists of 38 Managing
Directors, one of whom is a member of the NYSE, and certain Directors. WPG has
approximately 250 full-time employees in addition to its Directors. WPG and its
affiliates act as investment adviser or manager for approximately $13 billion of
institutional and private investment accounts, excluding the Weiss, Peck & Greer
Mutual Funds described in this Statement of Additional Information, RWB/WPG U.S.
Large Stock Fund and Tomorrow Funds Retirement Trust, for which WPG serves as
the investment adviser.
Roger J. Weiss is a Senior Managing Director of WPG and Chairman of the
Board and Trustee of each of the Funds and President of the International Fund.
Stephen H. Weiss, brother of Roger J. Weiss, is also a Senior Managing Director
of WPG. Francis H. Powers is a Managing Director of WPG, and Executive Vice
President and Treasurer of each of the Funds. Jay C. Nadel, is a Managing
Director of WPG and an Executive Vice President and Secretary of each of the
Funds. Mr. R. Scott Richter is a Managing Director of WPG and Vice President of
Tax Free Money Market Fund and Municipal Fund. Ms. Janet A. Fiorenza is a
Managing Director of WPG and a Vice President of Tax Free Money Market Fund. A.
Roy Knutsen is a Managing Director of WPG and President of the Growth and Income
Fund. Adam Starr is a Managing Director of WPG and President and Trustee of
Tudor Fund and Growth Fund. The Managing Directors of WPG who serve on WPG's
executive committee are Stephen H. Weiss (Chairman), Roger J. Weiss, Philip
Greer, Ronald M. Hoffner, Wesley W. Lang, Jr., Mitchell E. Cantor and Gil Cogan.
The persons responsible for the day-to-day management of each Fund's
portfolio are listed in the Prospectus. Messrs. Stephen H. Weiss and Roger J.
Weiss may also participate in each Fund's investment decisions and all of the
principals in WPG consult on a regular basis among themselves about general
market conditions, as well as specific securities and industries.
In the management of the Funds and their other accounts, WPG and its
affiliates allocate investment opportunities to all accounts for which they are
appropriate subject to the availability of cash in any particular account and
the final decision of the individual or individuals in charge of such accounts.
Where market supply is inadequate for a distribution to all such accounts,
securities are allocated on a pro rata basis. In some cases this procedure may
have an adverse effect on the price or volume of the security as far as the
Funds are concerned. However, it is the judgment of the Board that the
desirability of continuing the Funds' advisory arrangements with the Adviser
outweighs any disadvantages that may result from contemporaneous transactions.
See "Portfolio Brokerage."
SUBADVISER TO THE INTERNATIONAL FUND
Hill Samuel Asset Management Limited ("Hill Samuel" or the "Subadviser")
of London, England, serves as subadviser to the International Fund pursuant to a
Subadvisory Agreement by and among the Fund, the Adviser and Hill Samuel. An
affiliate of Hill Samuel, Hill Samuel Investment Management Limited ("HSIM"),
previously served as the International Fund's subadviser. HSIM merged with Hill
Samuel in a transaction that did not, as represented by Hill Samuel, result in
an "assignment" of the Subadvisory Agreement (as such term is defined in the
1940 Act and the rules thereunder). Prior to April 4, 1996, Lloyds Investment
Management International Limited ("LIMI"), an affiliate of Hill Samuel, served
as the International Fund's subadviser. LIMI merged with Hill Samuel on April 4,
1996 in a transaction that did not, in the opinion of counsel to Hill Samuel and
LIMI, result in an "assignment" of the Subadvisory Agreement (as such term is
defined in the 1940 Act and the rules thereunder). The Subadvisory Agreement was
most recently approved by the Board of International Fund on April 22, 1998, was
approved by the shareholders of the International Fund on April 21, 1993 and
became effective May 1, 1993. Hill Samuel is a United Kingdom corporation
regulated by IMRO in the United Kingdom and registered with the SEC as an
investment adviser under the Investment Advisers Act of 1940. Hill Samuel is an
indirect wholly owned subsidiary of Lloyds TSB plc of London ("Lloyds TSB"), a
major U.K. banking institution whose predecessor was established in 1677 and
whose shares are listed on the International Stock Exchange in London. Hill
Samuel services clients throughout the world ranging from governments, financial
institutions and international companies to small growing concerns, charities,
pension funds, mutual funds, closed-end trusts and private individuals. Hill
Samuel maintains global investment management capabilities covering equity,
fixed income, money market and other investment assets and instruments. Hill
Samuel conducts investment research directly and through associated and joint
venture companies and utilizes a variety of other external sources, including
brokers and dealers who may execute transactions for the Fund and other clients.
London-based specialist investment managers and analysts visit international
markets and remain in continuous contact with affiliated advisory organizations
of Hill Samuel.
Under the Subadvisory Agreement, Hill Samuel provides the International
Fund and the Adviser with investment research, advice and supervision and with
an investment program for that portion of the International Fund's portfolio
invested in foreign securities consistent with the International Fund's
objective and policies. Pursuant to the Subadvisory Agreement, the Adviser pays
to Hill Samuel a quarterly advisory fee equal on an annual basis to 0.40% of the
advisory fee actually received by the Adviser from the International Fund. The
International Fund has no responsibility to pay Hill Samuel's fees and pays only
the Adviser's fee. Hill Samuel's predecessor in interest agreed not to impose
all or a portion of its fee (payable by the International Fund's investment
adviser) from time to time since the International
Fund's inception. For the years ended December 31, 1995, 1996 and 1997, WPG paid
Hill Samuel or its predecessors in interest, as the case may be, $29,402 ,
$26,668 and $24,753, respectively, in subadvisory
fees.
The Agreement provides that the Subadviser will not be liable for any
loss sustained by the International Fund by reason of the adoption or
implementation of any investment policy or the purchase, sale or retention of
any security, whether or not such purchase, sale or retention shall have been
based upon investigation and research made by any other individual, firm or
corporation if such recommendation shall have been made and such other
individual firm or corporation shall have been selected with due care and in
good faith, except for a loss resulting from willful misfeasance, bad faith or
gross negligence in the performance by the Subadviser of its duties or by reason
of the Subadviser's reckless disregard of its obligations and duties thereunder.
The Adviser may from time to time recommend to the Board the engagement
of a new subadviser. Any agreement with a new subadviser will be subject to the
approval of a majority vote of shareholders of the International Fund.
-36-
<PAGE>
The subadvisory fee is accrued daily and will be prorated if Hill Samuel
shall not have acted as the International Fund's subadviser during any entire
monthly period. The Subadvisory Agreement may be modified or amended only with
the approval of the holders of a majority of the outstanding voting securities
of the International Fund and by a vote of the majority of the non-Interested
Trustees of the International Fund. The Subadvisory Agreement's continuance must
be approved annually by a majority of the Board of the International Fund or by
a vote of the holders of a majority of the outstanding voting securities of the
International Fund, but in either event it also must be approved by a vote of
the majority of the non-Interested Trustees of the International Fund, cast in
person at a meeting called for the purpose of voting on such approval. The
Subadvisory Agreement may be terminated without penalty by any party upon 60
days' written notice and will terminate automatically in the event of its
assignment.
In the management of the International Fund and their other accounts, WPG
and the Subadviser and their subsidiaries allocate investment opportunities to
all accounts for which they are appropriate subject to the availability of cash
in any particular account and the final decision of the individual or
individuals in charge of such accounts. Where market supply is inadequate for a
distribution to all such accounts, securities are allocated on a pro rata basis.
In some cases this procedure may have an adverse effect on the price or volume
of the security as far as the International Fund is concerned. However, it is
the judgment of the Board that the desirability of continuing the International
Fund's advisory arrangements with the Adviser and the Subadviser outweighs any
disadvantages that may result from contemporaneous transactions. See "Portfolio
Brokerage."
ADMINISTRATOR
WPG, in its capacity of administrator to the Funds, performs
administrative, transfer agency related and shareholder relations services and
certain clerical and accounting services for each Fund under separate
administration agreements (the "Administration Agreements"). More specifically,
these obligations pursuant to the Administration Agreements include, subject to
the general supervision of the Boards, (a) providing supervision of all aspects
of the Funds' non-investment operations (the parties giving due recognition to
the fact that certain of such operations are performed by others pursuant to
agreements with the Funds), (b) providing the Funds, to the extent not provided
pursuant to their custodian and transfer agency agreements or agreements with
other institutions, with personnel to perform such executive, administrative,
accounting and clerical services as are reasonably necessary to provide
effective administration of the Funds, (c) arranging, to the extent not provided
pursuant to such agreements, for the preparation, at the Funds' expense, of its
tax returns, reports to shareholders, periodic updating of the prospectuses and
reports filed with the SEC and other regulatory authorities, (d) providing the
Funds, to the extent not provided pursuant to such agreements, with adequate
office space and certain related office equipment and services, (e) maintaining
all of the Funds' records other than those maintained pursuant to such
agreements or the Advisory Agreements, and (f) providing to the Funds transfer
agency-related and shareholder relations services and facilities and the
services of one or more of its employees or officers, or employees or officers
of its affiliates, relating to such functions (including salaries and benefits,
office space and supplies, equipment and teaching).
For its services under the Administration Agreements, WPG is entitled to
receive a fee, computed daily and payable monthly, at an annual rate based on
each Fund's average daily net assets and the annual fee rates are as follows:
-37-
<PAGE>
<TABLE>
<CAPTION>
ADMINISTRATION FEES PAID
FOR THE YEAR ENDED DECEMBER 31,
PRESENT ANNUAL
FUND ANNUAL RATE (1) 1995 1996 1997
- ---- --------------------- ---- ---- ----
<S> <C> <C> <C> <C>
Government Money 0.04% $90,549 $82,182 $71,476
Market Fund
Tax Free Money 0.05% 34,224 38,227 47,012
Market Fund
Municipal Fund 0.00% while net -0- -0- -0-
assets are less
than $50 million
0.12% while net
assets are $50
million or
more
Core Bond Fund 0.05% 55,869 43,212 50,727
Growth and Income
Fund 0.06% 75,890 466,182 69,393
Tudor Fund 0.05% 105,894 127,165 99,436
International Fund 0.00% while net -0- -0- -0-
assets are less than
$25 million
0.06% while net
assets are $25 million
or more
Growth Fund 0.15% 13,177 12,576 38,528
Quantitative Fund 0.06% 20,409 29,280 42,169
<FN>
- ------------------
(1) The Trustees review the rate at which the administration fees are
paid at least annually and may change the rate of compensation without
shareholder approval. The administration fees were paid at different rates than
those set forth above at various times during the periods shown.
</FN>
</TABLE>
Each Administration Agreement provides that WPG will not be liable for
any error of judgment or mistake of law or for any loss suffered by a Fund in
connection with the matters to which the Agreements relate, except for a loss
resulting from willful misfeasance, bad faith or gross negligence on the part of
WPG in the performance of its duties or from the reckless disregard by WPG of
its obligations and duties thereunder. Each Administration Agreement's
continuance must be approved annually by a majority vote of the Board and may be
terminated without penalty, by either party, upon 60 days' written notice.
EXPENSES
With respect to each Fund, the Fund pays: (i) fees and expenses of any
investment adviser or administrator of the Fund; (ii) organization expenses of
the Fund; (iii) fees and expenses incurred by the Fund in connection with
membership in investment company organizations; (iv) brokers' commissions;
(v) payment for portfolio pricing services to a pricing agent, if any; (vi)
legal, accounting or auditing
-38-
<PAGE>
expenses (including an allocable portion of the cost of WPG's employees
rendering legal services to the Fund); (vii) interest, insurance premiums, taxes
or governmental fees; (viii) the fees and expenses of the transfer agent of the
Fund; (ix) the cost of preparing stock certificates or any other expenses,
including, without limitation, clerical expenses of issue, redemption or
repurchase of shares of the Fund; (x) the expenses of and fees for registering
or qualifying shares of the Fund for sale and of maintaining the registration of
the Fund and registering the Fund as a broker or a dealer; (xi) the fees and
expenses of Trustees of the Fund who are not affiliated with the Adviser; (xii)
the cost of preparing and distributing reports and notices to shareholders, the
SEC and other regulatory authorities; (xiii) the fees or disbursements of
custodians of the Fund's assets, including expenses incurred in the performance
of any obligations enumerated by the Declaration of Trust or By-Laws of the Fund
insofar as they govern agreements with any such custodian; (xiv) costs in
connection with annual or special meetings of shareholders, including proxy
material preparation, printing and mailing; and (xv) litigation and
indemnification expenses and other extraordinary expenses not incurred in the
ordinary course of the Fund's business.
During the fiscal years ended December 31, 1996 and 1997, the Adviser
voluntarily reimbursed the Municipal Fund in the amount of $21,096 and $4,292,
respectively, and voluntarily did not impose its management fee in the amount of
$56,306 during the fiscal year ended December 31, 1997. See the Prospectus
regarding current fee waivers and expense limitations.
Each Fund may also enter into arrangements with third parties that
provide omnibus accounting and transfer agency-related services (including
recordkeeping and nondistribution-related shareholder servicing) for the benefit
of Fund shareholders who are the beneficial owners of Fund shares held in
nominee form with the third parties. A Fund may compensate such third parties
for the provision of subaccounting and transfer agency-related services based on
a percentage of the Fund's assets for which such entities perform such services.
To the extent that a Fund compensates a third party for the provision of these
services, it will not incur duplicative fees with its transfer agent. As of the
date of this Statement of Additional Information, the Funds have entered into
arrangements with the following third parties omnibus account service providers:
Hewitt (Core Bond Fund), Mercer (Core Bond Fund), Jack White (Growth and Income
Fund, Tudor Fund, Core Bond Fund, Growth Fund, International Fund, Quantitative
Fund and Municipal Fund), Corroon (each Fund), Schwab (Quantitative Fund and
Municipal Fund) and Fidelity (Growth and Income Fund, Tudor Fund, Core Bond
Fund, Growth Fund, Quantitative Fund and Municipal Fund).
The Funds' Advisory and Administration Agreements each provide that WPG,
in its capacities as investment adviser and administrator, may render similar
services to others so long as the services provided thereunder are not impaired
thereby.
In an attempt to avoid any potential conflict with portfolio transactions
for a Fund, the Adviser and the Funds have adopted extensive restrictions on
personal securities trading by personnel of the Adviser and its affiliates.
These restrictions include: pre-clearance of all personal securities
transactions and a prohibition of purchasing initial public offerings of
securities. These restrictions are a continuation of the basic principle that
the interests of the Funds and their shareholders come before those of the
Adviser and its principals and employees.
ADMINISTRATION AND SERVICE PLANS
Under the administration and service plans of the Core Bond Fund and the
International Fund (each, a "Plan" and together, the "Plans"), these Funds may
enter into contracts ("Servicing Agreements") with banks (other than the
Custodian), trust companies, broker-dealers (other than WPG) or other
-39-
<PAGE>
financial organizations ("Service Organizations") to provide certain
administrative and shareholder services ("Services") on behalf of the Funds.
A Service Organization will receive a fee payable by the applicable Fund
in respect of shares held by or through such Service Organization for its
customers for Services performed pursuant to the Plan and the applicable
Servicing Agreement. The schedule of fees and the basis upon which such fees
will be paid will be determined by the Trustees of the applicable Fund;
provided, however, that the aggregate annual fees to be paid to all Service
Organizations and a Fund's expenses under the Plans will not exceed 0.05% of the
Fund's average daily net assets per year. Neither the Custodian nor WPG will be
a Service Organization or receive fees for Services. During the year ended
December 31, 1997, the Core Bond Fund paid or incurred fees to Service
Organizations of $378 pursuant to its Plan, all of which was paid to dealers.
During the year ended December 31, 1997, no fees were paid by the International
Fund pursuant to its Plan.
Rule 12b-1 (the "Rule") under the 1940 Act regulates the circumstances
under which an investment company may, directly or indirectly, bear the expenses
of distributing its shares. The Rule defines such distribution expenses to
include the cost of "any activity which is primarily intended to result in the
sale of fund shares." The Rule provides, among other things, that an investment
company may bear such expenses only pursuant to a plan adopted in accordance
with the Rule. Because some or all of the fees to be paid to certain Service
Organizations, in some cases, could be deemed to be payment of distribution
expenses, and because the Core Bond Fund and the International Fund bear the
expense of preparing, printing and distributing the Prospectus and Statement of
Additional Information, the Boards have adopted the Plans and will enter into
Service Agreements pursuant thereto. In adopting the Plans, the Boards concluded
that there is a reasonable likelihood that the Plans will benefit the Core Bond
Fund and the International Fund and their respective shareholders by the
provision of the services described above. Specifically, the Boards determined
that the Plans would increase the assets of the Funds which may reduce each
Fund's expense ratio, reduce securities transaction costs, reduce the advisory
fee rates, prevent untimely disposition of portfolio securities to meet
redemption requests and increase the diversification of the Fund's investments.
The Boards last approved the Plans and Servicing Agreements on April 22, 1998.
The Plans permit, among other things, the payments to Service
Organizations and the reimbursement by the Funds, as well as the payment by the
Funds, of the costs of preparing, printing and distributing prospectuses and
statements of additional information for prospective and existing shareholders
and of implementing and operating the Plans as described above. A report of the
amounts so expended, and the purposes for which such expenditures were incurred,
must be made to the Trustees for their review at least quarterly. In addition,
the Plans provide that they may not be amended to increase materially the costs
which a Fund may bear for distribution pursuant to its Plan without shareholder
approval and that the other material amendments of the Plan must be approved by
the Trustees, and by the non-Interested Trustees who do not have any direct or
indirect financial interest in the operation of the Plan or in the related
Service Agreements, by vote cast in person at a meeting called for the purpose
of considering such amendments. The selection and nomination of the
non-Interested Trustees of the Core Bond Fund and the International Fund has
been committed to the discretion of the non-Interested Trustees of the Core Bond
Fund and the International Fund. Each Plan is subject to annual approval, by the
applicable Board and by the non-Interested Trustees who do not have any direct
or indirect financial interest in the operation of the Plan or in any of such
Service Agreements, by vote cast in person at a meeting called for the purpose
of voting on the Plan.
Each Plan is terminable at any time by a vote of a majority of the
non-Interested Trustees who have no direct or indirect financial interest in the
operation of the Plan or in any of the related Service Agreements or by vote of
the holders of a majority of the outstanding voting securities of
-40-
<PAGE>
the applicable Fund. Any Service Agreement will be terminable without penalty,
at any time, by vote of a majority of the non-Interested Trustees who have no
direct or indirect financial interest in the operation of the applicable Plan or
in any of the related Service Agreements, or upon not more than 60 days' written
notice to the Service Organization by vote of the holders of a majority of the
outstanding voting securities of the applicable Fund. Each Service Agreement
will terminate automatically in the event of its assignment.
The Glass-Steagall Act and other applicable statutes and regulations
prohibit certain types of banks from engaging in the business of underwriting,
selling or distributing securities. While the scope of this prohibition has not
been clearly defined by the courts or appropriate regulatory agencies, the
Trustees believe that such laws should not preclude a bank from acting as a
Service Organization. Accordingly, the Core Bond Fund and the International Fund
may engage banks to perform administrative and shareholder servicing functions.
Judicial or administrative decisions or interpretations of such laws, as well as
changes in either federal or state statutes or regulations relating to the
permissible activities of banks and their subsidiaries or affiliates, could
prevent a bank from continuing to perform all or a part of its servicing
activities. If a bank were prohibited from so acting, its shareholder clients
would be permitted to remain shareholders of the Funds and alternative means for
continuing the servicing of such shareholders would be sought. In that event,
changes in the operation of the Funds might occur and a shareholder serviced by
such bank might no longer be able to avail itself of any automatic investment or
other services then being provided by the bank. The Trustees do not expect that
shareholders would suffer any adverse financial consequences as a result of any
of these occurrences. In addition, state securities laws on this issue may
differ from the interpretations of federal law expressed herein, and banks and
other financial institutions purchasing shares on behalf of their customers may
be required to register as dealers pursuant to state law.
TRUSTEES AND OFFICERS
Each Board has responsibility for management of the business of its
Fund(s). The executive officers of each Fund are responsible for its day to day
operation. Set forth below is certain information concerning the Trustees and
officers of the Funds. Unless otherwise noted, each individual serves in the
capacity indicated with each Fund. Trustees and executive officers deemed to be
"interested persons" of the Funds for purposes of the 1940 Act are indicated by
an asterisk. Each of the non-Interested Trustees is a member of each Fund's
Audit Committee and Special Nominating Committee.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS DURING PAST
NAME AND ADDRESS/DATE OF BIRTH TITLE FIVE YEARS
- ------------------------------ ----- ----------
<S> <C> <C>
Roger J. Weiss* Chairman of the Senior Managing Director, WPG;
One New York Plaza Board and Trustee; Chairman of the Board and Trustee,
New York, NY 10004 President(1) RWB/WPG U.S. Large Stock Fund and
Tomorrow Funds Retirement Trust;
4/29/39 Executive Vice President and Director,
WPG Advisers, Inc.
Raymond R. Herrmann, Jr. Trustee Chairman of the Board, Sunbelt Beverage
654 Madison Avenue Corporation (distributor of wines and
Suite 1400 liquors); Former Vice Chairman and
New York, NY 10017 Director, McKesson Corporation (U.S.
distributor of drugs and health care
9/11/20 products, wine and spirits); Life Member,
Board of Overseers of Cornell Medical
College; Member of Board and Executive
Committee, Sky Ranch for Boys; Member,
-41-
<PAGE>
NAME AND ADDRESS/DATE OF BIRTH TITLE PRINCIPAL OCCUPATIONS DURING PAST
FIVE YEARS
- ------------------------------ ----- ---------------------------------
Evaluation Advisory Board, Biotechnology
Investments, Ltd.; Trustee, RWB/WPG
U.S. Large Stock Fund and Tomorrow
Funds Retirement Trust
Lawrence J. Israel Trustee Private Investor; Director and Trustee of
200 Broadway, Suite 249 the Touro Infirmary; Member of the
New Orleans, LA 70118 Intercollegiate Athletics Committee of the
Administrators of the Tulane Educational
12/13/34 Fund; Trustee, RWB/WPG U.S. Large
Stock Fund and Tomorrow Funds
Retirement Trust
Graham E. Jones Trustee Financial Manger, Practice Management
330 Garfield Street, Suite 200 Systems (Medical Services Company);
Santa Fe, NM 87501 Director, the Malaysia Fund; Director, the
Thai Fund; Member of the Advisory
1/31/33 Council, The Thailand Fund; Director, the
Turkish Investment Fund; Trustee, various
investment companies managed by
Morgan Grenfell Capital Management, Inc.
and Morgan Grenfell Investment Services,
Ltd., since 1993; Director, the Pakistan
Fund; Trustee, RWB/WPG U.S. Large
Stock Fund
Paul Meek Trustee Financial and Economic Consultant to
5837 Cove Landing Road foreign central banks under the auspices
Burke, VA 22015 of each of the Harvard Institute for
International Development, the Inter-
11/12/25 national Monetary Fund and the World
Bank; President, PM Consulting (financial
and economic consulting); Former
Consultant, Fischer, Francis, Trees & Watts
("FFTW") (fixed income investment
managers); Trustee, FFTW Funds; Former
Vice President and Monetary Adviser,
Federal Reserve Bank of New York;
Trustee, RWB/WPG U.S. Large Stock
Fund
William B. Ross Trustee Financial Consultant; Former Senior Vice
2733 E. Newton Avenue President, Mortgage Guaranty Insurance
Shorewood, WI 53211 Corporation (mortgage credit insurer);
Former Senior Vice President, MGIC
8/22/27 Investment Corporation (financial services
holding company); Trustee, RWB/WPG
U.S. Large Stock Fund
-42-
<PAGE>
PRINCIPAL OCCUPATIONS DURING PAST
NAME AND ADDRESS/DATE OF BIRTH TITLE FIVE YEARS
- ------------------------------ ----- ----------
Robert A. Straniere Trustee Member, New York State Assembly; Sole
182 Rose Avenue Proprietor, Straniere Law Firm; Director,
Staten Island, NY 10306 various Reich and Tang Funds; Trustee,
RWB/WPG U.S. Large Stock Fund
3/28/41
A. Roy Knutsen* President(2) Managing Director, WPG
One New York Plaza
New York, NY10004
6/10/40
Adam Starr* President(3,5) Managing Director, WPG;
One New York Plaza President, WPG Tudor
New York, NY 10004 Fund and WPG Growth
Fund; Analyst and
4/16/51 Portfolio Manager for the
Farber Fund prior thereto
Francis H. Powers* Executive Vice Managing Director, WPG; Vice President
One New York Plaza President and Secretary, Weiss, Peck & Greer Advisers,
New York, NY 10004 Treasurer Inc.; Executive Vice President and
Treasurer, RWB/WPG U.S. Large Stock
7/6/40 Fund and Tomorrow Funds Retirement
Trust
Jay C. Nadel* Executive Vice Managing Director, WPG; Director, Operating
One New York Plaza President and Departments of WPG; Executive Vice
New York, NY 10004 Secretary President and Secretary, RWB/WPG U.S.
Large Stock Fund and Tomorrow Funds
Retirement Trust
7/21/58
Daniel Cardell* Vice President(6) Managing Director, WPG;
One New York Plaza Senior Vice President and
New York, NY 10004 Director of Equities for the Bank of
America prior thereto
7/31/57
Janet A. Fiorenza* Vice President(1) Managing Director, WPG
One New York Plaza
New York, NY 10004
6/9/49
- 43 -
<PAGE>
PRINCIPAL OCCUPATIONS DURING PAST
NAME AND ADDRESS/DATE OF BIRTH TITLE FIVE YEARS
- ----------------------------------- ----- ---------------------------------
S. Blake Miller* Vice President(5) Director, WPG
One New York Plaza
New York, NY 10004
3/4/65
R. Scott Richter* Vice President(1) Managing Director, WPG;
One New York Plaza Vice President, WPG Tax
New York, NY 10004 Free Money Market Fund
12/6/50
Joseph J. Reardon* Vice President Senior Vice President, Mutual Fund
One New York Plaza Operations, WPG; Vice President,
New York, NY 10004 Tomorrow Funds Retirement Trust
4/4/60
Joseph Parascondola* Assistant Vice Assistant Manager, Mutual Fund
One New York Plaza President Operations, WPG since 1995; Assistant
New York, NY 10004 Vice President, Tomorrow Funds
Retirement Trust; Manager, Mutual Fund
6/6/63 Accounting, Concord Financial Group
prior thereto
Therese Hogan Assistant Manager, State Regulation, First Data
First Data Investor Secretary Investor Services Group, Inc. since June
Services Group 1994; Senior Legal Assistant,
53 State Street Palmer & Dodge prior thereto
Boston, MA 02109
2/27/62
- ------------
<FN>
1. Tax Free Money Market Fund and Municipal Fund.
2. Growth and Income Fund.
3. Tudor Fund.
4. International Fund.
5. Growth Fund.
6. Quantitative Fund.
</FN>
</TABLE>
- 44 -
<PAGE>
COMPENSATION OF TRUSTEES AND OFFICERS
The Funds pay no compensation to their Trustees affiliated with the
Adviser or to their officers. None of the Trustees or officers have engaged in
any financial transactions with any Fund or with the Adviser during the past
fiscal year (other than the purchase and redemption of Fund shares) and except
that certain Trustees and officers who are managing directors or directors of
the Adviser may, from time to time, purchase and sell ownership interests in the
Adviser.
The following table sets forth the compensation paid to the Trustees for
the Funds' fiscal years ended December 31, 1997:
- 45 -
<PAGE>
<TABLE>
<CAPTION>
AGGREGATE COMPENSATION FROM*
- ---------------------------------------------------------------------------------------------------------------------------
GOVERNMENT TAX-FREE GROWTH
MONEY MONEY AND
MARKET MARKET MUNICIPAL CORE BOND INCOME TUDOR
NAME OF TRUSTEE FUND FUND FUND FUND FUND FUND
- --------------- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Roger J. Weiss $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Melville Straus*** N/A N/A N/A N/A 0 0
Raymond R. Herrmann, Jr 2,625 2,625 2,625 2,625 2,625 2,625
Lawrence J. Israel 2,625 2,625 2,625 2,625 2,625 2,625
Graham E. Jones 2,625 2,625 2,625 2,625 2,625 2,625
Paul Meek 2,625 2,625 2,625 2,625 2,625 2,625
William B. Ross 2,625 2,625 2,625 2,625 2,625 2,625
Harvey E. Sampson**** 2,125 2,125 2,125 2,125 2,125 2,125
Robert A. Straniere 2,625 2,625 2,625 2,625 2,625 2,625
PENSION OR TOTAL
RETIREMENT COMPENSATION
BENEFITS FROM THE
ACCRUED AS FUNDS
PART OF AND OTHER
INTERNATIONAL GROWTH QUANTITATI VE FUNDS' FUNDS IN
NAME OF TRUSTEE FUND FUND FUND EXPENSES COMPLEX**
- --------------- ---- ---- ---- -------- -------
Roger J. Weiss $ 0 $ 0 $ 0 $0 $ 0
Melville Straus*** N/A 0 N/A 0 0
Raymond R. Herrmann, Jr 2,625 2,625 2,625 0 34,125
Lawrence J. Israel 2,625 2,625 2,625 0 34,125
Graham E. Jones 2,625 2,625 2,625 0 24,125
Paul Meek 2,625 2,625 2,625 0 24,125
William B. Ross 2,625 2,625 2,625 0 24,125
Harvey E. Sampson**** 2,125 2,125 2,125 0 29,625
Robert A. Straniere 2,625 2,625 2,625 0 24,125
<FN>
- ------------
*In addition to the compensation paid during 1997 by the Funds to the
Trustees, the Funds paid deferred compensation to Willis Winn, a former Trustee,
as follows: Growth and Income Fund - $9,099.45; Tudor Fund - $9,099.45; Growth
Fund - $6,684.81; Core Bond Fund - $6,684.81; Government Money Market Fund -
$4,873.85; Tax Free Money Market Fund - $4,873.85; International Fund -
$3,224.70; and Quantitative Fund - $509.49.
**As of December 31, 1997, there were 13 mutual funds in the Weiss,
Peck & Greer group of funds (including the Tomorrow(R) Funds) that publicly
offer their shares.
*** Mr. Straus resigned as a Trustee of WPG Growth and Income Fund, WPG
Tudor Fund and WPG Growth Fund during 1997.
**** Effective April 23, 1998, Mr. Sampson is no longer a Trustee of
the Funds.
</FN>
</TABLE>
-46-
<PAGE>
BENEFICIAL OWNERSHIP
AS OF APRIL 1, 1998
<TABLE>
<CAPTION>
SHARES (PERCENTAGE OF OUTSTANDING) HELD BY
------------------------------------------ WPG ADVISORY
ACCOUNTS IN WHICH
TRUSTEES AND OFFICERS WPG ADVISORY WPG DISCLAIMS
FUND (AS A GROUP) WPG ACCOUNTS(1) BENEFICIAL OWNERSHIP
- ---- ------------ --- ----------- --------------------
<S> <C> <C> <C> <C> <C> <C>
Government Money Market * 0 66,089,000 (39.98% 64,600,000 (97.75%)
Tax Free Money Market Fund * 0 61,902,000 (54.64%) 61,902,000 (100.00%)
Municipal Fund * 0 1,391,388 (56.11%) 1,391,388 (100.00%)
Core Bond Fund * 12,280 (0.10%) 8,331,748 (69.70%) 8,317,493 (99.83%)
Growth and Income Fund * 5,187 (0.15%) 1,595,639 (45.15%) 1,567,221 (98.22%)
Tudor Fund * 6,859 (0.10%) 1,444,883 (21.10%) 1,422,459 (98.45%)
International Fund 11,124 (1.43%) 11,050 (1.43%) 514,653 (66.37%) 510,259 (99.15%)
Growth Fund * 1,270 (0.37%) 240,826 (69.70%) 240,826 (100.00%)
Quantitative Fund * 0 9,214,480 (63.79%) 9,068,175 (98.41%)
<FN>
- -----------------
*As of April 1, 1998, the Trustees and officers of each Fund as a group
beneficially owned not more than 1% of the outstanding shares of each Fund.
(1)WPG Advisory Accounts are advisory accounts over which WPG or its
affiliates have discretionary investment authority and/or discretionary
authority to vote the securities held in such accounts.
</FN>
</TABLE>
-47-
<PAGE>
CERTAIN SHAREHOLDERS
As of March 31, 1998, no person within the knowledge of the management of
the Funds directly or indirectly owned, controlled or held with power to vote 5%
or more of the outstanding voting securities (i.e., shares) of any Fund, except
as set forth below:
PERCENTAGE OF
NAME AND ADDRESS OUTSTANDING SHARES
- ---------------- ------------------
TAX FREE MONEY MARKET FUND
Robert Sussman & 8.59%
Robynn Sussman JT WROS
21 Murray Hill Road
New York, NY 10583
Ascend Communications, Inc. 5.20%
1275 Harbor Bay Parkway
Alameda, CA 94510
CORE BOND FUND
The Trust Co. of Toledo Ttee 11.32%
For NWO Plumbers & Pipefitters
Local 50 Pension and Trust
6135 Trust Drive
Holland, OH 43528
The Trust Co. of Toledo NA 9.14%
Ttee. Toledo Plumbers Local
#50 Pension & Retirement Option C
Attn: Lenore Peterson
6135 Trust Drive, Suite #206
Holland, OH 43528
Key Trust Co Ttee FBO 8.42%
Bricklayers Allied Craftsmen
Local 83 Pen/PL
A/C 40009500
P. O. Box 94871
Cleveland, OH 44101-4871
Oneal Steel Co. Pension Trust 5.55%
For Certain Hrly Pd Emps
Southtrust Corp - Trust Ops
Attn: Linda Whitehead
P.O. Box 2554
Birmingham, AL 35290
-48-
<PAGE>
PERCENTAGE OF
NAME AND ADDRESS OUTSTANDING SHARES
- ----------------- ------------------
GROWTH AND INCOME FUND
Star Creations Hong Kong Ltd.
Ugland House 10.83%
P.O. Box 309
Georgetown Grand Cayman BWI
Sunbelt Beverage Corporation* 8.40%
Profit Sharing Plan
4601 Hollins Ferry Rd.
Baltimore, MD 21227
INTERNATIONAL FUND
Gussman Investments 7.24%
Nadel & Gussman Oil Producers
First National Tower 32nd Floor
Tulsa, OK 74103
GROWTH FUND
Mac & Co. 20.89%
A/C #861-319
P.O. Box 320
Mellon Bank Mutual Funds
Pittsburgh, PA 15230-0320
_____________
*Mr. Herrmann, a non-interested Trustee of each Fund, is Chairman of
the Board of Sunbelt Beverage Corporation. Mr. Herrmann disclaims beneficial
ownership of more than 99% of the shares held by the Sunbelt Beverage
Corporation's Profit Sharing Plan.
-49-
<PAGE>
PERCENTAGE OF
NAME AND ADDRESS OUTSTANDING SHARES
- ---------------------- ------------------
Wisconsin State Carpenter Pension Fund 18.66%
A/C Weiss Acct #416-977001
c/o Firstar Trust Company
Attn: Mutual Funds
P.O. Box 1787
Milwaukee, WI 53201-1787
Fox Valley Laborers Pension Fund 0.55%
Taft Hartley Fund
28 North 1st Street
Geneva, IL 60134-2221
Cullman Ventures Inc. Master Trust 8.31%
Attn: James O. Moore
101 Merritt 7
Norwalk, CT 06851
Mint & Co. 7.67%
A/C# 1960772010
Attn: Mutual Fund Ops
PO Box 92800
Rochester, NY 14692-8900
Thermo Electron Corp. Plan 7.51%
C/O State Street Bank & Trust
Nay Ling Chin
Master Trust Division
PO Box 1992
Boston, MA 02105-1992
Wells Fargo Bank as Agent for the 7.31%
Goldman 1988 Charitable Remainder Trust
#112874 MF MAC 9139-027
PO Box 9800
Calabasas, CA 91372-0800
Blue Bell Pension Fund B 5.87%
For Hourly Employees Fund
Attn: Ms. Susan Pritchard
C/O United Missouri Bank
PO Box 419260
Kansas City, MO 64141-6260
-50-
<PAGE>
PERCENTAGE OF
NAME AND ADDRESS OUTSTANDING SHARES
- ---------------- ------------------
QUANTITATIVE FUND
The Trust Co. of Toledo NA 22.01%
Ttee. Toledo Plumbers Local
#50 Pension & Retirement Pool A
Attn: Lenore Peterson
6135 Trust Drive, Suite #206
Holland, OH 43528
The Trust Co. of Toledo Ttee 17.70%
for NWO Plumbers & Pipefitters
Local 50 Pension and Trust
6135 Trust Drive, Suite 206
Holland, OH 43528
Star Creations Hong Kong Ltd. 11.59%
Ugland House
P.O. Box 309
Georgetown Grand Cayman BWI
-51-
<PAGE>
HOW TO PURCHASE SHARES
(See "How to Purchase Shares" in the Prospectus.)
The offering of shares of each Fund is continuous. A Fund may terminate
the continuous offering of its shares and may refuse to accept any purchase
order at any time at the discretion of its Trustees. Shares of the Funds may be
purchased from the Funds directly by an investor or may be purchased on behalf
of an investor by WPG or another broker-dealer or, in the case of Core Bond Fund
and International Fund, by a Service Organization. An investor directly
purchasing a Fund's shares should complete and execute the subscription form
included with the Prospectus in accordance with the instructions in the
Prospectus. Investors purchasing a Fund's shares through WPG, another
broker-dealer or a Service Organization should contact WPG, the broker-dealer or
the Service Organization, as appropriate, directly by mail or by telephone for
appropriate instructions.
In the case of telephone subscriptions, if full payment for telephone
subscriptions is not received by the Fund within the customary time period for
settlement then in effect after the acceptance of the order by the Fund, the
order is subject to cancellation and the purchaser will be liable to the
affected Fund for any loss suffered as a result of such cancellation. To recoup
such loss each Fund reserves the right to redeem shares owned by any shareholder
whose purchase order is cancelled for non-payment, and such purchaser may be
prohibited from placing further telephone orders.
The purchaser of a Fund's shares pays no sales load or underwriting
commission with respect to an investment in the Fund. If a subscription or
redemption is arranged and settlement made through a member of the National
Association of Securities Dealers, Inc. ("NASD"), then that member may, in its
discretion, charge a fee for this service. Service Organizations may receive
fees for certain administrative services which they perform for the Core Bond
Fund and International Fund and may also charge their customers fees for
automatic investment, redemption or other services provided to the customers.
Information concerning services and customer charges will be provided by the
particular Service Organization to any customer who must authorize the purchase
of a Fund's shares prior to such purchase.
Shares of the Funds may be transferred upon delivery to the Transfer
Agent of appropriate written instructions which clearly identify the account and
the number of shares to be transferred. Such instructions must be signed by the
registered owner and must be accompanied by certificates for the shares, if any,
which are being transferred, duly endorsed, or with an executed stock power. No
signature guarantee will be required on a transfer request if the proceeds of
the transfer are requested to be made payable to the shareholder of record and
sent to the record address of such shareholder. Otherwise, the signature on the
letter of instructions and the share certificates or the stock power must be
guaranteed, and otherwise be in good order for purposes of transfer. See "How to
Redeem Shares" in the Prospectus for a discussion of acceptable signature
guarantors. The Funds are not bound to record any transfer until all required
documents have been received by the Transfer Agent.
In addition to the Transfer Agent, each Fund has authorized one or more
brokers and dealers to accept on its behalf orders for the purchase and
redemption of Fund shares. Under certain conditions, such authorized brokers and
dealers may designate other intermediaries to accept orders for the purchase and
redemption of Fund shares. In accordance with a position taken by the staff of
the SEC, such purchase and redemption orders are considered to have been
received by a Fund when accepted by the authorized broker or dealer or, if
applicable, the authorized broker's or dealer's designee. Also in accordance
with the position taken by the staff of the SEC, such purchase and redemption
orders will receive the appropriate Fund's net asset value per share next
computed after the purchase or redemption order is accepted by the authorized
-52-
<PAGE>
broker or dealer or, if applicable, the authorized broker's or dealer's
designee.
LIMITS ON FUND SHARE TRANSACTIONS
In order to reduce the investment performance effect of excessive
shareholder trading in shares of the Weiss, Peck & Greer Equity Funds and to
minimize the Funds' transaction expenses, WPG has adopted a policy of limiting
the number of shareholder exchange and purchase/redemption transactions by any
one account (or group of accounts under common management) involving Weiss, Peck
& Greer Equity Funds ("Equity Share Transactions"), to a total of six such
transactions per calendar year, computed on a multi- Fund basis. Equity Share
Transactions subject to this limit are: (a) exchanges into or out of any Weiss,
Peck & Greer Equity Fund; and (b) any pair of transactions involving a purchase
followed by a redemption for offsetting or substantially similar amounts, in any
one Weiss, Peck & Greer Equity Fund.
The Weiss, Peck & Greer Equity Funds currently include WPG Tudor Fund,
WPG Growth and Income Fund, Weiss, Peck & Greer International Fund, WPG Growth
Fund and WPG Quantitative Equity Fund. This limit does not apply to any
transactions solely among or solely involving WPG Core Bond Fund, WPG Government
Money Market Fund, WPG Tax Free Money Market Fund and the WPG Intermediate
Municipal Bond Fund.
If the transaction activity in any account or group of accounts under
common management exceeds this limit, the applicable Fund may, at its
discretion, refuse additional purchase orders, or the purchase portion of
additional exchange orders, as the case may be, with respect to such account or
group of accounts for the remainder of the calendar year. Redemption orders will
not be refused.
"IN-KIND" PURCHASES
The shares of a Fund may be purchased, in whole or in part, by delivering
to the Fund securities that (a) meet the investment objective and policies of
that Fund, (b) have readily available market prices and quotations, (c) are
liquid securities not restricted as to transfer and (d) are otherwise acceptable
to the Adviser and the Fund, which reserve the right to reject all or any part
of the securities offered in exchange for shares of such Fund. An investor who
wishes to make an "in-kind" purchase should furnish to the Fund a list with a
full and exact description of all of the securities which he proposes to
deliver. The market value of securities accepted in exchange must be at least
equal to the initial or additional purchase minimum. The Fund will specify those
securities which it is prepared to accept and will provide the investor with the
necessary forms to be completed and signed by the investor. The investor should
then send the securities, in proper form for transfer, with the necessary forms
to the Fund's custodian and certify that there are no legal or contractual
restrictions on the free transfer and sale of the securities. The securities
will be valued as of the close of business on the day of receipt by the Fund in
the same manner as portfolio securities of the Fund are valued. See "Net Asset
Value." The number of full and fractional Fund shares having a net asset value
(as next determined following receipt of the securities) equal to the value of
the securities delivered by the investor will be issued to the investor, less
any applicable stock transfer taxes. A Fund will acquire such securities for
investment purposes only and not for immediate resale. The exchange of
securities by the investor for shares of a Fund is a taxable transaction that
may result in recognition of gain or loss on the securities so exchanged for
federal, state and local income tax purposes. Investors should consult their own
tax advisers in light of their particular tax situations.
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REDEMPTION OF SHARES
(See "How to Redeem Shares" in the Prospectus.")
Any shareholder of a Fund is entitled to require the Fund to redeem all
or part of his shares. It is suggested that all redemption requests be sent by
certified mail, return receipt requested. Investors whose shares are purchased
through their accounts at WPG, a broker-dealer or a Service Organization may
redeem all or a part of their shares in accordance with instructions pertaining
to such accounts. It is the responsibility of WPG, the broker-dealer or the
Service Organization to transmit the redemption order and credit its customer's
account with the redemption proceeds on a timely basis. Other investors may
redeem all or part of their shares in accordance with the procedures detailed in
the Prospectus.
The redemption price, which may be more or less than the price paid by
the shareholder for his shares, is the net asset value per share next determined
after a written request for redemption in proper form is received by First Data
Investor Services Group, Inc. (the "Transfer Agent") or the Fund. Redemptions
are taxable transactions for shareholders who are subject to tax. There is no
redemption charge imposed by any Fund with respect to the redemption of shares.
Redemption requests which are not in proper form will be returned to the
shareholder for correction. Redemptions will not become effective until all
documents in proper form have been received by the Transfer Agent. The Transfer
Agent will reject redemption requests unless checks (including certified checks
or cashier's checks) received for shares purchased have cleared (which may take
up to fifteen days). To prevent such rejection, an investor may contact the Fund
or the Transfer Agent to arrange for payment for shares in cash or another form
of immediately available funds.
The redemption price may be paid in cash or portfolio securities, at each
Fund's discretion. The Funds have, however, elected to be governed by Rule 18f-1
under the 1940 Act pursuant to which each Fund is obligated to redeem shares
solely in cash up to the lesser of $250,000 or 1% of the net asset value of the
Fund during any 90-day period for any one shareholder. Should redemptions by any
shareholder exceed such limitation, a Fund will have the option of redeeming the
excess in cash or portfolio securities. In the latter case, the securities are
taken at their value employed in determining the redemption price and the
shareholder may incur a brokerage charge when the shareholder sells the
securities he receives. The selection of such securities will be made in such
manner as the officers of the affected Fund deem fair and reasonable.
Payment for redeemed shares normally will be made after receipt by the
Transfer Agent of a written request for redemption in proper form as more fully
described in the Prospectus. Normally redemption proceeds are paid by check and
mailed to the shareholder of record. Shareholders may elect to have payments
wired to their bank, unless their bank cannot receive federal reserve wires.
(Please contact the Funds for further information on wire charges.) Such payment
may be postponed, and the right of redemption suspended during any period when:
(a) trading on the New York Stock Exchange ("NYSE") is restricted as determined
by the applicable rules and regulations of the SEC or the NYSE is closed for
other than weekends and holidays; (b) the SEC has, by order, permitted such
suspension; or (c) an emergency, as defined by rules and regulations of the SEC,
exists, making disposal of portfolio securities or valuation of net assets of
the Fund not reasonably practicable.
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NET ASSET VALUE
(See "How Each Fund's Net Asset Value is Determined" in the Prospectus.)
The net asset value of each Fund is determined once daily, Monday through
Friday (when the NYSE is open for regular trading) on each day (other than a day
during which no shares of the applicable Fund were tendered for redemption and
no order to purchase or sell shares of that Fund was received) in which there is
a sufficient degree of trading in that Fund's portfolio securities that the
current net asset value of that Fund's shares might be materially affected. Such
determination is made as of the close of regular trading on the NYSE, normally
4:00 P.M. New York City time. In addition, Government Money Market Fund and Tax
Free Money Market Fund calculate their net asset value per share as of 12:00
P.M. New York City time on those days on which the NYSE is open for regular
trading and on which a purchase order for Fund shares and related federal funds
wire is received prior to 12:00 P.M. New York City time. The net asset value per
share is calculated by dividing the value of a Fund's securities, cash and other
assets (including dividends accrued but not collected) less all of its
liabilities (including options and accrued expenses but excluding capital and
surplus), by the total number of shares outstanding, the result being rounded to
the nearest cent. All expenses of a Fund are accrued daily and taken into
account for the purpose of determining the net asset value. The NYSE is not open
for trading on weekends or on New Year's Day (January 1), Dr. Martin Luther
King, Jr. Day (the third Monday in January), Presidents' Day (the third Monday
in February), Good Friday, Memorial Day (the last Monday in May), Independence
Day (July 4), Labor Day (the first Monday in September), Thanksgiving Day (the
fourth Thursday in November) and Christmas Day (December 25).
The public offering price of a Fund's shares is the net asset value per
share next determined after receipt of an order. Orders for shares which have
been received by a Fund or the Transfer Agent prior to the close of regular
trading of the NYSE are confirmed at the offering price effective at the close
of regular trading of the NYSE on that day, while orders received subsequent to
the close of regular trading of the NYSE will be confirmed at the offering price
effective at the close of regular trading of the NYSE on the next day on which
the net asset value is calculated.
Portfolio securities traded on more than one U.S. national securities
exchange or on a U.S. exchange and a foreign securities exchange are valued at
the last sale price from the exchange representing the principal market for such
securities on the business day when such value is determined.
The value of all assets and liabilities expressed in foreign currencies will be
converted into U.S. dollar values at currency exchange rates determined by the
Fund's custodian to be representative of fair levels at times prior to the close
of trading on the NYSE. Trading in securities on European and Far Eastern
securities exchanges and over-the-counter markets is normally completed well
before the close of business on the NYSE and may not take place on all business
days that the NYSE is open and may take place on days when the NYSE is closed.
Events affecting the values of portfolio securities that occur between the time
their prices are determined and the close of regular trading on the NYSE will
not be reflected in a Fund's calculation of net asset value unless the Adviser
determines that the particular event would materially affect net asset value, in
which case an adjustment may be made.
THE NON-MONEY MARKET FUNDS
In determining the net asset value of each non-Money Market Fund,
securities, options on securities, futures contracts and options thereon which
are listed or admitted to trading on a national exchange, are valued at their
last sale on such exchange prior to the time of determining net asset value; or
if no sales are reported on such exchange on that day, at the mean between the
most recent bid and asked price. Securities
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listed on more than one exchange shall be valued on the exchange on which the
security is most extensively traded. Unlisted securities for which market
quotations are readily available are valued at the mean between the most recent
bid and asked prices. Other securities and assets for which market quotations
are not readily available are valued at their fair value as determined in good
faith by the Funds' Valuation Committee as authorized by the Boards.
Bonds and other fixed income securities (other than short-term
obligations but including listed issues) in a Fund's portfolio are valued at
fair market value on the basis of valuations furnished by a pricing service
which utilizes both dealer-supplied valuations and electronic data processing
techniques which take into account appropriate factors such as
institutional-size trading in similar groups of securities, yield, quality,
coupon rate, maturity, type of issue, trading characteristics and other market
data, without exclusive reliance upon quoted prices or exchange or
over-the-counter prices, when such valuations are believed to reflect the fair
value of such securities.
For purposes of determining the net asset value of the Funds' shares,
options transactions will be treated as follows: When a Fund sells an option, an
amount equal to the premium received by that Fund will be included in that
Fund's accounts as an asset and a deferred liability will be created in the
amount of the option. The amount of the liability will be marked to the market
to reflect the current market value of the option. If the option expires or if
that Fund enters into a closing purchase transaction, that Fund will realize a
gain (or a loss if the cost of the closing purchase exceeds the premium
received), and the related liability will be extinguished. If a call option
contract sold by a Fund is exercised, that Fund will realize the gain or loss
from the sale of the underlying security and the sale proceeds will be increased
by the premium originally received.
THE MONEY MARKET FUNDS
Pursuant to a rule of the SEC, each Money Market Fund's portfolio
securities are valued using the amortized cost method of valuation to seek to
maintain a constant net asset value of $1.00 per share. This method involves
valuing a security at cost on the date of acquisition and thereafter assuming a
constant accretion of a discount or amortization of a premium to maturity,
regardless of the impact of fluctuating interest rates on the market value of
the instrument. While this method provides certainty in valuation, it may result
in periods during which value, as determined by amortized cost, is higher or
lower than the price that a Money Market Fund would receive if it sold the
instrument. During such periods, the yield to investors in a Money Market Fund
may differ somewhat from that obtained in a similar investment company which
uses available market quotations to value all of its portfolio securities.
During periods of declining interest rates, the quoted yield on shares of a
Money Market Fund may tend to be higher than a like computation made by a fund
with identical investments utilizing a method of valuation based upon market
prices and estimates of market prices for all of its portfolio instruments.
Thus, if the use of amortized cost by a Money Market Fund resulted in a lower
aggregate portfolio value on a particular day, a prospective investor in the
Fund would be able to obtain a somewhat higher yield if he or she purchased
shares of the Fund on that day, than would result from investment in a fund
utilizing solely market values, and existing investors in the Fund would receive
less investment income. The converse would apply in a period of rising interest
rates.
The Board of Trustees of Funds Trust has established procedures
designed to stabilize, to the extent reasonably possible, each Money Market
Fund's price per share as computed for the purpose of sales and redemptions at
$1.00. Such procedures include review of the Money Market Funds' respective
portfolio by the Board, at such intervals as they deem appropriate, to determine
whether the Funds' net asset values per share calculated by using available
market quotations or market equivalents (the determination of value by reference
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to interest rate levels, quotations of comparable securities and other factors)
deviate from $1.00 per share based on amortized cost. If such deviation exceeds
1/2 of 1%, the Board will promptly consider what action, if any, will be
initiated. In the event that the Board determines that a deviation exists which
may result in material dilution or other unfair results to investors or existing
shareholders of either Money Market Fund, it will take such corrective action as
it regards to be necessary and appropriate, including the sale of portfolio
instruments prior to maturity to realize capital gains or losses or to shorten
average portfolio maturity; withholding part or all of dividends or payment of
distributions from capital or capital gains; redemptions of shares in kind; or
establishing a net asset value per share by using available market quotations or
equivalents. In addition, in order to stabilize the net asset value per share at
$1.00 the Board has the authority (1) to reduce or increase the number of shares
outstanding on a pro rata basis, and (2) to offset each shareholder's pro rata
portion of the deviation between the net asset value per share and $1.00 from
the shareholder's accrued dividend account or from future dividends. Further,
the Board may authorize an affiliate of the Money Market Funds to purchase from
a Money Market Fund any security that is not an "eligible security" in
accordance with Rule 2a-7 under the 1940 Act. Each Money Market Fund may hold
cash for the purpose of stabilizing its net asset value per share. Holdings of
cash, on which no return is earned, would tend to lower the yield on a Money
Market Fund's shares.
Generally, in order to continue to use the amortized cost method of
valuation, the Money Market Funds' respective investments, including repurchase
agreements, must be U.S. dollar-denominated instruments which the Board
determines present minimal credit risks and which are of high quality (i.e., two
highest ratings) as determined by two nationally recognized statistical rating
organizations or, in the case of any instrument that is not so rated, of
comparable quality as determined by the Board. Each Money Market Fund must also
comply with certain other conditions, including certain diversification
requirements, and must maintain a dollar-weighted average portfolio maturity
(not more than 90 days) appropriate to its objective of maintaining a stable net
asset value of $1.00 per share and generally may not purchase any instrument
with a remaining maturity of more than 397 days. Should the disposition of a
portfolio security result in a dollar-weighted average portfolio maturity of
more than 90 days, a Money Market Fund will invest its available cash in such a
manner as to reduce such maturity to 90 days or less as soon as reasonable
practicable. The Adviser will periodically review this method of valuation and
recommend changes to the Board which may be necessary to assure that the
portfolio instruments are valued at their fair value as determined by the Board
in good faith.
INVESTOR SERVICES
The Funds offer a variety of services, as described in Appendix B and in
the sections that follow, designed to meet the needs of its shareholders. The
costs of providing such services are borne by the Funds, except as otherwise
specified below. Further information on each service is set forth in the
Prospectus under the caption "Shareholder Services."
AUTOMATIC REINVESTMENT PLAN
For the convenience of a Fund's shareholders and to permit shareholders
to increase their shareholdings in a Fund, the Funds' Transfer Agent is, unless
otherwise specified, appointed in the subscription form by the investor as an
agent to receive all dividends and capital gains distributions and to reinvest
them in shares (or fractions thereof) of the applicable Fund, at the net asset
value per share next determined after the record date for the dividend or
distribution. The investor may, of course, terminate such agency agreement at
any time by written notice to the Transfer Agent, and direct the Transfer Agent
to have dividends or capital gains distributions, or both, if any, sent to him
in cash rather than reinvested in shares of the applicable Fund. The Funds or
Transfer Agent may also terminate such agency agreement, and the Funds have the
right to appoint a successor Transfer Agent.
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EXCHANGE PRIVILEGE
Shares of a Fund may be exchanged by mail for shares of any other Fund
at their relative net asset values. Shareholders may exchange shares by
telephone or telegram once the Telephone Authorization Section of the account
application has been completed and filed with the Transfer Agent and it has been
accepted. To exchange shares by telephone, call 1-800-223-3222 between the hours
of 9:00 A.M. and 4:00 P.M. Eastern time on any day that the Funds are open for
business. A current Prospectus, which may be obtained from a Fund, should be
read in advance of any investment in any Fund. For tax purposes, an exchange
involves a redemption of shares, which is a taxable transaction for shareholders
who are subject to tax. Signatures on the written authorization to exchange by
telephone or telegram must be guaranteed in the same manner as set forth under
"How to Purchase Shares." However, for exchanges by mail, no guarantee is
required if the exchange is being made into an identically registered account.
The exchange privilege is available only in those jurisdictions where shares of
the Funds may be legally sold. When establishing a new account by an exchange,
the value of the shares redeemed must meet the minimum initial investment
requirement of the Funds involved. In addition, the exchange privilege is
available only when payment for the shares to be redeemed has been made.
Exchange requests will not be accepted for shares purchased by check until such
check clears which could be up to 15 days from the date that the shares were
purchased. If for these or other reasons the exchange cannot be effected, the
shareholder will be so notified.
This service is intended to provide shareholders with a convenient way to
switch their investments when their objectives or perceived market conditions
suggest a change. The exchange privilege is not meant to afford shareholders an
investment vehicle to play short-term swings in the stock market by engaging in
frequent transactions in and out of the Funds. Shareholders who engage in such
frequent transactions may be prohibited from or restricted in placing future
exchange orders. See "HOW TO REDEEM SHARES --Excessive Trading" in the
Prospectus and "HOW TO PURCHASE SHARES --Limits On Fund Share Transactions"
above for limitations on exchanges and trading in the Funds' shares.
AUTOMATIC INVESTMENT PLAN
The Automatic Investment Plan enables investors to make regular (monthly
or quarterly) investments of $50 or more in shares of any Fund (except for the
Growth Fund and the Quantitative Fund) through an automatic withdrawal from your
designated bank account by simply completing the Automatic Investment Plan
application. Please call 1-800-223-3332 or write to WPG to receive this form. By
completing the form, you authorize the Funds' Custodian to periodically draw
money from your designated account, and to invest such amounts in account(s)
with the Fund(s) specified. The transaction will be automatically processed to
your mutual fund account on or about the first business day of the month or
quarter you designate.
If you elect the Automatic Investment Plan, please be aware that: (1) the
privilege may be revoked without prior notice if any check is not paid upon
presentation; (2) the Funds' Custodian is under no obligation to notify you as
to the non-payment of any check, and (3) this service may be modified or
discontinued by the Funds' Custodian upon thirty (30) days' written notice to
you prior to any payment date, or may be discontinued by you by written notice
to the Transfer Agent at least ten (10) days before the next payment date.
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SWEEP PROGRAM
Shares may be purchased through a sweep program under which funds in a
customer's private account with WPG are automatically invested in shares of the
Government Money Market Fund or the Tax Free Money Market Fund. Under this
program, funds deposited in a private account with WPG usually are invested
daily in the customer's account with the Government Money Market Fund or the Tax
Free Money Market Fund. The Funds expect that WPG will transmit orders for the
purchase of a Fund's shares on the same day that funds are swept from the
private account. The Sweep Program is serviced by WPG's outside service bureau,
ADP, in connection with the Funds' Custodian. An account statement will be
generated through WPG.
SYSTEMATIC WITHDRAWAL PLAN
Redemption of shares for such purposes may reduce or even liquidate the
account, particularly in a declining market. Such payments paid to a shareholder
cannot be considered a yield or income on the investment. Payments to a
shareholder in excess of distributions of investment income will constitute a
return of his invested principal, and liquidation of shares pursuant to this
Plan is a redemption, which is a taxable transaction for shareholders who are
subject to tax.
Withdrawals at the same time as regular purchases of a Fund's shares
ordinarily will not be permitted since purchases are intended to accumulate
capital and the Systematic Withdrawal Plan is designed for the regular
withdrawal of funds, except that a shareholder may make lump sum investments, of
$5,000 or more. The Systematic Withdrawal Plan may be terminated by the
shareholder, without penalty, at any time and the Funds may terminate the Plan
at will. There are no contractual rights on the part of either party with
respect to the Plan.
DIVIDENDS, DISTRIBUTIONS AND TAX STATUS
Each Fund is separate for investment and accounting purposes and is
treated as a separate entity for federal income tax purposes. A regulated
investment company qualifying under Subchapter M of the Code is not subject to
federal income tax on distributed amounts to the extent that it distributes its
taxable and tax-exempt net investment income and net realized capital gains in
accordance with the timing and other requirements of the Code. Each Fund intends
to qualify and be treated as a regulated investment company for each taxable
year.
Qualification of a Fund for treatment as a regulated investment company
under the Code requires, among other things, that (a) at least 90% of the Fund's
gross income for its taxable year, without offset for losses from the sale or
other disposition of stock or securities or other transactions, be derived from
interest, payments with respect to securities loans, dividends and gains from
the sale or other disposition of stock or securities or foreign currencies, or
other income (including but not limited to gains from options, futures, or
forward contracts) derived with respect to its business of investing in such
stock, securities or currencies; (b) the Fund distribute for its taxable year
(in accordance with the Code's timing and other requirements) to its
shareholders as dividends at least 90% of its taxable and tax-exempt net
investment income, the excess of net short-term capital gain over net long-term
capital loss earned in such year and any other net income (except for the
excess, if any, of net long-term capital gain over net short-term capital loss,
which need not be distributed in order for the Fund to qualify as a regulated
investment company but is taxed to the Fund if it is not distributed); and (c)
the Fund diversify its assets so that, at the close of each quarter of its
taxable year, (i) at least 50% of the fair market value of its total (gross)
assets is comprised of cash, cash items, U.S. Government securities, securities
of other regulated investment companies and other securities, with
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such other securities limited in respect of any one issuer to no more than 5% of
the fair market value of the Fund's total assets and 10% of the outstanding
voting securities of such issuer and (ii) no more than 25% of the fair market
value of its total assets is invested in the securities of any one issuer (other
than U.S. Government securities and securities of other regulated investment
companies) or of two or more issuers controlled by the Fund and engaged in the
same, similar, or related trades or businesses.
Each Fund intends to distribute at least annually to its shareholders all
or substantially all of its taxable income (if any) (including net realized
capital gains) and any net tax-exempt interest. Exchange control or other
foreign laws, regulations or practices may restrict repatriation of investment
income, capital or the proceeds of securities sales by foreign investors and may
therefore make it more difficult for a Fund that invests in foreign securities,
such as the International Fund, to satisfy the distribution requirements
described above, as well as the excise tax distribution requirements described
below. However, each Fund generally expects to be able to obtain sufficient cash
to satisfy such requirements from new investors, the sale of securities or other
sources. If for any taxable year a Fund does not qualify as a regulated
investment company, it will be taxed on all of its taxable income at corporate
rates, its net tax-exempt interest (if any) may be subject to the alternative
minimum tax, and its distributions to shareholders will be taxable as ordinary
dividends to the extent of its current and accumulated earnings and profits.
Each Fund is subject to a 4% nondeductible federal excise tax on amounts
required to be but not distributed under a prescribed formula. The formula
requires that a Fund distribute (or be deemed to have distributed) to
shareholders during a calendar year at least 98% of the Fund's ordinary income
(not including tax-exempt interest) for the calendar year, at least 98% of the
excess of its capital gains over the capital losses realized during the one-year
period ending October 31 during such year, as well as any income or gain (as so
computed) from the prior calendar year that was not distributed for such year
and on which the Fund paid no federal income tax. Each Fund has distribution
policies that should generally enable it to avoid liability for this tax.
Net investment income for a Fund is the Fund's investment income less its
expenses. Dividends from taxable net investment income, certain net realized
foreign currency gains, and the excess, if any, of net short-term capital gain
over net long-term capital loss of a Fund will be taxed to shareholders as
ordinary income, and dividends from net long-term capital gain in excess of net
short-term capital loss ("capital gain dividends") will be taxed to shareholders
as long-term capital gain, for federal income tax purposes. As a result of
federal tax legislation enacted on August 5, 1997 (the "Act"), gain recognized
after May 6, 1997 from the sale of a capital asset is taxable to individual
(noncorporate) investors at different maximum federal income tax rates,
depending generally upon the tax holding period for the asset, the federal
income tax bracket of the taxpayer, and the dates the asset was acquired and/or
sold. The Treasury Department has issued guidance under the Act that (subject to
possible modification by future "technical corrections" legislation) will enable
each Fund to pass through to its shareholders the benefits of the capital gains
rates enacted in the Act. Each Fund will provide appropriate information to its
shareholders about the tax rate(s) applicable to its capital gain dividends (if
any) in accordance with this and any future guidance. Shareholders should
consult their own tax advisers on the correct application of these new rules in
their particular circumstances. These dividends are paid after taking into
account, and reducing the distribution to the extent of, any available capital
loss carryforwards. The Funds have the following capital loss carryforwards as
of December 31, 1997:
YEAR OF
FUND AMOUNT EXPIRATION
- ---- ------ ----------
Tax Free Money Market Fund $ 10,444 2001
Government Money Market Fund 2,014,086 2002
Municipal Fund 100,067 2002
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Core Bond Fund $18,940,089 2002
Tax Free Money Market Fund 1,383 2003
Core Bond Fund 20,112,733 2003
Municipal Fund 7,685 2003
Core Bond Fund 753,007 2004
Tax Free Money Market Fund 3,072 2004
Government Money Market Fund 252 2005
Tax Free Money Market Fund 4,337 2005
Long-term capital gains of a Fund are taxable to shareholders as capital
gains if they are either distributed in the form of capital gain dividends or
retained by the Fund and designated for treatment as capital gains distributed
to the shareholders. Capital gain dividends are not eligible for the
dividends-received deduction. If any net realized long-term capital gain in
excess of net realized short-term capital loss is retained by a Fund for
reinvestment, requiring federal income taxes to be paid thereon by the Fund, the
Fund will elect to treat such capital gains as having been distributed to
shareholders. As a result, each shareholder will report such capital gains as
capital gains, will be able to claim his share of federal income taxes paid by
the Fund on such gains as a credit against his own federal income tax liability,
and will be entitled to increase the adjusted tax basis of his Fund shares by
the difference between his pro rata share of such gains and his tax credit.
Each year, each Fund will notify shareholders of the tax status of its
dividends and distributions including, in the case of the Tax-Free Money Market
Fund and the Municipal Fund, a statement of the percentage of the prior calendar
year's distributions which the Fund has designated as tax-exempt, the percentage
(if any) of such tax-exempt distributions treated as a tax-preference item for
purposes of the federal alternative minimum tax, and the source on a
state-by-state basis of all distributions of tax-exempt interest.
A portion of the dividends from the Growth and Income Fund, Tudor Fund,
International Fund, Growth Fund and Quantitative Fund may qualify for the 70%
dividends-received deduction for corporate shareholders. The portion of such
dividends which qualifies for such deduction is the portion, properly designated
by the Funds, which is derived from dividends of U.S. domestic corporations with
respect to shares held by the Funds that are not debt-financed and have been
held for tax purposes at least a minimum period, generally 46 days, extending
before and after each such dividend. The International Fund does not expect to
have any significant investment in U.S. domestic corporations. The
dividends-received deduction for corporations will be reduced to the extent the
shares of a Fund with respect to which the dividends are received are treated as
debt-financed under the Code and will be eliminated if such shares are deemed to
have been held (for tax purposes) for less than the minimum period referred to
above with respect to each dividend. Shareholders will be informed of the
percentages of dividends which may qualify for the dividends-received deduction.
Dividends from Funds other than the Growth and Income Fund, Tudor Fund,
International Fund, Growth and Quantitative Fund will not qualify for the
dividends-received deduction.
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Section 1059 of the Code provides for a reduction in a stock's basis
for the untaxed portion (i.e., the portion qualifying for the dividends-received
deduction) of an "extraordinary dividend" if the stock has not been held at
least two years prior to the extraordinary dividend. Extraordinary dividends are
dividends paid during a prescribed period which equal or exceed 10 percent (5
percent for preferred stock) of the recipient corporation's adjusted basis in
the stock of the payor or which meet an alternative fair market value test. To
the extent that dividend payments by the Growth and Income Fund, Tudor Fund,
Growth Fund, International Fund and Quantitative Fund to their corporate
shareholders constitutes extraordinary dividends, such shareholders' basis in
their shares will be reduced, and to the extent such basis would be reduced
below zero, current recognition of income may be required.
The excess, if any, of a corporation's "adjusted current earnings" over
its "alternative minimum taxable income" includes the amount of dividends, if
any, excluded from income by virtue of the 70% dividends-received deduction,
which may increase its alternative minimum tax liability.
Dividends, including capital gain dividends, paid by a Fund (except for
daily dividends paid by the Money Market Funds, the Core Bond Fund and the
Municipal Bond Fund) shortly after a shareholder's purchase of shares have the
effect of reducing the net asset value per share of his shares by the amount per
share of the dividend distribution. Although such dividends are, in effect, a
partial return of the shareholder's purchase price to the shareholder, they will
be subject to federal income tax as described above, except for exempt-interest
dividends (as defined below). Therefore, prior to purchasing shares an investor
should consider the impact of an anticipated dividend distribution.
Distributions from a Fund's current or accumulated earnings and profits
("E&P"), as computed for federal income tax purposes, will be taxable as
described above whether taken in shares or in cash. Amounts that are not
allowable as a deduction in computing taxable income, including expenses
associated with earning tax-exempt interest income, do not reduce current E&P
for this purpose. Distributions, if any, in excess of E&P will constitute a
return of capital, which will first reduce an investor's tax basis in Fund
shares and thereafter (after such basis is reduced to zero) will generally give
rise to capital gains. Shareholders electing to receive distributions in the
form of additional shares will have a cost basis for federal income tax purposes
in the shares so received equal to the amount of cash they would have received
had they elected to receive cash.
All dividends and capital gain dividends, whether received in shares or
in cash, must be reported by each taxable shareholder on his or her federal
income tax return. Shareholders are also required to report tax-exempt interest,
including exempt-interest dividends. Redemptions of shares, including exchanges
for shares of another Fund, may result in tax consequences to the shareholder
and are also subject to these reporting requirements, although no gain or loss
would usually be realized on the redemption or other disposition of shares of
the Money Market Funds.
Equity options (including options on stock and options on narrow-based
stock indices) and over-the-counter options on debt securities written or
purchased by a Fund will be subject to tax under Section 1234 of the Code. In
general, no loss is recognized by a Fund upon payment of a premium in connection
with the purchase of a put or call option. The character of any gain or loss
recognized (i.e., long-term or short-term) will generally depend, in the case of
a lapse or sale of the option, on the Fund's holding period for the option, and
in the case of an exercise of the option, on the Fund's holding period for the
underlying security. The purchase of a put option may constitute a short sale
for federal income tax purposes, possibly requiring the recognition of gain in
an appreciated substantially identical portfolio stock or security causing an
adjustment in the holding period of such stock or security in the Fund's
portfolio. If a Fund writes a put or call option, no gain is recognized upon its
receipt of a premium. If the option lapses or
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is closed out, any gain or loss is treated as a short-term capital gain or loss.
If a call option is exercised, whether the gain or loss is long-term or
short-term depends on the holding period of the underlying stock or security.
The exercise of a put option written by a Fund is not a taxable transaction for
the Fund.
Futures contracts, including certain foreign currency futures contracts,
that are "regulated futures contracts," entered into by a Fund and listed
non-equity options written or purchased by a Fund (including options on debt
securities, options on futures contracts, options on securities indices, options
on broad-based stock indices, and certain foreign currency options), will be
governed by Section 1256 of the Code. Absent a tax election to the contrary,
gain or loss attributable to the lapse, exercise or closing out of any such
position (with the exceptions stated in the next paragraph) will be treated as
60% long-term and 40% short-term capital gain or loss, and on the last trading
day of a Fund's taxable year, all outstanding Section 1256 positions will be
marked to market (i.e., treated as if such positions were closed out at their
closing price on such day), and any resulting gain or loss will be recognized as
60% long-term and 40% short-term capital gain or loss. Under certain
circumstances, entry into a futures contract to sell a security may constitute a
short sale for federal income tax purposes, causing an adjustment in the holding
period of the underlying security or a substantially identical security in a
Fund's portfolio. Additionally, a Fund may be required to recognize gain (which
is subject to tax distribution requirements) if an option, future, forward
contract, short sale or other transaction that is not marked to market under
Section 1256 of the Code is treated as a constructive sale of an appreciated
financial position in the Fund's portfolio.
Certain foreign currency forward contracts entered into by a Fund may
also be subject to Section 1256 of the Code, which as described above generally
requires that contracts governed by Section 1256 be marked to market (i.e.,
treated as if they were closed out at their closing price) on the last day of
the Fund's taxable year, with any resulting gain or loss taken into account for
such year. Absent a tax election to the contrary that may be available for any
such contract that is not part of a straddle, this mark to market gain or loss,
as well as gain or loss from the actual closing out of or delivery under such a
contract, will generally be treated as ordinary income or loss. Gain or loss
from any foreign currency forward contracts, foreign currency futures contracts
or foreign currency options that are not subject to Section 1256 will also
generally be treated as ordinary income or loss.
Certain tax rules governing foreign currency activities and foreign
currency options, futures and forward contracts not directly related to a Fund's
principal business of investing in stock or securities could require that these
activities be limited under possible future Treasury regulations, in order to
satisfy the 90% test described above.
Positions of a Fund which consist of at least one stock and at least one
stock option or other position with respect to a related security which
substantially diminishes the Fund's risk of loss with respect to such stock
could be treated as a "straddle" which is governed by Section 1092 of the Code,
the operation of which may cause deferral of losses, adjustments in the holding
periods of stock or securities and conversion of short-term capital losses into
long-term capital losses. An exception to these straddle rules exists for any
"qualified covered call options" on stock written by a Fund.
Positions of a Fund which consist of at least one debt security not
governed by Section 1256 and at least one futures contract or listed non-equity
option governed by Section 1256 which substantially diminishes a Fund's risk of
loss with respect to such debt security will be treated as a "mixed straddle."
Although mixed straddles are subject to the straddle rules of Section 1092 of
the Code, certain tax elections exist for them which reduce or eliminate the
operation of these rules. Each Fund will monitor its transactions in options,
futures and forward contracts and may make certain tax elections in order to
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mitigate the operation of these rules .
Foreign exchange gain or loss realized with respect to foreign
currency-denominated debt instruments, foreign currency forward contracts,
foreign currency-denominated payables and receivables and foreign currency
options and futures contracts (other than foreign currency options and futures
contracts that are governed by Section 1256 of the Code and for which no
election is made) are generally treated as ordinary income or loss under Section
988 of the Code.
The tax rules applicable to options, futures, currency forward contracts
, foreign currency transactions and constructive sales may affect the amount,
timing and character of a Fund's income and, consequently, its distributions to
shareholders by causing holding period adjustments, converting short-term
capital losses into long-term capital losses, converting capital gain or loss
into ordinary income or loss, and accelerating a Fund's income or gains or
deferring its losses.
The federal income tax rules applicable to dollar rolls and certain
structured or hybrid securities are not or may not be settled, and a Fund may be
required to account for these transactions or investments in a manner that,
under certain circumstances, may limit the extent of its use of such
transactions or investments.
A Fund's investment in zero coupon securities, capital appreciation
bonds, or other securities having original issue discount (or market discount,
if the Fund elects to include market discount in income currently) will
generally cause it to realize income prior to the receipt of cash payments with
respect to these securities. The mark to market and constructive sale rules
described above may also require a Fund to recognize income or gains without a
concurrent receipt of cash. In order to distribute this income or gains,
maintain its qualification as a regulated investment company, and avoid federal
income or excise taxes, the Fund may be required to liquidate portfolio
securities that it might otherwise have continued to hold.
Investments in lower-rated securities, in which the Growth and Income
Fund, Tudor Fund and Growth Fund may invest, may present special tax issues for
a Fund to the extent actual or anticipated defaults may be more likely with
respect to such securities. Tax rules are not entirely clear about issues such
as when a Fund may cease to accrue interest, original issue discount, or market
discount; when and to what extent deductions may be taken for bad debts or
worthless securities; how payments received on obligations in default should be
allocated between principal and income; and whether exchanges of debt
obligations in a workout context are taxable. These and other issues will be
addressed by the Funds, in the event they invest in such securities, in order to
reduce the risk of distributing insufficient income to preserve their status as
regulated investment companies and seek to avoid becoming subject to federal
income or excise tax.
A Fund, to the extent it invests in foreign securities, may be subject to
foreign withholding or other foreign taxes with respect to income (possible
including, in some cases, capital gains) derived from foreign securities. These
taxes may be reduced or eliminated under the terms of an applicable U.S. income
tax treaty in some cases. However, the Funds, other than the International Fund,
generally will not be eligible to pass through to shareholders these taxes and
any associated foreign tax credits or deductions for foreign taxes paid by such
Funds that are not thus reduced or eliminated. Such Funds generally will,
however, be entitled to deduct such taxes in computing their income subject to
tax (if any).
The International Fund may qualify for and make the election permitted
under Section 853 of the Code so that shareholders will be able to claim a
credit or deduction on their federal income tax returns for,
and will be required to treat as amounts distributed to them (in addition to the
dividends and distributions
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they actually received), their pro rata portion of qualified taxes paid by the
Fund to foreign countries. Qualified taxes generally include only taxes that are
treated as income taxes under United States tax principles and therefore would
not include, for example, stamp taxes, securities transaction taxes, and similar
taxes. The shareholders of the International Fund may claim a foreign tax credit
or deduction by reason of the Fund's election under Section 853 of the Code, if
the Fund makes such an election, which is permitted only if more than 50% of the
value of the total assets of the Fund at the close of its taxable year consists
of stocks or securities of foreign corporations. The foreign tax credit or
deduction available to shareholders is subject to the satisfaction of holding
period requirements and certain other requirements and limitations imposed under
the Code. For instance, under Section 63 of the Code, no deduction for foreign
taxes may be claimed by shareholders who do not itemize deductions on their
federal income tax returns, although any such shareholder may claim a credit for
foreign taxes and in any event will be treated as having taxable income
increased by the shareholder's pro rata share of foreign taxes paid by the Fund
if the Fund makes the election permitted under Section 853. If a shareholder
chooses to take a credit for the foreign taxes deemed paid by such shareholder,
the amount of the credit that may be claimed in any year may not exceed the same
proportion of the U.S. tax against which such credit is taken which the
shareholder's taxable income from foreign sources (but not in excess of the
shareholder's entire taxable income) bears to his entire taxable income. For
this purpose, long-term and short-term capital gains the Fund realizes and
distributes to shareholders will generally not be treated as income from foreign
sources in their hands, nor will distributions of certain foreign currency gains
subject to Section 988 of the Code and of any other income realized by the Fund
that is deemed, under the Code, to be U.S.-source income in the hands of the
Fund. This foreign tax credit limitation may also be applied separately to
certain specific categories of foreign-source income and the related foreign
taxes. As a result of these rules, which have different effects depending upon
each shareholder's particular tax situation, certain shareholders may not be
able to claim a credit for the full amount of their proportionate share of the
foreign taxes paid by the Fund. It should also be noted that, if the election is
made, a tax-exempt shareholder, like other shareholders, will be required to
treat as part of the amounts distributed its pro rata portion of the income
taxes paid by the Fund to foreign countries. However, that income will generally
be exempt from taxation by virtue of such shareholder's tax-exempt status, and
such a shareholder will not be entitled to either a tax credit or a deduction
with respect to such income.
If a Fund acquires stock (including, under proposed regulations, an
option to acquire stock such as is inherent in a convertible bond) in certain
foreign corporations that receive at least 75% of their annual gross income from
passive sources (such as interest, dividends, certain rents and royalties, or
capital gain) or hold at least 50% of their assets in investments producing such
passive income ("passive foreign investment companies"), the Fund could be
subject to federal income tax and additional interest charges on "excess
distributions" received from such companies or gain from the sale of stock in
such companies, even if all income or gain actually received by the Fund is
distributed on a timely basis to its shareholders. The Fund would not be able to
pass through to its shareholders any credit or deduction for such tax and
interest charges. Certain elections may be available to ameliorate these adverse
tax consequences, but any such election could require the Fund to include
certain amounts as income or gain (subject to the distribution requirements
described above) without a concurrent receipt of cash. These investments could
also result in the treatment of associated capital gains as ordinary income.
Each Fund that is permitted to acquire foreign investments may limit and/or
manage its investments in passive foreign investment companies to minimize its
tax liability or maximize its return from these investments.
Subchapter M of the Code permits the character of tax-exempt interest
distributed by a regulated investment company to flow through as
"exempt-interest dividends" that are treated as tax-exempt interest to its
shareholders, provided that at least 50% of the value of its assets at the end
of each quarter of its taxable year is invested in state, municipal and other
obligations the interest on which is excluded from
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gross income under Section 103(a) of the Code. Each of the Municipal Bond Fund
and Tax Free Money Market Fund intends to satisfy this 50% requirement in order
to permit its distributions of tax-exempt interest to be treated as
exempt-interest dividends under the Code. Distributions to shareholders of
tax-exempt interest earned by Municipal Bond Fund and Tax Free Money Market Fund
for the taxable year are therefore not subject to regular federal income tax,
although they may be subject to the individual and corporate alternative minimum
taxes described below.
A portion of the income that Tax Free Money Market Fund and Municipal
Bond Fund receive and distribute to shareholders may be subject to regular
federal, alternative minimum, state and local income taxes. Investments or
transactions that produce taxable income or gain would include options or
futures transactions, securities loans, repurchase agreements and when-issued or
forward- commitment transactions disposed of at a gain. Accrued market discount
that is required to be included in income with respect to securities acquired at
a market discount and a portion of the discount from certain stripped tax-exempt
obligations or their coupons is also taxable.
Interest on indebtedness incurred by shareholders to purchase or carry
shares of the Tax Free Money Market Fund or Municipal Bond Fund will not be
deductible for federal income tax purposes to the extent it is deemed related to
exempt-interest dividends paid by such funds. Under rules used by the Internal
Revenue Service to determine when borrowed funds are used for the purpose of
purchasing or carrying particular assets, the purchase of shares may be
considered to have been made with borrowed funds even though the borrowed funds
are not directly traceable to the purchase of shares.
Section 147(a) of the Code prohibits exemption from taxation of interest
on certain governmental obligations to persons who are "substantial users" (or
persons related thereto) of facilities financed by such obligations. Neither Tax
Free Money Market Fund nor Municipal Bond Fund has undertaken any investigation
as to the users of the facilities financed by bonds in their respective
portfolios, and these funds may not be appropriate investments for substantial
users (or related persons) of such facilities.
Distributions of tax exempt income are taken into account in computing
the portion, if any, of Social Security and Railroad Retirement benefits subject
to federal and, in some cases, state taxes.
Several provisions of federal tax law were enacted principally in the
1970's and 1980's that may affect the supply of, and the demand for, tax-exempt
bonds, as well as the tax-exempt nature of interest paid thereon. For example:
(i) Interest on certain private activity bonds issued after August 15,
1986 (or, in certain cases, on or after September 1, 1986) is generally not
exempt from regular tax, although it might have been exempt under prior law.
These include bonds the proceeds of which are used to finance sports facilities,
convention facilities, industrial parks and nuclear waste disposal facilities;
(ii) Interest (including exempt-interest dividends attributable to such
interest) on all private activity bonds issued on or after August 8, 1986 (or,
in certain cases, September 1, 1986) other than qualified Section 501(c)(3)
bonds or refundings of bonds originally issued before such dates is an item of
tax preference that is subject to the individual alternative minimum tax and the
alternative minimum tax on corporations;
(iii) Interest (including exempt-interest dividends attributable to such
interest) on all tax-exempt bonds, regardless of when issued, may increase
liability for the corporate alternative minimum tax because 75% of the excess of
adjusted current earnings over alternative minimum taxable income is an
adjustment
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that, except to the extent already taken into account as private activity bond
interest, increases the alternative minimum taxable income subject to the
corporate alternative minimum tax; and
(iv) Due to the substantial number and range of requirements to be
satisfied by tax-exempt bonds after their issuance, the risk of retroactive
revocation of the tax-exempt status of bonds due to acts or omissions on the
part of issuers after the date of issuance is in general greater than under
prior law but varies for different types of bonds.
It is not possible to predict with certainty the effect of these tax
law changes upon the tax-exempt bond market, including the availability of
obligations appropriate for investment by the Tax Free Money Market Fund or the
Municipal Bond Fund.
Different tax treatment, including a penalty on certain distributions,
excess contributions or other transactions is accorded to accounts maintained as
IRAs or other retirement plans. Investors should consult their tax advisors for
more information. See also Appendix B.
All or a portion of a loss realized upon the redemption or other
disposition of shares of a Fund may be disallowed under "wash sale" rules to the
extent shares of the same Fund are purchased (including shares acquired by means
of reinvested dividends) within a 61-day period beginning 30 days before and
ending 30 days after such redemption or other disposition. Any loss realized
upon a shareholder's sale, redemption or other disposition of shares with a tax
holding period of six months or less will be disallowed, in the case of a
disposition of shares of Tax Free Money Fund or Municipal Bond Fund, to the
extent of the amount of any exempt-interest dividends paid with respect to such
shares and, for such shares of all Funds, any portion of such loss that is not
disallowed will be treated as a long-term capital loss to the extent of any
capital gains with respect to such shares. Exchanges and withdrawals under the
Systematic Withdrawal Plan are treated as redemptions for federal income tax
purposes. Shareholders should consult their own tax advisers regarding their
particular circumstances to determine whether a disposition of the shares of a
Fund is properly treated as a sale for tax purposes, as is assumed in the
foregoing discussion. Also, future Treasury Department guidance issued to
implement the Act may contain additional rules for determining the tax treatment
of sales of the shares of a Fund held for various periods, including the
treatment of losses on the sale of shares held for six months or less that are
recharacterized as long-term capital losses, as described above.
The Funds may be required to pay state taxes in states that have
jurisdiction to tax them, except to the extent an exemption may be available,
but the Funds do not anticipate that their state tax liabilities will be
substantial.
The foregoing discussion of U.S. federal income tax law relates solely to
the application of that law to U.S. persons, i.e., U.S. citizens and residents
and U.S. domestic corporations, partnerships, trusts and estates subject to tax
under such law. The discussion does not address the special tax rules applicable
to certain classes of investors, such as tax-exempt entities, financial
institutions, and insurance companies. Each shareholder who is not a U.S. person
should consider the U.S. and foreign tax consequences of ownership of shares of
the Funds, including the possibility that such a shareholder may be subject to a
U.S. withholding tax at a rate of 30% (or at a lower rate under an applicable
income tax treaty) on Fund distributions treated as ordinary dividends and,
unless an effective IRS Form W-8 or authorized substitute for Form W-8 is on
file, to 31% backup withholding on certain other payments from a Fund.
This discussion of the federal income tax treatment of the Fund and its
shareholders is based on the federal income tax law in effect as of the date of
this Statement of Additional Information. Shareholders
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should consult their tax advisers about the application of the provisions of tax
law described in this statement of additional information and about the possible
application of state, local and foreign taxes in light of their particular tax
situations.
PORTFOLIO BROKERAGE
It is the general policy of the Adviser not to employ any broker in the
purchase or sale of securities for a Fund's portfolio unless the Adviser
believes that the broker will obtain the best results for the Fund, taking into
consideration such relevant factors as price, the ability of the broker to
effect the transaction and the broker's facilities, reliability and financial
responsibility. Commission rates, being a component of price, are considered
together with such factors.
U.S. Government and debt securities are traded primarily in the
over-the-counter market. Transactions in the over-the-counter market are
generally principal transactions with dealers and the costs of such transactions
involve dealer spreads rather than brokerage commissions. With respect to
over-the-counter transactions, the Funds, where possible, deal directly with the
dealers who make a market in the securities involved except in those
circumstances where better prices and execution are available elsewhere. Under
the 1940 Act, persons affiliated with a Fund are prohibited from dealing with
the Fund as a principal in the purchase and sale of securities. Since
transactions in the over-the-counter market usually involve transactions with
dealers acting as principal for their own account, affiliated persons of the
Funds, including WPG, may not serve as a Fund's dealer in connection with such
transactions. However, affiliated persons of a Fund may serve as its broker in
transactions conducted on an exchange or over-the-counter transactions conducted
on an agency basis. Subject to the foregoing, where transactions are effected on
securities exchanges, the Funds employ WPG as principal broker. A Fund is not
obligated to deal with any broker or group of brokers in the execution of
transactions in portfolio securities. On occasion, certain money market
instruments may be purchased directly from an issuer, in which case no
commissions or discounts are paid.
The commission rate on all U.S. exchange orders is subject to
negotiation. Section 17(e) of the 1940 Act limits to "the usual and customary
broker's commission" the amount which can be paid by a Fund to an affiliated
person, such as WPG, acting as broker in connection with transactions effected
on a securities exchange. The Board, including a majority of the Trustees who
are not "interested persons" of the Fund or the Adviser, has adopted procedures
designed to comply with the requirements of Section 17(e) of the 1940 Act and
Rule 17e-1 thereunder to ensure that a broker's commission is "reasonable and
fair compared to the commission, fee or other remuneration received by other
brokers in connection with comparable transactions involving similar securities
being purchased or sold on a securities exchange during a comparable period of
time ...." Rule 17e-1 also requires the Boards, including a majority of the
non-Interested Trustees, to adopt procedures reasonably designed to provide that
the commission paid is consistent with the above standard, review those
procedures at least annually to determine that they continue to be appropriate
and determine at least quarterly that transactions have been effected in
compliance with those procedures. The Boards, including a majority of the
non-Interested Trustees, have adopted procedures designed to comply with the
requirements of Rule 17e-1.
It is contemplated that the International Fund may employ Lloyds Bank
Stockbrokers, a broker affiliated with the Subadviser, as principal broker in
agency transactions on U.K. securities exchanges and German securities markets,
respectively. The above discussion regarding Rule 17e-1 and the procedures
adopted by the Boards to comply with the requirements thereof applies equally to
exchange orders effected by Lloyds Bank Stockbrokers.
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Pursuant to these procedures, commissions paid to WPG must be at least
as favorable as those believed to be contemporaneously charged by other brokers
in connection with comparable transactions involving similar securities being
purchased or sold on a securities exchange. A transaction is not placed with WPG
if a Fund would have to pay a commission rate less favorable than WPG's
contemporaneous charges for comparable transactions for its other most favored,
but unaffiliated, customers except for accounts for which WPG acts as a clearing
broker for another brokerage firm, and any customers of WPG determined by a
majority of the non-Interested Trustees not to be comparable to the Funds. With
regard to comparable customers, in isolated situations, subject to the approval
of a majority of the non-Interested Trustees, exceptions may be made. Since WPG,
as investment adviser to the Funds, is obligated to provide management, which
includes elements of research and related skills, such research and related
skills will not be used by WPG as a basis for negotiating commissions at a rate
higher than that determined in accordance with the above criteria. When
appropriate, orders for the account of the Funds are combined with orders for
other investment companies advised by WPG and orders placed for the account of
the International Fund by the Subadviser are combined with orders of their
respective clients, in order to obtain a more favorable commission rate. When
the same security is purchased for two or more funds or accounts on the same
day, each Fund or account pays the average price and commissions paid are
allocated in direct proportion to the number of shares purchased.
In selecting brokers other than WPG and Lloyds Bank Stockbrokers to
effect transactions on securities exchanges, the Funds consider the factors set
forth in the first paragraph under this heading and any investment products or
services provided by such brokers, subject to the criteria of Section 28(e) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"). When more
than one firm is believed to meet the factors set forth in the first paragraph
under this heading, preference may be given to firms that also sell shares of
the respective Fund. Section 28(e) specifies that a person with investment
discretion shall not be "deemed to have acted unlawfully or to have breached a
fiduciary duty" solely because such person has caused the account to pay a
higher commission than the lowest rate available. To obtain the benefit of
Section 28(e), the person so exercising investment discretion must make a good
faith determination that the commissions paid are "reasonable in relation to the
value of the brokerage and research services provided viewed in terms of either
that particular transaction or his overall responsibilities with respect to the
accounts as to which he exercises investment discretion." Accordingly, if the
Adviser determines in good faith that the amount of commissions charged by a
broker is reasonable in relation to the value of the brokerage and research
products and services provided by such broker, the Adviser may cause the Funds
to pay commissions to such broker in an amount greater than the amount another
firm might charge. Research services may include (i) furnishing advice as to the
value of securities, the advisability of investing in, purchasing or selling
securities, and the availability of securities or purchasers or sellers of
securities, (ii) furnishing seminars, information, analyses and reports
concerning issuers, industries, securities, trading markets and methods,
legislative developments, changes in accounting practices, economic factors and
trends, portfolio strategy, access to research analysts, corporate management
personnel, industry experts and economists, comparative performance evaluation
and technical measurement services and quotation services, and products and
other services (such as third party publications, reports and analysis, and
computer and electronic access, equipment, software, information and accessories
that deliver, process or otherwise utilize information, including the research
described above) providing lawful and appropriate assistance to the Adviser (and
its affiliates) in carrying out their decision-making responsibilities and (iii)
effecting securities transactions and performing functions incidental thereto
(such as clearance and settlement). The investment advisory fees paid by the
Funds under the advisory agreements will not be reduced as a result of the
Adviser's receipt of research services.
Each year, the Adviser and Subadviser (in the case of the International
Fund) consider the amount and nature of the research products and services
provided by other brokers as well as the extent to which
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such products and services are relied upon, and attempt to allocate a portion of
the brokerage business of its clients, such as the Funds, on the basis of that
consideration. In addition, brokers sometimes suggest a level of business they
would like to receive in return for the various services they provide. Actual
brokerage business received by any broker may be less than the suggested
allocations, but can (and often does) exceed the suggestions, because total
brokerage is allocated on the basis of all the considerations described above.
For the fiscal year ended December 31, 1997, the International Fund paid
commissions in the amount of $58,693 to unaffiliated brokers on the basis of
research services they afforded to such Fund. The foregoing amounts do not
include or take into account any profits or losses realized by such brokers on
"net" transactions for the account of a Fund such as transactions in U.S.
Government securities and transactions executed through market makers and in the
third market. In no instance is a broker excluded from receiving business
because it has not been identified as providing research services. As permitted
by Section 28(e), the investment information received from other brokers may be
used by the Adviser (and its affiliates) and the Subadviser (for the
International Fund) in servicing all of their accounts and not all such
information may be used by the Adviser or Subadviser, as the case may be, in
connection with the Fund generating the brokerage credits. Nonetheless, the
Funds believe that such investment information provides the Funds with benefits
by supplementing the research otherwise available to the Adviser.
As set forth above, each Fund employs WPG, a member firm of the NYSE, as
its principal broker on U.S. exchange transactions. Section 11(a) of the
Exchange Act provides that a member firm of a national securities exchange (such
as WPG) may not effect transactions on such exchange for the account of an
investment company (such as a Fund) of which the member firm or its affiliate is
the investment adviser unless certain conditions are met. These conditions
require that the investment company authorize the practice and that the
investment company receive from the member firm at least annually a statement of
all commissions paid in connection with such transactions. WPG's transactions on
behalf of the Funds are effected in compliance with these conditions.
In certain instances there may be securities which are suitable for a
Fund's portfolio as well as for that of another Fund or one or more of the other
clients of the Adviser. Investment decisions for a Fund and for the Adviser's
other clients are made with a view to achieving their respective investment
objectives. It may develop that a particular security is bought or sold for only
one client even though it might be held by, or bought or sold for, other
clients. Likewise, a particular security may be bought for one or more clients
when one or more other clients are selling that same security. Some simultaneous
transactions are inevitable when several clients receive investment advice from
the same investment adviser, particularly when the same security is suitable for
the investment objectives of more than one client. When two or more clients are
simultaneously engaged in the purchase or sale of the same security, the
securities are allocated among clients in a manner believed to be equitable to
each. It is recognized that in some cases this system could have a detrimental
effect on the price or volume of the security in a particular transaction as far
as a Fund is concerned. The Funds believe that over time their ability to
participate in volume transactions will produce better executions for the Funds.
WPG and, with respect to the International Fund, Lloyds Bank
Stockbrokers, furnish to the Funds at least quarterly statements setting forth
the total amount of all compensation retained by them or any associated person
of them in connection with effecting transactions for the account of the Funds,
and the Boards review and approve all Fund portfolio transactions and the
compensation received by WPG and Lloyds Bank Stockbrokers in connection
therewith.
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BROKERAGE COMMISSIONS
<TABLE>
<CAPTION>
PERCENTAGE OF
AGGREGATE DOLLAR
AMOUNT OF
TRANSACTIONS
INVOLVING THE
PERCENTAGE OF PAYMENT OF
AGGREGATE COMMISSIONS
AGGREGATE BROKERAGE COMMISSIONS EFFECTED THROUGH
COMMISSIONS PAID TO WPG WPG
FUND 1995 1996 1997 DURING 1997 DURING 1997
- ---- ------ ---- ---- -------------- ------------------
<S> <C> <C> <C> <C> <C>
Government Money Market $ 0 $ 0 $ 0 N/A N/A
Tax Free Money Market 0 0 0 N/A N/A
Municipal Fund 0 0 0 N/A N/A
Core Bond Fund 12,754 0 0 N/A N/A
Growth and Income Fund 123,093 110,111 125,690 79.30% 81.66%
Tudor Fund 431,776 400,178 258,048 35.44% 38.86%
International Fund 68,825 82,181 58,693 0% 0%
Growth Fund 192,837 116,204 101,120 39.58% 41.76%
Quantitative Fund 54,903 157,358 215,632 97.87% 98.60%
</TABLE>
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<PAGE>
PERCENTAGE OF
AGGREGATE DOLLAR
AMOUNT OF
TRANSACTIONS
INVOLVING THE
PERCENTAGE OF PAYMENT OF
AGGREGATE COMMISSIONS
COMMISSIONS PAID EFFECTED DURING 1997
DURING 1997 TO THROUGH
LLOYDS LLOYDS
FUND BANK STOCKBROKERS BANK STOCKBROKERS
- ---- ----------------- -----------------
International Fund 0% 0%
The foregoing amounts do not include any profits of losses realized by
brokers or dealers on "net" transactions for the account of any Fund (such as
transactions in U.S. Government securities and transactions executed through
market makers and in the third market).
WPG does not knowingly participate in commissions paid by the Funds to
other brokers or dealers and does not seek or knowingly receive any reciprocal
business as the result of the payment of such commissions. In the event that WPG
at any time learns that it has knowingly received reciprocal business, it will
so inform the Boards.
To the extent that WPG receives brokerage commissions on a Fund's
portfolio transactions, officers and Trustees of a Fund who are also managing
directors of WPG may receive indirect compensation from the Fund through their
participation in such brokerage commissions.
Subject to the supervision of the Boards, all investment decisions of the
Funds are executed through WPG's trading department.
PORTFOLIO TURNOVER
See "Financial Highlights" in the Prospectus for the Funds' portfolio
turnover rates.
In determining such portfolio turnover, U. S. Government securities and
all other securities (including options) which have maturities at the time of
acquisition of one year or less ("short-term securities") are excluded. The
annual portfolio turnover rate is calculated by dividing the lesser of the cost
of purchases or proceeds from sales of portfolio securities for the year by the
monthly average of the value of the portfolio securities owned by the applicable
Fund during the year. The monthly average is calculated by totalling the values
of the portfolio securities as of the beginning and end of the first month of
the year and as of the end of the succeeding 11 months and dividing the sum by
13. A turnover rate of 100% would occur if all of a Fund's portfolio securities
(other than short-term securities) were replaced once in a period of one year.
It should be noted that if a Fund were to write a substantial number of options
which are exercised, the portfolio turnover rate of that Fund would increase.
Increased portfolio turnover results in increased brokerage costs which a Fund
must pay and the possibility of more short-term gains , distributions of which
are taxable as ordinary income.
The non-Money Market Funds will trade their portfolio securities without
regard to the length of time for which they have been held. To the extent that a
Fund's portfolio is traded for short-term market
-72-
cons
<PAGE>
iderations and portfolio turnover rate exceeds 100%, the annual portfolio
turnover rate of the Fund could be higher than most mutual funds.
Although the Money Market Funds intend normally to hold securities
purchased until maturity, at which time they will be redeemable at their full
principal value plus accrued interest, either Fund may, at times, sell portfolio
securities prior to maturity based on a revised evaluation of the issuer, to
meet redemptions, or in anticipation of a change in short-term interest rates.
In the event there are unusually heavy redemption requests due to changes in
interest rates or otherwise, a Money Market Fund may have to sell a portion of
its investment portfolio at a time when it may be disadvantageous to do so.
However, the Adviser believes that a Fund's ability to borrow money to
accommodate redemption requests may mitigate the necessity for such portfolio
sales during these periods.
ORGANIZATION
(See "Organization and Capitalization,"
"How to Purchase Shares," and "Redemption
of Shares" in the Prospectus.)
Government Money Market Fund, Tax Free Money Market Fund, Municipal Fund,
Core Bond Fund and Quantitative Fund are each separate investment portfolios of
Weiss, Peck & Greer Funds Trust ("Funds Trust"). Funds Trust, Growth and Income
Fund, Tudor Fund, International Fund and Growth Fund are Massachusetts business
trusts established under separate Declarations of Trust on September 11, 1985,
April 13, 1988, April 13, 1988, January 24, 1989 and April 13, 1988,
respectively. Each Fund's Declaration of Trust ("Declaration of Trust") was
amended and restated on May 1, 1993 and further amended from time to time.
Under Massachusetts law, shareholders of a business trust, unlike
shareholders of a corporation, could be held personally liable as partners for
the obligations of the trust under certain circumstances. The Declarations of
Trust, however, provide that Fund shareholders shall not be subject to any
personal liability for the acts or obligations of the Funds and that every
written obligation, contract, instrument or undertaking made by the Funds may
contain a provision to that effect. The Boards intend to conduct the operations
of the Funds, with the advice of counsel, in such a way so as to avoid, to the
extent possible, ultimate liability of the shareholders for liabilities of the
Funds.
The Declarations of Trust further provide that no Trustee, officer,
employee or agent of a Fund is liable to the Fund or to a shareholder, nor is
any Trustee, officer, employee or agent liable to any third persons in
connection with the affairs of the Fund, except as such liability may arise from
his or its own bad faith, willful misfeasance, gross negligence or reckless
disregard of his or its duties. They each also provide that all third parties
shall look solely to the property of the particular Fund for satisfaction of
claims arising in connection with the affairs of that Fund. With the exceptions
stated, the Declarations of Trust permit the Boards to provide for the
indemnification of Trustees, officers, employees or agents of the Funds against
all liability in connection with the affairs of the Funds. All persons dealing
with a Fund must look solely to the property of that Fund for the enforcement of
any claims against that Fund as neither the Trustees, officers, agents or
shareholders assume any personal liability for obligations entered into on
behalf of the Funds. No Fund is liable for the obligations of any other Fund.
Under the Declarations of Trust, the Funds are not required to hold
annual meetings to elect Trustees or for other purposes. It is not anticipated
that the Funds will hold shareholders' meetings unless required by
law or the Declarations of Trust. A Fund will be required to hold a meeting to
elect Trustees to fill any
-73-
<PAGE>
existing vacancies on its Board if, at any time, fewer than a majority of the
Trustees have been elected by the shareholders of the Fund. The Boards are
required to call a meeting for the purpose of considering the removal of persons
serving as Trustee if requested in writing to do so by the holders of not less
than 10 percent of the outstanding shares of a Fund.
Fund shares do not have cumulative voting rights, so that the holders of
more than 50% of the outstanding shares may elect all of the Trustees. Each Fund
share is entitled to such dividends and distributions out of the income earned
on the assets belonging to that Fund as are declared in the discretion of the
Board. In the event of the liquidation or dissolution of a Fund, Fund shares are
entitled to receive their proportionate share of the assets which are available
for distribution as the Trustees in their sole discretion may determine.
Shareholders are not entitled to any preemptive or subscription rights. All
shares, when issued, will be fully paid and non-assessable by the Funds.
Pursuant to the Declarations of Trust, the Boards may create additional
funds by establishing additional series of shares. The establishment of
additional series would not affect the interests of current shareholders in the
existing Funds. As of the date of this Statement of Additional Information, the
Boards do not have any plans to establish additional series of shares in any of
the Funds.
Pursuant to the Declarations of Trust, the Boards may establish and issue
multiple classes of shares. As of the date of this Statement of Additional
Information, the Boards do not have any plan to establish multiple classes of
shares for any of the Funds.
Pursuant to the Declarations of Trust, the Boards may also authorize a
Fund to invest all or part of its investable assets in a single open-end
investment company that has substantially the same investment objectives,
policies and restrictions as the Fund. As of the date of this Statement of
Additional Information, the Boards do not have any plan to authorize any Fund to
so invest its assets.
Upon the initial purchase of shares, the shareholder agrees to be bound
by the applicable Fund's Declaration of Trust, as amended from time to time. The
Declarations of Trust are on file at the Office of the Secretary of State of The
Commonwealth of Massachusetts in Boston, Massachusetts.
CUSTODIAN
The Custodian for the Funds is Boston Safe Deposit and Trust Company at
One Exchange Place, Boston, Massachusetts 02109. In its capacity as Custodian,
Boston Safe Deposit and Trust Company performs all accounting services, holds
the assets of the Funds and is responsible for calculating the net asset value
per share. The custodian may appoint subcustodians from time to time to hold
certain securities purchased by a Fund in foreign countries and to hold cash and
currencies for the Funds.
TRANSFER AGENT
First Data Investor Services Group, Inc., 4400 Computer Drive,
Westborough, MA 01581 acts as transfer agent for the Funds and in such capacity,
processes purchases, transfers and redemptions of shares, acts as dividend
disbursing agent, and maintains records and handles correspondence with respect
to shareholder accounts.
-74-
<PAGE>
LEGAL COUNSEL
Hale and Dorr LLP, 60 State Street, Boston, Massachusetts 02109, serves
as legal counsel to each Fund.
INDEPENDENT AUDITORS
KPMG Peat Marwick, LLP ("KPMG"), 345 Park Avenue, New York, New York
10154, serves as the Funds' independent accountants and in that capacity audits
the Fund's annual financial statements.
CALCULATION OF PERFORMANCE DATA
TOTAL RETURN
NON-MONEY MARKET FUNDS
Each Non-Money Market Fund, may calculate current return for a
twelve-month period by determining the "net change in value" of a hypothetical
account having a balance of one share at the beginning of the period, dividing
the net change in value by the value of the account at the end of the base
period, with the resulting return figure carried to the nearest hundredth of one
percent. "Net change in value" of an account will consist of the value of
additional shares purchased with dividends from the original share and dividends
declared on both the original share and any such additional shares (not
including long-term realized gains or losses and unrealized appreciation or
depreciation) less applicable expenses of a Fund.
The average annual total return of each Fund is determined for a
particular period by calculating the actual dollar amount of the investment
return on a $1,000 investment in the Fund made at the maximum public offering
price (i.e., net asset value) at the beginning of the period, and then
calculating the annual compounded rate of return which would produce that
amount. Total return of a Fund for a period of one year is equal to the actual
return of the Fund during that period. This calculation assumes that all
dividends and distributions are reinvested at net asset value on the
reinvestment dates during the period.
Total return information for each of the non-Money Market Funds is set
forth on the following page.
- 75 -
<PAGE>
<TABLE>
<CAPTION>
TOTAL RETURN
ONE YEAR FIVE YEARS TEN YEARS
ENDED ENDED 12/31/97 ENDED 12/31/97
FUND 12/31/97 ANNUALIZED CUMULATIVE ANNUALIZED CUMULATIVE
- ---- -------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Municipal Fund 7.85%(1) 5.51%(1) 27.32%(1) N/A N/A
Core Bond Fund 7.37% 4.67%(2) 25.63%(2) 7.54%(2) 106.96%(2)
Growth and Income Fund 36.27% 18.42% 133.01% 16.65% 367.19%
Tudor Fund 11.11% 13.77% 90.63% 14.83% 299.01%
International Fund(3) 2.89%(3) 8.95%(3) 53.55%(3) 3.82%(3) 37.95%(3)
Growth Fund 9.67% 12.28% 78.54% 13.70% 261.31%
Quantitative Fund(4) 25.47% 17.78%(4) 126.62%(4) N/A N/A
<FN>
- -------------
(1) The Municipal Fund commenced operations on July 1, 1993. The Municipal
Fund's advisory fee was not imposed, in whole or in part, and the Adviser
reimbursed certain operating expenses during various periods since inception of
the Fund. Had the Adviser imposed its entire fee, the Municipal Fund's total
returns for the periods ended December 31, 1997 would be as follows: One-Year
7.56%; Life-of-Fund Annualized 5.15%; and Life-of-Fund Cumulative 25.37%. Prior
to October 19, 1994, the Municipal Fund paid an advisory fee at a different
rate.
(2) The Core Bond Fund's management fee was increased by 0.10% of the Fund's
average daily net assets effective July 31, 1991. The performance data set forth
herein includes periods during which the lower management fee was in effect.
(3) The International Fund commenced operations on June 1, 1989. The
International Fund's advisory fee was not imposed, in whole or in part, during
various periods since inception of the Fund. Had the Adviser imposed its entire
fee, the International Fund's total returns for the periods ended December 31,
1997 would be as follows: Five-Year Annualized 8.74%; Five-Year Cumulative
52.06%; Life-of-Fund Annualized 3.34%; and Life-of-Fund Cumulative 32.56%.
(4) The Quantitative Fund commenced operations on January 1, 1993.
</FN>
</TABLE>
-76-
<PAGE>
YIELD
MUNICIPAL FUND, CORE BOND FUND AND GROWTH AND INCOME FUND
The 30-day yield quotation of Municipal Fund, Core Bond Fund and Growth and
Income Fund is computed by dividing the net investment income for the period by
the maximum offering price per share on the last day of the period, according to
the following formula:
6
YIELD=2[(a - b +1) -1]
-----
cd
Where:
a = Dividends and interest earned during the period.
b = Expenses accrued for the period.
c = The average daily number of shares outstanding during the period that
were entitled to receive dividends
d = The maximum offering price (i.e., net asset value) per share on the
last day of the period.
YIELD FOR
30-DAY PERIOD
ENDED 12/31/97
--------------
1. Municipal Fund 4.00%
2. Core Bond Fund 5.13%
3. Growth and Income Fund 1.32%
THE MONEY MARKET FUNDS
The Money Market Funds' yield quotations are calculated by a standard
method prescribed by the rules of the SEC. Under this method, the yield
quotation is based on a hypothetical account having a balance of exactly one
share at the beginning of a seven-day period.
The yield quotation is computed as follows: the net change, exclusive of
capital changes (i.e., realized gains and losses from the sale of securities and
unrealized appreciation and depreciation), in the value of a hypothetical
pre-existing account having a balance of one share at the beginning of the base
period is determined by dividing the net change in account value by the value of
the account at the beginning of the base period. This base period return is then
multiplied by 365/7 with the resulting yield figure carried to the nearest 100th
of 1%. The determination of net change in account value reflects the value of
additional shares purchased with dividends from the original share, dividends
declared on both the original share and any such additional shares, and all fees
that are charged to that Fund, in proportion to the length of the base period
and that Fund's average account size.
The Money Market Funds also may advertise quotations of effective yield for
a 7 calendar day period.
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<PAGE>
Effective yield is computed by compounding the unannualized base period return
determined as described in the preceding paragraph by adding 1 to that return,
raising the sum to the 365/7 power and subtracting one from the result,
according to the following formula:
365/7-1
Effective Yield = [(Base Period Return + 1)
YIELD
7-DAY PERIOD
ENDED 12/31/97
----- --------
SEVEN
SEVEN DAY
DAY EFFECTIVE
YIELD YIELD
----- -----
Government Money Market Fund 4.94% 4.82%
Tax Free Money Market Fund 3.47% 3.53%
HYPOTHETICAL TAX EQUIVALENT YIELD
TAX FREE MONEY MARKET FUND AND MUNICIPAL FUND
- ---------------------------------------------
Tax Free Money Market Fund and Municipal Fund may also publish their
tax-equivalent yield, which is the net annualized taxable yield needed to
produce a specified tax-exempt yield at a given tax rate based on a specified 7
day period in the case of Tax Free Money Market Fund, and a specified 30-day
period in the case of Municipal Fund. Tax-equivalent yield is calculated by
dividing that portion of the Fund's yield which is tax-exempt by one minus a
stated income tax rate and adding that quotient to the remaining portion, if
any, of the yield of the Fund which is not tax-exempt.
A TAX-EXEMPT YIELD OF
5%, 7% AND 9% IS EQUIVALENT TO
A FULLY TAXABLE YIELD OF*
1998 TAXABLE INCOME 1998 FEDERAL TAX
INDIVIDUAL RETURN BRACKET 5% 7% 9%
- -------------------- ------------- ------- ------- -------
$ 0 25,350 15.0% 5.88% 8.24% 10.59%
$ 25,351 61,400 28.0% 6.94% 9.72% 12.50%
$ 61,401 128,100 31.0% 7.25% 10.14% 13.04%
$128,101 278,450 36.0% 7.81% 10.94% 14.06%
Over $278,450 39.6% 8.28% 11.59% 14.90%
JOINT RETURN
- ------------
$ 0 42,350 15.0% 5.88% 8.24% 10.59%
$ 42,351 102,300 28.0% 6.94% 9.72% 12.50%
$102,301 155,950 31.0% 7.25% 10.14% 13.04%
$155,951 278,450 36.0% 7.81% 10.94% 14.06%
Over $ 278,450 39.6% 8.28% 11.59% 14.90%
- --------------
* These illustrations assume the Federal alternative minimum tax is not
applicable and that an individual is not a "head of household," a "married
individual filing a separate return," or a "surviving spouse." Note also that
these Federal income tax brackets and rates do not take into account the effects
of (i) a reduction in the deductibility of itemized deductions for taxpayers
whose federal adjusted gross income exceeds $124,500 (or, in the case of a
separate return by a married individual, $62,250), or (ii) the gradual phase-out
of the personal exemption amount for taxpayers whose federal adjusted gross
income exceeds $124,500 (for single individuals) or $186,800 (for married
individuals filing jointly).The effective federal tax rates and equivalent
yields for such taxpayers would be higher than those shown above.
TAX-EQUIVALENT YIELD (1)
SEVEN DAY SEVEN DAY 30-DAY
TAX EQUIVALENT TAX EQUIVALENT TAX EQUIVALENT
YIELD EFFECTIVE YIELD YIELD
----- --------------- -----
Tax Free Money Market Fund 5.75% 5.90% N/A
Municipal Fund N/A N/A 6.62%
- -----------
1 Assumes a 39.6% Federal marginal tax rate.
GENERAL
Each Fund may from time to time advertise comparative performance as
measured by various independent sources, including, but not limited to, Lipper
Analytical Services, Inc., Donaghues Money Fund Report, Barron's, The Wall
Street Journal, Weisenberger Investment Companies Service, Business Week,
Changing Times, Financial World, Forbes, Fortune, Morningstar Mutual Funds, The
New York Times, Personal Investor, Sylvia Porter's Personal Finance and Money.
Each Fund may from time to time advertise its performance relative to
certain indices and benchmark investments, including: (a) the Lipper Analytical
Services, Inc. Mutual Fund Performance Analysis, Fixed Income Analysis and
Mutual Fund Indices (which measure total return and average current yield for
the mutual fund industry and rank mutual fund performance); (b) the CDA Mutual
Fund Report published by CDA Investment Technologies, Inc. (which analyzes
price, risk and various measures of return for the mutual fund industry); (c)
the Consumer Price Index published by the U.S. Bureau of Labor Statistics (which
measures changes in the price of goods and services); (d) Stocks, Bonds, Bills
and Inflation published by Ibbotson Associates (which provides historical
performance figures for stocks, government securities and inflation); (e) the
Standard & Poor's Indices; (f) other taxable investments including certificates
of deposit (CDs), money market deposit accounts (MMDAs), checking accounts,
savings accounts, money market mutual funds and repurchase agreements; and (g)
historical investment data supplied by the research departments of various
research and brokerage firms. In addition, each Fund may from time to time
advertise its performance relative to the following benchmark indices: Core Bond
Fund -- Lehman Aggregate Index; Municipal Fund -- Lipper Intermediate Municipal
Bond Funds Average and Lehman Brothers 3-10 Year Municipal Bond Index;
Quantitative Fund -- S&P 500 Index; Growth and Income Fund -- S&P 500 and Lipper
Capital Growth and Income Funds Average; Tudor Fund -- Lipper Capital
Appreciation Index and Russell 2500 Growth Index; International Fund -- Morgan
Stanley Europe, Australia, Far East (EAFE) Index; and Growth Fund -- Lipper
Small Cap Index, Wilshire Small Company Growth Index and Russell 2,000 Growth
Index.
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<PAGE>
The composition of the investments in the above-referenced indices and
the characteristics of a Fund's benchmark investments are not identical to, and
in some cases may be very different from, those of a Fund's portfolio. These
indices and averages are generally unmanaged and the items included in the
calculations of such indices and averages may not be identical to the formulas
used by a Fund to calculate its performance figures.
From time to time advertisements or communications to shareholders may
summarize the substance of information contained in shareholder reports
(including the investment composition of a Fund), as well as the views of the
Adviser as to current market, economic, trade and interest rate trends,
legislative, regulatory and monetary developments, investment strategies and
regulated matters believed to be of relevance to a Fund.
In addition, from time to time, advertisements or information may include a
discussion of asset allocation models developed by the Adviser and/or its
affiliates, certain attributes or benefits to be derived from asset allocation
strategies and the WPG mutual funds that may be offered as investment options
for the strategic asset allocations. Such advertisements and information may
also include the Adviser's current economic outlook and domestic and
international market views to suggest periodic tactical modifications to current
asset allocation strategies. Such advertisements and information may include
other material which highlight or summarize the services provided in support of
an asset allocation program.
In addition, advertisements or shareholder communications may include a
discussion of certain attributes or benefits to be derived by an investment in a
Fund. Such advertisements or information may include symbols, headlines or other
material which highlight or summarize the information discussed in more detail
therein.
Performance data is based on historical results and is not intended to
indicate future performance. Total return, thirty-day yield, 7-day yield and
7-day effective yield, tax equivalent yield and distribution rate will vary
based on changes in market conditions, portfolio expenses, portfolio investments
and other factors. The value of a Fund's shares will fluctuate and an investor's
shares may be worth more or less than their original cost upon redemption. Each
Fund may also, at its discretion, from time to time make a list of its portfolio
holdings available to investors upon request. Performance information of a Fund
may not provide a basis for comparison with other investments using a different
method of calculating performance.
Return for a Fund will fluctuate from time to time, unlike bank deposits or
other investments which pay a fixed yield or return for a stated period of time,
and do not provide a basis for determining future returns.
FINANCIAL STATEMENTS
Each Fund's audited financial statements and related report of KPMG ,
independent auditors, included in the Annual Report to Shareholders of the Funds
for the year ended December 31, 1997, is attached hereto and hereby incorporated
by reference into this Statement of Additional Information.
- 80 -
<PAGE>
APPENDIX A
Description of Bond Ratings Moody's Investors Service, Inc.
Aaa: Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edge." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa: Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuations of protective elements
may be of greater amplitude or there may be other elements present which make
the long-term risks appear somewhat larger than in Aaa securities.
A: Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.
Baa: Bonds which are rated Baa are considered as medium grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba: Bonds rated Ba are judged to have speculative elements; their future cannot
be considered as well assured. Often the protection of interest and principal
payments may be very moderate and thereby not well safeguarded during both good
and bad times over the future. Uncertainty of position characterizes bonds in
this class.
B: Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Moody's also provides credit ratings for preferred stocks. It should be
borne in mind that preferred stock occupies a junior position to bonds within a
particular capital structure and that these securities are rated within the
universe of preferred stocks.
aaa: An issue which is rated "aaa" is considered to be a top-quality preferred
stock. This rating indicates good asset protection and the least risk of
dividend impairment within the universe of preferred stocks.
aa: An issue which is rated "aa" is considered a high-grade preferred stock.
This rating indicates that there is a reasonable assurance that earnings and
asset protection will remain relatively well maintained in the foreseeable
future.
a: An issue which is rated "a" is considered to be an upper-medium grade
preferred stock. While risks are judged to be somewhat greater than in the "aaa"
and "aa" classifications, earnings and asset protections are, nevertheless,
expected to be maintained at adequate levels.
A-1
<PAGE>
baa: An issue which is rated "baa" is considered to be a medium grade preferred
stock, neither highly protected nor poorly secured. Earnings and asset
protection appear adequate at present but may be questionable over any great
length of time.
ba: An issue which is rated "ba" is considered to have speculative elements and
its future cannot be considered well assured. Earnings and asset protection may
be very moderate and not well safeguarded during adverse periods. Uncertainty of
position characterizes preferred stocks in this class.
b: An issue which is rated "b" generally lacks the characteristics of a
desirable investment. Assurance of dividend payments and maintenance of other
terms of the issue over any long period of time may be small.
Moody's ratings for municipal notes and other short-term loans are
designated Moody's Investment Grade (MIG). This distinction is in recognition of
the differences between short-term and long-term credit risk. Loans bearing the
designation MIG 1 are of the best quality, enjoying strong protection by
establishing cash flows of funds for their servicing or by established and
broad-based access to the market for refinancing, or both. Loans bearing the
designation MIG 2 are of high quality, with margins of protection ample although
not so large as in the preceding group. A short term issue having a demand
feature (i.e. payment relying on external liquidity and usually payable on
demand rather than fixed maturity dates) is differentiated by Moody's with the
use of the Symbol VMIG, instead of MIG.
Moody's also provides credit ratings for tax-exempt commercial paper. These
are promissory obligations (1) not having an original maturity in excess of nine
months, and (2) backed by commercial banks. Notes bearing the designation P-1
have a superior capacity for repayment. Notes bearing the designation P-2 have a
strong capacity for repayment.
STANDARD & POOR'S RATINGS GROUP
- -------------------------------
AAA: Bonds rated AAA have the higher rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.
AA: Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from the higher rated issues only in small degree.
A: Bonds rated A have a very strong capacity to pay interest and repay
principal, although they are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than bonds in higher rated
categories.
BBB: Bonds rated BBB are regarded as having an adequate capacity to pay interest
and repay principal. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
bonds in this category than in higher rated categories.
Bonds rated BB, B, CCC and CC are regarded, on balance, as predominantly
speculative with respect to the issuer's capacity to pay interest and repay
interest or principal in accordance with the terms of the obligation. BB
indicates the lowest degree of speculation and CC the highest degree of
speculation. While such debt will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures.
A-2
<PAGE>
BB: Debt rated BB has less near-term vulnerability to default that other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The BB
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB- rating.
B: Debt rated B has a greater vulnerability to default but currently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The B rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
BB or BB-rating.
S&P's top ratings for municipal notes issued after July 29, 1984 are SP-1
and SP-2. The designation SP-1 indicates a very strong capacity to pay principal
and interest. A"+" is added for those issues determined to possess overwhelming
safety characteristics. An "SP-2" designation indicates a satisfactory capacity
to pay principal and interest.
Commercial paper rated A-2 or better by S&P is described as having a very
strong degree of safety regarding timeliness and capacity to repay.
Additionally, as a precondition for receiving an S&P commercial paper rating, a
bank credit line and/or liquid assets must be present to cover the amount of
commercial paper outstanding at all times.
The Moody's Prime-2 rating and above indicates a strong capacity for
repayment of short-term promissory obligations.
GLOSSARY
--------
Commercial Paper: Short-term promissory notes of large corporations with
excellent credit ratings issued to finance their current operations.
Certificates of Deposit: Negotiable certificates representing a commercial
bank's obligations to repay funds deposited with it, earning specified rates of
interest over given periods.
Bankers' Acceptances: Negotiable obligations of a bank to pay a draft which has
been drawn on it by a customer. These obligations are backed by large banks and
usually are backed by goods in international trade.
Time Deposits: Non-negotiable deposits in a banking institution earning a
specified interest rate over a given period of time.
Corporate Obligations: Bonds and notes issued by corporations and other business
organizations in order to finance their long-term credit needs.
A - 3
<PAGE>
APPENDIX B
ADDITIONAL INVESTOR SERVICES
(Each Fund other than Tax Free Money Market Fund, Municipal Fund and Growth
Fund)
PROTOTYPE RETIREMENT PLAN FOR EMPLOYERS AND SELF-EMPLOYED INDIVIDUALS
Prototype retirement plans (the "Retirement Plan") are available for those
entities or self-employed individuals who wish to purchase shares in a Fund
(other than the Tax Free Money Market Fund, the Municipal Fund and Growth Fund)
in connection with a money purchase plan or a profit sharing plan maintained by
their employer. The Retirement Plans were designed to conform to the
requirements of the Code and the Employee Retirement Income Security Act of
1974, as amended ("ERISA"). The Retirement Plans received opinion letters from
the Internal Revenue Service (the "IRS") on March 29, 1990 that the form of the
Retirement Plans is acceptable under Section 401 of the Code.
Annual tax-deductible contributions to the Retirement Plan may be made up
to the lesser of $30,000 or 25% of the participant's earned income (disregarding
any compensation in excess of $160,000 (as adjusted by the IRS for inflation)).
Under the terms of the Retirement Plan, contributions by or on behalf of
participants may be invested in a Fund's shares with the designated custodian
under the Retirement Plan (the "Retirement Plan's Custodian"). Investment in
other mutual funds advised by the Adviser or one of its affiliates may also be
available. Employers adopting the Retirement Plan may elect either that a
participant shall specify the investments to be made with contributions by or on
behalf of such participant or that the employer shall specify the investments to
be made with all such contributions. Since no Fund is intended as a complete
investment program it is important, in connection with such election, that
employers give careful consideration to the fiduciary obligation requirements of
ERISA.
All dividends and distributions received by the Retirement Plan's Custodian
on the Funds' shares held by the Plan's Custodian will be reinvested in the
applicable Fund's shares at net asset value. Distributions of benefits to
participants, when made, will be paid first in cash, to the extent that any
amount credited to a participant's account is not invested in the applicable
Fund's shares, and then in full Fund shares (and cash in lieu of fractional
shares).
Boston Safe Deposit and Trust Company serves as the Retirement Plan's
Custodian under a Custodial Agreement. Custodian fees which are payable by the
employer to the Retirement Plan's Custodian under such Custodial Agreement are a
$10 application fee for processing the Retirement Plan application, an annual
maintenance fee of $15 per participant, and a distribution fee of $10 for each
distribution from a participant's account. Such fees may be altered from time to
time by agreement of the employer and the Retirement Plan's Custodian. For
further details see the terms of the Retirement Plan which are available from
the Trust.
Distributions must be made pursuant to the terms of the Retirement Plan and
generally may not commence before retirement, disability, death, termination of
employment, or termination of the Retirement Plan and must commence no later
than April 1 of the year following the year in which the participant attains age
70 1/2 (the "required beginning date"). Distributions are taxed as ordinary
income when received, except the portion, if any, considered a return of a
participant's nondeductible contributions. Certain distributions before age 59
1/2 may be subject to a 10% nondeductible penalty on the taxable
portion of the distribution. Failure to make minimum required distributions by
the required beginning date may be subject to a 50% excise tax.
B-1
<PAGE>
It should be noted that the Retirement Plan is a retirement investment
program involving commitments covering future years. In deciding whether to
utilize the Retirement Plan, it is important that the employer consider his or
her needs and those of the Retirement Plan participants and whether the
investment objectives of the Funds are likely to fulfill such needs. Termination
or curtailment of the Retirement Plan for other than business reasons within a
few years after its adoption may result in adverse tax consequences.
Employers who contemplate adoption of the Retirement Plan should consult an
attorney or financial adviser regarding all aspects of the Plan as a retirement
plan vehicle (including fiduciary obligations under ERISA).
INDIVIDUAL RETIREMENT ACCOUNT
Persons with earned income, whether or not they are active participants
in a pension, profit-sharing or stock bonus plan described in Code ss. 401(a),
Federal, state or local pension plan, an annuity plan described in Code ss.
403(a), an annuity contract or custodial account described in Code ss. 403(b), a
simplified employee pension plan described in Code ss. 408(k), or a trust
described in Code ss. 501(c)(18) ("active participant"), generally are eligible
to establish an Individual Retirement Account ("IRA"). An individual may make a
deductible IRA contribution only if (i) the individual is not an active
participant, or (ii) the individual has an adjusted gross income below a certain
level ($50,000 for married individuals filing a joint return, with a phase-out
for adjusted gross income between $50,000 and $60,000; $30,000 for a single
individual, with a phase-out for adjusted gross income between $30,000 and
$40,000). The phase-out ranges for deductibility are increased in years after
1998 until they reach $50,000 to $60,000 for single taxpayers for the year 2005
and thereafter and $80,000 to $100,000 for married taxpayers filing jointly for
the years 2007 and thereafter. The phase-out range of $0 to $10,000 of AGI for
an active participant, married and filing separately does not increase. An
individual whose spouse is an active participant may still be able to make a
deductible contribution if he or she is not an active participant, subject to a
phase-out range of $150,000 to $160,000 of modified AGI if filing jointly. An
individual who is not permitted to make a deductible contribution to an IRA for
a taxable year may nonetheless make annual nondeductible contributions to an IRA
up to the lesser of 100% of the individual's earned income or $2,000 to an IRA
(up to $4,000 to IRAs for an individual and his or her spouse) for that year.
There are special rules for determining how withdrawals are to be taxed if an
IRA contains both deductible and nondeductible amounts. In general, a
proportionate amount of each withdrawal will be deemed to be made from
nondeductible contributions; amounts treated as a return of nondeductible
contributions will not be taxable. Also, annual contributions may be made to a
spousal IRA even if the spouse has no earnings in a given year .
Withdrawals from the IRA (other than the portion treated as a return of
nondeductible contributions) are taxed as ordinary income when received, may be
made without penalty after the participant reaches age 59 1/2 and must commence
no later than the required beginning date (see discussion of Prototype
Retirement Plans above). Withdrawals before age 59 1/2 may involve the payment
of a 10% nondeductible penalty on the taxable portion of the amount withdrawn.
The time and rate of withdrawal must conform with Code requirements in order to
avoid adverse tax consequences. All dividends and distributions on shares held
in IRA accounts are reinvested in full and fractional shares and are not subject
to federal income tax until withdrawn from the IRA. Investors should consult
their tax advisers for further tax information, including information with
respect to the imposition of state and local income taxes and the effects of tax
law changes.
B-2
<PAGE>
The Funds have arranged for Boston Safe Deposit and Trust Company to
furnish the required custodial services for IRAs using any of a Fund's shares as
the underlying investment. The Bank will charge an acceptance fee of $10 for
each new IRA and an annual maintenance fee of $15 for each year that an IRA is
in existence. There is a $10 fee for processing a premature distribution. These
fees will be deducted from the IRA account and may be changed by the Custodian
upon 30 days' prior notice.
To establish an IRA for investment in a Fund's shares, an investor must
complete an application and a custodial agreement that includes IRS Form 5305-A
(which has been supplemented to provide certain additional custodial provisions)
and must make an initial cash contribution to the IRA, subject to the limitation
on contributions described above. Pursuant to IRS regulations, an investor may
for seven days following establishment of an IRA revoke the IRA. Detailed
information on IRAs, together with the necessary form of application and
custodial agreement, is available from the Trust and should be studied carefully
by persons interested in utilizing a Fund for IRA investments. Such persons
should also consult their own advisers regarding all aspects of the Funds as an
appropriate IRA investment vehicle.
ROTH INDIVIDUAL RETIREMENT ACCOUNT
- ----------------------------------
Like the traditional IRA described above, a Roth Individual Retirement
Account ("Roth IRA") is a program through which taxpayers may obtain certain
income tax benefits for themselves. Unlike a traditional IRA, contributions to a
Roth IRA are not deductible. However, a Roth IRA is a tax-sheltered account and,
if certain conditions are met, distributions from a Roth IRA will be tax free.
Annual contributions to a Roth IRA must be in cash and (other than rollover
or conversion contributions) when combined with contributions to both
traditional IRAs and other Roth IRAs may not exceed the lesser of $2,000 or 100
percent of compensation. The $2,000 maximum amount is reduced and phased out for
a single taxpayer with modified adjusted gross income (AGI) between $95,000 and
$110,000, and for a husband and wife who file joint returns and have AGIs
between $150,000 and $160,000. The $2,000 maximum is reduced and phased out for
married taxpayers filing separately with AGIs between zero and $10,000.
Participation in a Roth IRA contribution is not limited by participation in
a retirement plan or program other than a traditional IRA, as discussed above.
In addition, unlike traditional IRAs, contributions to a Roth IRA may be made
after age 70 1/2 so long as the IRA owner has compensation and an AGI below the
maximum thresholds discussed above.
Provided that all of the applicable rollover rules are followed, a Roth IRA
may be rolled over to another Roth IRA, or may receive rollover contributions
from either a traditional IRA or Roth IRA.
If AGI is less than $100,000, an individual may rollover (or convert) all
or any portion of any existing traditional IRA into a Roth IRA. The conversion
amount or the amount of the rollover from the traditional IRA to the Roth IRA is
treated as a distribution for income tax purposes and is includible in gross
income (except for any nondeductible contributions). Although the rollover
amount is generally included in income, the 10 percent early distribution excise
tax does not apply to rollovers or conversions from a traditional IRA to a Roth
IRA.
For a rollover of assets from a traditional IRA to a Roth IRA prior to
January 1, 1999, the taxable amount of the distribution is included in gross
income ratably over a four year period beginning with 1998.
B - 3
<PAGE>
Qualified distributions from a Roth IRA are NOT includable in income.
Qualified distributions are distributions made AFTER the five taxable year
period beginning with the first taxable year for which a contribution (or
conversion from a traditional IRA) was made to the Roth IRA, and which is made
after age 59 1/2, death, disability, or for first-time home buyer expenses.
SIMPLIFIED EMPLOYEE PENSION PLAN
A simplified employee pension (a "SEP") allows an employer to make
contributions toward his or her own (if a self-employed individual) and his or
her employees' retirement and, for certain SEPs established prior to 1997, may
permit the employees to make elective deferrals by salary reduction. A SEP
requires an Individual Retirement Account (a "SEP-IRA") to be established for
each "qualifying employee," although the employer may include additional
employees if it wishes. A qualifying employee is one who: (a) is at least age
21, (b) has worked for the employer during at least 3 of 5 years immediately
preceding the tax year, and (c) has received at least $400 for 1998 (as indexed
for inflation) in compensation in the tax year.
An employer is not required to make any contribution to the SEP-IRA.
However, if the employer does make a contribution, the contribution must be
based on a written allocation formula and must not discriminate in favor of
highly compensated employees, as defined in Code Section 414(q). The employer
may make annual contributions on behalf of each qualifying employee, provided
that the contributions, when combined with the employee's elective deferrals, do
not exceed 15% of the employee's compensation or $30,000, whichever is less.
A SEP-IRA that is part of a SEP established before 1997 may include a
salary reduction arrangement under which the employee can choose to have the
employer make contributions ("elective deferrals") to his or her SEP-IRA out of
his or her salary. However, employees may make elective deferrals only if (i) at
least 50% of the employer's eligible employees choose elective deferrals; (ii)
the employer did not have more than 25 eligible employees at any time during the
preceding year; and (iii) the amount deferred each year by each eligible highly
compensated employee as a percentage of pay is no more than 125% of the average
deferral percentage of all other eligible employees. An elective deferral
arrangement is not available for a SEP maintained by a state or local
government, or any of their political subdivisions, agencies, or
instrumentalities, or to exempt organizations.
In general, the total income which an employee can defer under a salary
reduction arrangement included in a SEP and certain other elective deferral
arrangements is limited to $10,000 (indexed annually for inflation). This dollar
limit applies only to the elective deferrals, not to any contributions from
employer funds. The Code may require that contributions be further limited to
prevent discrimination in favor of highly compensated employees. An employee may
also make regular IRA contributions to his or her SEP-IRA (see discussion of
IRAs, above).
Under the terms of the SEP-IRA, contributions by or on behalf of
participants may be invested in Fund shares (or shares of other funds designated
by the Adviser as eligible investments), as specified by the participant. All
dividends and distributions on shares held in SEP-IRAs are reinvested in full
and fractional shares. Since no Fund is intended as a complete investment
program it is important, in connection with the adoption of a SEP-IRA, that
employers give careful consideration to the fiduciary obligation requirements of
ERISA, particularly those pertaining to diversification of investments.
Withdrawals before age 59 1/2 may involve the payment of a 10%
nondeductible penalty on the amount withdrawn. Withdrawals must commence no
later than the required beginning date (see discussions
of Prototype Retirement Plans, above). The time and rate of withdrawal must
conform with
B-4
<PAGE>
Code requirements in order to avoid adverse tax consequences. Contributions to a
SEP-IRA by an employer are excluded from the employee's income rather than
deducted from it. Elective deferrals made to an employee's SEP-IRA generally are
excluded from his income in the year of deferral, but are included in wages for
social security (FICA) and unemployment (FUTA) tax purposes. However, if the
employee makes regular IRA contributions to his SEP-IRA, (other than elective
deferrals), he can deduct them the same way as contributions to a regular IRA,
up to the amount of his deduction limit. Investors should consult their tax
advisers for further tax information including information with respect to the
imposition of state and local income taxes and the effects of tax law changes.
The Funds have arranged for Boston Safe Deposit and Trust Company to
furnish the required custodial services for SEP-IRAs using the Fund's shares as
the underlying investment. Boston Safe Deposit and Trust Company will charge an
acceptance fee of $10 for each new SEP-IRA and an annual maintenance fee of $15
for each year that a SEP-IRA is in existence. There is a $10 fee for each
premature distribution. These fees will be deducted from the SEP-IRA account and
may be changed by the Custodian upon 30 days' prior written notice.
To establish a SEP-IRA, an employer and employee should complete the Weiss,
Peck & Greer IRA application materials, as well as IRS Form 5305-SEP. Pursuant
to IRS regulations, an investor may for seven days following establishment of a
SEP-IRA revoke the SEP-IRA. Detailed information on SEP-IRAs, together with the
necessary form of application and custodial agreement, is available from the
Fund and should be studied carefully by persons interested in utilizing the Fund
for SEP-IRA investments. Such persons should also consult their own advisers
regarding all aspects of the Fund as an appropriate SEP- IRA investment vehicle.
SIMPLE RETIREMENT PLANS
- -----------------------
Effective for plan years after 1996, an employer may establish a SIMPLE
retirement plan under new Section 408(p) of the Code. Under such plan, the
employer may make contributions to individual retirement accounts established
for each employee. Such individual retirement accounts must, by their terms, be
limited to contributions under a SIMPLE retirement program. THE WEISS, PECK &
GREER IRA IS NOT SO LIMITED AND MAY NOT BE USED TO FUND A SIMPLE RETIREMENT
PROGRAM.
B - 5
<PAGE>
<PAGE>
WEISS, PECK & GREER
MUTUAL FUNDS
ANNUAL REPORT
DECEMBER 31, 1997
WPG TUDOR FUND
WPG GROWTH AND INCOME FUND
WPG GROWTH FUND
WPG QUANTITATIVE EQUITY FUND
WEISS, PECK & GREER INTERNATIONAL FUND
WPG GOVERNMENT SECURITIES FUND
WPG INTERMEDIATE MUNICIPAL BOND FUND
WPG GOVERNMENT MONEY MARKET FUND
WPG TAX FREE MONEY MARKET FUND
ONE NEW YORK PLAZA
NEW YORK, NEW YORK 10004
800-223-3332
<PAGE>
WEISS, PECK & GREER MUTUAL FUNDS
TABLE OF CONTENTS
Chairman's Letter ......................................... 2
Major Portfolio Changes - Equity Funds .................... 4
Average Annual Total Returns .............................. 5
Ten Largest Holdings ...................................... 10
Schedules of Investments:
WPG Tudor Fund ........................................ 12
WPG Growth and Income Fund ............................ 14
WPG Growth Fund ....................................... 16
WPG Quantitative Equity Fund .......................... 18
Weiss, Peck & Greer International Fund ................ 19
WPG Government Securities Fund ........................ 22
WPG Intermediate Municipal Bond Fund .................. 23
WPG Government Money Market Fund ...................... 27
WPG Tax Free Money Market Fund ........................ 27
Statements of Assets and Liabilities ...................... 34
Statements of Operations .................................. 36
Statements of Changes in Net Assets ....................... 38
Notes to Financial Statements ............................. 40
Financial Highlights ...................................... 48
GROWTH
OBJECTIVE: Maximum capital appreciation (intended primarily for institutional
investors).
INTERNATIONAL
OBJECTIVE: Long-term growth of capital.
TUDOR
OBJECTIVE: Capital appreciation.
GROWTH AND INCOME
OBJECTIVE: Long-term growth of capital and current income.
QUANTITATIVE EQUITY
OBJECTIVE: Seeks to provide investment results that exceed the S & P 500.
INTERMEDIATE MUNICIPAL BOND
OBJECTIVE: High current income consistent with relative stability of principal
Exempt from Federal Income Tax.
GOVERNMENT SECURITIES
OBJECTIVE: Current income.
* TAX FREE MONEY MARKET
OBJECTIVE: Maximize current income with preservation of capital and liquidity.
Exempt from Federal Income Tax.
* GOVERNMENT MONEY MARKET
OBJECTIVE: Maximize current income with preservation of capital and liquidity.
* Although these Funds are money market funds and attempt to maintain a stable
$1.00 net asset value per share, investments in these Funds are neither
insured or guaranteed by the U.S. Government. There can be no assurance that
either Fund will be able to maintain a stable net asset value of $1.00 per
share.
<PAGE>
DEAR SHAREHOLDER:
DOMESTIC MARKETS
- ----------------
1997 was an unprecedented year for domestic financial markets. The major
stock indices returned over 20% for the third consecutive year, and the yields
on long-term U.S. Treasury bonds fell to near record levels, ending the year
with a yield of 5.92%.
The S&P 500 gained 33.4% in 1997, completing a robust three-year period in
which it has risen 125.6%. The ten-year performance of the S&P 500 is better
than any other 10 year period in history, except for the two that ended in 1958
and 1959. The Dow Jones Industrial Average now has risen for seven consecutive
years advancing more than 300%. The Wilshire 5000, a measure of the entire
universe of domestic equity issues, rose 29% during 1997. Small stock
performance lagged large cap returns, as evidenced by the Lipper Small Cap Index
which returned 15.0% for the same time period.
The stock market was more volatile during 1997 than in 1996. The Federal
Reserve Board raised the federal funds rate during March 1997 when concerns
arose regarding a strengthening U.S. economy and its effect upon future
inflation. This action caused a sharp stock market setback of almost ten percent
during early Spring. Cyclical and small cap issues rebounded decisively during
the third quarter due to favorable valuations and the increasing confidence of
investors regarding the profit outlook.
Fourth quarter stock performance was dampened during late October when
strong financial turmoil in Hong Kong caused world markets to correct. This
concern spread to Korea and then to Japan, the largest capitalized Asian market.
While Asia accounts for only a small proportion of U.S. companies' sales, it is
important for most U.S. multinationals. As a result, during the quarter,
defensive sectors outperformed. Utility issues and health care companies in
particular performed well. Technology stocks and other economically sensitive
issues significantly underperformed.
The real success story of 1997 was that Consumer Price Index inflation fell
to 1.7%, the lowest since 1986 when a collapse in oil prices aided that year's
report. Energy and food prices helped 1997 results, but even without these two
volatile components, prices would have only increased by just 2.2%; the lowest
in thirty years. The Producer Price Index was actually negative for the year
(-1.2%) and up slightly (+0.1%) when energy and food prices are eliminated. The
outlook for 1998 suggests that a low inflation environment should continue.
As we enter 1998, the lingering Asian financial crisis continues to create
investor uncertainty regarding its impact upon the U.S. economy and corporate
profits. A widening of our net export deficit will slow domestic economic
activity, but inflation should be positively impacted due to lower import
pricing. Asia's problems have already influenced domestic monetary policy,
causing the Federal Reserve to maintain a steady rate structure. We expect that
corporate operating earnings in 1998 will improve modestly, rising 5% to 7%,
relative to an estimated increase of over 10% in 1997. High valuations and
slower growth may also spur continued high merger activity.
The 1998 economic environment should be characterized by diminishing growth
combined with little corporate pricing power. Equity securities that exhibit
steady, consistent earnings results should outperform.
History suggests that after three years of spectacular stock market gains,
1998 most likely will show lower returns combined with continued high
volatility. In this environment, stock selection will be increasingly important,
and hence, our focus will be on companies that meet our overall investment
profile and provide the greatest potential for long-term growth.
The fixed income markets responded favorably to the decline in inflation,
following a first quarter scare due to strong growth and fears of intensifying
wage pressures. Lower levels of Treasury issuance due to a dramatic decline in
the budget deficit also had a positive impact on performance. In the fourth
quarter, however financial difficulties in Asia clearly dominated the fixed
income markets. The resulting higher level of global economic uncertainty drove
yields lower and caused corporate bonds to underperform Treasury securities. In
spite of lower yields, mortgage securities performed well in 1997, as high
credit quality and incremental yield remained in demand.
Page 2
<PAGE>
INTERNATIONAL MARKETS
- ---------------------
1997 was a year of mixed fortunes in financial markets. Against the
background of buoyant bond markets and strong gains on Wall Street, equity
prices surged higher in Europe and the UK but suffered steep declines in Asia
and Japan.
The international story of the year was the gathering crisis in the Far
East. Problems relating to international indebtedness and budget and current
account worries seemed initially to be containable but investor worries
reverberated through the region. One country after another suffered steep
declines in both currency exchange rates and stock markets - a modern day domino
effect. Concern turned to fear and it was clear that there was no place to hide
in the region. Even Japan, which showed evidence of having broken out of
economic lethargy, disappointed yet again.
Fortunately, however, the economic and political environment in Europe and
the UK was positive for equities. The UK economy was very strong throughout
1997. Corporate activity was also a feature of the year, not just with merger
and acquisition activity but also with companies returning capital to
shareholders. The strength of sterling benefited U.S. dollar returns from UK
investments. On the continent of Europe, there was a growing confidence that
economic activity was improving and there was a well entrenched belief that
European Economic and Monetary Union (EMU) would start on time in 1999.
Looking ahead, the uncertainties in Asia and Japan persist. IMF help has
been sought by several Asian countries and there has been a plethora of
announcements relating to budget spending controls, reforms and restructuring.
Similarly, in Japan there are still problems in the banking sector and the
economy's progress is hard to assess. In the UK, we anticipate that growth will
slow and eventually interest rates will fall again, but an economic downturn is
not expected. Growth in Europe could improve marginally on 1997 levels and we
anticipate that EMU factors will continue to sustain investor confidence.
At Weiss, Peck & Greer, we continue to direct our efforts to identify
investments that will enable our shareholders to achieve their long term goals.
Sincerely,
/s/ Roger J. Weiss
Roger J. Weiss
Chairman of the Board
January 20, 1998
Page 3
<PAGE>
WEISS, PECK & GREER MUTUAL FUNDS
MAJOR PORTFOLIO CHANGES - EQUITY FUNDS - QUARTER ENDING DECEMBER 31, 1997
UNAUDITED
TUDOR GROWTH AND INCOME
ADDITIONS ADDITIONS
- --------- ---------
ADVO Inc. Cisco Systems Inc.
Affiliated Managers Group Conseco Inc. Preferred Stock 7.000%
Corrections Corp of America Entertainment Properties Trust
Movado Group Inc. Ericsson L M Telephone Co. ADR Cl B
PETsMART Inc. Convertible Bond Philip Services Corp.
6.750% Due 11/1/04 SAFECO Corp.
Rational Software Corp.
RSL Communications Ltd. Cl A
Staten Island Bancorp Inc.
Vencor Inc.
Washington Federal Inc.
DELETIONS DELETIONS
- --------- ---------
ESC Medical Systems Ltd. Amerada Hess Corp.
EVI Inc. Colgate - Palmolive Co.
Globalstar Telecommunications Ltd. Crescent Operating Inc.
Hyperion Software Corp. Dura Pharmaceuticals Convertible Bond
Just for Feet Inc. 3.500% Due 7/15/02
Omnicare Care Gables Residential Trust
Papa John's International Inc. Hercules Inc.
PETsMART Inc. Intel Corp.
Templeton Dragon Fund Motorola Inc.
Whole Foods Market Inc. Pharmacia & Upjohn Inc.
GROWTH INTERNATIONAL
ADDITIONS ADDITIONS
- --------- ---------
ADVO Inc. Brambles Industries Ltd.
Affiliated Managers Group Diageo PLC
Corrections Corp of America Endesa SA
Emcor Group Inc. Mabuchi Motor Co.,Ltd.
Flexinternational Software Nintendo Co.,Ltd.
KTI Inc. Sun Hung Kai Properties
Rational Software Corp. Total SA Cl B
Staten Island Bancorp Inc. TTB Finance Cayman Convertible Bond
Washington Federal Inc. 0.750% Due 9/29/49
DELETIONS DELETIONS
- --------- ---------
Aspect Telecommunications Australia & New Zealand Bank Group
ESC Medical Systems Ltd. Banque Nationale De Paris
Globalstar Telecommunications Ltd. CSR
Hyperion Software Corp. Dai Ichi Kangyo Bank
Intermedia Communications Inc. Dao Heng Bank Group
P - COM Inc. Hitachi Ltd.
Papa John's International Inc. Iberdrola SA
Qualcomm Inc. Imperial Tobacco
Templeton Dragon Fund Mitsubishi Trust & Banking
Whole Foods Market Inc. Yokogawa Electric Corp.
Page 4
<PAGE>
WEISS, PECK & GREER MUTUAL FUNDS
AVERAGE ANNUAL TOTAL RETURN
TUDOR FUND
The Fund underperformed its benchmarks for the year ended December 31, 1997 as a
result of unfavorable stock selection and an overweighting in the biotechnology,
technology, telecommunications and retail sectors. This was partially offset by
outperformance in the energy, financial and manufacturing sectors.
Adam Starr took over as portfolio manager for Melville Straus on December 17,
1997. Mr. Starr is in the process of reshaping the Fund's portfolio,
concentrating on companies which he feels have the best fundamental investment
prospects. Mr. Starr hopes to achieve more stability in returns of the Fund
going forward.
[Graph omitted here]
Graph depicts the comparison of a $10,000 investment between the Tudor Fund
and the Russell 2500 Growth Index and the Lipper Capital Appreciation Index
for the periods from January 1988 through December 31,1997.
TUDOR FUND
TUDOR RUSSELL LIPPER
----- ------- ------
1/1/88 10,000 10,000 10,000
12/88 11,514 11,690 11,285
12/89 14,397 14,555 14,479
12/90 13,653 12,779 13,352
12/91 19,908 19,811 18,367
12/92 20,928 20,958 19,756
12/93 23,728 23,502 22,867
12/94 21,400 23,201 22,305
12/95 30,213 30,983 29,351
12/96 35,899 35,652 33,739
12/97 39,887 40,914 40,440
AVERAGE ANNUAL TOTAL RETURN
(for the periods ended December 31, 1997)
1 year 5 years 10 years
------ ------- --------
TUDOR ........................... 11.11% 13.77% 14.84%
Russell 2500 Growth Index ....... 14.76% 14.32% 15.13%
Lipper Cap Appreciation Index ... 19.86% 15.40% 14.99%
GROWTH AND INCOME FUND
The one year return of the Growth & Income Fund for 1997 was among the highest
in the history of the Fund. The Fund outperformed the Lipper Growth & Income
Average by over 9%. The Fund's annualized three year return of 31% outpaces the
Lipper Growth & Income Average by over 4% per year. Financial, consumer cyclical
and health care sectors led Fund performance during the year. American Express,
Bank of New York, Federal National Mortgage Association and Travelers Group Inc.
paced the financial sector, each increasing by over 50%. Bristol - Myers Squibb,
Eli Lilly, Pfizer and Schering Plough were all up by more than 70% last year.
Home Depot and Carnival Cruise Line were leading performers among several
consumer cyclical holdings. The outlook for large cap investing continues to be
positive. Slower economic growth in 1998 and continued pricing pressures will
tend to favor large companies.
[Graph omitted here]
Graph depicts the comparison of a $10,000 investment between the Growth and
Income Fund and the Lipper Growth & Income Funds Average for the periods of
January 1988 through December 31, 1997.
GROWTH & INCOME FUND
G&I S&P LIPPER
--- --- ------
1/1/88 10,000 10,000 10,000
12/88 10,947 11,661 11,625
12/89 13,973 15,356 14,403
12/90 12,525 10,581 13,787
12/91 17,625 13,804 17,832
12/92 20,058 14,856 19,481
12/93 21,971 16,354 21,858
12/94 20,772 16,570 21,696
12/95 25,570 22,797 28,494
12/96 34,303 28,031 34,498
12/97 46,744 52,369 43,266
AVERAGE ANNUAL TOTAL RETURN
(for the periods ended December 31, 1997)
1 year 5 years 10 years
------ ------- --------
GROWTH AND INCOME 36.27% 18.44% 16.67%
S&P 500 Stock Index 33.36% 20.27% 18.05%
Lipper Growth & Income
Funds Average 27.14% 17.63% 15.86%
Page 5
<PAGE>
WEISS, PECK & GREER MUTUAL FUNDS
AVERAGE ANNUAL TOTAL RETURN
GROWTH FUND
The Fund underperformed its benchmarks for the year ended December 31, 1997 as a
result of unfavorable stock selection and an overweighting in the biotechnology,
computer equipment and services, telecommunications and retail sectors. This was
partially offset by outperformance in the energy, financial, business services
and leisure sectors.
Adam Starr took over as portfolio manager for Melville Straus on December 17,
1997. Mr. Starr is in the process of reshaping the Fund's portfolio,
concentrating on companies which he feels have the best fundamental investment
prospects. Mr. Starr hopes to achieve more stability in returns of the Fund
going forward.
[Graph omitted here]
Graph depicts the comparison of a $10,000 investment between the Growth Fund and
the Wilshire Small Co. Growth Index, the Lipper Small Cap Index and the Russell
2000 Growth Index for the periods of January 198 through December 31, 1997.
GROWTH FUND
GROWTH WILSHIRE LIPPER RUSSELL
------ -------- ------ -------
1/1/88 250,000 250,000 250,000 250,000
12/88 278,525 298,250 300,850 300,925
12/89 347,794 354,649 364,209 361,622
12/90 303,277 287,195 314,021 296,663
12/91 475,568 450,321 488,415 451,549
12/92 505,386 509,764 518,581 486,634
12/93 580,486 601,419 606,353 551,649
12/94 499,044 604,667 603,442 538,244
12/95 697,264 817,449 794,251 705,314
12/96 822,702 930,911 908,385 784,733
12/97 902,258 1,078,461 1,045,097 886,356
AVERAGE ANNUAL TOTAL RETURN
(for the periods ended December 31, 1997)
1 year 5 years 10 years
------ ------- --------
GROWTH .......................... 9.67% 12.29% 13.70%
Wilshire Small Co. Growth Index.. 15.85% 16.17% 15.74%
Lipper Small Cap Index .......... 15.05% 15.04% 15.38%
Russell 2000 Growth Index ....... 12.95% 12.74% 13.49%
QUANTITATIVE EQUITY FUND
The Fund lagged its benchmark in 1997. This was due to the risk adverse nature
of the Fund and sector weightings that have differed from the benchmark. While
still maintaining its risk features, the sector weightings were reallocated
during the year so that they are now more in line with the benchmark of the S&P
500. As we move into 1998, we believe that the Fund is better positioned to beat
the benchmark in either rising or falling market environments.
[Graph omitted here]
Graph depicts the comparison of a $10,000 investment between the Quantitative
Equity Fund and the S&P 500 Index for the periods of January 1993 through
December 31, 1997.
QUANTITATIVE EQUITY FUND
QUANTITATIVE
EQUITY S&P
------ ---
1/93 10,000 10,000
12/93 11,390 11,008
12/94 11,429 11,153
12/95 15,242 15,345
12/96 18,064 18,868
12/97 22,665 25,162
AVERAGE ANNUAL TOTAL RETURN
(for the periods ended December 31, 1997)
1 year 5 years+
------ -------
QUANTITATIVE EQUITY ........ 25.47% 17.78%
S&P 500 Stock Index ........ 33.36% 20.27%
+ Commencement of operations 1/1/93
Page 6
<PAGE>
WEISS, PECK & GREER MUTUAL FUNDS
AVERAGE ANNUAL TOTAL RETURN
INTERNATIONAL FUND
1997 was a year of mixed fortunes in financial markets. Against the background
of buoyant bond markets and strong gains on Wall Street, equity prices surged
higher in Europe and the UK but suffered steep declines in Asia and Japan. Asset
allocation in the Fund was adjusted to take advantage of this disparate market
performance with holdings in the Far East reduced and holdings in Europe and the
UK increased. As a result, the Fund returned 2.90% for the year ended December
31,1997 versus a return of 2.06% for the EAFE Index.
[Graph omitted here]
Graph depicts the comparison of a $10,000 investment between the International
Fund and the EAFE for the periods of June 1989 through December 31, 1997.
INTERNATIONAL FUND
INTERNATIONAL EAFE
------------- ----
6/1/89 10,000 10,000
12/89 11,054 11,567
12/90 9,415 8,883
12/91 9,510 9,994
12/92 8,984 8,810
12/93 12,329 11,711
12/94 11,550 12,655
12/95 12,812 14,117
12/96 13,406 15,015
12/97 13,793 15,324
AVERAGE ANNUAL TOTAL RETURN
(for the periods ended December 31,1997)
since
1 year 5 years inception+
------ ------- ----------
INTERNATIONAL(A) ....... 2.89% 8.96% 3.83%
EAFE (Europe, Australia,
Far East) Index ...... 2.06% 11.71% 5.10%
+ Commencement of operations 6/1/89
(A) The Adviser waived its fee from inception of the Fund through 2/28/90 and
has waived a portion of its fee from that date through October 19, 1994. Had
the Adviser not done so, the total return for the five years ended 12/31/97
and from inception through 12/31/97 would have been lower.
WEISS, PECK & GREER MUTUAL FUNDS
AVERAGE ANNUAL TOTAL RETURN
INTERMEDIATE MUNICIPAL BOND FUND
Municipal yields declined in step with treasuries during 1997. As rates edged
downward, yield hungry investors moved cash into lesser grade securities. This
phenomenon caused the yield spread between AAA rated securities and BBB rated
securities to tighten. These two forces produced relatively strong returns for
intermediate term municipal funds.
The Fund benefitted generally from the forces driving its market. Our philosophy
of maintaining a neutral exposure to interest rate changes while seeking to
uncover value at the security level generated returns in excess of the market.
For the year, the total return of the Fund exceeded the return of its
Morningstar benchmark by over 0.40% and exceeded its Lipper benchmark by almost
0.70%.
[Graph omitted here]
Graph depicts the comparison of a $10,000 investment between the Intermediate
Municipal Bond Fund and the Lehman 3-10 Year Municipal Bond Index and the
Lipper Intermediate Muni Funds Index.
INTERMEDIATE MUNICIPAL BOND
MUNI BOND LEHMAN LIPPER
--------- ------ ------
7/1/93 10,000 10,000 10,000
12/93 10,348 10,414 10,344
12/94 10,111 10,138 9,970
12/95 11,329 11,536 11,284
12/96 11,805 12,041 11,700
12/97 12,732 12,937 12,538
AVERAGE ANNUAL TOTAL RETURN
(for the periods ended December 31, 1997)
since
1 year inception +
------ -----------
INTERMEDIATE MUNICIPAL BOND (B) ....... 7.85% 5.51%
Lehman Bros. 3-10 yr. Muni Bond Index.. 7.44% 5.89%
Lipper Intermediate Muni Funds ........ 7.16% 5.27%
+ Commencement of operations 7/1/93
(B) The Adviser waived its fee from inception of the Fund through October 19,
1994 and reimbursed certain other expenses. Had the Adviser not done so, the
total return of the Fund for the year ended 12/31/97 and from inception
through 12/31/97 would have been lower.
Page 7
<PAGE>
WEISS, PECK & GREER MUTUAL FUNDS
AVERAGE ANNUAL TOTAL RETURN
WPG GOVERNMENT SECURITIES FUND
For the year ended December 31, 1997 WPG's Government Securities Fund total
return trailed that of the Morningstar General Government Bond Universe and the
Lehman Brothers Intermediate Government Mortgage Index. In order to maintain
income in a low interest rate environment, the Fund maintained a fairly large
allocation in mortgage backed securities during 1997 due to the higher
incremental yields versus Treasury securities. This allocation was reduced in
the second quarter in response to increased risk due to the declining yield
premium versus Treasuries. This strategy has a negative impact on returns
relative to our benchmarks as mortgage securities continued to perform well. In
the second half of the year, however the value of mortgage backed securities
become more attractive versus Treasuries and the allocation was gradually
increased to 40% - 50% of the Fund. Yield curve positioning was focused for much
of the year on a "bullet" strategy (i.e. maturities centered around the weighted
average) due to the overall higher portfolio yield this produced. The Fund did
achieve its objective of providing attractive income with a relatively low level
of principal risk.
As the new year begins the Fund will shift its focus and strategy to more of a
fixed income, total return orientation. This will involve the inclusion of
Investment grade and asset backed securities, in addition to Treasury, Agency
and Agency Mortgage Securities. In addition, the Fund will seek to outperform on
a total return basis a more broad based fixed income benchmark, the Lehman
Brothers Aggregate Index. To reflect the more institutional nature of the client
base, WPG will voluntarily cap the Fund's expenses ratio at 0.50%. Fund
management feels that these changes will make the Fund more competitive and
attractive to its shareholders.
[Graph omitted here]
Graph depicts the comparison of a $10,000 investment between the Government
Securities Fund and the Lehman INTMD Government/MBS and the Morningstar
General Government Bond Index for the periods of January 1988 through December
31, 1997.
GOVERNMENT SECURITIES FUND
GOVERNMENT LEHMAN MORNINGSTAR
---------- ------ -----------
1/1/88 10,000 10,000 10,000
12/88 10,791 10,730 10,655
12/89 12,290 12,204 11,907
12/90 13,389 13,432 12,902
12/91 15,258 15,417 14,698
12/92 16,461 16,489 15,595
12/93 17,936 17,742 16,829
12/94 16,376 17,444 16,241
12/95 18,546 20,130 18,668
12/96 19,260 21,060 19,136
12/97 20,679 22,762 20,637
AVERAGE ANNUAL TOTAL RETURN
(for the periods ended December 31, 1997)
1 year 5 years 10 years
------ ------- --------
GOVERNMENT SECURITIES .............. 7.37% 4.67% 7.54%
Lehman Intermed. Gov./MBS .......... 8.49% 6.74% 8.61%
Morningstar Gen'l Gov. Bond Index .. 7.84% 5.77% 7.51%
Page 8
<PAGE>
WEISS, PECK & GREER MUTUAL FUNDS
AVERAGE ANNUAL TOTAL RETURN
Performance represents historical data. The investment return and principal
value of an investment will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their original cost. Each Fund's
results and the indices (except as noted below) assume the reinvestment of all
capital gain distributions and income dividends. Each Fund's past performance is
not indicative of future performance and should be considered in light of each
Fund's investment policy and objectives, the characteristics and quality of its
portfolio securities, and the periods selected. The S&P 500 Stock Index is a
broad based measurement of changes in stock market conditions based on the
average performance of 500 widely held common stocks. The Russell 2000 Growth
Index and Russell 2500 Growth Index are measurements of changes in stock market
conditions based on the average performance of U.S. growth oriented securities
with a median market capitalization of approximately $220 million and $1.4
billion, respectively. Lipper Analytical Services ("Lipper") and Morningstar
compare mutual funds according to overall performance, investment objectives,
investment policies, assets, expense levels, periods of existence and other
factors. Wilshire Asset Management indices are derived from the largest 2500 of
the Wilshire 5000 Stock Index and is a broad based index. The Lehman Brothers
Intermediate Government/Mortgage Backed Securities Index is a market weighted
blend of all intermediate government issues (3-10 year maturities) and all
mortgage securities. The Lehman Brothers Aggregate Index is a market weighted
blend of all government issues, mortgage securities and investment grade
corporate debt securities. The Lehman Brothers 3-10 year Muni Bond Index is a
broad based index which contains all securities in the Lehman Municipal Bond
Index with maturities from 3-10 years. The Morgan Stanley Capital International
Europe, Australia, Far East ("EAFE") is an index of more than 800 companies in
Europe, Australia and the Far East.
Page 9
<PAGE>
WEISS, PECK & GREER MUTUAL FUNDS
TEN LARGEST HOLDINGS AT DECEMBER 31, 1997 *
PERCENT
VALUE OF NET
TUDOR FUND (000'S) ASSETS
- ---------- ------- ------
Solectron Corp .................. $5,299 3.2%
BE Aerospace Inc ................ 4,810 2.9%
Starbucks Corp .................. 3,837 2.3%
Nuevo Energy Corp ............... 3,293 2.0%
PLATINUM Technology Inc ......... 3,291 2.0%
Hexcel Corp ..................... 3,274 2.0%
Gulf Canada Resources ........... 3,101 1.9%
Amerin Corp ..................... 3,052 1.8%
Corrections Corp of America 3,039 1.8%
Hadco Corp ...................... 3,009 1.8%
----- ---
$36,005 21.7%
======= ====
PERCENT
VALUE OF NET
GROWTH AND INCOME FUND (000'S) ASSETS
- ---------------------- ------- ------
Lilly (Eli) & Co .................. $4,526 3.9%
American Express Co ............... 4,463 3.8%
Carnival Corp ..................... 4,430 3.8%
American International Group Inc. . 4,078 3.5%
Bank of New York Inc .............. 3,758 3.2%
Warner Lambert Co ................. 3,720 3.2%
Storage Technology Corp ........... 3,345 2.8%
Travelers Group Inc. .............. 3,233 2.8%
Schlumberger Ltd .................. 3,220 2.7%
Cresent Real Estate Equities Inc .. 3,150 2.7%
----- ---
$37,923 32.4%
======= ====
GROWTH FUND
- -----------
BE Aerospace Inc ................. $1,150 2.5%
PLATINUM Technology Inc .......... 1,130 2.4%
Corrections Corp of America ...... 1,112 2.4%
Gulf Canada Resources ............ 1,099 2.4%
Amerin Corp ...................... 1,092 2.3%
Nuevo Energy Corp ................ 1,019 2.2%
Hexcel Corp ...................... 935 2.0%
Hadco Corp ....................... 905 1.9%
America West Holdings Corp. Cl B.. 885 1.9%
Phycor Inc ....................... 877 1.9%
--- ---
$10,204 21.9%
======= ====
QUANTITATIVE EQUITY FUND
- ------------------------
Exxon Corp ...................... $ 3,794 4.0%
General Electric Co ............. 2,876 3.0%
Dayton Hudson Corp .............. 2,720 2.8%
Ameritech Corp .................. 2,689 2.8%
Lilly (Eli) & Co ................ 2,660 2.8%
International Business Machines
Corp ........................ 2,227 2.3%
Microsoft Corp .................. 2,210 2.3%
BellSouth Corp .................. 2,117 2.2%
Ford Motor Co ................... 1,845 1.9%
Royal Dutch Petroleum Co ADR .... 1,718 1.9%
----- ---
$24,856 26.0%
======= ====
INTERNATIONAL FUND
- ------------------
Viag AG ......................... $288 3.4%
Commerzbank AG .................. 251 2.9%
Novartis AG ..................... 250 2.9%
Nestle .......................... 214 2.5%
Preussag AG ..................... 206 2.4%
Instituto Nazionale Delle
Assicurazione ................ 199 2.3%
Daimler Benz AG ................. 197 2.3%
Eaux (Cie Generale Des) ......... 195 2.3%
Nippon Telegraph & Telephone Corp 189 2.2%
Elsevier ........................ 181 2.1%
--- ---
$2,170 25.3%
====== ====
Page 10
<PAGE>
WEISS, PECK & GREER MUTUAL FUNDS
<TABLE>
<CAPTION>
TEN LARGEST HOLDINGS AT DECEMBER 31,1997* - CONTINUED
PERCENT
VALUE OF NET
GOVERNMENT SECURITIES FUND (000'S) ASSETS
- -------------------------- ------- ------
<S> <C> <C>
United States Treasury Note 6.500% Due 10/15/06 .................... $27,574 25.4%
Government National Mortgage Association 7.000% Due 1/15/28 ......... 14,698 13.6%
Federal National Mortgage Association 7.500% Due 1/1/13-1/1/28 ...... 11,555 10.7%
Federal Home Loan Bank Discount Note Due 1/22/98 .................... 11,173 10.3%
Government National Mortgage Association 7.500% Due 9/15/07-8/15/17.. 8,433 7.8%
United States Treasury Note 5.750% Due 9/30/99 ...................... 7,405 6.8%
United States Treasury Bond 6.375% Due 8/15/27 ...................... 6,065 5.6%
United States Treasury Note 6.500% Due 5/31/01 ...................... 6,009 5.5%
Federal Home Loan Bank Discount Note Due 1/14/98 .................... 5,858 5.4%
Federal National Mortgage Association 6.500% Due 1/1/13 ............. 5,629 5.2%
-------- ----
$104,399 96.3%
======== ====
INTERMEDIATE MUNICIPAL BOND FUND
- --------------------------------
San Antonio Texas Electric & Gas 5.250% Due 2/1/10 ................... $1,040 4.4%
San Francisco California City & County Refunding Series 1
(FGIC Insured) 5.000% Due 6/15/10 ................................. 1,030 4.4%
Port of Houston Texas General Obligation Bond 5.100% 10/1/11 ......... 1,019 4.3%
Cook County Illinois School District No. 99 (FGIC Insured)
8.500% Due 12/1/01 ................................................. 1,011 4.3%
Springfield Illinois Electric Revenue 6.500% Due 3/1/08 .............. 863 3.7%
Lancaster County Pennsylvania General Obligation Bond Series B
(AMBAC Insured) 4.100% Due 11/1/03 ................................... 834 3.6%
Harris County Texas Flood District General Obligation Zero Coupon
Due 10/1/06 ........................................................ 642 2.7%
Oklahoma County Oklahoma Home Finance Authority Single Family
Refunding Prerefunded Zero Coupon Due 7/1/12 ...................... 642 2.7%
Cypress Fairbanks Texas General Obligation Independent School District
7.300% Due 2/15/07 ................................................ 603 2.6%
Surry County North Carolina Pollution Control Finance
Authority 9.250% Due 12/1/02 ....................................... 588 2.5%
------ ----
$8,272 35.2%
====== ====
<FN>
* The composition of the largest securities in each portfolio is subject to change.
</FN>
</TABLE>
Page 11
<PAGE>
WEISS, PECK & GREER MUTUAL FUNDS
SCHEDULES OF INVESTMENTS AT DECEMBER 31, 1997
NUMBER VALUE
OF SHARES SECURITY (000'S)
- --------- -------- -------
TUDOR
COMMON STOCKS (86.1%)
CAPITAL GOODS
COMMUNICATIONS (2.2%)
30,000 +Advanced Fibre Communication Inc. ............... $ 874
20,000 +Aspect Telecommunications ........................ 417
87,500 +P-COM Inc. ....................................... 1,509
40,000 +RSL Communications Ltd Cl A ...................... 880
--------
3,680
--------
COMPUTER PERIPHERALS (0.3%)
60,000 +Network Computing Devices ....................... 562
--------
.
COMPUTER SOFTWARE & SERVICES (8.3%)
27,500 +Arbor Software Corp. ............................. 1,114
29,000 +Data Processing .................................. 740
125 +Exigent International Inc. ....................... --
39,500 * +Flexinternational Software ....................... 612
44,500 +Industri-Matematik International Corp. ........... 1,313
20,000 +Legato Systems Inc. .............................. 880
50,000 +Made2Manage Inc. ................................. 378
40,000 +Parametric Technology Corp. ...................... 1,895
116,500 *+PLATINUM Technology Inc. ......................... 3,291
156,500 +Rational Software Corp. .......................... 1,780
100,000 +Segue Software Inc. .............................. 1,088
30,000 +Vantive Corp. .................................... 758
--------
13,849
--------
INTERNET (1.1%)
50,000 +Security Dynamics Technology Inc. ................ 1,787
OTHER CAPITAL GOODS (6.1%)
179,800 +BE Aerospace Inc. ................................ 4,810
131,300 +Hexcel Corp. ..................................... 3,274
17,000 +Thermoquest Corp. ................................ 308
50,000 +Thermoquest Corp. (A) ............................ 861
75,000 +Trident International Inc. ....................... 975
--------
10,228
--------
SEMICONDUCTORS & RELATED (1.4%)
31,000 +KLA - Tencor Corp. .............................. 1,197
25,500 +Uniphase Corp. ................................... 1,055
--------
2,252
--------
32,358
--------
CONSUMER
BIOTECHNOLOGY (6.0%)
10,000 +Arqule Inc. ...................................... 229
70,000 *+BioChem Pharmaceutical Inc. ...................... 1,461
NUMBER VALUE
OF SHARES SECURITY (000'S)
- --------- -------- -------
TUDOR (CONTINUED)
30,000 +Cor Therapeutics ................................. $ 675
20,000 +Dura Pharmaceuticals Inc. ........................ 918
16,000 +Guilford Pharmaceuticals Inc. .................... 322
30,000 +INCYTE Pharmaceuticals Inc. ...................... 1,350
57,500 *+North American Vaccine Inc. ..................... 1,434
30,000 +Pathogenesis Corp. ............................... 1,114
114,200 +Ribi Immunochem Research Inc. .................... 421
15,000 +SANGSTAT Medical Corp. ........................... 607
149,900 +SEQUUS Pharmaceuticals Inc. ...................... 1,115
30,000 +Synaptic Pharmaceutical Corp. .................... 326
--------
9,972
--------
HEALTH CARE - COST
CONTAINMENT (4.0%)
100,000 +Access Health Inc. ............................... 2,938
75,000* Integrated Health Services Inc. .................. 2,339
59,000 +Vencor Inc. ...................................... 1,442
--------
6,719
--------
HEALTH CARE- OTHER (1.6%)
10,000 +Cadus Pharmaceutical Corp. ...................... 64
97,000* +Phycor Inc. ..................................... 2,619
--------
2,683
--------
MEDIA-CELLULAR (2.4%)
120,000 +Loral Space & Communications ..................... 2,573
81,000 +Western Wireless Corp Cl A ....................... 1,407
--------
3,980
--------
MEDIA - OTHER (1.7%)
257,000 +Paging Networks Inc. ............................ 2,763
OTHER CONSUMER (6.9%)
40,600 +Central Garden & Pet ............................. 1,066
31,500 +Ciena Corp. ...................................... 1,925
30,000 *+Family Golf Centers Inc. ........................ 941
30,000 +Gemstar International Group Ltd. ................. 731
60,000 *Hollingher International ......................... 840
32,500 +NBTY Inc. ........................................ 1,085
55,000 *Royal Caribbean Cruises Ltd. ..................... 2,932
360,500 +Wetherspoon J.D .................................. 1,983
--------
11,503
--------
RESTAURANTS (3.6%)
65,000 +Rainforest Cafe Inc. ............................ 2,145
100,000 +Starbucks Corp. ................................. 3,837
--------
5,982
--------
RETAIL (3.6%)
17,500 +Barnett Inc. ..................................... 385
30,000 *+Friedman's Inc Cl A .............................. 538
32,000 Movado Group Inc. ................................ 736
See notes to financial statements
Page 12
<PAGE>
WEISS, PECK & GREER MUTUAL FUNDS
SCHEDULES OF INVESTMENTS AT DECEMBER 31, 1997
NUMBER VALUE
OF SHARES SECURITY (000'S)
- --------- -------- -------
TUDOR (CONTINUED)
50,000 +Party City Corp. ................................. $1,613
65,000 +Williams Sonoma Inc. ............................. 2,722
--------
5,994
--------
49,596
--------
ENERGY
OIL & GAS EXPLORATION (3.9%)
443,000 +Gulf Canada Resources ........................... 3,101
80,800 +Nuevo Energy Co. ................................. 3,293
--------
6,394
--------
OIL SERVICES (3.0%)
7,500 +BJ Services Co. .................................. 540
15,000 +KTI Inc. ......................................... 246
50,000 +Noble Drilling Corp. ............................. 1,531
40,000 +Rowan Companies .................................. 1,220
35,000 +Weatherford Enterra Inc. ......................... 1,531
--------
5,068
--------
11,462
--------
INTERMEDIATE GOODS & SERVICES
BASIC INDUSTRIES (2.8%)
55,300 CalMat Co. ....................................... 1,541
80,000 Lyondell Petrochemical Co. ....................... 2,120
7,000 OM Group Inc. .................................... 256
200,000 +Waxman Industries Inc. ........................... 738
--------
4,655
--------
BUSINESS SERVICES (14.3%)
12,500 +Cambridge Technology Partners Inc.. .............. 520
45,000 Checkpoint Systems Inc. ........................... 788
14,000 +Ciber Inc. ....................................... 812
18,000 +Compuware Corp ................................... 576
82,000 +Corrections Corp of America ...................... 3,039
35,000 +Emcor Group Inc. ................................. 718
66,500 +Hadco Corp. ...................................... 3,009
65,000 +International Network Services ................... 1,503
40,000 +Keane Inc. ....................................... 1,625
230,200 +MoneyGram Payment Systems ........................ 2,475
127,500 +Solectron Corp. .................................. 5,299
42,000 +Technology Solutions ............................. 1,108
85,000 +Wackenhut Corrections Corp. ...................... 2,284
--------
23,756
--------
TRANSPORTATION (3.3%)
153,300 +America West Holdings Corp.Cl B .................. 2,855
NUMBER VALUE
OF SHARES SECURITY (000'S)
- --------- -------- -------
TUDOR (CONTINUED)
45,000 *+Continental Airlines Cl B ........................ $2,166
20,000 +Virgin Express Holdings ADR ...................... 415
--------
5,436
--------
33,847
INTEREST SENSITIVE
BANKS (3.3%)
85,000 +BankUnited Financial Corp Cl A ................... 1,310
23,000 Coastal Bancorp Inc. ............................. 802
20,000 Seacoast Banking ................................. 770
75,000 +Staten Island Bancorp Inc. ....................... 1,570
31,500 Washington Federal Inc. .......................... 990
--------
5,442
--------
INSURANCE (1.8%)
109,000 +Amerin Corp. ..................................... 3,052
--------
OTHER (2.9%)
45,000 +ADVO Inc. ........................................ 878
71,400 +Affiliated Managers Group ........................ 2,071
85,000 +Cadiz Land Company Inc. .......................... 728
23,500 +Cornell Corrections .............................. 488
85,000 +Novacare Employee Services ....................... 680
--------
4,845
--------
13,339
--------
REAL ESTATE INVESTMENT TRUST (1.6%)
RESIDENTIAL
109,500 Mills Corp. ...................................... 2,683
--------
TOTAL COMMON STOCKS
(Cost $102,419) .................................. 143,285
--------
CONVERTIBLE PREFERRED
STOCK (0.0%)
CAPITAL GOODS (0.0%)
OTHER CAPITAL GOODS
(Cost $500)
5,138 +Advance Promotion Technologies Inc (A) ........... 1
--------
NUMBER
OF WARRANTS
- -----------
WARRANTS (0.3%)
ENERGY
OIL SERVICES
(Cost $48)
10,000 B.J. Services Co. ................................ 459
--------
See notes to financial statements Page 13
<PAGE>
WEISS, PECK & GREER MUTUAL FUNDS
SCHEDULES OF INVESTMENTS AT DECEMBER 31, 1997
PRINCIPAL
AMOUNT VALUE
(000'S) SECURITY (000'S)
- ------- -------- -------
TUDOR (CONTINUED)
CONVERTIBLE BOND (1.6%)
CONSUMER
RETAIL
(Cost $2,500)
$2,500 PETsMART Inc.
6.750% Due 11/1/04 (B) ...................... $2,614
--------
REPURCHASE AGREEMENT (15.9%)
(Cost $26,576)
26,576 UBS Securities 6.250% Due 1/2/98
with a maturity value of $26,585
(Collateralized by $27,298
U.S. Treasury Bond
8.875% Due 2/15/19) ............................ 26,576
--------
TOTAL INVESTMENTS (103.9%)
(Cost $132,043) ................................ 172,935
LIABILITES IN EXCESS OF
OTHER ASSETS (-3.9%) ........................... (6,476)
--------
TOTAL NET ASSETS (100.0%) ........................ $166,459
========
(A) SEC Rule 144 security. Requires registration under the SEC Act of 1933
before it can be offered for public sale.
(B) SEC Rule 144A security. Such security has limited markets and is traded
among "qualified institutional buyers."
+ Non-income producing security
* Securities out on loan.
NUMBER VALUE
OF SHARES SECURITY (000'S)
- --------- -------- -------
GROWTH AND INCOME
COMMON STOCKS (94.8%)
CAPITAL GOODS
AEROSPACE (2.1%)
50,000 Boeing Co. ....................................... $2,447
--------
BUSINESS SERVICES (0.9%)
75,000 +Philip Services Corp. ............................ 1,078
--------
COMPUTER SOFTWARE &
SERVICES (9.0%)
40,000 +BMC Software Inc. ............................... 2,625
100,000 +Cadence Design Systems Inc. ..................... 2,450
37,500 +Cisco Systems Inc. .............................. 2,091
54,000 +Storage Technology Corp. ........................ 3,345
--------
10,511
--------
OTHER CAPITAL GOODS (7.4%)
30,000 Emerson Electric Co. ............................. 1,693
50,000 Ericsson L M Telephone Co. ADR Cl B .............. 1,866
40,000 General Electric Co. ............................. 2,935
30,000 Xerox Corp. ...................................... 2,214
--------
8,708
--------
22,744
--------
CONSUMER
HEALTH CARE (16.4%)
40,000 American Home Products Corp. ..................... 3,060
24,000 Bristol-Myers Squibb Co. ......................... 2,271
65,000 Lilly (Eli) & Co. ................................ 4,526
25,000 Merck & Co. ...................................... 2,656
40,000 Pfizer Inc. ...................................... 2,982
30,000 Warner Lambert Co. ............................... 3,720
--------
19,215
--------
RESTAURANTS (2.4%)
60,000 McDonald's Corp. ................................. 2,865
--------
OTHER CONSUMER (12.0%)
80,000 Carnival Corp. ................................... 4,430
65,000 Hilton Hotel Corp. ............................... 1,934
50,000 Home Depot ....................................... 2,928
62,500 Philip Morris Companies Inc. ..................... 2,832
50,000 Tandy Corp. ...................................... 1,928
--------
14,052
--------
36,132
--------
Page 14 See notes to financial statements
<PAGE>
WEISS, PECK & GREER MUTUAL FUNDS
SCHEDULES OF INVESTMENTS AT DECEMBER 31, 1997
NUMBER VALUE
OF SHARES SECURITY (000'S)
- --------- -------- -------
GROWTH AND INCOME (continued)
OTHER CONSUMER
CONSUMER NON-DURABLES (1.7%)
30,000 Johnson & Johnson Co. ............................ $1,976
--------
INTERMEDIATE GOODS & SERVICES
BASIC INDUSTRIES (1.8%)
50,000 Monsanto Co. ..................................... 2,100
NATURAL RESOURCES
ENERGY & RELATED (9.2%)
35,000 Dresser Industries Inc. .......................... 1,468
75,000 Energen Corp. .................................... 2,981
50,000 Exxon Corp. ...................................... 3,059
40,000 Schlumberger Ltd. ................................ 3,220
--------
10,728
--------
REAL ESTATE INVESTMENT TRUSTS
COMMERCIAL & INDUSTRIAL (6.7%)
50,000 CCA Prison Realty Trust .......................... 2,231
80,000 Crescent Real Estate Equities Inc. ............... 3,150
80,000 Duke Realty Investors Inc. ....................... 1,940
25,000 Entertainment Properties Trust ................... 484
--------
7,805
--------
HEALTH CARE (1.3%)
75,000 LTC Properties Inc. .............................. 1,556
--------
RESIDENTIAL (1.5%)
70,000 Mills Corp. ...................................... 1,715
--------
11,076
--------
INTEREST SENSITIVE
BANKS (7.9%)
40,000 BankAmerica Corp. ................................ 2,920
65,000 Bank of New York Inc. ............................ 3,758
35,000 Barnett Banks Inc. ............................... 2,516
--------
9,194
--------
INSURANCE (8.3%)
37,500 American International Group Inc. ................ 4,078
50,000 SAFECO Corp. ..................................... 2,437
60,000 Travelers Group Inc. ............................. 3,233
--------
9,748
--------
NUMBER VALUE
OF SHARES SECURITY (000'S)
- --------- -------- -------
GROWTH AND INCOME (continued)
OTHER (6.2%)
50,000 American Express Co. ............................. $4,463
50,000 Federal National Mortgage Association ............ 2,853
--------
7,316
--------
26,258
--------
TOTAL COMMON STOCKS
(Cost $71,171) ................................. 111,014
--------
PREFERRED STOCK (1.5%)
(Cost $1,794)
INTEREST SENSITIVE
INSURANCE (1.5%)
35,000 Conseco Inc 7.000% ............................... 1,794
--------
PRINCIPAL
AMOUNT
(000'S)
- -------
EURODOLLAR DEPOSIT (1.9%)
(Cost $2,237)
$2,237 Societe Generale Bank
5.500% Due 1/2/98 ............................. 2,237
--------
TOTAL INVESTMENTS (98.2%)
(Cost $75,202) ................................. 115,045
OTHER ASSETS IN EXCESS
OF LIABILITIES (1.8%) ............................ 2,101
--------
TOTAL NET ASSETS (100.0%) ........................ $117,146
=========
+ Non-income producing security.
See notes to financial statements Page 15
<PAGE>
WEISS, PECK & GREER MUTUAL FUNDS
SCHEDULES OF INVESTMENTS AT DECEMBER 31, 1997
NUMBER VALUE
OF SHARES SECURITY (000'S)
- --------- -------- -------
GROWTH
COMMON STOCKS (79.6%)
CAPITAL GOODS
COMMUNICATION (0.5%)
8,000 +Advanced Fibre Communication Inc. ................ $ 233
--------
COMPUTER PERIPHERALS (0.5%)
23,500 +Network Computing Devices ........................ 220
--------
COMPUTER SOFTWARE (7.9%)
10,000 *+Flexinternational Software ....................... 155
11,000 +Parametric Technology Corp. ...................... 521
40,000 +PLATINUM Technology Inc. ......................... 1,130
57,500 +Rational Software Corp. .......................... 654
17,500 +Security Dynamics Technology Inc. ................ 626
25,000 +Segue Software Inc. .............................. 272
12,500 +Vantive Corp. .................................... 316
--------
3,674
--------
OTHER CAPITAL GOODS (7.6%)
43,000 +BE Aerospace Inc. ................................ 1,150
17,500 +Emcor Group Inc. ................................. 359
37,500 *+Hexcel Corp. ..................................... 935
250,000 *+Noise Cancellation Technology .................... 281
25,000 +ThermoQuest Corp. (A) ............................ 431
30,000 +Trident International Inc. ....................... 390
--------
3,546
--------
SEMI-CONDUCTORS & RELATED (0.9%)
10,500 +KLA - Tencor Corp ................................ 406
--------
8,079
--------
CONSUMER
BIOTECHNOLOGY (5.7%)
22,500 +BioChem Pharmaceutical Inc. ...................... 470
10,000 +Cor Therapeutics ................................. 225
8,500 +INCYTE Pharmaceuticals Inc. ...................... 382
300 +Metra Biosystems Inc. ............................ 1
14,700 *+North American Vaccine Inc. ...................... 367
10,500 +Pathogenesis Corp ................................ 390
100,000 +Ribi Immunochem Research Inc. .................... 369
60,000 +SEQUUS Pharmaceuticals Inc. ...................... 446
--------
2,650
--------
HEALTH CARE - COST
CONTAINMENT (3.9%)
22,500 +Access Health Inc. ............................... 661
22,500 Integrated Health Services Inc. .................. 702
18,500 +Vencor Inc. ...................................... 452
--------
1,815
--------
NUMBER VALUE
OF SHARES SECURITY (000'S)
- --------- -------- -------
GROWTH (continued)
HEALTH CARE - OTHER (1.9%)
32,500* +Phycor Inc. ...................................... $ 877
--------
HEALTH CARE - PHARMACEUTICALS (0.7%)
7,000 +Dura Pharmaceuticals Inc. ........................ 321
--------
MEDIA - CELLULAR (1.4%)
30,000 +Loral Space & Communications ..................... 643
--------
MEDIA - OTHER (1.4%)
62,000 +Paging Network Inc. .............................. 666
--------
OTHER CONSUMER (4.8%)
7,500 *+Central Garden & Pet ............................. 197
11,000 +Ciena Corp ....................................... 672
10,000 +Gemstar International Group Ltd. ................. 244
20,000 *Hollinger International .......................... 280
16,000 Royal Caribbean Cruises Ltd. ..................... 853
--------
2,246
--------
RESTAURANTS (1.9%)
13,000 +Rainforest Cafe Inc. ............................. 429
12,000 +Starbucks Corp ................................... 460
--------
889
--------
RETAIL (5.9%)
8,000 +Barnett Inc. ..................................... 176
10,000 +Friedman's Inc Cl A .............................. 179
55,000 +Just for Feet Inc. ............................... 722
15,000 +Party City Corp. ................................. 484
105,000 +PETsMART Inc. .................................... 761
10,000 *+Williams Sonoma Inc. ............................. 419
--------
2,741
--------
12,848
--------
ENERGY
OIL & GAS EXPLORATION (4.5%)
157,000 +Gulf Canada Resources ........................... 1,099
25,000 +Nuevo Energy Co. ................................. 1,019
--------
2,118
--------
OIL SERVICES (3.0%)
3,500 +BJ Services Co. .................................. 252
16,000 +Noble Drilling Corp .............................. 490
9,500 +Rowan Companies .................................. 289
8,500 +Weatherford Enterra Inc. ......................... 372
--------
1,403
--------
3,521
--------
Page 16 See notes to financial statements
<PAGE>
WEISS, PECK & GREER MUTUAL FUNDS
SCHEDULES OF INVESTMENTS AT DECEMBER 31, 1997
NUMBER VALUE
OF SHARES SECURITY (000'S)
- --------- -------- -------
GROWTH (continued)
INTERMEDIATE GOODS & SERVICES
BASIC INDUSTRIES (3.7%)
18,800 CalMat Co. ....................................... $ 524
6,500 *+KTI Inc .......................................... 107
32,500 Lyondell Petrochemical Co. ....................... 861
62,200 *+Waxman Industries Inc. ........................... 229
--------
1,721
--------
BUSINESS SERVICES (12.8%)
422,500 *+Advanced Promotion Technology Inc. ............... 4
13,500 *+Checkpoint Systems Inc. .......................... 236
5,000 +Compuware Corp ................................... 160
30,000 +Corrections Corp. of America ..................... 1,112
20,000 +Hadco Corp ....................................... 905
33,000 *+International Network Services ................... 763
12,000 +Keane Inc. ....................................... 488
72,500 +MoneyGram Payment Systems ........................ 779
18,000 +Solectron Corp ................................... 748
13,500 +Technology Solutions ............................. 356
15,000 +Wackenhut Corrections Corp. ...................... 403
--------
5,954
--------
TRANSPORTATION (1.9%)
47,500 +America West Holdings Corp Cl B .................. 885
--------
8,560
--------
INTEREST SENSITIVE
BANKS (3.6%)
32,500 +BankUnited Financial Corp Cl A ................... 501
7,500 Coastal Bancorp Inc. ............................. 262
5,500 Seacoast Banking ................................. 212
25,000 +Staten Island Bancorp Inc. ....................... 523
5,000 Washington Federal Inc. .......................... 157
--------
1,655
--------
INSURANCE (2.3%)
39,000 +Amerin Corp. ..................................... 1,092
--------
OTHER (1.8%)
10,000 +ADVO Inc. ........................................ 195
22,000 *+Affiliated Managers Group ........................ 638
--------
833
--------
3,580
--------
REAL ESTATE INVESTMENT TRUST
RESIDENTIAL (1.0%)
20,000 Mills Corp ....................................... 490
TOTAL COMMON STOCKS
(Cost $31,003) .................................. 37,078
PRINCIPAL
AMOUNT VALUE
(000'S) SECURITY (000'S)
- ------- -------- -------
GROWTH (continued)
REPURCHASE AGREEMENT (34.9%)
(Cost $16,253)
$16,253 UBS Securities 6.250% Due 1/2/98
with maturity value of $16,259
(Collateralized by $16,546
U.S. Treasury Note
9.000% Due 11/15/18) ........................... $16,253
--------
TOTAL INVESTMENTS (114.5%)
(Cost $47,256) ................................ 53,331
LIABILITIES IN EXCESS OF
OTHER ASSETS (-14.5%) ......................... (6,774)
--------
TOTAL NET ASSETS (100.0%) ....................... $46,557
========
+ Non-income producing security.
* Security out on loan.
(A) SEC Rule 144 security. Requires registration under the SEC Act of 1933
before it can be offered for public sale.
See notes to financial statements Page 17
<PAGE>
WEISS, PECK & GREER MUTUAL FUNDS
SCHEDULES OF INVESTMENTS AT DECEMBER 31, 1997
NUMBER VALUE
OF SHARES SECURITY (000'S)
- --------- -------- -------
QUANTITATIVE EQUITY
COMMON STOCKS (95.4%)
BASIC MATERIALS (3.5%)
10,900 Dow Chemical Co. ................................. $1,106
14,800 Fort James Corp. ................................. 566
10,000 Rohm & Haas Co. .................................. 958
24,200 USX US Steel Group ............................... 756
--------
3,386
--------
CONSUMER CYCLICAL (11.3%)
19,700 Brunswick Corp ................................... 597
17,062 +Cendant Corp. .................................... 587
45,600 Darden Restaurants Inc. .......................... 570
40,300 Dayton Hudson Corp. .............................. 2,720
7,600 +Federated Department Stores Inc. ................. 327
37,900 Ford Motor Co. ................................... 1,845
6,400 King World Productions Inc. ...................... 370
10,400 Masco Corp ....................................... 529
16,500 New York Times Co Cl A ........................... 1,091
25,600 TJX Companies Inc. ............................... 880
10,600 VF Corp .......................................... 488
8,900 Walt Disney Co. .................................. 882
--------
10,886
--------
CONSUMER NON - CYCLICAL (11.0%)
20,200 American Stores Co. .............................. 415
28,539 Archer Daniels Midland Co. ....................... 619
14,400 Campbell Soup Co. ................................ 837
7,800 Clorox Co. ....................................... 617
10,600 Colgate- Palmolive Co. ........................... 779
16,900 Coors (Adolph) Cl B .............................. 562
9,900 Dean Foods ....................................... 589
14,300 Heinz H J Co. .................................... 727
13,300 Kellogg Co. ...................................... 660
19,000 Newell Co. ....................................... 807
28,400 PepsiCo, Inc. .................................... 1,035
30,600 Philip Morris Companies Inc. ..................... 1,387
8,500 Procter & Gamble Co. ............................. 678
16,100 Quaker Oats Co. .................................. 849
--------
10,561
--------
ENERGY (8.2%)
6,400 Coastal Corp. .................................... 396
62,000 Exxon Corp. ...................................... 3,794
31,700 Royal Dutch Petroleum Co ADR ..................... 1,718
6,600 Schlumberger Ltd. ................................ 531
18,000 Texaco Inc. ...................................... 979
8,600 Tidewater Inc. ................................... 474
--------
7,892
--------
NUMBER VALUE
OF SHARES SECURITY (000'S)
- --------- -------- -------
QUANTITATIVE EQUITY (continued)
FINANCIAL (16.7%)
13,700 Allstate Corp .................................... $1,245
19,400 American General Corp ............................ 1,049
17,600 BankAmerica Corp. ................................ 1,285
13,300 Bankers Trust N.Y. Corp. ......................... 1,495
11,100 Chase Manhattan Corp. ............................ 1,215
23,000 Comdisco Inc. .................................... 769
12,900 Comerica Inc. .................................... 1,164
18,400 Fannie Mae ....................................... 1,050
14,400 First Chicago NBD ................................ 1,202
5,100 Golden West Financial ............................ 499
10,400 Marsh & McLennan Companies ....................... 776
22,935 Morgan Stanley Dean Witter Discover .............. 1,356
20,900 Southtrust Corp. ................................. 1,326
29,100 Travelers Group Inc. ............................. 1,568
--------
15,999
--------
HEALTH (10.7%)
17,900 Abbot Laboratories ............................... 1,174
10,500 Bristol-Myers Squibb Co. ......................... 994
38,200 Lilly (Eli) & Co. ................................ 2,660
15,100 Merck & Co. ...................................... 1,604
26,600 Schering-Plough Corp. ............................ 1,652
15,500 +Tenet Healthcare Corp. ........................... 513
10,700 Warner Lambert Co. ............................... 1,327
8,200 +Wellpoint Health Networks ........................ 346
--------
10,270
--------
INDUSTRIALS (10.1%)
16,900 Browning Ferris Industries Inc. .................. 625
6,700 Centex Corp. ..................................... 422
12,800 Cooper Industries Inc. ........................... 627
10,100 Deere & Co. ...................................... 589
12,700 Deluxe Corp. ..................................... 439
39,200 General Electric Co. ............................. 2,876
11,600 Ingersoll Rand Co. ............................... 470
17,900 International Paper Co. .......................... 772
15,100 Lubrizol Corp. ................................... 557
25,050 Parker Hannifin Corp. ............................ 1,149
11,500 Textron Inc. ..................................... 719
7,400 Tribune Co. ...................................... 461
-------
9,706
--------
TECHNOLOGY (19.2%)
14,700 +Airtouch Communications,Inc ...................... 611
33,400 Ameritech Corp. .................................. 2,689
37,600 BellSouth Corp. .................................. 2,117
14,750 Compaq Computer Corp. ............................ 833
9,300 Computer Associates International Inc. ........... 492
4,900 Eaton Corp. ...................................... 437
Page 18 See notes to financial statements
<PAGE>
WEISS, PECK & GREER MUTUAL FUNDS
SCHEDULES OF INVESTMENTS AT DECEMBER 31, 1997
NUMBER VALUE
OF SHARES SECURITY (000'S)
- --------- -------- -------
QUANTITATIVE EQUITY (continued)
10,200 General Dynamics Corp. ........................... $ 882
13,800 Harris Corp. ..................................... 633
14,800 Hewlett Packard Co. .............................. 925
6,000 Honeywell Inc. ................................... 411
17,500 Intel Corp. ...................................... 1,229
21,300 International Business Machines Corp. ............ 2,227
17,100 +Microsoft Corp. ................................. 2,210
16,900 +National Semiconductor .......................... 438
9,200 Pitney Bowes Inc. ................................ 827
13,100 Texas Instruments Inc. ........................... 590
11,600 Xerox Corp. ...................................... 856
--------
18,407
--------
TRANSPORTATION (1.1%)
6,000 Burlington Northern Santa Fe ..................... 558
3,900 Delta Air Lines, Inc. ............................ 464
--------
1,022
--------
UTILITIES (3.6%)
16,900 AT & T Corp. ..................................... 1,035
19,200 Edison International ............................. 522
7,400 FPL Group Inc. ................................... 438
25,200 GPU Inc. ......................................... 1,062
14,100 Washington Gas Light Co. ......................... 436
--------
3,493
--------
TOTAL COMMON STOCKS
(Cost $70,680) 91,622
--------
PRINCIPAL
AMOUNT
- ------
(000's)
U.S. GOVERNMENT
OBLIGATION (4.8%)
(Cost $4,586)
$4,600 * US Treasury Bill Due 1/22/98 ..................... 4,586
--------
TOTAL INVESTMENTS (100.2%)
(Cost $75,266) ................................. 96,208
LIABILITIES IN EXCESS OF
OTHER ASSETS (-0.2%) ........................... (153)
--------
TOTAL NET ASSETS (100.0%) ........................ $96,055
========
NUMBER OF UNREALIZED
CONTRACTS APPRECIATION
- --------- ------------
FUTURES PURCHASED
(Aggregated futures amount $4,376)
18 March S&P 500 Futures ............................ 30
--------
+ Non-income producing security.
* Securities pledged in whole or part for futures purchased.
NUMBER VALUE
OF SHARES SECURITY (000'S)
- --------- -------- -------
INTERNATIONAL
COMMON STOCKS (109.6%)
AUSTRALIA (2.2%)
3,700 Brambles Industries Ltd. ......................... $ 73
4,000 Broken Hill Property ............................. 37
5,600 National Australia Bank Ltd. ..................... 78
--------
188
--------
AUSTRIA (1.5%)
915 OMV .............................................. 127
BELGIUM (1.1%)
215 Generale De Banque ............................... 94
DENMARK (1.0%)
1,330 Tele Danmark `B' ................................. 82
FRANCE (13.6%)
1,421 Alcatel Alsthom .................................. 181
2,282 Axa Uap .......................................... 176
975 Christian Dior ................................... 100
1,396 Eaux (Cie Generale Des) .......................... 195
1,614 Havas ............................................ 116
1,885 Lafarge .......................................... 124
921 Societe Generale ................................. 125
1,340 Total SA - Cl B .................................. 146
--------
1,163
--------
GERMANY (11.0%)
6,371 Commerzbank AG ................................... 251
2,815 Daimler Benz AG .................................. 197
676 Preussag AG ...................................... 206
534 Viag AG .......................................... 288
--------
942
--------
HONG KONG (2.2%)
7,000 Cheung Kong Holdings ............................. 46
34,400 Hong Kong & China Gas ............................ 66
11,000 Sun Hung Kai Properties .......................... 77
--------
189
--------
ITALY (5.0%)
43,393 Fiat Spa ......................................... 126
98,000 Istituto Nazionale Delle
Assicurazione ............................... 199
15,835 Telecom Italia ................................... 101
--------
426
--------
JAPAN (23.7%)
6,000 The Bank of Tokyo-Mitsubishi ..................... 83
440 Canon Sales Co. .................................. 5
80 Circle K Japan Co. ............................... 4
4,000 Eisai Co. ........................................ 61
See notes to financial statements Page 19
<PAGE>
WEISS, PECK & GREER MUTUAL FUNDS
SCHEDULES OF INVESTMENTS AT DECEMBER 31, 1997
NUMBER VALUE
OF SHARES SECURITY (000'S)
- --------- -------- -------
INTERNATIONAL (continued)
2,000 Fuji Photo Film Ltd. ............................. $ 76
8,000 Fujikura Cable ................................... 53
5,000 Fujitsu Ltd. ..................................... 54
15 Japan Tobacco Inc. ............................... 106
6,000 Kinden Corp. ..................................... 64
1,000 Mabuchi Motor Co. Ltd. ........................... 51
4,000 Matsushita Electric Industrial ................... 58
2,700 Meitec ........................................... 76
7,000 Mitsui Fudosan Co. ............................... 68
9,000 Mitsui & Co. ..................................... 53
5,000 Mycal Corp. ...................................... 42
800 Nintendo Co.,Ltd ................................. 79
12,000 Nippon Express Co. ............................... 60
22 Nippon Telegraph & Telephone Corp. ............... 189
260 Nippon Television Network ........................ 76
13,000 Nissan Motor Co. ................................. 54
5,000 Nitto Denko Corp. ................................ 86
4,000 Nomura Securities Co. ............................ 53
6,000 Ricoh ............................................ 74
9,000 Sanwa Shutter Corp. .............................. 45
1,000 Secom Co. Ltd. ................................... 64
5,000 Seiyo Food Systems ............................... 18
900 SMC Corp. ........................................ 79
900 Sony Corp. ....................................... 80
3,000 Taisho Pharmaceutical ............................ 77
13,000 Toray Industries Inc. ............................ 58
3,000 Toyota Motor Co. ................................. 86
--------
2,032
--------
NETHERLANDS (4.3%)
11,215 Elsevier ......................................... 181
1,364 K.L.M ............................................ 51
2,315 Philips Electronics .............................. 139
--------
371
--------
SINGAPORE (0.3%)
3,000 D.B.S. Land ...................................... 26
SPAIN (4.8%)
2,107 Argentaria CMN ................................... 128
8,340 Endesa SA ........................................ 148
3,100 Repsol ........................................... 132
--------
408
--------
SWEDEN (2.9%)
2,843 Ericsson Tele B .................................. 107
2,749 Pharmacia & Upjohn ............................... 101
3,255 Stora Kopparberg Cl A ............................ 41
--------
249
--------
NUMBER VALUE
OF SHARES SECURITY (000'S)
- --------- -------- -------
INTERNATIONAL (continued)
SWITZERLAND (7.4%)
143 Nestle ........................................... $ 214
154 Novartis AG ...................................... 250
120 Schweizerische Bankgeselschaft ................... 173
--------
637
--------
UNITED KINGDOM (28.6%)
5,710 Abbey National ................................... 102
29,325 ASDA Group ....................................... 86
4,560 Barclays ......................................... 121
3,752 Bass ............................................. 58
7,442 BBA Group ........................................ 50
3,498 British Aerospace ................................ 100
4,536 British Airways .................................. 42
5,940 British Land Co. ................................. 66
11,821 British Petroleum Co. ............................ 155
9,578 British Telecomm ................................. 75
8,400 Cable & Wireless ................................. 74
55,148 +Centrica ......................................... 81
5,294 Compass Group .................................... 65
5,875 Diageo PLC ....................................... 54
4,491 Emap ............................................. 67
5,058 General Accident ................................. 88
12,989 General Electric ................................. 84
4,387 Glaxo Wellcome ................................... 104
4,652 Granada Group .................................... 71
3,571 HSBC Holdings .................................... 91
4,629 Kingfisher ....................................... 65
5,207 Next ............................................. 59
5,620 Powergen ......................................... 73
7,004 Prudential Corp. ................................. 84
4,444 Reuters .......................................... 49
22,272 Shell Transport & Trading ........................ 161
9,786 Smithkline Beachman .............................. 100
13,227 Tomkins .......................................... 63
7,115 Wolseley ......................................... 56
2,849 Zeneca Group ..................................... 100
--------
2,444
--------
TOTAL COMMON STOCKS
(Cost $8,059) 9,378
--------
NUMBER OF
WARRANTS
- --------
WARRANTS (0.0%)
(Cost $1)
FRANCE (0.0%)
1,134 Eaux (CIE Generale Des) .......................... 1
--------
Page 20 See notes to financial statements
<PAGE>
WEISS, PECK & GREER MUTUAL FUNDS
SCHEDULES OF INVESTMENTS AT DECEMBER 31, 1997
PRINCIPAL
AMOUNT VALUE
(000'S) SECURITY (000'S)
- ------- -------- -------
INTERNATIONAL (continued)
CONVERTIBLE BONDS (1.5%)
JAPAN (1.5%)
$9,000 Sumitomo Bank International Finance
0.75% Due 5/31/01 .............................. $72
7,500 TTB Finance Cayman
0.75% Due 9/29/49 .............................. 58
--------
TOTAL CONVERTIBLE BONDS
(Cost $168) .............................. 130
--------
TOTAL INVESTMENTS (111.1%)
(Cost $8,228) ............................ 9,509
--------
LIABILITIES IN EXCESS OF
OTHER ASSETS (-11.1%) .................... (954)
--------
TOTAL NET ASSETS (100.0%) ........................ $8,555
========
+ Non-income producing security.
INTERNATIONAL FUND
INDUSTRY CONCENTRATIONS
% OF NET VALUE
ASSETS (000'S)
------ -------
14.5% Banking .......................................... $1,242
9.3% Health & Personal Care ........................... 793
8.9% Energy Sources ................................... 758
7.7% Utilties - Electrical & Gas ...................... 656
7.3% Telecommunications ............................... 628
6.6% Business & Public Services ....................... 568
6.4% Insurance ........................................ 547
5.4% Automobiles ...................................... 463
4.7% Broadcasting & Publishing ........................ 400
4.0% Multi - Industry ................................. 340
3.7% Electrical & Electronics ......................... 316
3.2% Appliances & Household Durables .................. 277
3.1% Merchandising .................................... 270
3.0% Real Estate ...................................... 257
3.0% Recreation, Other Consumer ....................... 255
2.5% Food & Household Products ........................ 218
2.5% Financial Services ............................... 213
2.1% Building Materials ............................... 180
1.9% Beverages & Tobacco .............................. 160
1.7% Industrial Components ............................ 148
1.5% Data Processing & Reproduction ................... 128
1.2% Aerospace & Military Technology .................. 100
1.1% Transportation - Airlines ........................ 93
1.0% Miscellaneous Materials and Commodities .......... 86
0.9% Machinery & Engineering .......................... 79
0.7% Construction & Housing ........................... 64
0.7% Transportation - Road & Railway .................. 60
0.7% Leisure & Tourism ................................ 58
0.7% Chemicals ........................................ 58
0.6% Wholesale & International Trade .................. 53
0.5% Forest Products & Paper .......................... 41
111.1% Total Investments ................................ 9,509
--------
-11.1% Liabilities in Excess of
Other Assets .................................. (954)
--------
100.0% Total Net Assets ................................. $8,555
========
See notes to financial statements Page 21
<PAGE>
WEISS, PECK & GREER MUTUAL FUNDS
SCHEDULES OF INVESTMENTS AT DECEMBER 31, 1997
PRINCIPAL
AMOUNT VALUE
(000'S) SECURITY (000's)
- ------- -------- -------
GOVERNMENT SECURITIES
U.S TREASURY & GOVERNMENT
AGENCY SECURITIES (133.5%)
U.S. GOVERNMENT SECURITIES (50.8%)
U.S. TREASURY BOND (5.6%)
$5,750 6.375% Due 8/15/27 ............................... $6,065
U.S. TREASURY NOTES (45.2%)
3,505 5.625% Due 11/30/98 .............................. 3,505
2,975 5.875% Due 7/31/99 ............................... 2,983
7,395 5.750% Due 9/30/99 ............................... 7,405
1,485 6.375% Due 3/31/01 ............................... 1,513
5,870 6.500% Due 5/31/01 ............................... 6,009
26,335 6.500% Due 10/15/06 .............................. 27,574
--------
48,989
--------
TOTAL U.S. GOVERNMENT SECURITIES
(Cost $54,947) ................................. 55,054
--------
U.S. GOVERNMENT AGENCIES (82.7%)
FEDERAL HOME LOAN MORTGAGE
Corporation-Pass Through
(FREDDIE MAC) (6.1%)
635 7.000% Due 1/15/08
Series 1460 I .................................. 658
1,775 7.000% Due 3/15/08
Series 1472 JC ................................. 1,852
1,311 7.000% Due 5/1/09 ................................ 1,339
2,660 7.500% Due 8/15/24
Series 1900 M .................................. 2,734
--------
6,583
--------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION (FNMA) (21.1%)
1,500 9.000% Due 11/1/10 ............................... 1,589
4,031 7.000% Due 1/1/11 (c) ............................ 4,101
5,620 6.500% Due 1/1/13 (c) ............................ 5,629
11,480 7.500% Due 1/1/13-1/1/28 (c) ..................... 11,555
--------
22,874
--------
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION (GNMA) (21.3%)
8,157 *7.500% Due 9/15/07-8/15/17 ....................... 8,433
14,575 7.000% Due 1/15/28 (c) ........................... 14,698
--------
23,131
--------
PRINCIPAL
AMOUNT VALUE
(000'S) SECURITY (000'S)
- ------- -------- -------
GOVERNMENT SECURITIES (continued)
FEDERAL HOME LOAN BANKS
(FHLB) (25.9%)
$5,500 *Discount Note Due 1/2/98 ......................... $5,499
5,870 *Discount Note Due 1/14/98 ........................ 5,858
5,620 *Discount Note Due 1/16/98 ........................ 5,607
11,210 *Discount Note Due 1/22/98 ........................ 11,173
--------
28,137
--------
FEDERAL HOME LOAN MORTGAGE
CORPORATION (FREDDIE MAC) (8.3%)
5,610 Discount Note Due 1/20/98 ........................ 5,594
3,365 Discount Note Due 1/22/98 ........................ 3,354
--------
8,948
--------
TOTAL U.S. GOVERNMENT AGENCIES
(Cost $89,286) 89,673
--------
TOTAL INVESTMENTS (133.5%)
(Cost $144,233) 144,727
LIABILITIES IN EXCESS OF
OTHER ASSETS (-33.5%) (36,284)
--------
TOTAL NET ASSETS (100.0%) $108,443
--------
* Securities pledged in whole or part as collateral for when issued
securities.
(c) Securities purchased on a when issued basis.
Page 22 See notes to financial statements
<PAGE>
WEISS, PECK & GREER MUTUAL FUNDS
SCHEDULES OF INVESTMENTS AT DECEMBER 31, 1997
PRINCIPAL
AMOUNT VALUE
(000'S) SECURITY (000'S)
- ------- -------- -------
INTERMEDIATE MUNICIPAL BOND
ARIZONA (0.4%)
$100 Pinal County Arizona
Industrial Development Authority
4.950% Due 12/1/09 (a) ......................... $ 100
CALIFORNIA (8.9%)
565 California Educational Facilities
Authority Revenue Refunding
College of Chiropractic
4.700% Due 11/1/01 ............................. 566
1,000 San Francisco California
City & County Refunding
Series 1 (FGIC Insured)
5.000% Due 6/15/20 ............................. 1,030
480 Simi Valley USA California
University School District
Certificates of Participation
Refunding & Capital
Improvement Projects
(AMBAC Insured)
4.800% Due 8/1/10 .............................. 486
COLORADO (1.3%)
100 Adams County Colorado
School District No. 12 Series D
General Obligation
(MBIA Insured )
5.450% Due 12/15/06 ............................ 108
45 Brighten Colorado
General Obligation
(FGIC Insured )
Zero Coupon Due 12/1/00 ........................ 40
150 Westminster Colorado Multifamily
Revenue Refunding Housing
Oasis Wexford Apartments Project
5.350% Due 12/1/25 ............................. 157
CONNECTICUT (1.5%)
85 Connecticut State Health & Education
Facilities Authority Revenue
Sacred Heart University Series D
4.800% Due 7/1/99 .............................. 86
95 Connecticut State Health & Education
Facilities Authority Revenue
Sacred Heart University Series D
5.200% Due 7/1/01 .............................. 97
PRINCIPAL
AMOUNT VALUE
(000'S) SECURITY (000's)
- ------- -------- -------
INTERMEDIATE MUNICIPAL BOND (continued)
$100 Connecticut State Health & Education
Facilities Authority Revenue
Sacred Heart University Series D
5.300% Due 7/1/99 .............................. $103
50 Stratford Connecticut
General Obligation Bond
(FGIC Insured)
7.000% Due 6/15/04 ............................. 58
DISTRICT OF COLUMBIA (1.3%)
300 District of Columbia
General Obligation Bond
5.000% Due 6/1/01 .............................. 303
FLORIDA (7.7%)
20 Florida State Pollution Control
Revenue Series F
5.500% Due 7/1/98 .............................. 20
340 Jacksonville Florida Electric
Authority Revenue
6.000% Due 7/1/01 .............................. 354
435 Pace Property Finance Authority
Florida Utility System Revenue
Refunding & Improvement
(AMBAC Insured)
5.000% Due 9/1/08 .............................. 445
455 Pace Property Finance Authority
Florida Utility System Revenue
Refunding & Improvement
(AMBAC Insured)
5.100% Due 9/1/09 .............................. 466
500 St. John's County Florida
Water & Sewer Revenue
(MBIA Insured)
5.250% Due 6/1/10 .............................. 529
GEORGIA (2.0%)
400 Georgia State Series D
General Obligation
6.700% Due 8/1/10 .............................. 478
ILLINOIS (11.6%)
240 Chicago Illinois
Water Revenue Refunding
(AMBAC Insured)
5.600% Due 11/1/04 ............................. 257
See notes to financial statements Page 23
<PAGE>
WEISS, PECK & GREER MUTUAL FUNDS
SCHEDULES OF INVESTMENTS AT DECEMBER 31, 1997
PRINCIPAL
AMOUNT VALUE
(000'S) SECURITY (000'S)
- ------- -------- -------
INTERMEDIATE MUNICIPAL BOND (continued)
$875 Cook County Illinois School District
School District No. 99
(FGIC Insured)
8.500% Due 12/1/01 ............................. $1,011
100 Cook County Illinois School District
School District No. 99
(FGIC Insured)
8.400% Due 1/1/01 .............................. 111
100 Cook & DuPage Counties, Illinois
Combined School District - B
(FGIC Insured)
Zero Coupon Due 12/1/05 ........................ 70
307 Illinois Health Facilities
Authority Revenue Series A
(MBIA Insured)
7.900% Due 8/15/03 ............................. 312
100 Illinois State General Obligation
5.700% Due 6/1/98 ............................ 101
750 Springfield Illinois Electric Revenue
6.500% Due 3/1/08 .............................. 863
INDIANA (1.9%)
410 La Porte Indiana Economic
Development Revenue
Boise Cascade Corp. Project
Escrowed to Maturity
7.375% Due 6/1/01 .............................. 444
IOWA (0.5%)
100 Iowa Student Loan Liquidity Corp.
Student Loan Revenue
6.450% Due 3/1/02 ............................... 107
KANSAS (1.0%)
225 Leavenworth County Kansas
Unified School District
(FHA Insured)
5.150% Due 9/1/13 .............................. 228
KENTUCKY (2.5%)
180 Dayton Kentucky Elderly
Housing Speers Court
(FHA Insured)
5.350% Due 9/1/05 .............................. 188
PRINCIPAL
AMOUNT VALUE
(000'S) SECURITY (000's)
- ------- -------- -------
INTERMEDIATE MUNICIPAL BOND (continued)
$385 Kentucky State Turnpike Authority
Toll Road Revenue Series A
8.500% Due 7/1/04 .............................. $393
MASSACHUSETTS (4.1%)
250 Massachusetts Bay
Transportation Authority
General Transportation System
5.300% Due 3/1/05 .............................. 264
500 Massachusetts State
Consolidated Loan Series D
General Obligation
5.250% Due 11/1/12 ............................. 513
175 New England Education Loan
Marketing Corp. Series E
5.000% Due 7/1/99 .............................. 178
MICHIGAN (1.9%)
155 Ferris St. College
7.500% Due 8/15/03 ............................. 167
240 Michigan State Building Authority
Chippewa Correctional Facilities
Escrowed to Maturity
7.250% Due 10/1/04 ............................. 281
MINNESOTA (0.4%)
100 St. Paul Minnesota Port Authority
Commercial Development General
Revenue Fort Rd Med/Irvine
(Assets Guaranty Insured)
7.500% Due 9/1/02 .............................. 104
NEBRASKA (1.2%)
245 Nebraska Investment Finance
Authority Multi Family Revenue
Refunding Housing Wycliffe West
5.500% Due 12/1/25 ............................. 255
20 Nebraska Investment Finance
Authority Single Family
Mortgage Series C
6.500% Due 9/15/14 ............................. 21
NEVADA (1.5%)
185 Nevada Housing Division
Single Family Program
5.550% Due 10/1/02 ............................. 193
Page 24 See notes to financial statements
<PAGE>
WEISS, PECK & GREER MUTUAL FUNDS
SCHEDULES OF INVESTMENTS AT DECEMBER 31, 1997
PRINCIPAL
AMOUNT VALUE
(000'S) SECURITY (000's)
------- -------- -------
INTERMEDIATE MUNICIPAL BOND (continued)
$150 Nevada State Muni Bond
Bank Project 38-39A
Escrowed to Maturity
Refunded
6.400% Due 7/1/05 .............................. $164
NEW JERSEY (2.5%)
340 Arlington Arms Financing Corp.
New Jersey Mortgage Revenue
Arlington Arms Apartments
(FHA Insured)
10.250% Due 3/1/25 ............................. 351
240 Gateway New Jersey Housing
Development Corp
Revenue Bond Section 8
(FHA Insured)
10.500% Due 8/1/25 ............................. 247
NEW YORK (5.1%)
100 Hempstead Town New York
General Obligation, Series B
(AMBAC Insured)
6.500% Due 1/1/12 .............................. 118
505 New York State Environmental
Facility Corp., Pollution
Control Revenue Series B
5.300% Due 12/15/10 ............................ 530
210 New York State Medical
Care Facilities Finance Agency
Revenue (FHA Insured)
7.875% Due 2/15/07 ............................. 215
50 New York State Urban
Development Correctional
Facilities Series G
7.100% Due 1/1/03 .............................. 53
250 Onondaga County New York
General Obligation Bond
5.875% Due 2/15/09 ............................. 278
NORTH CAROLINA (2.5%)
500 Surry County North Carolina
Pollution Control Finance Authority
9.250% Due 12/1/02 ............................. 588
PRINCIPAL
AMOUNT VALUE
(000'S) SECURITY (000'S)
- ------- -------- -------
INTERMEDIATE MUNICIPAL BOND (continued)
OHIO (0.1%)
$145 Ohio Housing Financing Agency
Single Family Mortgage
Series 1985A (FGIC Insured)
Zero Coupon Due 1/15/15 ........................ $26
OKLAHOMA (3.8%)
30 Enid Oklahoma Hospital
Authority (St. Mary's Hospital)
Escrowed to Maturity
8.000% Due 7/1/98 .............................. 30
1,625 Oklahoma County
Oklahoma Home Finance Authority
Single Family Refunding
Prerefunded
Zero Coupon Due 7/1/12 ......................... 642
200 Tulsa Oklahoma Metropolitan
Utility Authority Revenue
7.000% Due 2/1/03 ............................. 216
PENNSYLVANIA (6.9%)
500 Hempfield Pennsylvania
School District Refunding
6.700% Due 10/15/99 ............................ 504
840 Lancaster County Pennsylvania
General Obligation Bond
Series B (AMBAC Insured)
4.100% Due 11/1/03 ............................. 834
250 Pennsylvania State Industrial
Development Authority
(AMBAC Insured)
5.800% Due 7/1/09 .............................. 276
SOUTH CAROLINA (3.5%)
70 Piedmont Municipal Power Agency
South Carolina Electric Revenue
Series A Escrowed to Maturity
(FGIC Insured)
6.125% Due 1/1/07 .............................. 79
430 Piedmont Municipal Power Agency
South Carolina Electric Revenue
Series A (FGIC Insured)
6.125% Due 1/1/07 .............................. 484
See notes to financial statements Page 25
<PAGE>
WEISS, PECK & GREER MUTUAL FUNDS
SCHEDULES OF INVESTMENTS AT DECEMBER 31, 1997
PRINCIPAL
AMOUNT VALUE
(000'S) SECURITY (000's)
- ------- -------- -------
INTERMEDIATE MUNICIPAL BOND (continued)
$230 Piedmont Municipal Power Agency
South Carolina Electric Refunding
Escrowed to Maturity
(MBIA Insured)
6.250% Due 1/1/09 .............................. $262
TEXAS (19.9%)
500 Cypress-Fairbanks Texas
General Obligation
Independent School District
7.300% Due 2/15/07 ............................. 603
500 Deer Park Texas Independent
School District School Building
6.375% Due 2/15/07 .............................. 574
350 El Paso Texas General Obligation
(FGIC Insured)
7.000% Due 8/15/06 .............................. 415
100 Garland Texas Independent
School District Series A
General Obligation
Zero Coupon Due 2/15/99 ........................ 96
1,100 Harris County Texas Flood District
General Obligation
Zero Coupon Due 10/1/06 ........................ 642
265 Lower Colorado River Authority
Prerefunded Revenue
6.250% Due 5/1/07 .............................. 299
1,000 Port of Houston Texas
General Obligation Bond
5.100% Due 10/1/11 ............................. 1,019
1,000 San Antonio Texas Electric & Gas
5.250% Due 2/1/10 .............................. 1,040
UTAH (1.6%)
380 Salt Lake City Utah Water
Conservancy District Revenue
Refunding Series A
Escrowed to Maturity
(MBIA Insured)
10.875% Due 10/1/02 ........................... 384
PRINCIPAL
AMOUNT VALUE
(000'S) SECURITY (000'S)
- ------- -------- -------
INTERMEDIATE MUNICIPAL BOND (continued)
VIRGINIA (2.4%)
$500 Brunswick County Virginia
Industrial Development Authority
Correctional Facilities Lease
(MBIA Insured)
5.650% Due 7/1/09 .............................. $544
100 Virginia State Housing
Development Authority
Multi Family Series A
Zero Coupon Due 11/1/17 ........................ 19
WASHINGTON (2.6%)
250 Lynnwood Washington Water &
Sewer Revenue Refunding
(FGIC Insured)
6.000% Due 12/1/07 ............................. 280
300 Washington State Motor Vehicle
Tax General Obligation
6.200% Due 3/1/08 .............................. 340
TOTAL INVESTMENTS (100.6%)
(Cost $22,808) ................................ 23,639
LIABILITIES IN EXCESS
OF OTHER ASSETS (-0.6%) ........................ (131)
-------
TOTAL NET ASSETS (100.0%) ....................... $23,508
=======
(a) Interest rate subject to change approximately every 1 to 180 days. Principal
payable on demand at periodic intervals at the Fund's option.
Page 26 See notes to financial statements
<PAGE>
WEISS, PECK & GREER MUTUAL FUNDS
SCHEDULES OF INVESTMENTS AT DECEMBER 31, 1997
PRINCIPAL
AMOUNT VALUE
(000'S) SECURITY (000's)
- ------- -------- -------
GOVERNMENT MONEY MARKET
U.S. GOVERNMENT AGENCY
OBLIGATIONS (78.0%)
Federal Farm Credit Bank (7.2%)
$5,000 Discount Note Due 1/6/98 ......................... $4,996
5,000 Discount Note Due 1/26/98 ........................ 4,980
5,000 Discount Note Due 2/3/98 ......................... 4,974
-------
14,950
-------
FEDERAL HOME LOAN BANK (70.8%)
10,000 Discount Note Due 1/2/98 ......................... 9,999
5,000 Discount Note Due 1/5/98 ......................... 4,997
10,000 Discount Note Due 1/7/98 ......................... 9,991
5,000 Discount Note Due 1/8/98 ......................... 4,995
9,150 Discount Note Due 1/9/98 ......................... 9,139
4,487 Discount Note Due 1/12/98 ........................ 4,479
5,000 Discount Note Due 1/14/98 ........................ 4,990
5,000 Discount Note Due 1/16/98 ........................ 4,989
5,000 Discount Note Due 1/21/98 ........................ 4,985
4,400 Discount Note Due 1/23/98 ........................ 4,385
5,000 Discount Note Due 1/28/98 ........................ 4,979
10,000 Discount Note Due 1/30/98 ........................ 9,955
4,317 Discount Note Due 2/4/98 ......................... 4,295
2,590 Discount Note Due 2/5/98 ......................... 2,576
5,000 Discount Note Due 2/6/98 ......................... 4,973
5,000 Discount Note Due 2/11/98 ........................ 4,969
5,000 Discount Note Due 2/13/98 ........................ 4,967
5,000 Discount Note Due 2/18/98 ........................ 4,963
3,000 Discount Note Due 2/24/98 ........................ 2,975
10,000 Discount Note Due 2/25/98 ........................ 9,915
10,000 Discount Note Due 2/27/98 ........................ 9,912
5,000 Discount Note Due 3/6/98 ......................... 4,950
5,000 Discount Note Due 3/11/98 ........................ 4,946
5,000 Discount Note Due 3/12/98 ........................ 4,947
5,000 Discount Note Due 3/13/98 ........................ 4,945
-------
147,216
-------
TOTAL U.S. GOVERNMENT AGENCIES
(Cost $162,166) ................................ 162,166
-------
REPURCHASE AGREEMENT (10.6%)
(Cost $21,921)
21,921 UBS Securities 6.250% Due 1/2/98
with maturity value of $21,929
(Collateralized by $22,446
U.S. Treasury Bond
13.875% Due 5/15/11) ........................... 21,921
-------
TOTAL INVESTMENTS (88.6%)
(Cost $184,087) ................................ 184,087
OTHER ASSETS IN EXCESS
OF LIABILITIES (11.4%) .......................... 23,730
-------
TOTAL NET ASSETS (100.0%) ........................ $207,817
========
PRINCIPAL
AMOUNT VALUE
(000'S) SECURITY (000'S)
- ------- -------- -------
TAX FREE MONEY MARKET
ALABAMA (0.5%)
$600 McIntosh Alabama Industrial
Development Board Pollution
Control Revenue Ciba-Geigy
Corporate Project
5.100% Due 7/1/04 (a) (e) ...................... $600
ARIZONA (1.0%)
1,275 Tucson Industrial Development
Tucson City Center Parking
Garage Authority
4.275% Due 6/1/15 (a) (e) ...................... 1,275
COLORADO (3.0%)
100 Colorado Housing Finance Authority
Multi-Family Housing Revenue
(Grant Street Plaza)
4.275% Due 11/1/09 (a) (e) ..................... 100
1,700 Jefferson County Colorado
Industrial Development Revenue
Kindercare Centers Series C
3.800% Due 2/1/01 (a) (e) ...................... 1,700
2,000 Smith Creek Colorado
Metropolitan District Revenue
4.200% Due 10/1/35 (a) (e) ..................... 2,000
125 Summit County Colorado
Recreational Facilities Revenue
Refunding (Copper Mountain)
4.000% Due 4/1/17 (a) (e) ...................... 125
DELAWARE (3.1%)
4,000 Delaware Economic
Development Authority
Multifamily Housing Revenue
(School House Trust 1985)
3.900% Due 12/1/15 (a) (e) ..................... 4,000
DISTRICT OF COLUMBIA (1.1%)
700 District of Columbia General Fund
Series B-1 Recovery Bonds
5.000% Due 6/1/03 (a) (e) ...................... 700
800 District of Columbia General Fund
Series B-3 Recovery Bonds
5.000% Due 6/1/03 (a) (e) ...................... 800
See notes to financial statements Page 27
<PAGE>
WEISS, PECK & GREER MUTUAL FUNDS
SCHEDULES OF INVESTMENTS AT DECEMBER 31, 1997
PRINCIPAL
AMOUNT VALUE
(000'S) SECURITY (000'S)
- ------- -------- -------
TAX FREE MONEY MARKET (continued)
FLORIDA (2.1%)
$750 Florida Gulf Coast University
Certificates of Participation
Series 97
4.150% Due 8/1/27 (a) (e) ...................... $750
1,985 Orange County Florida
Industrial Development
Revenue Refunding
(Orlando-Hawaiian Motel)
3.900% Due 10/1/15 (a) (e) ..................... 1,985
GEORGIA (4.1%)
3,600 Burke County Georgia
Development Authority Pollution
Control Georgia Power Co.
5.050% Due 10/1/24 (a) (e) ...................... 3,600
1,200 Burke County Georgia Development
Authority Pollution Control
Revenue Georgia Power Co.
5.050% Due 9/1/25 (a) (e) ...................... 1,200
600 Gwinnet County Georgia
Development Authority Revenue
(Wesleyan School Project)
4.200% Due 3/1/17 (a) (e) ...................... 600
HAWAII (1.6%)
2,100 Hawaii State Housing Authority
Multifamily Revenue
(Tropicana West Project A)
3.800% Due 8/1/10 (a) (e) ...................... 2,100
ILLINOIS (9.9%)
200 Darien Industrial Development
Authority Kindercare Centers
Series C
3.900% Due 2/1/01 (a) (e) ...................... 200
800 Illinois Development Finance
Authority Industrial Development
Refunding Bond (Dart Container)
3.900% Due 8/1/25 (a) (e) ...................... 800
2,000 Illinois Educational Facilities
Authority Revenue
Field Museum National History
3.800% Due 11/1/25 (a) (e) ..................... 2,000
PRINCIPAL
AMOUNT VALUE
(000'S) SECURITY (000'S)
- ------- -------- -------
TAX FREE MONEY MARKET (continued)
$500 Illinois Health Facilities Authority
Revenue Central Health for
NW Community Hospital
4.000% Due 10/1/15 (a) (e) ..................... $500
3,500 Illinois Health Facilities Authority
Revenue Advocate Health Care
Series B
3.650% Due 8/15/22 (a) (e) ..................... 3,500
3,550 St. Clair County Illinois Industrial
Development Board
(Winchester Apartments Project
Series 94)
4.550% Due 10/1/15 (a) (e) ..................... 3,550
2,300 Troy Grove Illinois Refunding
(Unimin Corp.)
5.015% Due 5/1/10 (a) (d) ...................... 2,300
INDIANA (6.6%)
1,185 Benton Indiana Community School
Corp. Tax Anticipation Warrants
4.250% Due 12/31/98 ............................ 1,187
720 GAF Tax-Exempt Bond Grantor
Trust Series A
4.300% Due 4/1/08 (a) (e) ...................... 720
600 Hamilton County Indiana
Option Tax Revenue Series 1997
3.900% Due 7/10/98 ............................. 600
1,000 Indiana Bond Bank
Advance Funding Notes
4.000% Due 1/21/98 ............................. 1,000
1,500 Indiana Bond Bank
Advance Funding Notes
3.900% Due 2/2/98 .............................. 1,500
1,000 Indianapolis Indiana
Economic Development
(Joint & Clutch Series 1984)
3.995% Due 12/1/14 (a) (d) ..................... 1,000
1,500 New Albany Floyd County Indiana
School Building Corp
Bond Anticipation Notes
3.950% Due 9/1/98 .............................. 1,500
Page 28 See notes to financial statements
<PAGE>
WEISS, PECK & GREER MUTUAL FUNDS
SCHEDULES OF INVESTMENTS AT DECEMBER 31, 1997
PRINCIPAL
AMOUNT VALUE
(000'S) SECURITY (000'S)
- ------- -------- -------
TAX FREE MONEY MARKET (continued)
$1,090 St Joseph County Indiana
Judgement Funding General
Obligation Bond
4.000% Due 6/30/98 ............................. $1,090
IOWA (0.5%)
600 Iowa Higher Education Loan Authority
Revenue (Palmer Chiropractic)
5.350% Due 4/1/27 (a) (e) ...................... 600
KANSAS (1.5%)
2,000 Salina Kansas Central Mall
(Salina Central Mall Dillard)
4.400% Due 12/1/14 (a) (e) ..................... 2,000
KENTUCKY (3.3%)
820 Boone County Kentucky Industrial
Development Bond Revenue
(Jamike/Hemmer Project)
4.000% Due 2/1/06 (a) (e) ....................... 820
430 Elva-New Harmony Oak Level
Fire Protection District
4.220% Due 12/1/31 (a) (e) ..................... 430
230 Florence Kentucky Industrial
Building Revenue
(Florence Commercial Project)
3.900 % Due 6/1/07 (a) (e) ..................... 230
1,850 Fort Thomas Kentucky
Industrial Buildings Revenue
(Carmel Manor Project)
3.900% Due 10/1/14 (a) (e) ..................... 1,850
490 Harvey Brewers Fire Protection District
Kentucky Lease Revenue Program
4.220% Due 12/1/31 (a) (e) ..................... 490
490 Muhlenberg County Airport District
Development Area Financial Trust
4.220% Due 12/1/31 (a) (e) ..................... 490
MAINE (1.3%)
1,675 Maine Health and Higher Education
Facilities Authority
(VHA New England) Series E
3.700% Due 12/1/25 (a) (e) ..................... 1,675
PRINCIPAL
AMOUNT VALUE
(000'S) SECURITY (000'S)
- ------- -------- -------
TAX FREE MONEY MARKET (continued)
MASSACHUSETTS (0.8%)
$1,000 Brockton Massachusetts
Revenue Anticipation Notes
4.500% Due 6/30/98 ............................. $1,002
50 Massachusetts State Housing
Finance Agency Revenue
Residential Development Series C
5.600% Due 5/15/98 ............................. 50
MICHIGAN (9.8%)
960 Birmingham Michigan Economic
Development Corporation
(Brown Street Project 83)
4.525% Due 12/1/18 (a) (e) ..................... 960
2,100 Lansing Michigan Economic
Development Corp
(Atrium Office Building)
3.850% Due 5/1/15 (a) (e) ...................... 2,100
905 Leelanau County Michigan
Economic Development Corp
Revenue (American Community
Mutual Insurance Co Project)
3.850% Due 6/15/06 (a) (e) ..................... 905
1,015 Livonia Michigan Economic
Development Corporation
(American Community
Mutual Insurance)
3.850% Due 11/15/04 (a) (e) ..................... 1,015
200 McDonald Tax-Exempt
Mortgage Trust #1
4.500% Due 1/15/09 (a) (e) ..................... 196
200 Michigan State Job Development
Authority Revenue
(Kentwood Residence)
3.800% Due 11/1/14 (a) (e) ..................... 200
320 Michigan State Strategic Fund
Revenue (Tawas Bay
Association Project)
3.850% Due 12/1/01 (a) (e) ..................... 320
See notes to financial statements Page 29
<PAGE>
WEISS, PECK & GREER MUTUAL FUNDS
SCHEDULES OF INVESTMENTS AT DECEMBER 31, 1997
PRINCIPAL
AMOUNT VALUE
(000'S) SECURITY (000'S)
- ------- -------- -------
TAX FREE MONEY MARKET (continued)
$555 Michigan State Strategic Fund
Limited Obligation Revenue
Refunding (Woodbridge
Commercial Properties)
3.800% Due 10/15/05 (a) (e) .................... $555
2,200 Oakland County Michigan Economic
Development Corporation
(Corners Shopping Center)
3.700% Due 8/1/15 (a) (e) ...................... 2,200
3,500 Plainwell Michigan Economic
Development Corp
(Phillip Morris Inc.)
4.650% Due 11/1/07 (a) (e) ..................... 3,500
800 University of Michigan Hospital
5.100% Due 12/1/19 (a) (e) ...................... 800
MINNESOTA (2.3%)
1,120 Hutchinson Minnesota
Economic Development Authority
Revenue Refunding
(Developers Diversified)
3.850% Due 8/15/06 (a) (e) ..................... 1,120
1,109 International Falls Minnesota
Economic Development
Revenue (Developers Diversified
Limited Project)
4.370% Due 7/1/06 (a) (e) ...................... 1,109
750 Minneapolis Minnesota Series B
General Obligation
4.140% Due 12/1/05 (a) (e) ..................... 750
MISSISSIPPI (0.4%)
575 Desoto County Mississippi
Industrial Development
Revenue (American Soap
Company Project)
5.015% Due 12/1/08 (a) (d) ..................... 575
MISSOURI (4.2%)
3,600 Jackson County Industrial
Development Authority
YMCA Greater Kansas Project A
5.400% Due 11/1/16 (a) (e) ..................... 3,600
PRINCIPAL
AMOUNT VALUE
(000'S) SECURITY (000'S)
- ------- -------- -------
TAX FREE MONEY MARKET (continued)
$1,850 Kansas City Industrial Development
Authority Hospital Revenue
Baptist Health System Series A
4.000% Due 8/1/18 (a) (e) ...................... $1,850
NEW JERSEY (1.2%)
1,000 New Jersey Economic
Development Authority
(Genlyte-Union County Project)
4.000% Due 10/15/09 (a) (e) .................... 1,000
495 New Jersey Health Care Facilities
Finance Authority Revenue
Atlantic City Medical Center
Series B
8.375% Due 8/1/20 (b) .......................... 506
NEW YORK (2.7%)
1,000 Nassau County New York
Revenue Anticipation Notes
Series A
4.250% Due 3/10/98 ............................. 1,001
360 New York City Cultural Resources
Revenue Trust (Modern Museum)
4.500% Due 1/1/99 .............................. 362
500 New York, New York Municipal
Securities Trust Receipts
4.250% Due 2/1/19 (a) (e) ...................... 500
175 New York State Power Authority
General Purpose Revenue
(Series W Refunding)
6.200% Due 1/1/98 (b) .......................... 175
1,500 North Hempstead New York
Bond Anticipation Notes Series B
4.000% Due 1/29/98 ............................. 1,500
NORTH CAROLINA (0.1%)
100 Beaufort North Carolina
Industrial Facility Pollution Control
Revenue - Texas Gulf Inc 1985
4.250% Due 12/1/00 (a) (e) ..................... 100
OHIO (13.6%)
190 Brooklyn Ohio Industrial
Development Revenue Refunding
(Clinton Road Project A)
3.850% Due 12/1/00 (a) (e) ..................... 190
Page 30 See notes to financial statements
<PAGE>
WEISS, PECK & GREER MUTUAL FUNDS
SCHEDULES OF INVESTMENTS AT DECEMBER 31, 1997
PRINCIPAL
AMOUNT VALUE
(000'S) SECURITY (000'S)
- ------- -------- -------
TAX FREE MONEY MARKET (continued)
$690 Buckeye Ohio Tax Exempt
Mortgage Bond Trust Series C
4.260% Due 2/1/05 (a) (e) ...................... $690
940 Cincinnati & Hamilton County
Ohio Port Authority Revenue
Refunding (Tri State Building)
3.700% Due 9/1/99 (a) (e) ...................... 940
495 Citizens Federal Tax-Exempt
Mortgage Bond Trust
4.100% Due 9/1/08 (a) (e) ...................... 495
495 Clermont County Ohio Economic
Development Revenue
(John Q. Hammons Project)
3.800% Due 5/1/12 (a) (e) ...................... 495
225 Franklin County Ohio Industrial
Development Revenue
(GSW Building Association Ltd.)
3.800% Due 11/1/15 (a) (e) ..................... 225
1,665 Lakewood Ohio Hospital
Revenue (Hospital
Improvement Series 1983)
4.180% Due 11/1/10 (a) (e) ..................... 1,665
1,200 Lorain County Industrial
Development Authority - Living &
Hospital Facilities Elyria United
Methodist Village Project
4.000% Due 6/1/02 (a) (e) ...................... 1,200
916 McDonald Tax Exempt Mortgage
Trust #1
4.500% Due 1/15/09 (a) (e) ..................... 916
1,035 Montgomery County Ohio
Economic Development Revenue
(Wayne Town Association)
3.800% Due 10/1/99 (a) (e) ..................... 1,035
1,285 Ohio Company Tax Exempt
Mortgage Trust Series 2
4.140% Due 6/15/03 (a) (e) ..................... 1,285
1,270 Riverside Ohio Economic
Development Revenue
(Riverside Association Project)
3.800% Due 9/1/12 (a) (e) ...................... 1,270
PRINCIPAL
AMOUNT VALUE
(000'S) SECURITY (000'S)
- ------- -------- -------
TAX FREE MONEY MARKET (continued)
$930 Riverside Ohio Economic
Development Revenue
(Wright Point Association)
3.800% Due 9/1/10 (a) (e) ...................... $930
2,000 Stark County Ohio Health Care
Facilities (Canton Christian
Home Project) Series 90
3.750% Due 9/1/15 (a) (e) ...................... 2,000
555 Stark County Ohio Health Care
Facility (Canton Christian Home)
3.800% Due 9/15/16 (a) (e) ..................... 555
275 Stark County Ohio Industrial
Development Revenue
(Belpar Professional Building)
3.850% Due 10/1/04 (a) (e) ..................... 275
1,925 Stark County Ohio Industrial
Development Revenue
(Newmarket Parking Ltd.)
3.850% Due 11/1/14 (a) (e) ..................... 1,925
1,550 Willoughby Hills Ohio Industrial
Development Revenue
(Renaissance Properties Project)
3.850% Due 12/15/14 (a) (e) .................... 1,550
OKLAHOMA (1.0%)
1,250 Tulsa County Oklahoma Industrial
Development Authority
Healthcare Revenue
Laureate Psychiatric Center
3.900% Due 12/15/08 (a) (e) .................... 1,250
PENNSYLVANIA (7.5%)
815 Commonwealth Tax-Exempt
Mortgage Bond Trust Series A
4.050% Due 11/1/05 (a) (e) ..................... 815
196 McDonald Tax Exempt Mortgage
Trust #1
4.500% Due 1/15/09 (a) (e) ..................... 196
3,250 Montgomery County Pennsylvania
Higher Education & Loan
Series 96A
4.000% Due 8/1/21 (a) (e) ...................... 3,250
See notes to financial statements Page 31
<PAGE>
WEISS, PECK & GREER MUTUAL FUNDS
SCHEDULES OF INVESTMENTS AT DECEMBER 31, 1997
PRINCIPAL
AMOUNT VALUE
(000'S) SECURITY (000'S)
- ------- -------- -------
TAX FREE MONEY MARKET (continued)
$1,500 Montgomery County Pennsylvania
Higher Education & Loan
Series 97A
4.000% Due 4/1/17 (a) (e) ...................... $1,500
1,000 Pennsylvania State Higher Education
Facilities Authority Revenue
Carnegie Mellon University
Series A
4.850% Due 11/1/25 (a) (e) ..................... 1,000
1,200 Pennsylvania State Higher Education
Facilities Authority Revenue
Thomas Jefferson University
Series B
3.800% Due 6/1/07 (a) (e) ...................... 1,200
1,800 Schuylkill County Pennsylvania
Industrial Development Authority
Resource Recovery Revenue NE
Power Series A
3.700% Due 12/1/02 (a) (e) ..................... 1,800
TENNESSEE (3.3%)
375 Clarksville Refunding General
Obligation
5.100% Due 2/1/98 .............................. 375
2,700 Franklin County Tennessee Health
& Educational Facilities Revenue
(University of the South Sewanee)
3.800% Due 9/1/10 (a) (e) ...................... 2,700
1,280 GAF Tax-Exempt Bond Grantor
Trust Series A
4.300% Due 4/1/08 (a) (e) ...................... 1,280
TEXAS (7.1%)
1,400 Harris County Texas
Multifamily Housing Revenue
(Country Scape Development)
4.525% Due 4/1/07 (a) (e) ...................... 1,400
650 NCNB Pooled Tax Exempt Trust
Certificate of Participation
Series 1990-B
4.250% Due 11/15/20 (B)(a)(d) .................. 650
2,485 Port of Corpus Christi Texas
Industrial Development
(Lantana Corp. Project)
3.855% Due 7/1/02 (a) (e) ...................... 2,485
PRINCIPAL
AMOUNT VALUE
(000'S) SECURITY (000'S)
- ------- -------- -------
TAX FREE MONEY MARKET (continued)
$2,000 San Antonio Texas Electric & Gas
3.800% Due 2/1/20 (a) (e) ...................... $2,000
2,650 Waxahachie Texas Industrial
Development Authority
(Dart Container Project
Series 1985)
3.825% Due 4/1/06 (a) (d) ...................... 2,650
VERMONT (0.3%)
425 Vermont Industrial Development
Authority Hydroelectric Revenue
Bond Central Vermont Public
Service Corp.
3.950% Due 12/1/13 (a) (e) ..................... 425
VIRGINIA (3.2%)
1,100 Richmond Virginia Revenue Bond
4.200% Due 6/30/01 (a) (e) ..................... 1,100
2,000 Richmond Virginia Public Utilities
Revenue Series A
7.900% Due 1/15/08 (b) ......................... 2,042
1,000 Rockingham County Virginia
Industrial Development Authority
(Merck & Company Inc. Project)
4.650% Due 10/1/22 (a) (e) ..................... 1,000
WASHINGTON (0.8%)
1,055 Washington State Housing Finance
Community Non-Profit Housing
Revenue (Emerald Heights Project)
5.100% Due 1/1/21 (a) (e) ...................... 1,055
WEST VIRGINIA (2.9%)
3,100 Marshall County West Virginia
Pollution Control Revenue
Mountaineer Carbon Co.
4.900% Due 12/1/20 (a) (e) ..................... 3,100
680 Wood County West Virginia
Industrial Development Revenue
(Aga Gas Inc Project)
3.900% Due 10/1/98 (a) (e) ..................... 680
WISCONSIN (5.8%)
910 De Pere Wisconsin School District
4.100% Due 10/28/98 ............................ 911
Page 32 See notes to financial statements
<PAGE>
WEISS, PECK & GREER MUTUAL FUNDS
SCHEDULES OF INVESTMENTS AT DECEMBER 31, 1997
PRINCIPAL
AMOUNT VALUE
(000'S) SECURITY (000'S)
- ------- -------- -------
TAX FREE MONEY MARKET (continued)
$3,000 Fox Point & Bayside Wisconsin
Joint School District
Bond Anticipation Notes
4.200% Due 4/10/98 $3,001
1,000 Oregon Wisconsin School District
Tax Revenue Anticipation Notes
4.220% Due 9/16/98 1,001
2,600 University of Wisconsin Hospital &
Clinics Authority Revenue
3.700% Due 4/1/26 (a) (e) 2,600
WYOMING (1.0%)
1,190 Cheyenne County Wyoming
Economic Development
Revenue Bonds (Holiday Inn)
3.900% Due 10/1/10 (a) (e) 1,190
100 Sweetwater County Wyoming
Pollution Control Revenue
(Idaho Power) Series C
5.100% Due 7/15/26 (a) (e) 100
-------
TOTAL INVESTMENTS (107.6%)
(Cost $139,915) 139,915
LIABILITIES IN EXCESS OF
OTHER ASSETS (-7.6%) (9,832)
-------
TOTAL NET ASSETS (100.0%) $130,083
========
(B) SEC Rule 144A Security. Such security has limited markets and is traded
among "qualified institutional buyers."
(a) Interest rate subject to change approximately every 1 to 180 days. Principal
payable on demand at periodic intervals at the Fund's option.
(b) Prerefunded
(d) Coupon fluctuates with the Prime Rate (Prime is the rate on corporate loans
posted by at least 75% of the nation's 30 largest banks).
(e) Coupon fluctuates with remarket value.
See notes to financial statements Page 33
<PAGE>
WEISS, PECK & GREER MUTUAL FUNDS
STATEMENTS OF ASSETS AND LIABILITIES AT DECEMBER 31, 1997
<TABLE>
<CAPTION>
GROWTH AND QUANTITATIVE
$ in Thousands TUDOR INCOME GROWTH EQUITY
- -------------- ----- ------ ------ ------
MONEY MARKET
ASSETS
<S> <C> <C> <C> <C> <C>
Investments at value (+) ............................ $ 146,359 $ 115,045 $ 37,078 $ 96,208
Investments in Repurchase Agreements,at value (+) ... 26,576 0 16,253 0
Cash ................................................ 1 0 0 0
Receivable for securities sold ...................... 2,797 1,710 8,159 0
Receivable for Fund shares sold ..................... 589 400 1,465 101
Dividends and interest receivable ................... 131 166 24 150
Other assets ........................................ 13 7 4 7
--------- --------- -------- --------
176,466 117,328 62,983 96,466
--------- --------- -------- --------
LIABILITIES
Distributions payable ............................... 0 0 0 0
Payable to custodian bank ........................... 0 0 0 286
Payable for investment securities purchased ......... 4,859 0 429 0
Payable for Fund shares redeemed .................... 4,921 46 15,916 11
Unrealized depreciation on forward currency contracts 0 0 0 0
Accrued investment advisory fee payable - Note 5 .... 132 73 37 63
Accrued administration fee payable - Note 5 ......... 7 6 4 4
Payable for variation margin ........................ 0 0 0 1
Accrued expenses .................................... 88 57 40 46
--------- --------- -------- --------
10,007 182 16,426 411
--------- --------- -------- --------
NET ASSETS .................................... 166,459 117,146 46,557 96,055
========= ========= ======== ========
NET ASSETS REPRESENTED BY:
Shares of beneficial interest, at par ............... 2,531 3,336 1 16
Paid-in surplus ..................................... 120,321 73,588 37,400 72,722
Accumulated undistributed net investment income/
(distributions in excess of net investment income) 98 243 62 382
Undistributed net realized gains on investments,
futures, options and currencies/(Distributions
in excess of realized gains on investments,
futures, options and currencies) ................. 2,617 136 3,019 1,963
Net unrealized appreciation on
investments, futures and currencies .............. 40,892 39,843 6,075 20,972
--------- --------- -------- --------
NET ASSETS APPLIED TO OUTSTANDING SHARES ............ 166,459 117,146 46,557 96,055
========= ========= ======== ========
CAPITAL SHARES (AUTHORIZED SHARES UNLIMITED)
Outstanding ......................................... 7,601 3,336 409 16,452
========= ========= ======== ========
Par Value ........................................... $ .33 1/3 $ 1.00 $ 0.001 $ 0.001
========= ========= ======== ========
Net asset value per share ........................... $ 21.90 $ 35.11 $ 113.74 $ 5.84
========= ========= ======== ========
(+) Investments at cost ............................. 132,043 75,202 47,256 75,266
UNREALIZED APPRECIATION/(DEPRECIATION): *
Gross appreciation ............................... 42,526 40,399 8,633 22,157
Gross depreciation ............................... (1,634) (556) (2,558) (1,185)
--------- --------- -------- --------
NET UNREALIZED APPRECIATION ......................... 40,892 39,843 6,075 20,972
========= ========= ======== ========
Page 34
<PAGE>
INTERMEDIATE
GOVERNMENT MUNICIPAL GOVERNMENT TAX FREE
$ in Thousands INTERNATIONAL SECURITIES BOND MONEY MARKET MONEY MARKET
- -------------- ------------- ---------- ---- ------------ ------------
ASSETS
Investments at value (+) ............................ $ 9,509 $ 144,727 $ 23,639 $ 162,166 $139,915
Investments in Repurchase Agreements,at value (+) ... 0 0 0 21,921 0
Cash ................................................ 0 112 55 1 732
Receivable for securities sold ...................... 202 33,210 0 0 0
Receivable for Fund shares sold ..................... 1 731 63 27,400 2,716
Dividends and interest receivable ................... 29 888 368 4 1,100
Other assets ........................................ 1 4 7 4 9
--------- --------- --------- --------- --------
9,742 179,672 24,132 211,496 144,472
--------- --------- --------- --------- --------
LIABILITIES
Distributions payable ............................... 0 476 89 0 9
Payable to custodian bank ........................... 974 0 0 0 0
Payable for investment securities purchased ......... 148 70,600 474 0 11,763
Payable for Fund shares redeemed .................... 5 26 31 3,500 2,499
Unrealized depreciation on forward currency contracts 4 0 0 0 0
Accrued investment advisory fee payable - Note 5 .... 14 56 5 79 54
Accrued administration fee payable - Note 5 ......... 0 4 0 6 4
Payable for variation margin ........................ 0 0 0 0 0
Accrued expenses .................................... 42 67 25 94 60
--------- --------- --------- --------- --------
1,187 71,229 624 3,679 14,389
--------- --------- --------- --------- --------
NET ASSETS .................................... 8,555 108,443 23,508 207,817 130,083
NET ASSETS REPRESENTED BY:
Shares of beneficial interest, at par ............... 8 12 2 208 130
Paid-in surplus ..................................... 7,462 147,831 22,782 209,624 129,972
Accumulated undistributed net investment income/
(distributions in excess of net investment income) (23) 3 1 0 0
Undistributed net realized gains on investments,
futures, options and currencies/(Distributions
in excess of realized gains on investments,
futures, options and currencies) ................. (168) (39,887) (108) (2,015) (19)
Net unrealized appreciation on
investments, futures and currencies .............. 1,276 494 831 0 0
--------- --------- --------- --------- --------
NET ASSETS APPLIED TO OUTSTANDING SHARES ............ 8,555 108,443 23,508 207,817 130,083
========= ========= ========= ========= ========
CAPITAL SHARES (AUTHORIZED SHARES UNLIMITED)
Outstanding ......................................... 843 11,611 2,249 208,091 130,104
========= ========= ========= ========= ========
Par Value ........................................... $ 0.01 $ 0.001 $ 0.001 $ 0.001 $ 0.001
========= ========= ========= ========= ========
Net asset value per share ........................... $ 10.15 $ 9.34 $ 10.45 $ 1.00 $ 1.00
========= ========= ========= ========= ========
(+) Investments at cost ............................. 8,228 144,233 22,808 184,087 139,915
UNREALIZED APPRECIATION/(DEPRECIATION): *
Gross appreciation ............................... 1,817 496 837 0 0
Gross depreciation ............................... (541) (2) (6) 0 0
--------- --------- --------- --------- --------
NET UNREALIZED APPRECIATION ......................... 1,276 494 831 0 0
========= ========= ========= ========= ========
<FN>
* Based on cost of securities for Federal Income tax purposes which does not
differ from book cost.
</FN>
</TABLE>
See notes to financial statements
Page 35
<PAGE>
WEISS, PECK & GREER MUTUAL FU NDS
STATEMENTS OF OPERATIONS FOR YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
GROWTH AND QUANTITATIVE
TUDOR INCOME GROWTH EQUITY
----- ------ ------ ------
$ in Thousands
INVESTMENT INCOME:
<S> <C> <C> <C> <C>
Dividends ...................................................... $ 498 $ 1,811 $ 175 $ 1,985
Interest ....................................................... 377 124 214 166
Income from securities loaned - Note 4 ......................... 48 0 19 0
Class action litigation settlements ............................ 476 6 219 3
-------- -------- ------- --------
1,399 1,941 627 2,154
-------- -------- ------- --------
EXPENSES:
Investment advisory fee - Note 5 ............................... 1,587 759 475 783
Transfer agent fees and expenses ............................... 204 81 27 52
Administration fees - Note 5 ................................... 99 69 38 42
Custodian fees and expenses .................................... 81 17 33 31
Fund accounting fees and expenses .............................. 76 43 29 45
Professional fees .............................................. 64 47 44 44
Trustees' fees and expenses .................................... 22 21 20 20
Registration fees .............................................. 19 18 21 13
Shareholders' reports .......................................... 10 9 9 14
Other expenses ................................................. 18 13 10 35
-------- -------- ------- --------
2,180 1,077 706 1,079
Less fees waived by adviser .................................... 0 0 0 0
Less reimbursement by adviser .................................. 0 0 0 0
Less expenses paid indirectly - Note 7 ......................... (3) (3) (2) (3)
-------- -------- ------- --------
2,177 1,074 704 1,076
-------- -------- ------- --------
NET INVESTMENT INCOME/(LOSS) ................................... (778) 867 (77) 1,078
-------- -------- ------- --------
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS,
FUTURES, OPTIONS AND CURRENCIES:
Net realized gain/(loss) on investments ............... 27,744 12,903 9,380 18,088
Net realized (loss) on currencies ..................... (12) 0 (5) 0
Net change in unrealized appreciation/(depreciation) on
investments, futures and options ............. (6,932) 16,703 (2,179) 4,604
Net change in unrealized depreciation on currencies ... 0 0 0 0
-------- -------- ------- --------
NET GAIN/(LOSS) ON INVESTMENTS, FUTURES, OPTIONS AND
CURRENCIES ............................................ 20,800 29,606 7,196 22,692
-------- -------- ------- --------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ............................. 20,022 30,473 7,119 23,770
======== ======== ======= ========
</TABLE>
Page 36 See notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
INTERMEDIATE GOVERNMENT
GOVERNMENT MUNICIPAL MONEY MONEY
$ in Thousands INTERNATIONAL SECURITIES BOND MARKET MARKET
- -------------- ------------- ---------- ---- ------ ------
INVESTMENT INCOME:
<S> <C> <C> <C> <C> <C>
Dividends ...................................................... $ 216 $ 0 $ 0 $ 0 $ 0
Interest ....................................................... 16 7,491 1,128 8,582 5,086
Income from securities loaned - Note 4 ......................... 0 17 0 0 0
Class action litigation settlements ............................ 2 0 0 0 0
------- ------- ------- ------- -------
234 7,508 1,128 8,582 5,086
------- ------- ------- ------- -------
EXPENSES:
Investment advisory fee - Note 5 ............................... 62 702 96 780 650
Transfer agent fees and expenses ............................... 39 53 35 182 84
Administration fees - Note 5 ................................... 0 51 0 72 47
Custodian fees and expenses .................................... 22 23 4 29 23
Fund accounting fees and expenses .............................. 24 50 21 65 55
Professional fees .............................................. 46 64 29 55 44
Trustees' fees and expenses .................................... 18 21 18 21 20
Registration fees .............................................. 13 11 16 29 23
Shareholders' reports .......................................... 6 14 6 12 11
Other expenses ................................................. 6 19 15 21 14
------- ------- ------- ------- -------
236 1,008 240 1,266 971
Less fees waived by adviser .................................... 0 0 (56) 0 0
Less reimbursement by adviser .................................. 0 0 (4) 0 0
Less expenses paid indirectly - Note 7 ......................... (3) (2) (2) (5) (10)
------- ------- ------- ------- -------
233 1,006 178 1,261 961
------- ------- ------- ------- -------
NET INVESTMENT INCOME/(LOSS) ................................... 1 6,502 950 7,321 4,125
------- ------- ------- ------- -------
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS,
FUTURES, OPTIONS AND CURRENCIES:
Net realized gain/(loss) on investments ............... (989) 1,562 34 0 (4)
Net realized (loss) on currencies ..................... (196) 0 0 0 0
Net change in unrealized appreciation/(depreciation) on
investments, futures and options ............. 691 307 652 0 0
Net change in unrealized depreciation on currencies ... (19) 0 0 0 0
------- ------- ------- ------- -------
NET GAIN/(LOSS) ON INVESTMENTS, FUTURES, OPTIONS AND
CURRENCIES ............................................ 387 1,869 686 0 (4)
------- ------- ------- ------- -------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ............................. 388 8,371 1,636 7,321 4,121
======= ======= ======= ======= =======
</TABLE>
See notes to financial statements
Page 37
<PAGE>
WEISS, PECK & GREER MUTUAL F UNDS
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
GROWTH AND
TUDOR INCOME GROWTH
----- ------ ------
$ in Thousands
1997 1996 1997 1996 1997 1996
---- ---- ---- ---- ---- ----
OPERATIONS:
<S> <C> <C> <C> <C> <C> <C>
Net investment income/(loss) ...................... ($ 778) ($ 1,042) $ 867 $ 1,107 ($ 77) ($ 43)
Net realized gain/(loss) on
investments, futures,
options, and currencies ........................ 27,732 30,159 12,903 7,405 9,375 13,594
Net change in unrealized
appreciation/(depreciation)
on investments, futures,
options and currencies ......................... (6,932) 1,416 16,703 7,840 (2,179) (2,903)
--------- --------- --------- -------- --------- ---------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ...................... 20,022 30,533 30,473 16,352 7,119 10,648
--------- --------- --------- -------- --------- ---------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income ..................... 0 0 (735) (1,001) 0 0
From capital gains ............................. (26,044) (27,250) (13,500) (6,957) (7,513) (13,157)
--------- --------- --------- -------- --------- ---------
NET DECREASE DUE TO
DISTRIBUTIONS .................................. (26,044) (14,235) (7,958) (7,513) (13,157) (13,157)
--------- --------- --------- -------- --------- ---------
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST:
RECEIVED ON ISSUANCE:
Shares sold .................................... 398,240 157,573 19,356 10,378 250,575 120,071
Distributions reinvested ....................... 24,010 24,493 12,892 7,047 7,513 12,286
Shares redeemed ................................ (431,139) (169,513) (14,277) (10,239) (273,976) (127,462)
--------- --------- --------- -------- --------- ---------
NET INCREASE/(DECREASE) FROM
CAPITAL SHARE TRANSACTIONS ..................... (8,889) 12,553 17,971 7,186 (15,888) 4,895
--------- --------- --------- -------- --------- ---------
TOTAL INCREASE/(DECREASE)
IN NET ASSETS .................................. (14,911) 15,836 34,209 15,580 (16,282) 2,386
NET ASSETS:
Beginning of year ................................. 181,370 165,534 82,937 67,357 62,839 60,453
--------- --------- --------- -------- --------- ---------
End of year + ..................................... 166,459 181,370 117,146 82,937 46,557 62,839
========= ========= ========= ======== ========= =========
+ Includes undistributed net
investment income/
(distributions in excess of
net investment income) ........................ 98 (358) 243 207 62 (205)
Transactions in shares of the funds (in thousands):
Sold ........................................... 16,664 6,124 549 366 2,055 861
Reinvestment of distributions .................. 1,115 1,057 368 238 67 104
Redeemed ....................................... (17,969) (6,604) (410) (364) (2,243) (918)
--------- --------- --------- -------- --------- ---------
Net increase/(decrease) ........................... (190) 577 507 240 (121) 47
========= ========= ========= ======== ========= =========
</TABLE>
<TABLE>
<CAPTION>
QUANTITATIVE GOVERNMENT
EQUITY INTERNATIONAL SECURITIES
------ ------------- ----------
1997 1996 1997 1996 1997 1996
$ in Thousands ---- ---- ---- ---- ---- ----
OPERATIONS:
<S> <C> <C> <C> <C> <C> <C>
Net investment income/(loss) ...................... $ 1,078 $ 2,219 $ 1 $ 41 $ 6,502 $ 8,454
Net realized gain/(loss) on
investments, futures,
options, and currencies ........................ 18,088 29,051 (285) 1,469 1,562 (1,080)
Net change in unrealized
appreciation/(depreciation)
on investments, futures,
options and currencies ......................... 4,604 (5,583) 672 (887) 307 (2,578)
--------- --------- -------- -------- --------- ---------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ...................... 23,770 25,687 388 623 8,371 4,796
--------- --------- -------- -------- --------- ---------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income ..................... (1,032) (1,873) (7) (44) (6,446) (8,400)
From capital gains ............................. (18,970) (26,218) (348) (1,393) 0 0
--------- --------- -------- -------- --------- ---------
NET DECREASE DUE TO
DISTRIBUTIONS .................................. (20,002) (28,091) (355) (1,437) (6,446) (8,400)
--------- --------- -------- -------- --------- ---------
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST:
RECEIVED ON ISSUANCE:
Shares sold .................................... 10,292 40,334 1,504 2,535 9,057 8,570
Distributions reinvested ....................... 19,631 25,939 353 1,284 4,387 5,278
Shares redeemed ................................ (40,086) (94,620) (6,496) (4,038) (27,730) (61,018)
--------- --------- -------- -------- --------- ---------
NET INCREASE/(DECREASE) FROM
CAPITAL SHARE TRANSACTIONS ..................... (10,163) (4,639) (4,639) (219) (14,286) (47,170)
--------- --------- -------- -------- --------- ---------
TOTAL INCREASE/(DECREASE)
IN NET ASSETS .................................. (6,395) (30,751) (4,606) (1,033) (12,361) (50,774)
NET ASSETS:
Beginning of year ................................. 102,450 133,201 13,161 14,194 120,804 171,578
--------- --------- -------- -------- --------- ---------
End of year + ..................................... 96,055 102,450 8,555 13,161 108,443 120,804
========= ========= ======== ======== ========= =========
+ Includes undistributed net
investment income/
(distributions in excess of
net investment income) ........................ 382 336 (23) (41) 3 8
Transactions in shares of the funds (in thousands):
Sold ........................................... 1,618 5,658 142 224 989 929
Reinvestment of distributions .................. 3,361 4,345 35 124 476 575
Redeemed ....................................... (5,933) (12,053) (613) (358) (3,003) (6,638)
--------- --------- -------- -------- --------- ---------
Net increase/(decrease) ........................... (954) (2,050) (436) (10) (1,538) (5,134)
========= ========= ======== ======== ========= =========
</TABLE>
<TABLE>
<CAPTION>
INTERMEDIATE
MUNICIPAL GOVERNMENT TAX FREE
BOND MONEY MARKET MONEY MARKET
---- ------------ ------------
1997 1996 1997 1996 1997 1996
$ in Thousands ---- ---- ---- ---- ---- ----
OPERATIONS:
<S> <C> <C> <C> <C> <C> <C>
Net investment income/(loss) ...................... $ 950 $ 657 $ 7,321 $ 6,130 $ 4,125 $ 3,940
Net realized gain/(loss) on
investments, futures,
options, and currencies ........................ 34 5 0 7 (4) (3)
Net change in unrealized
appreciation/(depreciation)
on investments, futures,
options and currencies ......................... 652 (46) 0 0 0 0
-------- ----------- ----------- ----------- ----------- ------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ...................... 1,636 616 7,321 6,137 4,121 3,937
-------- ----------- ----------- ----------- ----------- -------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income ..................... (950) (657) (7,321) (6,132) (4,125) (3,940)
From capital gains ............................. 0 0 0 0 0 0
-------- ----------- ----------- ----------- ----------- ------
NET DECREASE DUE TO
DISTRIBUTIONS .................................. (950) (657) (7,321) (6,132) (4,125) (3,940)
-------- ----------- ----------- ----------- ----------- ------
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST:
RECEIVED ON ISSUANCE:
Shares sold .................................... 13,254 6,115 1,653,080 1,206,518 1,058,249 1,110,592
Distributions reinvested ....................... 564 473 7,078 6,163 3,978 3,991
Shares redeemed ................................ (6,210) (4,063) (1,605,127) (1,191,110) (1,049,563)(1,118,911)
-------- ----------- ----------- ----------- ----------- ----------
NET INCREASE/(DECREASE) FROM
CAPITAL SHARE TRANSACTIONS ..................... 7,608 2,525 55,031 21,571 12,664 (4,328)
-------- ----------- ----------- ----------- ----------- ---------
TOTAL INCREASE/(DECREASE)
IN NET ASSETS .................................. 8,294 2,484 55,031 21,576 12,660 (4,331)
NET ASSETS:
Beginning of year ................................. 15,214 12,730 152,786 131,210 117,423 121,754
-------- ----------- ----------- ----------- ----------- ---------
End of year + ..................................... 23,508 15,214 207,817 152,786 130,083 117,423
======== =========== =========== =========== =========== ========
+ Includes undistributed net
investment income/
(distributions in excess of
net investment income) ........................ 1 1 0 0 0 0
Transactions in shares of the funds (in thousands):
Sold ........................................... 1,301 607 1,653,080 1,206,516 1,058,249 1,110,592
Reinvestment of distributions .................. 55 47 7,078 6,163 3,978 3,991
Redeemed ....................................... (607) (402) (1,605,127) (1,191,110) (1,049,563)(1,118,911)
-------- ----------- ----------- ----------- ------------ ----------
Net increase/(decrease) ........................... 749 252 55,031 21,569 12,664 (4,328)
======== =========== =========== =========== =========== ==========
</TABLE>
See notes to financial statements Page 39
<PAGE>
WEISS PECK & GREER MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS
1. - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
- ------------
The following are open-end management investment companies registered under
the Investment Company Act of 1940 (the "Act"):
WPG Tudor Fund ("Tudor")
WPG Growth and Income Fund ("Growth and Income")
WPG Growth Fund ("Growth")
Weiss, Peck & Greer Funds Trust ("WPG Funds Trust"):
WPG Quantitative Equity Fund ("Quantitative Equity")
WPG Government Securities Fund ("Government Securities")
WPG Intermediate Municipal Bond Fund ("Municipal Bond")
WPG Government Money Market Fund ("Government Money Market")
WPG Tax Free Money Market Fund ("Tax Free Money Market")
Weiss, Peck & Greer International Fund ("International")
Each fund is diversified.
Government Money Market and Tax Free Money Market are money market funds
that seek to maintain continuous net asset values of $1.00. The following
is a summary of the significant accounting policies followed by the funds
in the preparation of the financial statements. These policies are in
conformity with generally accepted accounting principles.
PORTFOLIO VALUATION
- -------------------
COMMON STOCK - Securities listed or admitted to trading on a national
securities exchange, including options, are valued at the last sale price,
on such exchange, as of the close of regular trading on the New York Stock
Exchange ("NYSE") on the day the net asset value calculation is made.
Unlisted securities and listed securities for which there are no sales
reported on the valuation date are valued at the mean between the most
recent bid and asked prices.
BONDS - Bonds and other fixed income securities (other than short-term
obligations but including listed issues) are valued by a pricing service
which utilizes both dealer-supplied valuations and electronic data
processing techniques which take into account appropriate factors such as
institutional-size trading in similar groups of securities, yield, quality,
coupon rate, maturity, type of issue, trading characteristics and other
market data, without exclusive reliance upon quoted prices, exchanges or
over-the-counter prices, when such valuations are believed to reflect the
market value of such securities.
MONEY MARKET SECURITIES - Investments are valued at amortized cost, which
has been determined by the Funds' Board of Trustees to represent the fair
value of the Fund's investments.
FOREIGN SECURITIES - Securities listed or admitted to trading on an
international securities exchange, including options, are valued at the
last sale price, at the close of the primary international exchange on the
day the net asset value calculation is made. Unlisted securities and listed
securities for which there are no sales reported on the valuation date are
valued at the mean between the most recent bid and ask prices.
OTHER SECURITIES - Other securities and assets for which market quotations
are not readily available are valued at their fair value as determined, in
good faith, by the Funds' Valuation Committee as authorized by the Funds'
Board of Trustees.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME
- ---------------------------------------------
Securities transactions are recorded on a trade date basis. Realized gains
and losses from securities transactions are recorded utilizing the specific
identification method. Dividend income is recognized on the ex-dividend
date and interest income is recognized on an accrual basis. Discounts on
fixed income securities are accreted to interest income over the life of
the security or until an applicable call date if sooner, with a
corresponding increase in cost basis; premiums are amortized on municipal
securities only, with a corresponding decrease in cost basis.
Page 40
<PAGE>
WEISS PECK & GREER MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
FEDERAL INCOME TAXES
- --------------------
The Funds intend to comply with the requirements of the Internal Revenue
Code that pertain to regulated investment companies and to distribute all
of their taxable income to their shareholders. No federal income tax or
excise tax provision is required. As of December 31, 1997, the following
funds had capital loss carryforwards:
(in thousands)
YEAR OF EXPIRATION
------------------
FUND 2001 2002 2003 2004 2005
---- ---- ---- ---- ---- ----
Government Securities -- 18,940 20,113 753 --
Municipal Bond -- 100 8 -- --
Government Money Market -- 2,014 -- -- 2
Tax Free Money Market 11 -- 1 3 4
DISTRIBUTION TO SHAREHOLDERS
- ----------------------------
DIVIDENDS FROM NET INVESTMENT INCOME - Distributions are recorded on the
ex-dividend date. Dividends from net investment income are declared and
paid annually when available for the Tudor, Growth, Quantitative Equity and
International Funds and quarterly for the Growth & Income Fund. Dividends
from net investment income are declared daily and paid monthly for the
Government Securities, Municipal Bond, Government Money Market and Tax Free
Money Market Funds.
DISTRIBUTIONS FROM CAPITAL GAINS - Distributions from capital gains are
declared by December 31 of the year in which they are earned and are paid
by January 31 of the following year. To the extent that net realized
capital gains can be offset by capital loss carryovers, if any, it is the
policy of the Funds not to distribute such gains.
The character of income and gains to be distributed are determined in
accordance with income tax regulations which may differ from generally
accepted accounting principles. These differences are due to differing
treatments for items such as mortgage backed securities, net operating
losses, deferral of wash sale losses, options and futures, and post October
losses.
ORGANIZATION EXPENSES
- ---------------------
Organizational and initial offering expenses of approximately $97,000 and
$77,000 for the Quantitative Equity Fund and Municipal Bond Fund,
respectively, were deferred and are being amortized on a straight line
basis over a sixty-month period.
REPURCHASE AGREEMENTS (TUDOR, GROWTH, GOVERNMENT SECURITIES,
GOVERNMENT MONEY MARKET)
- -----------------------
It is each Funds' policy to take possession of securities or other assets
purchased under agreements to resell. The securities purchased under
agreements to resell are marked to market every business day to ensure that
the value of the "collateral" is at least equal to the value of the loan,
including the accrued interest earned thereon, plus sufficient additional
market value as is considered necessary to provide a margin of safety.
FUTURES (TUDOR, GROWTH, QUANTITATIVE EQUITY, INTERNATIONAL,
GOVERNMENT SECURITIES)
- ----------------------
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a
contract, a Fund is required to pledge to the broker an amount of cash
and/or securities equal to the minimum "initial margin" requirements of the
exchange. Pursuant to the contract, the Fund agrees to receive from, or pay
to the broker, an amount of cash equal to the daily fluctuation in value of
the contract. Such a receipt or payment is known as a "variation margin"
and is recorded by each Fund as an unrealized gain or loss. When the
contract is closed, the Fund records a realized gain or loss equal to the
difference between the value of the contract at the time it was opened and
the value at the time it was closed. The Fund is also required to fully
collateralize futures contracts purchased. The Fund only enters into
futures contracts which are traded on exchanges.
Page 41
<PAGE>
WEISS PECK & GREER MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
OPTIONS WRITING (TUDOR, GROWTH & INCOME, GROWTH, QUANTITATIVE EQUITY,
INTERNATIONAL AND GOVERNMENT SECURITIES)
- -------------------------------------------
A Fund may write covered options to protect against adverse movements in
the price of securities in the investment portfolio. When a Fund writes an
option, an amount equal to the premium received by the Fund is recorded as
a liability and is subsequently adjusted to the current market value of the
option written. Premiums received from writing options which expire
unexercised are recorded by the Fund on the expiration date as realized
gains from options transactions. The difference between the premium and the
amount paid on effecting a closing purchase transaction, including
brokerage commissions, is also treated as a realized gain, or if the
premium is less than the amount paid for the closing purchase transaction,
as a realized loss. If a call is exercised, the premium is added to the
proceeds from the sale of the underlying securities or currencies in
determining whether the Fund has realized a gain or loss. If a put is
exercised, the premium reduces the cost basis of the securities or
currencies purchased by the Fund. In writing an option, the Fund bears the
market risk of an unfavorable change in the price of the security
underlying the written option. Exercise of an option written by the Fund
could result in the selling or buying of a security or currency at a price
different from the current market value. The Fund only enters into options
which are traded on exchanges except for Tudor and Growth which can enter
into non-exchange options with counterparties as authorized by the Board of
Trustees.
FOREIGN SECURITIES (TUDOR, GROWTH AND INCOME, GROWTH, INTERNATIONAL)
- --------------------------------------------------------------------
Certain risks result from investing in foreign securities in addition to
the usual risks inherent in domestic investments. Such risks include future
political, economic and currency exchange developments including investment
restrictions and changes in foreign laws.
FORWARD CURRENCY CONTRACTS (TUDOR, GROWTH AND INCOME, GROWTH, INTERNATIONAL)
- ----------------------------------------------------------------------------
A Fund may enter into forward contracts. Such contracts may be utilized in
connection with planned purchases or sales of securities or to hedge the
U.S. dollar value of portfolios denominated in foreign currencies.
Fluctuations in the value of the forward contracts are recorded for book
purposes as unrealized gains or losses by the Fund. Risks may arise upon
entering into these contracts from the potential inability of
counterparties to meet the terms of their contracts and from unanticipated
movements in the value of the foreign currency relative to the U.S. dollar.
Upon entering into such a contract, the Fund is required to segregate
assets with its custodian at least equal to the value of the Fund's assets
committed to fulfilling the forward currency contract.
FOREIGN CURRENCY TRANSACTIONS (TUDOR, GROWTH AND INCOME, GROWTH, INTERNATIONAL)
- -------------------------------------------------------------------------------
The books and records of each Fund are maintained in United States (U.S.)
dollars. Foreign currencies, investments and other assets or liabilities,
denominated in foreign currencies, are translated into U.S. dollars at the
exchange rates prevailing on the close of trading on the primary foreign
market. The Fund does not isolate that portion of the results of operations
resulting from changes in foreign exchange rates on investments from the
fluctuations arising from changes in market prices of securities held. Such
fluctuations are included with the net realized and unrealized gain or loss
from investments.
Reported net realized foreign exchange gains or losses arise from sales and
maturities of short term securities, sales of foreign currencies, currency
gains or losses realized between the trade and settlement dates on
securities transactions, the difference between the amounts of dividends,
interest, and foreign withholding taxes recorded on the Fund's books, and
the U.S. dollar equivalent of the amounts actually received or paid. Net
unrealized foreign exchange gains and losses arise from changes in the
value of assets and liabilities other than investments in securities at
year end, resulting from changes in the exchange rate.
USE OF ESTIMATES
- ----------------
Estimates and assumptions are required to be made regarding assets,
liabilities and changes in net assets resulting from operations when
financial statements are prepared. Changes in the economic environment,
financial markets and any other parameters used in determining these
estimates could cause actual results to differ from these amounts.
Page 42
<PAGE>
WEISS PECK & GREER MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
2 - SECURITIES TRANSACTIONS
For the year ended December 31, 1997, sales proceeds, cost of securities
purchased, (other than short term investments and options written), total
commissions and commissions received by Weiss, Peck & Greer ("WPG"), the
Fund's investment adviser or Hill Samuel Investment Management Limited, the
International Fund's sub-adviser, on such transactions were as follows:
PROCEEDS COST OF COMMISSIONS
OF SECURITIES SECURITIES TOTAL RECEIVED BY
SOLD PURCHASED COMMISSIONS WPG OR HSIM
(000's) (000's) (000's) (000's)
------- ------- ------- -------
Tudor $239,125 $181,025 $258 $ 91
Growth and Income 69,050 70,820 126 100
Growth 85,945 51,555 101 40
Quantitative Equity 113,101 80,083 216 211
International 10,648 6,521 59 0
Government
Securities 377,317 381,643 0 0
Municipal Bond 8,054 16,162 0 0
OPTIONS WRITING ACTIVITY
- ------------------------
For the year ended December 31, 1997, the number of covered call options
written, expired and closed and their related realized gain/(loss) were as
follows:
<TABLE>
<CAPTION>
GOVERNMENT
TUDOR GROWTH SECURITIES
----- ------ ----------
($ in thousands) NUMBER NUMBER NUMBER
OF PREMIUMS OF PREMIUMS OF PREMIUMS
CONTRACTS RECEIVED CONTRACTS RECEIVED CONTRACTS RECEIVED
--------- -------- --------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
COVERED CALL
OPTIONS WRITTEN
Contracts Outstanding
December 31, 1996 150 $ 39 90 $ 21 0 $ 0
Contracts Written 7,778 6,479 2,308 2,082 16 43
----- ----- ----- ----- -- --
7,928 6,518 2,398 2,103 16 43
----- ----- ----- ----- -- --
CONTRACTS TERMINATED
Expired 1,082 1,291 652 434 8 20
Exercised 82 22 -- -- 8 23
Closed 6,764 5,205 1,746 1,669 0 0
----- ----- ----- ----- - -
TOTAL CONTRACTS TERMINATED 7,928 6,518 2,398 2,103 16 43
----- ----- ----- ----- -- --
Contracts Outstanding at
December 31, 1997 0 $ 0 0 $ 0 0 $ 0
=== ==== ====== ======= ===== ====== ===== ===
COST OF TOTAL CONTRACTS $ 7,091 $2,472 $ 23
------ ------ ------
REALIZED GAIN/(LOSS) ON CONTRACTS (573) (369) 20
------ ------ ------
AGGREGATE VALUE OF COLLATERAL $ 0 $ 0 0
------ ------ ------
</TABLE>
Page 43
<PAGE>
WEISS PECK & GREER MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
3 - INVESTMENTS IN RESTRICTED SECURITIES
Certain of the Funds may from time to time purchase restricted
securities.The following are restricted securities and would require
registration under the Securities Act of 1933 before they could be offered
for public sale in the U.S. Each security is valued under a method approved
by the Board of Trustees as reflecting fair value.
<TABLE>
<CAPTION>
Cost Value Per Unit Total Market Percentage of
Per at Acquisition Value Per Unit Value 12/31/97 Net Assets at
Fund Security Unit Date at 12/31/97 (000's) 12/31/97
- ---- -------- ---- ---- ----------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Tudor Advanced Promotion
Technologies $100.00 $73.76 $0.20 $1 0.00%
Tudor PETsMART Inc.
6.750% Due 11/1/04 100.00 100.25 104.56 2,614 1.56%
Tudor Thermoquest Corp. 15.00 14.84 17.22 861 0.51%
Tax Free NCNB Pooled Tax Exempt
Money Trust-Texas 100.00 100.00 100.00 650 0.39%
Market
Growth Thermoquest Corp. 15.00 14.84 17.22 431 0.92%
</TABLE>
4-SECURITIES LENDING (TUDOR, GROWTH, GOVERNMENT SECURITIES)
At December 31, 1997, the Tudor Fund loaned securities valued at
$15,003,836. For collateral the Tudor Fund received a letter of credit in
an amount equal to $15,000,000. On January 2, 1998, the borrowing broker
returned securities valued at $470,524 to the Tudor Fund in order for the
Fund to have collateral at least equal to the current market value of
securities loaned. At December 31, 1997 the Growth Fund loaned securities
valued at $4,217,966. For collateral, the Growth Fund received U.S.
Government securities in the amount of $4,302,332. During the year the
Tudor Fund, Growth Fund and Government Securities Fund earned approximately
$43,643, $13,191 and $15,601 in securities lending fees, net of custodian
expenses, respectively.
5 - INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
WPG serves as the Funds' investment adviser. The advisory fees of each Fund
are as follows, and are paid monthly except for the International Fund
which is paid quarterly:
Tudor .90% of net assets up to $300 million
.80% of net assets $300 million to $500 million
.75% of net assets in excess of $500 million
Growth and Income .75% of net assets
Growth .75% of net assets
Quantitative Equity .75% of net assets
International .50% while net assets under $15 million
.85% while net assets $15 to $20 million
1.00% while net assets in excess of $20 million
Government Securities .60% of net assets up to $300 million
.55% of net assets $300 million to $500 million
.50% of net assets in excess of $500 million
continued on next page
Page 44
<PAGE>
WEISS PECK & GREER MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
continued from previous page
Municipal Bond .00% while net assets under $17 million
.50% while net assets in excess of $17 million
Government Money Market .50% of net assets up to $500 million
& .45% of net assets $500 million to $1 billion
Tax Free Money Market .40% of net assets $1 billion to $1.5 billion
.35% of net assets in excess of $1.5 billion
Pursuant to authority granted under its Investment Advisory Agreement with
the International Fund, WPG has selected Hill Samuel Investment Management
Limited ("HSIM"), formerly Lloyds Investment Management Limited, as
sub-adviser to the International Fund. Pursuant to a sub-advisory
agreement, HSIM has overall responsibility for the management of the
International Fund's assets invested in non-US securities. Lloyds
Investment Management Limited, the parent of HSIM, is a non-managing member
of WPG.
Each Fund has entered into an Administration Agreement with WPG. For the
period January 1, 1997 through April 30, 1997 WPG was entitled to receive
the following fees based upon a percentage of average daily net assets:
Tudor .07%, Growth and Income .09%, Growth .02%, Quantitative Equity .02%,
International .06% while assets exceed $25 million, Government Securities
.03%, Intermediate Municipal Bond .12% while assets exceed $50 million,
Government Money Market .06%, and Tax Free Money Market .03%. As of May 1,
1997, WPG is entitled to receive the following fees based upon a percentage
of average daily net assets: Tudor .05%, Growth & Income .06%, Growth .08%,
Quantitative Equity .05%, Government Securities .05%, Government Money
Market .04% and Tax Free Money Market .04%. The fee for International and
Municipal Bond have remained the same.
6 - DISTRIBUTION PLAN (GOVERNMENT SECURITIES)
The Trust has adopted a plan of Distribution (the "Plan") under Section 12
(b) of the 1940 Act and Rule 12b-1 thereunder. The Fund may pay up to 0.25%
of its average daily net assets under any one agreement but is limited to
an aggregate of 0.05% of its average annual net assets for activities
primarily intended to result in the sale of its shares.
For the year ended December 31, 1997, expenses incurred under the Plan were
$378.
Under the terms, the Plan shall remain in effect from year to year,
provided such continuance is approved annually by a vote of a majority of
those Trustees who are not "interested persons" of the Trust and who have
no direct or indirect financial interest in the operation of the Plan or in
any agreement related to the Plan.
7 - CUSTODIAN FEES
Each Fund has entered into an expense offset agreement with its custodian
wherein it receives credit toward the reduction of custodian fees whenever
there are uninvested cash balances. For the year ended December 31, 1997
the Funds' custodian fees and related offset were as follows:
Custodian Offset
Fee Credit
--- ------
Tudor $81,438 $3,438
Growth and Income 17,154 2,667
Growth 33,307 2,057
Quantitative Equity 30,558 3,058
International 22,027 3,027
continued on next page
Page 45
<PAGE>
WEISS PECK & GREER MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
continued from previous page
Government Securities 23,160 1,660
Municipal Bond 4,297 1,528
Government Money Market 28,810 5,310
Tax Free Money Market 22,727 9,727
The Funds could have invested their cash balances elsewhere if they had not
agreed to a reduction in fees under the expense offset agreement with their
custodian.
8 - RECLASSIFICATION OF CAPITAL ACCOUNTS
In accordance with the adoption of Statement of Position 93-2
"Determination, Disclosure and Financial Statement Presentation of Income,
Capital Gain and Return of Capital Distributions by Investment Companies",
reclassifications were made to the Funds' capital accounts to reflect
permanent book/tax differences and income and gains available for
distributions under income tax regulations. Net investment income, net
realized gains and net assets were not affected by this change. At December
31, 1997, the amounts reclassified were as follows:
Undistributed Undistributed Additional
Net Investment Net Realized Paid-in
Income Gains Surplus
(000's) (000's) (000's)
------- ------- -------
Tudor $ 1,235 $(1,292) $ 57
Growth and Income (80) 94 2
Growth 344 6 (351)
Quantitative Equity -- (23) 23
International 24 179 (203)
Government Securities (61) 61 --
9 - FEDERAL INCOME TAX STATUS OF DIVIDENDS (UNAUDITED)
WPG Tax Free and WPG Municipal Bond have determined that all dividends paid
during the year ended December 31, 1997 were paid from investment income
and are exempt from Federal income. None of these dividends are subject to
the Alternative Minimum Tax.
The Funds have distributed long-term capital gains to shareholders during
the fiscal year ended December 31, 1997 in the following amounts:
28% 20%
--- ---
Tudor Fund $10,350,632 $13,021,763
Growth & Income 6,163,006 4,922,450
Growth Fund 765,371 3,930,159
Quantitative Equity 6,798,497 9,978,356
International Fund 149,625 61,528
The percentage of investment company taxable income eligible for the
dividends received deduction and for certain corporate shareholders with
respect to the fiscal year ended December 31, 1997, is 100% for the Growth
and Income Fund and the Quantitative Equity Fund.
Page 46
<PAGE>
WEISS PECK & GREER MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
The above figures may differ from those cited elsewhere in the report due
to differences in the calculation of income and capital gains for
Securities and Exchange Commission (financial reporting) purposes and
Internal Revenue Service (tax) purposes.
10 - SUBSEQUENT EVENT (GOVERNMENT FUND)
On January 20, 1998, the WPG Government Securities Fund changed its name
and investment policies. The new name of the Fund is WPG Core Bond Fund.
Prior to this change, the Fund invested at least 65% of its total assets in
debt obligations issued or guaranteed by the U.S. Government with
maturities exceeding one year. The new policy, among other things, permits
the Fund to invest at least 80% of its assets in debt securities of all
types, including U.S. Government Securities and corporate debt securities.
In addition, under normal market conditions, the Fund will maintain an
average dollar weighted duration of between 3 and 7 years and will limit
its investments to investment grade securities.
Page 47
<PAGE>
WEISS, PECK & GREER MUTUAL FUNDS
FINANCIAL HIGHLIGHTS
(for the years ended December 31 except as indicated in the footnotes)
$ per share
<TABLE>
<CAPTION>
NET TOTAL
REALIZED INCOME
NET AND (LOSS) DIVIDENDS DISTRI-
NET INVEST UNREALIZED FROM FROM BUTIONS
ASSET MENT GAINS OR INVESTMENT NET FROM TOTAL CONTRI-
VALUE AT INCOME (LOSSES) ON OPERA- INVESTMENT CAPITAL DISTRI- BUTIONS TO
OF PERIOD (LOSS) SECURITIES TIONS INCOME GAINS BUTIONS CAPITAL
--------- ------ ---------- ----- ------ ----- ------- -------
TUDOR
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1997 $ 23.28 $ 0.06 $ 2.46 $ 2.52 $ 0.00 $ (3.90) $(3.90) $ 0.00
1996 22.95 (0.14) 4.41 4.27 0.00 (3.94) (3.94) 0.00
1995 19.34 (0.10) 8.03 7.93 0.00 (4.32) (4.32) 0.00
1994 23.40 (0.13) (2.14) (2.27) 0.00 (1.79) (1.79) 0.00
1993 24.85 (0.22) 3.51 3.29 0.00 (4.74) (4.74) 0.00
GROWTH AND INCOME FUND
1997 29.32 0.24 10.30 10.54 (0.24) (4.51) (4.75) 0.00
1996 26.02 0.24 6.11 6.35 (0.39) (2.66) (3.05) 0.00
1995 21.36 0.51 6.44 6.95 (0.53) (1.76) (2.29) 0.00
1994 23.34 0.56 (1.83) (1.27) (0.62) (0.09) (0.71) 0.00
1993 23.89 0.56 1.71 2.27 (0.89) (1.93) (2.82) 0.00
GROWTH
1997 118.47 0.54 10.73 11.27 0.00 (16.00) (16.00) 0.00
1996 125.17 (0.76) 22.90 22.14 0.00 (28.84) (28.84) 0.00
1995 94.45 (0.22) 37.70 37.48 0.00 (6.76) (6.76) 0.00
1994 116.62 (0.29) (15.96) (16.25) 0.00 (5.92) (5.92) 0.00
1993 126.68 (0.78) 19.42 18.64 0.00 (28.70) (28.70) 0.00
QUANTITATIVE EQUITY FUND
1997 5.89 0.08 1.42 1.50 (0.08) (1.47) (1.55) 0.00
1996 6.85 0.16 1.13 1.29 (0.15) (2.10) (2.25) 0.00
1995 5.44 0.13 1.70 1.83 (0.12) (0.30) (0.42) 0.00
1994 5.58 0.13 (0.11) 0.02 (0.11) (0.05) (0.16) 0.00
1993 5.00 0.08 0.62 0.70 (0.08) (0.04) (0.12) 0.00
INTERNATIONAL
1997 10.29 0.01 0.29 0.30 (0.01) (0.43) (0.44) 0.00
1996 11.01 (0.07) 0.57 0.50 (0.04) (1.18) (1.22) 0.00
1995 10.93 0.04 1.15 1.19 (0.15) (0.96) (1.11) 0.00
1994 11.72 0.01 (0.75) (0.74) 0.00 (0.05) (0.05) 0.00
1993 8.54 (0.02) 3.20 3.18 0.00 0.00 0.00 0.00
</TABLE>
<TABLE>
<CAPTION>
ratios
NET NET AVERAGE
ASSET ASSETS AT RATIO OF RATIO OF COMMISS-
VALUE AT END OF EXPENSES NET INCOME PORTFOLIO ION
END OF TOTAL PERIOD TO AVERAGE TO AVERAGE TURNOVER PER
PERIOD RETURN (OOO'S) NET ASSETS NET ASSETS RATE SHARE
------ ------ ------- ---------- ---------- ---- -----
TUDOR
<S> <C> <C> <C> <C> <C> <C> <C>
1997 $ 21.90 11.11% $166,459 1.24 (0.44%) 106.3% $0.0600
1996 23.28 18.82 181,370 1.25 (0.57) 105.4 0.0580
1995 22.95 41.18 165,534 1.30 (0.47) 123.1 N/A
1994 19.34 (9.81) 144,207 1.28 (0.62) 109.1 N/A
1993 23.40 13.38 242,067 1.25 (0.76) 118.2 N/A
GROWTH AND INCOME
1997 35.11 36.27 117,146 1.06 0.88 69.6 0.0620
1996 29.32 24.42 82,937 1.15 1.50 75.8 0.0620
1995 26.02 32.73 67,357 1.22 2.10 79.4 N/A
1994 21.36 (5.47) 61,045 1.23 2.49 71.9 N/A
1993 23.34 9.53 62,714 1.26 2.15 86.4 N/A
GROWTH
1997 113.74 9.67 46,557 1.12 (0.12) 84.3 0.0540
1996 118.47 17.99 62,839 1.08 (0.07) 122.4 0.0640
1995 125.17 39.72 60,453 1.07 (0.21) 119.0 N/A
1994 94.45 (14.03) 87,942 0.95 (0.27) 99.3 N/A
1993 116.62 14.87 169,302 0.98 (0.54) 126.6 N/A
QUANTITATIVE EQUITY FUND
1997 5.84 25.47 96,055 1.03 1.03 77.7 0.0540
1996 5.89 18.51 102,450 0.95 1.52 60.8 0.0340
1995 6.85 33.37 133,201 1.00 2.00 26.1 N/A
1994 5.44 0.34 73,484 1.14 2.36 46.8 N/A
1993 5.58 13.90 46,921 1.32 2.01 20.6 N/A
INTERNATIONAL
1997 10.15 2.89 8,555 1.89 0.02 55.1 0.0270
1996 10.29 4.64 13,161 1.71 0.31 85.2 0.0190
1995 11.01 10.92 14,194 1.74 0.39 55.9 N/A
1994 10.93 (6.32) 17,102 1.95 0.12 69.8 N/A
1993 11.72 37.24 15,996 2.12 (0.13) 75.9 N/A
</TABLE>
Page 48
<PAGE>
WEISS, PECK & GREER MUTUAL FUNDS
FINANCIAL HIGHLIGHTS
(for the years ended December 31 except as indicated in the footnotes)
<TABLE>
<CAPTION>
$ PER SHARE
NET TOTAL
REALIZED INCOME
NET AND (LOSS) DIVIDENDS DISTRI- NET NET
NET INVEST UNREALIZED FROM FROM BUTIONS ASSET ASSETS
ASSET MENT GAINS OR INVESTMENT NET FROM TOTAL CONTRI- VALUE AT END OF
VALUE AT INCOME (LOSSES) ON OPERA- INVESTMENT CAPITAL DISTRI- BUTIONS TO END OF TOTAL PERIOD
OF PERIOD (LOSS) SECURITIES TIONS INCOME GAINS BUTIONS CAPITAL PERIOD RETURN ($000'S)
--------- ------ ---------- ----- ------ ----- ------- ------- ------- ------ -------
GOVERNMENT SECURITIES
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997 $9.19 $0.51 $0.15 $0.66 $(0.51) $0.00 $(0.51) $0.00 $ 9.34 7.37% $108,443
1996 9.38 0.64 (0.29) 0.35 (0.54) 0.00 (0.54) 0.00 9.19 3.85 120,804
1995 8.83 0.60 0.54 1.14 (0.59) 0.00 (0.59) 0.00 9.38 13.25 171,578
1994 10.37 0.68 (1.56) (0.88) (0.64) (0.02) (0.66) 0.00 8.83 (8.70) 216,364
1993 10.38 0.79 0.14 0.93 (0.79) (0.15) (0.94) 0.00 10.37 8.96 334,904
INTERMEDIATE MUNICIPAL BOND
1997 10.14 0.47 0.31 0.78 (0.47) 0.00 (0.47) 0.00 10.45 7.85 23,508
1996 10.20 0.48 (0.06) 0.42 (0.48) 0.00 (0.48) 0.00 10.14 4.20 15,214
1995 9.51 0.44 0.69 1.13 (0.44) 0.00 (0.44) 0.00 10.20 12.05 12,730
1994 10.15 0.41 (0.64) (0.23) (0.41) 0.00 (0.41) 0.00 9.51 (2.29) 14,005
1993* 10.00 0.19 0.15 0.34 (0.19) 0.00 (0.19) 0.00 10.15 3.48 12,334
GOVERNMENT MONEY MARKET
1997 1.00 0.05 0.00 0.05 (0.05) 0.00 (0.05) 0.00 1.00 4.76 207,817
1996 1.00 0.04 0.00 0.04 (0.04) 0.00 (0.04) 0.00 1.00 4.56 152,786
1995 1.00 0.05 0.00 0.05 (0.05) 0.00 (0.05) 0.00 1.00 5.16 131,210
1994 1.00 0.04 (0.01) 0.03 (0.04) 0.00 (0.04) 0.01 1.00 3.58 188,197
1993 1.00 0.03 0.00 0.03 (0.03) 0.00 (0.03) 0.00 1.00 2.80 140,926
TAX FREE MONEY MARKET
1997 1.00 0.03 0.00 0.03 (0.03) 0.00 (0.03) 0.00 1.00 3.23 130,083
1996 1.00 0.03 0.00 0.03 (0.03) 0.00 (0.03) 0.00 1.00 3.14 117,423
1995 1.00 0.04 0.00 0.04 (0.04) 0.00 (0.04) 0.00 1.00 3.63 121,754
1994 1.00 0.03 0.00 0.03 (0.03) 0.00 (0.03) 0.00 1.00 2.61 152,501
1993 1.00 0.02 0.00 0.02 (0.02) 0.00 (0.02) 0.00 1.00 2.32 136,889
</TABLE>
<TABLE>
<CAPTION>
RATIOS
AVERAGE
RATIO OF RATIO OF COMMISS-
EXPENSES NET INCOME PORTFOLIO ION
TO AVERAGE TO AVERAGE TURNOVER PER
NET ASSETS NET ASSETS RATE SHARE
---------- ---------- ---- -----
GOVERNMENT SECURITIES
<S> <C> <C> <C> <C>
1997 0.86%A 5.56% 330.3% N/A
1996 0.81 5.87 333.1 N/A
1995 0.82 6.52 375.0 N/A
1994 0.80 7.18 115.9 N/A
1993 0.81 7.43 97.5 N/A
INTERMEDIATE MUNICIPAL BOND
1997 0.85 4.55 39.8 N/A
1996 0.85 4.72 44.4 N/A
1995 0.85 4.38 51.2 N/A
1994 0.85 4.20 30.9 N/A
1993 0.84 B 3.86 B 17.0 B N/A
GOVERNMENT MONEY MARKET
1997 0.81 4.68 N/A N/A
1996 0.83 4.48 N/A N/A
1995 0.82 5.06 N/A N/A
1994 0.80 3.54 N/A N/A
1993 0.81 2.75 N/A N/A
TAX FREE MONEY MARKET
1997 0.74 3.17 N/A N/A
1996 0.72 3.10 N/A N/A
1995 0.76 3.56 N/A N/A
1994 0.73 2.59 N/A N/A
1993 0.74 2.29 N/A N/A
<FN>
* From July 1, 1993 (commencement of operations) to December 31, 1993.
A Effective January 1, 1998 WPG has voluntarily agreed to limit the total
expenses of the Fund to 0.50% of average daily net assets.
B Annualized
</FN>
</TABLE>
Page 49
<PAGE>
WEISS, PECK & GREER MUTUAL FUNDS
FINANCIAL HIGHLIGHTS
(For the years ended December 31 except as indicated in the footnotes)
The Adviser agreed to reimburse other operating expenses and not to its full fee
for certain periods. Had the Adviser not so agreed, and had the Funds not
received a custody fee earnings credit, the total return would have been lower
and the net investment income/(loss) per share, ratio of expenses to average net
assets and ratio of net investment income to average net assets would have been:
RATIO OF
NET
RATIO OF INVESTMENT
EXPENSES INCOME
TO AVERAGE TO AVERAGE
NET ASSETS NET ASSETS
---------- ----------
GROWTH
1995 1.08% (0.21%)
QUANTITATIVE EQUITY
1993 1.41% 1.92%
INTERNATIONAL
1997 1.92% (0.01%)
1996 1.76% 0.26%
1995 1.76% 0.39%
1994 2.35% (0.28%)
1993 2.89% (0.64%)
INTERMEDIATE MUNICIPAL BOND
1997 1.15% 4.25%
1996 1.01% 4.56%
1995 0.97% 4.25%
1994 1.45% 3.60%
1993* 2.00% A 2.70% A
For the Tudor, Growth and Income, Quantitative Equity, Government Securities,
Municipal Bond, Government Money Market and Tax Free Money Market Funds the
custody fee earnings credit had an effect of less than 0.01% per share on the
above ratios. For the Growth Fund the custody fee earnings credit had an effect
of less than 0.01% on the above ratios for 1996 and 1997.
Notes:
* From July 1, 1993 (commencement of operations) to December 31, 1993
A Annualized
Page 50
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Trustees of:
WPG TUDOR FUND
WPG GROWTH AND INCOME FUND
WPG GROWTH FUND
WPG QUANTITATIVE EQUITY FUND
WEISS, PECK & GREER INTERNATIONAL FUND
WPG GOVERNMENT SECURITIES FUND
WPG INTERMEDIATE MUNICIPAL BOND FUND
WPG GOVERNMENT MONEY MARKET FUND
WPG TAX FREE MONEY MARKET FUND
We have audited the accompanying statements of assets and liabilities, including
the schedules of investments of WPG Tudor Fund, WPG Growth and Income Fund, WPG
Growth Fund, WPG Quantitative Equity Fund, Weiss, Peck & Greer International
Fund, WPG Government Securities Fund, WPG Intermediate Municipal Bond Fund, WPG
Government Money Market Fund and WPG Tax Free Money Market Fund as of December
31, 1997, and the related statements of operations for the year then ended,
statements of changes in net assets for each of the years in the two-year period
then ended, and financial highlights for each of the periods indicated on pages
48 through 50. These financial statements and financial highlights are the
responsibility of the Funds' management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1997, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of WPG
Tudor Fund, WPG Growth and Income Fund, WPG Growth Fund, WPG Quantitative Equity
Fund, Weiss, Peck & Greer International Fund, WPG Government Securities Fund,
WPG Intermediate Municipal Bond Fund, WPG Government Money Market Fund and WPG
Tax Free Money Market Fund as of December 31, 1997, the results of their
operations for the year then ended, the changes in their net assets for each of
the years in the two-year period then ended, and their financial highlights for
each of the periods indicated above, in conformity with generally accepted
accounting principles.
KPMG Peat Marwick LLP
New York, New York
January 19, 1998
Page 51
<PAGE>
WEISS, PECK & GREER
ONE NEW YORK PLAZA, NEW YORK, NY 10004
INDEPENDENT TRUSTEES AND MEMBERS
OF AUDIT COMMITTEE
Raymond R. Herrmann, Jr. William B. Ross
Lawrence J. Israel Harvey E. Sampson
Graham E. Jones Robert A. Straniere
Paul Meek
OFFICERS
ROGER J. WEISS
Chairman of the Board and Trustee - all funds
President - Weiss, Peck & Greer International Fund
ADAM STARR
President - WPG Tudor Fund, WPG Growth Fund
JAY C. NADEL
Executive Vice President and Secretary - all funds
FRANCIS H. POWERS
Executive Vice President and Treasurer - all funds
JOSEPH J. REARDON
Vice President - all funds
JOSEPH PARASCONDOLA
Assistant Vice President - all funds
A. ROY KNUTSEN
President - WPG Growth and Income Fund
DANIEL S. VANDIVORT
President - WPG Funds Trust
DANIEL CARDELL
Vice President - WPG Quantitative Equity Fund
R. SCOTT RICHTER
Vice President - WPG Intermediate Municipal Bond Fund
JANET A. FIORENZA
Vice President - WPG Tax Free Money Market Fund
S. BLAKE MILLER
Vice President - WPG Intermediate Municipal Bond Fund
INVESTMENT ADVISER
Weiss, Peck & Greer, LLC
One New York Plaza
New York, NY 10004
CUSTODIAN
Boston Safe Deposit and Trust Company
One Exchange Place
Boston, MA 02109
DIVIDEND DISBURSING AND
TRANSFER AGENT
First Data Investor Services Group
4400 Computer Drive
Westboro, MA 01581-5120
LEGAL COUNSEL
Hale and Dorr
60 State Street
Boston, MA 02109
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP
345 Park Avenue
New York, NY 10154
This report is submitted for the general information of shareholders and is not
authorized for distribution to prospective investors unless preceded or
accompanied by an effective prospectus. Nothing herein is to be considered an
offer of sale or solicitation of an offer to buy shares of the Weiss, Peck &
Greer Funds. Such offering is made only by prospectus, which includes details as
to offering and other material information.
<PAGE>
WPG GROWTH AND INCOME FUND
PART C. OTHER INFORMATION
Item 24. FINANCIAL STATEMENTS AND EXHIBITS.
----------------------------------
(a) Financial Statements -
Included in Part A:
Financial Highlights for each of the ten years in the period
ended December 31, 1997.
Included in Part B:
Schedule of Investments.
Statement of Assets and Liabilities at December 31, 1997.
Statement of Operations for the year ended December 31, 1997.
Statementof Changes in Net Assets for years ended
December 31, 1996 and December 31, 1997.
Financial Highlights.
Notes to Financial Statements.
Independent Auditors Report.
(b) Exhibits -
EXHIBIT
NUMBER DESCRIPTION
------ -----------
1(a) Amended and Restated Declaration of Trust dated
May 1, 1993 of Registrant***** (and t)
1(b) Certificate of Amendment dated October 28, 1993 to
the Amended and Restated Declaration of Trust
dated May 1, 1993 of Registrant***** (and t)
2 By-Laws of Registrant* (and t)
<PAGE>
3 Not Applicable
4 Not Applicable
5(a) Investment Advisory Agreement between Registrant
and Weiss, Peck & Greer***** (and t)
5(b) Administration Agreement between Registrant and
Weiss, Peck & Greer***** (and t)
6 Not Applicable
7 Not Applicable
8 Custodian Agreement between Registrant and The
Boston Safe Deposit and Trust Company** (and t)
9(a) Transfer Agency Agreement between Registrant and
The Boston Safe Deposit and Trust Company**
9(b) Accounting Services Agreement between Registrant
and The Boston Company Advisors, Inc.** (and t)
10 Opinion and Consent of Hale and Dorr LLP (t)
11 Consent of KPMG Peat Marwick LLP (t)
12 Not Applicable
14 Not Applicable
15 Not Applicable
16 Performance Calculation Schedule****
18 Not Applicable
19 Powers of Attorney***** (and t)
27 Financial Data Schedule (t)
- --------------
(t) Filed herewith.
C-2
<PAGE>
* Previously filed with Post-Effective Amendment No. 12
on April 28, 1988.
** Previously filed with Post-Effective Amendment No. 13
dated April 28, 1989.
*** Previously filed with Post-Effective Amendment No. 15
on February 11, 1991.
**** Previously filed with Post-Effective Amendment No. 16
dated April 8, 1991.
***** Previously filed with Post-Effective Amendment No. 20
dated April 19, 1994.
****** Previously filed with Post-Effective Amendment No. 21 dated November 4,
1994.
Item 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
--------------------------------------------------------------
Not Applicable.
Item 26. NUMBER OF HOLDERS OF SECURITIES (AS OF MARCH 31, 1998).
-------------------------------------------------------
TITLE OF CLASS NUMBER OF RECORD HOLDERS
-------------- ------------------------
Shares of
Beneficial
Interest
par value
$1.00 per share 2,040
Item 27. INDEMNIFICATION.
----------------
Reference is made to Article VIII of the Registrant's Declaration of
Trust and Article V of the Registrant's By-Laws.
Nothing in the By-Laws of the Trust may be construed to be in
derogation of the provisions of Section 17(h) of the Investment
Company Act of 1940, as amended (the "1940 Act"), which provides
that the by-laws of a registered investment company shall not
contain any provision which protects or purports to protect any
director or officer of such company against any liability of the
company or to its security holders to which he would otherwise be
subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the
conduct of his office ("disabling conduct").
The Registrant understands that in the opinion of the Securities and
Exchange Commission (the "Commission") an indemnification provision
C-3
<PAGE>
does not violate Section 17(h) of the 1940 Act if it precludes
indemnification for any liability whether or not there is an
adjudication of liability, arising by reason of disabling
conduct. Reasonable and fair means for determining whether
indemnification shall be made include (1) a final decision on
the merits by a court or other body before whom the proceeding
was brought that the person to be indemnified (the
"indemnitee") was not liable by reason of disabling conduct
or, (2) in the absence of such a decision, a reasonable
determination, based upon a review of the facts that the
indemnitee was not liable by reason of disabling conduct by
(a) the vote of a majority of a quorum of trustees who are
neither "interested persons" of the Registrant as defined in
Section 2(a)(19) of the 1940 Act nor parties to the preceding
("disinterested non-party trustees"), or (b) an independent
legal counsel in a written opinion. The Registrant further
understands that in the Commission's view the dismissal of
either a court action or an administrative proceeding against
an indemnitee for insufficiency of evidence of any disabling
conduct with which he has been charged would provide
reasonable assurance that he was not liable by reason of
disabling conduct. A determination by the vote of a majority
of a quorum of disinterested nonparty trustees would also
provide reasonable assurance that the indemnitee was not
liable by reason of disabling conduct.
The Registrant further understands that the Commission
believes that an indemnification provision does not violate
Section 17(h) of the 1940 Act simply because it requires or
permits the Registrant to advance attorney's fees or other
expenses incurred by its trustees, officers or investment
adviser in defending a proceeding, upon the undertaking by or
on behalf of the indemnitee to repay the advance unless it is
ultimately determined that he is entitled to indemnification,
so long as the provision also requires at least one of the
following as a condition to the advance: (1) the indemnitee
shall provide security for his undertaking, (2) the Registrant
shall be insured against losses arising by reason of any
lawful advances, or (3) a majority of a quorum of the
disinterested nonparty trustees of the Registrant, or an
independent legal counsel in a written opinion, shall
determine, based on a review of readily available facts (as
opposed to a full trial-type inquiry), that there is reason to
believe that the indemnitee ultimately will be found entitled
to indemnification. The Registrant is also aware that the
Commission believes that an improper indemnification payment
or advance of legal expenses could constitute a breach of
fiduciary duty involving personal misconduct under Section 36
of the 1940 Act or an unlawful and willful conversion of an
investment company's assets under Section 37 of the 1940 Act.
C-4
<PAGE>
Insofar as the indemnification for liabilities
arising under the Securities Act of 1933 (the "Securities
Act") may be permitted to trustees, officers and controlling
persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant understands that in
the opinion of the Commission such indemnification is against
public policy as expressed in the Securities Act and is,
therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a
trustee, officer or controlling person of the Registrant in
the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Securities Act and will be governed by the final
adjudication of such issue.
Weiss, Peck & Greer, L.L.C. carries for itself and its
subsidiaries Directors and Officers Liability Insurance. Under
this policy, outside directors would be covered up to the
limits specified for any claim against them for acts committed
in their capacities as members of the Board. A pro rata share
of the premium for this coverage is charged to each investment
company.
Item 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.
-----------------------------------------------------
The business and other connections of the officers
and directors of Weiss, Peck & Greer, L.L.C. are listed on the
Form ADV of Weiss, Peck & Greer, L.L.C. as currently on file
with the Commission (File No. 801-6604), the text of which is
hereby incorporated by reference.
Item 29. PRINCIPAL UNDERWRITERS.
-----------------------
Not Applicable.
Item 30. LOCATION OF ACCOUNTS AND RECORDS.
---------------------------------
All accounts, books and other documents required to
be maintained by Section 31(a) of the 1940 Act and the rules
thereunder are maintained at the following locations:
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<PAGE>
NAME ADDRESS
---- -------
WPG Growth and Income Fund One New York Plaza
New York, NY 10004
The Boston Safe Deposit One Boston Place
and Trust Company Boston, MA 02109
First Data Investor P.O. Box 9037
Services Group, Inc. Boston, MA 02205
Item 31. MANAGEMENT SERVICES.
--------------------
Not Applicable.
Item 32. UNDERTAKINGS.
-------------
(a) Not Applicable.
(b) Not Applicable.
(c) The Registrant undertakes to deliver, or cause to be
delivered with the Prospectus, to each person to whom the
Prospectus is sent or given a copy of the Registrant's report
to shareholders furnished pursuant to and meeting the
requirements of Rule 30d-1 under the 1940 Act from which the
specified information is incorporated by reference, unless
such person currently holds securities of the Registrant and
otherwise has received a copy of such report, in which case
the Registrant shall state in the Prospectus that it will
furnish, without charge, a copy of such report on request, and
the name, address and telephone number of the person to whom
such a request should be directed.
C-6
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that this
Post-Effective Amendment to the Registration Statement meets all the
requirements for effectiveness pursuant to Rule 485(b) under the Securities Act
of 1933 and the Registrant has duly caused this Post-Effective Amendment to the
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of New York, and State of New York on the 22nd day
of April, 1998.
WPG GROWTH AND INCOME FUND
/S/FRANCIS H. POWERS
--------------------
Francis H. Powers, Executive
Vice President
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to the Registrant's Registration Statement has been
signed below by the following persons in the capacities and on the dates
indicated.
SIGNATURE TITLE DATE
- --------- ----- ----
/S/ROGER J. WEISS Chairman of April 22, 1998
- ---------------------------------
Roger J. Weiss the Board
(Principal
Executive Officer)
and Trustee
/S/FRANCIS H. POWERS Executive Vice April 22, 1998
- ---------------------------------
Francis H. Powers President and
Treasurer
(Principal
Financial and
Accounting Officer)
<PAGE>
SIGNATURE TITLE DATE
- --------- ----- ----
RAYMOND R. HERRMANN, JR.* Trustee April 22, 1998
- --------------------------
Raymond R. Herrmann, Jr.
LAWRENCE J. ISRAEL* Trustee April 22, 1998
- --------------------------
Lawrence J. Israel
GRAHAM E. JONES* Trustee April 22, 1998
- --------------------------
Graham E. Jones
PAUL MEEK* Trustee April 22, 1998
- --------------------------
Paul Meek
WILLIAM B. ROSS* Trustee April 22, 1998
- --------------------------
William B. Ross
HARVEY E. SAMPSON* Trustee April 22, 1998
- --------------------------
Harvey E. Sampson
ROBERT A. STRANIERE* Trustee April 22, 1998
- --------------------------
Robert A. Straniere
*By:/S/FRANCIS H. POWERS April 22, 1998
----------------------------------
Francis H. Powers
Attorney-in-Fact
<PAGE>
EXHIBIT INDEX
-------------
EXHIBIT DESCRIPTION
- ------- -----------
1(a) Amended and Restated Declaration of Trust dated May 1, 1993
of Registrant
1(b) Certificate of Amendment dated October 28, 1993 to the
Amended and Restated Declaration of Trust dated May 1, 1993
of Registrant
2 By-Laws of Registrant
5(a) Investment Advisory Agreement between Registrant and Weiss,
Peck & Greer
5(b) Administration Agreement between Registrant and Weiss, Peck
& Greer
8 Custodian Agreement between Registrant and The Boston Safe
Deposit and Trust Company
9(b) Accounting Services Agreement between Registrant and The
Boston Company Advisors, Inc.
10 Opinion and Consent of Hale and Dorr LLP
11 Consent of KPMG Peat Marwick LLP
16 Powers of Attorney
27 Financial Data Schedule
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
WPG GROWTH AND INCOME FUND
One New York Plaza
New York, NY 10004
Dated May 1, 1993
DECLARATION OF TRUST made as of this 1st day of May, 1993 by Roger J.
Weiss, Melville Straus, Raymond R. Herrmann, Jr., Thomas J. Hilliard, Jr.,
Lawrence J. Israel, Graham E. Jones, Paul Meek, William B. Ross, Harvey E.
Sampson, Robert A. Straniere and Willis J. Winn (together with all other persons
from time to time duly elected, qualified and serving as Trustees in accordance
with the provisions of Article II hereof, the "Trustees");
WHEREAS, pursuant to the Trust's Declaration of Trust, the Trustees
established a trust for the investment and reinvestment of funds contributed
thereto;
WHEREAS, said Declaration of Trust provides that the beneficial interest in
the trust assets be divided into transferable shares of beneficial interest;
WHEREAS, said Declaration of Trust provides that all money and property
contributed to the trust established thereunder shall be held and managed in
trust for the benefit of the holders, from time to time, of the shares of
beneficial interest issued thereunder and subject to the provisions thereof; and
WHEREAS, the Trustees desire to amend and restate said Declaration of Trust
in its entirety, as hereinafter provided;
NOW, THEREFORE, the undersigned, being a majority of the Trustees of the
Trust, hereby amend and restate the Declaration of Trust in its entirety, as
follows:
ARTICLE I
NAME AND DEFINITIONS
SECTION 1.1. NAME. The name of the trust created hereby is "WPG Growth and
Income Fund" (the "Trust").
SECTION 1.2. DEFINITIONS. Wherever they are used herein, the following
terms have the following respective meanings:
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<PAGE>
(a) "ADMINISTRATOR" means the party, other than the Trust, to the contract
described in Section 3.3 hereof.
(b) "BY-LAWS" means the By-laws referred to in Section 2.8 hereof, as
amended from time to time.
(c) "CLASS" means any division of shares within a Series, which Class is or
has been established within such Series in accordance with the provisions of
Article V.
(d) The terms "COMMISSION" and "INTERESTED PERSON" have the meanings given
them in the 1940 Act. Except as such term may be otherwise defined by the
Trustees in conjunction with the establishment of any Series of Shares, the term
"vote of a majority of the Shares outstanding and entitled to vote" shall have
the same meaning as is assigned to the term "vote of a majority of the
outstanding voting securities" in the 1940 Act.
(e) "CUSTODIAN" means any Person other than the Trust who has custody of
any Trust Property as required by Section 17(f) of the 1940 Act, but does not
include a system for the central handling of securities described in said
Section 17(f).
(f) "DECLARATION" means this Amended and Restated Declaration of Trust as
amended from time to time. Reference in this Declaration of Trust to
"Declaration," "hereof," "herein," and "hereunder" shall be deemed to refer to
this Declaration rather than exclusively to the article or section in which such
words appear.
(g) "DISTRIBUTOR" means the party, other than the Trust, to the contract
described in Section 3.1 hereof.
(h) "FUND" or "FUNDS," individually or collectively, means the separate
Series of Shares of the Trust, together with the assets and liabilities assigned
thereto.
(i) "FUNDAMENTAL RESTRICTIONS" means the investment restrictions set forth
in the Prospectus and Statement of Additional Information and designated as
fundamental restrictions therein.
(j) "HIS" shall include the feminine and neuter, as well as the masculine,
genders.
(k) "INVESTMENT ADVISER" means the party, other than the Trust, to the
contract described in Section 3.2 hereof.
(l) The "1940 ACT" means the Investment Company Act of 1940, as amended
from time to time.
-2-
<PAGE>
(m) "PERSON" means and includes individuals, corporations, partnerships,
trusts, associations, joint ventures and other entities, whether or not legal
entities, and governments and agencies and political subdivisions thereof.
(n) "PROSPECTUS" means the Prospectus and Statement of Additional
Information included in the Registration Statement of the Trust under the
Securities Act of 1933 as such Prospectus and Statement of Additional
Information may be amended or supplemented and filed with the Commission from
time to time.
(o) "SERIES" individually or collectively means the separately managed
component(s) of the Trust (or, if the Trust shall have only one such component,
then that one) as may be established and designated from time to time by the
Trustees pursuant to Section 5.11 hereof.
(p) "SHAREHOLDER" means a record owner of Outstanding Shares.
(q) "SHARES" means the equal proportionate units of interest into which the
beneficial interest in the Trust shall be divided from time to time, including
the Shares of any and all Series or of any Class within any Series (as the
context may require) which may be established by the Trustees, and includes
fractions of Shares as well as whole Shares. "Outstanding" Shares means those
Shares shown from time to time on the books of the Trust or its Transfer Agent
as then issued and outstanding, but shall not include Shares which have been
redeemed or repurchased by the Trust and which are at the time held in the
treasury of the Trust.
(r) "TRANSFER AGENT" means any Person other than the Trust who maintains
the Shareholder records of the Trust, such as the list of Shareholders, the
number of Shares credited to each account, and the like.
(s) "TRUST" means WPG Growth and Income Fund.
(t) The "TRUSTEES" means the persons who have signed this Declaration, so
long as they shall continue in office in accordance with the terms hereof, and
all other persons who now serve or may from time to time be duly elected,
qualified and serving as Trustees in accordance with the provisions of Article
II hereof, and reference herein to a Trustee or the Trustees shall refer to such
person or persons in this capacity or their capacities as trustees hereunder.
(u) "TRUST PROPERTY" means any and all property, real or personal, tangible
or intangible, which is owned or held by or for the account of the Trust or the
Trustees, including any and all assets of or allocated to any Series or Class,
as the context may require.
-3-
<PAGE>
ARTICLE II
TRUSTEES
SECTION 2.1. GENERAL POWERS. The Trustees shall have exclusive and absolute
control over the Trust Property and over the business of the Trust to the same
extent as if the Trustees were the sole owners of the Trust Property and
business in their own right, but with such powers of delegation as may be
permitted by this Declaration. The Trustees shall have power to conduct the
business of the Trust and carry on its operations in any and all of its branches
and maintain offices both within and without the Commonwealth of Massachusetts,
in any and all states of the United States of America, in the District of
Columbia, and in any and all commonwealths, territories, dependencies, colonies,
possessions, agencies or instrumentalities of the United States of America and
of foreign governments, and to do all such other things and execute all such
instruments as they deem necessary, proper or desirable in order to promote the
interests of the Trust although such things are not herein specifically
mentioned. Any determination as to what is in the interests of the Trust made by
the Trustees in good faith shall be conclusive. In construing the provisions of
this Declaration, the presumption shall be in favor of a grant of power to the
Trustees.
The enumeration of any specific power herein shall not be construed as
limiting the aforesaid powers. Such powers of the Trustees may be exercised
without order of or resort to any court.
SECTION 2.2. INVESTMENTS. The Trustees shall have the power:
(a) To operate as and carry on the business of an investment company, and
exercise all the powers necessary and appropriate to the conduct of such
operations.
(b) To invest in, hold for investment, or reinvest in, cash; securities,
including common, preferred and preference stocks; warrants; subscription
rights; profit-sharing interests or participations and all other contracts for
or evidence of equity interests; bonds, debentures, bills, time notes and all
other evidences of indebtedness; negotiable or non-negotiable instruments;
government securities, including securities of any state, municipality or other
political subdivision thereof, or any governmental or quasi-governmental agency
or instrumentality; and money market instruments including bank certificates of
deposit, finance paper, commercial paper, bankers' acceptances and all kinds of
repurchase agreements, of any corporation, company, trust, association, firm or
other business organization however established, and of any country, state,
municipality or other political subdivision, or any governmental or
quasi-governmental agency or instrumentality; and the Trustees shall be deemed
to have the foregoing powers with respect to any additional securities in which
the Trust may invest should the Fundamental Restrictions be amended.
-4-
<PAGE>
(c) To acquire (by purchase, subscription or otherwise), to hold, to trade
in and deal in, to acquire any rights or options to purchase or sell, to sell or
otherwise dispose of, to lend and to pledge any such securities, to enter into
repurchase agreements, reverse repurchase agreements, firm commitment agreements
and forward foreign currency exchange contracts, to purchase and sell options on
securities, securities indices, currency and other financial assets, futures
contracts and options on futures contracts of all descriptions and to engage in
all types of hedging and risk-management transactions.
(d) To exercise all rights, powers and privileges of ownership or interest
in all securities and repurchase agreements included in the Trust Property,
including the right to vote thereon and otherwise act with respect thereto and
to do all acts for the preservation, protection, improvement and enhancement in
value of all such securities and repurchase agreements.
(e) To acquire (by purchase, lease or otherwise) and to hold, use,
maintain, develop and dispose of (by sale or otherwise) any property, real or
personal, including cash or foreign currency, and any interest therein.
(f) To borrow money and in this connection issue notes or other evidence of
indebtedness; to secure borrowings by mortgaging, pledging or otherwise
subjecting as security the Trust Property; and to endorse, guarantee, or
undertake the performance of any obligation or engagement of any other Person
and to lend Trust Property.
(g) To aid by further investment any corporation, company, trust,
association or firm, any obligation of or interest in which is included in the
Trust Property or in the affairs of which the Trustees have any direct or
indirect interest; to do all acts and things designed to protect, preserve,
improve or enhance the value of such obligation or interest; and to guarantee or
become surety on any or all of the contracts, stocks, bonds, notes, debentures
and other obligations of any such corporation, company, trust, association or
firm.
(h) To enter into a plan of distribution and any related agreements whereby
the Trust may finance directly or indirectly any activity which is primarily
intended to result in sales of Shares.
(i) To adopt on behalf of the Trust or any Series thereof an alternative
purchase plan providing for the issuance of multiple Classes of Shares (as
authorized herein at Section 5.11), such Shares being differentiated on the
basis of purchase method and allocation of distribution expenses.
(j) In general to carry on any other business in connection with or
incidental to any of the foregoing powers, to do everything necessary, suitable
or
-5-
<PAGE>
proper for the accomplishment of any purpose or the attainment of any object or
the furtherance of any power hereinbefore set forth, either alone or in
association with others, and to do every other act or thing incidental or
appurtenant to or arising out of or connected with the aforesaid business or
purposes, objects or powers.
The foregoing clauses shall be construed both as objects and powers, and
the foregoing enumeration of specific powers shall not be held to limit or
restrict in any manner the general powers of the Trustees.
The Trustees shall not be limited to investing in obligations maturing
before the possible termination of the Trust, nor shall the Trustees be limited
by any law limiting the investments which may be made by fiduciaries.
SECTION 2.3. LEGAL TITLE. Legal title to all the Trust Property shall be
vested in the Trustees as joint tenants except that the Trustees shall have
power to cause legal title to any Trust Property to be held by or in the name of
one or more of the Trustees, or in the name of the Trust or any Series of the
Trust, or in the name of any other Person as nominee, on such terms as the
Trustees may determine, provided that the interest of the Trust therein is
deemed appropriately protected. The right, title and interest of the Trustees in
the Trust Property and the Property of each Series of the Trust shall vest
automatically in each Person who may hereafter become a Trustee. Upon the
termination of the term of office, resignation, removal or death of a Trustee he
shall automatically cease to have any right, title or interest in any of the
Trust Property, and the right, title and interest of such Trustee in the Trust
Property shall vest automatically in the remaining Trustees. Such vesting and
cessation of title shall be effective whether or not conveyancing documents have
been executed and delivered.
SECTION 2.4. ISSUANCE AND REPURCHASE OF SHARES. The Trustees shall have the
power to issue, sell, repurchase, redeem, retire, cancel, acquire, hold, resell,
reissue, dispose of, transfer, and otherwise deal in Shares and, subject to the
provisions set forth in Articles VI and VII and Section 5.11 hereof, to apply to
any such repurchase, redemption, retirement, cancellation or acquisition of
Shares any funds or property of the Trust, whether capital or surplus or
otherwise, to the full extent now or hereafter permitted by the laws of The
Commonwealth of Massachusetts governing business corporations.
SECTION 2.5. DELEGATION; COMMITTEES. The Trustees shall have power,
consistent with their continuing exclusive authority over the management of the
Trust and the Trust Property, to delegate from time to time to such of their
number or to officers, employees or agents of the Trust the doing of such things
and the execution of such instruments either in the name of the Trust or any
Series of the Trust or the names of the Trustees or otherwise as the Trustees
may deem expedient, to the same extent as such delegation is permitted by the
1940 Act.
-6-
<PAGE>
SECTION 2.6. COLLECTION AND PAYMENT. Subject to Section 5.11 hereof, the
Trustees shall have power to collect all property due to the Trust; to pay all
claims, including taxes, against the Trust Property; to prosecute, defend,
compromise or abandon any claims relating to the Trust Property; to foreclose
any security interest securing any obligations, by virtue of which any property
is owed to the Trust; and to enter into releases, agreements and other
instruments.
SECTION 2.7. EXPENSES. Subject to Section 5.11 hereof, the Trustees shall
have the power to incur and pay any expenses which in the opinion of the
Trustees are necessary or incidental to carry out any of the purposes of this
Declaration, and to pay reasonable compensation from the funds of the Trust to
themselves as Trustees. The Trustees shall fix the compensation of all officers,
employees and Trustees of the Trust.
SECTION 2.8. MANNER OF ACTING; BY-LAWS. Except as otherwise provided herein
or in the By-laws, any action to be taken by the Trustees may be taken by a
majority of the Trustees present at a meeting of Trustees (a quorum being
present), including any meeting held by means of a conference telephone circuit
or similar communications equipment by means of which all persons participating
in the meeting can hear each other, or by written consents of a majority of the
entire number of Trustees then in office. The Trustees may adopt By-laws not
inconsistent with this Declaration to provide for the conduct of the business of
the Trust and may amend or repeal such By-laws to the extent such power is not
reserved to the Shareholders.
Notwithstanding the foregoing provisions of this Section 2.8 and in
addition to such provisions or any other provision of this Declaration or of the
By-laws, the Trustees may by resolution appoint a committee consisting of less
than the whole number of Trustees then in office, which committee may be
empowered to act for and bind the Trustees and the Trust, as if the acts of such
committee were the acts of all the Trustees then in office, with respect to the
institution, prosecution, dismissal, settlement, review or investigation of any
action, suit or proceeding which shall be pending or threatened to be brought
before any court, administrative agency or other adjudicatory body.
SECTION 2.9. MISCELLANEOUS POWERS. Subject to Section 5.11 hereof, the
Trustees shall have the power to: (a) employ or contract with such Persons as
the Trustees may deem desirable for the transaction of the business of the Trust
or any Series thereof; (b) enter into joint ventures, partnerships and any other
combinations or associations; (c) remove Trustees or fill vacancies in or add to
their number, elect and remove such officers and appoint and terminate such
agents or employees as they consider appropriate, and appoint from their own
number, and terminate, any one or more committees which may exercise some or all
of the power and authority of the Trustees as the Trustees may determine; (d)
purchase, and pay for out of Trust
-7-
<PAGE>
Property or Trust Property of the appropriate Series of the Trust, insurance
policies insuring the Shareholders, Trustees, officers, employees, agents,
investment advisers, administrators, distributors, selected dealers or
independent contractors of the Trust against all claims arising by reason of
holding any such position or by reason of any action taken or omitted by any
such Person in such capacity, whether or not constituting negligence, or whether
or not the Trust would have the power to indemnify such Person against such
liability; (e) establish pension, profit-sharing, share purchase, and other
retirement, incentive and benefit plans for any Trustees, officers, employees
and agents of the Trust; (f) to the extent permitted by law, indemnify any
person with whom the Trust or any Series thereof has dealings, including the
Investment Adviser, Administrator, Distributor, Transfer Agent and selected
dealers, to such extent as the Trustees shall determine; (g) guarantee
indebtedness or contractual obligations of others; (h) determine and change the
fiscal year of the Trust or any Series thereof and the method by which its or
their accounts shall be kept; and (i) adopt a seal for the Trust, but the
absence of such seal shall not impair the validity of any instrument executed on
behalf of the Trust.
SECTION 2.10. PRINCIPAL TRANSACTIONS. Except in transactions not permitted
by the 1940 Act or rules and regulations adopted by the Commission, the Trustees
may, on behalf of the Trust, buy any securities from or sell any securities to,
or lend any assets of the Trust or any Series thereof to any Trustee or officer
of the Trust or any firm of which any such Trustee or officer is a member acting
as principal, or have any such dealings with the Investment Adviser, Distributor
or Transfer Agent or with any Interested Person of such Person; and the Trust or
a Series thereof may employ any such Person, or firm or company in which such
Person is an Interested Person, as broker, legal counsel, registrar, transfer
agent, dividend disbursing agent or custodian upon customary terms.
SECTION 2.11. LITIGATION. The Trustees shall have the power to engage in
and to prosecute, defend, compromise, abandon, or adjust by arbitration, or
otherwise, any actions, suits, proceedings, disputes, claims and demands
relating to the Trust, and out of the assets of the Trust or any Series thereof
to pay or to satisfy any debts, claims or expenses incurred in connection
therewith, including those of litigation, and such power shall include without
limitation the power of the Trustees or any appro priate committee thereof, in
the exercise of their or its good faith business judgment, to dismiss any
action, suit, proceeding, dispute, claim or demand, derivative or otherwise,
brought by any person, including a Shareholder in its own name or the name of
the Trust, whether or not the Trust or any of the Trustees may be named
individually therein or the subject matter arises by reason of business for or
on behalf of the Trust.
SECTION 2.12. NUMBER OF TRUSTEES. The number of Trustees shall be such
number as shall be fixed from time to time by a written instrument signed by a
-8-
<PAGE>
majority of the Trustees, provided, however, that the number of Trustees shall
in no event be less than two (2) nor more than twenty-one (21).
SECTION 2.13. ELECTION AND TERM. Except for the Trustees named herein or
appointed to fill vacancies pursuant to Section 2.15 hereof, the Trustees may
succeed themselves and shall be elected by the Shareholders owning of record a
plurality of the Shares voting at a meeting of Shareholders on a date fixed by
the Trustees. Except in the event of resignations or removals pursuant to
Section 2.14 hereof, each Trustee shall hold office until such time as less than
a majority of the Trustees holding office have been elected by Shareholders. In
such event the Trustees then in office shall call a Shareholders' meeting for
the election of Trustees. Except for the foregoing circumstances, the Trustees
shall continue to hold office and may appoint successor Trustees.
SECTION 2.14. RESIGNATION AND REMOVAL. Any Trustee may resign his trust
(without the need for any prior or subsequent accounting) by an instrument in
writing signed by him and delivered to the other Trustees and such resignation
shall be effective upon such delivery, or at a later date according to the terms
of the instrument. Any of the Trustees may be removed (provided the aggregate
number of Trustees after such removal shall not be less than two) for cause, by
the action of two-thirds of the remaining Trustees or by action of two-thirds of
the outstanding Shares of the Trust (for purposes of determining the
circumstances and procedures under which any such removal by the Shareholders
may take place, the provisions of Section 16(c) of the 1940 Act (or any
successor provisions) shall be applicable to the same extent as if the Trust
were subject to the provisions of that Section). Upon the resignation or removal
of a Trustee, or his otherwise ceasing to be a Trustee, he shall execute and
deliver such documents as the remaining Trustees shall require for the purpose
of memorializing the conveyance to the Trust or the remaining Trustees of any
Trust Property held in the name of the resigning or removed Trustee. Upon the
incapacity or death of any Trustee, his legal representative shall execute and
deliver on his behalf such documents as the remaining Trustees shall require as
provided in the preceding sentence.
SECTION 2.15. VACANCIES. The term of office of a Trustee shall terminate
and a vacancy shall occur in the event of his death, retirement, resignation,
removal, bankruptcy, adjudicated incompetence or other incapacity to perform the
duties of the office of a Trustee. No such vacancy shall operate to annul the
Declaration or to revoke any existing agency created pursuant to the terms of
the Declaration. In the case of an existing vacancy, including a vacancy
existing by reason of an increase in the number of Trustees, subject to the
provisions of Section 16(a) of the 1940 Act, the remaining Trustees shall fill
such vacancy by the appointment of such other person as they in their discretion
shall see fit, made by a written instrument signed by a majority of the Trustees
then in office. Any such appointment shall not become effective, however, until
the person named in the written instrument of appointment
-9-
<PAGE>
shall have accepted in writing such appointment and agreed in writing to be
bound by the terms of the Declaration. An appointment of a Trustee may be made
in anticipation of a vacancy to occur at a later date by reason of retirement,
resignation or increase in the number of Trustees, provided that such
appointment shall not become effective prior to such retirement, resignation or
increase in the number of Trustees. Whenever a vacancy in the number of Trustees
shall occur, until such vacancy is filled as provided in this Section 2.15, the
Trustees in office, regardless of their number, shall have all the powers
granted to the Trustees and shall discharge all the duties imposed upon the
Trustees by the Declaration. A written instrument certifying the existence of
such vacancy signed by a majority of the Trustees in office shall be conclusive
evidence of the existence of such vacancy.
SECTION 2.16. DELEGATION OF POWER TO OTHER TRUSTEES. Any Trustee may, by
power of attorney, delegate his power for a period not exceeding six (6) months
at any one time to any other Trustee or Trustees; provided that in no case shall
fewer than two (2) Trustees personally exercise the powers granted to the
Trustees under this Declaration except as herein otherwise expressly provided.
ARTICLE III
CONTRACTS
SECTION 3.1. UNDERWRITING CONTRACT. The Trustees may in their discretion
from time to time enter into an exclusive or non-exclusive distribution contract
or contracts providing for the sale of the Shares to net the Trust or the
applicable Series of the Trust not less than the amount provided for in Section
7.1 of Article VII hereof, whereby the Trustees may either agree to sell the
Shares to the other party to the contract or appoint such other party as their
sales agent for the Shares, and in either case on such terms and conditions, if
any, as may be prescribed in the By-laws, and such further terms and conditions
as the Trustees may in their discretion determine not inconsistent with the
provisions of this Article III or of the By-laws; and such contract may also
provide for the repurchase of the Shares by such other party as agent of the
Trustees.
SECTION 3.2. ADVISORY OR MANAGEMENT CONTRACT. Subject to approval by a vote
of a majority of Shares outstanding and entitled to vote, the Trustees may in
their discretion from time to time enter into one or more investment advisory or
management contracts or, if the Trustees establish multiple Series, separate
investment advisory or management contracts with respect to one or more Series
whereby the other party or parties to any such contracts shall undertake to
furnish the Trust or such Series management, investment advisory,
administration, accounting, legal, statistical and research facilities and
services, promotional or marketing activities, and such other facilities and
services, if any, as the Trustees shall
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from time to time consider desirable and all upon such terms and conditions as
the Trustees may in their discretion determine. Notwithstanding any provisions
of the Declaration, the Trustees may authorize the Investment Advisers, or any
of them, under any such contracts (subject to such general or specific
instructions as the Trustees may from time to time adopt) to effect purchases,
sales, loans or exchanges of portfolio securities and other investments of the
Trust on behalf of the Trustees or may authorize any officer, employee or
Trustee to effect such purchases, sales, loans or exchanges pursuant to
recommendations of such Investment Advisers, or any of them (and all without
further action by the Trustees). Any such purchases, sales, loans and exchanges
shall be deemed to have been authorized by all of the Trustees. The Trustees
may, in their sole discretion, call a meeting of Shareholders in order to submit
to a vote of Shareholders at such meeting the approval or continuance of any
such investment advisory or management contract. If the Shareholders of any one
or more of the Series of the Trust should fail to approve any such investment
advisory or management contract, the Investment Adviser may nonetheless serve as
Investment Adviser with respect to any Series whose Shareholders approve such
contract.
SECTION 3.3. ADMINISTRATION AGREEMENT. The Trustees may in their discretion
from time to time enter into an administration agreement or, if the Trustees
establish multiple Series or Classes separate administration agreements with
respect to each Series or Class, whereby the other party to such agreement shall
undertake to manage the business affairs of the Trust or of a Series or Class
thereof of the Trust and furnish the Trust or a Series or a Class thereof with
office facilities, and shall be responsible for the ordinary clerical,
bookkeeping and recordkeeping services at such office facilities, and other
facilities and services, if any, and all upon such terms and conditions as the
Trustees may in their discretion determine.
SECTION 3.4. SERVICE AGREEMENT. The Trustees may in their discretion from
time to time enter into Service Agreements with respect to one or more Series or
Classes of Shares whereby the other parties to such Service Agreements will
provide administration and/or support services pursuant to Administration Plans
and Service Plans, and all upon such terms and conditions as the Trustees in
their discretion may determine.
SECTION 3.5. TRANSFER AGENT. The Trustees may in their discretion from time
to time enter into a transfer agency and shareholder service contract whereby
the other party to such contract shall undertake to furnish transfer agency and
shareholder services to the Trust. The contract shall have such terms and
conditions as the Trustees may in their discretion determine not inconsistent
with the Declaration. Such services may be provided by one or more Persons.
SECTION 3.6. CUSTODIAN. The Trustees may appoint or otherwise engage one or
more banks or trust companies, each having an aggregate capital, surplus and
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undivided profits (as shown in its last published report) of at least two
million dollars ($2,000,000) to serve as Custodian with authority as its agent,
but subject to such restrictions, limitations and other requirements, if any, as
may be contained in the By-Laws of the Trust. The Trustees may also authorize
the Custodian to employ one or more sub-custodians, including such foreign banks
and securities depositories as meet the requirements of applicable provisions of
the 1940 Act, and upon such terms and conditions as may be agreed upon between
the Custodian and such sub-custodian, to hold securities and other assets of the
Trust and to perform the acts and services of the Custodian, subject to
applicable provisions of law and resolutions adopted by the Trustees.
Section 3.7. Affiliations of Trustees or Officers, Etc. The fact that:
(i) any of the Shareholders, Trustees or officers of the Trust or any
Series thereof is a shareholder, director, officer, partner, trustee,
employee, manager, adviser or distributor of or for any partnership,
corporation, trust, association or other organization or of or for any
parent or affiliate of any organization, with which a contract of the
character described in Sections 3.1, 3.2, 3.3 or 3.4 above or for services
as Custodian, Transfer Agent or disbursing agent or for related services
may have been or may hereafter be made, or that any such organization, or
any parent or affiliate thereof, is a Shareholder of or has an interest in
the Trust, or that
(ii) any partnership, corporation, trust, association or other
organization with which a contract of the character described in Sections
3.1, 3.2, 3.3 or 3.4 above or for services as Custodian, Transfer Agent or
disbursing agent or for related services may have been or may hereafter be
made also has any one or more of such contracts with one or more other
partnerships, corporations, trusts, associations or other organizations, or
has other business or interests,
shall not affect the validity of any such contract or disqualify any
Shareholder, Trustee or officer of the Trust from voting upon or executing the
same or create any liability or accountability to the Trust or its Shareholders.
SECTION 3.8. COMPLIANCE WITH 1940 ACT. Any contract entered into pursuant
to Sections 3.1 or 3.2 shall be consistent with and subject to the requirements
of Section 15 of the 1940 Act (including any amendment thereof or other
applicable Act of Congress hereafter enacted), as modified by any applicable
order or orders of the Commission, with respect to its continuance in effect,
its termination and the method of authorization and approval of such contract or
renewal thereof.
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ARTICLE IV
LIMITATIONS OF LIABILITY OF SHAREHOLDERS,
TRUSTEES AND OTHERS
SECTION 4.1. NO PERSONAL LIABILITY OF SHAREHOLDERS, TRUSTEES, ETC. No
Shareholder shall be subject to any personal liability whatsoever to any Person
in connection with Trust Property or the acts, obligations or affairs of the
Trust or any Series thereof. No Trustee, officer, employee or agent of the Trust
or any Series thereof shall be subject to any personal liability whatsoever to
any Person, other than to the Trust or its Shareholders, in connection with
Trust Property or the affairs of the Trust, except to the extent arising from
bad faith, willful misfeasance, gross negligence or reckless disregard of his
duties with respect to such Person; and all such Persons shall look solely to
the Trust Property, or to the Property of one or more specific Series of the
Trust if the claim arises from the conduct of such Trustee, officer, employee or
agent with respect to only such Series, for satisfaction of claims of any nature
arising in connection with the affairs of the Trust. If any Shareholder,
Trustee, officer, employee, or agent, as such, of the Trust or any Series
thereof, is made a party to any suit or proceeding to enforce any such liability
of the Trust or any Series thereof, he shall not, on account thereof, be held to
any personal liability. The Trust shall indemnify and hold each Shareholder
harmless from and against all claims and liabilities, to which such Shareholder
may become subject by reason of his being or having been a Shareholder, and
shall reimburse such Shareholder or former Shareholder (or his or her heirs,
executors, administrators or other legal representatives or in the case of a
corporation or other entity, its corporate or other general successor) out of
the Trust Property for all legal and other expenses reasonably incurred by him
in connection with any such claim or liability. The indemnification and
reimbursement required by the preceding sentence shall be made only out of
assets of the one or more Series whose Shares were held by said Shareholder at
the time the act or event occurred which gave rise to the claim against or
liability of said Shareholder. The rights accruing to a Shareholder under this
Section 4.1 shall not impair any other right to which such Shareholder may be
lawfully entitled, nor shall anything herein contained restrict the right of the
Trust or any Series thereof to indemnify or reimburse a Shareholder in any
appropriate situation even though not specifically provided herein.
SECTION 4.2. NON-LIABILITY OF TRUSTEES, ETC. No Trustee, officer, employee
or agent of the Trust or any Series thereof shall be liable to the Trust, its
Shareholders, or to any Shareholder, Trustee, officer, employee, or agent
thereof for any action or failure to act (including without limitation the
failure to compel in any way any former or acting Trustee to redress any breach
of trust) except for his own bad faith, willful misfeasance, gross negligence or
reckless disregard of the duties involved in the conduct of his office.
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SECTION 4.3. MANDATORY INDEMNIFICATION. (a) Subject to the exceptions and
limitations contained in paragraph (b) below:
(i) every person who is, or has been, a Trustee, officer, employee or
agent of the Trust (including any individual who serves at its request as
director, officer, partner, trustee or the like of another organization in
which it has any interest as a shareholder, creditor or otherwise) shall be
indemnified by the Trust, or by one or more Series thereof if the claim
arises from his or her conduct with respect to only such Series, to the
fullest extent permitted by law against all liability and against all
expenses reasonably incurred or paid by him in connection with any claim,
action, suit or proceeding in which he becomes involved as a party or
otherwise by virtue of his being or having been a Trustee or officer and
against amounts paid or incurred by him in the settlement thereof;
(ii) the words "claim," "action," "suit," or "proceeding" shall apply
to all claims, actions, suits or proceedings (civil, criminal, or other,
including appeals), actual or threatened; and the words "liability" and
"expenses" shall include, without limitation, attorneys' fees, costs,
judgments, amounts paid in settlement, fines, penalties and other
liabilities.
(b) No indemnification shall be provided hereunder to a Trustee or officer:
(i) against any liability to the Trust, a Series thereof or the
Shareholders by reason of willful misfeasance, bad faith, gross negligence
or reckless disregard of the duties involved in the conduct of his office;
(ii) with respect to any matter as to which he shall have been finally
adjudicated not to have acted in good faith in the reasonable belief that
his action was in the best interest of the Trust or a Series thereof;
(iii) in the event of a settlement or other disposition not involving
a final adjudication as provided in paragraph (b)(ii) resulting in a
payment by a Trustee or officer, unless there has been a determination that
such Trustee or officer did not engage in willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the
conduct of his office:
(A) by the court or other body approving the settlement or other
disposition;
(B) based upon a review of readily available facts (as opposed to
a full trial-type inquiry) by (x) vote of a majority of the Non-
interested Trustees acting on the matter (provided that a majority of
the
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Non-interested Trustees then in office act on the matter) or (y)
written opinion of independent legal counsel; or
(C) by a vote of a majority of the Shares outstanding and
entitled to vote (excluding Shares owned of record or beneficially by
such individual).
(c) The rights of indemnification herein provided may be insured against by
policies maintained by the Trust, shall be severable, shall not affect any other
rights to which any Trustee or officer may now or hereafter be entitled, shall
continue as to a person who has ceased to be such Trustee or officer and shall
inure to the benefit of the heirs, executors, administrators and assigns of such
a person. Nothing contained herein shall affect any rights to indemnification to
which personnel of the Trust or any Series thereof other than Trustees and
officers may be entitled by contract or otherwise under law.
(d) Expenses of preparation and presentation of a defense to any claim,
action, suit or proceeding of the character described in paragraph (a) of this
Section 4.3 may be advanced by the Trust or a Series thereof prior to final
disposition thereof upon receipt of an undertaking by or on behalf of the
recipient to repay such amount if it is ultimately determined that he is not
entitled to indemnification under this Section 4.3, provided that either:
(i) such undertaking is secured by a surety bond or some other
appropriate security provided by the recipient, or the Trust or Series
thereof shall be insured against losses arising out of any such advances;
or
(ii) a majority of the Non-interested Trustees acting on the matter
(provided that a majority of the Non-interested Trustees act on the matter)
or an independent legal counsel in a written opinion shall determine, based
upon a review of readily available facts (as opposed to a full trial-type
inquiry), that there is reason to believe that the recipient ultimately
will be found entitled to indemnification.
As used in this Section 4.3, a "Non-interested Trustee" is one who (i)
is not an "Interested Person" of the Trust (including anyone who has been
exempted from being an "Interested Person" by any rule, regulation or order of
the Commission), and (ii) is not involved in the claim, action, suit or
proceeding.
SECTION 4.4. NO BOND REQUIRED OF TRUSTEES. No Trustee shall be obligated to
give any bond or other security for the performance of any of his duties
hereunder.
SECTION 4.5. NO DUTY OF INVESTIGATION; NOTICE IN TRUST INSTRUMENTS, ETC. No
purchaser, lender, transfer agent or other Person dealing with the Trustees or
any
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officer, employee or agent of the Trust or a Series thereof shall be bound to
make any inquiry concerning the validity of any transaction purporting to be
made by the Trustees or by said officer, employee or agent or be liable for the
application of money or property paid, loaned, or delivered to or on the order
of the Trustees or of said officer, employee or agent. Every obligation,
contract, instrument, certificate, Share, other security of the Trust or a
Series thereof or undertaking, and every other act or thing whatsoever executed
in connection with the Trust shall be conclusively presumed to have been
executed or done by the executors thereof only in their capacity as Trustees
under this Declaration or in their capacity as officers, employees or agents of
the Trust or a Series thereof. Every written obligation, contract, instrument,
certificate, Share, other security of the Trust or a Series thereof or
undertaking made or issued by the Trustees may recite that the same is executed
or made by them not individually, but as Trustees under the Declaration, and
that the obligations of the Trust or a Series thereof under any such instrument
are not binding upon any of the Trustees or Shareholders individually, but bind
only the Trust Property or the Trust Property of the applicable Series, and may
contain any further recital which they may deem appropriate, but the omission of
such recital shall not operate to bind the Trustees individually. The Trustees
shall at all times maintain insurance for the protection of the Trust Property
or the Trust Property of the applicable Series, its Shareholders, Trustees,
officers, employees and agents in such amount as the Trustees shall deem
adequate to cover possible tort liability, and such other insurance as the
Trustees in their sole judgment shall deem advisable.
SECTION 4.6. RELIANCE ON EXPERTS, ETC. Each Trustee, officer or employee of
the Trust or a Series thereof shall, in the performance of his duties, be fully
and completely justified and protected with regard to any act or any failure to
act resulting from reliance in good faith upon the books of account or other
records of the Trust or a Series thereof, upon an opinion of counsel, or upon
reports made to the Trust or a Series thereof by any of its officers or
employees or by the Investment Adviser, the Administrator, the Distributor,
Transfer Agent, selected dealers, accountants, appraisers or other experts or
consultants selected with reasonable care by the Trustees, officers or employees
of the Trust, regardless of whether such counsel or expert may also be a
Trustee.
ARTICLE V
SHARES OF BENEFICIAL INTEREST
SECTION 5.1. BENEFICIAL INTEREST. The interest of the beneficiaries
hereunder shall be divided into transferable Shares of beneficial interest
without par value. The number of such Shares of beneficial interest authorized
hereunder is unlimited. The Trustees shall have the exclusive authority without
the requirement of Shareholder approval to establish and designate one or more
Series of shares and one or more
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Classes thereof as the Trustees deem necessary or desirable. Each share of any
Series shall represent an equal proportionate Share in the assets of that Series
with each other Share in that Series. Subject to the provisions of Section 5.11
hereof, the Trustees may also authorize the creation of additional Series of
Shares (the proceeds of which may be invested in separate, independently managed
portfolios) and additional Classes of Shares within any Series. All Shares
issued hereunder including, without limitation, Shares issued in connection with
a dividend in Shares or a split in Shares, shall be fully paid and nonassessable
by the Trust.
SECTION 5.2. RIGHTS OF SHAREHOLDERS. The ownership of the Trust Property of
every description and the right to conduct any business hereinbefore described
are vested exclusively in the Trustees, and the Shareholders shall have no
interest therein other than the beneficial interest conferred by their Shares,
and they shall have no right to call for any partition or division of any
property, profits, rights or interests of the Trust nor can they be called upon
to share or assume any losses of the Trust or suffer an assessment of any kind
by virtue of their ownership of Shares. The Shares shall be personal property
giving only the rights specifically set forth in this Declaration. The Shares
shall not entitle the holder to preference, preemptive, appraisal, conversion or
exchange rights, except as the Trustees may determine with respect to any Series
or Class of Shares.
SECTION 5.3. TRUST ONLY. It is the intention of the Trustees to create only
the relationship of Trustee and beneficiary between the Trustees and each
Shareholder from time to time. It is not the intention of the Trustees to create
a general partnership, limited partnership, joint stock association,
corporation, bailment or any form of legal relationship other than a trust.
Nothing in this Declaration of Trust shall be construed to make the
Shareholders, either by themselves or with the Trustees, partners or members of
a joint stock association.
SECTION 5.4. ISSUANCE OF SHARES. The Trustees in their discretion may, from
time to time without vote of the Shareholders, issue Shares, in addition to the
then issued and outstanding Shares and Shares held in the treasury, to such
party or parties and for such amount and type of consideration, including cash
or property, at such time or times and on such terms as the Trustees may deem
best, except that only Shares previously contracted to be sold may be issued
during any period when the right of redemption is suspended pursuant to Section
6.9 hereof, and may in such manner acquire other assets (including the
acquisition of assets subject to, and in connection with the assumption of,
liabilities) and businesses. In connection with any issuance of Shares, the
Trustees may issue fractional Shares and Shares held in the treasury. The
Trustees may from time to time divide or combine the Shares of the Trust or, if
the Shares be divided into Series or Classes, of any Series or any Class thereof
of the Trust, into a greater or lesser number without thereby changing the
proportionate beneficial interests in the Trust or in the Trust Property
allocated or belonging to such Series or Class. Contributions to the Trust or
Series thereof may be
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accepted for, and Shares shall be redeemed as, whole Shares and/or 1/1,000ths of
a Share or integral multiples thereof.
SECTION 5.5. REGISTER OF SHARES. A register shall be kept at the principal
office of the Trust or an office of the Transfer Agent which shall contain the
names and addresses of the Shareholders and the number of Shares held by them
respectively and a record of all transfers thereof. Such register shall be
conclusive as to who are the holders of the Shares and who shall be entitled to
receive dividends or distributions or otherwise to exercise or enjoy the rights
of Shareholders. No Shareholder shall be entitled to receive payment of any
dividend or distribution, nor to have notice given to him as provided herein or
in the By-laws, until he has given his address to the Transfer Agent or such
other officer or agent of the Trustees as shall keep the said register for entry
thereon. It is not contemplated that certificates will be issued for the Shares;
however, the Trustees, in their discretion, may authorize the issuance of share
certificates and promulgate appropriate rules and regulations as to their use.
SECTION 5.6. TRANSFER OF SHARES. Shares shall be transferable on the
records of the Trust only by the record holder thereof or by his agent thereunto
duly authorized in writing, upon delivery to the Trustees or the Transfer Agent
of a duly executed instrument of transfer, together with such evidence of the
genuineness of each such execution and authorization and of other matters as may
reasonably be required. Upon such delivery the transfer shall be recorded on the
register of the Trust. Until such record is made, the Shareholder of record
shall be deemed to be the holder of such Shares for all purposes hereunder and
neither the Trustees nor any transfer agent or registrar nor any officer,
employee or agent of the Trust shall be affected by any notice of the proposed
transfer.
Any person becoming entitled to any Shares in consequence of the death,
bankruptcy or incompetence of any Shareholder, or otherwise by operation of law,
shall be recorded on the register of Shares as the holder of such Shares upon
production of the proper evidence thereof to the Trustees or the Transfer Agent,
but until such record is made, the Shareholder of record shall be deemed to be
the holder of such Shares for all purposes hereunder and neither the Trustees
nor any Transfer Agent or registrar nor any officer or agent of the Trust shall
be affected by any notice of such death, bankruptcy or incompetence, or other
operation of law.
SECTION 5.7. NOTICES. Any and all notices to which any Shareholder may be
entitled and any and all communications shall be deemed duly served or given if
mailed, postage prepaid, addressed to any Shareholder of record at his last
known address as recorded on the register of the Trust.
SECTION 5.8. TREASURY SHARES. Shares held in the treasury shall, until
resold pursuant to Section 5.4, not confer any voting rights on the Trustees,
nor shall such
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Shares be entitled to any dividends or other distributions declared with respect
to the Shares.
SECTION 5.9. VOTING POWERS. The Shareholders shall have power to vote only
(i) for the election of Trustees as provided in Section 2.13; (ii) with respect
to any investment advisory contract entered into pursuant to Section 3.2; (iii)
with respect to termination of the Trust or a Series or Class thereof as
provided in Section 8.2; (iv) with respect to any amendment of this Declaration
to the extent and as provided in Section 8.3; (v) with respect to any merger,
consolidation or sale of assets as provided in Section 8.4; (vi) with respect to
incorporation of the Trust to the extent and as provided in Section 8.5; (vii)
to the same extent as the stockholders of a Massachusetts business corporation
as to whether or not a court action, proceeding or claim should or should not be
brought or maintained derivatively or as a class action on behalf of the Trust
or a Series thereof or the Shareholders of either; (viii) with respect to any
plan adopted pursuant to Rule 12b-1 (or any successor rule) under the 1940 Act,
and related matters, to the extent required under the 1940 Act; and (ix) with
respect to such additional matters relating to the Trust as may be required by
this Declaration, the By-laws or any registration of the Trust as an investment
company under the 1940 Act with the Commission (or any successor agency) or as
the Trustees may consider necessary or desirable. Each whole Share shall be
entitled to one vote as to any matter on which it is entitled to vote and each
fractional Share shall be entitled to a proportionate fractional vote. On any
matter submitted to a vote of Shareholders, all Shares shall be voted by
individual Series except (1) when permitted by the 1940 Act, Shares shall be
voted in the aggregate and not by individual Series; and (2) when the Trustees
have determined that the matter affects only the interests of one or more Series
or Class thereof, then only the Shareholders of such Series or Class thereof
shall be entitled to vote thereon. The Trustees may, in conjunction with the
establishment of any further Series or any Classes of Shares, establish
conditions under which the several Series or Classes of Shares shall have
separate voting rights or no voting rights. There shall be no cumulative voting
in the election of Trustees. Until Shares are issued, the Trustees may exercise
all rights of Shareholders and may take any action required by law, this
Declaration or the Bylaws to be taken by Shareholders. The By-laws may include
further provisions for Shareholders' votes and meetings and related matters.
SECTION 5.10. MEETINGS OF SHAREHOLDERS. No annual or regular meetings of
Shareholders are required. Special meetings of the Shareholders, including
meetings involving only the holders of Shares of one or more but less than all
Series or Classes thereof, may be called at any time by the Chairman of the
Board, President, or any Vice-President of the Trust, and shall be called by the
President or the Secretary at the request, in writing or by resolution, of a
majority of the Trustees, or at the written request of the holder or holders of
ten percent (10%) or more of the total number of Shares then issued and
outstanding of the Trust entitled to vote at such meeting. Meetings of the
Shareholders of any Series of the Trust shall be called by the
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President or the Secretary at the written request of the holder or holders of
ten percent (10%) or more of the total number of Shares then issued and
outstanding of such Series of the Trust entitled to vote at such meeting. Any
such request shall state the purpose of the proposed meeting.
SECTION 5.11. SERIES OR CLASS DESIGNATION. (a) Without limiting the
authority of the Trustees set forth in Section 5.1 to establish and designate
any further Series, it is hereby confirmed that the Trust consists of the
presently Outstanding Shares of a single Series (the "Existing Series").
(b) Without limiting the authority of the Trustees set forth in Section
5.1 to establish and designate any further Classes, it is hereby confirmed that
each Series of the Trust's Shares consists of a single Class.
(c) The Shares of the existing Series and each Class thereof herein
established and designated and any Shares of any further Series and Classes that
may from time to time be established and designated by the Trustees shall be
established and designated, and the variations in the relative rights and
preferences as between the different Series shall be fixed and determined, by
the Trustees (unless the Trustees otherwise determine with respect to further
Series or Classes at the time of establishing and designating the same);
provided, that all Shares shall be identical except that there may be variations
so fixed and determined between different Series or Classes thereof as to
investment objective, policies and restrictions, purchase price, payment
obligations, distribution expenses, right of redemption, special and relative
rights as to dividends and on liquidation, conversion rights, exchange rights,
and conditions under which the several Series shall have separate voting rights,
all of which are subject to the limitations set forth below. All references to
Shares in this Declaration shall be deemed to be Shares of any or all Series or
Classes as the context may require.
(d) As to any existing Series and Classes, both heretofore and herein
established and designated, and any further division of Shares of the Trust into
additional Series or Classes, the following provisions shall be applicable:
(i) The number of authorized Shares and the number of Shares of each
Series or Class thereof that may be issued shall be unlimited. The Trustees
may classify or reclassify any unissued Shares or any Shares previously
issued and reacquired of any Series or Class into one or more Series or one
or more Classes that may be established and designated from time to time.
The Trustees may hold as treasury shares (of the same or some other Series
or Class), reissue for such consideration and on such terms as they may
determine, or cancel any Shares of any Series or Class reacquired by the
Trust at their discretion from time to time.
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(ii) All consideration received by the Trust for the issue or sale of
Shares of a particular Series or Class, together with all assets in which
such consideration is invested or reinvested, all income, earnings, profits
and proceeds thereof, including any proceeds derived from the sale,
exchange or liquidation of such assets, and any funds or payments derived
from any reinvestment of such proceeds in whatever form the same may be,
shall irrevocably belong to that Series for all purposes, subject only to
the rights of creditors of such Series and except as may otherwise be
required by applicable tax laws, and shall be so recorded upon the books of
account of the Trust. In the event that there are any assets, income,
earnings, profits and proceeds thereof, funds or payments which are not
readily identifiable as belonging to any particular Series, the Trustees
shall allocate them among any one or more of the Series established and
designated from time to time in such manner and on such basis as they, in
their sole discretion, deem fair and equitable. Each such allocation by the
Trustees shall be conclusive and binding upon the Shareholders of all
Series for all purposes. No holder of Shares of any Series shall have any
claim on or right to any assets allocated or belonging to any other Series.
(iii) The assets belonging to each particular Series shall be charged
with the liabilities of the Trust in respect of that Series or the
appropriate Class or Classes thereof and all expenses, costs, charges and
reserves attributable to that Series or Class or Classes thereof, and any
general liabilities, expenses, costs, charges or reserves of the Trust
which are not readily identifiable as belonging to any particular Series
shall be allocated and charged by the Trustees to and among any one or more
of the Series established and designated from time to time in such manner
and on such basis as the Trustees in their sole discretion deem fair and
equitable. Each allocation of liabilities, expenses, costs, charges and
reserves by the Trustees shall be conclusive and binding upon the
Shareholders of all Series and Classes for all purposes. The Trustees shall
have full discretion, to the extent not inconsistent with the 1940 Act, to
determine which items are capital; and each such determination and
allocation shall be conclusive and binding upon the Shareholders. The
assets of a particular Series of the Trust shall, under no circumstances,
be charged with liabilities attributable to any other Series or Class
thereof of the Trust. All persons extending credit to, or contracting with
or having any claim against a particular Series or Class of the Trust shall
look only to the assets of that particular Series for payment of such
credit, contract or claim.
(iv) The power of the Trustees to pay dividends and make distributions
shall be governed by Section 7.2 of this Declaration with respect to any
Series or Classes which represent the interests in the assets of the Trust
immediately prior to the establishment of two or more Series or Classes.
With
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respect to any other Series or Class, dividends and distributions on Shares
of a particular Series or Class may be paid with such frequency as the
Trustees may determine, which may be daily or otherwise, pursuant to a
standing resolution or resolutions adopted only once or with such frequency
as the Trustees may determine, to the holders of Shares of that Series or
Class, from such of the income and capital gains, accrued or realized, from
the assets belonging to that Series, as the Trustees may determine, after
providing for actual and accrued liabilities belonging to that Series or
Class. All dividends and distributions on Shares of a particular Series or
Class shall be distributed pro rata to the Shareholders of that Series or
Class in proportion to the number of Shares of that Series or Class held by
such Shareholders at the time of record established for the payment of such
dividends or distribution.
(v) Each Share of a Series of the Trust shall represent a beneficial
interest in the net assets of such Series. Each holder of Shares of a
Series or Class thereof shall be entitled to receive his pro rata share of
distributions of income and capital gains made with respect to such Series
or Class net of expenses. Upon redemption of his Shares or indemnification
for liabilities incurred by reason of his being or having been a
Shareholder of a Series or Class, such Shareholder shall be paid solely out
of the funds and property of such Series of the Trust. Upon liquidation or
termination of a Series or Class thereof of the Trust, Shareholders of such
Series or Class thereof shall be entitled to receive a pro rata share of
the net assets of such Series. A Shareholder of a particular Series of the
Trust shall not be entitled to participate in a derivative or class action
on behalf of any other Series or the Shareholders of any other Series of
the Trust.
(vi) On each matter submitted to a vote of Shareholders, all Shares of
all Series and Classes shall vote as a single class; provided, however,
that (1) as to any matter with respect to which a separate vote of any
Series or Class is required by the 1940 Act or is required by attributes
applicable to any Series or Class or is required by any Rule 12b-1 plan,
such requirements as to a separate vote by that Series or Class shall
apply; (2) to the extent that a matter referred to in clause (1) above
affects more than one Class or Series and the interests of each such Class
or Series in the matter are identical, then, subject to clause (3) below,
the Shares of all such affected Classes or Series shall vote as a single
Class; (3) as to any matter which does not affect the interests of a
particular Series or Class, only the holders of Shares of the one or more
affected Series or Classes shall be entitled to vote; and (4) the
provisions of the following sentence shall apply. On any matter that
pertains to any particular Class of a particular Series or to any Class
expenses with respect to any Series which matter may be submitted to a vote
of Shareholders, only Shares of the affected Class or that Series, as the
case may be, shall be entitled to vote except that: (x) to the extent said
matter affects Shares of another Class or Series, such
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other Shares shall also be entitled to vote, and in such cases Shares of
the affected Class, as the case may be, of such Series shall be voted in
the aggregate together with such other Shares; and (y) to the extent that
said matter does not affect Shares of a particular Class of such Series,
said Shares shall not be entitled to vote (except where otherwise required
by law or permitted by the Trustees acting in their sole discretion) even
though the matter is submitted to a vote of the Shareholders of any other
Class or Series.
(vii) Except as otherwise provided in this Article V, the Trustees
shall have the power to determine the designations, preferences,
privileges, payment obligations, limitations and rights, including voting
and dividend rights, of each Class and Series of Shares. Subject to
compliance with the requirements of the 1940 Act, the Trustees shall have
the authority to provide that the holders of Shares of any Series or Class
shall have the right to convert or exchange said Shares into Shares of one
or more Series or Classes of Shares in accordance with such requirements,
conditions and procedures as may be established by the Trustees.
(viii) The establishment and designation of any Series or Classes of
Shares shall be effective upon the execution by a majority of the then
Trustees of an instrument setting forth such establishment and designation
and the relative rights and preferences of such Series or Classes, or as
otherwise provided in such instrument. At any time that there are no Shares
outstanding of any particular Series or Class previously established and
designated, the Trustees may by an instrument executed by a majority of
their number abolish that Series or Class and the establishment and
designation thereof. Each instrument referred to in this section shall have
the status of an amendment to this Declaration.
SECTION 5.12. ASSENT TO DECLARATION OF TRUST. Every Shareholder, by virtue
of having become a Shareholder, shall be held to have expressly assented and
agreed to the terms hereof and to have become a party hereto.
ARTICLE VI
REDEMPTION AND REPURCHASE OF SHARES
SECTION 6.1. REDEMPTION OF SHARES. (a) All Shares of the Trust shall be
redeemable, at the redemption price determined in the manner set out in this
Declaration. Redeemed or repurchased Shares may be resold by the Trust. The
Trust may require any Shareholder to pay a sales charge to the Trust, the
underwriter, or any other person designated by the Trustees upon redemption or
repurchase of
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Shares in such amount and upon such conditions as shall be determined from time
to time by the Trustees.
(b) The Trust shall redeem the Shares of the Trust or any Series or Class
thereof at the price determined as hereinafter set forth, upon the appropriately
verified written application of the record holder thereof (or upon such other
form of request as the Trustees may determine) at such office or agency as may
be designated from time to time for that purpose by the Trustees. The Trustees
may from time to time specify additional conditions, not inconsistent with the
1940 Act, regarding the redemption of Shares in the Trust's then effective
Prospectus.
SECTION 6.2. PRICE. Shares shall be redeemed at a price based on their net
asset value determined as set forth in Section 7.1 hereof as of such time as the
Trustees shall have theretofore prescribed by resolution. In the absence of such
resolution, the redemption price of Shares deposited shall be based on the net
asset value of such Shares next determined as set forth in Section 7.1 hereof
after receipt of such application. The amount of any contingent deferred sales
charge or redemption fee payable upon redemption of Shares may be deducted from
the proceeds of such redemption.
SECTION 6.3. PAYMENT. Payment of the redemption price of Shares of the
Trust or any Series or Class thereof shall be made in cash or in property to the
Shareholder at such time and in the manner, not inconsistent with the 1940 Act
or other applicable laws, as may be specified from time to time in the Trust's
then effective Prospectus, subject to the provisions of Section 6.4 hereof.
Notwithstanding the foregoing, the Trustees may withhold from such redemption
proceeds any amount arising (i) from a liability of the redeeming Shareholder to
the Trust or (ii) in connection with any Federal or state tax withholding
requirements.
SECTION 6.4. EFFECT OF SUSPENSION OF DETERMINATION OF NET ASSET VALUE. If,
pursuant to Section 6.9 hereof, the Trustees shall declare a suspension of the
determination of net asset value with respect to Shares of the Trust or of any
Series or Class thereof, the rights of Shareholders (including those who shall
have applied for redemption pursuant to Section 6.1 hereof but who shall not yet
have received payment) to have Shares redeemed and paid for by the Trust or a
Series or Class thereof shall be suspended until the termination of such
suspension is declared. Any record holder who shall have his redemption right so
suspended may, during the period of such suspension, by appropriate written
notice of revocation at the office or agency where application was made, revoke
any application for redemption not honored and withdraw any Share certificates
on deposit. The redemption price of Shares for which redemption applications
have not been revoked shall be based on the net asset value of such Shares next
determined as set forth in Section 7.1 after the termination of such suspension,
and payment shall be made within seven (7) days
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after the date upon which the application was made plus the period after such
application during which the determination of net asset value was suspended.
SECTION 6.5. REPURCHASE BY AGREEMENT. The Trust may repurchase Shares
directly, or through the Distributor or another agent designated for the
purpose, by agreement with the owner thereof at a price not exceeding the net
asset value per share determined as of the time when the purchase or contract of
purchase is made or the net asset value as of any time which may be later
determined pursuant to Section 7.1 hereof, provided payment is not made for the
Shares prior to the time as of which such net asset value is determined.
SECTION 6.6. REDEMPTION OF SHAREHOLDER'S INTEREST. The Trustees, in their
sole discretion, may cause the Trust to redeem all of the Shares of one or more
Series or Class thereof held by any Shareholder if the value of such Shares held
by such Shareholder is less than the minimum amount established from time to
time by the Trustees.
SECTION 6.7. REDEMPTION OF SHARES IN ORDER TO QUALIFY AS REGULATED
INVESTMENT COMPANY; DISCLOSURE OF HOLDING. (a) If the Trustees shall, at any
time and in good faith, be of the opinion that direct or indirect ownership of
Shares or other securities of the Trust has or may become concentrated in any
Person to an extent which would disqualify the Trust or any Series of the Trust
as a regulated investment company under the Internal Revenue Code of 1986, then
the Trustees shall have the power by lot or other means deemed equitable by them
(i) to call for redemption by any such Person a number, or principal amount, of
Shares or other securities of the Trust or any Series of the Trust sufficient to
maintain or bring the direct or indirect ownership of Shares or other securities
of the Trust or any Series of the Trust into conformity with the requirements
for such qualification and (ii) to refuse to transfer or issue Shares or other
securities of the Trust or any Series of the Trust to any Person whose
acquisition of the Shares or other securities of the Trust or any Series of the
Trust in question would result in such disqualification. The redemption shall be
effected at the redemption price and in the manner provided in Section 6.1.
(b) The holders of Shares or other securities of the Trust or any Series of
the Trust shall upon demand disclose to the Trustees in writing such information
with respect to direct and indirect ownership of Shares or other securities of
the Trust or any Series of the Trust as the Trustees deem necessary to comply
with the provisions of the Internal Revenue Code of 1986, as amended, or to
comply with the requirements of any other taxing authority.
SECTION 6.8. REDUCTIONS IN NUMBER OF OUTSTANDING SHARES PURSUANT TO NET
ASSET VALUE FORMULA. The Trust may also reduce the number of outstanding Shares
of the Trust or any Series of the Trust pursuant to the provisions of Section
7.3.
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SECTION 6.9. SUSPENSION OF RIGHT OF REDEMPTION. The Trust may declare a
suspension of the right of redemption or postpone the date of payment or
redemption for the whole or any part of any period (i) during which the New York
Stock Exchange is closed other than customary weekend and holiday closings, (ii)
during which trading on the New York Stock Exchange is restricted, (iii) during
which an emergency exists as a result of which disposal by the Trust or a Series
thereof of securities owned by it is not reasonably practicable or it is not
reasonably practicable for the Trust or a Series thereof fairly to determine the
value of its net assets, or (iv) during any other period when the Commission may
for the protection of Shareholders of the Trust by order permit suspension of
the right of redemption or postponement of the date of payment or redemption;
provided that applicable rules and regulations of the Commission shall govern as
to whether the conditions prescribed in clauses (ii), (iii), or (iv) exist. Such
suspension shall take effect at such time as the Trust shall specify but not
later than the close of business on the business day next following the
declaration of suspension, and thereafter there shall be no right of redemption
or payment on redemption until the Trust shall declare the suspension at an end,
except that the suspension shall terminate in any event on the first day on
which said stock exchange shall have reopened or the period specified in (ii) or
(iii) shall have expired (as to which in the absence of an official ruling by
the Commission, the determination of the Trust shall be conclusive). In the case
of a suspension of the right of redemption, a Shareholder may either withdraw
his request for redemption or receive payment based on the net asset value
existing after the termination of the suspension.
ARTICLE VII
DETERMINATION OF NET ASSET VALUE,
NET INCOME AND DISTRIBUTIONS
SECTION 7.1. NET ASSET VALUE. The net asset value of each outstanding Share
of the Trust or of each Series or Class thereof shall be determined on such days
and at such time or times as the Trustees may determine. The value of the assets
of the Trust or any Series thereof may be determined (i) by a pricing service
which utilizes electronic pricing techniques based on general institutional
trading, (ii) by appraisal of the securities owned by the Trust or any Series of
the Trust, (iii) in certain cases, at amortized cost, or (iv) by such other
method as shall be deemed to reflect the fair value thereof, determined in good
faith by or under the direction of the Trustees. From the total value of said
assets, there shall be deducted all indebtedness, interest, taxes, payable or
accrued, including estimated taxes on unrealized book profits, expenses and
management charges accrued to the appraisal date, net income determined and
declared as a distribution and all other items in the nature of liabilities
which shall be deemed appropriate, as incurred by or allocated to the Trust or
any Series or Class of the Trust. The resulting amount which shall represent the
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total net assets of the Trust or Series or Class thereof shall be divided by the
number of Shares of the Trust or Series or Class thereof outstanding at the time
and the quotient so obtained shall be deemed to be the net asset value of the
Shares of the Trust or Series or Class thereof. The net asset value of the
Shares shall be determined at least once on each business day, as of the close
of regular trading on the New York Stock Exchange or as of such other time or
times as the Trustees shall determine. The power and duty to make the daily
calculations may be delegated by the Trustees to the Investment Adviser, the
Administrator, the Custodian, the Transfer Agent or such other Person as the
Trustees by resolution may determine. The Trustees may suspend the daily
determination of net asset value to the extent permitted by the 1940 Act. It
shall not be a violation of any provision of this Declaration of Trust if Shares
are sold, redeemed or repurchased by the Trust at a price other than one based
on net asset value if the net asset value is affected by one or more errors
inadvertently made in the pricing of portfolio securities or in accruing income,
expenses or liabilities.
SECTION 7.2. DISTRIBUTIONS TO SHAREHOLDERS. (a) The Trustees shall from
time to time distribute ratably among the Shareholders of the Trust or of a
Series or Class thereof such proportion of the net profits, surplus (including
paid-in surplus), capital, or assets of the Trust or such Series held by the
Trustees as they may deem proper. Such distributions may be made in cash or
property (including without limitation any type of obligations of the Trust or
Series or Class or any assets thereof), and the Trustees may distribute ratably
among the Shareholders of the Trust or Series or Class thereof additional Shares
of the Trust or Series or Class thereof issuable hereunder in such manner, at
such times, and on such terms as the Trustees may deem proper. Such
distributions may be among the Shareholders of the Trust or Series or Class
thereof at the time of declaring a distribution or among the Shareholders of the
Trust or Series or Class thereof at such other date or time or dates or times as
the Trustees shall determine. The Trustees may in their discretion determine
that, solely for the purposes of such distributions, Outstanding Shares shall
exclude Shares for which orders have been placed subsequent to a specified time
on the date the distribution is declared or on the next preceding day if the
distribution is declared as of a day on which Boston banks are not open for
business, all as described in the then effective Prospectus. The Trustees may
always retain from the net profits such amount as they may deem necessary to pay
the debts or expenses of the Trust or a Series or Class thereof or to meet
obligations of the Trust or a Series or Class thereof, or as they may deem
desirable to use in the conduct of its affairs or to retain for future
requirements or extensions of the business. The Trustees may adopt and offer to
Shareholders such dividend reinvestment plans, cash dividend payout plans or
related plans as the Trustees shall deem appropriate. The Trustees may in their
discretion determine that an account administration fee or other similar charge
may be deducted directly from the income and other distributions paid on Shares
to a Shareholder's account in each Series or Class of the Trust.
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(b) Inasmuch as the computation of net income and gains for Federal income
tax purposes may vary from the computation thereof on the books, the above
provisions shall be interpreted to give the Trustees the power in their
discretion to distribute for any fiscal year as ordinary dividends and as
capital gains distributions, respectively, additional amounts sufficient to
enable the Trust or a Series or Class thereof to avoid or reduce liability for
taxes.
SECTION 7.3. DETERMINATION OF NET INCOME; CONSTANT NET ASSET VALUE;
REDUCTION OF OUTSTANDING SHARES. Subject to Section 5.11 hereof, the net income
of the Series and Classes thereof of the Trust shall be determined in such
manner as the Trustees shall provide by resolution. Expenses of the Trust or of
a Series or Class thereof, including the advisory or management fee, shall be
accrued each day. Each Class shall bear only expenses relating to its Shares and
an allocable share of Series expenses in accordance with such policies as may be
established by the Trustees from time to time and as are not inconsistent with
the provisions of this Declaration of Trust or of any applicable document filed
by the Trust with the Commission or of the Internal Revenue Code of 1986, as
amended. Such net income may be determined by or under the direction of the
Trustees as of the close of trading on the New York Stock Exchange on each day
on which such market is open or as of such other time or times as the Trustees
shall determine, and, except as provided herein, all the net income of any
Series or Class of the Trust, as so determined, may be declared as a dividend on
the Outstanding Shares of such Series or Class. The Trustees shall have the
authority at any time and for any reason to reduce the number of Shares of any
Series or Class by reducing the number of Shares of such Series or Class by
reducing the number of full and fractional shares outstanding in any such Series
or Class. Without limiting the generality of the foregoing, if, for any reason,
the net income of any Series or Class of the Trust determined at any time is a
negative amount or for any other reason, the Trustees shall have the power with
respect to such Series or Class (i) to offset each Shareholder's pro rata share
of such negative amount from the accrued dividend account of such Shareholder,
or (ii) to reduce the number of Outstanding Shares of such Series or Class by
reducing the number of Shares in the account of such Shareholder by that number
of full and fractional Shares which represents the amount of such excess
negative net income, or (iii) to cause to be recorded on the books of the Trust
an asset account in the amount of such negative net income, which account may be
reduced by such amount; provided, that the same shall thereupon become the
property of the Trust with respect to such Series or Class and shall not be paid
to any Shareholder, and provided, further, that dividends shall not be declared
upon the Outstanding Shares of such Series or Class on or after the day such
negative net income is experienced, until such asset account is reduced to zero.
The Trustees shall have full discretion to determine whether any cash or
property received shall be treated as income or as principal and whether any
item of expense shall be charged to the income or the principal account, and
their determination made in good faith shall be conclusive upon the
Shareholders. In the case of stock dividends received, the Trustees shall have
full discretion to determine,
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in the light of the particular circumstances, how much if any of the value
thereof shall be treated as income, the balance, if any, to be treated as
principal.
SECTION 7.4. POWER TO MODIFY FOREGOING PROCEDURES. Notwithstanding any of
the foregoing provisions of this Article VII, but subject to Section 5.11
hereof, the Trustees may prescribe, in their absolute discretion, such other
bases and times for determining the per Share net asset value of the Shares of
the Trust or a Series or Class thereof or net income of the Trust or a Series or
Class thereof, or the declaration and payment of dividends and distributions as
they may deem necessary or desirable. Without limiting the generality of the
foregoing, the Trustees may establish several Series or Classes of Shares in
accordance with Section 5.11, and declare dividends thereon in accordance with
Section 5.11(d)(iv).
ARTICLE VIII
DURATION; TERMINATION OF TRUST OR A SERIES OR CLASS;
AMENDMENT; MERGERS, ETC.
SECTION 8.1. DURATION. The Trust shall continue without limitation of time
but subject to the provisions of this Article VIII.
SECTION 8.2. TERMINATION OF THE TRUST OR A SERIES OR A CLASS. The Trust or
any Series or Class thereof may be terminated by (i) the affirmative vote of the
holders of not less than two-thirds of the Shares outstanding and entitled to
vote at any meeting of Shareholders of the Trust or the appropriate Series or
Class thereof, (ii) by an instrument or instruments in writing without a
meeting, consented to by the holders of two-thirds of the Shares of the Trust or
the appropriate Series or Class thereof; provided, however, that if such
termination is recommended by the Trustees, the vote or written consent of the
holders of a majority of the Shares of the Trust or the appropriate Series or
Class thereof outstanding and entitled to vote shall be sufficient authorization
for such termination, or (iii) notice to Shareholders by means of an instrument
in writing signed by a majority of the Trustees, stating that a majority of the
Trustees has determined that the continuation of the Trust or a Series or Class
thereof is not in the best interest of such Series or Class, the Trust or their
respective shareholders as a result of factors or events adversely affecting the
ability of such Series or a Class or the Trust to conduct its business and
operations in an economically viable manner. Such factors and events may include
(but are not limited to) the inability of a Series or Class or the Trust to
maintain its assets at an appropriate size, changes in laws or regulations
governing the Series or Class or the Trust or affecting assets of the type in
which such Series or Class or the Trust invests or economic developments or
trends having a significant adverse impact on the business or operations of such
Series or Class or the Trust. Upon the termination of the Trust or the Series or
Class:
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(i) The Trust, Series or Class shall carry on no business except for
the purpose of winding up its affairs;
(ii) The Trustees shall proceed to wind up the affairs of the Trust,
Series or Class and all of the powers of the Trustees under this
Declaration shall continue until the affairs of the Trust, Series or Class
shall have been wound up, including the power to fulfill or discharge the
contracts of the Trust, Series or Class, collect its assets, sell, convey,
assign, exchange, transfer or otherwise dispose of all or any part of the
remaining Trust Property or Trust Property allocated or belonging to such
Series or Class to one or more persons at public or private sale for
consideration which may consist in whole or in part of cash, securities or
other property of any kind, discharge or pay its liabilities, and do all
other acts appropriate to liquidate its business; provided that any sale,
conveyance, assignment, exchange, transfer or other disposition of all or
substantially all the Trust Property or Trust Property allocated or
belonging to such Series or Class that requires Shareholder approval in
accordance with Section 8.4 hereof shall receive the approval so required;
and
(iii) After paying or adequately providing for the payment of all
liabilities, and upon receipt of such releases, indemnities and refunding
agreements as they deem necessary for their protection, the Trustees may
distribute the remaining Trust Property or the remaining property of the
terminated Series or Class, in cash or in kind or partly each, among the
Shareholders of the Trust or the Series or Class according to their
respective rights.
(b) After termination of the Trust, Series or Class and distribution to the
Shareholders as herein provided, a majority of the Trustees shall execute and
lodge among the records of the Trust and file with the Office of the Secretary
of the Commonwealth of Massachusetts an instrument in writing setting forth the
fact of such termination, and the Trustees shall thereupon be discharged from
all further liabilities and duties with respect to the Trust or the terminated
Series or Class, and the rights and interests of all Shareholders of the Trust
or the terminated Series or Class shall thereupon cease.
SECTION 8.3. AMENDMENT PROCEDURE. (a) This Declaration may be amended by a
vote of the holders of a majority of the Shares outstanding and entitled to vote
or by any instrument in writing, without a meeting, signed by a majority of the
Trustees and consented to by the holders of a majority of the Shares outstanding
and entitled to vote.
(b) The Trustees may amend this Declaration without the vote or consent of
Shareholders if they deem it necessary to conform this Declaration to the
requirements of applicable Federal or state laws or regulations or the
requirements of
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the regulated investment company provisions of the Internal Revenue Code of
1986, as amended, or if requested or required to do so by any Federal agency or
by a state Blue Sky commissioner or similar official, but the Trustees shall not
be liable for failing so to do. The Trustees may also amend this Declaration
without the vote or consent of Shareholders if they deem it necessary or
desirable to change the name of the Trust or Series or to make any other changes
in the Declaration which do not adversely affect the rights of Shareholders
hereunder. Finally, the Trustees may amend this Declaration without the vote or
consent of Shareholders (i) to add to their duties or obligations or surrender
any rights or powers granted to them herein; (ii) to cure any ambiguity, to
correct or supplement any provision herein which may be inconsistent with any
other provision herein or to make any other provisions with respect to matters
or questions arising under this Declaration which will not be inconsistent with
the provisions of this Declaration; and (iii) to eliminate or modify any
provision of this Declaration which (a) incorporates, memorializes or sets forth
an existing requirement imposed by or under any Federal or state statute or any
rule, regulation or interpretation thereof or thereunder or (b) any rule,
regulation, interpretation or guideline of any federal or state agency, now or
hereafter in effect, including without limitation, requirements set forth in the
1940 Act and the rules and regulations thereunder (and interpretations thereof),
to the extent any change in applicable law liberalizes, eliminates or modifies
any such requirements, but the Trustees shall not be liable for failure to do
so.
(c) No amendment may be made under this Section 8.3 which would change any
rights with respect to any Shares of the Trust or Series or Class thereof by
reducing the amount payable thereon upon liquidation of the Trust or Series or
Class thereof or by diminishing or eliminating any voting rights pertaining
thereto, except with the vote or consent of the holders of two-thirds of the
Shares of the Trust or such Series or Class outstanding and entitled to vote.
Nothing contained in this Declaration shall permit the amendment of this
Declaration to impair the exemption from personal liability of the Shareholders,
Trustees, officers, employees and agents of the Trust or to permit assessments
upon Shareholders.
(d) A certificate signed by a majority of the Trustees setting forth an
amendment and reciting that it was duly adopted by the Shareholders or by the
Trustees as aforesaid or a copy of the Declaration, as amended, and executed by
a majority of the Trustees, shall be conclusive evidence of such amendment when
lodged among the records of the Trust.
SECTION 8.4. MERGER, CONSOLIDATION AND SALE OF ASSETS. The Trust or any
Series thereof may merge or consolidate with any other corporation, association,
trust or other organization or may sell, lease or exchange all or substantially
all of the Trust Property or Trust Property allocated or belonging to such
Series, including its good will, upon such terms and conditions and for such
consideration when and as authorized at any meeting of Shareholders called for
the purpose by the affirmative
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vote of the holders of two-thirds of the Shares of the Trust or such Series
outstanding and entitled to vote, or by an instrument or instruments in writing
without a meeting, consented to by the holders of two-thirds of the Shares of
the Trust or such Series; provided, however, that, if such merger,
consolidation, sale, lease or exchange is recommended by the Trustees, the vote
or written consent of the holders of a majority of the Shares of the Trust or
such Series outstanding and entitled to vote shall be sufficient authorization;
and any such merger, consolidation, sale, lease or exchange shall be deemed for
all purposes to have been accomplished under and pursuant to Massachusetts law.
SECTION 8.5. INCORPORATION. The Trustees may cause to be organized or
assist in organizing a corporation or corporations under the laws of any
jurisdiction or any other trust, partnership, association or other organization
to take over all or portion of the Trust Property or the Trust Property
allocated or belonging to such Series or to carry on any business in which the
Trust shall directly or indirectly have any interest, and to sell, convey and
transfer all or portion of the Trust Property or the Trust Property allocated or
belonging to such Series to any such corporation, trust, association or
organization in exchange for the shares or securities thereof or otherwise, and
to lend money to, subscribe for the shares or securities of, and enter into any
contracts with any such corporation, trust, partnership, association or
organization, or any corporation, partnership, trust, association or
organization in which the Trust or such Series holds or is about to acquire
shares or any other interest. The Trustees may also cause a merger or
consolidation between the Trust or any successor thereto and any such
corporation, trust, partnership, association or other organization if and to the
extent permitted by law, as provided under the law then in effect. Nothing
contained herein shall be construed as requiring approval of Shareholders for
the Trustees to organize or assist in organizing one or more corporations,
trusts, partnerships, associations or other organizations and selling, conveying
or transferring all or a portion of the Trust Property to such organization or
entities.
ARTICLE IX
REPORTS TO SHAREHOLDERS
The Trustees shall at least semi-annually submit to the Shareholders of
each Series a written financial report of the transactions of the Trust and
Series thereof including financial statements which shall be certified at least
annually by independent public accountants.
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ARTICLE X
MISCELLANEOUS
SECTION 10.1. EXECUTION AND FILING. This Declaration and any amendment
hereto shall be filed in the office of the Secretary of The Commonwealth of
Massachusetts and in such other places as may be required under the laws of
Massachusetts and may also be filed or recorded in such other places as the
Trustees deem appropriate. Each amendment so filed shall be accompanied by a
certificate signed and acknowledged by a Trustee stating that such action was
duly taken in a manner provided herein, and unless such amendment or such
certificate sets forth some later time for the effectiveness of such amendment,
such amendment shall be effective upon its execution. A restated Declaration,
integrating into a single instrument all of the provisions of the Declaration
which are then in effect and operative, may be executed from time to time by a
majority of the Trustees and filed with the Secretary of The Commonwealth of
Massachusetts. A restated Declaration shall, upon execution, be conclusive
evidence of all amendments contained therein and may thereafter be referred to
in lieu of the original Declaration and the various amendments thereto.
SECTION 10.2. GOVERNING LAW. This Declaration is executed by the Trustees
and delivered in The Commonwealth of Massachusetts and with reference to the
laws thereof, and the rights of all parties hereto and the validity and
construction of every provision hereof shall be subject to and construed
according to the laws of said Commonwealth.
SECTION 10.3. COUNTERPARTS. This Declaration may be simultaneously executed
in several counterparts, each of which shall be deemed to be an original, and
such counterparts, together, shall constitute one and the same instrument, which
shall be sufficiently evidenced by any such original counterpart.
SECTION 10.4. RELIANCE BY THIRD PARTIES. Any certificate executed by an
individual who, according to the records of the Trust appears to be a Trustee
hereunder, certifying as to (a) the number or identity of Trustees or
Shareholders, (b) the due authorization of the execution of any instrument or
writing, (c) the form of any vote passed at a meeting of Trustees or
Shareholders, (d) the fact that the number of Trustees or Shareholders present
at any meeting or executing any written instrument satisfies the requirements of
this Declaration, (e) the form of any By-laws adopted by or the identity of any
officers elected by the Trustees, or (f) the existence of any fact or facts
which in any manner relate to the affairs of the Trust, shall be conclusive
evidence as to the matters so certified in favor of any Person dealing with the
Trustees and their successors.
-33-
<PAGE>
SECTION 10.5. PROVISIONS IN CONFLICT WITH LAW OR REGULATIONS. (a) The
provisions of this Declaration are severable, and if the Trustees shall
determine, with the advice of legal counsel, that any of such provisions is in
conflict with the 1940 Act, the regulated investment company provisions of the
Internal Revenue Code of 1986, as amended, or with other applicable laws and
regulations, the conflicting provision shall be deemed never to have constituted
a part of this Declaration; provided, however, that such determination shall not
affect any of the remaining provisions of this Declaration or render invalid or
improper any action taken or omitted prior to such determination.
(b) If any provision of this Declaration shall be held invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall
attach only to such provision in such jurisdiction and shall not in any manner
affect such provision in any other jurisdiction or any other provision of this
Declaration in any jurisdiction.
IN WITNESS WHEREOF, the undersigned have executed this instrument this 1st
day of May, 1993.
/s/ Roger J. Weiss
-----------------------------------
Roger J. Weiss, as Trustee and
not individually
One New York Plaza
New York, NY 10004
/s/ Raymond R. Herrmann
-----------------------------------
Raymond R. Herrmann, Jr., as Trustee
and not individually
155 East 44th Street
New York, NY 10017
/s/ Thomas J. Hilliard
-----------------------------------
Thomas J. Hilliard, Jr., as Trustee
and not individually
1316 Iverness Drive
Pittsburgh, PA 15222
-34-
<PAGE>
/s/ Lawrence J. Israel
-----------------------------------
Lawrence J. Israel, as Trustee and
not individually
220 Broadway
Suite 249
New Orleans, LA 70118
/s/ Graham E. Jones
-----------------------------------
Graham E. Jones, as Trustee and
not individually
23 Chestnut Street
Boston, MA 02108
/s/ Paul Meek
-----------------------------------
Paul Meek, as Trustee and not
individually
5837 Cove Landing Road
Burke, VA 22015
/s/ William B. Ross
-----------------------------------
William B. Ross, as Trustee and
not individually
2733 E. Newton Avenue
Shorewood, WI 53211
/s/ Harvey E. Sampson
-----------------------------------
Harvey E. Sampson, as Trustee and
not individually
600 Secaucus Road
Secaucus, NJ 07094
-35-
<PAGE>
/s/ Robert A. Straniere
-----------------------------------
Robert A. Straniere, as Trustee and
not individually
64 Timber Ridge Drive
Staten Island
New York, NY 10306
/s/ Melville Straus
-----------------------------------
Melville Straus, as Trustee and
not individually
One New York Plaza
New York, NY 10004
/s/ Willis J. Winn
-----------------------------------
Willis J. Winn, as Trustee and
not individually
Winnfield Farm
Route 1, Box 87
Trimble, MO 64492
-36-
CERTIFICATE OF AMENDMENT
TO THE
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
WPG GROWTH AND INCOME FUND
One New York Plaza
New York, NY 10004
This Certificate of Amendment to the Amended and Restated Declaration of
Trust, dated May 1, 1993 (the "Declaration"), of WPG Growth and Income Fund, a
Massachusetts business trust (the "Trust"), is made this 28th day of October,
1993 for the following purpose.
The undersigned, being a majority of the Trustees of the Trust, acting
pursuant to Section 8.3(b) of the Declaration hereby amend the Declaration by
deleting Section 5.1 of the Declaration in its entirety and substituting the
following:
SECTION 5.1. BENEFICIAL INTEREST. The interest of the beneficiaries
hereunder shall be divided into transferable Shares of beneficial interest,
$1.00 par value per share. The number of such Shares of beneficial interest
authorized hereunder is unlimited. The Trustees shall have the exclusive
authority without the requirement of Shareholder approval to establish and
designate one or more Series of shares and one or more Classes thereof as
the Trustees deem necessary or desirable. Each share of any Series shall
represent an equal proportionate Share in the assets of that Series with
each other Share in that Series. Subject to the provisions of Section 5.11
hereof, the Trustees may also authorize the creation of additional Series
of Shares (the proceeds of which may be invested in separate, independently
managed portfolios) and additional Classes of Shares within any Series. All
Shares issued hereunder including, without limitation, Shares issued in
connection with a dividend in Shares or a split in Shares, shall be fully
paid and nonassessable by the Trust.
-1-
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this instrument this 28th
day of October, 1993.
/s/ Roger J. Weiss
------------------------------------
Roger J. Weiss, as Trustee and
not individually
One New York Plaza
New York, NY 10004
/s/ Melville Straus
------------------------------------
Melville Straus, as Trustee and
not individually
One New York Plaza
New York, NY 10004
/s/ Raymond R. Herrmann, Jr.
------------------------------------
Raymond R. Herrmann, Jr., as Trustee
and not individually
155 East 44th Street
New York, NY 10017
/s/ Thomas J. Hilliard, Jr.
------------------------------------
Thomas J. Hilliard, Jr., as Trustee
and not individually
1316 Iverness Drive
Pittsburgh, PA 15222
/s/ Laurence J. Israel
------------------------------------
Laurence J. Israel, as Trustee and
not individually
220 Broadway
Suite 249
New Orleans, LA 70118
-2-
<PAGE>
/s/ Graham E. Jones
------------------------------------
Graham E. Jones, as Trustee
and not individually
23 Chestnut Street
Boston, MA 02108
/s/ Paul Meek
------------------------------------
Paul Meek, as Trustee and
not individually
5837 Cove Landing Road
Burke, VA 22015
/s/ William B. Ross
------------------------------------
William B. Ross, as Trustee
and not individually
2733 E. Newton Avenue
Shorewood, WI 53211
/s/ Harvey E. Sampson
------------------------------------
Harvey E. Sampson, as Trustee and
not individually
600 Secaucus Road
Secaucus, NJ 07094
/s/ Robert A. Straniere
------------------------------------
Robert A. Straniere, as
Trustee and not individually
182 Rose Avenue
Staten Island
New York, NY 10306
-3-
BY-LAWS
of
WPG FUND
--------
ARTICLE I
---------
OFFICES
-------
The principal office of the Trust shall be in the City of New York,
County of New York, State of New York. The Trust may also have offices at such
other places, within or without the State of New York, as the Trustees determine
from time to time or the business of the Trust requires.
ARTICLE II
----------
SHAREHOLDERS
------------
SECTION 1. MEETINGS. Meetings of shareholders shall be held at such
----------
place within or without the Commonwealth of Massachusetts, on such day and at
such time, as the Trustees may determine.
SECTION 2. MEETINGS. Meetings of shareholders may be called at any time
----------
by the President or a majority of the Trustees for the purpose of transacting
any business that may properly come before the meeting, and shall be called by
any Trustee upon receipt of a written request stating the purpose of the
proposed meeting signed by holders of record entitled to cast at least 10% of
all the votes entitled to be cast at any such meeting. No meeting need be called
upon the request of the holders of less than a majority of all votes entitled to
be cast at such meeting to consider any matter which is substantially the same
as a matter voted upon at any meeting of shareholders held during the preceding
twelve months.
SECTION 3. RECORD DATES. The Trustees may fix, in advance, a date as
-------------
the record date for the purpose of determining shareholders entitled to notice
of, or to vote at, any meeting of shareholders, or shareholders entitled to
receive payment of any dividend or the allotment of any other rights, or in
order to make a determination of shareholders for any other proper purpose. Such
date in any case shall be not more than 60 days prior to the date on which the
particular action requiring such determination of shareholders is to be taken.
SECTION 4. NOTICE OF MEETING. Not less than 10 and not more than 60
------------------
days before any meeting of shareholders, the Secretary shall mail to each
shareholder
1
<PAGE>
entitled to vote at the meeting and to each other shareholder entitled to notice
of such meeting at his registered address, written notice of the time, date,
place and the purpose or purposes of the meeting. Only the business stated in
the notice of meeting shall be considered at such meeting. Any adjourned meeting
may be held as adjourned without further notice. No notice need be given to any
shareholder who shall have failed to inform the Trust of his current address or
if a written waiver of notice, executed before or after the meeting by the
shareholder or his attorney thereunto authorized, is filed with the recorder of
the meeting.
SECTION 5. ADJOURNMENT. A meeting of shareholders may be adjourned from
------------
time to time without further notice, other than as announced at the meeting, to
a date not more than 120 days after the original record date. At any such
adjourned meeting, any action may be taken that could have been taken at the
meeting originally called.
SECTION 6. QUORUM AND VOTING. The holders of a majority of the
------------------
outstanding shares of each series of the Trust entitled to vote at the meeting
shall be present in person or by proxy in order to constitute a quorum for the
transaction of business at any meeting of shareholders. Only shareholders of
record shall be entitled to vote. Each whole share shall be entitled to one vote
as to any matter and each fractional share shall be entitled to a proportionate
fractional vote. In the absence of a quorum, a majority of the Shares of each
series of the Trust present at the meeting in person or by proxy, may adjourn at
meeting from time to time until a quorum shall be present.
SECTION 7. PROXIES. At any meeting of shareholders, any holder of
--------
shares entitled to vote thereat may vote by proxy, provided that no proxy shall
be voted at any meeting unless it shall have been placed on file with the
Secretary, or with such other officer and agent of the Trust as the Secretary
may direct, for verification prior to the time at which such vote shall be
taken. Proxies may be solicited in the name of one or more Trustees or one or
more officers of the Trust. When any share is held jointly by several persons,
any one of them may vote at any meeting in person or by proxy in respect of such
share, but if more than one of them shall be present at the meeting in person or
by proxy, and such joint owners or their proxies so present disagree as to any
vote to be cast, such vote shall not be received in respect of such share. A
proxy purporting to be executed by or on behalf of a shareholder shall be deemed
valid unless challenged at or prior to its exercise, and the burden of proving
invalidity shall rest on the challenger. If the holder of any such share is a
minor or a person of unsound mind, and subject to guardianship or the legal
control of any other person as regards the charge or management of such share,
he may vote by his guardian or such other person appointed or having such
control, and such vote may be given in person or by proxy.
SECTION 8. INSPECTION OF RECORDS. The records of the Trust shall be
----------------------
open to
2
<PAGE>
inspection by shareholders to the same extent as is permitted shareholders of a
Massachusetts business corporation.
SECTION 9. ACTION WITHOUT MEETING. Any action which may be taken by
-----------------------
shareholders may be taken without a meeting if a majority of shareholders of the
Trust or the applicable series of the Trust entitled to vote on the matter (or
such larger proportion thereof as shall be required by law, the declaration of
Trust or these By-Laws for approval of such matter) consent to the action in
writing and the written consents are filed with the records of the meetings of
shareholders. Such consents shall be treated for all purposes as a vote taken at
a meeting of shareholders.
SECTION 10. CONDUCT OF MEETINGS. Each meeting of shareholders shall be
--------------------
presided over by the President or, if he is not present, by the Chairman of the
Board or any Vice President or, if none of them is present, by a chairman to be
elected at the meeting. The Secretary shall act as secretary of the meeting or,
if he is not present, an Assistant Secretary shall so act. If neither the
Secretary nor an Assistant Secretary is present, the chairman of the meeting
shall appoint a secretary.
ARTICLE III
-----------
TRUSTEES
--------
SECTION 1. NUMBER AND TENURE. The number of Trustees fixed by the
------------------
Trustees pursuant to the Declaration of Trust as the number which shall
constitute all of the Trustees may be increased or decreased by a vote of a
majority of the Trustees from time to time, provided that this number shall not
be less than three nor more than 21. Beginning with the Trustees elected at the
first meeting of shareholders following the public offering of the Shares, each
Trustee shall hold office until his successor is elected and qualified or until
his earlier resignation, removal or death.
SECTION 2. PLACE OF MEETINGS. Meetings of the Trustees, regular or
-----------------
special, may be held at any place within or without the Commonwealth of
Massachusetts as the Trustees may determine.
SECTION 3. MEETINGS OF TRUSTEES. The Trustees may in their discretion
--------------------
provide for regular or stated meetings of the Trustees. No notice of regular or
stated meetings shall be required. Meetings of the Trustees, other than regular
or stated meetings, may be called at any time by the President or a majority of
the Trustees. Written notice of the time and place of any meeting of the
Trustees, other than regular or stated meetings, shall be delivered,
telegraphed, cabled or wirelessed to each Trustee not less than one day before
the meeting or mailed to each Trustee not less than three days before such
meeting. Notice of a meeting need not be given to any Trustee if a written
waiver of notice, executed by him before or after a meeting,
3
<PAGE>
is filed with the records of the meeting, or to any Trustee who attends the
meeting without protesting, prior thereto or at its commencement, the lack of
notice to him. A notice or waiver of notice need not specify the purpose of any
meeting.
SECTION 4. TELEPHONE MEETINGS; ACTION BY CONSENT. The Trustees or any
--------------------------------------
committee thereof may participate in a meeting by means of conference telephone
or similar communications equipment if all persons participating in the meeting
can hear each other at the same time and participation by such means shall be
deemed to have been held at a place designated by the Trustees at the meeting.
Participation in a telephone conference meeting shall constitute presence in
person at such meeting.
Any action required or permitted to be taken at any meeting of the
Trustees may be taken by the Trustees without a meeting if all the Trustees
consent to the action in writing and the written consents are filed with the
records of the Trustees' meetings. Such consents shall be treated as a vote for
all purposes.
SECTION 5. QUORUM. One-third of the total number of Trustees shall
-------
constitute a quorum for the transaction of business, provided that a quorum
shall in no case be less than three Trustees. If at any meeting of the Trustees
there shall be less than a quorum present, the majority of those present may
adjourn the meeting until a quorum shall have been obtained. Except as otherwise
provided by law, the Declaration of Trust, these By-Laws or any contract or
agreement to which the Trust is a party, the act of a majority of the Trustees
present at any meeting at which there is a quorum shall be the act of the
Trustees.
SECTION 6. COMMITTEES. The Trustees may by resolution passed by a
----------
majority of the Trustees designate an executive committee and other committees
composed of two or more Trustees, and the members thereof, to the extent
permitted by law, and each committee shall have the powers, authority and duties
specified in the resolution creating the same and permitted by law. A majority
of the members of a committee shall constitute a quorum for the transaction of
business. If a member of a committee is absent or disqualified from voting, the
committee member or members present, whether or not constituting a quorum, may
unanimously appoint another member of the Trustees to act at the meeting in
place of the absent or disqualified member.
SECTION 7. MEETINGS, QUORUM AND MANNER OF ACTING. The Trustees may (1)
-------------------------------------
provide for stated meetings of any Committee, (2) specify the manner of calling
and notice required for special meetings of any Committee, (3) specify the
number of members of a Committee required to constitute a quorum and the number
of members of a Committee required to exercise specified powers delegated to
such Committee, (4) authorize the making of decisions to exercise specific
powers by written assent of the requisite number of members of a Committee
without a meeting, and (5) authorize the members of a Committee to meet by means
of a
4
<PAGE>
telephone circuit. The Trustees shall keep regular minutes of their meetings and
records of decisions taken without a meeting and cause them to be recorded in a
book designated for that purpose and kept in the Office of the Trust.
SECTION 8. COMPENSATION OF TRUSTEES. The Trustees may authorize
-------------------------
reasonable compensation to Trustees for their services as Trustees and as
members of committees of the Trustees and may authorize the reimbursement of
reasonable expenses incurred by Trustees in connection with rendering those
services.
ARTICLE IV
----------
OFFICERS
--------
SECTION 1. ELECTION AND REMOVAL. The Trustees shall elect a President,
---------------------
a Secretary and a Treasurer. The Trustees may also in their discretion elect one
or more Vice Presidents, Assistant Secretaries, Assistant Treasurers and other
officers, agents and employees. Any two or more offices, except those of
President and Vice President, may be held by the same person. The Trustees may
fill any vacancy which may occur in any office. Except as otherwise provided by
law, the Declaration of Trust or these By-Laws, the President, the Treasurer and
the Secretary shall each hold office until his successor shall have been duly
elected and qualified, and all other officers shall hold office at the pleasure
of the Trustees. Any officer may be removed from office at any time with or
without cause by the vote of a majority of the Trustees whenever, in the
judgment of the Trustees, the best interests of the Trust will be served
thereby. The Trustees may delegate to any officer or committee the power to
appoint subordinate officers or agents. An officer may be but need not be a
Trustee or shareholder.
SECTION 2. POWERS AND DUTIES. The officers of the Trust shall have such
-----------------
powers and duties as generally pertain to their respective offices as well as
such powers and duties as may from time to time be conferred by resolution of
the Trustees.
SECTION 3. COMPENSATION OF OFFICERS. The officers of the Trust shall be
-------------------------
paid a salary to be determined by the Trustees.
5
<PAGE>
ARTICLE V
---------
INDEMNIFICATION
---------------
The Trust shall indemnify each individual ("Indemnitee") who is a
present or former Trustee, officer, employee or agent of the Trust, or who,
while a Trustee, is or was serving at the request of the Trust as a Trustee,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, who, by reason of his position was, is, or is
threatened to be made a party to any threatened, pending, or completed action,
suit, or proceeding, whether civil, criminal, administrative, or investigative
(hereinafter collectively referred to as a "Proceeding") to the fullest extent
permitted under the laws of the Commonwealth of Massachusetts, the Investment
Company Act of 1940 and any other applicable law now or hereafter in effect,
including the advance of related expenses, provided, however, that such
indemnity shall not protect any Indemnitee from any liability arising out of
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office ("Disabling Conduct").
Notwithstanding the foregoing, no indemnification shall be made by the
Trust to any Indemnitee unless:
(a) the court or other body before whom the Proceeding to
which the Indemnitee is a party was brought (i) dismisses the
Proceeding for insufficiency of evidence of any Disabling Conduct or
(ii) reaches a final decision on the merits that the Indemnitee was not
liable by reason of Disabling Conduct; or
(b) in the event of a settlement or other disposition not
involving a final decision as provided in paragraph (a), there is a
reasonable determination, based upon a review of the facts, that the
Indemnitee was not liable by reason of Disabling Conduct, which
determination shall be made by:
(i) the court or other body approving the settlement or
other disposition; or
(ii) the vote of a majority of a quorum of the Trustees
who are neither "interested persons" of the Trust as
defined in the Investment Company Act of 1940 nor
parties to the Proceeding or a proceeding on the
same or similar grounds that is then or has at any
time been pending; or
(iii) an independent legal counsel in a written opinion.
Anything in this Article V to the contrary notwithstanding, any advance
of
6
<PAGE>
expenses by the Trust to an Indemnitee shall be made only upon the undertaking
by or on behalf of the Indemnitee to repay the advance unless it is ultimately
determined that such Indemnitee is entitled to indemnification as above
provided, and only if one of the following conditions is met:
(a) the Indemnitee shall provide adequate security for his
undertaking;
(b) the Trust shall be insured against losses arising by
reason of any lawful advances; or
(c) there is a determination, based on a review of readily
available facts, that there is reason to believe that the Indemnitee
will ultimately be found to be entitled to indemnification, which
determination shall be made by:
(i) a majority of a quorum of the Trustees who are
neither "interested persons" of the Trust as defined
in the Investment Company Act of 1940 nor parties to
the Proceeding or a proceeding on the same or
similar grounds that is then or has at any time been
pending; or
(ii) an independent legal counsel in a written opinion.
The rights of Indemnification herein provided may be insured against by
policies maintained by the Trust, shall be severable, shall not affect any other
rights to which any Trustee or officer may now or hereafter be entitled, shall
continue as to a person who has ceased to be such Trustee or officer and shall
inure to the benefit of the heirs, executors, administrators and assigns of such
a person. Nothing contained herein shall affect any rights to indemnification to
which personnel of the Trust other than Trustees and officers may be entitled by
contract or otherwise under the law.
ARTICLE VI
----------
FISCAL YEAR
-----------
The fiscal year of the Trust shall begin on the first day of January in
each year, and shall end on the 31st day of December in each year, provided,
however, that the Trustees may from time to time change the fiscal year.
7
<PAGE>
ARTICLE VII
-----------
WAIVERS OF NOTICE
-----------------
Whenever any notice whatever is required to be given by the law, the
Declaration of Trust or these By-Laws, a waiver thereof in writing, signed by
the person or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed equivalent thereto. A notice shall be deemed to
have been telegraphed, cabled, telexed, telecopied or wirelessed for the
purposes of these ByLaws when it has been delivered to a representative of any
telegraph, cable, telex, telecopy or wireless company with instructions that it
be telegraphed, cabled, telexed, telecopied or wirelessed.
ARTICLE VIII
------------
AMENDMENTS
----------
These By-Laws, or any of them, may be altered, amended or repealed, or
new By-Laws may be adopted by (a) a vote of a majority of the Shares outstanding
and entitled to vote or (b) by the Trustees, provided, however, that no By-Law
may be amended, adopted or repealed by the Trustees if such amendment, adoption
or repeal requires, pursuant to law, the Declaration of Trust or these By-Laws,
a vote of the shareholders.
8
INVESTMENT ADVISORY AGREEMENT
WPG GROWTH AND INCOME FUND
AGREEMENT made as of the 1st day of May, 1993, by and between WPG
GROWTH AND INCOME FUND, a Massachusetts business trust (the "Trust"), and WEISS,
PECK & GREER, a New York limited partnership (the "Investment Adviser" or
"WPG").
The Trust is an open-end, management investment company, registered
under the Investment Company Act of 1940, as amended (the "1940 Act"). The
Investment Adviser is an investment adviser registered under the Investment
Advisers Act of 1940, as amended, and is a broker-dealer registered under the
Securities Exchange Act of 1934, as amended.
The Trust desires the Investment Adviser to render services to the
Trust, and the Investment Adviser is willing to render such services upon the
terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises, the parties hereto
agree as follows:
1. INVESTMENT ADVISER. The Trust will, and hereby does, retain the
Investment Adviser to act as the investment adviser of the Trust
and to provide certain services, as more fully set forth below,
and the Investment Adviser hereby accepts such retainer.
2. SUB-ADVISERS. The Investment Adviser may engage one or more
investment advisers which are either registered as such or
specifically exempt from registration under the Investment
Advisers Act of 1940, as amended, to act as sub- advisers to
provide with respect to the Trust certain services set forth in
Section 4 of this Agreement, all as shall be set forth in a
written contract to which the Trust and the Investment Adviser
shall be parties, which contract shall be subject to approval by
the vote of a majority of the Trustees of the Trust who are not
interested persons of the Investment Adviser, the sub-adviser or
of the Trust, cast in person at a meeting called for the purpose
of voting on such approval and by the vote of a majority of the
outstanding voting securities of the Trust and otherwise
consistent with the terms of the 1940 Act.
3. INFORMATION SUPPLIED BY THE TRUST. The Trust will, from time to
time, deliver to the Investment Adviser detailed statements of
the assets and resources of the Trust and information as to its
investment objectives.
4. ADVISORY SERVICES.
(a) The Investment Adviser will regularly provide the Trust with
investment research, advice and supervision and will furnish
continuously an investment program for the Trust consistent
with the investment objectives and policies of the Trust.
The Investment Adviser will determine from time to time what
securities shall be purchased for the Trust, what securities
shall be held or sold by the Trust and what portion of the
Trust's assets shall be held uninvested as cash, subject
always to the provisions of the Trust's Declaration of
Trust, By-Laws and its registration statement under the 1940
Act and under the Securities Act of 1933 covering the
Trust's shares, as filed with the Securities and Exchange
Commission, and to the investment objectives, policies and
restrictions of the Trust, as each of the same shall be from
time to time in effect, and subject, further, to such
policies and instructions as the Board of Trustees of the
Trust may from time to time establish. To carry out such
determinations, the Investment Adviser will place orders for
the investment and reinvestment of Trust assets. The
Investment Adviser will exercise full discretion and act for
the Trust in the same manner and with the same force and
effect as the Trust itself might or could do with respect to
purchases, sales or other transactions, as well as with
respect to all other things necessary or incidental to the
furtherance or conduct of such purchases, sales or other
transactions.
(b) The Investment Adviser will, to the extent reasonably
required in the conduct of the business of the Trust and
upon its request, furnish to the Trust research, statistical
and advisory reports upon the industries, businesses,
corporations or securities as to which such requests shall
be made, whether or not the Trust shall at the time have any
investment in such industries, businesses, corporations or
securities. The Investment Adviser will use its best efforts
in the preparation of such reports and will endeavor to
consult the persons and sources believed by it to have
information available with respect to such industries,
businesses, corporations or securities.
(c) The Investment Adviser will maintain all books and records
with respect to the Trust's securities transactions required
by sub-paragraphs (b)(5),(6),(9) and (10) and paragraph (f)
of Rule 31a-1 under the 1940 Act (other than those records
being maintained by the Trust's custodian or transfer agent)
and preserve such records
2
<PAGE>
for the periods prescribed therefor by Rule 31a-2 of the
1940 Act. The Investment Adviser will also provide to the
Trust's Board of Trustees such periodic and special reports
as the Board may reasonably request.
5. ALLOCATION OF CHARGES AND EXPENSES. The Investment Adviser will
pay all costs incurred by it in connection with the performance
of its duties under Section 4. The Investment Adviser will pay
the compensation and expenses of all of its personnel and will
make available, without expense to the Trust, the services of
such of its partners, officers and employees as may duly be
elected officers or Trustees of the Trust, subject to their
individual consent to serve and to any limitations imposed by
law. The Investment Adviser will not be required to pay any
expenses of the Trust other than those specifically allocated to
the Investment Adviser in this paragraph 5. In particular, but
without limiting the generality of the foregoing, the Investment
Adviser will not be required to pay: (i) fees and expenses of any
administrator of the Trust; (ii) organization expenses of the
Trust; (iii) fees and expenses incurred by the Trust in
connection with membership in investment company organizations;
(iv) brokers' commissions; (v) payment for portfolio pricing
services to a pricing agent, if any; (vi) legal, accounting or
auditing expenses (including an allocable portion of the cost of
its employees rendering legal services to the Trust); (vii)
interest, insurance premiums, taxes or governmental fees; (viii)
the fees and expenses of the transfer agent of the Trust; (ix)
the cost of preparing stock certificates or any other expenses,
including clerical expenses of issue, redemption or repurchase of
shares of the Trust; (x) the expenses of and fees for registering
or qualifying shares for sale and of maintaining the registration
of the Trust and registering the Trust as a broker or a dealer;
(xi) the fees and expenses of Trustees of the Trust who are not
affiliated with the Investment Adviser; (xii) the cost of
preparing and distributing reports and notices to shareholders,
the Securities and Exchange Commission and other regulatory
authorities; (xiii) the fees or disbursements of custodians of
the Trust's assets, including expenses incurred in the
performance of any obligations enumerated by the Declaration of
Trust or By-Laws of the Trust insofar as they govern agreements
with any such custodian; (xiv) costs in connection with annual or
special meetings of shareholders, including proxy material
preparation, printing and mailing; or (xv) litigation and
indemnification expenses and other extraordinary expenses not
incurred in the ordinary course of the Trust's business. The
Investment Adviser shall not be required to pay expenses of
activities which are primarily intended to result in sales of
shares of the Trust.
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<PAGE>
6. LIMITATION OF LIABILITY.
(a) THE INVESTMENT ADVISER. The Investment Adviser will not be
liable for any error of judgment or mistake of law or for
any loss sustained by reason of the adoption of any
investment policy or the purchase, sale, or retention of any
security on the recommendation of the Investment Adviser,
whether or not such recommendation shall have been based
upon its own investigation and research or upon
investigation and research made by any other individual,
firm or corporation; but nothing contained herein will be
construed to protect the Investment Adviser against any
liability to the Trust or its shareholders by reason of
willful misfeasance, bad faith or gross negligence in the
performance of its duties or by reason of its reckless
disregard of its obligations and duties under this
Agreement.
(b) THE TRUST. It is understood and expressly stipulated that
none of the Trustees or shareholders of the Trust shall be
personally liable hereunder. Neither the Trustees, officers,
agents nor shareholders of the Trust assume any personal
liability for obligations entered into on behalf of the
Trust. All persons dealing with the Trust must look solely
to the property of the Trust for the enforcement of any
claims against the Trust. No series of the Trust shall be
liable for any claims against any other series.
7. COMPENSATION OF THE INVESTMENT ADVISER. Neither the Investment
Adviser nor any affiliate of the Investment Adviser will act as
principal or receive directly or indirectly any compensation in
connection with the purchase or sale of investment securities by
the Trust, other than the compensation provided for in this
Section and such brokerage commissions as are permitted by the
1940 Act, it being contemplated that WPG will act as principal
broker for the Trust in U.S. securities transactions.
(a) Except as provided in Subsection (b) below, the Trust will
pay the Investment Adviser an annual fee, payable monthly,
which varies in accordance with the total amount of daily
net assets of the Trust under the management of the
Investment Adviser. The annual advisory fee expressed as a
percentage of the average daily net assets of the Trust is
0.75% of the average daily net assets. For any period less
than a full month during which this Agreement is in effect,
the fee shall be prorated according to the proportion which
such period bears to a full month. For the purposes hereof,
the net assets of the Trust shall be computed in
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the manner specified in the Trust's prospectus for the
computation of the value of such net assets in connection
with the determination of the net asset value of its shares.
On any day that the net asset value calculation is suspended
as specified in the Trust's prospectus, the net asset value
for purposes of calculating the advisory fee shall be
calculated as of the date last determined.
(b) If the operating expenses of the Trust in any year
(including the investment advisory fee referred to in
Subsection (a) above, but excluding taxes, brokerage
commissions, interest, dividends on securities sold short,
distribution expenses, and extraordinary legal fees and
expenses) exceed the limits set by certain state securities
administrators in states in which shares of the Trust are
sold, the amount payable to the Investment Adviser under
Subsection (a) above will be reduced (but not below $0) by
the amount of such excess. If amounts have already been
advanced to the Investment Adviser under this Agreement, the
Investment Adviser will return such amounts to the Trust to
the extent required by the preceding sentence.
(c) In addition to the foregoing, the investment Adviser may
from time to time agree not to impose all or a portion of
its fee otherwise payable hereunder (in advance of the time
such fee or portion thereof would otherwise accrue) and/or
undertake to pay or reimburse the Trust for all or a portion
of its expenses not otherwise required to be borne or
reimbursed by the Investment Adviser. Any such fee reduction
or undertaking may be discontinued or modified by the
Investment Adviser at any time.
8. ADVERTISING MATERIAL. The Trust will not approve or authorize the
use or distribution, in connection with the offering of its
shares for sale, of any literature or advertisements in any form
or through any medium, written or oral, unless not less than ten
(10) days prior to the giving of such approval or authorization
by the Trust, the Trust shall have submitted such literature or
advertising to the Investment Adviser and the Investment Adviser,
within ten (10) days, shall either have specifically approved or
shall have failed to disapprove such literature or advertising.
9. DURATION AND TERMINATION OF THIS AGREEMENT.
(a) DURATION. This Agreement shall remain in force until April
30, 1995 and from year to year thereafter, but only so long
as such
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<PAGE>
continuance is specifically approved at least annually by a
vote of a majority of the Trustees, including a majority of
the Trustees who are not parties hereto or "interested
persons" (as defined by the 1940 Act) of the Investment
Adviser, or by vote of a "majority of the outstanding voting
shares" (as defined in the 1940 Act) of the Trust, subject
to the provisions for termination and all of the other terms
and conditions hereof.
(b) VOLUNTARY TERMINATION. This Agreement may be terminated
without the payment of any penalty by (a) the Trust, upon
sixty (60) days notice in writing to the Investment Adviser
provided such termination is authorized by resolution of the
Trustees of the Trust or by a vote of a "majority of its
outstanding voting shares" of the Trust (as defined in the
Act) and (b) the Investment Adviser upon sixty (60) days
notice in writing to the Trust.
(c) AUTOMATIC TERMINATION. This Agreement will automatically and
immediately terminate in the event of its "assignment," as
that term is used in the 1940 Act and rules and regulations
promulgated thereunder, by the Investment Adviser.
10. TRADING, SERVICES TO OTHERS, BROKERAGE. Nothing in this Agreement
will in any way limit or restrict the Investment Adviser or any
of its officers, directors, partners or employees from buying,
selling or trading in any securities for its own or other
accounts. The Investment Adviser may act as an investment adviser
to any other person, firm or corporation, and may perform
management and any other services for any other person,
association, corporation, firm or other entity pursuant to any
contract or otherwise, and take any action or do anything in
connection therewith or related thereto; and no such performance
of management or other services or taking of any such action or
doing of any such thing shall be in any manner restricted or
otherwise affected by any aspect of any relationship of the
Investment Adviser to or with the Trust or deemed to violate or
give rise to any duty or obligation of the Investment Adviser to
the Trust; provided, however, that it is understood that any
advice rendered to the Trust by the Investment Adviser will be
used solely for the benefit of the Trust. The Trust recognizes
that Investment Adviser, in effecting transactions for their
various accounts, may not always be able to take or liquidate
investment positions in the same security at the same time and at
the same price.
11. NAME OF THE TRUST. The Trust hereby agrees that in the event that
neither the Investment Adviser nor any of its affiliates acts as
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<PAGE>
investment adviser to the Trust, the name of the Trust will be
changed to one that does not contain the name "Weiss, Peck &
Greer" or the initials "WPG" or otherwise suggest an affiliation
with the Investment Adviser.
12. SERIES OF THE TRUST. The Investment Adviser recognizes that the
Trust may terminate any series of the Trust, and may create new
series.
13. CHANGE OF MEMBERSHIP OF INVESTMENT ADVISER. The Investment
Adviser hereby agrees to notify the Trust of any change in the
membership of its partnership within a reasonable time after such
change.
14. INDEPENDENT CONTRACTOR. The Investment Adviser is an independent
contractor and not an employee of the Trust for any purpose.
15. ENTIRE AGREEMENT. This Agreement states the entire agreement of
the parties hereto, and is intended to be the complete and
exclusive statement of the terms hereof. It may not be added to
or changed orally, and may not be modified or rescinded except by
a writing signed by the parties hereto and in accordance with the
1940 Act, when applicable.
16. NOTICES. Any notices sent pursuant to this Agreement may be sent
by mail (postage prepaid) as follows, or to such other address or
addresses as the party may advise in writing:
(a) In the case of notices sent to the Trust to:
WPG GROWTH AND INCOME FUND
One New York Plaza
New York, New York 10004
Attention: Jay C. Nadel
(b) In the case of notices sent to the Investment Adviser to:
WEISS, PECK & GREER
One New York Plaza
New York, New York 10004
Attention: Francis H. Powers
17. GOVERNING LAW. This Agreement and all performance hereunder
shall be governed by the laws of the State of New York,
which apply to contracts made and to be performed in the
State of New York.
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<PAGE>
18. MISCELLANEOUS. The captions in this Agreement are included
for convenience of reference only and in no way define or
delimit any of the provisions hereof or otherwise affect
their construction or effect. This Agreement may be executed
simultaneously in two or more counterparts, each of which
shall be deemed an original, but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
WPG GROWTH AND INCOME FUND
By:________________________________
Its:
WEISS, PECK & GREER
By:________________________________
Its:
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ADMINISTRATION AGREEMENT
WPG GROWTH AND INCOME FUND
AGREEMENT made as of the 1st day of May, 1993, by and between WPG
GROWTH AND INCOME FUND, a Massachusetts business trust (the "Trust"), and WEISS,
PECK & GREER, a New York limited partnership (the "Administrator").
The Trust is an open-end, management investment company, registered
under the Investment Company Act of 1940, as amended (the "1940 Act"). The
Administrator is an investment adviser registered under the Investment Advisers
Act of 1940, as amended and is a broker-dealer registered under the Securities
Exchange Act of 1934, as amended.
The Trust desires the Administrator to render services to the Trust,
and the Administrator is willing to render such services upon the terms and
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises, the parties hereto
agree as follows:
1. ADMINISTRATIVE SERVICES.
(a) Subject to the general supervision of the Board of Trustees of
the Trust, the Administrator will provide certain administrative
services to the Trust. The Administrator will, to the extent such
services are not required to be performed by others pursuant to
the custodian agreement, the transfer agency agreement (to the
extent that a person other than the Administrator is serving
thereunder as the Trust's transfer agent), or other arrangements
(i) provide supervision of all aspects of the Trust's operations
not referred to in Section 4 of the current Investment Advisory
Agreement between the Trust and the Trust's investment adviser
(the "Investment Advisory Agreement"); (ii) provide the Trust
with personnel to perform such executive, administrative,
accounting and clerical services as are reasonably necessary to
provide effective administration of the Trust; (iii) arrange for,
at the Trust's expense, (a) the preparation for the Trust of all
required tax returns, (b) the preparation and submission of
reports to existing shareholders and (c) the periodic updating of
the Trust's prospectus and statement of additional information
and the preparation of reports filed with the Securities and
Exchange Commission and other regulatory authorities; (iv)
maintain all of the Trust's records not required to be maintained
by the investment adviser pursuant to Section 4(c) of the
Investment Advisory Agreement; (v) provide the Trust with
adequate office space and all necessary office equipment and
services,
<PAGE>
including, without limitation, telephone service, heat,
utilities, stationery supplies and similar items; and (vi)
provide to the Trust transfer agency- related and shareholder
relations services and facilities and the services of one or more
of its employees or officers, or employees or officers of its
affiliates, relating to such functions (including salaries and
benefits, office space and supplies, equipment and teaching).
(b) The Administrator will also provide to the Trust's Board of
Trustees such periodic and special reports as the Board may
reasonably request. The Administrator shall for all purposes
herein be deemed to be an independent contractor and shall,
except as otherwise expressly provided or authorized, have no
authority to act for or represent the Trust in any way or
otherwise be deemed an agent of the Trust.
(c) The Administrator will notify the Trust of any change in its
membership within a reasonable time after such change.
(d) The services hereunder are not deemed exclusive and the
Administrator shall be free to render similar services to others
so long as its services under this Agreement are not impaired
thereby.
2. ALLOCATION OF CHARGES AND EXPENSES. Except as otherwise provided in Section
1 of this Agreement, the Administrator will pay all costs it incurs in
connection with the performance of its duties under Section 1 of this
Agreement. The Administrator will pay the compensation and expenses of all
of its personnel and will make available, without expense to the Trust, the
services of such of its partners, officers and employees as may duly be
elected officers or Trustees of the Trust, subject to their individual
consent to serve and to any limitations imposed by law. The Administrator
will not be required to pay any expenses of the Trust other than those
specifically allocated to the Administrator in this Section 2. In
particular, but without limiting the generality of the foregoing, the
Administrator will not be required to pay: (i) fees and expenses of any
investment adviser of the Trust; (ii) organization expenses of the Trust;
(iii) fees and expenses incurred by the Trust in connection with membership
in investment company organizations; (iv) brokers' commissions; (v) payment
for portfolio pricing services to a pricing agent, if any; (vi) legal or
auditing expenses (including an allocable portion of the cost of its
employees rendering legal services to the Trust); (vii) interest, insurance
premiums, taxes or governmental fees; (viii) the fees and expenses of the
transfer agent of the Trust; (ix) the cost of preparing stock certificates
or any other expenses, including, without limitation, clerical expenses of
issue, redemption or repurchase of shares of the Trust; (x) the expenses of
and fees for registering or qualifying shares of the Trust for sale and of
maintaining the registration of the Trust and registering the Trust as a
broker or a dealer; (xi) the fees and expenses of Trustees of the Trust who
are not affiliated with the Administrator; (xii) the cost of preparing and
distributing reports and notices to shareholders, the Securities and
Exchange Commission and other regulatory authorities; (xiii) the fees or
disbursements of custodians of the Trust's assets, including expenses
incurred in the performance of any obligations enumerated
2
<PAGE>
by the Declaration of Trust or By-Laws of the Trust insofar as they govern
agreements with any such custodian; (xiv) costs in connection with annual
or special meetings of shareholders, including proxy material preparation,
printing and mailing; or (xv) litigation and indemnification expenses and
other extraordinary expenses not incurred in the ordinary course of the
Trust's business. The Administrator shall not be required to pay expenses
of activities which are primarily intended to result in sales of shares of
the Trust.
3. COMPENSATION OF THE ADMINISTRATOR.
(a) For all services to be rendered and payments made as provided in
Sections 1 and 2 hereof, the Trust will pay the Administrator on
the last day of each month a fee at an annual rate equal to 0.09%
per annum of the average daily net assets of the Trust. The
"average daily net assets" of the Trust shall be determined on
the basis set forth in the Trust's prospectus or otherwise
consistent with the 1940 Act and the regulations promulgated
thereunder.
(b) If the operating expenses of the Trust in any year (including the
administration fee referred to in Subsection (a) above, but
excluding taxes, brokerage commissions, interest, dividends on
securities sold short, distribution expenses, and extraordinary
legal fees and expenses) exceed the limits set by certain state
securities administrators in states in which shares of the Trust
are sold, the amount payable to the Administrator under
Subsection (a) above will be reduced (but not below $0) by the
amount of such excess. If amounts have already been advanced to
the Administrator under this Agreement, the Administrator will
return such amounts to the Trust to the extent required by the
preceding sentence.
(c) In addition to the foregoing, the Administrator may from time to
time agree not to impose all or a portion of its fee otherwise
payable hereunder (in advance of the time such fee or portion
thereof would otherwise accrue) and/or undertake to pay or
reimburse the Trust for all or a portion of its expenses not
otherwise required to be borne or reimbursed by the
Administrator. Any such fee reduction or undertaking may be
discontinued or modified by the Administrator at any time.
4. LIMITATION OF LIABILITY OF ADMINISTRATOR AND TRUST. The Administrator shall
not be liable for any error of judgment or mistake of law or for any loss
suffered by the Trust in connection with the matters to which this
Agreement relates, except a loss resulting from willful misfeasance, bad
faith or gross negligence on its part in the performance of its duties or
from reckless disregard by the Administrator of its obligations and duties
under this Agreement. Any person, even though also employed by the
Administrator, who may be or become an employee of and paid by the Trust
shall be deemed, when acting within the scope of his employment by the
Trust, to be acting in such employment solely for the Trust and not as its
employee or agent. It is understood and expressly stipulated that none of
the trustees or shareholders of the Trust shall be
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<PAGE>
personally liable hereunder. None of the trustees, officers, agents or
shareholders of the Trust assume any personal liability for obligations
entered into on behalf of the Trust. All persons dealing with the Trust
must look solely to the property of the Trust for the enforcement of any
claims against the Trust. The Trust shall not be liable for any claims
against any other Series of the Trust.
5. DURATION AND TERMINATION OF THIS AGREEMENT. This Agreement shall remain in
force until April 30, 1994 and shall continue for periods of one year
thereafter, but only so long as such continuance is specifically approved
at least annually by the vote of a majority of the Board of Trustees of the
Trust. This Agreement may, on 60 days' written notice to the other party,
be terminated at any time without the payment of any penalty by the Trust
or by the Administrator.
6. AMENDMENT OF THIS AGREEMENT. No provisions of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument
in writing signed by the party against which enforcement of the change,
waiver, discharge or termination is sought.
7. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
8. MISCELLANEOUS. The captions in this Agreement are included for convenience
of reference only and in no way define or delimit any of the provisions
hereof or otherwise affect their construction or effect. This Agreement may
be executed simultaneously in two or more counterparts, each of which shall
be deemed an original, but all of which together shall constitute one and
the same instrument.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
WPG GROWTH AND INCOME FUND
By:________________________________
Its:_______________________________
WEISS, PECK & GREER
By:________________________________
Its:_______________________________
5
CUSTODY AGREEMENT
AGREEMENT dated as of March 20, 1989, between WPG FUND (the "Trust"),
a Massachusetts business trust, having its principal office and place of
business at One New York Plaza, New York, New York 10004, and BOSTON SAFE
DEPOSIT AND TRUST COMPANY (the "Custodian"), a Massachusetts trust company with
its principal place of business at One Boston Place, Boston, Massachusetts
02108.
W I T N E S S E T H
That for and in consideration of the mutual promises hereinafter set
forth, the Trust and the Custodian agree as follows:
1. DEFINITIONS.
Whenever used in this Agreement or in any Schedules to this
Agreement, the following words and phrases, unless the context
otherwise requires, shall have the following meanings:
(a) "Authorized Person" shall be deemed to include the President,
and any Vice President, the Secretary, the Treasurer, or any
other person, whether or not any such person is an officer or
employee of the Trust, duly authorized by the Board of Trustees
of the Trust to give Oral Instructions and Written Instructions
on behalf of the Trust and listed in the certification annexed
hereto as Appendix A or such other certification as may be
received by the Custodian from time to time.
(b) "Book-Entry System" shall mean the Federal Reserve/ Treasury
book-entry system for United States and federal agency
Securities, its successor or successors and its nominee or
nominees.
(c) "Certificate" shall mean any notice, instruction or other
instrument in writing, authorized or required by this Agreement
to be given to the Custodian, which is actually received by the
Custodian and signed on behalf of the Trust by such Authorized
Person as the Trust shall designate.
(d) "Declaration of Trust" shall mean the Declaration of Trust of
the Trust dated April 13, 1988 as the same may be amended from
time to time.
(e) "Depository" shall mean The Depository Trust Company ("DTC"),
a clearing agency registered with the Securities and Exchange
Commission under Section 17(A) of the Securities Exchange Act of
1934,
<PAGE>
as amended, its successor or successors and its nominee or
nominees, in which the Custodian is hereby specifically
authorized to make deposits. The term "Depository" shall further
mean and include any other person to be named in a Certificate
authorized to act as a depository under the 1940 Act, its
successor or successors and its nominee or nominees.
(f) "Money Market Security" shall be deemed to include, without
limitation, debt obligations issued or guaranteed as to interest
and principal by the Government of the United States or agencies
or instrumentalities thereof, commercial paper, bank certificates
of deposit, bankers' acceptances and short-term corporate
obligations, where the purchase or sale of such securities
normally requires settlement in federal funds on the same day as
such purchase or sale, and repurchase and reverse repurchase
agreements with respect to any of the foregoing types of
securities.
(g) "Oral Instructions" shall mean verbal instructions actually
received by the Custodian from a person reasonably believed by
the Custodian to be an Authorized Person.
(h) "Prospectus" shall mean the Trust's current prospectus and
statement of additional information relating to the registration
of the Trust's Shares under the Securities Act of 1933, as
amended.
(i) "Shares" refers to the shares of beneficial interest of the
Trust.
(j) "Security" or "Securities" shall be deemed to include bonds,
debentures, notes, stocks, shares, evidences of indebtedness, and
other securities and investments from time to time owned by the
Trust.
(k) "Transfer Agent" shall mean the person which performs the
transfer agent, dividend disbursing agent and shareholder
servicing agent functions for the Trust.
(l) "Written Instructions" shall mean a written communication
actually received by the Custodian from a person reasonably
believed by the Custodian to be an Authorized Person by any
system whereby the receiver of such communication is able to
verify through codes or otherwise with a reasonable degree of
certainty the authenticity of the sender of such communication.
(m) The "1940 Act" refers to the Investment Company Act of 1940,
and the Rules and Regulations thereunder, all as amended from
time to time.
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<PAGE>
2. APPOINTMENT OF CUSTODIAN.
(a) The Trust hereby constitutes and appoints the Custodian as
custodian of all the Securities and moneys at the time owned by
or in the possession of the Trust during the period of this
Agreement.
(b) The Custodian hereby accepts appointment as such custodian
for the Trust and agrees to perform the duties thereof as
hereinafter set forth.
3. COMPENSATION.
(a) The Trust will compensate the Custodian for its services
rendered under this Agreement in accordance with the fees set
forth in the Fee Schedule annexed hereto as Schedule A and
incorporated herein. Such Fee Schedule does not include
out-of-pocket disbursements of the Custodian for which the
Custodian shall be entitled to bill separately. Out-of-pocket
disbursements shall include, but shall not be limited to, the
items specified in the Schedule of Out-of-Pocket charges annexed
hereto as Schedule B and incorporated herein, which schedule may
be modified by the Custodian upon not less than thirty days prior
written notice to the Trust.
(b) Any compensation agreed to hereunder may be adjusted from
time to time by attaching to Schedule A of this Agreement a
revised Fee Schedule, dated and signed by an Authorized Person of
the Trust and a duly authorized officer of the Custodian.
(c) The Custodian will bill the Trust as soon as practicable
after the end of each calendar month, and said billings will be
detailed in accordance with the Fee Schedule. The Trust will
promptly pay to the Custodian the amount of such billing.
4. CUSTODY OF CASH AND SECURITIES.
(a) RECEIPT AND HOLDING OF ASSETS. The Trust will deliver or
cause to be delivered to the Custodian all Securities and moneys
owned by it at any time during the period of this Agreement. The
Custodian will not be responsible for such Securities and moneys
until actually received by it. The Trust shall instruct the
Custodian from time to time in its sole discretion, by means of a
Certificate, or, in connection with the purchase or sale of Money
Market Securities, by means of Oral Instructions or Written
Instructions as to the manner in which and in what amounts
Securities and moneys of the Trust are to be deposited on behalf
of the
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<PAGE>
Trust in the Book-Entry System; or the Depository provided,
however, that prior to the deposit of Securities of the Trust in
the Book-Entry System or the Depository, including a deposit in
connection with the settlement of a purchase or sale, the
Custodian shall have received a Certificate specifically
approving such deposits by the Custodian in the Book-Entry System
or the Depository.
(b) ACCOUNTS AND DISBURSEMENTS. The Custodian shall establish and
maintain a separate account for the Trust and shall credit to the
separate account of the Trust all moneys received by it for the
account the Trust and shall disburse the same only:
1. In payment for Securities purchased for the Trust, as
provided in Section 5 hereof;
2. In payment of dividends or distributions with respect to
the Shares of the Trust, as provided in Section 7 hereof;
3. In payment of original issue or other taxes with respect
to the Shares of the Trust, as provided in Section 8 hereof;
4. In payment for Shares which have been redeemed by the
Trust, as provided in Section 8 hereof;
5. Pursuant to Written Instructions, or with respect to
Money Market Securities, Oral Instructions or Written
Instructions, setting forth the name and address of the
person to whom the payment is to be made, the amount to be
paid and the purpose for which payment is to be made; or
6. In payment of fees and in reimbursement of the expenses
and liabilities of the Custodian attributable to the Trust,
as provided in Section 11(h) hereof.
(c) CONFIRMATION AND STATEMENTS. Promptly after the close of
business on each day, the Custodian shall furnish the Trust
with confirmations and a summary of all transfers to or from
the account of the Trust during said day. Where securities
purchased by the Trust are in a fungible bulk of securities
registered in the name of the Custodian (or its nominee) or
shown on the Custodian's account on the books of the
Depository or the Book-Entry System, the Custodian shall by
book entry or otherwise identify the quantity of those
securities belonging to the Trust. At least monthly, the
Custodian shall furnish the Trust with
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<PAGE>
a detailed statement of the Securities and moneys held for the
Trust under this Agreement.
(d) REGISTRATION OF SECURITIES AND PHYSICAL SEPARATION. All
Securities held for the Trust which are issued or issuable only
in bearer form, except such Securities as are held in the
Book-Entry System, shall be held by the Custodian in that form;
all other Securities held for the Trust may be registered in the
name of the Trust, in the name of any duly appointed registered
nominee of the Custodian as the Custodian may from time to time
determine, or in the name of the Book-Entry System or the
Depository or their successor or successors, or their nominee or
nominees. The Trust reserves the right to instruct the Custodian
as to the method of registration and safekeeping of the
Securities of the Trust. The Trust agrees to furnish to the
Custodian appropriate instruments to enable the Custodian to hold
or deliver in proper form for transfer, or to register in the
name of its registered nominee or in the name of the Book-Entry
System or the Depository, any Securities which it may hold for
the account of the Trust and which may from time to time be
registered in the name of the Trust. The Custodian shall hold all
such Securities which are not held in the Book-Entry System or
the Depository in a separate account for the Trust in the name of
the Trust physically segregated at all times from those of any
other person or persons.
(e) COLLECTION OF INCOME AND OTHER MATTERS AFFECTING SECURITIES.
Unless otherwise instructed to the contrary by a Certificate, the
Custodian by itself, or through the use of the Book-Entry System
or the Depository with respect to Securities therein deposited,
shall with respect to all Securities held for the Trust in
accordance with this Agreement:
1. Collect all income due or payable;
2. Present for payment and collect the amount payable upon
all Securities which may mature or be called, redeemed or
retired, or otherwise become payable; Notwithstanding the
foregoing, the Custodian shall have no responsibility to the
Trust for monitoring or ascertaining any call, redemption or
retirement dates with respect to put bonds which are owned
by the Trust and held by the Custodian or its nominees. Nor
shall the Custodian have any responsibility or liability to
the Trust for any loss by the Trust for any missed payments
or other defaults resulting therefrom; unless the Custodian
receives timely notification from the Trust specifying the
time, place and manner for the presentment of any
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such put bond owned by the Trust held by the Custodian or
its nominee. The Custodian shall not be responsible and
assumes no liability for the Trust for the accuracy or
completeness of any notification the Custodian may furnish
to the Trust with respect to put bonds;
3. Surrender Securities in temporary form for definitive
Securities;
4. Execute any necessary declarations or certificates of
ownership under the Federal income tax laws or the laws or
regulations of any other taxing authority now or hereafter
in effect; and
5. Hold directly, or through the Book-Entry System or the
Depository with respect to Securities therein deposited, for
the account of each Portfolio all rights and similar
Securities issued with respect to any Securities held by the
Custodian hereunder for the Trust.
(f) DELIVERY OF SECURITIES AND EVIDENCE OF AUTHORITY. Upon
receipt of Written Instructions and not otherwise, except for
subparagraphs 5, 6, 7, and 8 which may be effected by Oral or
Written Instructions, the Custodian, directly or through the use
of the Book-Entry System or the Depository, shall:
1. Execute and deliver or cause to be executed and delivered
to such persons as may be designated in such Written
Instructions proxies, consents, authorizations, and any
other instruments whereby the authority of the Trust as
owner of any Securities may be exercised;
2. Deliver or cause to be delivered any Securities held for
the Trust in exchange for other Securities or cash issued or
paid in connection with the liquidation, reorganization,
refinancing, merger, consolidation or recapitalization of
any corporation, or the exercise of any conversion
privilege;
3. Deliver or cause to be delivered any Securities held for
the Trust to any protective committee, reorganization
committee or other person in connection with the
reorganization, refinancing, merger, consolidation or
recapitalization or sale of assets of any corporation, and
receive and hold under the terms of this Agreement in the
separate account for the Trust such certificates
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of deposit, interim receipts or other instruments or
documents as may be issued to it to evidence such delivery;
4. Make or cause to be made such transfers or exchanges of
the assets to the Trust and take such other steps as shall
be stated in said Certificate to be for the purpose of
effectuating any duly authorized plan of liquidation,
reorganization, merger, consolidation or recapitalization of
the Trust;
5. Deliver Securities owned by the Trust upon sale of such
Securities for the account of the Trust pursuant to Section
5;
6. Deliver Securities owned by the Trust upon the receipt of
payment in connection with any repurchase agreement related
to such Securities entered into by the Trust;
7. Deliver Securities owned by the Trust to the issuer
thereof or its agent when such Securities are called,
redeemed, retired or otherwise become payable; provided,
however, that in any such case the cash or other
consideration is to be delivered to the Custodian;
Notwithstanding the foregoing, the Custodian shall have no
responsibility to the Trust for monitoring or ascertaining
any call, redemption or retirement dates with respect to the
put bonds which are owned by the Trust and held by the
Custodian or its nominee. Nor shall the Custodian have any
responsibility or liability to the Trust for any loss by the
Trust for any missed payment or other default resulting
therefrom; unless the Custodian received timely notification
from the Trust specifying the time, place and manner for the
presentment of any such put bond owned by the Trust and held
by the Custodian or its nominee. The Custodian shall not be
responsible and assumes no liability to the Trust for the
accuracy or completeness of any notification the Custodian
may furnish to the Trust with respect to put bonds;
8. Deliver Securities owned by the Trust for delivery in
connection with any loans of securities made by the Trust
but only against receipt of adequate collateral as agreed
upon from time to time by the Custodian and the Trust which
may be in the form of cash or obligations issued by the
United States government, its agencies or instrumentalities;
9. Deliver Securities owned by the Trust for delivery as
security in connection with any borrowings by the Trust
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requiring a pledge of Trust assets, but only against receipt
of amounts borrowed;
10. Deliver Securities owned by the Trust upon receipt of
instructions from the Trust for delivery to the Transfer
Agent or to the holders of Shares in connection with
distributions in kind, as may be described from time to time
in the Trust's Prospectus, in satisfaction of requests by
holders of Shares for repurchase or redemption; and
11. Deliver Securities owned by any Portfolio for any other
proper business purpose, but only upon receipt of, in
addition to Written Instructions, a certified copy of a
resolution of the Board of Trustees signed by an Authorized
Person and certified by the Secretary of the Trust,
specifying the Securities to be delivered, setting forth the
purpose for which such delivery is to be made, declaring
such purpose to be a proper business purpose, and naming the
person or persons to whom delivery of such Securities shall
be made.
(g) ENDORSEMENT AND COLLECTION OF CHECKS ETC. The Custodian is
hereby authorized to endorse and collect all checks, drafts or
other orders for the payment of money received by the Custodian
for the account of the Trust.
5. PURCHASE AND SALE OF INVESTMENT OF THE TRUST.
(a) Promptly after each purchase of Securities for the Trust, the
Trust shall deliver to the Custodian (i) with respect to each
purchase of Securities which are not Money Market Securities,
Written Instruction, and (ii) with respect to each purchase of
Money Market Securities, either Written or Oral Instruction, in
either case specifying with respect to each purchase: (1) the
name of the issuer and the title of the Securities; (2) the
number of shares or the principal amount purchased and accrued
interest, if any; (3) the date of purchase and settlement; (4)
the purchase price per unit; (5) the total amount payable upon
such purchase; (6) the name of the person from whom or the broker
through whom the purchase was made, if any; (7) whether or not
such purchase is to be settled through the Book-Entry System or
the Depository; and (8) whether the Securities purchased are to
be deposited in the Book-Entry System or the Depository. The
Custodian shall receive all Securities purchased by or for the
Trust and upon receipt of such Securities shall pay out of the
moneys held for the account of the Trust the total amount payable
upon such purchase, provided that the same conforms
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to the total amount payable as set forth in such Written or Oral
Instructions.
(b) Promptly after each sale of Securities of the Trust, the
Trust shall deliver to the Custodian (i) with respect to each
sale of Securities which are not Money Market Securities, Written
Instruction, and (ii) with respect to each sale of Money Market
Securities, either Written or Oral Instruction, in either case
specifying with respect to such sale: (1) the name of the issuer
and the title of the Securities; (2) the number of shares or
principal amount sold, and accrued interest, if any; (3) the date
of sale; (4) the sale price per unit; (5) the total amount
payable to the Trust upon such sale; (6) the name of the broker
through whom or the person to whom the sale was made; and (7)
whether or not such sale is to be settled through the Book-Entry
System or the Depository. The Custodian shall deliver or cause to
be delivered the Securities to the broker or other person
designated by the Trust upon receipt of the total amount payable
to the Trust upon such sale, provided that the same conforms to
the total amount payable to the Trust as set forth in such
Written Instruction or such Oral Instructions. Subject to the
foregoing, the Custodian may accept payment in such form as shall
be satisfactory to it, and may deliver Securities and arrange for
payment in accordance with the customs prevailing among dealers
in Securities.
6. LENDING OF SECURITIES.
If the Trust is permitted by the terms of the Declaration of
Trust and as disclosed in its Prospectus to lend Securities,
within 24 hours after each loan of Securities, the Trust shall
deliver to the Custodian Written Instruction specifying with
respect to each such loan: (1) the name of the issuer and the
title of the Securities; (2) the number of shares or the
principal amount loaned; (3) the date of loan and delivery; (4)
the total amount to be delivered to the Custodian, against the
loan of the Securities, including the amount of cash collateral
and the premium, if any, separately identified; (5) the name of
the broker, dealer or financial institution to which the loan was
made; and (6) whether the Securities loaned are to be delivered
through the Book-Entry System or the Depository.
Promptly after each termination of a loan of Securities, the
Trust shall deliver to the Custodian Written Instruction
specifying with respect to each such loan termination and return
of Securities: (1) the name of the issuer and the title of the
Securities to be returned; (2) the number of shares or the
principal amount to be returned; (3) the date of termination; (4)
the total amount to be delivered by the Custodian
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(including the cash collateral for such Securities minus any
offsetting credits as described in said Written Instructions);
(5) the name of the broker, dealer or financial institution from
which the Securities will be returned; and (6) whether such
return is to be effected through the Book-Entry System or the
Depository. The Custodian shall receive all Securities returned
from the broker, dealer or financial institution to which such
Securities were loaned and upon receipt thereof shall pay, out of
the moneys of the Trust, the total amount payable upon such
return of Securities as set forth in the Written Instruction.
Securities returned to the Custodian shall be held as they were
prior to such loan.
7. PAYMENT OF DIVIDENDS OR DISTRIBUTIONS.
(a) The Trust shall furnish to the Custodian the resolution of
the Board of Trustees of the Trust certified by the Secretary (i)
authorizing the declaration of dividends of the Trust on a
specified periodic basis and authorizing the Custodian to rely on
Oral or Written Instructions specifying the date of the
declaration of such dividend or distribution, the date of payment
thereof, the record date as of which shareholders entitled to
payment shall be determined, the amount payable per share to the
shareholders of record as of the record date and the total amount
payable to the Transfer Agent on the payment date, or (ii)
setting forth the date of declaration of any dividend or
distribution by of the Trust, the date of payment thereof, the
record date as of which shareholders entitled to payment shall be
determined, the amount payable per share to the shareholders of
record as of the record date and the total amount payable to the
Transfer Agent on the payment date.
(b) Upon the payment date specified in such resolution, Oral
Instructions, or Written Instructions, as the case may be, the
Custodian shall pay out the moneys specifically allocated to and
held for the account of the Trust the total amount payable to the
Transfer Agent of the Trust.
8. SALE AND REDEMPTION OF SHARES OF THE TRUST.
(a) Whenever the Trust shall sell any Shares of the Trust, the
Trust shall deliver or cause to be delivered to the Custodian a
Written Instruction duly specifying:
1. The number of Shares sold, trade date, and price; and
2. The amount of money to be received by the Custodian for
the sale of such Shares.
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(b) Upon receipt of such money from the Transfer Agent, the
Custodian shall credit such money to the separate account of the
Trust.
(c) Upon issuance of any Shares of the Trust in accordance with
the foregoing provisions of this Section 8, the Custodian shall
pay, all original issue or other taxes required to be paid in
connection with such issuance upon the receipt of Written
Instruction specifying the amount to be paid.
(d) Except as provided hereafter, whenever any Shares of the
Trust are redeemed, the Trust shall cause the Transfer Agent to
promptly furnish to the Custodian Written Instructions,
specifying:
1. The number of Shares redeemed; and
2. The amount to be paid for the Shares redeemed.
(e) Upon receipt from the Transfer Agent of advice setting forth
the number of Shares of the Trust received by the Transfer Agent
for redemption and that such Shares are valid and in good form
for redemption, the Custodian shall make payment to the Transfer
Agent the total amount specified in the Written Instruction
issued pursuant to paragraph (d) of this Section 8.
(f) Notwithstanding the above provisions regarding the redemption
of Shares, whenever such Shares are redeemed pursuant to any
check redemption privilege which may from time to time be offered
by the Trust, the Custodian, unless otherwise instructed by
Written Instruction shall, upon receipt of advice from the Trust
or its agent stating that the redemption is in good form for
redemption in accordance with the check redemption procedure,
honor the check presented as part of such check redemption
privilege out of the moneys of the Trust.
9. INDEBTEDNESS.
(a) The Trust will cause to be delivered to the Custodian by any
bank (excluding the Custodian) from which the Trust borrows money
for temporary administrative or emergency purposes using
Securities as collateral for such borrowings, a notice or
undertaking in the form currently employed by any such bank
setting forth the amount which such bank will loan to the Trust
against delivery of a stated amount of collateral. The Trust
shall promptly deliver to the Custodian Written or Oral
Instructions stating with respect to each such borrowing: (1) the
name of the bank; (2) the amount and terms of the borrowing,
which
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may be set forth by incorporating by reference an attached
promissory note, duly endorsed by the Trust, or other loan
agreement; (3) the time and date, if known, on which the loan is
to be entered into (the "borrowing date"); (4) the date on which
the loan becomes due and payable; (5) the total amount payable to
the Trust on the borrowing date; (6) the market value of
Securities to be delivered as collateral for such loan, including
the name of the issuer, the title and the number of shares or the
principal amount of any particular Securities; (7) whether the
Custodian is to deliver such collateral through the Book-Entry
System or the Depository; and (8) a statement that such loan is
in conformance with the 1940 Act and the Trust's Prospectus.
(b) Upon receipt of Written Instruction referred to in
subparagraph (a) above, the Custodian shall deliver on the
borrowing date the specified collateral and the executed
promissory note, if any, against delivery by the lending bank of
the total amount of the loan payable, provided that the same
conforms to the total amount payable as set forth in the Written
or Oral Instructions. The Custodian may, at the option of the
lending bank, keep such collateral in its possession, but such
collateral shall be subject to all rights therein given the
lending bank by virtue of any promissory note or loan agreement.
The Custodian shall deliver as additional collateral in the
manner directed by the Trust from time to time such Securities as
may be specified in Written or Oral Instructions to collateralize
further any transaction described in this Section 9. The Trust
shall cause all Securities released from collateral status to be
returned directly to the Custodian, and the Custodian shall
receive from time to time such return of collateral as may be
tendered to it. In the event that the Trust fails to specify in
Written or Oral Instructions all of the information required by
this Section 9, the Custodian shall not be under any obligation
to deliver any Securities. Collateral returned to the Custodian
shall be held hereunder as it was prior to being used as
collateral.
10. PERSONS HAVING ACCESS TO ASSETS OF THE TRUST.
(a) No Trustee, officer, employee or agent of the Trust, and no
officer, director, employee or agent of the investment adviser,
shall have physical access to the assets of the Trust held by the
Custodian or be authorized or permitted to withdraw any
investments of the Trust, nor shall the Custodian deliver any
assets of the Trust to any such person. No officer, director,
employee or agent of the Custodian who holds any similar position
with the Trust or the investment adviser shall have access to the
assets of the Trust.
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(b) The individual employees of the Custodian duly authorized by
the Board of Directors of the Custodian to have access to the
assets of the Trust are listed in the certification annexed
hereto as Appendix C. The Custodian shall advise the Trust of any
change in the individuals authorized to have access to the assets
of the Trust by written notice to the Trust accompanied by a
certified copy of the authorizing resolution of the Custodian's
Board of Directors approving such change.
(c) Nothing in this Section 10 shall prohibit any officer,
employee or agent of the Trust, or any officer, director,
employee or agent of the investment adviser, from giving Oral
Instructions or Written Instructions to the Custodian or
executing a Certificate so long as it does not result in delivery
of or access to assets of the Trust prohibited by paragraph (a)
of this Section 10.
11. CONCERNING THE CUSTODIAN.
(a) STANDARD OF CONDUCT. Except as otherwise provided herein,
neither the Custodian nor its nominee shall be liable for any
loss or damage, including counsel fees, resulting from its action
or omission to act or otherwise, except for any such loss or
damage arising out of its own negligence or willful misconduct.
The Custodian may, with respect to questions of law, apply for
and obtain the advice and opinion of counsel to the Trust or of
its own counsel, at the expense of the Trust, and shall be fully
protected with respect to anything done or omitted by it in good
faith in conformity with such advice or opinion. The Custodian
shall be liable to the Trust for any loss or damage resulting
from the use of the Book-Entry System or the Depository arising
by reason of any negligence, misfeasance or misconduct on the
part of the Custodian or any of its employees or agents.
(b) LIMIT OF DUTIES. Without limiting the generality of the
foregoing, the Custodian shall be under no duty or obligation to
inquire into, and shall not be liable for:
1. The validity of the issue of any Securities purchased by
the Trust, the legality of the purchase thereof, or the
propriety of the amount paid therefor;
2. The legality of the sale of any Securities by the Trust,
or the propriety of the amount for which the same are sold;
3. The legality of the issue or sale of any Shares, or the
sufficiency of the amount to be received therefor;
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4. The legality of the redemption of any Shares, or the
propriety of the amount to be paid therefor;
5. The legality of the declaration or payment of any
dividend or other distribution of the Trust;
6. The legality of any borrowing for temporary or emergency
administrative purposes.
(c) NO LIABILITY UNTIL RECEIPT. The Custodian shall not be liable
for, or considered to be the Custodian of, any money, whether or
not represented by any check, draft, or other instrument for the
payment of money, received by it on behalf of the Trust until the
Custodian actually receives and collects such money directly or
by the final crediting of the account representing the Trust's
interest in the Book-Entry System or the Depository. The
Custodian shall exercise diligence appropriate to first class
mutual fund custodians in pursuing payment on any such
instrument, or any dividend, interest or other receivable of the
Trust.
(d) AMOUNTS DUE FROM TRANSFER AGENT. The Custodian shall not be
under any duty or obligation to take action to effect collection
of any amount due to the Trust from the Transfer Agent nor to
take any action to effect payment or distribution by the Transfer
Agent of any amount paid by the Custodian to the Transfer Agent
in accordance with this Agreement.
(e) COLLECTION WHERE PAYMENT REFUSED. The Custodian shall not be
under any duty or obligation to take action to effect collection
of any amount, if the Securities upon which such amount is
payable are in default, or if payment is refused after due demand
or presentation, unless and until (a) it shall be directed to
take such action by a Certificate and (b) it shall be assured to
its satisfaction of reimbursement of its costs and expenses in
connection with any such action.
(f) APPOINTMENT OF AGENTS AND SUB-CUSTODIANS. The Custodian may
appoint one or more banking institutions, including but not
limited to banking or other qualified institutions located in
foreign countries, to act as Depository or Depositories or as
Sub-Custodian or as Sub-Custodians of Securities and moneys at
any time owned by the Trust, upon terms and conditions specified
in a Certificate. The Custodian shall use reasonable care in
selecting a Depository and/or Sub-Custodian located in a country
other than the United States ("Foreign Sub-Custodian"), and shall
oversee the maintenance of any Securities or moneys of the Trust
by any Foreign Sub-Custodian. Any selection of and form of
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contract with a Foreign Custodian shall be subject to approval by
the Trust that such selection and contract are consistent with
the requirements of Rule l7f-5 (and Rule 17f-4, if applicable)
under the 1940 Act, and the Custodian shall provide the Trust
with such information and recommendations as may be reasonably
necessary as a basis for such approval.
(g) NO DUTY TO ASCERTAIN AUTHORITY. The Custodian shall not be
under any duty or obligation to ascertain whether any Securities
at any time delivered to or held by it for the Trust are such as
may properly be held by the Trust under the provisions of the
Declaration of Trust and the Prospectus.
(h) COMPENSATION OF THE CUSTODIANS. The Custodian shall be
entitled to receive, and the Trust agrees to pay to the
Custodian, such compensation as may be agreed upon from time to
time between the Custodian and the Trust. The Custodian may
charge against any moneys of the Trust such compensation and any
expenses incurred by the Custodian in the performance of its
duties pursuant to such agreement with respect to the Trust. The
Custodian shall also be entitled to charge against any money held
by it the amount of any loss, damage, liability or expense
incurred with respect to the Trust, including counsel fees, for
which it shall be entitled to reimbursement under the provisions
of this Agreement.
The expenses which the Custodian may charge against such
account include, but are not limited to, the expenses of
Sub-Custodians and foreign branches of the Custodian incurred in
settling transactions outside of Boston, Massachusetts or New
York City, New York involving the purchase and sale of Securities
of any Portfolio.
(i) RELIANCE ON CERTIFICATES AND INSTRUCTIONS. The Custodian
shall be entitled to rely upon any Certificate, notice or other
instrument in writing received by the Custodian and reasonably
believed by the Custodian to be genuine and to be signed by the
required number of officers of the Trust. The Custodian shall be
entitled to rely upon any Written Instructions or Oral
Instructions actually received by the Custodian pursuant to the
applicable Sections of this Agreement and reasonably believed by
the Custodian to be genuine and to be given by an Authorized
Person. The Trust agrees to forward to the Custodian Written
Instructions from an Authorized Person confirming such Oral
Instructions in such manner so that such Written Instructions are
received by the Custodian, whether by hand delivery, telex or
otherwise, by the close of business on the same day that such
Oral
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Instructions are given to the Custodian. The Trust agrees that
the fact that such confirming instructions are not received by
the Custodian shall in no way affect the validity of the
transactions or enforceability of the transactions hereby
authorized by the Trust. The Trust agrees that the Custodian
shall incur no liability to the Trust in acting upon Oral
Instructions given to the Custodian hereunder concerning such
transactions provided such instructions reasonably appear to have
been received from a duly Authorized Person.
(j) INSPECTION OF BOOKS AND RECORDS. The books and records of the
Custodian shall be open to inspection and audit at reasonable
times by officers and auditors employed by the Trust and by
employees of the Securities and Exchange Commission.
The Custodian shall provide the Trust with any report
obtained by the Custodian on the system of internal accounting
control of the Book-Entry System or the Depository and with such
reports on its own systems of internal accounting control as the
Trust may reasonably request from time to time.
12. TERM AND TERMINATION.
(a) This Agreement shall become effective on the date first set
forth above and shall continue in effect thereafter from year to
year unless termination pursuant to Section 12(b) of this
Agreement.
(b) Either of the parties hereto may terminate this Agreement by
giving to the other party a notice in writing specifying the date
of such termination, which shall be not less than 120 days after
the date of receipt of such notice. In the event such notice is
given by the Trust, it shall be accompanied by a certified
resolution of the Board of Trustees of the Trust, electing to
terminate this Agreement and designating a successor custodian or
custodians, which shall be a person qualified to so act under the
1940 Act or undertaking to make such designation at least 30 days
prior to the termination date. In the event such notice is given
by the Custodian, the Trust shall, on or before the termination
date, deliver to the Custodian a certified resolution of the
Board of Trustees of the Trust, designating a successor custodian
or custodians. In the absence of such designation by the Trust,
the Custodian may designate a successor custodian, which shall be
a person qualified to so act under the 1940 Act. If the Trust
fails to designate a successor custodian the Trust shall upon the
date specified in the notice of termination of this Agreement and
upon the delivery by the Custodian of all Securities (other than
Securities held in the Book-Entry Systems
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which cannot be delivered to the Trust) and moneys then owned by
the Trust be deemed to be its own custodian and the Custodian
shall thereby be relieved of all duties and responsibilities
pursuant to this Agreement, other than the duty with respect to
Securities held in the Book-Entry System which cannot be
delivered to the Trust.
(c) Upon the date set forth in such notice under paragraph (b) of
this Section 12, this Agreement shall terminate to the extent
specified in such notice, and the Custodian shall upon receipt of
a notice of acceptance by the successor custodian on that date
deliver directly to the successor custodian all Securities and
moneys then held by the Custodian after deducting all fees,
expenses and other amounts for the payment or reimbursement of
which it shall then be entitled and otherwise cooperate in the
transfer of its duties and responsibilities hereunder.
13. MISCELLANEOUS.
(a) Annexed hereto as Appendix A is a certification signed by the
Secretary of the Trust setting forth the names and the signatures
of the present Authorized Persons. The Trust agrees to furnish to
the Custodian a new certification in similar form in the event
that any such present Authorized Person ceases to be such an
Authorized Person or in the event that other or additional
Authorized Persons are elected or appointed. Until such new
certification shall be received, the Custodian shall be fully
protected in acting under the provisions of this Agreement upon
Oral Instructions or signatures of the present Authorized Persons
as set forth in the last delivered certification.
(b) Annexed hereto as Appendix B is a certification signed by the
Secretary of the Trust setting forth the names and the signatures
of the present officers of the Trust. The Trust agrees to furnish
to the Custodian a new certification in similar form in the event
any such present officer ceases to be an officer of the Trust or
in the event that other or additional officers are elected or
appointed. Until such new certification shall be received, the
Custodian shall be fully protected in acting under the provisions
of this Agreement upon the signature of the officers as set forth
in the last delivered certification.
(c) The Custodian shall provide the Trust and/or its investment
manager such reports on securities and cash positions,
transaction fails, aging of receivables and other relevant data
as the Trust or investment manager may reasonably require and
shall reconcile any differences with the records of the Trust's
pricing and bookkeeping agent. The Custodian will also timely
provide the Trust's pricing and bookkeeping
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agent with such information in the Custodian's possession as the
pricing and bookkeeping agent may reasonably require.
(d) Any notice or other instrument in writing, authorized or
required by this Agreement to be given to the Custodian, shall be
sufficiently given if addressed to the Custodian and mailed or
delivered to it at its offices at One Boston Place, Boston,
Massachusetts 02108 Attn: Mert Thompson or at such other place as
the Custodian may from time to time designate in writing.
(e) Any notice or other instrument in writing, authorized or
required by this Agreement to be given to the Trust, shall be
sufficiently given if addressed to the Trust and mailed or
delivered to it at its offices at One New York Plaza, New York,
New York 10004 Attn: Jay C. Nadel, or at such other place as the
Trust may from time to time designate in writing.
(f) This Agreement may not be amended or modified in any manner
except by a written agreement executed by both parties with the
same formality as this Agreement, and as may be permitted or
required by the 1940 Act.
(g) This Agreement shall extend to and shall be binding upon the
parties hereto, and their respective successors and assigns;
provided, however, that this Agreement shall not be assignable by
the Trust without the written consent of the Custodian, or by the
Custodian without the written consent of the Trust authorized or
approved by a resolution of the Board of Trustees of the Trust,
and any attempted assignment without such written consent shall
be null and void.
(h) This Agreement shall be construed in accordance with the laws
of the Commonwealth of Massachusetts.
(i) It is expressly agreed to that the obligations of the Trust
hereunder shall not be binding upon any of the Trustees,
shareholders, nominees, officers, agents, or employees of the
Trust, personally, but bind only the trust property of the Trust,
as provided in the Declaration of Trust of the Trust. The
execution and delivery of this Agreement have been authorized by
the Trustees of the Trust and signed by an authorized officer of
the Trust, acting as such, and neither such authorization by such
Trustees nor such execution and delivery by such officer shall be
deemed to have been made by any of them individually or to impose
any liability on any of them personally, but shall bind only the
trust property of the Trust as provided in its Declaration of
Trust.
-18-
<PAGE>
(j) The captions of the Agreement are included for convenience of
reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or
effect.
(k) This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, but such
counterparts shall, together, constitute only one instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their respective officers thereunder duly
authorized as of the day and year first above written.
WPG FUND
By: /s/
-------------------------------
BOSTON SAFE DEPOSIT AND TRUST
COMPANY
By: /s/
-------------------------------
-19-
<PAGE>
APPENDIX A
I, Lori D. Nawn, Secretary of WPG FUND, a Massachusetts business trust
(the "Trust"), do hereby certify that:
The following individuals have been duly authorized as Authorized
Persons to give Oral Instructions and Written Instructions on behalf of the
Trust and the signatures set forth opposite their respective names are their
true and correct signatures:
NAME SIGNATURE
--------------------------------------------
--------------------------------------------
--------------------------------------------
--------------------------------------------
--------------------------------------------
--------------------------------------------
--------------------------------------------
--------------------------------------------
Lori D. Nawn, Secretary
-20-
<PAGE>
APPENDIX C
The following individuals are authorized by Boston Safe Deposit and
Trust Company to have access to the assets of WPG Fund:
Edward H. Cleary
Karen D. DeVitto
Peter DiCerbo
Carolyn F. Kress
Russell G. McAdams
Gregg E. Pendergast
Geraldine E. Ryan
Virginia Shea
S. Elizabeth Tindley
Cynthia E. Toomey
-21-
<PAGE>
CUSTODY AGREEMENT
FEE SCHEDULE
SCHEDULE A
Weiss Peck and Greer Funds Trust, WPG Fund, WPG Growth Fund and Tudor
Fund (collectively referred to as the "Trusts") agree to pay to Boston Safe
Deposit and Trust Company the following fees. Such fees to be calculated on the
daily net assets of the combined Trusts.
DOMESTIC SAFEKEEPING FEE:
COMBINED ASSETS ANNUAL FEE RATE
First $50 million .0002
Next $100 million .000175
Next $100 million .000150
Excess .000100
TRANSACTION CHARGES
Fee per non-depository
eligible securities $17.00
Fee per depository
eligible securities $10.00
Fee per mortgage-backed
securities paydown $10.00
Fee per option and futures $17.00
Fee per foreign transaction $27.00
Fee per issue per annum $12.00
Fee per short term security held
in the account for two months or
longer $ 5.00
CREDIT INCOME
Income Collection on Equities and Bonds Interest Income will be
credited in good funds on payable date plus one.
GNMAE will be credited in good funds on the fourth (4th) business day
after payable date. First month principle and interest payment into a new pool
will be credited on a when collected basis.
-22-
<PAGE>
Variable Rate Bond Income will be credited upon receipt of good funds.
SPECIAL SERVICES
Fees for activities of a non recurring nature such as portfolio
consolidation or reorganization, extraordinary shipments and the preparation of
special reports will be subject to negotiation.
-23-
<PAGE>
CUSTODY AGREEMENT
OUT-OF-POCKET EXPENSES
SCHEDULE B
Reimbursable out-of-pocket expenses will be added to each monthly
invoice and will include, but not limited to, such customary items as telephone,
wire charges ($5.50 per wire) postage, insurance, pricing services, courier
services and duplicating charges.
-24-
The Shareholder Services Group, Inc.
Exchange Place
Boston, Massachusetts 02109
Gentlemen:
This letter acknowledges the consent of WPG Growth and Income Fund to
the assignment of the Accounting Services Agreement dated March 20, 1989 between
The Boston Company Advisors, Inc. ("Boston Advisors") and WPG Growth and Income
Fund (formerly WPG Fund), as amended (collectively, the "Agreement") to The
Shareholder Services Group, Inc. ("TSSG"). This acknowledgment will be effective
upon the consummation of the proposed acquisition of The Boston Company Inc.'s
third party mutual fund administration business by TSSG (the "Proposed
Transaction"). We understand that, effective upon the completion of the Proposed
Transaction, TSSG will assume all of Boston Advisors' rights and obligations
under the Agreement accruing after that date and that The Boston Company, Inc.
and its affiliates, including Boston Advisors, will no longer be liable under
the Agreement or responsible for any acts or omissions of TSSG occurring after
that time.
Sincerely,
WPG Growth and Income Fund
By: /s/
---------------------------------------------------
Title:
Date:
-1-
<PAGE>
ACCOUNTING SERVICES AGREEMENT
AGREEMENT, made as of this 20th day of March 1989 by and between THE
BOSTON COMPANY ADVISORS, INC., a Massachusetts corporation (hereinafter called
"Boston Advisors") and WPG FUND, a Massachusetts business trust (hereinafter
called the "Trust").
WHEREAS, the Trust is registered as an open-end diversified management
investment company under the Investment Company Act of 1940;
WHEREAS, the Trust desires to retain Boston Advisors to render pricing
and bookkeeping services to the Trust and Boston Advisors is willing to render
such services;
WITNESSETH:
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. APPOINTMENT. The Trust hereby appoints Boston Advisors to act as
-------------
Pricing and Bookkeeping Agent of the Trust on the terms set forth in this
Agreement. Boston Advisors accepts such appointment and agrees to render the
services herein set forth for the compensation herein provided.
2. SERVICES. Boston Advisors shall be responsible for (i) the
---------
determination of the Trust's net assets and the net asset value per share of the
Trust's outstanding shares and the offering price, if different from the net
asset value per share, at which the Trust's shares are sold, at the time and in
the manner from time to time determined by the Board of Trustees of the Trust
("pricing") and the timely communication of such information to the person or
persons designated by the Trust; and (ii) maintaining the accounts, books and
other records of the Trust required by Section 31(a) of the Investment Company
Act of 1940 and the rules thereunder or as the Trust may reasonably require for
tax, accounting, performance, advertising or other business purposes
("bookkeeping"). All accounts, books and other records are the property of the
Trust; shall be available for inspection and use by the Trust and shall be
preserved by Boston Advisors for the periods and in the places required by Rule
31a-2 under the Investment Company Act of 1940 and shall be surrendered to the
Trust upon request. Boston Advisors shall furnish at its expense space and all
necessary light, heat, equipment, stationery and stenographic, clerical, mailing
and messenger services in connection with such pricing and bookkeeping.
Boston Advisors will from time to time employ or associate with itself
such person or persons as Boston Advisors may believe to be particularly suited
to assist it in the performance of this Agreement.
-2-
<PAGE>
3. COMPENSATION OF BOSTON ADVISORS. For the services to be rendered
--------------------------------
and the facilities to be furnished by Boston Advisors, as provided in Sections 2
and 3 hereof, Boston Advisors shall receive from the Trust an annual fee,
payable monthly, computed as follows:
(a) ANNUAL FEE. For the services to be rendered and the facilities
----------
to be furnished by Boston Advisors, as provided in this Agreement, Boston
Advisors shall be compensated by the Trust pursuant to a Fee Schedule between
the Trust and Boston Advisors as set forth in Schedule A attached hereto.
(b) FEE ACCRUAL AND PAYMENT. Remuneration under this Agreement
------------------------
shall begin to accrue on the date hereof. The fee for the previous month shall
be paid on the first business day of each month, provided that in the event,
this Agreement is terminated as of a date other than the last day of a month,
the fee shall be computed pursuant to paragraph (c) of this Section 3 and paid
on the effective date of such termination.
(c) PRORATION. If this Agreement commences on any date other than
---------
the first day of a month, the fee payable with respect to such initial
fractional month shall be prorated according to the proportion that such period
bears to the full monthly period. Upon any termination of this Agreement before
the end of a month, the fee for such part of that month shall be prorated
according to the proportion that such period bears to the full monthly period.
4. AUDIT INSPECTIONS AND VISITATION. Boston Advisors shall make
--------------------------------
available during regular business hours all records and other data created and
maintained pursuant to this Agreement for the reasonable audit and inspections
by the Trust, or any regulatory agency having authority over the Trust. Upon
reasonable notice by the Trust, Boston Advisors shall make available during
regular business hours its facilities and premises employed in connection with
the performance of its duties under this Agreement for reasonable visitation by
any person designated by the Trust, or any regulatory agency having authority
over the Trust.
5. ACTS OF GOD, ETC. Boston Advisors shall not be liable for delays or
-----------------
errors occurring by reason of circumstances beyond its control, including but
not limited to, acts of civil or military authority, national emergencies, work
stoppage, fire, flood, catastrophe, act of God, insurrection, war, riot, or
failure of communication or power supply. In the event of equipment breakdown
beyond its control Boston Advisors shall take reasonable steps to minimize
service interruptions but shall have no liability with respect thereto.
6. RELIANCE ON WRITTEN OR ORAL INSTRUCTIONS. For all purposes under
-----------------------------------------
this Agreement, Boston Advisors is authorized to act on written or oral
instructions that Boston Advisors receives and reasonably believes to be
transmitted by a person
-3-
<PAGE>
authorized by the Board of Trustees of the Trust to give such instructions. Oral
instructions will be followed by a confirmatory written instructions, document
or written record to Boston Advisors. Boston Advisors shall be entitled to rely
reasonably on any written or oral instructions received and any act or omissions
undertaken in compliance therewith shall be free of liability and fully
indemnified and held harmless by the Trust.
7. LIABILITY AND REMEDIES.
------------------------
(a) Boston Advisors shall not be liable for any loss suffered by
the Trust in connection with the performance of Boston Advisors' obligations and
duties under this Agreement, except to the extent that such loss results from
negligence or willful misconduct in the performance of, or omission to perform,
such obligations and duties. Boston Advisors shall not be deemed to have been
negligent or to have engaged in willful misconduct with respect to any incorrect
calculations of net asset value per share ("pricing errors") to the extent that
a pricing error is based upon prices furnished by an independent pricing service
prudently selected by Boston Advisors, provided that in the event that Boston
Advisors receives a price from a pricing service for any security owned by the
Trust which results in a pricing variance in excess of 10% of the prior business
day's price for such security, Boston Advisors shall notify, via fax, the
investment manager of the Trust of such pricing variance by 5:45 P.M. on the
date that the pricing variance occurs.
(b) Notwithstanding the provisions of Section 7(a), Boston Advisors
shall be liable for any loss to the Trust resulting from a pricing error caused
by Boston Advisors' own negligence to the extent that such loss resulted from an
error in computation by Boston Advisors unless and to the extent that such
pricing error resulted from incorrect information supplied or necessary
information not provided by the Fund or any of its agents.
(c) In the event of a pricing error, Boston Advisors shall correct
such error promptly upon discovery and, if Boston Advisors is liable to the
Trust for such error under this Section 7, Boston Advisor (acting through the
Trust's transfer agent, but at the direction and responsibility of Boston
Advisors), may seek to mitigate the loss or dilutive effect to certain
shareholders resulting therefrom by adjusting share balances to the extent
practicable for transactions executed while such error was in effect to reflect
balances that should have resulted in the absence of such error
("reprocessing"), provided however that Boston Advisors shall not reprocess any
account after 30 days after such error occurred (with each business day that
such error occurred being considered a separate error) without the consent of
the Trust.
(d) For purposes of a pricing error for which Boston Advisors is
liable under this Section 7, the Trust may have incurred a loss or there may
have been dilution with respect to certain shareholders (i) if the pricing error
resulted in a
-4-
<PAGE>
net asset value per share in excess of the actual net asset value per share
("overpricing") or (ii) if the error resulted in a net asset value per share
that was less that the actual net asset value per share ("underpricing"). In the
case of an overpricing error, shareholders who purchased shares during the
pendency of such error may have their accounts reprocessed to reflect the
additional shares which they should have received upon investment and any
subsequent shares to which they should be entitled. Boston Advisors shall
reimburse the Trust for all excess amounts per share paid out to redeeming
shareholders during the pendency of an overpricing error if such excess amount
per share exceeds .1 of 1% of the corrected net asset value per share of the
Trust.
In the case of an underpricing error, Boston Advisors shall bear all
processing and mailing costs, if any, in accordance with good industry practice
with respect to redeeming shareholders who are entitled to additional amounts on
account of such error. Boston Advisors shall also be entitled pursuant to
Section 7(c) to reprocess accounts of shareholders who purchased shares during
the pendency of such error and received too many shares as a result thereof, and
to the extent that any such account is not reprocessed or capital is not
contributed thereto pursuant to Section 7(e)(i.e., if the cost of reprocessing
exceeds the loss or dilutive effect to its shareholders), Boston Advisors shall
contribute capital to the Trust in the amount necessary to remedy the dilutive
effect of the underpricing error.
(e) In the event of a pricing error for which Boston Advisors is
liable under Section 7, the Trust shall not withhold its consent to any
reprocessing pursuant to Section 7(c) to increase account share balances of
shareholders who purchased during the pendency of an overpricing error.
Moreover, pursuant to Section 7(c), the Trust shall not unreasonably withhold
its consent to any reprocessing to decrease share balances of shareholders who
purchased during the pendency of an underpricing error, provided however that in
the case of certain shareholder accounts of significant clients of the Trust's
investment manager or of an affiliate of such investment manager where the
President of the Trust determines that the best interests of the Trust so
require, the Trust may withhold consent, in which case the investment manager
shall contribute capital to the Trust equal to 60% of the amount necessary to
remedy the dilutive effect of an underpricing error if such accounts were not
reprocessed, and Boston Advisors shall contribute 40% of such amount.
(f) If Boston Advisors is required to reimburse the Trust under the
terms of the Agreement for any loss under this Section 7, Boston Advisors shall
be subrogated to the rights of the Trust and may pursue such remedies, including
legal actions, as Boston Advisors considers appropriate with respect to
shareholders who receive excess redemption proceeds because of overpricing
errors, provided that such shareholders are not significant investment clients
of the Trust's investment manager or of an affiliate of such manager, at the
time such remedy is pursued. With respect to shareholders who are significant
clients, Boston Advisors may request by one or
-5-
<PAGE>
such more letters, subject to the reasonable approval as to substance and tone
by such investment manager, that the shareholders return any excess to Boston
Advisors, and may discuss this matter in person or by phone with such
shareholders in a manner not inconsistent with the tone and spirit of the
approved letter, but in no event shall Boston Advisors seek any further remedies
against such shareholders, including litigation, without giving the Trust's
investment manager notice, and the opportunity to pay Boston Advisors 40% of the
aggregate excess attributed to such clients under $100,000, and 60% of the
aggregate excess attributed to such clients of $100,000 or more, in which event
the Boston Advisor shall seek not further remedies against such shareholders.
8. TERMS AND TERMINATIONS.
-----------------------
(a) This Agreement shall become effective on the date set forth
above and shall continue in effect from year to year thereafter unless
terminated pursuant to Section 8(b) of the Agreement.
(b) This Agreement may be terminated by either party on 120 days'
written notice without payment of any penalty, provided that in the event that
Boston Advisors elects to discontinue providing accounting and bookkeeping
services to all of its non-affiliated investment companies, Boston Advisors
shall provide the Trust with 240 days' written notice prior to such termination
date or any such shorter period as the parties may mutually agree.
9. LIABILITY OF TRUSTEES, OFFICERS AND SHAREHOLDERS. The execution and
-------------------------------------------------
delivery of this Agreement have been authorized by the Trustees of the Trust and
signed by an authorized officer of the Trust, acting as such, and neither such
authorization by such Trustees nor such execution and delivery by such officer
shall be deemed to have been made by any of them individually or to impose any
liability on any of them personally, and the obligations of this Agreement are
not binding upon any of the Trustees or shareholders of the Trust, but bind only
the trust property of the Trust as provided in the Declaration of Trust.
-6-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officer thereunto duly authorized as of the day and year
first above written.
THE BOSTON COMPANY ADVISORS, INC.
By: /s/
----------------------------------
WPG FUND
By: /s/
----------------------------------
-7-
<PAGE>
ACCOUNTING SERVICES AGREEMENT
FEE SCHEDULE
SCHEDULE A
WPG Fund agrees to pay The Boston Company Advisors Inc. the following
fee. Such fee to be calculated on the daily net assets of the Trust.
First Year .0003
Second Year .0004
There is a monthly minimum fee of $1,000 for any new portfolio
introduced by Weiss, Peck and Greer.
SPECIAL SERVICES
- ----------------
Fees for activities of a non recurring nature such as portfolio
consolidation or reorganizations, extraordinary shipments and the preparation of
special reports will be subject to negotiation.
-8-
HALE AND DORR LLP
C o u n s e l l o r s a t L a w
60 State Street, Boston, Massachusetts 02109
617-526-6000 o fax 617-526-5000
March 19, 1998
WPG Growth and Income Fund
One New York Plaza
New York, New York 10004
Ladies and Gentlemen:
WPG Growth and Income Fund (the "Trust") is a Massachusetts business
trust created under a written Declaration of Trust dated April 13, 1988, and
executed and delivered on that date, as amended on December 31, 1990, as amended
and restated on May 1, 1993, and as further amended from time to time (as so
amended and restated, the "Declaration of Trust"). The beneficial interests
thereunder are represented by transferable shares of beneficial interest, $1.00
par value per share.
The Trustees of the Trust have the powers set forth in the Declaration
of Trust, subject to the terms, provisions and conditions therein provided.
Under Article V, Section 5.1 of the Declaration of Trust, the number of shares
of beneficial interest authorized to be issued under the Declaration of Trust is
unlimited and the Trustees are authorized to divide the shares into one or more
series of shares and one or more classes thereof as they deem necessary or
desirable. Under Article V, Section 5.4 of the Declaration of Trust, the
Trustees are empowered, in their discretion, to issue shares to such parties and
for such amount and type of consideration including cash or property (or for no
consideration if pursuant to a share dividend or division), at such time or
times and on such terms as the Trustees may deem best.
We have examined the Declaration of Trust, the By-laws, as amended from
time to time, of the Trust, resolutions of the Board of Trustees relating to the
authorization and issuance of shares of beneficial interest of the Trust and
such other documents as we have deemed necessary or appropriate for the purposes
of this opinion, including, but not limited to, originals, or copies certified
or otherwise identified to our satisfaction, of such documents, Trust records
and other instruments. In our examination of the above documents, we have
assumed the genuineness of all signatures, the authenticity of all documents
submitted to us as originals and the conformity to original documents of all
documents submitted to us as certified or photostatic copies.
<PAGE>
WPG Growth and Income Fund
March 19, 1998
Page 2
For purposes of this opinion letter, we have not made an independent
review of the laws of any state or jurisdiction other than The Commonwealth of
Massachusetts and express no opinion with respect to the laws of any
jurisdiction other than the laws of The Commonwealth of Massachusetts. Further,
we express no opinion as to compliance with any state or federal securities
laws, including the securities laws of The Commonwealth of Massachusetts.
Our opinion below, as it relates to the non-assessability of the shares
of the Trust, is qualified to the extent that under Massachusetts law,
shareholders of a Massachusetts business trust may be held personally liable for
the obligations of the trust. In this regard, however, please be advised that
the Declaration of Trust disclaims shareholder liability for acts or obligations
of the Trust and provides that notice of such disclaimer may be given in each
note, bond, contract, certificate or undertaking made or issued by the Trustees
or officers of the Trust. Also, the Declaration of Trust provides for
indemnification out of Trust property for all loss and expense of any
shareholder held personally liable for the obligations of the Trust; provided,
however, no Trust property may be used to indemnify any shareholder of any
series of the Trust other than Trust property allocated or belonging to that
series.
We are of the opinion that all necessary Trust action precedent to the
issuance of the shares of beneficial interest of the Trust has been duly taken,
and that all such shares may legally and validly be issued for, among other
things, cash, and when sold will be fully paid and non-assessable by the Trust
upon receipt by the Trust or its agent of consideration thereof in accordance
with terms described in the Trust's Declaration of Trust and registration
statement, subject to compliance with the Securities Act of 1933, as amended,
the Investment Company Act of 1940, as amended, and the applicable state laws
regulating the sale of securities.
We consent to your filing this opinion with the Securities and Exchange
Commission as an exhibit to the Trust's registration statement on Form N1-A and
with securities commissions of states in which shares of beneficial interest of
the Trust are qualified. Except as provided in this paragraph, this opinion may
not be relied upon by, or filed with, any other parties or for any other
purpose.
Very truly yours,
/s/Hale and Dorr LLP
Hale and Dorr LLP
INDEPENDENT AUDITOR'S CONSENT
-----------------------------
To The Shareholders and Board of Trustees of:
WPG Government Money Market Fund
WPG Tax Free Money Market Fund
WPG Intermediate Municipal Bond Fund
WPG Core Bond Fund
WPG Growth and Income Fund
WPG Tudor Fund
Weiss, Peck & Greer International Fund
WPG Growth Fund
WPG Quantitative Equity Fund
We consent to the use of our report dated January 19, 1998 with respect to the
WPG Government Money Market Fund, WPG Tax Free Money market Fund, WPG
Intermediate Municipal Bond Fund, WPG Core Bond Fund, WPG Growth and Income
Fund, WPG Tudor Fund, Weiss, Peck & Greer International Fund, WPG Growth Fund,
and WPG Quantitative Equity Fund incorporated herein by reference and to the
references of our firm under headings "Financial Highlights" in the Prospectus
and "Financial Statements" and "Independent Auditors" in the Statement of
Additional Information.
KPMG Peat Marwick LLP
New York, New York
April 28, 1998
POWER OF ATTORNEY
Each of the undersigned Trustees of WPG Growth & Income Fund, a
Massachusetts business trust (the "Fund"), does hereby constitute and appoint
Francis H. Powers, Jay C. Nadel and Roger J. Weiss, and each of them acting
singly, to be his true, sufficient and lawful attorneys, with full power of
substitution to each of them, and each of them acting singly, to sign for him,
in his name and in the capacities indicated below, (1) any and all amendments to
the Registration Statements on Form N-8A and Form N-1A to be filed by the Fund
under the Investment Company Act of 1940, as amended (the "1940 Act"), and/or
the Securities Act of 1933, as amended (the "1933 Act"), (2) any registration
statement on Form N-14, and any and all amendments thereto, filed by the Fund
and (3) any and all other documents and papers relating thereto, and generally
to do all such things in his name and on his behalf in the capacities indicated
below to enable the Fund to comply with the 1940 Act and the 1933 Act and all
requirements of the Securities and Exchange Commission thereunder, hereby
ratifying and confirming his signature as it may be signed by said attorneys or
each of them to any and all such documents.
IN WITNESS WHEREOF, I have hereunder set my hand on this Instrument on this
22nd day of April, 1998.
/S/RAYMOND R. HERMANN, JR. /S/WILLIAM B. ROSS
- -------------------------- ------------------
Raymond R. Hermann, Jr., William B. Ross,
as Trustee and not individually as Trustee and not individually
/S/LAWRENCE J. ISRAEL /S/ HARVEY E. SAMPSON
- --------------------- ---------------------
Lawrence J. Israel, Harvey E. Sampson,
as Trustee and not individually as Trustee and not individually
/S/GRAHAM E. JONES /S/ ROBERT A. STRANIERE
- ------------------ -----------------------
Graham E. Jones, Robert A. Straniere,
as Trustee and not individually as Trustee and not individually
/S/PAUL MEEK /S/ ROGER J. WEISS
- ------------ ------------------
Paul Meek, Roger J. Weiss,
as Trustee and not individually as Trustee and not individually
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000004879
<NAME> WPG GROWTH AND INCOME FUND
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 75202
<INVESTMENTS-AT-VALUE> 115045
<RECEIVABLES> 2276
<ASSETS-OTHER> 7
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 117328
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 182
<TOTAL-LIABILITIES> 182
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 76924
<SHARES-COMMON-STOCK> 3336
<SHARES-COMMON-PRIOR> 2829
<ACCUMULATED-NII-CURRENT> 243
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 136
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 39843
<NET-ASSETS> 117146
<DIVIDEND-INCOME> 1811
<INTEREST-INCOME> 124
<OTHER-INCOME> 6
<EXPENSES-NET> 1074
<NET-INVESTMENT-INCOME> 867
<REALIZED-GAINS-CURRENT> 12903
<APPREC-INCREASE-CURRENT> 16703
<NET-CHANGE-FROM-OPS> 30473
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (735)
<DISTRIBUTIONS-OF-GAINS> (13500)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 19356
<NUMBER-OF-SHARES-REDEEMED> (14277)
<SHARES-REINVESTED> 12892
<NET-CHANGE-IN-ASSETS> 34209
<ACCUMULATED-NII-PRIOR> 207
<ACCUMULATED-GAINS-PRIOR> 639
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 759
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1077
<AVERAGE-NET-ASSETS> 100403
<PER-SHARE-NAV-BEGIN> 29.32
<PER-SHARE-NII> .24
<PER-SHARE-GAIN-APPREC> 10.30
<PER-SHARE-DIVIDEND> (.24)
<PER-SHARE-DISTRIBUTIONS> (4.51)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 35.11
<EXPENSE-RATIO> 1.06
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
