As filed with the Securities and Exchange Commission on May 5, 2000.
File No. 33-00226
File No. 811-4404
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. 27 [X]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 29 [X]
WEISS, PECK & GREER FUNDS TRUST
-------------------------------
(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
RONALD M. HOFFNER, 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
___ on May 1, 2000 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
_X_ 75 days after filing pursuant to paragraph (a)(2) of Rule 485
___ on ___________ pursuant to paragraph (a)(2) of Rule 485
<PAGE>
The information in this prospectus is not complete and may be changed. The fund
may not sell these securities until the registration statement, which has been
filed with the Securities and Exchange Commission, is effective. This prospectus
is not an offer to sell these securities and is not soliciting an offer to buy
these securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION: DATED MAY 5, 2000
WEISS, PECK & GREER
MUTUAL FUNDS
Prospectus
__________, 2000
WPG EuroNet Fund
ONE NEW YORK PLAZA
NEW YORK, NEW YORK 10004
800-223-3332
The Securities and Exchange Commission has not
approved or disapproved these securities or
determined whether this prospectus is accurate or
complete. Any statement to the contrary is a
crime.
<PAGE>
CONTENTS
PAGE
----
Risk/Return Summary....................................................
More About the Fund's Investments and Risks............................
Management of the Fund.................................................
How to Buy Shares......................................................
How to Exchange Shares.................................................
How to Redeem Shares...................................................
Other Shareholder Service Information..................................
Share Price and Other Shareholder Information..........................
Dividends, Distributions and Taxes.....................................
For More Information.........................................Back Cover
ABOUT THE INVESTMENT ADVISER
Weiss, Peck & Greer, L.L.C. (WPG) serves as the fund's investment adviser.
Robeco Institutional Asset Management US Inc. (RIAM) serves as the fund's
investment subadviser. WPG and RIAM are headquartered in New York and are
subsidiaries of Robeco Groep N.V., a Dutch public limited liability company
(Robeco). Founded in 1929, Robeco is one of the world's oldest asset management
organizations. As of the date of this prospectus, Robeco, through its investment
management subsidiaries, had approximately $110 billion in assets under
management, including approximately $18 billion managed directly by WPG. WPG,
which has over 30 years experience as an investment adviser to institutional and
individual clients, is a member firm of the New York Stock Exchange.
A WORD ABOUT RISK
An investment in the fund is not a bank deposit and is not insured or guaranteed
by the FDIC or any other government agency.
-2-
<PAGE>
RISK/RETURN SUMMARY WPG EURONET FUND
INVESTMENT GOAL
Long-term capital growth.
PRINCIPAL INVESTMENTS
Equity securities of European Companies engaged in Internet-related businesses.
The fund invests at least 65% of assets in non-U.S. dollar denominated and U.S.
dollar denominated common stocks and other equity securities of European
Companies engaged in Internet-related businesses.
The fund invests primarily in securities of companies domiciled in developed
European countries. However, the fund may also invest to a lesser extent in
securities of European Companies domiciled in Eastern European countries or
emerging European markets. The fund also may purchase forward foreign currency
contracts in European currencies in connection with its investments.
PRINCIPAL STRATEGIES
The fund uses a "growth" strategy to identify investments in European Companies
engaged in Internet-related businesses that the adviser and the subadviser
(together, the "advisers") believe offer opportunity for significant growth of
revenue or earnings. The advisers seek to buy securities of companies that they
believe are, or have the potential to be, market leaders in their particular
Internet-related business segment. In making this determination, the advisers
use quantitative and qualitative analysis to examine key growth characteristics
for the company. The advisers also consider scale, market share and momentum in
the selection and timing of securities for the fund's portfolio. When possible,
the advisers will use market corrections as an opportunity to buy
growth-oriented securities at a relatively low price. The advisers may sell
securities of a company whose growth characteristics have become less favorable,
or which loses its market leadership potential because of a change in the
competitive landscape.
PERFORMANCE
Because the fund is newly organized, it has no performance record as of the date
of this prospectus. The fund's performance will vary from year to year. The
fund's past performance does not necessarily indicate how the fund will perform
in the future.
EUROPEAN COMPANIES: A "European Company" is any company that (i) is organized
and has a principal business office in a European country; (ii) derives at least
50% of its total revenue from business transacted in Europe; or (iii) has equity
securities that trade principally on a stock exchange in Europe.
INTERNET-RELATED BUSINESSES: The Internet is a world-wide network of computers
through which users can share information and communicate electronically.
Internet-related businesses are businesses that provide products or services
designed for, or related to, the Internet. These businesses may include
research, design, development, manufacturing, or distribution of
Internet-related products or services.
The advisers select stocks for inclusion in two distinct portions of the fund's
portfolio -- "core" holdings and "tilt" holdings. The fund's portfolio consists
primarily of core holdings, which are securities of Internet-related businesses
that exhibit strong fundamental characteristics. The advisers select core
holdings with a 2-3 year investment horizon. Tilt holdings represent a smaller
portion of the fund's portfolio and consist of Internet-related businesses with
a shorter investment horizon, seeking to capture higher performance for the fund
based on momentum trading and a company's short-term fundamentals and
quantitative characteristics.
There is no limit on the size of the companies in which the fund may invest.
These companies often will be small or micro capitalization companies in the
early stages of development. The fund may invest without limit in initial public
offerings ("IPOs").
Although the fund will primarily use a growth strategy, the advisers may, to a
limited extent, use traditional valuation methodology as a means of identifying
undervalued Internet opportunities for the fund.
-3-
<PAGE>
RISK/RETURN SUMMARY WPG EURONET FUND
PRINCIPAL RISKS
You could lose money on your investment in the fund or the fund could
underperform other possible investments if any of the following occurs:
- -- Stock prices, including those in European stock markets, go down in
response to general economic conditions or specific events.
- -- European stocks, Internet stocks, growth stocks and/or small or micro cap
stocks fall out of favor with investors.
- -- Companies in which the fund invests suffer unexpected losses or lower than
expected earnings which, in addition to causing the fund
to be less liquid, will reduce the fund's net asset value.
- -- The advisers' judgment about the growth potential of one or more stock(s)
selected for the fund's portfolio, or the timing of buy or sell decision,
or the attractiveness of a particular currency or foreign market prove to
be wrong.
SPECIAL RISKS
In addition to the risks described above, the fund is subject to special risks.
These risks include:
EUROPEAN INVESTMENTS. Investing in European Companies involves unique risks
compared to investing in securities of U.S. companies. Less information about
some European Companies or markets may be available due to less rigorous
disclosure and accounting standards or regulatory practices. Many European
securities markets are smaller, less liquid and more volatile than the U.S.
securities markets. In a changing market, the advisers may not be able to sell
the fund's portfolio securities in reasonable amounts and at reasonable prices.
The economies of European countries may grow at slower than expected rates or
suffer a downturn or recession. The U.S. dollar may appreciate against European
currencies or European countries may impose restrictions on currency conversion
or trading. Economic and Monetary Union (EMU) and the introduction of a single
European currency may increase the volatility of European markets. In addition,
you could lose money as a result of adverse changes in foreign currency exchange
rates relative to the fund's foreign currency exposure. The risk of loss may be
increased to the extent the fund uses currency derivative contracts. In
addition, these investments may be subject to withholding and other foreign
taxes that may decrease the fund's return.
EASTERN EUROPEAN AND EMERGING MARKETS INVESTMENTS. The risks of investing in
securities of European Companies are more pronounced to the extent the companies
are domiciled or the securities trade in Eastern European countries or emerging
European markets, which are more likely to be adversely affected by political,
economic or social developments.
INDUSTRY/SECTOR RISK. The fund will invest primarily in European Companies
engaged in Internet-related businesses. Therefore, the value of the fund's
shares will be especially susceptible to the risks of companies engaged in
Internet-related businesses. These risks include heightened government
regulation, intense competition, rapidly changing technology and demand for
technology, industry consolidation, and unusually high risk of product
obsolescence. Many Internet-related businesses have not yet achieved
profitability and may not achieve profitability in the future. Because of these
risks, prices of securities of companies in Internet-related businesses tend to
be more volatile than prices of securities of other technology companies, and
substantially more volatile than prices of securities of companies in other
industries. Accordingly, the value of the fund's shares may be substantially
more volatile than those of funds that are not concentrated in Internet-related
businesses.
MICRO CAP AND SMALL CAP STOCK RISK. Compared to large or medium capitalization
companies, prices of securities of micro and small capitalization companies tend
to be more sensitive to changes in the economy, earnings results and investor
expectations. These companies are in the early stages of development and have
limited product lines and capital resources. Therefore, their stocks tend to be
less liquid and more difficult to value and experience sharper swings in market
values. This could result in greater losses to the fund.
WHO MAY WANT TO INVEST
The fund may be appropriate if you:
- -- Are seeking long-term growth of capital
- -- Are willing to accept a high level of volatility and risk
- -- Are seeking to diversify your portfolio by investing in a specialized
portfolio of European Internet stocks
WHO MAY NOT WANT TO INVEST
---
The fund may not be appropriate if you:
- -- Are pursuing a short-term investment goal
- -- Want stability of principal
- -- Are uncomfortable with the high risk and price volatility of European
Internet stocks
-4-
<PAGE>
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund.
<TABLE>
<CAPTION>
INSTITUTIONAL RETAIL
CLASS CLASS
SHAREHOLDER FEES
(paid directly from your investment)
<S> <C> <C>
Sales Charge None None
Redemption Fee (as a
percentage of amount 2.00% 2.00%
redeemed)(1)
ANNUAL FUND OPERATING EXPENSES
(paid by the fund as a % of fund net assets)
Management fee 1.50% 1.50%
12b-1 distribution fees None 0.25%
Other expenses(2) 1.87% 1.87%
Total operating expenses 3.37% 3.62%
----- -----
Less: Fee Waiver(3) (0.37%) (0.37%)
Net annual operating expenses 3.00% 3.25%
===== =====
<FN>
- -----------------
(1) The fund imposes a redemption fee on any shares redeemed within 6 months
after the date on which the shares were purchased. Unless otherwise
specified by the shareholder, the fund assumes that shares that have been
held by the shareholder the longest are redeemed first.
(2) Other expenses are based on estimated amounts for the current fiscal year.
(3) The adviser has agreed to cap the fund's operating expenses. The adviser
may not discontinue or modify this cap without the approval of the fund's
trustees.
</FN>
</TABLE>
EXAMPLE
This example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds. Your actual costs may be
higher or lower.
NUMBER OF YEARS YOU
OWN YOUR SHARES
1 YEAR 3 YEARS
------ -------
Institutional Class: $308 $940
Retail Class: $333 $1,016
The example assumes:
- -- You invest $10,000 for the periods shown.
- -- You reinvest all distributions and dividends without a sales charge.
- -- The fund's operating expenses have been capped by the adviser and remain
the same.
- -- Your investment has a 5% return each year.
- -- You redeemed at the end of each period.(1)
-5-
<PAGE>
MORE ABOUT THE FUND'S INVESTMENTS AND RISKS
The Risk/Return Summary describes the fund's investment objective and its
principal investment strategies and risks. This section provides some additional
information about the fund's investments and certain portfolio management
techniques that the fund may use. More information about the fund's investments
and portfolio management techniques, which entail additional risks, is included
in the fund's statement of additional information (SAI).
EQUITY INVESTMENTS
The fund may invest in all types of equity securities. Equity securities
include exchange-traded and over-the-counter common and preferred stocks,
warrants, rights, convertible securities, depositary receipts and shares,
trust certificates, limited partnership interests, shares of other
investment companies and REITs, and equity participations.
FOREIGN SECURITIES
The Fund invests primarily in securities denominated in foreign currencies.
Investments in securities of foreign entities and securities denominated in
foreign currencies involve special risks. These include possible political
and economic instability and the possible imposition of exchange controls
or other restrictions on investments. Changes in foreign currency rates
relative to the U.S. dollar will affect the U.S. dollar value of the fund's
assets denominated or quoted in currencies other than the U.S. dollar.
Emerging market investments offer the potential for significant gains but
also involve greater risks than investing in more developed countries.
Political or economic stability, lack of market liquidity and government
actions such as currency controls or seizure of private business or
property may be more likely in emerging markets. In Europe, Economic and
Monetary Union (EMU) and the transition to a single currency began in 1999.
There are significant political and economic risks associated with EMU,
which may increase the volatility of the fund's European securities and
present valuation problems.
FIXED INCOME INVESTMENTS
The fund may invest a portion of its assets in fixed income securities.
Fixed income investments include bonds, notes (including structured notes),
mortgage-backed securities, asset-backed securities, convertible
securities, Eurodollar and Yankee dollar instruments, preferred stocks and
money market instruments. Fixed income securities may be issued by
corporate and governmental issuers and may have all types of interest rate
payment and reset terms, including fixed rate, adjustable rate, zero
coupon, contingent, deferred, payment-in-kind and auction rate features.
The Fund may invest in debt securities of any credit rating, including
those rated below investment grade by a ratings organization, or if
unrated, of comparable quality. These bonds, commonly known as "junk
bonds," are considered speculative because they have a higher risk of
issuer default, are subject to greater price volatility and may be
illiquid. The credit quality of securities held in the fund's portfolio is
determined at the time of investment. If a security is rated differently by
multiple ratings organizations, the fund treats the security as being rated
in the higher rating category.
SECURITIES LENDING
The fund may seek to increase its income by lending portfolio securities to
institutions, such as certain broker-dealers. Portfolio security loans are
secured continuously by collateral maintained on a current basis at an
amount at least equal to the market value of the securities loaned. The
value of the securities loaned by the fund will not exceed 33 1/3% of the
value of the fund's total assets. The fund may experience a loss or delay
in the recovery of its securities if the borrowing institution breaches its
agreement with the fund.
-6-
<PAGE>
DERIVATIVE CONTRACTS
The fund may, but need not, use derivative contracts for any of the
following purposes:
-- To hedge against adverse changes caused by changes in stock market
prices, currency exchange rates or interest rates in the market value
of its securities or securities to be bought; and
-- As a substitute for buying or selling currencies or securities.
The Fund does not currently intend to use derivative contracts to enhance
return in non-hedging situations. Examples of derivative contracts include:
futures and options on securities, securities indices or currencies;
options on these futures; forward foreign currency contracts; and interest
rate or currency swaps. A derivative contract will obligate or entitle the
fund to deliver or receive an asset or cash payment that is based on the
change in value of one or more securities, currencies or indices. Even a
small investment in derivative contracts can have a big impact on the
fund's stock market, currency and interest rate exposure. Therefore, using
derivatives can disproportionately increase losses and reduce opportunities
for gains when stock prices, currency rates or interest rates are changing.
The fund may not fully benefit from or may lose money on derivatives if
changes in their value do not correspond accurately to changes in the value
of the fund's holdings. The other parties to certain derivative contracts
present the same types of default risk as issuers of fixed income
securities. Derivatives can also make the fund less liquid and harder to
value, especially in declining markets.
TEMPORARY INVESTMENTS
The fund may depart from its principal investment strategies in response to
adverse market, economic or political conditions by taking temporary
defensive positions in all types of money market and short-term debt
securities. If the fund were to take a temporary defensive position, it may
be unable for a time to achieve its investment goal.
PORTFOLIO TURNOVER
The fund may engage in active and frequent trading, resulting in high
portfolio turnover. This may lead to the realization and distribution to
shareholders of higher capital gains, increasing their tax liability.
Frequent trading may also increase transaction costs, which could detract
from the fund's performance.
INVESTMENT GOAL
The fund's investment goal is not fundamental and may be changed without
shareholder approval by the fund's board of trustees. If there is a change
in the fund's investment goal, you should consider whether the fund remains
an appropriate investment.
-7-
<PAGE>
MANAGEMENT OF THE FUND
THE ADVISER AND SUBADVISER
Weiss, Peck & Greer, L.L.C. serves as the fund's investment adviser. Robeco
Institutional Asset Management US Inc. (RIAM) serves as the fund's
investment subadviser. WPG and RIAM are headquartered at One New York
Plaza, New York, New York 10004, and are subsidiaries of Robeco, a Dutch
public limited liability company. Founded in 1929, Robeco is one of the
world's oldest asset management organizations.
Subject to the general supervision of the fund's boards of trustees, WPG
oversees the fund's operations. WPG and RIAM are jointly responsible for
the selection and management of all portfolio investments in accordance
with the fund's investment objective and policies.
THE PORTFOLIO MANAGERS
THE PORTFOLIO MANAGERS ARE
PRIMARILY RESPONSIBLE FOR
THE DAY-TO-DAY OPERATION
OF THE FUND.
The co-portfolio managers of the fund are Laurence Zuriff, of WPG, and
Arjen J.W. Jongma, of RIAM. Mr. Zuriff has been a managing director of WPG
since 1999. Prior thereto, Mr. Zuriff was a vice president of York Capital
Management and a growth equity analyst at Granite Capital. Mr. Jongma has
been a portfolio manager of RIAM since 2000 and has been employed by RIAM's
parent company, Robeco, since 1993, most recently as the head of Robeco's
European small and mid-cap team.
MANAGEMENT FEES PAID BY THE FUND
The fund pays management fees at the rate of 1.50% of average daily net
assets. The adviser has agreed to reduce the fund's management fee to the
extent necessary to limit total expenses for Institutional Class shares to
3.00% of average daily net assets. The adviser may not discontinue or
modify this cap without the approval of the fund's trustees.
ADMINISTRATION AND SERVICE
RETAIL CLASS ONLY
The fund has adopted a Rule 12b-1 plan for its Retail Class shares. Under
the plan, the fund pays PLAN distribution and service fees for the sale of
their shares and for administrative and shareholder services in an
aggregate amount of up to 0.25% of their average daily net assets. These
fees are an ongoing expense and over time will increase the cost of your
investment and may cost you more than other types of sales charges.
-8-
<PAGE>
HOW TO BUY SHARES
IN GENERAL
You may make an initial purchase of shares of the fund by mail, by wire, or
through any authorized securities dealer. Shares of the fund may be
purchased on any day on which the New York Stock Exchange is open for
business. A completed and signed application is required for each new
account you open with the fund regardless of how you choose to make your
initial purchase. The fund reserves the right to reject any purchase for
any reason and to cancel any purchase due to nonpayment. 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.
INVESTMENT MINIMUMS
INSTITUTIONAL CLASS RETAIL CLASS
------------------- ------------
Initial Investment $100,000 $2,500*
Subsequent Investment $ 10,000 $ 100
- -------------
* For Uniform Gift to Minor (UGMA) accounts and eligible retirement accounts,
the minimum initial investment for Retail Class shares is $250.
THE FUND MAY WAIVE THESE MINIMUMS AT ITS DISCRETION.
BY MAIL
You may purchase shares of the fund 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 fund's transfer agent, PFPC,
Inc., Attention: WPG Mutual Funds, P.O. Box 60448, King of Prussia, PA
19406-0448.
BY WIRE
You may also purchase shares of the fund by wiring your investment to the
fund's wire bank account with the fund's custodian. Please call the adviser
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 the transfer agent, as described above.
THROUGH AN AUTHORIZED
BROKER-DEALER
Broker-dealers approved by the adviser are authorized to sell you shares of
the fund. You may also obtain copies of the application from any such
authorized securities dealer. Shares purchased through securities dealers
may be subject to transaction fees, no part of which will be received by
the fund or the adviser.
AUTOMATIC INVESTMENT PLAN
The Automatic Investment Plan is a convenient way for you to purchase a
fixed dollar amount of shares at regular intervals selected by you. Through
the plan, you may automatically transfer funds (minimum of $50 per
transaction per fund) from your designated bank account on a monthly or
quarterly basis.
GOOD ORDER
Orders to buy shares are not considered received until received "in good
order." If your purchase is cancelled due to nonpayment or because your
check does not clear (and as a result, your account must be redeemed), you
will be responsible for any loss incurred by the funds.
-9-
<PAGE>
HOW TO EXCHANGE SHARES
IN GENERAL
You may exchange shares of the fund for shares of any other WPG Mutual Fund
provided that all accounts are identically registered. Shares exchanged
will be valued at their respective net asset values next determined after
the receipt of a proper exchange request. Exchange requests may be delayed
up to 15 days for shares purchased by check. Please call the adviser at
1-800-223-3332 to request a copy of the prospectus for the WPG Mutual
Funds. You should read that prospectus carefully before requesting an
exchange.
BY TELEPHONE You may authorize telephone exchanges by marking the
appropriate boxes on your account application and providing the information
requested in the application. To exchange 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 fund is open. Telephone exchange requests made after 4:00 p.m. Eastern
time will not be accepted. The fund may use identification procedures, such
as providing written confirmation of telephone exchange transactions and
tape recording of telephone exchange requests, to confirm that a telephone
exchange request is genuine. The fund reserves 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 below.)
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.
BY MAIL
When making a written exchange request, please provide:
-- Name of the fund
-- Account number
-- Class of shares
-- Dollar amount or number of shares to exchange
-- Signature of each owner exactly as account is registered
-- Your share certificates, if any, properly endorsed or with proper
powers of attorney
-- Medallion signature guarantees, if the account in the fund whose
shares are being purchased will not be identically registered
-- Any other documentation required by the transfer agent or adviser
OTHER INFORMATION ABOUT EXCHANGES
No sales charge or other fee is imposed on exchanges, except you will be
charged a redemption fee on any shares redeemed within 6 months after the
date that they were purchased. An exchange involves a redemption of the
shares exchanged and may therefore result in a tax liability for you.
Unless waived by the fund, you must satisfy the initial and subsequent
minimum investment for each fund you are exchanging into.
-10-
<PAGE>
HOW TO REDEEM SHARES
IN GENERAL
Subject to the restrictions outlined below, you may redeem all or any part
of your shares in the fund at a price equal to the net asset value next
computed following receipt and acceptance of your redemption request by the
transfer agent or other fund agent. A redemption is a taxable transaction
that may result in a tax liability for you.
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
fund or its agents. If you wish to have your redemption proceeds wired to
your checking or bank account, you may so elect. Currently, the transfer
agent charges a fee for wire transfers.
The fund cannot accept requests which specify a particular date or price
for redemption or which specify any other special conditions.
BY TELEPHONE
You may authorize telephone redemptions by marking the appropriate boxes on
your account application and providing the information requested in the
application. To redeem shares by telephone, simply call 1-800-223-2332
between 9:00 a.m. and 4:00 p.m. Eastern time on any day that the fund is
open. Telephone redemption requests made after 4:00 p.m. Eastern time will
not be accepted.
The telephone redemption privilege is not available with respect to (i)
redemptions in excess of $50,000 during any 30-day period, (ii) accounts
that are registered jointly or requiring supporting legal documents, or
(iii) shares for which certificates have been issued. Proceeds from
telephone redemptions will be mailed by check payable to the shareholder of
record to the address of record, or wired to the bank as directed, on the
account application.
BY MAIL
Unless you are redeeming through an authorized broker-dealer, you must
submit a written request in "proper form" directly to PFPC, Inc.,
Attention: WPG Mutual Funds, P.O. Box 60448, King of Prussia, PA
19406-0448.
THROUGH AN AUTHORIZED BROKER-DEALER
You may transmit your redemption request to the fund through an authorized
broker-dealer. The broker-dealer may charge you a transaction fee for this
service.
PROPER FORM
To be in proper form, your redemption request must include:
-- Name of the fund
-- Account number
-- Class of shares
-- Dollar amount or number of shares to redeem
-- Signature of each owner exactly as account is registered
-- Your share certificates, if any, properly endorsed or with proper
powers of attorney
-- Medallion signature guarantees, if your proceeds are being sent to an
address or person other than those listed on the account registration,
or if you are redeeming shares represented by certificates
-- Any other documentation required by the transfer agent or adviser
(generally required for redemptions by corporations, estates, trusts,
guardianships, custodianships, partnerships, and pension and profit
sharing plans)
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 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.
SYSTEMATIC WITHDRAWAL PLAN
The systematic withdrawal plan allows you to establish automatic monthly or
quarterly transfers of a fixed amount ($50 or more) from your account(s) in
the fund(s) to you or your designated bank account. You must have a minimum
balance of $15,000 in a fund account to use this feature.
-11-
<PAGE>
REDEMPTION FEE
You will be charged a redemption fee equal to 2% of the amount redeemed on
any redemption of shares effected within 6 months after the date on which
you purchased the shares. Unless you otherwise specify on your redemption
request, the fund assumes that shares you have held the longest are
redeemed first in order to minimize the redemption fee.
-12-
<PAGE>
OTHER SHAREHOLDER SERVICE INFORMATION
SHAREHOLDER INQUIRIES
If you have any questions about the fund or the shareholder services
described below, please call the fund at 1-800-223-3332. Written inquiries
should be sent to PFPC, Inc., Attention: WPG Mutual Funds, P.O. Box 60448,
King of Prussia, PA 19406-0448.
The fund may amend the shareholder services described in this prospectus or
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, the fund's 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
for that transaction. In addition, following each distribution from your
fund, you will receive a shareholder statement reflecting any reinvestment
of a dividend or distribution in shares of the fund, including your current
share balance with the fund. The fund will also send you shareholder
reports no less frequently than semi-annually. You also will receive
year-end tax information about your account(s) with the fund.
MINIMUM ACCOUNT SIZE
Due to the relatively high cost of maintaining smaller accounts, the fund
may redeem shares in any account if, as the result of redemptions, the
value of that account drops below $100 for Retail Class shares or $15,000
for the Institutional Class shares. You will be allowed at least 60 days,
after written notice by the fund, 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 protect shareholders, the fund has adopted a trading policy limiting 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 the fund or any other WPG
Mutual Fund (other than between certain fixed income funds), and (ii) any
pair of transactions involving a purchase of shares of any one WPG Mutual
Fund followed by a redemption of an offsetting or substantially equivalent
dollar amount of shares of that same fund. If you violate this policy, your
future purchases of, or exchanges into, the fund or other WPG Mutual Funds
may be permanently refused. This trading policy does not prohibit you from
redeeming shares of the fund. The fund may waive the trading policy in its
discretion.
MEDALLION SIGNATURE
GUARANTEES
When the fund requires a signature guarantee, it must be a "medallion"
signature guarantee. A "medallion" signature guarantee may be obtained from
a bank, broker-dealer or other financial institution that participates in
the following "medallion" programs recognized by the Securities Transfer
Association: Securities Transfer Agents Medallion Program (STAMP), Stock
Exchange Medallion Program (SEMP) and New York Stock Exchange, Inc.
Medallion Signature Program (NYSE MSP). Any other signature guarantees will
not be accepted. Medallion signature guarantees cannot be obtained from a
notary public.
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<PAGE>
SHARE PRICE AND OTHER SHAREHOLDER INFORMATION
HOW SHARES OF THE FUND ARE VALUED
The fund's net asset value per share is calculated as of the close of
regular trading on the New York Stock Exchange, normally 4:00 p.m. Eastern
time, every day the Exchange is open for regular trading. The net asset
value per share, calculated as described below, is effective for all orders
received in good order (as previously described) by the fund or its agents
prior to the close of regular trading on the Exchange for that day. Orders
received by the fund or its 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 Exchange is
generally open Monday through Friday except for most national holidays.
The fund's net asset value (NAV) per share 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 fund's NAV, securities (other than certain
money market instruments) are valued primarily based on market quotations.
If market quotations are not available, then the fair value of the
securities is determined by a valuation committee appointed by the Board of
Trustees. Foreign securities markets may be open on days when the U.S.
markets are closed. For this reason, the values of foreign securities owned
by the fund could change on a day when you cannot buy or sell shares of the
fund. When the value of securities in the fund's portfolio have been
materially affected by events occurring after the close of a foreign
securities exchange, the fund may price those securities at fair value. Use
of fair value to price securities may result in valuing those securities
higher or lower than another fund that uses market quotations to price the
same securities. The fund may use pricing services to value bonds and other
fixed income investments. Money market instruments with a remaining
maturity of 60 days or less at the time of purchase are generally valued at
amortized cost.
SHARE CERTIFICATES
The fund will not issue share certificates.
DELIVERY OF PROSPECTUS AND SHAREHOLDER REPORTS
With your express consent or your implied consent upon written notice, the
fund may elect to send prospectuses and shareholder reports on a
"household" basis. This means that the fund may send only one copy of a
prospectus or annual report to all members of a household that fund
shareholders. If at any time you wish to revoke your consent to this
practice, you may do so by contacting WPG, either orally or in writing, in
the manner described above under "Shareholder Inquiries." The fund will
begin sending you individual copies of any prospectus or shareholder report
it delivers 30 days after receiving your revocation.
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<PAGE>
DIVIDENDS, DISTRIBUTIONS AND TAXES
DIVIDENDS AND DISTRIBUTIONS
The fund normally pays dividends and distributes capital gains, if any, as
follows:
INCOME DIVIDEND CAPITAL GAIN DISTRIBUTIONS ARE
FUND DISTRIBUTIONS DISTRIBUTIONS PRIMARILY FROM
---- ------------- ------------- --------------
WPG EuroNet Fund Annually Annually Capital gain
The fund may pay additional distributions and dividends at other times if
necessary for the fund to avoid federal tax. Unless you instruct otherwise,
capital gain distributions and dividends are reinvested in additional fund
shares of the same class that you hold. The fund's distributions and
dividends, whether received in cash or reinvested in additional fund
shares, may be subject to federal and/or state income tax. You do not pay a
sales charge on reinvested distributions or dividends.
TAXES
In general, share transactions are taxed as follows:
TRANSACTION FEDERAL INCOME TAX STATUS
----------- -------------------------
Redemption or exchange of shares Usually capital gain or loss;
long-term only if shares owned
more than one year
Long-term capital gain distributions Long-term capital gain
Short-term capital gain distributions Ordinary income
Dividends Ordinary income
Long-term capital gain distributions are taxable to you as long-term
capital gain regardless of how long you have owned your shares. You may
want to avoid buying shares when the fund is about to declare a capital
gain distribution or a taxable dividend, because it will be taxable to you
even though it may actually be a return of a portion of your investment.
After the end of each year, the fund will provide you with information
about the distributions and dividends that you received and any redemptions
of shares during the previous year. If you do not provide the fund with
your correct taxpayer identification number and any required
certifications, you may be subject to back-up withholding of 31% of your
distributions, dividends (other than exempt-interest dividends), and
redemption proceeds. Because each shareholder's circumstances are different
and special tax rules may apply, you should consult with your tax adviser
about your investment in the fund and your receipt of dividends,
distributions or redemption proceeds.
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<PAGE>
WEISS, PECK & GREER
MUTUAL FUNDS
FOR MORE INFORMATION
If you want more information about the WPG EuroNet Fund, the following documents
are available upon request:
SHAREHOLDER REPORTS
Annual and semiannual reports to shareholders provide additional information
about the fund's investments. These reports discuss the market conditions and
investment strategies that significantly affected the fund's performance during
its last fiscal year.
STATEMENT OF ADDITIONAL INFORMATION
The Statement of Additional Information (SAI) provides more detailed information
about the fund. It is incorporated into this prospectus by reference.
- ------------------------------------------- ----------
Investment Company Act file number 811-4404
- ------------------------------------------- ----------
HOW TO OBTAIN THIS INFORMATION
You may get free copies of the fund's shareholder reports and the SAI by
contacting the fund at:
Address: WPG Mutual Funds
c/o PFPC, Inc.
P.O. Box 60448
King of Prussia, PA 19406-0448
Telephone: 1-800-223-3332
You can review the fund's shareholder reports, prospectus and SAI at the Public
Reference Room of the Securities and Exchange Commission. You can get text-only
copies of these documents for free from the SEC's website at HTTP://WWW.SEC.GOV,
or for a duplicating fee by writing, calling or e-mailing:
Address: Public Reference Room
Securities and Exchange Commission
Washington, D.C. 20549-6009
Telephone: 1-800-733-0330
E-mail: [email protected]
IF SOMEONE MAKES A STATEMENT THAT IS NOT IN THIS PROSPECTUS ABOUT THE FUND, YOU
SHOULD NOT RELY UPON THAT INFORMATION. NEITHER THE FUND NOR ITS DISTRIBUTOR IS
OFFERING TO SELL SHARES OF THE FUND TO ANY PERSON TO WHOM THE FUND MAY NOT
LAWFULLY SELL ITS SHARES.
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<PAGE>
The information in this statement of additional information is not complete and
may be changed. The fund may not sell these securities until the registration
statement, which has been filed with the Securities and Exchange Commission, is
effective. This statement of additional information is not an offer to sell
these securities and is not soliciting an offer to buy these securities in any
state where the offer or sale is not permitted.
SUBJECT TO COMPLETION: DATED MAY 5, 2000
WPG EURONET FUND
ONE NEW YORK PLAZA
NEW YORK, NEW YORK 10004
(800) 223-3332
STATEMENT OF ADDITIONAL INFORMATION
__________, 2000
This Statement of Additional Information (SAI) is not a prospectus, but
expands upon and supplements the information contained in the prospectus dated
_________, 2000, as amended and/or supplemented from time to time, of WPG
EuroNet Fund.
This Statement of Additional Information should be read in conjunction
with the fund's prospectus. Additional information about the fund's investments
is available in the fund's annual and semi-annual reports to shareholders.
Investors can obtain free copies of reports and the prospectus by contacting the
fund at the phone number above.
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
----
The Fund's Investment Objective, Policies And Techniques.....................1
Investment Restrictions.....................................................17
Advisory, Subadvisory And Administrative Services...........................19
Trustees And Officers.......................................................26
Compensation Of Trustees And Officers.......................................28
Redemption Of Shares........................................................31
Net Asset Value.............................................................32
Investor Services...........................................................33
Dividends, Distributions And Tax Status.....................................35
Portfolio Brokerage.........................................................41
Portfolio Turnover..........................................................45
Organization................................................................45
Custodian...................................................................46
Transfer Agent..............................................................47
Legal Counsel...............................................................47
Independent Auditors........................................................47
Calculation Of Performance Data.............................................47
Appendix A.................................................................A-1
Appendix B.................................................................B-1
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<PAGE>
THE FUND'S INVESTMENT
OBJECTIVE, POLICIES AND
TECHNIQUES
Weiss, Peck & Greer, L.L.C. ("WPG") serves as the fund's investment
adviser and administrator. Robeco Institutional Asset Management US Inc.
("RIAM") serves as the fund's investment subadviser. WPG and RIAM are referred
to herein together as the "Adviser."
The fund is a series of Weiss, Peck & Greer Funds Trust (the "Trust"),
a diversified, open-end, management investment company. The investment
objective, policies and restrictions of the fund may be changed or altered by
the Board of Trustees of the Trust (the "Board") without shareholder approval,
except to the extent such policies and restrictions have been adopted as
fundamental. See "Investment Restrictions." The securities in which the fund may
invest and certain other investment policies are further described in the
prospectus. There can be no assurance that the fund's investment objective will
be achieved.
The fund's investment objective is long-term capital growth. Under
normal conditions the fund will invest at least 65% of its assets in non-U.S.
dollar denominated and U.S. dollar denominated common stocks and other
securities of "European Companies" engaged in "Internet-related businesses" as
these terms are described in the prospectus. The fund may also invest to a
lesser extent in securities of European Companies domiciled in Eastern European
countries or emerging European markets. The fund may invest a portion of its
assets in fixed income securities.
The Appendix to this SAI contains a description of the quality
categories of corporate bonds in which the fund may invest and a Glossary
describing some of the fund's investments.
REPURCHASE AND REVERSE REPURCHASE AGREEMENTS
Subject to its investment restrictions and policies, the 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 the 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 the fund. The repurchase price may be higher than the
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 the 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 fund 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 fund may
invest. The fund 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 the fund. The 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.
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<PAGE>
In addition to the risk of the seller's default or a decline in value
of the underlying security, the 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 the 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 the
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 fund acknowledge these
risks, it is expected that they can be controlled through careful monitoring
procedures.
The fund may enter into reverse repurchase agreements with 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.
Under the Investment Company Act of 1940, as amended (the "1940 Act"),
reverse repurchase agreements may be considered borrowings by the seller. The
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.
FOREIGN SECURITIES
The fund invests primarily in securities of foreign issuers. 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 fund 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 the 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. The fund will incur costs in converting foreign
currencies into U.S. dollars.
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<PAGE>
INVESTING IN EMERGING MARKETS
The 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 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.
-3-
<PAGE>
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.
EURODOLLAR AND YANKEE DOLLAR INVESTMENTS
The fund 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.
DEPOSITORY RECEIPTS
With respect to certain foreign securities, the fund may purchase
depository receipts of all kinds, including American Depository Receipts (ADRs),
European Depository Receipts (EDRs), Global Depository Receipts (GDRs) and
International Depository Receipts (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.
over-the-counter (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 the 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.
RISK CONSIDERATIONS OF MEDIUM GRADE SECURITIES
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 security purchased
by the fund is subsequently downgraded below investment grade, the Adviser will
consider such event in its determination of whether the fund should continue to
hold the security.
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<PAGE>
RISK CONSIDERATIONS OF LOWER RATED SECURITIES
The fund may invest in fixed income securities that are not investment
grade but are rated as low as B by Moody's or B by 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 the 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 adversely affect the value of outstanding fixed income securities
and the ability of the issuers to repay principal and interest.
High yield fixed income securities (commonly known as "junk bonds") are
considered speculative investments and, while generally providing greater income
than investments in higher rated securities, involve greater risk of loss of
principal and income (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.
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 the 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 the 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, the 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 the 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 the 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 the 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, the 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.
-5-
<PAGE>
FORWARD COMMITMENT AND WHEN-ISSUED TRANSACTIONS
The 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 the 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. The fund will not enter into such transactions for
the purpose of leverage.
When-issued purchases and forward commitments enable the 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, the 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, the 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. 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.
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 the 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. The 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 the 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 the fund may agree to a longer settlement
period.
The 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,
the fund may dispose of or renegotiate a commitment after it is entered into.
The fund also may sell securities it has committed to purchase before those
securities are delivered to the fund on the settlement date. The 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 the 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.
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LOANS OF PORTFOLIO SECURITIES
Subject to its investment restrictions, the 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. The rules of
the New York Stock Exchange, Inc. give the 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, the 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. The 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
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
The fund currently does not intend to purchase or sell options on
securities, indices or currencies for speculative purposes.
WRITING COVERED OPTIONS. The fund may write covered call and 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, the fund may write call
and put options on currencies. The 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 the 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 the 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 the 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, the fund may forego the
opportunity to profit from an increase in the market price of the underlying
security.
A put option written by the 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 the fund are covered. A written
call option or put option may be covered by (i) maintaining cash or liquid
securities, either of which, 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.
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The 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."
The 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
a single security.
The fund 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. The fund may also cover call and put options on a
securities index by using the other methods described above.
PURCHASING OPTIONS. The fund may 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 the fund may enter into closing sale transactions in
order to realize gains or minimize losses on options it had purchased. In
addition, the fund may purchase put and call options on currencies.
The 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 the fund, in return for the premium paid, to
purchase specified securities at a specified price during the option period. The
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 the 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 the fund's securities. Put options may also be purchased by the
fund for the purpose of affirmatively benefiting from a decline in the price of
securities which it does not own. The 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.
The 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.
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Transactions by the 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 the 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.
WRITING AND PURCHASING CURRENCY CALL AND PUT OPTIONS. The 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 may 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 may 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. Although the fund may use
option transactions 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 mutual fund which do not engage in
such activities. These risks include the following: for writing call options,
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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, the 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 the fund may not exactly match the
composition of the securities index on which options are written. If the
forecasts of the Adviser regarding movements in securities prices, interest
rates or currency exchange rates are incorrect, the fund's investment results
may have been better without the hedge 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 the 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
the 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 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, the 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
The fund currently does not intend to enter into futures transactions
for speculative purposes.
To seek to increase total return (although the fund currently does not
intend to do so) or to hedge against changes in interest rates, securities
prices, currency exchange rates, the fund may purchase and sell various kinds of
futures contracts, and purchase and write call and put options on any of such
futures contracts. The fund may also enter into closing purchase and sale
transactions with respect to any of such contracts and options. The futures
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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. The 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 the 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, the
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, the 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 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, the fund may instead make, or take,
delivery of the 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 the fund
proposes to acquire or the exchange rate of currencies in which portfolio
securities are quoted or denominated. The 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
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 the fund or securities with
characteristics similar to those of the fund's portfolio securities. Similarly,
the 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 the 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 the 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 the fund's portfolio securities would
be substantially offset by a decline in the value of the futures position.
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On other occasions, the fund may take a "long" position by purchasing
futures contracts. This would be done, for example, when the 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 the 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, the 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 the fund's assets. By
writing a call option, the 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 the 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 the fund in writing
options on futures is potentially unlimited and may exceed the amount of the
premium received. The fund 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. The 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 fund will engage in futures and related
options transactions only for bona fide hedging or to seek to increase total
return as permitted by the CFTC regulations which permit principals of an
investment company registered under the 1940 Act to engage in such transactions
without registering as commodity pool operators. (As previously stated, the fund
currently does not intend to enter into futures transactions to seek to increase
total return.) The 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,
the 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, the 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 the 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 the 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. The 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."
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Transactions in futures contracts and options on futures involve
brokerage costs, require margin deposits and, in the case of contracts and
options obligating the 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.
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 the Adviser
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.
While transactions in futures contracts and options on futures may
reduce certain risks, such transactions themselves entail certain other risks.
Thus, while the 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
securities is likely to fluctuate as a result of independent factors not related
to currency fluctuations.
Perfect correlation between the 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 fund may 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. The 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.
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The fund is permitted to enter into forward contracts under two
circumstances. First, when the 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 the 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 fund has no current intention to do so, the fund 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.
The fund 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 fund to deliver an amount of foreign currency in excess of
the value of the fund's respective portfolio securities or other assets quoted
or denominated in that currency. At the consummation of the forward contract,
the 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
the 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 the 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 fund's transactions in forward contracts will be limited to those
described above. Of course, the fund is not required to enter into such
transactions with regard to its foreign currency quoted or denominated
securities, and the fund will not do so unless deemed appropriate by the
Adviser.
When entering into a forward contract, the 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.
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This method of protecting the value of the 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 the 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 fund may enter into forward contracts to seek to reduce
currency exchange rate risks, transactions in such contracts involve certain
other risks. Thus, while the fund may benefit from such transactions,
unanticipated changes in currency prices may result in a poorer overall
performance for the fund than if it had not engaged in any such transactions.
Moreover, there may be imperfect correlation between the 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 the 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 fund's 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.
CONVERTIBLE SECURITIES AND PREFERRED STOCKS
The fund 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 fund may invest include sinking fund, convertible, perpetual fixed and
adjustable rate (including auction rate) preferred stocks. There is no minimum
credit rating applicable to the fund's investment in preferred stocks and
securities convertible into or exchangeable for common stocks.
STRUCTURED OR HYBRID NOTES
The 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.
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.
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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., 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 the fund
do not, however, 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.
RESTRICTED AND ILLIQUID SECURITIES
The 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, the fund will not invest more
than 15% of its net assets 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 stripped
mortgage-backed securities (SMBS), municipal leases, certain over-the-counter
options, securities that are not readily marketable and Restricted Securities,
unless the Board determines, 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 Board has adopted guidelines
and delegated to the Adviser the daily function of determining and monitoring
the liquidity of the fund's portfolio securities. The Board, however, retains
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 Board will carefully monitor the 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 the 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 the 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
The 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, the 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 fund to convert to the
so-called master-feeder fund structure has been approved by the fund's
shareholders. The Board does not intend to authorize investing in this manner at
this time.
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The fund may also 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. For example, the 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 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.
MARKET CHANGES
The market value of the fund's investments, and thus the fund's 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.
PORTFOLIO TURNOVER
The fund does not purchase securities with a view to rapid turnover,
there are no limitations on the length of time that securities must be held by
the fund and the 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 fund and
its shareholders.
INVESTMENT RESTRICTIONS
The 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 fund. As defined in the 1940 Act and as used in the
prospectus and this SAI, "a majority of the outstanding voting securities" of
the 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, the
fund may not:
1. Issue senior securities. For purposes of this restriction, borrowing
money in accordance with paragraph 2 below, making loans in accordance
with paragraph 6 below, the issuance of shares of beneficial interests
in multiple classes or series, the deferral of trustees' fees, the
purchase or sale of options, futures contracts, forward commitments and
repurchase agreements entered into in accordance with the fund's
investment policies or within the meaning of paragraph 5 below, are not
deemed to be senior securities.
2. Borrow money, except in amounts not to exceed 33 1/3% of the value of
the fund's total assets (including the amount borrowed) taken at market
value (i) from banks for temporary or short-term purposes or for the
clearance of transactions, (ii) in connection with the redemption of
portfolio shares or to finance failed settlements of portfolio trades
without immediately liquidating portfolio securities or other assets,
(iii) in order to fulfill commitments or plans to purchase additional
securities pending the anticipated sale of other portfolio securities
or assets and (iv) the fund may enter into reverse repurchase
agreements and forward roll transactions. For purposes of this
investment restriction, investments in short sales, futures contracts,
options on futures contracts, securities or indices and forward
commitments shall not constitute borrowing.
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3. Underwrite the securities of other issuers, except to the extent that,
in connection with the deposition of portfolio securities, the fund may
be deemed to be an underwriter under the Securities Act of 1933.
4. Purchase or sell real estate except that the fund may (i) acquire or
lease office space for its own use, (ii) invest in securities of
issuers fund that invest in real estate or interests therein, (iii)
invest in securities that are secured by real estate or interests
therein, (iv) purchase and sell mortgage-related securities and (v)
hold and sell real estate acquired by the fund, as a result of the
ownership of securities.
5. Purchase or sell commodities or commodity contracts, except the fund
may purchase and sell options on securities, securities indices and
currency, futures contracts on securities, securities indices and
currency and options on such futures, forward foreign currency exchange
contracts, forward commitments, securities index put or call warrants
and repurchase agreements entered into in accordance with the fund's
investment policies.
6. Make loans, except that the fund (1) may lend portfolio securities in
accordance with the fund's investment policies up to 33 1/3% of the
fund's total assets taken at market value, (2) enter into repurchase
agreements, and (3) purchase all or a portion of an issue of debt
securities, bank loan participation interest, bank certificates of
deposit, bankers' acceptances, debentures or other securities, whether
or not the purchase is made upon the original issuance of the
securities.
7. With respect to 75% of its total assets, 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.
The 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 the fund.
In addition to the fundamental policies mentioned above, the Board has
adopted the following non-fundamental policies which may be changed or amendedby
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.
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<PAGE>
(d) Invest more than 15% of its net assets in securities which are
illiquid.
(e) Purchase additional securities if the fund's borrowings exceed 5%
of its net assets.
Except with respect to each fund's fundamental investment restriction
regarding borrowing, any investment limitation of the fund that is expressed as
a percentage is determined at the time of investment by the fund. An increase or
decrease in the fund's net asset value or a company's market capitalization
subsequent to the fund's initial investment will not affect the fund's
compliance with the percentage limitation or the company's status as small,
medium or large cap. From time to time, the adviser may include as small, medium
or large cap certain companies having market capitalizations outside the
definitions described in the prospectus. Similarly, an issuer's credit quality
is determined only at the time of the last investment by the fund in securities
of that issuer. If a change occurs in an issuer's credit quality subsequent to a
fund's investment, the adviser will consider what action to take with respect to
that security. Under the 1940 Act, the 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. ("WPG"), One New York Plaza, New York, New
York 10004, serves as investment adviser and administrator to the fund.
WPG is an indirect, wholly-owned subsidiary of Robeco. Robeco is the
holding company for 100% of the shares of Robeco International B.V. and Robeco
Nederland B.V. ("Robeco Nederland") (collectively referred to as the "Robeco
Group"). Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A., Rabobank
Nederland owns 50% of the shares of Robeco and the balance is owned by
shareholders of the Robeco Group fund.
The Robeco Group is the fund management group. Robeco Nederland advises
and manages investment fund, some of whose shares are traded primarily on the
Amsterdam Stock Exchange, which fund include (1) Robeco N.V., (2) Rolinco N.V.,
(3) Rorento N.V., (4) RG Rente Mixfund N.V., (5) RG Obligatie Mixfund N.V., (6)
RG Aandelen Mixfund N.V., (7) RG Florente Fund N.V., (8) RG Divirente Fund N.V.,
(9) RG America Fund N.V., (10) RG Europe Fund N.V., (11) RG Pacific Fund N.V.,
(12) Nettorente Fund N.V., (13) RG Hollands Bezit N.V., (14) RG Emerging Markets
Fund N.V., (15) RG Tactimix Funds, and (16) RG Zelfselect Landen Fund N.V.
Robeco Nederland also advises and manages a number of institutional fund. The
Robeco Group operates primarily outside of the United States, although it
currently holds significant ownership interests in three U.S. investment
advisers, in addition to being the parent company of WPG.
The Robeco Group, through its subsidiaries, has approximately 2,500
employees worldwide. Of the approximately $110 billion in assets under
management at December 31, 1999, approximately $18 billion was managed in the
United States.
The fund's Board, including a majority of the Trustees who are not
"interested persons" (as such term is defined in the 1940 Act) of the fund or
WPG (the "non-Interested Trustees"), approved the fund's current investment
advisory agreement (the "Advisory Agreement") at a meeting held on April 19,
2000.
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<PAGE>
Pursuant to the Advisory Agreement, WPG (together with RIAM, as
described below) regularly provides the fund with investment research, advice
and supervision and furnishes continuously an investment program for the fund
consistent with the investment objectives and policies of the fund. WPG
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
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 SEC, and to the investment objectives, policies and restrictions
of the fund, 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, WPG
places orders for the investment and reinvestment of fund assets. (See
"Portfolio Brokerage.")
For its investment advisory services under the Advisory Agreement, WPG
receives an annual fee, payable monthly, which varies in accordance with the
average daily net assets of the fund under the management of WPG. The advisory
fee is accrued daily and will be prorated if WPG shall not have acted as the
fund's investment adviser during any entire monthly period.
Under the Advisory Agreement the fund pays to WPG management fees at
the rate of 1.50% of average daily net assets. WPG has voluntarily agreed to
waive the fund's management fee and to reimburse the fund's other expenses to
the extent necessary to limit the fund's total expenses for Institutional Class
shares to 3.00% average daily net assets. WPG may not discontinue or modify this
cap without the approval of the fund's trustees.
The Advisory Agreement provides that WPG will not be liable for any
loss sustained by the 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 WPG, 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 WPG of its
duties or by reason of WPG's reckless disregard of its obligations and duties
thereunder.
The Advisory Agreement may be modified or amended only with the
approval of the holders of a "majority of the outstanding voting securities" (as
defined in the 1940 Act) of the applicable fund and by a vote of the majority of
the non-Interested Trustees of the fund. The Advisory Agreement's continuance
after its initial two-year term 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 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. The Advisory
Agreement may be terminated without penalty, by either party, upon not more than
60 days' written notice and will terminate automatically in the event of its
assignment.
As of December 31, 1999, WPG had capital of approximately $145 million.
WPG has approximately 300 full-time employees. As of December 31, 1999, WPG and
its affiliates had assets under management of approximately $18 billion,
primarily for institutions and high net worth individuals.
Roger J. Weiss is a Senior Managing Director of WPG, Chairman of the
Board and Trustees of the trust. Stephen H. Weiss, brother of Roger J. Weiss, is
also a Senior Managing Director of WPG. Ronald M. Hoffner is a Managing Director
of WPG, and Executive Vice President and Treasurer of the trust. Joseph J.
Reardon is a Senior Vice President of WPG and a Vice President and Secretary of
the trust. Steven M. Pires is an Assistant Manager of WPG and Assistant Vice
President of the trust. Laurence Zuriff is a Managing Director of WPG and a Vice
President of the fund. Arjen J. W. Jongma is a Portfolio Manager of RIAM and a
Vice President of the fund.
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The persons responsible for the day-to-day management of the fund's
portfolio are listed in the prospectus. Messrs. Stephen H. Weiss and Roger J.
Weiss may also participate in the fund's investment decisions and all of the
Managing Directors 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 fund 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 fund
are concerned. However, it is the judgment of the Board that the desirability of
continuing the fund's advisory arrangements with the Adviser outweighs any
disadvantages that may result from contemporaneous transactions. See "Portfolio
Brokerage."
SUBADVISER
Robeco Institutional Asset Management US Inc. ("RIAM") serves as the
investment subadviser to the fund. RIAM, which is headquartered at One New York
Plaza, New York, New York 10004, is an affiliate of WPG and an indirect wholly
owned subsidiary of WPG's parent company, Robeco. The ownership of Robeco is
described above under "Investment Adviser." RIAM serves as the fund's subadviser
pursuant to an investment subadvisory agreement among WPG, RIAM and the fund
(the "Subadvisory Agreement"). The Subadvisory Agreement was approved by the
fund's Board, including a majority or the non-Interested Trustees, at a meeting
held on April 19, 2000.
Under the Subadvisory Agreement, RIAM, subject to the supervision of,
and jointly with, WPG, is responsible for the selection and management of all of
the fund's portfolio investments. RIAM regularly provides the fund with advice
concerning the investment management of the fund's portfolio, in accordance with
the fund's investment objectives and policies. RIAM determines what securities
shall be purchased or held or sold for the fund subject always to the provisions
of the fund's Declaration of Trust and By-laws and the 1940 Act, and to the
investment objectives, policies and restrictions of the fund, including such
policies, procedures and instructions as the Board of Trustees may from time to
time establish and deliver to RIAM. In return for these services, WPG pays RIAM
a quarterly subadvisory fee equal on an annual basis to 40% of the advisory fee
paid by the fund to WPG. In the event that the amount payable to WPG is reduced,
the amount payable by WPG to RIAM will be likewise reduced by a proportionate
amount. The fund has no responsibility to pay RIAM's fees and pays only WPG's
advisory fees.
In connection with providing investment subadvisory services to the
fund, in addition to using its own personnel, RIAM utilizes the services of
certain personnel ("Shared Personnel") of Robeco Nederland, B.V. ("RN BV") and
Robeco Institutional Asset Management, B.V. ("RIAM BV"). When providing
investment advisory services to the fund, the Shared Personnel act solely in
their capacity as associated persons of RIAM. RIAM also uses certain
administrative services of RN BV and RIAM BV, including data processing and
related recordkeeping services, and client report preparation services. RN BV
and RIAM BV are both located at Coolsingel 120, 3011 AG Rotterdam, The
Netherlands.
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<PAGE>
The Subadvisory Agreement provides that RIAM is not liable for any loss
sustained by the 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 RIAM of its duties or by reason of RIAM's reckless disregard of
its obligations and duties thereunder.
ADMINISTRATOR
WPG, in its capacity as administrator to the fund, performs
administrative, transfer agency related and shareholder relations services and
certain clerical and accounting services for the fund under an administration
agreement (the "Administration Agreement"). More specifically, these obligations
pursuant to the Administration Agreement include, subject to the general
supervision of the Board, (a) providing supervision of all aspects of the fund's
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 fund), (b) providing the fund, to the extent not provided pursuant to its
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 fund, (c) arranging, to the extent not provided pursuant
to such agreements, for the preparation, at the fund's 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
fund, 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 fund's records other than those maintained pursuant to such
agreements or the Advisory Agreement, and (f) providing to the fund 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 Agreement, WPG is entitled to
receive a fee, computed daily and payable monthly, at an annual rate of 0.09% of
the fund's average daily net assets. 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 Agreement provides that WPG will not be liable for
any error of judgment or mistake of law or for any loss suffered by the 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. The 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 not more than 60 days' written
notice.
PRINCIPAL UNDERWRITER
Provident Distributors, Inc., a subsidiary of PFPC, Inc., (formerly
First Data Distributors, Inc.), Four Falls Corporate Center, Suite 600, West
Conshohocken, Pennsylvania 19428-2961 (the Underwriter") serves as the principal
underwriter in connection with the continuous offering of shares of the fund
pursuant to an Underwriting Agreement with the Trust dated August, 1998. The
Underwriting Agreement's continuance after its initial two-year term must be
approved annually by the Trustees, including a majority of the non-Interested
Trustees, cast in person at a meeting called for the purpose of voting on such
approval. The Underwriting Agreement was approved by the Trustees at a meeting
held on April 19, 2000. As the fund's principal underwriter, the Underwriter
performs certain services related to the distribution of shares of the fund to
the public.
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The Underwriter bears all expenses in providing services under the
Underwriting Agreement. Such expenses include compensation to its employees and
representatives to any investment dealers and financial firms for distribution
related services. To the extent not borne by the Retail Class shares of the fund
under its Administration and Services Plan, the Underwriter also pays certain
expenses in connection with the distribution of the fund's shares, including the
cost of preparing, printing and distributing advertising materials, and the cost
of printing and distributing prospectuses and supplements to prospective
shareholders. WPG, and not the fund, bears the fees charged by the Underwriter.
The fund bears, among other things, the cost of registering its shares under
federal, state and foreign securities law.
EXPENSES
With respect to the 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 expenses (including an allocable portion of the cost of
the Adviser'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.
The 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. The 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 the fund compensates a third party for the provision of these
services, it will not incur duplicative fees with its transfer agent.
The fund's 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 the fund, WPG and the fund have adopted a Code of Ethics in
accordance of the 1940 Act. The Code contains extensive restrictions on personal
securities trading by personnel of WPG and its affiliates and others who
normally come into possession of information regarding the fund's portfolio
transactions. 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 fund and its shareholders come before those of the Adviser
and its employees. The Code is on file with, and available from, the SEC.
-23-
<PAGE>
ADMINISTRATION AND SERVICE PLAN FOR RETAIL CLASS SHARES
Under the administration and service plans of the fund (the "Plan") the
fund, with respect to its Retail Class Shares may enter into contracts
("Servicing Agreements") with banks (other than the Custodian), trust companies,
broker-dealers (other than WPG) or other financial organizations ("Service
Organizations") to provide certain administrative and shareholder services
("Services") on behalf of the fund. The Board of the fund and Funds Trust,
including a majority of the non-Interested Trustees, approved the current Plan
at a meeting held on April 19, 2000.
A Service Organization will receive a fee payable by the fund in
respect of shares held by or through such Service Organization for its customers
for Services performed pursuant to the Plan and the Servicing Agreement. The
schedule of fees and the basis upon which such fees will be paid will be
determined by the Trustees of the fund; provided, however, that the aggregate
annual fees to be paid to all Service Organizations and the fund's expenses
under the Plans will not exceed 0.25% 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.
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 fund bears the expense of preparing, printing and
distributing the prospectus and Statement of Additional Information, the Board
has adopted the Plan with respect to Retail Class shares of the fund and will
enter into Service Agreements pursuant thereto. In adopting the Plan, the Board
concluded that there is a reasonable likelihood that the Plan will benefit the
fund and its respective shareholders by the provision of the services described
above. Specifically, the Board determined that the Plan may increase the assets
of the fund which may reduce the 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 Plan permits, among other things, the payments to Service
Organizations and the reimbursement by the fund, as well as the payment by the
fund, 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 Plan 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 Plan provides that it may not be amended to increase materially the costs
which the 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 Funds Trust has been committed to the discretion of
the non-Interested Trustees of Funds Trust. The Plan is subject to annual
approval, by the 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.
-24-
<PAGE>
The 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 the 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 fund. Each Service Agreement will terminate
automatically in the event of its assignment.
The 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 fund and alternative
means for continuing the servicing of such shareholders would be sought. In that
event, changes in the operation of the fund 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. 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.
-25-
<PAGE>
TRUSTEES AND OFFICERS
The Board has responsibility for management of the business of the
fund. The executive officers of the fund are responsible for its day to day
operation. Set forth below is certain information concerning the Trustees and
officers of the fund. Unless otherwise noted, each individual serves in the
capacity indicated with the fund. Trustees and executive officers deemed to be
"interested persons" of the fund for purposes of the 1940 Act are indicated by
an asterisk (*). Each of the non-Interested Trustees is a member of the fund's
Audit Committee and Special Nominating Committee.
<TABLE>
<CAPTION>
NAME AND ADDRESS AND PRINCIPAL OCCUPATIONS
DATE OF BIRTH POSITION(S) HELD DURING PAST FIVE YEARS
- ------------- ---------------- ----------------------
<S> <C> <C>
Roger J. Weiss* Chairman of the Senior Management Director, WPG; Chairman of the Board and
One New York Plaza Board and Trustee; Trustee, RWB/WPG U.S. Large Stock Fund and Tomorrow Funds
New York, NY 10004 President Retirement Trust; Executive Vice President and Director,
WPG Advisers, Inc.
4/29/39
Raymond R. Herrmann, Jr. Trustee Chairman of the Board, Sunbelt Beverage Corporation
654 Madison Avenue (distributor of wines and liquors); Former Vice Chairman
Suite 1400 and Director, McKesson Corporation (U.S. distributor of
New York, NY 10017 drugs and health care products, wine and spirits); Life
Member, Board of Overseers of Cornell Medical College;
9/11/20 Member of Board and Executive committee, Sky Ranch for
Boys; Member, 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 the Tour
200 Broadway, Suite 249 Infirmary; Member of the Intercollegiate Athletics
New Orleans, LA 70018 Committee of the Administrators of the Tulane Educational
Fund; Trustee, RWB/WPG U.S. Large Stock Fund and Tomorrow
12/13/34 Funds Retirement Trust
Graham E. Jones Trustee Senior Vice President, BGK Realty Inc., since 1995;
330 Garfield Street, Financial Manager, Practice Management Systems (Medical
Suite 200 Services Company); Director, the Malaysia Fund; Director,
Santa Fe, NM 87501 twelve closed-end fund managed by Morgan Stanley Asset
Management; Trustee, various investment companies managed
1/3/33 by Morgan Grenfell Capital Management, Inc. and Morgan
Grenfell Investment Services, Ltd., since 1993; Trustee,
RWB/WPG U.S. Large Stock Fund and Tomorrow Funds
Retirement Trust
William B. Ross Trustee Financial Consultant; Former Senior vice President,
2733 E. Newton Avenue Mortgage Guaranty Insurance Corporation (mortgage credit
Shorewood, WI 53211 insurer); Former Senior vice President, MGIC Investment
Corporation (financial services holding company); Trustee,
8/22/27 RWB/WPG U.S. Large Stock Fund
-26-
<PAGE>
NAME AND ADDRESS AND PRINCIPAL OCCUPATIONS
DATE OF BIRTH POSITION(S) HELD DURING PAST FIVE YEARS
- ------------- ---------------- ----------------------
Robert A. Straniere Trustee Member, New York State Assembly; Sole Proprietor,
182 Rose Avenue Straniere Law Firm; Director, various Reich and Tang
Staten Island, NY 10306 Funds; Trustee, RWB/WPG U.S. Large Stock Fund
3/28/41
Lawrence Zuriff* Vice President Managing Director, WPG; President, WPG Tudor Fund; Vice
One New York Plaza President, York Capital Management; Growth Equity Analyst,
New York, NY 10004 Granite Capital prior thereto
4/16/51
Arjen J. W. Jongma* Vice President Portfolio Manager, RIAM and Robeco Group N.V.
One New York Plaza
New York, NY 10004
3/23/67
Ronald M. Hoffner* Executive Vice Managing Director, WPG
One New York Plaza President and
New York, NY 10004 Treasurer
10/06/50
Joseph J. Reardon* Vice President and Senior Vice President, Mutual Fund Operations, WPG; Vice
One New York Plaza Secretary President, Tomorrow Funds Retirement Trust
New York, NY 10004
4/4/60
Steven M. Pires* Assistant Vice Assistant Manager, Mutual Fund Operations, Weiss, Peck &
One New York Plaza President Greer L.L.C. since February 1999. Assistant Vice
New York, NY 10004 President Smith Barney Asset Management 1996-1999 Senior
Accountant, United Continental Corp. 1992-1996
9/12/56
Therese Hogan Assistant Secretary Manager, State Regulation, First Data Investor Services
PFPC, Inc. 1994 Group, Inc. since June Senior Legal Assistant, Palmer &
53 State Street Dodge prior thereto
Boston, MA 02109
2/27/62
</TABLE>
-27-
<PAGE>
COMPENSATION OF TRUSTEES AND OFFICERS
The fund pays no compensation to its Trustees affiliated with the
Adviser or to its 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.
<TABLE>
<CAPTION>
AGGREGATE COMPENSATION FROM
PENSION OR RETIREMENT TOTAL COMPENSATION FROM
BENEFITS ACCRUED AS PART THE FUNDS AND OTHER
NAME OF TRUSTEE EURONET FUND* OF FUNDS' EXPENSES FUNDS IN COMPLEX**
- --------------- ------------ ------------------ -----------------
<S> <C> <C> <C>
Roger J. Weiss 0 $0 $0
Raymond R. Herrmann, Jr. 0 29,000
Lawrence J. Israel 0 29,000
Graham E. Jones 0 29,000
Paul Meek*** 0 0 21,500
William B. Ross 0 21,500
Robert A. Straniere 0 21,500
<FN>
- ---------------
* Estimated for fiscal year ending December 31, 2000
** Compensation for other funds is for the calendar year ended December 31,
1999. As of that date, there were 12 mutual funds in the Weiss, Peck & Greer
group of fund (including the Tomorrow Funds) that publicly offered their shares.
***Effective October 31, 1999, Mr. Meek is no longer a Trustee of the WPG Funds.
</FN>
</TABLE>
BENEFICIAL OWNERSHIP
<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>
EuroNet Fund N/A* N/A* N/A* N/A*
<FN>
- ---------------
* Not applicable because the fund is newly organized.
(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>
-28-
<PAGE>
CERTAIN SHAREHOLDERS
Because the fund is newly organized, information regarding shareholders
of the fund that directly or indirectly own, control or hold with power to vote
5% or more of the outstanding voting securities (i.e., shares) of the fund, is
not yet available.
HOW TO PURCHASE SHARES
(SEE "HOW TO PURCHASE SHARES" IN THE PROSPECTUS.)
The offering of shares of the fund is continuous. The 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 fund
may be purchased from the fund directly by an investor or may be purchased on
behalf of an investor by WPG or another broker-dealer or, by a Service
Organization. An investor directly purchasing the fund's shares should complete
and execute the subscription form included with the prospectus in accordance
with the instructions in the prospectus. Investors purchasing the 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 fund
for any loss suffered as a result of such cancellation. To recoup such loss the
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 the 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 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 the fund's shares prior to such purchase.
Shares of the fund 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. The fund is
not bound to record any transfer until all required documents have been received
by the Transfer Agent.
Signature guarantees, when required, must be obtained from any one of
the following institutions, provided that such institution meets credit
standards established by the fund's 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 exchange or a
clearing agency.
-29-
<PAGE>
In addition to the Transfer Agent, the 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 the 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 fund's net asset value per share next computed after the
purchase or redemption order is accepted by the authorized 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 (as
defined below) and to minimize the fund's 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
Quantitative Equity Fund and WPG EuroNet 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 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 the 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. The fund will acquire such
securities for investment purposes only and not for immediate resale. The
exchange of securities by the investor for shares of the 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.
-30-
<PAGE>
REDEMPTION OF SHARES
(SEE "HOW TO REDEEM SHARES" IN THE PROSPECTUS.")
Any shareholder of the 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 PFPC, 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 fund.
The redemption price may be paid in cash or portfolio securities, at
the fund's discretion. The fund has, however, elected to be governed by Rule
18f-1 under the 1940 Act pursuant to which the 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, the 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 fund 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.
-31-
<PAGE>
NET ASSET VALUE
(SEE "HOW SHARES OF THE FUND ARE VALUED" IN THE PROSPECTUS.)
The net asset value of the 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 fund were tendered for redemption and
no order to purchase or sell shares of the fund was received) in which there is
a sufficient degree of trading in the fund's portfolio securities that the
current net asset value of the 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. The net asset value per share is calculated by
dividing the value of the 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 the 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 the 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 the 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
the 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.
In determining the net asset value of the 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 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 fund's Valuation Committee as
authorized by the Board.
-32-
<PAGE>
Bonds and other fixed income securities (other than short-term
obligations but including listed issues) in the 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 fund's shares,
options transactions will be treated as follows: When the 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, the 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 the 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.
INVESTOR SERVICES
The fund offers 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 fund, 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 the fund's shareholders and to permit
shareholders to increase their shareholdings in the fund, the fund's 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 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 fund. The fund or Transfer Agent
may also terminate such agency agreement, and the fund have the right to appoint
a successor Transfer Agent.
EXCHANGE PRIVILEGE
Shares of the fund may be exchanged by mail for shares of any other
Weiss, Peck & Greer mutual 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 fund is 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.
-33-
<PAGE>
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 fund. 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 fund's shares.
AUTOMATIC INVESTMENT PLAN
The Automatic Investment Plan enables investors to make regular
(monthly or quarterly) investments of $50 or more in shares of the 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 fund's
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 fund's 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 fund's 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.
SWEEP PROGRAM
Shares may be purchased through a sweep program under which fund in a
customer's private account with WPG are automatically invested in shares of the
WPG Government Money Market Fund or the WPG Tax Free Money Market Fund. Under
this program, fund deposited in a private account with WPG usually are invested
daily in the customer's account with the WPG Government Money Market Fund or the
WPG Tax Free Money Market Fund. The fund expects that WPG will transmit orders
for the purchase of the fund's shares on the same day that fund are swept from
the private account. The Sweep Program is serviced by WPG's outside service
bureau, ADP, in connection with the fund's 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.
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Withdrawals at the same time as regular purchases of the 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 fund 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
The 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. The fund intends
to elect and to qualify and be treated as a regulated investment company for
each taxable year.
Qualification of the 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 the sum 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 diversifies 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 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.
The 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 the fund which invests in foreign
securities to satisfy the distribution requirements described above, as well as
the excise tax distribution requirements described below. However, the 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 the 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.
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The 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 the 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 its 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. The fund has distribution
policies that should generally enable it to avoid liability for this tax.
Net investment income for the 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 the 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. Dividends, including
capital gain dividends, 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 in which they are
declared. These dividends are paid after taking into account, and reducing the
distribution to the extent of, any available capital loss carryforwards.
expiration date(s) for the fund:
Long-term capital gains of the fund are taxable to shareholders as
long-term 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, which is described below. If any net
realized long-term capital gain in excess of net realized short-term capital
loss is retained by the 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 long-term 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, the fund will notify shareholders of the tax status of its
dividends and distributions. Distributions of interest income exempt for federal
income tax purposes may also be exempt under the tax laws of certain states or
localities if derived from obligations of such states or localities. Such an
exemption may be subject to certain concentration, designation, reporting or
other requirements in certain jurisdictions, which in some cases may not be
satisfied by the fund.
A portion of the dividends from the 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 fund, which is derived from dividends of U.S. domestic corporations with
respect to shares held by the fund 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 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 the 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.
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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 fund to its 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.
If you invest in the 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 the 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 the fund's investment in such
direct U.S. Government obligations. Such an exemption may be subject to certain
concentration, designation, reporting or other requirements in certain
jurisdictions, which in some cases may not be satisfied by the fund. 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.
Dividends, including capital gain dividends, paid by the 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 the 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.
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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 the fund will be subject to tax under section 1234 of the Code. In
general, no loss is recognized by the 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 or
causing an adjustment in the holding period of such a stock or security in the
fund's portfolio. If the fund writes a put or call option, no gain is recognized
upon its receipt of a premium. If the option lapses or is closed out, any gain
or loss is generally 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 the 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 the fund and
listed non-equity options written or purchased by the 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 the 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 the fund's portfolio. Additionally, the 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 the 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 the
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 the 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 the fund.
Positions of the 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 the fund's risk
of loss with respect to such debt security will be treated as a "mixed
straddle."
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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. The fund will monitor its transactions in options,
futures and forward contracts and may make certain tax elections in order to
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 the 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 the 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 the 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.
The 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 the 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 fund may invest,
may present special tax issues for the 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 the 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 fund, in the event it invests in such
securities, in order to reduce the risk of distributing insufficient income to
preserve its status as a regulated investment companies and seek to avoid
becoming subject to federal income or excise tax.
The 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 fund may not be
eligible to pass through to shareholders these taxes and any associated foreign
tax credits or deductions for foreign taxes paid by the fund that are not thus
reduced or eliminated. To the extent not eligible, however, the fund may be
entitled to deduct such taxes in computing its tax (if any).
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The 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 they
actually received), their pro rata portion of qualified taxes paid by the fund
to foreign countries (not in excess of the fund's actual tax liability).
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 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
(applicable to the credit at both the fund and shareholder levels) 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 qualified 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 does not apply to individuals that meet certain requirements for an
exemption, including the requirement that the amount of creditable foreign taxes
not exceed $300 ($600 in the case of a joint return). 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 the 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. The
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.
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.
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All or a portion of a loss realized upon the redemption or other
disposition of shares of the 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. 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 the fund is properly treated as a sale for tax purposes, as is
assumed in the foregoing discussion.
The fund may be required to pay state taxes in states that have taxing
jurisdiction, except to the extent an exemption may be available, but the fund
does not anticipate that its 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 fund, 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-8BEN or other authorized
withholding certificate is on file, to 31% backup withholding on certain other
payments from the 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 SAI. Shareholders should consult their tax advisers about the application
of the provisions of tax law described in this SAI 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 WPG and RIAM not to employ any broker in
the purchase or sale of securities for the 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 fund, 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 the 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
fund, including WPG and RIAM, may not serve as the fund's dealer in connection
with such transactions. However, affiliated persons of the fund may serve as its
broker in transactions conducted on an exchange or over-the-counter transactions
conducted on an agency basis. The 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.
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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 the 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 Board, 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 Board, including a majority of the
non-Interested Trustees, have adopted procedures designed to comply with the
requirements of Rule 17e-1.
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 the 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 fund. 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 fund, 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 fund are combined with orders for
other clients advised by WPG and/or RIAM in order to obtain a more favorable
commission rate. When the same security is purchased for two or more fund or
accounts on the same day, the fund or account pays the average price and
commissions paid are allocated in direct proportion to the number of shares
purchased.
It is contemplated that the fund may employ brokers affiliated with
RIAM, as primary brokers in agency transactions on non-U.S. securities
exchanges. The above discussion regarding Rule 17e-1 and the procedures adopted
by the Board to comply with the requirements thereof applies equally to exchange
orders effected by such affiliates.
In selecting brokers other than WPG (and brokers affiliated with RIAM)
to effect transactions on securities exchanges, the fund 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
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<PAGE>
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 WPG or
RIAM 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, WPG or RIAM may cause the fund 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 WPG or RIAM, as
the case may be, (and their 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 and subadvisory fees paid by the fund under the advisory and
subadvisory agreements will not be reduced as a result of WPG's or RIAM's
receipt of research services.
Each year, WPG considers the amount and nature of the research products
and services provided by other brokers as well as the extent to which such
products and services are relied upon, and attempts to allocate a portion of the
brokerage business of its clients, such as the fund, 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.
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 WPG and
RIAM (and their affiliates) in servicing all of its accounts and not all such
information may be used by WPG or RIAM in connection with the fund generating
the brokerage credits. Nonetheless, the fund believe that such investment
information provides the fund with benefits by supplementing the research
otherwise available to WPG and RIAM.
As set forth above, the 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 the 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 fund are effected in compliance with these conditions.
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<PAGE>
In certain instances there may be securities which are suitable for the
fund's portfolio as well as for that of another fund or one or more of the other
clients of WPG or RIAM. Investment decisions for the fund and for WPG's or
RIAM'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 the fund is concerned. The fund believe that over time its
ability to participate in volume transactions will produce better executions for
the fund.
WPG and RIAM furnish to the fund at least quarterly statements setting
forth the total amount of all compensation retained by them or their affiliates
any associated person of it in connection with effecting transactions for the
account of the fund, and the Board reviews and approve all fund portfolio
transactions and the compensation received by WPG or RIAM in connection
therewith.
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<PAGE>
PORTFOLIO TURNOVER
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 fund
during the year. The monthly average is calculated by totaling 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 the fund's portfolio securities
(other than short-term securities) were replaced once in a period of one year.
It should be noted that if the fund were to write a substantial number of
options which are exercised, the portfolio turnover rate of the fund would
increase. Increased portfolio turnover results in increased brokerage costs
which the fund must pay and the possibility of more short-term gains,
distributions of which are taxable as ordinary income.
The fund will trade its portfolio securities without regard to the
length of time for which they have been held. To the extent that the fund's
portfolio is traded for short-term market considerations and portfolio turnover
rate exceeds 100%, the annual portfolio turnover rate of the fund could be
higher than most mutual funds.
ORGANIZATION
(See "How to Buy Shares," and "How to Redeem Shares" in the
prospectus.)
WPG EuroNet Fund is a separate investment portfolio of the Trust. The
fund represents a separate series of shares in the Trust having different
objectives, programs, policies, and restrictions. The Trust was organized as a
business trust under the laws of the Commonwealth of Massachusetts
("Massachusetts business trust") on September 11, 1985. Each share of beneficial
interest represents an equal proportionate interest in the fund. Each share is
entitled to one vote on all matters submitted to a vote of all shareholders of
the 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. The 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 fund currently issues two classes of shares, Institutional Class
and Retail Class, each of which has equal rights with regard to voting,
redemptions, dividends and distributions, except that each class bears
separately certain class expenses and the Retail Class shares vote separately
with respect to matters affecting the Plan.
The Trust 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 fund and that every
written obligation, contract, instrument or undertaking made by the fund may
contain a provision to that effect. The Board intends to conduct the operations
of the fund, 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
fund.
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<PAGE>
The Declarations of Trust further provides that no Trustee, officer,
employee or agent of the 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. It also provides 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 Declaration of Trust permits the Board to provide for the indemnification of
Trustees, officers, employees or agents of the fund against all liability in
connection with the affairs of the fund. All persons dealing with the 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
fund. No fund is liable for the obligations of any other fund.
Under the Declaration of Trust, the fund is not required to hold annual
meetings to elect Trustees or for other purposes. It is not anticipated that the
fund will hold shareholders' meetings unless required by law or the Declaration
of Trust. Nevertheless, special meetings may be called for purposes such as
electing or removing Trustees, changing fundamental policies, or approving an
investment advisory agreement. The Trust will be required to hold a meeting to
elect Trustees to fill any existing vacancies on its Board if, at any time,
fewer than a majority of the Trustees have been elected by the shareholders of
the Trust. The Board is 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
theTrust.
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 (or class) as are declared in the
discretion of the Board. In the event of the liquidation or dissolution of the
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 fund.
Pursuant to the Declarations of Trust, the Board 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 fund. Also pursuant to the Declarations of Trust, the Board may
establish and issue additional classes of shares. Also pursuant to the
Declarations of Trust, the Board may also authorize the 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.
Upon the initial purchase of shares, the shareholder agrees to be bound
by the Declaration of Trust, as amended from time to time. The Declaration of
Trust is on file at the Office of the Secretary of State of The Commonwealth of
Massachusetts in Boston, Massachusetts.
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.
CUSTODIAN
The Custodian for the fund 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 accounting services, holds the
assets of the fund 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 the fund in foreign countries and to hold cash and
currencies for the fund.
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<PAGE>
TRANSFER AGENT
PFPC, Inc., P.O. Box60448, King of Prussia, PA 19406-0448 acts as
transfer agent for the fund 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.
LEGAL COUNSEL
Hale and Dorr LLP, 60 State Street, Boston, Massachusetts 02109, serves
as legal counsel to the fund.
INDEPENDENT AUDITORS
KPMG LLP ("KPMG"), 345 Park Avenue, New York, New York 10154, serves as
the fund's independent accountants and in that capacity audits the fund's annual
financial statements.
CALCULATION OF PERFORMANCE
DATA
TOTAL RETURN
The 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 the fund.
The average annual total return of the 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 the 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.
Because the fund is newly organized, total return information for the
fund not yet available.
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<PAGE>
GENERAL
The 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.
The 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 fund and repurchase agreements; and (g)
historical investment data supplied by the research departments of various
research and brokerage firms. In addition, the fund may from time to time
advertise its performance relative to the following benchmark indices: Bloomberg
European Internet Index.
The composition of the investments in the above-referenced indices and
the characteristics of the fund's benchmark investments are not identical to,
and in some cases may be very different from, those of the 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 the 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 the fund), as well as the views of WPG
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 the fund.
In addition, from time to time, advertisements or information may
include a discussion of asset allocation models developed by WPG and/or its
affiliates, certain attributes or benefits to be derived from asset allocation
strategies and the WPG mutual fund that may be offered as investment options for
the strategic asset allocations. Such advertisements and information may also
include WPG'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 materials
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
the fund. Such advertisements or information may include symbols, headlines or
other material which highlight or summarize the information discussed in more
detail therein.
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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 the fund's shares will fluctuate and an
investor's shares may be worth more or less than their original cost upon
redemption. The 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 the fund may not provide a basis for comparison with other
investments using a different method of calculating performance.
Return for the 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
Because the fund is newly organized, financial statements are not yet
available.
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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 fund 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.
A-3
<PAGE>
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 fund 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-4
<PAGE>
APPENDIX B
ADDITIONAL INVESTOR SERVICES
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 the
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 the fund's shares with the designated
custodian under the Retirement Plan (the "Retirement Plan's Custodian").
Investment in other mutual fund 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 fund's 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 fund 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 Section
401(a), Federal, state or local pension plan, an annuity plan described in Code
Section 403(a), an annuity contract or custodial account described in Code
Section 403(b), a simplified employee pension plan described in Code Section
408(k), or a trust described in Code Section 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 ($52,000 for married individuals filing a joint return,
with a phase-out for adjusted gross income between $52,000 and $62,000; $32,000
for a single individual, with a phase-out for adjusted gross income between
$32,000 and $42,000). The phase-out ranges for deductibility are increased in
years after 2000 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.
The fund has arranged for Boston Safe Deposit and Trust Company to
furnish the required custodial services for IRAs using any of the 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.
B-2
<PAGE>
To establish an IRA for investment in the 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 the fund for IRA investments. Such
persons should also consult their own advisers regarding all aspects of the fund
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.
In limited circumstances, taxpayers who comply with certain tax law
requirements may, before the due date (including extensions) for the filing of
their annual tax return, elect to recharacterize a contribution made during the
year to a Roth IRA as a contribution to a traditional IRA or vice versa.
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.
B-3
<PAGE>
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 $450 for 2000 (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 $10,500 (indexed annually for inflation). This dollar
limit applies only to the elective deferrals, not to any contributions from
employer fund. 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 fund 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 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.
B-4
<PAGE>
The fund has 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>
WEISS, PECK & GREER FUNDS TRUST
PART C. OTHER INFORMATION
Item 23. EXHIBITS.
--------
(Exhibits previously filed are incorporated by reference to the filing
containing such exhibit identified in the description of the exhibit.)
(a)(1) Amended and Restated Declaration of Trust dated May 1, 1993 of
Registrant (previously filed with Post-Effective Amendment No. 22 on
April 30, 1998).
(a)(1) Certificate of Amendment dated October 28, 1993 to the Amended and
Restated Declaration of Trust (previously filed with Post-Effective
Amendment No. 22 on November 21, 1997).
(a)(1) Certificate of Change in Name changing name of WPG Government
Securities Fund to WPG Core Bond Fund (previously filed with
Post-Effective Amendment No. 22 on November 21, 1997).
(a)(2) Establishment and Designation of Series and Classes of Beneficial
Interest of WPG EuroNet Fund (filed herewith).
(b) By-Laws of Registrant (previously filed with the Post-Effective
Amendment No. 22 on April 30, 1998).
(c) Not Applicable.
(d)(1) Form of Investment Advisory Agreement between WPG Government Money
Market Fund and Weiss, Peck & Greer, L.L.C. (previously filed with
Post-Effective Amendment No. 23 on June 12, 1998).
(d)(2) Form of Investment Advisory Agreement between WPG Tax Free Money
Market Fund and Weiss, Peck & Greer, L.L.C. (previously filed with
Post-Effective Amendment No. 23 on June 12, 1998).
(d)(3) Form of Investment Advisory Agreement between WPG Core Bond Fund and
Weiss, Peck & Greer, L.L.C. (previously filed with Post-Effective
Amendment No. 23 on June 12, 1998).
(d)(4) Form of Investment Advisory Agreement between WPG Quantitative
Equity Fund and Weiss, Peck & Greer, L.L.C. (previously filed with
Post-Effective Amendment No. 23 on June 12, 1998).
<PAGE>
(d)(5) Form of Investment Advisory Agreement between WPG Intermediate
Municipal Bond Fund and Weiss, Peck & Greer, L.L.C. (previously
filed with Post-Effective Amendment No. 23 on June 12, 1998).
(d)(6) Form of Investment Advisory Agreement between WPG EuroNet Fund and
Weiss, Peck & Greer, L.L.C. (filed herewith).
(d)(7) Form of Investment Subadvisory Agreement among Weiss, Peck & Greer,
L.L.C., WPG EuroNet Fund and Robeco Institutional Asset Management
US Inc. (filed herewith).
(e)(1) Principal Underwriting Agreement (previously filed with Post-
Effective Amendment No. 25 on February 26, 1999).
(e)(2) Amendment to Principal Underwriting Agreement adding WPG EuroNet
Fund (to be filed by amendment).
(f) Not applicable.
(g) Custodian Agreement between the Registrant and Boston Safe Deposit
and Trust Company dated March 20, 1989 (previously filed with
Post-Effective Amendment No. 22 on April 30, 1998).
(h)(1) Services Agreement between the Registrant and First Data Investor
Services, Inc. (previously filed with Post-Effective Amendment No.
25 on February 26, 1999).
(h)(2) Amendment to Services Agreement adding WPG EuroNet Fund (to be filed
by amendment).
(h)(3) Form of Administration Agreement between WPG EuroNet Fund and Weiss,
Peck & Greer, L.L.C. (filed herewith).
(i) Opinion and Consent of Hale and Dorr LLP (previously filed with
Post-Effective Amendment No. 22 on April 30, 1998).
(j) Not Applicable.
(k) Not Applicable.
(l) Not Applicable.
(m)(1) Administration and Service Plan of WPG Core Bond Fund (previously
filed with Post-Effective Amendment No. 23 on June 12, 1998).
(m)(2) Retail Class Administration and Service Plan of WPG EuroNet Fund
(filed herewith).
(n) Rule 18f-3 Multiple Class Plan of WPG EuroNet Fund (filed herewith).
(o) Not Applicable.
(p) Form of Code of Ethics (previously filed with Post-Effective
Amendment No. 26 on April 28, 2000).
-2-
<PAGE>
(q) Powers of Attorney (previously filed with Post-Effective Amendment No.
26 on April 28, 2000).
Item 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
-------------------------------------------------------------
Not Applicable
Item 25. 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 (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 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 nonparty 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.
-3-
<PAGE>
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.
Insofar as 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 trustee, 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 on 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.
Item 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISOR.
----------------------------------------------------
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 27. PRINCIPAL UNDERWRITERS.
----------------------
(a) PFPC, Inc. (formerly First Data Distributors, Inc.), the
principal underwriter of shares of the Registrant (the
"Principal Underwriter"), acts as principal underwriter to
each investment company in the Weiss, Peck & Greer Group of
Mutual Funds. These mutual funds include: Weiss, Peck & Greer
International Fund; WPG Tudor Fund; WPG Growth and Income
Fund; and Tomorrow Funds Retirement Trust.
-4-
<PAGE>
(b) Directors and Officers of the Principal Underwriter:
NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICES
BUSINESS ADDRESS WITH UNDERWRITER WITH REGISTRANT
---------------- ---------------- ---------------
Robert Guillocheau Director None
4400 Computer Drive
Westboro, MA
Francis Koudelka Director, President and None
4400 Computer Drive Chief Executive Officer
Westboro, MA
Jack Kutner Director None
4400 Computer Drive
Westboro, MA
Barbara Worthen Director None
4400 Computer Drive
Westboro, MA
Scott Hacker Vice President, None
4400 Computer Drive Treasurer and Chief
Westboro, MA Compliance Officer
Bruno DiStefano Vice President None
4400 Computer Drive
Westboro, MA
Sue Moscaritolo Vice President None
4400 Computer Drive
Westboro, MA
Bernard Rothman Vice President - Tax None
4400 Computer Drive
Westboro, MA
Christine Ritch Chief Legal Officer and None
4400 Computer Drive Clerk
Westboro, MA
Bradley Stearns Assistant Clerk None
4400 Computer Drive
Westboro, MA
(c) Not applicable.
Item 28. LOCATION OF ACCOUNTS AND RECORDS.
--------------------------------
All account, books and other documents required to be maintained by
Section 31(a) of the 1940 Act and the rules thereunder will be
maintained (1) at the offices of the Registrant at One New York
Plaza, New York, New York 10004 (2) at the offices of the
Registrant's Custodian, Boston Safe Deposit and Trust Company, at
One Boston Place, Boston, MA 02109 and (3) at the offices of the
Registrant's Transfer Agent, PFPC, Inc., P.O. Box 60448, King of
Prussia, PA 19406-0448.
Item 29. MANAGEMENT SERVICES.
-------------------
Not applicable.
-5-
<PAGE>
Item 30. UNDERTAKINGS.
------------
Not applicable.
-6-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this
Post-Effective Amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
and State of New York on the 4th day of May, 2000.
WEISS, PECK & GREER FUNDS TRUST,
on behalf of its series,
WPG EURONET FUND
/S/RONALD M. HOFFNER
--------------------
Ronald M. Hoffner
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 the Board May 4, 2000
- -----------------
Roger J. Weiss (Principal Executive Officer)
and Trustee
/S/RONALD M. HOFFNER Executive Vice President and May 4, 2000
- --------------------
Ronald M. Hoffner Treasurer (Principal Financial
and Accounting Officer)
-7-
<PAGE>
SIGNATURE TITLE DATE
- --------- ----- ----
RAYMOND R. HERRMANN, JR.* Trustee May 4, 2000
- ---------------------------
Raymond R. Herrmann, Jr.
LAWRENCE J. ISRAEL * Trustee May 4, 2000
- ---------------------------
Lawrence J. Israel
GRAHAM E. JONES * Trustee May 4, 2000
- ---------------------------
Graham E. Jones
WILLIAM B. ROSS* Trustee May 4, 2000
- ---------------------------
William B. Ross
ROBERT A. STRANIERE * Trustee May 4, 2000
- ---------------------------
Robert A. Straniere
*By: /S/RONALD M. HOFFNER May 4, 2000
---------------------
Ronald M. Hoffner
Attorney-in-Fact
-8-
<PAGE>
EXHIBIT INDEX
The following exhibits are filed as part of this Registration
Statement.
EXHIBIT DESCRIPTION
(a)(2) Establishment and Designation of Series and Classes of Beneficial
Interest of WPG EuroNet Fund
(d)(6) Form of Investment Advisory Agreement between WPG EuroNet Fund and
Weiss, Peck & Greer, L.L.C.
(d)(7) Form of Investment Subadvisory Agreement among Weiss, Peck & Greer,
L.L.C., WPG EuroNet Fund and Robeco Institutional Asset Management
US Inc.
(h)(3) Form of Administration Agreement between WPG EuroNet Fund and
Weiss, Peck & Greer, L.L.C.
(m)(2) Retail Class Administration and Service Plan of WPG EuroNet Fund
(n) Rule 18f-3 Multiple Class Plan of WPG EuroNet Fund
-9-
WEISS, PECK & GREER FUNDS TRUST
Establishment and Designation of Series
and Classes of Beneficial Interest of
WPG EuroNet Fund
The undersigned, being at least a majority of the Trustees of Weiss,
Peck & Greer Funds Trust, a Massachusetts business trust (the "Trust"), acting
pursuant to Article V, Sections 5.1 and 5.11 of the Amended and Restated
Declaration of Trust dated May 1, 1993 of the Trust, as amended (the
"Declaration"), do hereby:
1. Establish and designate an additional series of the Trust as follows: "WPG
EuroNet Fund" (the "Fund").
2. Divide the shares of beneficial interest of the Fund (the "Shares") to
create two transferable Shares of beneficial interest, $0.001 par value per
share, as follows:
(a) The two classes of Shares established and designated hereby are
"Institutional Class Shares" and "Retail Class Shares," respectively.
(b) Institutional Class Shares and Retail Class Shares shall be issued
each be entitled to all of the rights and preferences accorded to
Shares under the Declaration.
(c) The purchase price of Institutional Class Shares and Retail Class
Shares, the method of determining the net asset value of Institutional
Class Shares and Retail Class Shares and the relative dividend rights
of holders of Institutional Class Shares and Retail Class Shares shall
be established by the Trustees of the Trust in accordance with the
provisions of the Declaration and shall be set forth in the Fund's
prospectus and statement of additional information included as part of
the Trust's Registration Statement on Form N-1A under the Securities
Act of 1933 and/or the Investment Company Act of 1940, as amended and
as in effect at the time of issuing such Shares.
(d) The Trustees, acting in their sole discretion, may determine that any
Shares of the Fund issued are Institutional Class Shares, Retail Class
Shares, or Shares of any other class of the Fund hereinafter
established and designated by the Trustees.
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this instrument this
19th day of April, 2000.
/s/Roger J. Weiss /s/Raymond R. Herrmann, Jr.
- ----------------- ---------------------------
Roger J. Weiss Raymond R. Herrmann, Jr.
as Trustee and not individually as Trustee and not individually
One New York Plaza 654 Madison Avenue
New York, NY 10004 Suite 1400
New York, NY 10017
/s/Lawrence J. Israel /s/Graham E. Jones
- --------------------- ------------------
Lawrence J. Israel Graham E. Jones
as Trustee and not individually as Trustee and not individually
220 Broadway 330 Garfield Street, Suite 200
Suite 249 Santa Fe, NM 87501
New Orleans, LA 70118
/s/William B. Ross /s/Robert A. Straniere
- ------------------ ----------------------
William B. Ross Robert A. Straniere
as Trustee and not individually as Trustee and not individually
2733 E. Newton Avenue 182 Rose Avenue
Shorewood, WI 53211 Staten Island, NY 10306
INVESTMENT ADVISORY AGREEMENT
-----------------------------
WPG EURONET FUND
AGREEMENT made as of the __ day of ________, 2000, by and between
WEISS, PECK & GREER FUNDS TRUST, a Massachusetts business trust (the "Trust"),
on behalf of its series WPG EURONET FUND (the "Fund"), and WEISS, PECK & GREER,
L.L.C., a New York limited liability company (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, on behalf of the Fund, 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 Fund 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 Fund certain services set
forth in Section 4 of this Agreement, all as shall be set forth in a
written contract to which the Trust, on behalf of the Fund, 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 Fund 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 Fund and information as to the Fund's investment
objectives.
4. ADVISORY SERVICES.
(a) The Investment Adviser will regularly provide the Trust, on behalf of
the Fund, with investment research, advice and supervision and will
furnish continuously an investment program for the Fund consistent
with the investment objectives and policies of the Fund. The
Investment Adviser will determine from time to time what securities
<PAGE>
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 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 Fund, 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 Fund assets. The Investment Adviser
will exercise full discretion and act for the Fund in the same manner
and with the same force and effect as the Fund 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 Fund and upon its request, furnish to
the Fund research, statistical and advisory reports upon the
industries, businesses, corporations or securities as to which such
requests shall be made, whether or not the Fund 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 Fund'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 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
or the Fund, the services of such of its principals, officers and employees
as may be duly 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 bear any expenses otherwise
payable by the Trust or the Fund except as may be specifically agreed
pursuant to Section 7 of this Agreement, but will be required to pay
expenses specifically allocated to the Investment Adviser in this paragraph
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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 Fund; (ii) organization expenses of the Trust or
the Fund; (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; (xv) litigation and indemnification expenses and
other extraordinary expenses not incurred in the ordinary course of the
Trust's business; or (xvi) distribution fees and service fees.
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 and brokerage and research services as are
permitted by the Securities Exchange Act of 1934, it being contemplated
that WPG will act as principal broker for the Trust in U.S. securities
transactions.
<PAGE>
(a) The Trust, on behalf of the Fund, will pay the Investment Adviser an
annual fee, payable monthly in arrears, which varies in accordance
with the total amount of daily net assets of the Fund under the
management of the Investment Adviser. The annual advisory fee
expressed as a percentage of the average daily net assets of the Fund
is 1.50%. 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 Fund shall be computed in the manner
specified in the Fund'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 Fund's prospectus, the net asset
value for purposes of calculating the advisory fee shall be calculated
as of the date last determined.
(b) 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 assume responsibility for all or
a portion of any expenses related to the operations of the Fund that
are not otherwise required to be directly or indirectly borne by the
Investment Adviser. Further, any agreement by the Investment Adviser
to limit the Fund's operating expenses to a specific level may be made
with the understanding that the Fund, to the extent legally
permissable, will reimburse the Investment Adviser for advisory fees
foregone and/or expenses paid by the Investment Adviser for a
particular year pursuant to such agreement if in any subsequent year
operating expenses for the Fund are less than the operating expenses
limitation (if any), for such subsequent year to which the Investment
Adviser may agree. Subject to the foregoing, and unless otherwise
agreed by the Trust and the Investment Advise, any fee reduction or
undertaking referred to in this Subsection shall constitute a binding
modification of this Agreement while it is in effect but may be
discontinued or modified prospectively 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 shares of the Fund
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, 2002
and from year to year thereafter, but only so long as such 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.
<PAGE>
(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 Fund (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 or their 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, on
behalf of the Fund, by the Investment Adviser will be used solely for the
benefit of the Fund. The Trust recognizes that Investment Adviser, in
effecting transactions for its 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 AND THE FUND. The Trust hereby agrees that in the event
that neither the Investment Adviser nor any of its affiliates acts as
investment adviser to the Trust, the names of the Trust and the fund 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. INDEPENDENT CONTRACTOR. The Investment Adviser is an independent contractor
and not an employee of the Trust for any purpose.
14. 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.
<PAGE>
15. 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 and/or the Fund, to:
WPG EURONET FUND
One New York Plaza
New York, New York 10004
(b) In the case of notices sent to the Investment Adviser, to:
WEISS, PECK & GREER, L.L.C.
One New York Plaza
New York, New York 10004
16. GOVERNING LAW. Except to the extent preempted by U.S. federal 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.
17. 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.
<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 EURONET FUND
By:________________________________
Its:
WEISS, PECK & GREER, L.L.C.
By:________________________________
Its:
INVESTMENT ADVISORY AGREEMENT FOR SUBADVISER
--------------------------------------------
WPG EURONET FUND
AGREEMENT made as of the __ day of __________, 2000 by and among WEISS,
PECK & GREER, L.L.C., a New York limited liability company (the "Investment
Adviser"), WEISS, PECK & GREER FUNDS TRUST, a Massachusetts business trust, on
behalf of its series, WPG EURONET FUND (the "Fund"), and Robeco Institutional
Asset Management US Inc., a Delaware Corporation (the "Subadviser").
The Fund is an open-end, management investment company, registered
under the U.S. Investment Company Act of 1940, as amended (the "1940 Act"). The
Investment Adviser and the Subadviser are investment advisers registered under
the U.S. Investment Advisers Act of 1940, as amended (the "Advisers Act"). The
Investment Adviser is also a broker-dealer registered under the U.S. Securities
Exchange Act of 1934, as amended (the "Exchange Act").
Pursuant to authority granted the Investment Adviser by the Fund's
Trustees and pursuant to the provisions of the Investment Advisory Agreement
currently in effect between the Investment Adviser and the Fund, the Investment
Adviser has selected the Subadviser to act as a sub-investment adviser of the
Fund and to provide certain other services, as more fully set forth below, and
the Subadviser is willing to act as such sub-investment adviser and to perform
such services under the terms and conditions hereinafter set forth. Accordingly,
the Investment Adviser and the Fund agree with the Subadviser as follows:
1. The Subadviser, together with the Investment Adviser, shall be
jointly responsible for the selection and management of all of the Fund's
portfolio investments. The Subadviser shall regularly provide the Fund with
advice concerning the investment management of the Fund's portfolio, which
advice shall be consistent with the investment objectives and policies of the
Fund as set forth in the Fund's Prospectus and Statement of Additional
Information, and any investment guidelines or other instructions received in
writing from the Investment Adviser. The Subadviser shall determine what
securities shall be purchased or held or sold for the Fund subject always to the
provisions of the Fund's Declaration of Trust and By-laws and the 1940 Act, and
to the investment objectives, policies and restrictions (including, without
limitation, the requirements of Subchapter M of the U.S. Internal Revenue Code
of 1986, as amended (the "Internal Revenue Code"), for qualification as a
regulated investment company) of the Fund, as each of the same shall be from
time to time in effect as set forth in the Fund's Prospectus and Statement of
Additional Information, or in any investment guidelines or other instructions
received in writing from the Investment Adviser, and subject, further, to such
policies, procedures and instructions as the Board of Trustees may from time to
time establish and deliver to the Subadviser. The Investment Adviser shall
provide the Subadviser with written statements of such Declaration of Trust,
By-laws, investment objectives, policies, procedures and restrictions, and
instructions, as in effect from time to time. The Subadviser shall have no
responsibility for actions taken in conformity with any such documents.
The Investment Adviser shall oversee the investement management
function of the Subadviser. The Subadviser shall not be responsible for the
provision of administrative, bookkeeping or accounting services to the Fund,
except as otherwise provided herein or as may be necessary for the Subadviser to
supply to the Investment Adviser, the Fund or its Trustees the information
required to be supplied under this Agreement.
<PAGE>
In the performance of the Subadviser's duties hereunder, the Subadviser
is and shall be an independent contractor and unless otherwise expressly
provided herein or otherwise authorized in writing, shall have no authority to
act for or represent the Fund in any way or otherwise be deemed to be an agent
of the Fund or of the Investment Adviser. The Subadviser shall make its officers
and employees available to meet with the Fund's officers and Trustees at least
quarterly on due notice to review the investments and investment program of the
Fund in the light of current and prospective economic and market conditions.
2. The Subadviser shall bear its own costs of providing services
hereunder. Other than as herein specifically indicated, the Subadviser shall not
be responsible for the Fund's expenses, including brokerage and other expenses
incurred in placing orders for the purchase and sale of securities.
Specifically, the Subadviser shall not be responsible for expenses of the Fund
including, but not limited to, the following: (i) fees and expenses of any
administrator of the Fund; (ii) organization expenses of the Trust or the Fund;
(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; (xv) litigation and
indemnification expenses and other extraordinary expenses not incurred in the
ordinary course of the Trust's business; or (xvi) distribution fees and service
fees.
3. For all investment management services to be rendered hereunder, the
Investment Adviser shall pay the Subadviser an annual fee, payable quarterly in
arrears, which varies in accordance with the average daily net assets of the
Fund. The subadvisory fee shall equal on an annual basis 40% of the advisory fee
paid by the Fund to the Investment Adviser. For any period less than a full
fiscal quarter during which this Agreement is in effect, the subadvisory fee
shall be prorated according to the proportion which such period bears to a full
fiscal quarter. The Fund shall have no responsibility for the subadvisory fee
payable to the Subadviser.
For purposes hereof, the value of net assets of the Fund shall be
computed in the manner specified in the Fund's Prospectus and Statement of
Additional Information for the computation of the value of the net assets of the
Fund in connection with the determination of net asset value of its shares. On
any day that the net asset determination is suspended as specified in the Fund's
Prospectus, the net asset value for purposes of calculating the subadvisory fee
shall be calculated as of the date last determined.
<PAGE>
In the event that the advisory fee payable by the Fund to the
Investment Adviser shall be reduced, the amount payable to the Subadviser shall
be likewise reduced by a proportionate amount.
4. The Subadviser, or its agent, shall arrange for the placing of all
orders for the purchase and sale of securities for the Fund with brokers or
dealers selected by the Subadviser, provided that the Subadviser shall not be
responsible for brokerage commissions. In the selection of such brokers or
dealers and the placing of such orders, the Subadviser is directed at all times
to seek for the Fund the most favorable execution and net price available.
Neither the Subadviser nor any affiliate of the Subadviser shall act as
principal or receive directly or indirectly any compensation in connection with
the purchase or sale of investment securities by the Fund, other than
compensation provided for in this Agreement or in the Investment Advisory
Agreement of the Fund, and such brokerage commissions as are permitted by the
1940 Act, it being contemplated that certain affiliates of the Subadviser may
act as the primary broker for the Fund in the purchase and sale of portfolio
securities on non-U.S. securities markets and that the Investment Adviser will
act as broker for the Fund in any orders for purchase and sale of portfolio
securities within the U.S. The Subadviser agrees that all transactions effected
through brokers affiliated with the Subadviser shall be effected in compliance
with the written procedures established from time to time by the Board of
Trustees of the Fund pursuant to Rule 17e-1 under the 1940 Act and Rule
11a2-2(T) of the Exchange Act, if applicable, copies of which shall be provided
to the Subadviser by the Investment Adviser.
5. It is also understood that it is desirable for the Fund that the
Subadviser have access to supplemental investment and market research and
security and economic analyses provided by certain brokers who may execute
brokerage transactions at higher commissions to the Fund than may result when
allocating brokerage to other brokers on the basis of seeking the most favorable
price and efficient execution. Therefore, the Subadviser is authorized to place
orders for the purchase and sale of securities for the Fund with such certain
brokers, subject to review by the Fund's Trustees from time to time with respect
to the extent and continuation of this practice. It is understood that the
services provided by such brokers may be useful to the Subadviser in connection
with its services to other clients. If any occasion should arise in which the
Subadviser gives any advice to its clients concerning the shares of the Fund,
the Subadviser will act solely as investment counsel for such clients and not in
any way on behalf of the Fund. The Subadviser's services to the Fund pursuant to
this Agreement are not to be deemed to be exclusive and it is understood that
the Subadviser may render investment advice, management and other services to
others.
The Subadviser shall advise the Fund's custodian and the Investment
Adviser on a prompt basis of each purchase and sale of a portfolio security,
specifying the name of the issuer, the description and amount or number of
shares of the security purchases, the market price, commission and gross or net
price, trade date, settlement date and identity of the executing broker or
dealer, and such other information as may be reasonably required. From time to
time as the Trustees of the Fund or the Investment Adviser may reasonably
request, the Subadviser shall furnish to the Fund's officers and to each of its
Trustees, at the Subadviser's expense, reports on portfolio transactions and
reports on issues of securities held in the portfolio, all in such detail as the
Fund or the Investment Adviser may reasonably request.
<PAGE>
6. The Subadviser shall not be liable 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 Subadviser, 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, 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; but nothing herein contained will be construed to protect the
Subadviser against any liability to the Investment Adviser, the Fund 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.
The Subadviser may consult with legal counsel (who may be counsel to
the Fund, the Board of Trustees or the Investment Adviser) concerning any
questions that may arise with reference to its duties under this Agreement or
the Fund's Declaration of Trust and By-laws, and the opinion of such counsel
shall be full and complete protection in respect of any action taken or omitted
by the Subadviser hereunder in good faith and in accordance with such opinion.
7. This Agreement shall remain in force until April 30, 2002 and from
year to year thereafter, but only so long as each such continuance, and the
continuance of the Investment Adviser as investment adviser of the Fund, is
specifically approved at least annually by the vote of a majority of the
Trustees who are not interested persons of the Subadviser or the Investment
Adviser of the Fund, cast in person at a meeting called for the purpose of
voting on such approval or by a vote of a majority of the outstanding voting
securities of the Fund. The aforesaid requirement that continuance of this
Agreement be "specifically approved at least annually" shall be construed in a
manner consistent with the 1940 Act and the rules and regulations thereunder.
This Agreement may, on 60 days' written notice, be terminated at any time
without the payment of any penalty, (a) by the Fund, by the Board of Trustees,
or by vote of a majority of the outstanding voting securities of the Fund, (b)
by the Investment Adviser or (c) by the Subadviser. This Agreement shall
automatically terminate in the event of its assignment. In interpreting the
provisions of this Agreement, the definitions contained in Section 2(a) of the
1940 Act (particularly the definitions of "interested person," "assignment" and
"majority of the outstanding voting securities"), as from time to time amended,
shall be applied, subject, however, to such exemptions as may be granted by the
Securities and Exchange Commission by any rule, regulation or order.
8. 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, and no amendment of this Agreement shall be effective until approved in
accordance with the applicable requirements of the 1940 Act.
It shall be the responsibility of the Subadviser to furnish to the
Trustees of the Fund such information as may reasonably be necessary in order
for such Trustees to evaluate this Agreement or any proposed amendments thereto
for the purposes of casting a vote pursuant to paragraphs 7 or 8 hereof.
<PAGE>
9. The Subadviser shall conform its conduct in accordance with and will
ensure that the Fund's portfolio conforms with the 1940 Act and all rules and
regulations thereunder, the requirements for qualification as a regulated
investment company of Subchapter M of the Internal Revenue Code, all other
applicable federal and state laws and regulations, and with the provisions of
the Registration Statement as amended or supplemented, of the Fund under the
U.S. Securities Act of 1933, as amended, and the 1940 Act.
10. The Subadviser has reviewed the Registration Statement of the Fund
as filed with the Securities and Exchange Commission and represents and warrants
that with respect to disclosure about the Subadviser or information relating
directly or indirectly to the Subadviser, such Registration Statement contains,
as of the date hereof, no untrue statement of any material fact and does not
omit any statement of material fact that was required to be stated therein or
was necessary to make the statements contained therein not misleading. The
Subadviser further represents and warrants that it is an investment adviser
registered under the Advisers Act.
11. Except to the extent preempted by U.S. federal law, this Agreement
shall be governed by and construed in accordance with the laws of the State of
New York and, by executing this Agreement, the Subadviser consents to the
service of process in the State of New York and consents to the jurisdiction of
any U.S. federal or New York State court sitting in the borough of Manhattan,
City of New York, New York.
12. It is understood and expressly stipulated that neither the holders
of shares of the Fund nor the Trustees shall be personally liable hereunder. All
persons dealing with the Fund must look solely to the property of the Fund for
the enforcement of any claims against the Fund. 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.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first written above.
WEISS, PECK & GREER FUNDS TRUST
on behalf of WPG EURONET FUND
By:
Name:
Title:
ROBECO INSTITUTIONAL ASSET MANAGEMENT
US INC.
By:
Name:
Title:
WEISS, PECK & GREER, L.L.C.
By:
Name:
Title:
ADMINISTRATION AGREEMENT
------------------------
WPG EURONET FUND
AGREEMENT made as of the __ day of ________, 2000, by and between
WEISS, PECK & GREER FUNDS TRUST, a Massachusetts business trust (the "Trust"),
on behalf of its series WPG EURONET FUND (the "Fund"), and WEISS, PECK & GREER,
L.L.C., a New York limited liability company (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, on
behalf of the Fund, 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, on behalf of the Fund. 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 Fund's operations not
referred to in Section 4 of the current Investment Advisory Agreement
between the Trust, on behalf of the Fund, and the Trust's investment
adviser (the "Investment Advisory Agreement"); (ii) provide the Fund
with personnel to perform such executive, administrative, accounting
and clerical services as are reasonably necessary to provide effective
administration of the Fund; (iii) arrange for, at the Fund's expense,
(a) the preparation for the Fund of all required tax returns, (b) the
preparation and submission of reports to existing shareholders and (c)
the periodic updating of the Fund's prospectuses and statements of
additional information and the preparation of reports filed with the
Securities and Exchange Commission and other regulatory authorities;
(iv) maintain all of the Fund's records not required to be maintained
by the investment adviser pursuant to Section 4(c) of the Investment
Advisory Agreement; (v) provide the Fund with adequate office space
and all necessary office equipment and services, including, without
limitation, telephone service, heat, utilities, stationery supplies
and similar items; and (vi) provide to the Fund 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).
<PAGE>
(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 or
the Fund, the services of such of its principals, officers and employees as
may be duly 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 bear any expenses otherwise payable
by the Trust or the Fund except as may be specifically agreed pursuant to
Section 3 of this Agreement, but will be required to pay expenses
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 Fund; (ii) organization expenses of the Trust or
the Fund; (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 by the Agreement and 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; (xv) litigation
and indemnification expenses and other extraordinary expenses not incurred
in the ordinary course of the Trust's business; or (xvi) distribution fees
and service fees.
<PAGE>
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, on behalf of the Fund, will pay
the Administrator on the last day of each month a fee at an annual
rate equal to 0.08%. The "average daily net assets" of the Fund shall
be determined on the basis set forth in the Fund's prospectus or
otherwise consistent with the 1940 Act and the regulations promulgated
thereunder.
(b) 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 assume responsibility for all or
a portion of any expenses related to the operations of the Fund that
are not otherwise required to be directly or indirectly borne by the
Administrator. Further, any agreement by the Administrator to limit
the Fund's operating expenses to a specific level may be made with the
understanding that the Fund, to the extent legally permissible, will
reimburse the Administrator for advisory fees foregone and/or expenses
paid by the Administrator for a particular year pursuant to such
agreement if in any subsequent year operating expenses for the Fund
are less than the operating expenses limitation (if any), for such
subsequent year to which the Administrator may agree. Subject to the
foregoing, any fee reduction or undertaking referred to in this
Subsection shall constitute a binding modification of this Agreement
while it is in effect but may be discontinued or modified
prospectively 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 or the Fund 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 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 Fund shall not be liable for any claims against any other series of the
Trust.
<PAGE>
5. DURATION AND TERMINATION OF THIS AGREEMENT. This Agreement shall remain in
force until April 30, 2002 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.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
WPG EURONET FUND
By:________________________________
Its:
WEISS, PECK & GREER, L.L.C.
By:________________________________
Its:
RETAIL CLASS ADMINISTRATION AND SERVICE PLAN
--------------------------------------------
WPG EURONET FUND
Weiss, Peck & Greer Funds Trust (the "Trust"), on behalf of WPG EuroNet
Fund (the "Fund") intends to adopt this Administration and Service Plan (the
"Plan") in accordance with the provisions of Rule 12b-1 under the Investment
Company Act of 1940 (the "1940 Act") to permit the Fund to enter into contracts
with banks or other financial organizations (hereinafter collectively called the
"Service Organizations") to provide administrative and shareholder services for
the Fund to their respective clients who are shareholders of Retail Class shares
of the Fund (the "Clients").
The terms and conditions of this Plan are as follows:
1. The Service Organizations shall provide shareholder and administrative
services for their respective Clients who own Retail Class shares of
beneficial interest of the Fund (the "Shares"), which services may include,
without limitation: answering Client inquiries about the Fund; processing
purchase and redemption transactions; assisting Clients in changing
dividend and distribution options, account designations and addresses;
performance of sub-accounting; establishing and maintaining shareholder
accounts and records; investing Client cash account balances automatically
in Shares; 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 information and services as the
Fund reasonably may request, to the extent permitted by applicable statute,
rule or regulation. The Service Organizations shall provide to their
respective Clients a schedule of any fees that they may charge directly to
their Clients for such services and comply with all other applicable
disclosure requirements, including any requirement to disclose receipt of
fees pursuant to this Plan.
2. The Service Organizations shall provide such office space and equipment,
telephone facilities and personnel (which may be all or any part of the
space, equipment and facilities currently used in their business, or all or
any personnel employed by them) as is necessary or beneficial for providing
information and services to their respective Clients. The Service
Organizations shall promptly transmit to Clients all communications sent to
them for transmittal to Clients by or on behalf of the Fund, the Fund's
investment adviser, distributor, custodian or transfer or dividend
disbursing agent.
3. Neither the Service Organizations nor any of their employees or agents
shall be authorized to make any representation concerning the Shares except
those contained in the then current Prospectus and Statement of Additional
Information relating to the Fund, copies of which will be supplied by the
Fund to the Service Organizations; and the Service Organizations shall have
no authority to act as agent for the Fund.
<PAGE>
4. Each Service Organization will receive a fee payable by the Fund, for
services performed pursuant to the Plan. The schedule of fees and the basis
upon which such fees will be paid will be determined by the Trustees of the
Fund, and may be based on a stated fee or a percentage of the average daily
net assets attributable to the Shares held by the Clients of the Service
Organization, or any other reasonable method of calculation. The Fund will
set aside up to 0.25% of the average daily net assets of the Fund
attributable to the Shares to pay the Service Organizations the applicable
fee and to pay its expenses under the Plan. For the purposes of determining
the fees payable hereunder, the average daily net asset value of Shares of
the Fund shall be computed in the manner specified in the then current
Prospectus relating to the Fund. Appropriate adjustments to payments made
pursuant to this Section 4 shall be made whenever necessary to ensure that
no payment made by the Trust on behalf of the Fund with respect to the
Shares is in excess of the applicable maximum cap imposed on asset based
sales charges by the Rules of Conduct of the National Association of
Securities Dealers, Inc.
5. The Fund reserves the right, at its discretion and without notice, to
suspend the sale of Shares or withdraw the sale of Shares.
6. The Fund, with respect to Retail Class, shall pay a portion of the costs
and expenses in connection with preparation, printing and distribution of
the Prospectus and Statement of Additional Information relating to the Fund
to prospective Retail Class shareholders and existing shareholders, and the
implementation and operation of the Plan.
7. Any person who is authorized to direct the disposition of monies paid or
payable by the Fund pursuant to the Plan or any related agreement shall
provide to the Trustees, and the Trustees shall review, at least quarterly,
a written report of all amounts expended pursuant to the Plan and the
purpose for which such amounts were expended.
8. The Plan will become effective immediately upon the effectiveness of the
Trust's registration statement with respect to the Fund, and approval by a
majority of the Board of Trustees, including a majority of the Trustees who
are not "interested persons" (as defined in the 1940 Act) of the Trust and
have no direct or indirect financial interest in the operation of the Plan
or in any agreements entered into in connection with the Plan, pursuant to
a vote cast in person at a meeting called for the purpose of voting on the
approval of the Plan.
9. The Plan may be amended at any time by the Board of Trustees provided that
(a) any amendment to increase materially the costs which the Fund may bear
for distribution pursuant to the Plan shall be effective only upon approval
by a vote of a majority of the outstanding voting securities of the Retail
Class of the Fund, and (b) any material amendments of the terms of the Plan
shall become effective only upon approval by a majority of the Board of
Trustees, including a majority of the Trustees who are not "interested
persons" (as defined in the 1940 Act) of the Trust and have no direct or
indirect financial interest in the operation of the Plan, pursuant to a
vote cast in person at a meeting called for the purpose of voting on the
amendments of the terms.
<PAGE>
10. Unless earlier terminated in accordance with its terms, the Plan shall
continue in effect until April 30, 2001, and shall continue automatically
for successive annual periods, provided such continuance is approved by a
majority of the Board of Trustees, including a majority of the Trustees who
are not "interested persons" (as defined in the 1940 Act) of the Trust and
have no direct or indirect financial interest in the operation of the Plan
or in any agreements entered into in connection with the Plan, pursuant to
a vote cast in person at a meeting called for the purpose of voting on the
continuance of the Plan.
11. This Plan is terminable at any time by (a) majority of the Trustees who are
not "interested persons" (as defined in the 1940 Act) of the Trust and have
no direct or indirect financial interest in the operation of the Plan or in
any agreements entered into in connection with the Plan or (b) the vote of
a majority of the outstanding voting securities of the Retail Class of the
Fund. An agreement related to the Plan may be terminated at any time,
without payment of any penalty, in the manner specified in (a) above, or in
the manner specified in (b) above with not more than sixty days written
notice to any other party in the Agreement. Notwithstanding anything
contained herein, in the event that the Plan shall be terminated by the
Trustees, or the Plan or any part thereof, is found invalid or is ordered
terminated by any regulator or judicial authority, each agreement under the
Plan shall be terminable effective upon receipt of notice thereof by the
respective Service Organization.
12. Any agreement related to the Plan will terminate automatically in the event
of its assignment.
Approved April 19, 2000
WEISS, PECK & GREER FUNDS TRUST
WPG EURONET FUND
MULTIPLE CLASS PLAN PURSUANT TO RULE 18F-3
ADOPTED APRIL 19, 2000
Each class of shares of WPG EuroNet Fund (the "Fund"), a series of
Weiss, Peck & Greer Funds Trust, a Massachusetts business trust (the "Trust"),
will have the same relative rights and privileges and be subject to the same
fees and expenses, except as set forth below. The Trust's board of trustees may
determine in the future that other distribution arrangements, allocations of
sales charges (if any), expenses (whether ordinary or extraordinary) or services
to be provided to a class of shares are appropriate and amend this Plan
accordingly without the approval of shareholders of any class. Shares of a class
of the Fund may be exchanged only for shares of the same class of another Weiss,
Peck & Greer Fund (subject to the terms and conditions described in the Fund's
prospectus and statement of additional information). For this purpose, each
Weiss, Peck & Greer Fund that currently has only one class of shares shall be
deemed to be the equivalent of Institutional Class shares. Shares of a class of
the Fund shall have no rights to convert into shares of any other class of any
Fund. Shares of each class redeemed within 6 months after the date on which they
were purchased shall be subject to a redemption fee equal to 2% of the amount
redeemed.
ARTICLE I. RETAIL CLASS SHARES
Retail Class shares of the Fund are sold at net asset value without the
imposition of any sales charge (initial, contingent, deferred or otherwise).
Retail Class shares shall be entitled to the shareholder services set forth from
time to time in the Fund's prospectus with respect to Retail Class shares.
Retail Class shares of the Fund are subject to distribution and service fees
calculated upon a stated percentage of the Fund's net assets attributable to
Retail Class shares on the terms set forth in the Fund's Retail Class Rule 12b-1
Distribution and Service Plan. The Retail Class shareholders of the Fund have
exclusive voting rights, if any, with respect to the Fund's Retail Class 12b-1
Distribution and Service Plan. Transfer agency fees, blue sky fees, printing
costs and mailing expenses are allocated to Retail Class shares on a per account
basis except to the extent, if any, such an allocation would cause the Fund to
fail to satisfy any Internal Revenue Service requirements relating to the
issuance of multiple classes of shares.
ARTICLE II. INSTITUTIONAL CLASS SHARES
Institutional Class shares of the Fund are sold at net asset value
without the imposition of any sales charge (initial, contingent, deferred or
otherwise). Institutional Class shares shall be entitled to the shareholder
services set forth from time to time in the Fund's prospectus with respect to
Institutional Class shares. Institutional Class shares of the Fund are not
subject to any Rule 12b-1 distribution or service fees. Transfer agency fees,
blue sky fees, printing costs and mailing expenses are allocated to
Institutional Class shares on a per account basis except to the extent, if any,
such an allocation would cause the Fund to fail to satisfy any Internal Revenue
Service requirements relating to the issuance of multiple classes of shares.
<PAGE>
ARTICLE III. APPROVAL BY BOARD OF TRUSTEES
This Plan shall not take effect until it has been approved with respect
to the Fund by the vote of a majority (or whatever greater percentage may, from
time to time, be required under Rule 18f-3 under the Investment Company Act of
1940, as amended (the "Act")) of (a) all of the trustees of the Trust and (b)
the trustees who are not "interested persons" (as such term is defined under the
Act) of the Trust.
ARTICLE IV. AMENDMENTS
No material amendment to this Plan shall be effective unless it is
approved by the Trust's board of trustees in the same manner provided in Article
III.
