RWB/WPG U.S. LARGE STOCK FUND
Prospectus
May 1, 1999
Reinhardt Werba Bowen
1190 Saratoga Avenue
Suite 200
San Jose, California 95129
800-366-7266 Extension 124
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
Risk/Return Summary ....................................... 3
More about the Fund's Investments and Risks ............... 5
Management of the Fund .................................... 6
How to Buy Shares ......................................... 7
How to Redeem Shares ...................................... 8
Other Shareholder Service Information and Share Price ..... 9
Dividends, Distributions and Taxes ........................ 10
Financial Highlights ...................................... 11
For More Information ...................................... 12
WHO MAY INVEST
Shares of the fund are offered exclusively to individuals, institutions and
other entities that are advisory clients of Reinhardt Werba Bowen Advisory
Services.
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RISK/RETURN SUMMARY
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INVESTMENT GOAL
The fund's investment goal is total return through investing in equity
securities of U.S. companies with large market capitalizations.
PRINCIPAL INVESTMENT STRATEGIES
INVESTMENTS: The fund invests substantially all, and at least 65% of its assets,
in common stocks of U.S. companies with large market capitalizations.
Although the fund is generally fully invested in common stocks, the fund may on
occasion, instead of purchasing and selling common stocks directly, invest in
depository receipts and other investment companies which seek to replicate the
price performance and dividend yield of the S&P 500 Index and may use derivative
contracts (such as futures on the S&P 500 Index).
................................................................................
STRATEGIES: The adviser uses quantitative techniques to analyze the companies
included within the S&P 500 Index. Using a proprietary multi-factor model that
considers value characteristics, the adviser:
-- Identifies stocks from among this group that are selling at low relative
prices in light of their earnings expectations.
-- Assesses the level of risk associated with each stock, and identifies
stocks with the maximum expected return at each acceptable level of
risk.
Based on this information, the adviser selects the combination of stocks,
together with their appropriate weightings, that it believes will optimize the
fund's risk/return ratio. The adviser seeks to maintain the market
capitalization, sector allocations and style characteristics of the fund's
portfolio similar to those of the S&P 500 Index. Although the fund's portfolio
will not contain all the stocks included in the S&P 500 Index, it is expected
that the fund's performance will be highly correlated with the performance of
the S&P 500 Index.
The portfolio is rebalanced regularly to maintain the optimal risk/return
trade-off.
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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:
-- The U.S. stock market goes down.
-- Stocks of large capitalization companies temporarily fall out of favor
with investors.
-- Companies in which the fund invests suffer unexpected losses or lower
than expected earnings.
-- The adviser's judgment about the attractiveness, value or potential
appreciation of a particular company's common stock proves to be wrong.
-- The factors considered by the multi-factor model select for investment,
stocks that underperform the S&P 500 Index.
An investment in the fund is not a bank deposit and is not insured or guaranteed
by the FDIC or any other government agency.
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WHO MAY WANT TO INVEST
The fund may be appropriate if you:
-- Are pursuing a long-term goal, such as investing for retirement
-- Are seeking higher potential long-term returns associated with an
investment in stocks, and can accept a higher level of risk
-- Are seeking to diversify your portfolio by investing in a portfolio of
common stocks of large companies
-- Are seeking an objective, disciplined investment process
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
-- Desire a high level of current income
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RISK/RETURN SUMMARY
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PERFORMANCE
The bar chart and table shown below indicate the risks of investing in the fund.
The bar chart shows changes in the performance of the fund from year to year
over the life of the fund.
[GRAPH OMITTED HERE. THE BAR CHART OMITTED HERE SHOWS CHANGES IN THE PERFORMANCE
OF THE FUND FROM YEAR TO YEAR.]
U.S. LARGE STOCK FUND
TOTAL RETURN
CALENDAR YEARS ENDED DECEMBER 31
1994 0.06%
1995 33.81
1996 19.33
1997 30.83
1998 24.51
The table shows how the fund's average annual returns for different calendar
periods, and since inception on Juney8, 1993, compared to those of the S&P 500
Index, an unmanaged index of common stocks.
AVERAGE ANNUAL TOTAL RETURNS
(FOR THE PERIODS ENDED DECEMBER 31, 1998)
1 YEAR 5 YEARS SINCE INCEPTION
------ ------- ---------------
Fund 24.51% 21.08% 19.82%
S&P 500
Index 28.76% 24.15% 2.65%
FUND'S BEST AND WORST QUARTERLY TOTAL RETURNS
Best: 18.28% in the 4th quarter of 1998
Worst: -10.73% in the 3rd quarter of 1998
The fund's past performance does not necessarily indicate how the fund will
perform in the future.
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FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund.
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SHAREHOLDER FEES
(PAID DIRECTLY FROM YOUR INVESTMENT) None
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ANNUAL FUND OPERATING EXPENSES
(PAID-BY THE FUND AS A % OF FUND NET ASSETS)
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Management fee(1)
0.26%
12b-1 distribution fees None
Other expenses(1)
0.27%
----
Total annual operating expenses(1) 0.53%
====
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(1) Because the adviser agreed to cap the fund's expenses, the fund's actual
expenses for fiscal 1998 were as set forth below. The adviser may change or
discontinue the expense cap at any time.
Management fee 0.15%
Other expenses 0.27%
-----
Total annual operating expenses 0.42%
=====
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.
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NUMBER OF YEARS YOU
OWN YOUR SHARES 1 YEAR 3 YEARS 5 YEARS 10 YEARS
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Expenses* $54 $170 $296 $665
The example assumes:
-- You invest $10,000 for the periods shown
-- You redeem at the end of each period
-- You reinvest all distributions and dividends without a sales charge
-- The fund's operating expenses have not been capped or reduced and remain
the same
-- Your investment has a 5% return each year
- -----------
* Example assumes fund expenses were not capped. The example would be
as follows assuming fund expenses were capped by the adviser:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
$43 $135 $235 $530-
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<PAGE>
MORE ABOUT THE FUND'S INVESTMENTS AND RISKS
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The Risk/Return Summary for the fund 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, some of which entail risks, is
included in the Statement of Additional Information (SAI).
EQUITY INVESTMENTS
Although the fund invests primarily in common stocks of companies with large
market capitalizations, the fund may invest in all other types of equity
securities, including exchange-traded and over-the-counter 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. A company is considered to be
large cap if it has a public market capitalization o at least $4ybillion.
FIXED INCOME INVESTMENTS
The fund may invest up to 10% of its assets in fixed income securities of all
kinds. These fixed income securities will be rated at the time of investment at
least AA by Standard & Poor's or Aa by Moody's or their equivalent ratings by
other rating agencies or, if unrated, determined by the adviser to be of
comparable credit quality. Fixed income investments include bonds, notes
(including structured notes), mortgage-backed securities, asset-backed
securities, convertible securities, Eurodollar and Yankee dollar instruments 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.
DERIVATIVE CONTRACTS
The fund may, but need not, use derivative contracts for either of the following
purposes: to hedge against adverse changes caused by changes in stock market
prices in the market value of its securities or securities to be bought; or as a
substitute for buying or selling securities.
Examples of derivative contracts include: futures and options on securities and
securities indices; and options on these futures. 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 or indices. Even a
small investment in derivative contracts can have a big impact on the fund's
stock market exposure. Therefore, using derivatives can disproportionately
increase losses and reduce opportunities for gains when stock prices 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.
INVESTMENT GOALS
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.
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MANAGEMENT OF THE FUND
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THE ADVISER
Weiss, Peck & Greer, L.L.C. serves as the fund's investment adviser. WPG is
headquartered at One New York Plaza, New York, New York 10004, and is a
subsidiary of Robeco Groep N.V., a Dutch public limited liability company.
Founded in 1929, Robeco is one of the world's oldest asset management
organizations. As of the date of this prospectus, Robeco had approximately $95
billion in assets under management, including $17 billion managed directly by
WPG. WPG, which has over 28 years experience as an investment adviser to
institutional and individual clients, is a member firm of the New York Stock
Exchange.
Subject to the general supervision of the fund's board of trustees, WPG manages
the fund's portfolio and is responsible for the selection and management of all
portfolio investments of the fund in accordance with the fund's investment
objective and policies.
THE PORTFOLIO MANAGER
THE PORTFOLIO MANAGER
IS PRIMARILY RESPONSIBLE
FOR THE DAY-TO-DAY
OPERATION OF THE FUND.
PORTFOLIO MANAGER SINCE PAST 5 YEARS' BUSINESS EXPERIENCE
- ----------------- ----- ---------------------------------
Daniel J. Cardell 1996 Managing director of the adviser.
Prior thereto, senior vice
president and director of
equities for the Bank of America.
MANAGEMENT FEE
For the fiscal year ended December 31, 1998, the fund paid WPG a management fee
at the annual rate of 0.15% of the fund's average daily net assets, after a
voluntary waiver by WPG. The management fee decreases from 0.26% of average
daily net assets of assets up to $500 million to 0.20% of average daily net
assets of assets in excess of $2 billion.
THE ADMINISTRATOR
WPG also acts as the fund's administrator. As administrator, WPG provides
personnel for supervisory, administrative, accounting and clerical functions;
oversees the performance of administrative and professional services to the fund
by others; provides office facilities, furnishings and office equipment; and
prepares, but does not pay for, reports to shareholders, the SEC and other
regulatory authorities. For its administrative services, WPG does not currently
receive any compensation.
EXPENSE CAP
WPG has voluntarily agreed to limit the fund's total operating expenses
(excluding extraordinary expenses) to 0.42% of the fund's average daily net
assets. WPG modify or discontinue the expense limitation at its discretion.
YEAR 2000 CHALLENGE
Many computer software systems in use today cannot properly process date-related
information after December 31, 1999. This failure, commonly referred to as the
"Year 2000 Issue," could adversely affect the handling of securities trades,
pricing and account servicing for the fund. In addition, the cost of addressing
Year 2000 compliance may adversely affect the issuers of individual securities
held by the fund. The adviser has made Year 2000 compliance a high priority and
is taking steps that it believes are reasonably designed to address the Year
2000 Issue for its computer systems. The adviser has also been informed that
comparable steps are being taken by the fund's other major service providers.
The adviser does not currently anticipate that the Year 2000 Issue will have a
material impact on its ability to continue to fulfill its duties as investment
adviser. However, non-compliant computer systems in general could have a
material adverse effect on the fund's business, operations or financial
condition. Additionally, the fund's performance could be hurt if a computer
system failure at a company or governmental unit affects the prices of portfolio
securities.
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HOW TO BUY SHARES
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IN GENERAL
Shares of the fund may be purchased only by investment advisory clients of
Reinhardt Werba Bowen Advisory Services ("RWB"). RWB is a registered investment
adviser organized in 1975 and located in San Jose, California.
Because shares of the fund are available only to clients of RWB, you must have
an account agreement with RWB before you may invest in the fund. Please call RWB
at 1-800-366-7266 Extension 124 for more information regarding the services
provided by RWB, including how to purchase fund shares.
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. 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 fund.
INVESTMENT MINIMUM
The fund currently does not have any minimum investment or account requirements,
although it may establish minimum account balance requirements in the future.
THROUGH AN AUTHORIZED
FINANCIAL INSTITUTION
Financial institutions approved by RWB are authorized to hold your fund shares
as well as shares of other mutual funds and your other investment securities.
Approved financial institutions include certain banks and brokerage firms. In
consideration of these services, financial institutions may charge you a fee no
part of which will be received by the fund or WPG.
SHARE PRICE
Purchase orders for fund shares are priced at the fund's net asset value next
determined after receipt of the purchase order by an authorized financial
institution, provided that the order has been received by the fund (or its
agents) prior to its close of business. Your financial institution is
responsible for timely transmittal of your purchase order to RWB or other fund
agent. See "How Shares of the Fund are Valued."
SHARE CERTIFICATES
The fund will not issue share certificates.
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<PAGE>
HOW TO REDEEM SHARES
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IN GENERAL
As with purchases of fund shares, redemptions will be effected by the fund based
on instructions it receives from RWB.
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 of your redemption request in proper form by the fund or its
agents. 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 fund's transfer agent charges a
fee for wire transfers.
You cannot redeem shares by facsimile. In addition, the fund cannot accept
requests which specify a particular date or price for redemption or which
specify any other special conditions.
BY MAIL
You may submit a written redemption request in proper form directly to the fund,
Attention RWB/WPG U.S. Large Stock Fund, One New York Plaza, New York, New York
10004. No charge is imposed on any redemption request processed directly by the
fund.
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 1-800-223-3332 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. See "More
about Telephone Redemptions" below.
THROUGH AN
AUTHORIZED
FINANCIAL
INSTITUTION
You may transmit your redemption request to the fund through an authorized
financial institution. Financial institutions may charge you a fee for this
service no part of which will be received by the fund or WPG.
PROPER FORM
To be in proper form, your redemption request must include:
-- Name of the fund
-- Account number
-- Dollar amount or number of shares to redeem
-- Signature of each owner exactly as account is registered
-- Signature guarantees, if your proceeds are being sent to an address or
person other than those listed on the account registration
-- Any other documentation required by the fund's 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 o bank wire.
SIGNATURE GUARANTEES
You can obtain a signature guarantee from most banks, dealers, brokers, credit
unions and federal savings and loans, but not from a notary public.
IN KIND REDEMPTIONS
Although the fund generally intends to satisfy redemption requests in cash, it
may, under certain circumstances, satisfy redemptions requests in king by
delivery portfolio securities. See the SAI.
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<PAGE>
OTHER SHAREHOLDER SERVICE INFORMATION AND SHARE PRICE
- --------------------------------------------------------------------------------
SHAREHOLDER SERVICING AGENT
RWB services shareholders' accounts with the fund. These shareholder services
include but are not limited to: establishing and maintaining a toll-free
telephone number for investors to use in obtaining current account information;
and providing to investors upon request, information concerning the operation of
the fund and their investment in the fund. RWB and 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.
In consideration of these services, the fund pays to RWB a fee equal, on an
annual basis, to 0.10% of the fund's average daily net assets.
SHAREHOLDER INQUIRIES
If you have any questions about the fund or the shareholder services described
in this prospectus, please call RWB at 1-800-366-7266 extension 124. Written
inquiries should be sent to RWB at its address shown on the front cover of this
prospectus.
SHAREHOLDER 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 the 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, shortly after year-end, tax
information abou your account with the fund.
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 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 net asset value (NAV) of the fund's shares is determined by adding
the value of all securities, cash and other assets of the fund, subtracting
liabilities (including accrued expenses and dividends payable), and dividing the
result by the total number of outstanding shares in the fund.
For purposes of calculating the 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. If the
fund uses fair value to price securities, it may value 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.
MORE ABOUT TELEPHONE REDEMPTIONS
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 redemption request is genuine.
The fund may refuse any request made by telephone and may limit the amount
involved or the number of telephone requests made by any shareholder. (Such
exchange requests may, however, be made in writing in accordance with procedures
described in "How to Redeem Shares.") During periods of extreme economic
conditions or market changes, requests by telephone may be difficult to make due
to the heavy volume. During such times, please consider placing your order by
mail.
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<PAGE>
DIVIDENDS, DISTRIBUTIONS AND TAXES
- --------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS
The fund normally pays dividends and distributes capital gains, if any,
annually. Such distributions are primarily from capital gains. The fund may pay
additional distributions and dividends at other times if necessary to avoid
federal tax. Unless you instruct otherwise, capital gain distributions and
dividends are reinvested in additional fund shares. The fund's distributions and
dividends, whether received in cash or reinvested in additional fund shares, are
subject to federal income tax. You do no pay a sales charge on reinvested
distributions or dividends.
TAXES
In general, distributions and share transactions are taxed as follows:
Transaction Federal Income Tax Status
Redemption 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
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, RWB 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 your correct taxpayer
identification number and any required certifications, you may be subject to
back-up withholding of 31% of your distributions, dividends, and redemption
proceeds. Because each shareholder's circumstances are different and special tax
rules may apply, you should consult your tax adviser about your investment in
the fund.
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<PAGE>
FINANCIAL HIGHLIGHTS
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THE FINANCIAL HIGHLIGHTS TABLE IS INTENDED TO HELP YOU UNDERSTAND THE
PERFORMANCE OF THE FUND FOR THE PAST FIVE YEARS. CERTAIN INFORMATION REFLECTS
FINANCIAL RESULTS FOR A SINGLE SHARE. TOTAL RETURNS REPRESENT THE RATE THAT A
SHAREHOLDER WOULD HAVE EARNED (OR LOST) ON A FUND SHARE ASSUMING REINVESTMENT OF
ALL DIVIDENDS AND DISTRIBUTIONS. THE INFORMATION IN THE FOLLOWING TABLE WAS
AUDITED BY KPMG LLP, INDEPENDENT AUDITORS, WHOSE REPORT, ALONG WITH THE FUND'S
FINANCIAL STATEMENTS, ARE INCLUDED IN THE ANNUAL REPORT (AVAILABLE UPON
REQUEST).
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS (FOR THE YEARS ENDED DECEMBER 31,)
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
Per Share Data:
<S> <C> <C> <C> <C> <C>
Net Asset Value at Beginning of Year .......... $ 7.43 $ 6.65 $ 6.39 $ 5.05 $ 5.16
-------- -------- -------- -------- --------
Net Investment Income ................. 0.14 0.12 0.13 0.13 0.14
Net Realized and Unrealized Gain/(Loss)
on Investments ................ 1.65 1.93 1.12 1.58 (0.14)
-------- -------- -------- -------- --------
Total Income from Operations .......................... 1.79 2.05 1.25 1.71 0.00
-------- -------- -------- -------- --------
Dividends from Net Investment Income .. (0.13) (0.11) (0.12) (0.13) (0.11)
Distributions from Capital Gains ...... (1.46) (1.16) (0.87) (0.24) 0.00
-------- -------- -------- -------- --------
Total Distributions ........................... (1.59) (1.27) (0.99) (0.37) (0.11)
-------- -------- -------- -------- --------
Net Asset Value End of Year ................... $ 7.63 $ 7.43 $ 6.65 $ 6.39 $ 5.05
======== ======== ======== ======== ========
Total Return .......................................... 24.51% 30.83% 19.33% 33.81% 0.06%
Net Assets at End of Period (000's) ................... $186,896 $212,951 $200,226 $174,161 $106,850
Ratios:
Ratio of Expenses to Average Net Assets (a) ... 0.42% 0.51% 0.59% 0.69% 0.75%
Ratio of Net Investment Income to Average
Net Assets (a) ........................ 1.21% 1.46% 1.86% 2.26% 2.65%
Portfolio Turnover Rate ....................... 24.2% 54.2% 59.6% 27.1% 36.2%
<FN>
(a) The adviser agreed not to impose its full fee from inception through
December 31, 1998. Had the advisor not so agreed, the ratio of expenses and
net investment income to average net assets would have been 0.79% and 2.61%
for the year ended 12/31/94, 0.74% and 2.21% for the year ended 12/31/95,
0.62% and 1.83% for the year ended 12/31/96, 0.53% and 1.44% for the year
ended 12/31/97, and 0.53% and 1.10% for the year ended 12/31/98,
respectively. The custody fee earnings credit had an effect of less than
0.01% per share on the above ratios.
</FN>
</TABLE>
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<PAGE>
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RWB/WPG U.S. LARGE STOCK FUND
- --------------------------------------------------------------------------------
FOR MORE INFORMATION
If you want more information about the 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 811-7514
- --------------------------------------------------------------------------------
HOW TO OBTAIN THIS INFORMATION
You may get free copies of the fund's shareholder reports and the SAI by
contacting RWB at:
Address: 1190 Saratoga Avenue
Suite 200
San Jose, California 95129
Telephone: 1-800-366-7266 Extension 124
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 fee by writing to or calling:
Address: Public Reference Room
Securities and Exchange Commission
Washington, D.C. 20549-6009
Telephone: 1-800-733-0330
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.
<PAGE>
RWB/WPG U.S. LARGE STOCK FUND
A No-Load, Diversified
Mutual Fund
--------------------------------------------------
STATEMENT OF ADDITIONAL
INFORMATION
--------------------------------------------------
May 1, 1999
This Statement of Additional Information is not a prospectus and should be read
in conjunction with the Prospectus of the RWB/ WPG U.S. Large Stock Fund dated
May 1, 1999, as amended and/or supplemented from time to time (the
"Prospectus"), a copy of which may be obtained without charge by writing to
RWB/WPG U.S. Large Stock Fund, 1190 Saratoga Avenue, Suite 200, San Jose,
California 95129 or by calling 1-(800)-366-7266 -- EXT. 124.
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 Fund's financial statements, which are included in the 1998 annual reports
to shareholders, are incorporated by reference into this SAI.
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.
- 1 -
<PAGE>
TABLE OF CONTENTS
PAGE
INVESTMENT OBJECTIVE AND POLICIES............................................. 3
INVESTMENT RESTRICTIONS....................................................... 8
INVESTMENT ADVISER, ADMINISTRATOR AND
PRINCIPAL UNDERWRITER ......................................................10
TRUSTEES AND OFFICERS.........................................................14
HOW TO PURCHASE SHARES........................................................18
REDEMPTION OF FUND SHARES.....................................................19
SHAREHOLDER SERVICES..........................................................19
NET ASSET VALUE...............................................................20
DIVIDENDS, DISTRIBUTIONS AND TAX STATUS.......................................20
PORTFOLIO BROKERAGE...........................................................23
PORTFOLIO TURNOVER............................................................27
ORGANIZATION .................................................................27
PERFORMANCE INFORMATION.......................................................28
PERFORMANCE SUMMARY...........................................................28
CUSTODIAN.....................................................................29
TRANSFER AGENT................................................................29
INDEPENDENT AUDITORS .........................................................29
FINANCIAL STATEMENTS..........................................................29
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INVESTMENT OBJECTIVE AND POLICIES
RWB/WPG U.S. Large Stock Fund (the "Fund") is a registered no-load,
diversified open-end management investment company organized as a Delaware
business trust on February 16, 1993. On May 1, 1996, the Fund changed its name
from "U.S. Large Stock Fund" to "RWB/WPG U.S.
Large Stock Fund."
The investment objective, policies and restrictions of the Fund may be
changed or altered by the Board of Trustees of the Fund (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 described in
the Fund's Prospectus. This Statement of Additional Information should be read
in conjunction with the Prospectus.
The Fund offers investment advisory clients of Reinhardt Werba Bowen
Advisory Services, 1190 Saratoga Avenue, Suite 200, San Jose California 95129
("RWB"), a registered investment adviser, the opportunity to participate in a
portfolio of securities primarily of large market capitalization U.S.
companies.
FUTURES TRANSACTIONS
The Fund may enter into transactions for the purchase or sale of
futures contracts based on the S&P 500 Index which are traded on exchanges that
are licensed and regulated by the Commodity Futures Trading Commission ("CFTC").
FUTURES CONTRACTS ON INDICES. Futures contracts on indices do not
require the physical delivery of securities, but merely provide for profits and
losses resulting from changes in the market value of a contract to be credited
or debited at the close of each trading day to the respective accounts of the
parties to the contract. On the contract's expiration date a final cash
settlement occurs and the futures positions are simply closed out. Changes in
the market value of a particular futures contract reflect changes in the value
or level of the index on which the futures contract is based.
HEDGING STRATEGIES. Hedging by use of futures contracts seeks to
establish with more certainty than would otherwise be possible the value of or
effective rate of return on portfolio securities or securities that the Fund
proposes to acquire. The Fund may, for example, take a "short" position in the
futures market by selling futures contracts in order to hedge against an
anticipated decline in securities prices or rise in interest rates that would
adversely affect the value of the Fund's portfolio securities. If, in the
opinion of Weiss, Peck & Greer, L.L.C., the Fund's investment adviser (the
"Adviser" or "WPG"), there is a sufficient degree of correlation between price
trends for the Fund's portfolio securities and futures contracts based on the
S&P 500 Index, the Fund may enter into futures contracts on the S&P 500 Index as
part of its hedging strategy. 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 other occasions, the
Fund may take a "long" position by purchasing such futures contracts. This would
be done, for example, when the Fund anticipates the purchase of particular
securities when it has the necessary cash, but expects the price or rate of
return then available in the securities market to be less favorable than prices
or rates that are currently available in the futures markets.
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LIMITATIONS AND RISKS OF FUTURES TRANSACTIONS. The Fund may engage in
futures transactions for hedging purposes in accordance with CFTC regulations or
to seek to increase total return to the extent permitted by such regulations. In
utilizing futures for hedging the Fund will determine that the price
fluctuations in the futures contracts used for hedging purposes are
substantially related to price fluctuations in securities held by the Fund or
which it expects to purchase. Except as stated below, the Fund's futures
transactions will be entered into for traditional hedging purposes--that is,
futures contracts will be sold to protect against a decline in the price of
securities that the Fund owns, or futures contracts will be purchased to protect
the Fund against an increase in the price of securities it intends to purchase.
In instances involving the purchase of futures contracts by the Fund, an amount
of cash and cash equivalents, equal to the market value of the futures contracts
and options (less any related margin deposits), will be segregated on the Fund's
records or deposited in a segregated account with the Fund's custodian to
collateralize the position, thereby insuring that the use of such futures
contracts and options is unleveraged. As evidence of this hedging intent, the
Fund expects that on 75% or more of the occasions on which it takes a long
futures position (purchases futures contracts) the Fund will have purchased, or
will be in the process of purchasing, equivalent amounts of related securities
in the securities market at the time when the futures 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 without the corresponding
purchase of securities. 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 sum of the amounts of initial margin deposits on
the Fund's existing futures contracts and premiums paid for options on futures
entered into for the purpose of seeking to increase total return (net of the
amount the positions were "in the money" at the time of purchase) would not
exceed 5% of the market value of the Fund's net assets, after taking into
account unrealized gains and losses on such positions.
The use of futures contracts entails certain risks, including, but not
limited to the following: no assurance that futures transactions can be offset
at favorable prices; 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 initial face
amount of the futures contracts themselves. The use of futures contracts
requires special skills in addition to those needed to select portfolio
securities. If the expectations of the adviser regarding movements in securities
prices are incorrect, the Fund may have experienced better investment results
without the use of futures contracts.
The Fund will incur brokerage fees in connection with its futures
transactions, and it will be required to deposit and maintain funds with its
brokers as margin to guarantee performance of its futures obligations. In
addition, while futures contracts may be traded to reduce certain risks, futures
trading itself entails certain other risks. Thus, while the Fund may benefit
from the use of such contracts, unanticipated changes in stock market prices may
result in a poorer overall performance for
the Fund than if it had not entered into any futures contracts. Moreover, in the
event of an imperfect correlation between the futures contract and the 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.
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<PAGE>
The Fund will be required, in connection with transactions in futures
contracts, to make margin deposits, which will be held by the Fund's custodian
for the benefit of the merchant through whom the Fund engages in such futures
and options transactions. In the case of futures contracts thereon requiring the
Fund to purchase securities, the Fund must segregate cash or liquid securities
in an account maintained by the custodian to cover such contracts. Cash or
liquid securities required to be in a segregated account will be marked to
market daily.
To compensate for the imperfect correlation of movements in the price
of securities being hedged and movements in the price of futures contracts, the
Fund may buy or sell futures contracts in a greater dollar amount than the
dollar amount of the securities being hedged if the historical volatility of the
prices of such securities has been greater than the historical volatility of the
futures contracts. Conversely, the Fund may buy or sell fewer futures contracts
if the historical volatility of the price of the securities being hedged is less
than the historical volatility of the futures contracts.
Prior to exercise or expiration, an option position can be terminated only
by entering into a closing purchase or sale transaction. This requires a
secondary market on an exchange for call or put options of the same series.
Positions in futures may be closed out only on an exchange which provides a
secondary market for such futures. The Fund will enter into futures positions
only if there appears to be a liquid secondary market for such futures. However,
there can be no assurance that a liquid secondary market will exist for any
particular futures contract at any specific time. Thus, it may not be possible
to close a futures position. In the event of adverse price movements, the Fund
would continue to be required to make daily cash payments of maintenance margin
for futures contracts. The Fund may have to sell portfolio securities at a time
when it may be disadvantageous to do so if it had insufficient cash to meet the
daily maintenance margin requirements. In addition, the Fund may be required to
take or make delivery of the instruments underlying interest rate futures
contracts it holds. The inability to close futures positions also could have an
adverse impact on the Fund's ability to effectively hedge its portfolio.
DEPOSITORY RECEIPTS
With respect to foreign securities included in the S&P 500 Index, the
Fund may purchase American Depository Receipts. 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. ADRs are traded on domestic exchanges or in the U.S.
over-the-counter (OTC) market and, generally, are in registered 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.
However, the Fund intends to invest in ADRs that are issued in a program
sponsored by the issuer of the underlying securities.
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REPURCHASE AGREEMENTS
The Fund may enter into repurchase agreements in order to generate
additional current income. A repurchase agreement is an agreement under which
the Fund acquires a money market instrument, generally a United States
Government obligation, from a financial institution subject to resale to the
financial institution at an agreed upon price and date. Such resale price
reflects an agreed upon interest rate effective for the period of time the
instrument 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 prices 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 instrument.
Repurchase agreements usually are for short periods, such as one week or less,
but may be for longer periods. Repurchase agreements of more than one week's
duration are subject to the Fund's limitation on investments in illiquid
securities.
The use of repurchase agreements involves certain risks. For example,
if the other party to the agreement defaults on its obligation to repurchase the
underlying security at a time when the value of the security has declined, the
Fund may incur a loss upon disposition of the security. If the other party to
the agreement 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 the Fund and therefore subject to sale by the 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 other party
to the agreement. While the Fund's management acknowledges these risks, it is
expected that they can be controlled through careful monitoring procedures. 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.
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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OTHER INVESTMENT COMPANIES
The Fund may, subject to authorization by its Board of Trustees, 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 objective, policies and restrictions. The Board does not intend to
authorize investing in this manner at this time.
The Fund may invest up to 10% of its total assets in the securities of
other investment companies not affiliated with WPG. 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.
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.
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.
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<PAGE>
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.
When the Fund purchases securities on a when-issued or forward
commitment basis, the Fund or its 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.
INVESTMENT RESTRICTIONS
The Fund has adopted the following investment restrictions, which may
not be changed without approval of the holders of a majority of its outstanding
shares (a term which in this Statement of Additional Information means the
lesser of (i) 67% or more of the shares present at a meeting if the holders of
more than 50% of the outstanding shares of the Fund are present or represented
by proxy or (ii) more than 50% of the outstanding shares of the Fund). So long
as these fundamental restrictions are in effect, the Fund may not:
1. Purchase or sell real estate including securities of real estate
limited partnerships, but the Fund may invest in securities of companies engaged
in the real estate business.
2. Issue senior securities except as permitted by the Investment
Company Act of 1940, as amended, and except that the Fund may issue shares of
its beneficial interest in multiple classes or series, or borrow amounts in
excess of 33% of its total assets (including the amount borrowed) and then only
as a temporary measure for extraordinary or emergency purposes.
3. Make loans, except that this restriction shall not prohibit the
making of securities loans, the purchase of or investment in bank certificates
of deposits or bankers acceptances, the purchase and holding of all or a portion
of an issue of publicly distributed debt securities, or the entry into
repurchase agreements.
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4. Engage in the business of underwriting securities of others, except
to the extent that the Fund may be deemed to be an underwriter under the
Securities Act of 1933, as amended, when it purchases or sells portfolio
securities in accordance with its investment objective and policies; provided,
however, that the Fund may invest all or part of its investable assets in an
open-end investment company with substantially the same investment objective,
policies, and restrictions as the Fund.
5. Purchase securities, excluding U.S. Government securities, of one or
more issuers conducting their principal business activity in the same industry,
if immediately after such purchase the value of its investments in such industry
would exceed 25% of its total assets; provided, however, that the Fund may
invest all or part of its investable assets in an open-end investment company
with substantially the same investment objective, policies, and restrictions as
the Fund.
6. Invest in commodities or in commodities contracts except that the
Fund may purchase and sell financial futures contracts on the S&P 500 and
related options, and the Fund may purchase securities on a when-issued, stand-by
or forward commitment basis.
7. With respect to 75% of its total assets, purchase any security, if
as a result: (i) more than 5% of its total assets would be invested in
securities of any one issuer (excluding securities issued or guaranteed by the
U.S. Government, its agencies or instrumentalities), or (ii) the Fund would own
more than 10% of the voting securities of any issuer; provided, however, that
the Fund may invest all or part of its investable assets in an open-end
investment company with substantially the same investment objective, policies,
and restrictions as the Fund.
In addition to the fundamental policies mentioned above, the Board has
adopted the following non-fundamental policies which may be changed or amended
by action of the Board without approval of shareholders. So long as these
non-fundamental restrictions are in effect, the Fund may not:
(a) Invest in the securities of an issuer for the purpose of exercising
control or management, but it may do so where it is deemed advisable to protect
or enhance the value of an existing investment.
(b) Purchase securities of any other investment company except as
permitted by the Investment Company Act.
(c) Purchase securities on margin, except any short-term credits which
may be necessary for the clearance of transactions and the initial or
maintenance margin in connection with options and futures contracts and related
options.
(d) Invest more than 15% of its net assets in securities which are
illiquid.
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(e) Purchase additional securities if the Fund's borrowings exceed 5%
of its net assets.
All percentage limitations (except for limitations on borrowing) apply
only at the time a transaction is entered into. Accordingly, if a percentage
restriction is adhered to at the time of investment, a later increase or
decrease in the percentage which results from a relative change in values or
from a change in the Fund's net assets will not be treated as a violation.
INVESTMENT ADVISER AND ADMINISTRATOR
INVESTMENT ADVISER
As stated in the Prospectus, Weiss, Peck & Greer L.L.C., One New York
Plaza, New York, New York 10004 ("WPG" or the "Adviser"), serves as investment
adviser to the Fund.
On or about September 9, 1998, Robeco Groep N.V., a Dutch public
limited liability company ("Robeco"), acquired all of the outstanding equity
interests of the Adviser from its prior owners (the "Acquisition"). As a result
of the Acquisition, the Adviser is an indirect, wholly-owned subsidiary of
Robeco. Robeco is a Dutch corporation that was formed to be 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 funds.
The Robeco Group is a fund management group. Robeco Nederland advises
and manages investment funds, some of whose shares are traded primarily on the
Amsterdam Stock Exchange, which funds include (1) Robeco N.V., (2) Rolinco N.V.,
(3) Rorento N.V., (4) RG Rente Mixfund N.V., (5) RG Obligarie 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 funds. 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 $95 billion in assets under management
at December 31, 1998, approximately $19 billion was managed in the U.S.
In connection with the Acquisition, the Board of Trustees of the Fund,
including a majority of the Trustees who are not "interested persons" (as such
term is defined in the 1940 Act) of the Fund or the Adviser (the "Independent
Trustees"), approved the Fund's current investment advisory agreement (the
"Agreement") at a meeting held on May 19, 1998. The Agreement was approved by a
"majority of the outstanding voting securities" (as defined in the 1940 Act) of
the Fund at a special meeting of shareholders held on July 29, 1998, and became
effective upon the consummation of the Acquisition. Except for the dates of
execution, effectiveness and termination, the terms of the Agreement are
substantially identical to the terms of the investment advisory agreement which
was in effect immediately prior to the Acquisition.
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<PAGE>
Pursuant to the Agreement, the Adviser supervises and assists in the
management of the assets of the Fund and furnishes the Fund with research,
statistical, advisory and managerial services. The Adviser also pays the
compensation of all Trustees who are "interested persons" (as defined in the
Investment Company Act) of the Adviser except for Mr. Alan Werba, who is
compensated by Reinhardt Werba Bowen.
The Fund pays administration fees, taxes, brokerage fees and
commissions on portfolio transactions, interest, legal and accounting fees,
organizational expenses of the Fund, fees of custodians and transfer agents,
costs of share certificates, costs in connection with annual or special meetings
of shareholders, including the preparation and distribution of proxy materials,
costs in connection with the preparation and distribution of periodic reports to
shareholders, insurance premiums, expenses of an extraordinary and nonrecurring
nature, the compensation of non-executive employees of the Fund and fees of
Trustees who are not "interested persons" of the Adviser.
For its investment advisory services under the Agreement, the Adviser
is entitled to receive a monthly fee equal on an annual basis to a percentage of
the Fund's average daily net assets as follows: 0.26% up to $500 million, 0.24%
from $500 million to $1 billion, 0.22% from $1 billion to $2 billion, and 0.20%
thereafter. For the fiscal years ended December 31, 1996, 1997 and 1998, the
Fund paid under its prior advisory agreement with the Adviser advisory fees of
$545,737, $503,366 and $298,867, respectively, after the expense limitation. Had
the Adviser not voluntary agreed to limit the Fund's expenses, the Fund would
have paid the Adviser advisory fees of $547,177, $539,408 and $500,974,
respectively. Prior to April 1, 1996, the Fund paid an advisory fee equal on an
annual basis to a percentage of the Fund's average daily net assets as follows:
0.31% up to $200 million, 0.26% from $200 million to $500 million, 0.24% from
$500 million to $1 billion, 0.22% from $1 billion to $2 billion, and 0.20%
thereafter.
The advisory fee is accrued daily and will be prorated if the Adviser
shall not have acted as the Fund's investment adviser during any entire monthly
period. The Adviser has agreed to limit total fund operating expenses to certain
levels, as further described under "Management of the Fund" in the Fund's
Prospectus.
The Agreement provides that the Adviser 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 the Adviser, or upon investigation and research
made by any other individual, firm or corporation if such recommendation shall
have been made and such other individual, firm or corporation shall have been
selected with due care and in good faith, except for a loss resulting from
willful misfeasance, bad faith, or gross negligence in the performance by the
Adviser of its duties or by reason of the Adviser's reckless disregard of its
obligations and duties thereunder.
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<PAGE>
The 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 Fund and by a vote of the majority of the Independent Trustees
of the Fund. The Agreement's continuance after its initial two-year term must be
approved annually by a vote of the majority of the Trustees or by a vote of the
holders of a "majority of the outstanding voting securities" of the Fund, cast
in person at a meeting called for the purpose of voting on such approval. The
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, 1998, WPG had capital of approximately $[72]
million. WPG consists of 33 Managing Directors, one of whom is a member of the
NYSE and certain principals. WPG has approximately 250 full-time employees in
addition to its Managing Directors. As of December 31, 1998, WPG and its
affiliates had assets under management of approximately $[16] billion, primarily
for institutions and high net worth individuals.
Roger J. Weiss is a Senior Managing Director of WPG and Chairman of the
Board of Trustees of the Fund. Ronald M. Hoffner is a Managing Director of WPG
and Executive Vice President and Treasurer of the Fund. Joseph J. Reardon is a
Senior Vice President of WPG and Vice President and Secretary of the Fund. The
Managing Directors of WPG who serve on WPG's executive committee are Stephen H.
Weiss (Chairman), Roger J. Weiss, Constant Korthout, Phillip Greer, Ronald M.
Hoffner, Wesley W. Lang, Jr., Mitchell E. Cantor and Gil Cogan.
The person responsible for the day-to-day management of the Fund's
portfolio is Daniel J. Cardell. 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 addition to the Fund, the Adviser acts as the investment adviser to
each fund in the Weiss, Peck & Greer Group of Funds.
In the management of the Fund and its other accounts, the Adviser and
its subsidiaries allocate investment opportunities to all accounts for which
they are appropriate subject to the availability of cash in any particular
account and the final decision of the individual or individuals in charge of
such accounts. Where market supply is inadequate for a distribution to all such
accounts, securities are allocated on a pro rata basis. In some cases this
procedure may have an adverse effect on the price or volume of the security as
far as the Fund is 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."
ADMINISTRATOR
WPG, in its capacity of the Fund's administrator, performs
administrative, transfer agency related and shareholder relations services and
certain clerical and accounting services for the Fund (to the extent not
provided by other service providers) under an administration agreement dated May
19, 1993 (the "Administration Agreement"). More specifically, these obligations
include, subject to the general supervision of the Board, (a) providing
supervision of all aspects of the Fund's non-investment operations (the parties
-12-
<PAGE>
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 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 Securities and Exchange
Commission (the "SEC") and other regulatory authorities, (c) providing, to the
extent not provided pursuant to other agreements, the Fund with personnel to
perform such executive, administrative, accounting and clerical services as are
reasonably necessary to provide effective administration of the Fund, (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, to the
extent not provided pursuant to other agreements, 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 training).
For its services under the Administration Agreement, WPG currently does
not receive any compensation, although the Board may in the future decide to
compensate WPG for the provisions of administrative services.
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 WPG's employees
rendering legal services to the Fund); (vii) interest, insurance premiums, taxes
or governmental fees; (viii) the fees and expenses of the transfer agent of the
Fund; (ix) the cost of preparing stock certificates or any other expenses,
including, without limitation, clerical expenses of issue, redemption or
repurchase of shares of the Fund; (x) the expenses of and fees for registering
or qualifying shares of the Fund for sale and of maintaining the registration of
the Fund as a broker or a dealer; (xi) the fees and expenses of Trustees of the
Fund who are not affiliated with the Adviser or RWB; (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'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 extensive restrictions
on personal securities trading by personnel of WPG and its affiliates. These
restrictions include: pre-clearance of all personal securities transactions and
a prohibition of purchasing initial public offerings of securities. These
restrictions are a continuation of the basic principle that the interests of the
Fund and its shareholders come before those of WPG and its managing directors
and employees.
-13-
<PAGE>
PRINCIPAL UNDERWRITER
First Data Distributors, Inc., P.O. Box 60448, King of Prussia, PA
19406-0448 (the "Underwriter") serves as the principal underwriter in connection
with the continuous offering of shares of the Fund pursuant to an Underwriting
Agreement 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 Independent 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 July 22, 1998. As the Fund's principal
underwriter, the Underwriter performs certain services related to the
distribution of shares of the Fund to the public.
The Underwriter bears all expenses in providing services under the
Underwriting Agreement. 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. The Fund
bears, among other things, the cost of registering its shares under federal,
state and foreign securities law.
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. The Trustees and officers of the Fund are as follows:
<TABLE>
<CAPTION>
NAME, ADDRESS AND POSITION(S) PRINCIPAL OCCUPATIONS DURING PAST
DATE OF BIRTH HELD FIVE YEARS
------------- ---- ----------
<S> <C> <C>
Roger J. Weiss* Chairman of the Senior Managing Director, WPG; Chairman
One New York Plaza Board and of the Board of all WPG Funds and
New York, NY 10004 Trustee Tomorrow Funds Retirement Trust;
President, Weiss, Peck & Greer International
4/29/39 Fund; Former Executive Vice President and
Director, WPG Advisers, Inc.; Former
Executive Vice President and Director,
Tudor Management Company
Raymond R. Herrmann, Jr.** Trustee Chairman of the Board, Sunbelt Beverage
654 Madison Avenue Corporation (distributor of wines and
Suite 1400 liquors); Former Vice Chairman and
New York, NY 10017 Director, McKesson Corporation (U.S.
distributor of drugs and health care products,
9/11/20 wine and spirits); Life Member, Board of
Overseers of Cornell Medical College;
Member of Board and Executive Committee,
Sky Ranch for Boys; Member, Evaluation
Advisory Board, Biotechnology Investments,
Ltd.; Trustee of all WPG Funds and
Tomorrow Funds Retirement Trust
-14-
<PAGE>
NAME, ADDRESS AND POSITION(S) PRINCIPAL OCCUPATIONS DURING PAST
DATE OF BIRTH HELD FIVE YEARS
------------- ---- ----------
Lawrence J. Israel** Trustee Private Investor; Director and Trustee of the
200 Broadway, Suite 249 Touro Infirmary; Member of the
New Orleans, LA 70018 Intercollegiate Athletics Committee of the
Administrators of the Tulane Educational
12/13/34 Fund; Trustee of all WPG Funds and
Tomorrow Funds Retirement Trust
Graham E. Jones** Trustee Senior Vice President, BGK Realty Inc.,
330 Garfield Street since 1995; Financial Manager, Practice
Suite 200 Management Systems (Medical Services
Santa Fe, NM 87501 Company); Director, the Malaysia Fund;
Director, twelve closed-end funds managed
1/31/33 by Morgan Stanley Asset Management;
Trustee, various investment companies
managed by Morgan Grenfell Capital
Management, Inc. and Morgan Grenfell
Investment Services, Ltd., since 1993;
Trustee of all WPG Funds and Tomorrow
Funds Retirement Trust
Paul Meek** Trustee Financial and Economic Consultant to
5837 Cove Landing Road foreign central banks under the auspices of
Burke, VA 22015 each of the Harvard Institute for
International Development, the
11/12/25 International Monetary Fund and the World
Bank; President, PM Consulting (financial
and economic consulting); Former
Consultant, Fischer, Francis, Trees & Watts
("FFTW") (fixed income investment
managers); Trustee, FFTW Funds; Former
Vice President and Monetary Adviser,
Federal Reserve Bank of New York; Trustee
of all WPG Funds
William B. Ross** Trustee Financial Consultant; Former Senior Vice
2733 E. Newton Avenue President, Mortgage Guaranty Insurance
Shorewood, WI 53211 Corporation (mortgage credit insurer);
Former Senior Vice President, MGIC
8/22/27 Investment Corporation (financial services
holding company); Trustee of all WPG
Funds
-15-
<PAGE>
NAME, ADDRESS AND POSITION(S) PRINCIPAL OCCUPATIONS DURING PAST
DATE OF BIRTH HELD FIVE YEARS
------------- ---- ----------
Robert A. Straniere** Trustee Member, New York State Assembly; Sole
182 Rose Avenue Proprietor, Straniere Law Firm; Director,
Staten Island, NY 10306 various Reich and Tang Funds; Trustee of all
WPG Funds
3/28/41
Alan Werba* Trustee Director, Reinhardt Werba Bowen Advisory
1190 Saratoga Avenue Services (investment adviser); Registered
Suite 200 Principal, Royal Alliance Inc. (broker-dealer)
San Jose, CA 95129 1991-1993; Registered Principal, Integrated
Resources Equity Corporation (broker-
6/5/49 dealer) 1988-1991
Ronald M. Hoffner* Executive Vice Managing Director, Weiss, Peck & Greer,
One New York Plaza President and L.L.C.; Executive Vice President
New York, NY 10004 Treasurer and Treasurer, of
all WPG Funds and Tomorrow Funds
10/6/50 Retirement Trust
Daniel Cardell* Vice President(6) Managing Director, Weiss, Peck & Greer,
One New York Plaza L.L.C.; Senior Vice President and Director
New York, NY 10004 of Equities for the Bank of America prior
thereto
7/31/57
Joseph J. Reardon* Vice President Senior Vice President, Mutual Fund
One New York Plaza and Secretary Operations, Weiss, Peck & Greer, L.L.C.
New York, NY 10004 since 1995 (Vice President since December,
1993); Manager, Mutual Fund Operations,
4/4/60 Weiss, Peck & Greer, L.L.C. from February,
1990 to December, 1993; Vice President of
all WPG Funds and Tomorrow Funds
Retirement Trust
Steven M. Pires Assistant Vice Assistant Manager, Mutual Fund Operations,
One New York Plaza President Weiss, Peck & Greer, L.L.C.; Assistant
New York, NY 10004 Vice President, Mutual Funds Administration,
Smith Barney Asset Management 1996-1999;
9/12/56 Senior Accountant, United Continental
Corp., 1992-1996.
-16-
<PAGE>
NAME, ADDRESS AND POSITION(S) PRINCIPAL OCCUPATIONS DURING PAST
DATE OF BIRTH HELD FIVE YEARS
------------- ---- ----------
Therese Hogan Assistant Manager, State Regulation, First Data
First Data Investor Secretary Investor Services Group, Inc. since June
Services Group 1994; Senior Legal Assistant, Palmer &
53 State Street Dodge prior thereto
Boston, MA 02109
2/27/62
<FN>
- ------------------
* "Interested Person" within the meaning of the Investment Company Act.
** Member of the Audit Committee and the Special Nominating Committee.
</FN>
</TABLE>
COMPENSATION OF TRUSTEES AND OFFICERS
The Fund pays no compensation to its Trustees affiliated with the
Adviser or RWB, or its officers. None of the Fund's Trustees or officers have
engaged in any financial transactions with the Fund or the Adviser (except that
certain Trustees and officers who are managing directors of the Adviser may,
from time to time, purchase and sell ownership interests in the Adviser).
The following table sets forth all compensation paid to the Fund's
Trustees as of the Fund's fiscal year ended December 31, 1998:
<TABLE>
<CAPTION>
PENSION OR TOTAL
AGGREGATE RETIREMENT BENEFITS COMPENSATION
COMPENSATION ACCRUED AS PART OF FROM FUND AND
NAME OF TRUSTEE FROM THE FUND FUND'S EXPENSES OTHER FUNDS IN COMPLEX*
- --------------- ------------- --------------- -----------------------
<S> <C> <C> <C>
Roger J. Weiss $0 $0 $0
Alan Werba 0 0 0
Raymond R. Herrmann, Jr. $500 0 $29,000
Lawrence J. Israel $500 0 $29,000
Graham E. Jones $500 0 $23,375
Paul Meek $500 0 $21,500
William B. Ross $500 0 $21,500
Harvey E. Sampson** $500 0 $19,125
Robert A. Straniere $500 0 21,500
<FN>
- -----------------------
* As of December 31, 1998, there were 12 mutual funds in the WPG fund
complex that publicly offer their shares. ** Effective April 23, 1998,
Mr. Sampson was no longer a Trustee of the Fund.
</FN>
</TABLE>
-17-
<PAGE>
CERTAIN SHAREHOLDERS
As of February 28, 1999, no person within the knowledge of management
of the Fund or RWB owns of record or beneficially 5% or more of the outstanding
shares of the Fund, except that RWB held an aggregate of 99% of the shares of
the Fund in accounts of clients with respect to which RWB exercises investment
discretion and has the power to vote. RWB disclaims beneficial ownership of all
of such shares. As of such date, the officers and Trustees of the Fund as a
group owned, directly or indirectly, less than 1% of the shares of the Fund.
HOW TO PURCHASE SHARES
SHARES OF THE FUND MAY BE PURCHASED ONLY BY CLIENTS OF RWB.
Clients of RWB pay an annual asset allocation fee to RWB at the rate of
2% (or less on larger accounts) of the average monthly net assets under
management by RWB, including assets invested in the Fund. Financial institutions
utilized by RWB clients also charge certain service and transaction fees for
serving as record holders of shares of the Fund and other investments selected
by RWB for its clients. These fees, no part of which is received by the Fund or
the Adviser, are paid by RWB clients in addition to the expenses of the Fund.
The Fund is one of two mutual funds utilized by RWB to represent the Large Cap
U.S. Stocks class of assets.
For additional information regarding purchases of shares of the Fund,
see the Fund's 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.
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 may 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.
-18-
<PAGE>
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: (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.
REDEMPTION OF FUND SHARES
The Fund will redeem shares at the net asset value of such shares next
determined after receipt of the redemption order by the applicable financial
institution, provided that such order is transmitted to the Fund (or its agents)
by its close of business. 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 request for redemption in proper form is received
by the Fund (or its agents). Redemptions are taxable transactions for
shareholders who are subject to tax.
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 Investment Company 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 Board deems fair and reasonable.
Payment for redeemed shares normally will be made after receipt from
the applicable financial institution of a request for redemption in proper form
within the time periods described in the Prospectus. Such payment may be
postponed, and the right of redemption suspended during any period when: (a)
trading on the 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.
For additional information concerning Redemptions, see the Prospectus.
SHAREHOLDER SERVICES
RWB provides account servicing functions for the Fund. These services
include but are not limited to: establishing and maintaining a toll-free
telephone number for investors to use in obtaining current account information;
providing to investors quarterly reports with respect to the Fund's performance;
and providing to investors upon request information concerning the operation of
the Fund and their investment in the Fund. In consideration of these services,
the Fund pays to RWB a fee equal, on an annual basis, to 0.10% of the Fund's
average daily net assets. For the year ended December 31, 1998, the fee was paid
in the amount of $192,682. Mr. Alan Werba, a Trustee of the Fund, is a
shareholder and Director of RWB.
-19-
<PAGE>
NET ASSET VALUE
The net asset value of a share of the Fund is determined once daily,
Monday through Friday on each day the NYSE is open for regular trading (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 by the Fund) in
which there is a sufficient degree of trading in the Fund's portfolio securities
to affect materially the Fund's net assets as of the close of regular trading on
the NYSE (normally 4:00 P.M., New York City time). The NYSE is normally closed
on the following national holidays: New Year's Day, Dr. Martin Luther King, Jr.
Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day. Net asset value is determined by dividing
the value of the Fund's securities, cash and other assets (including dividends
accrued but not collected) less all 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. In making such
determination, securities listed or admitted to trading on a national securities
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. Unlisted
securities 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
Valuation Committee as authorized by the Board.
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 applicable financial
institution prior to the close of trading of the NYSE are confirmed at the
offering price effective at the close of the NYSE on that day provided that the
order is transmitted to the Fund (or its agents) by its close of business, while
orders received subsequent to such time will be confirmed at the offering price
effective at the close of the NYSE on the next day on which the net asset value
is calculated.
DIVIDENDS, DISTRIBUTIONS AND TAX STATUS
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
for the calendar year and 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.
A portion of the Fund's dividends 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. For this purpose, the Fund's holding periods for
-20-
<PAGE>
such shares may be reduced below the required minimum by certain futures
contracts or other positions that diminish its risk of loss with respect to such
shares. 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.
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
constitute extraordinary dividends, such shareholders' basis in their Fund
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.
Net investment income is the Fund's investment income less its
expenses. Dividends from 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 any 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 distributions are paid after taking into account, and reducing
the distributions to the extent of, any capital loss carryforward of the Fund.
Disclose amount(s) and expiration date(s) of any capital loss carryforwards as
of 12/31/98. 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. 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 capital gains as
long-term 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.
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 for each taxable year its net investment income and net
realized capital gains in accordance with the timing and other requirements
-21-
<PAGE>
of the Code. The Fund intends to qualify and be treated as a regulated
investment company for each taxable year. Qualification 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
net investment income, certain net realized foreign currency gains and the
excess of net short-term capital gain over net long-term capital loss earned in
such year and any other net income (except for the excess, if any, of net
long-term capital gain over net short-term capital loss, which need not be
distributed in order for the Fund to qualify as a regulated investment company
but is taxed to the Fund if it is not distributed); and (c) the Fund diversify
its assets so that, at the close of each quarter of its taxable year, (i) at
least 50% of the fair market value of its total (gross) assets is comprised of
cash, cash items, U.S. Government securities, securities of other regulated
investment companies and other securities, with 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.
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
purchase price to the shareholder, they will be subject to Federal income tax as
described above. 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. 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 if they had elected to receive cash.
Futures contracts entered into by the Fund will generally be governed
by Section 1256 of the Code. Absent a tax election to the contrary, gain or loss
attributable to the delivery under or closing out of any such position 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 that day), with any resulting gain or loss
recognized as 60% long-term and 40% short-term capital gain or loss. Under
certain circumstances, the tax straddle rules applicable to offsetting positions
in personal property may cause an adjustment in the holding period of the
underlying security or a substantially identical security in the Fund's
portfolio, or, in conjunction with rules of Section 1256, otherwise affect the
character or timing of the Fund's income, gain or loss and hence of its
distributions to shareholders.
All or a portion of a loss realized upon the redemption or other
disposition of Fund shares may be disallowed under "wash sale" rules to the
extent shares of the Fund are purchased (including shares acquired by means of
reinvested dividends) within a 61-day period beginning 30 days before and ending
30 days after such redemption or other disposition. Any loss realized upon the
-22-
<PAGE>
sale, redemption or other disposition of shares with a tax holding period of six
months or less will be treated as a long-term capital loss to the extent of any
capital gain dividend with respect to such shares. Exchanges are treated as
redemptions for Federal tax purposes. Shareholders should consult their own tax
advisers regarding their particular circumstances to determine whether a
disposition of Fund shares is properly treated as a sale for tax purposes, as is
assumed in the foregoing discussion. 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 advisers for more information.
The Fund may be required to pay state taxes in a state that has
jurisdiction to tax it, except to the extent an exemption may be available for
an investment company like the Fund, but the Fund does not anticipate that its
state tax liability will be substantial.
The foregoing discussion of U.S. federal income tax 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 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-8 , Form W-8BEN or other authorized withholding
certificate is on file, to 31% back-up 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 Statement of Additional Information. Investors should consult their own tax
advisers with respect to the application of the provisions of tax law described
in this statement of additional information and about the possible application
of state, local or foreign taxation in light of their particular tax situations.
PORTFOLIO BROKERAGE
It is the general policy of WPG not to employ any broker in the
purchase or sale of securities for the Fund's portfolio unless WPG believes that
such broker will obtain the best execution 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. Subject to the foregoing, where transactions are
effected on securities exchanges, the Fund employs WPG as principal broker.
Where transactions are effected in the over-the-counter market or a third
market, the Fund deals with the primary market makers unless a more favorable
result is obtainable elsewhere.
The commission rate on all exchange orders is subject to negotiation.
Section 17(e) of the Investment Company 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. Rule 17e-1 under the Investment Company Act stipulates
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<PAGE>
that a commission, fee or other remuneration does not exceed the usual and
customary broker's commission if it 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 Trustees who are not
"interested persons" of the Fund or WPG, to adopt procedures reasonably designed
to provide that the commission paid is consistent with the above standard and
determine at least quarterly that transactions have been effected in compliance
with those procedures. The Board, including a majority of the Independent
Trustees, has adopted procedures designed to comply with the requirements of
Rule 17e-1.
WPG acts as broker for the Fund on exchange transactions, subject,
however, to the general policy of the Fund set forth above and the procedures
adopted by the Board. 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 Trustees who are not "interested persons" of the Fund, WPG and
RWB not to be comparable to the Fund. With regard to comparable customers, in
isolated situations, subject to the approval of a majority of the Trustees who
are not "interested persons" of the Fund, WPG and RWB, exceptions may be made.
Since WPG has, as investment adviser to the Fund, the obligation 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 may be combined with orders
for the account of other funds and accounts advised by WPG in order to obtain a
more favorable commission rate. When the same security is purchased for two or
more funds on the same day, each fund pays the average price and commissions
paid are allocated in direct proportion to the number of shares purchased.
In selecting brokers other than WPG to effect transactions on
securities exchanges, the Fund considers 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"). Section 28(e) specifies
that a person with investment discretion shall not be "deemed to have acted
unlawfully or to have breached his fiduciary duty" solely because such person
has caused the account to pay a higher commission than the lowest rate
available. To obtain the benefit of Section 28(e), the person so exercising
investment discretion must make a good faith determination that the commissions
paid are "reasonable in relation to the value of the brokerage and research
services provided viewed in terms of either that particular transaction or his
overall responsibilities with respect to the accounts as to which he exercises
investment discretion." Accordingly, if WPG 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 services provided by such broker, it may cause the
Fund to pay commissions to such broker in an amount greater than the amount
another firm might charge.
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<PAGE>
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 (and its
affiliates) in carrying out their decision-making responsibilities and (iii)
effecting securities transactions and performing functions incidental thereto
(such as clearance and settlement). The investment advisory fees paid by the
Fund under the advisory agreements will not be reduced as a result of WPG'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 products and services, although the Fund
may not be willing to pay the same commission to such a broker as the Fund would
have paid had the broker provided research products and services. As permitted
by Section 28(e), the investment information received from other brokers may be
used by WPG (and its affiliates) in servicing all its accounts and not all such
information may be used by WPG in connection with the Fund. Nonetheless, the
Fund believes that such investment information provides the Fund with benefits
by supplementing the research otherwise available to the Fund.
As set forth above, the Fund employs WPG, a member firm of the NYSE, as
its principal broker on 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 (such as
WPG) 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.
In certain instances there may be securities which are suitable for the
Fund's portfolio as well as for that of one or more of the other clients of WPG.
Investment decisions for the Fund and for WPG'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 the 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 believes that over time its ability to
participate in volume transactions will produce better executions for the Fund.
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<PAGE>
WPG furnishes to the Fund at least quarterly a statement setting forth
the total amount of all compensation retained by WPG or any associated person of
WPG in connection with effecting transactions for the account of the Fund, and
the Board reviews and approves all the Fund's portfolio transactions and the
compensation received by WPG in connection therewith.
WPG does not knowingly participate in commissions paid by the Fund to
other brokers or dealers and does not seek or knowingly receive any reciprocal
business as the result of the payment of such commissions. In the event WPG at
any time learns that it has knowingly received reciprocal business, it will so
inform the Board.
The Fund paid total brokerage commissions on purchases and sales of
portfolio securities for the years ended December 31, 1996, 1997 and 1998, in
the amounts of $171,866, $193,235 and $147,489, respectively, of which $171,866,
$192,857 and $52,214, respectively, was received by WPG. The percentage of the
aggregate brokerage commissions paid by the Fund to WPG during 1998 was: 35%.
The percentage of the aggregate dollar amount of transactions involving the
payment of commissions through WPG during 1998 was: 35%. To the extent that WPG
receives brokerage commissions on Fund portfolio transactions, officers and
Trustees of the Fund who are also directors in WPG may receive indirect
compensation from the Fund through their participation in such brokerage
commissions.
Subject to the supervision of the Board, all investment decisions of
the Fund are made by WPG, which places orders for all purchases and sales of
portfolio securities through WPG's trading department.
PORTFOLIO TURNOVER
The portfolio turnover rates of the Fund for the past five fiscal years
ended December 31 are set forth in the prospectus under "Financial Highlights."
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. Such 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.
U.S. Government securities and all other securities the maturities of which at
the time of their acquisitions were one year or less are excluded from the
calculation of the annual portfolio turnover rate. A turnover rate of 100% would
occur if all of the Fund's portfolio securities were replaced in a period of one
year. Increased portfolio turnover results in increased brokerage costs which
the Fund must pay and the possibility of more net realized short-term capital
gains, distributions of which are taxable as ordinary income.
To the extent that its portfolio is traded for the short-term, the Fund
will be engaged essentially in trading operations based on short-term market
considerations as distinct from long-term investments based upon fundamental
valuation of securities. Because of this policy, portfolio securities may be
sold without regard to the length of time for which they have been held.
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<PAGE>
ORGANIZATION
The Fund was formed on February 16, 1993 as a "business trust" under
the laws of Delaware. On May 1, 1996, the Fund changed its name from "U.S. Large
Stock Fund" to "RWB/WPG U.S.
Large Stock 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. The Trust will be required to hold a meeting to elect Trustees to fill
any existing vacancies on the Board if, at any time, less than a majority of the
Trustees have been elected by the shareholders of the Fund. 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 the Fund. Whenever ten or more
shareholders of record (who have been such for at least six months and who hold
in the aggregate shares having a value of the lesser of $25,000 or 1% of the
Fund's net asset value) apply to the Trustees in writing that they wish
assistance in communicating with other shareholders for the purpose of causing
the Fund to call a meeting of shareholders to consider the removal of Trustees,
the Fund will so assist such shareholders in accordance with Section 16(a) of
the Investment Company Act.
The Fund's 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, in which case the holders of the remaining shares would not be able to
elect any Trustees. Shareholders are entitled to one vote for each full share
held, and fractional votes for fractional shares held.
Each share of the Fund is entitled to such dividends and distributions
out of the income earned on the assets of the Fund as are declared in the
discretion of the Board. In the event of the liquidation or dissolution of the
Fund, shareholders of the Fund are entitled to receive their proportional 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 Declaration of Trust, the Board may create additional
funds by establishing additional series of shares in the Fund. The establishment
of additional series would not affect the interests of current shareholders in
the existing Fund. The Board may also divide the shares of the Fund or any
series into classes, which classes shall have such rights, terms and preferences
as the Trustees may establish.
Upon the initial purchase of shares, the shareholder agrees to be bound
by the Fund's Declaration of Trust, as amended from time to time.
PERFORMANCE INFORMATION
The Fund will calculate performance on a total return basis, which
combines principal and dividend income changes, for various periods. Principal
changes are based on the difference between the initial offering price and the
closing net asset value per share for the period and assume reinvestments of
dividends. Dividend income is the capital gains and income dividends paid by the
Fund during the period.
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<PAGE>
Performance will vary from time to time and past results are not
necessarily representative of future results. Performance is a function of
portfolio management and is affected by operating expenses. Performance
information may not provide a basis for comparison with other investments or
other investment companies using a different method of calculating performance.
Comparative performance information may be used from time to time in
advertising the Fund's shares, including data from Lipper Analytical Services,
Inc., Morningstar, Inc., Standard & Poor's Index of 500 Stocks, the Dow Jones
Industrial Average, the Value Line Composite Index, the NASDAQ OTC Composite
Index, and other industry publications.
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 (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
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.
The Fund's results assume the reinvestment of all capital gain
distributions and income dividends.
Performance information for the Fund is set forth below:
PERFORMANCE SUMMARY
<TABLE>
<CAPTION>
FROM 6/8/93
(COMMENCEMENT
FOR THE YEAR FOR THE FIVE YEAR OF OPERATIONS)
ENDED 12/31/98 PERIOD ENDED 12/31/98 TO 12/31/98
-------------- --------------------- -----------
RWB/WPG U.S.
<S> <C> <C> <C>
Large Stock Fund 24.49% 21.07% 19.81%
</TABLE>
CUSTODIAN
The custodian for the Fund is Boston Safe Deposit and Trust Company,
One Exchange Place, Boston, Massachusetts 02109. In its capacity as custodian,
Boston Safe Deposit and Trust Company performs all accounting services, holds
the assets of the Fund and is responsible for calculating the daily net asset
value per share.
TRANSFER AGENT
First Data Investor Services Group, Inc. acts as Transfer Agent and
Dividend Paying Agent for the Fund.
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INDEPENDENT AUDITORS
KPMG LLP, 345 Park Avenue, New York, NY 10154, serves as the Fund's
independent accountants and in that capacity audits the Fund's annual financial
statements.
FINANCIAL STATEMENTS
The Statement of Assets and Liabilities, including the Schedule of
Investments, as of December 31, 1998, and the related Statement of Operations
for the year then ended, the Statement of Changes in Net Assets for each of the
years in the two-year period then ended, and the Financial Highlights and the
Report of KPMG LLP, independent auditors, each of which is included in the
Annual Report to Shareholders of the Fund for December 31, 1998, are hereby
attached to and incorporated by reference into this Statement of Additional
Information.
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