<PAGE>
As filed with the Securities and Exchange Commission on February 28, 1996
SECURITIES ACT FILE NO. 33-65632
INVESTMENT COMPANY ACT FILE NO. 811-7840
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------
FORM N-1A
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933 /X/
PRE-EFFECTIVE AMENDMENT NO. / /
POST-EFFECTIVE AMENDMENT NO. 3 /X/
AND/OR
REGISTRATION STATEMENT UNDER
INVESTMENT COMPANY ACT OF 1940 /X/
AMENDMENT NO. 5 /X/
(Check appropriate box or boxes)
---------------------------
WSIS SERIES TRUST
(Exact Name of Registrant as Specified in Charter)
787 Seventh Avenue, New York, New York 10019
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (212) 492-6000
----------
It is proposed that this filing will become effective (Check appropriate box):
immediately upon filing pursuant to paragraph (b)
-----
X on March 1, 1996 pursuant to paragraph (b)
-----
75 days after filing pursuant to paragraph (a)
-----
on (date) pursuant to paragraph (a) of Rule 485
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CATHERINE A. MAZZA
VICE PRESIDENT
WSIS SERIES TRUST
787 SEVENTH AVENUE
NEW YORK, NEW YORK 10019
(Name and Address of Agent for Service)
Copies to:
TIMOTHY W. DIGGINS, ESQ.
ROPES & GRAY
ONE INTERNATIONAL PLACE
BOSTON, MASSACHUSETTS 02110-2624
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
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<PAGE>
The Registrant has registered an indefinite number or amount of securities under
the Securities Act of 1933, as amended, pursuant to Rule 24f-2 and filed a Rule
24f-2 notice for its fiscal year most recently ended on December 19, 1995.
<PAGE>
WSIS SERIES TRUST
CROSS REFERENCE SHEET
(AS REQUIRED BY RULE 481(a))
PART A
N-1A Item No. Location
1. Cover Page . . . . . . . . . . . . . . . . . . Cover page
2. Synopsis . . . . . . . . . . . . . . . . . . . Summary of expenses
3. Condensed Financial Information. . . . . . . . Financial Highlights
4. General Description of Registrant. . . . . . . Investment objectives and
policies; Additional
information about the
Trust
5. Management of the Fund . . . . . . . . . . . . Additional information
about the Trust;
Management of the Trust
5A. Management's Discussion of Fund Performance. . Not applicable
6. Capital Stock and Other Securities . . . . . . Additional information
about the Trust;
Distributions
7. Purchase of Securities Being Offered . . . . . How to buy shares;
Determination of Net Asset
Value
8. Redemption or Repurchase . . . . . . . . . . . How to sell shares
9. Pending Legal Proceedings. . . . . . . . . . . Not Applicable
PART B
N-1A Item No. Location
10. Cover Page . . . . . . . . . . . . . . . . . . Cover Page
11. Table of Contents. . . . . . . . . . . . . . . Cover Page
12. General Information and History. . . . . . . . Additional information
about the Trust (Part A)
13. Investment Objectives and Policies . . . . . . Investment Objectives and
Policies of the Trust;
Investment Restrictions;
14. Management of the Registrant . . . . . . . . . Management Contract
15. Control Persons and Principal Holders
of Securities. . . . . . . . . . . . . . . . . Principal Holders of
Securities
16. Investment Advisory and Other Services . . . . Management Contract
17. Brokerage Allocation . . . . . . . . . . . . . Management Contract
(Brokerage and Research
Services)
18. Capital Stock and Other Securities . . . . . . Additional information
about the Trust (Part A);
Distributions (Part A)
19. Purchase, Redemption, and Pricing
of Securities Being Offered. . . . . . . . . . How to buy shares (Part
A); How to sell shares
(Part A); Determination of
Net Asset Value
20. Tax Status . . . . . . . . . . . . . . . . . . Taxes (Part A); Taxes
21. Underwriters . . . . . . . . . . . . . . . . . Principal Underwriter
22. Calculation of Performance Data. . . . . . . . Performance Information
<PAGE>
23. Financial Statements . . . . . . . . . . . . . Financial Statements
PART C
The information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C to this Registration Statement.
-2-
<PAGE>
WSIS SERIES TRUST
PROSPECTUS
MARCH 1, 1996
WSIS Series Trust is a no-load, open-end management investment company offering
in this Prospectus shares of beneficial interest in five separate investment
portfolios: Wertheim Equity Value Fund, Wertheim Small Capitalization Value
Fund, Wertheim High Yield Income Fund, Wertheim Investment Grade Income Fund,
and Wertheim Short-Term Investment Fund. Schroder Wertheim Investment Services,
Inc. ("SWIS") serves as investment adviser to each of the Funds.
The Trust provides investors an opportunity to design their own investment
programs through investing in a wide range of mutual funds managed by SWIS. Each
Fund pursues its investment objectives through the investment policies described
in this Prospectus. WERTHEIM HIGH YIELD INCOME FUND INVESTS PRIMARILY IN
LOWER-RATED BONDS, COMMONLY KNOWN AS "JUNK BONDS." INVESTMENTS OF THIS TYPE ARE
SUBJECT TO GREATER RISK OF LOSS OF PRINCIPAL AND NON-PAYMENT OF INTEREST THAN
HIGHER-RATED SECURITIES. PURCHASERS SHOULD CAREFULLY ASSESS THE RISKS ASSOCIATED
WITH AN INVESTMENT IN THAT FUND.
This Prospectus explains concisely the information about the Trust that a
prospective investor should know before investing in the Funds. Please read it
carefully and keep it for future reference. Investors can find more detailed
information about the Trust in the March 1, 1996 Statement of Additional
Information, as amended from time to time. For a free copy of the Statement of
Additional Information, please call 1-800-464-3108. The Statement of Additional
Information has been filed with the Securities and Exchange Commission and is
incorporated into this Prospectus by reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
(This page has been left blank intentionally.)
2
WSIS SERIES TRUST
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
-----------
<S> <C>
Summary of Expenses............................................................................... 4
Financial Highlights.............................................................................. 5
Investment objectives and policies................................................................ 8
Wertheim Equity Value Fund.................................................................... 8
Wertheim Small Capitalization Value Fund...................................................... 9
Wertheim High Yield Income Fund............................................................... 10
Wertheim Investment Grade Income Fund......................................................... 13
Wertheim Short-Term Investment Fund........................................................... 14
Other investment practices and risk considerations............................................ 16
Portfolio turnover............................................................................ 19
How to buy shares................................................................................. 19
How to sell shares................................................................................ 20
Exchanges......................................................................................... 21
Determination of net asset value.................................................................. 21
Distributions..................................................................................... 21
Taxes............................................................................................. 22
Management of the Trust........................................................................... 23
Performance information........................................................................... 24
Additional information about the Trust............................................................ 24
APPENDIX A -- Ratings Descriptions................................................................ 26
</TABLE>
3
WSIS SERIES TRUST
<PAGE>
SUMMARY OF EXPENSES
Expenses are one of several factors to consider when investing in the Funds. The
following tables summarize your maximum transaction costs from investing in the
Funds and expenses incurred by the Funds based on their most recent fiscal year.
The Example shows the cumulative expenses attributable to a hypothetical $1,000
investment in the Funds over specified periods.
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<S> <C>
Maximum Sales Load Imposed on Purchases........................................ None
Maximum Sales Load Imposed on Reinvested Dividends............................. None
Deferred Sales Load............................................................ None
Redemption Fees................................................................ None
Exchange Fee................................................................... None
</TABLE>
ANNUAL OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS)
<TABLE>
<CAPTION>
Wertheim
Wertheim Small Wertheim Wertheim Wertheim
Equity Capitalization High Yield Investment Short-Term
Value Value Income Grade Income Investment
Fund Fund Fund Fund Fund
----------- ------------- ----------- --------------- -----------
<S> <C> <C> <C> <C> <C>
Management Fees (after expense limitation).......... .75 .95 .49 .12 .35
12b-1 Fees (after expense limitation)............... None None None None None
Other Expenses (after expense limitation)........... .65 .75 .65 .62 .63
Total Fund Operating Expenses (after expense
limitation)........................................ 1.40 1.70 1.14 .74 .98
</TABLE>
The tables are provided to help you understand the expenses of investing in each
of the Funds and your share of the operating expenses each of the Funds incurs.
During fiscal 1995, Management Fees, Other Expenses, and Total Fund Operating
Expenses for the Small Capitalization Value Fund were .89%, .67%, and 1.56%,
respectively, reflecting expense limitations in effect during the year. The
Management Fees, Other Expenses, and Total Fund Operating Expenses shown in the
table above for each of the Funds other than the Equity Value and Small
Capitalization Value Funds reflect expense limitations
4
WSIS SERIES TRUST
<PAGE>
currently in effect. See "Management of the Trust" below. The following table
shows the Management Fees, Other Expenses, and Total Fund Operating Expenses for
each of those Funds based on the Funds' most recent fiscal year, as a percentage
of average net assets, in the absence of the expense limitations.
<TABLE>
<CAPTION>
Wertheim Wertheim Wertheim
High Yield Investment Short-Term
Income Grade Income Investment
Fund Fund Fund
------------- --------------- -------------
<S> <C> <C> <C>
Management Fees.......................................................... .90 .50 .40
Other Expenses........................................................... 1.06 1.00 .68
Total Fund Operating Expenses............................................ 1.96 1.50 1.08
</TABLE>
EXAMPLE
Your investment of $1,000 would incur the following expenses, assuming 5% annual
return and redemption at the end of each period:
<TABLE>
<CAPTION>
FUNDS: 1 year 3 years 5 years 10 years
----- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Wertheim Equity Value Fund...................................... $ 14 $ 45 $ 75 $ 169
Wertheim Small Capitalization Value Fund........................ $ 17 $ 54 $ 93 $ 202
Wertheim High Yield Income Fund................................. $ 12 $ 36 $ 63 $ 139
Wertheim Investment Grade Income Fund........................... $ 8 $ 24 $ 41 $ 92
Wertheim Short-Term Investment Fund............................. $ 10 $ 31 $ 54 $ 121
</TABLE>
The tables and Example do not represent past or future expense levels. Actual
expenses may be greater or less than those shown. Federal regulations require
the Example to assume a 5% annual return, but actual annual return will vary.
FINANCIAL HIGHLIGHTS
The table below presents per share financial information for each Fund for the
period ended October 31, 1995. This information has been audited by Arthur
Andersen LLP, independent auditors. The report of Arthur Andersen LLP is
contained in the Statement of Additional Information.
5
WSIS SERIES TRUST
<PAGE>
SELECTED PER SHARE DATA AND RATIOS (FOR A SHARE OUTSTANDING THROUGHOUT THE
PERIOD).
WSIS SERIES TRUST
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
SMALL CAPITALIZATION
EQUITY VALUE FUND VALUE FUND
----------------------------- -----------------------------
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1995 1994(1) 1995 1994(1)
----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
NET ASSET VALUE AT BEGINNING OF
PERIOD................................ $ 9.45 $ 10.00 $ 9.77 $ 10.00
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income/(Loss) (4)...... 0.11 0.06 (0.03) 0.00
Net Realized and Unrealized Gain
(Loss) on Investments............... 1.63 (0.61) 1.03 (0.23)
----------- ------------ ----------- ------------
Total from Investment Operations...... 1.74 (0.55) 1.00 (0.23)
----------- ------------ ----------- ------------
LESS DISTRIBUTIONS:
From Net Investment Income............ (0.07) 0.00 0.00 0.00
In Excess of Net Investment Income.... 0.00 0.00 0.00 0.00
Tax Return of Capital................. 0.00 0.00 0.00 0.00
----------- ------------ ----------- ------------
Total Distributions................... (0.07) 0.00 0.00 0.00
----------- ------------ ----------- ------------
NET ASSET VALUE AT END OF PERIOD........ $ 11.12 $ 9.45 $ 10.77 $ 9.77
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
TOTAL RETURN............................ 18.63% (5.50)%(5) 10.27% (2.30)%(5)
RATIOS & SUPPLEMENTAL DATA
Net Assets at End of Period (000's)... $ 38,088 $ 21,309 $ 47,929 $ 21,193
Ratio of Operating Expenses to Average
Net Assets (4)...................... 1.40% 1.30%(6) 1.56% 1.45%(6)
Ratio of Net Investment Income to
Average Net Assets.................. 1.27% 1.37%(6) (0.29)% 0.17%(6)
Portfolio Turnover Rate............... 83.15% 102.56% 45.74% 18.53%
</TABLE>
(1)For the period February 16, 1994 (commencement of investment operations)
through October 31, 1994.
(2)For the period February 22, 1994 (commencement of investment operations)
through October 31, 1994.
(3)For the period January 11, 1994 (commencement of investment operations)
through October 31, 1994.
Notes to Financial Highlights continued on page 39.
See notes to financial statements.
6
WSIS SERIES TRUST
<PAGE>
<TABLE>
<CAPTION>
HIGH YIELD INVESTMENT GRADE SHORT-TERM
INCOME FUND INCOME FUND INVESTMENT FUND
------------------------- ------------------------- -------------------------
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1995 1994(1) 1995 1994(2) 1995 1994(3)
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE AT BEGINNING OF
PERIOD................................ $ 8.79 $ 10.00 $ 9.14 $ 10.00 $ 9.88 $ 10.00
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income/(Loss) (4)...... 0.84 0.48 0.59 0.34 0.49 0.30
Net Realized and Unrealized Gain
(Loss) on Investments............... (0.07) (1.14) 0.79 (0.83) 0.00 (0.12)
----------- ----------- ----------- ----------- ----------- -----------
Total from Investment Operations...... 0.77 (0.66) 1.38 (0.49) 0.49 0.18
----------- ----------- ----------- ----------- ----------- -----------
LESS DISTRIBUTIONS:
From Net Investment Income............ (0.84) (0.47) (0.59) (0.34) (0.49) (0.30)
In Excess of Net Investment Income.... 0.00 (0.01) 0.00 0.00 0.00 0.00
Tax Return of Capital................. 0.00 (0.07) 0.00 (0.03) 0.00 0.00
----------- ----------- ----------- ----------- ----------- -----------
Total Distributions................... (0.84) (0.55) (0.59) (0.37) (0.49) (0.30)
----------- ----------- ----------- ----------- ----------- -----------
NET ASSET VALUE AT END OF PERIOD........ $ 8.72 $ 8.79 $ 9.93 $ 9.14 $ 9.88 $ 9.88
----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- -----------
TOTAL RETURN............................ 9.16% (6.60)%(5) 15.62% (4.90)%(5) 5.02% 1.83%(5)
RATIOS & SUPPLEMENTAL DATA
Net Assets at End of Period (000's)... $ 20,489 $ 15,956 $ 23,704 $ 12,905 $ 33,936 $ 30,771
Ratio of Operating Expenses to Average
Net Assets (4)...................... 1.48% 1.30%(6) 1.06% 0.87%(6) 0.95% 0.78%(6)
Ratio of Net Investment Income to
Average Net Assets.................. 9.67% 9.67%(6) 6.35% 6.39%(6) 4.91% 4.48%(6)
Portfolio Turnover Rate............... 149.58% 59.30% 113.50% 155.63% 27.86% 71.38%
</TABLE>
(4)Net Investment Income is after reimbursement of certain expenses by Schroder
Wertheim Investment Services, Inc. (See Note 3 to the Trust's financial
statements.) Had the Investment Adviser not undertaken to pay or reimburse
expenses related to the Funds, the Net Investment Income per share and Ratio
of Operating Expenses to Average Net Assets would have been as follows:
Wertheim Equity Value Fund: 1995 - $0.11 and 1.45%; 1994 - $0.02 and 2.17%;
Wertheim Small Capitalization Value Fund: 1995 - ($0.03) and 1.62%; 1994 -
($0.04) and 3.15%; Wertheim High Yield Income Fund: 1995 - $0.80 and 1.96%;
1994 - $0.44 and 3.59%, Wertheim Investment Grade Income Fund: 1995 - $0.56
and 1.50%; 1994 - $0.21 and 3.98%; and Wertheim Short-Term Investment Fund:
1995 - $0.47 and 1.08%; 1994 - $0.24 and 1.66%, respectively.
(5)Not annualized.
(6)Annualized.
7
WSIS SERIES TRUST
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
Each Fund has a different investment objective or objectives which it pursues
through the investment policies described below. Because of the differences in
objectives and policies among the Funds, the Funds will achieve different
investment returns and will be subject to varying degrees of market and
financial risk. The investment objectives and policies of each Fund may, unless
otherwise specifically stated, be changed by the Trustees of the Trust without a
vote of the shareholders. As a matter of policy, the Trustees would not
materially change an investment objective of a Fund without shareholder
approval. There is no assurance that any Fund will achieve its objective or
objectives. Additional Funds may be created from time to time with different
investment objectives and policies.
If the securities rating of a debt security held by a Fund declines below any
minimum rating for securities in which the Fund may invest, the Fund will not be
required to dispose of the security, but SWIS will consider whether continued
investment in the security is consistent with the Fund's investment objectives.
Certain of the Funds may also use a variety of derivative strategies including,
without limitation, options, futures contracts, and forward contracts, and
mortgage-backed securities described below. See "Other investment practices and
risk considerations."
None of the Funds is intended to be a complete investment program, and there is
no assurance that a Fund will achieve its objectives.
WERTHEIM EQUITY VALUE FUND
WERTHEIM EQUITY VALUE FUND'S INVESTMENT OBJECTIVE IS TO SEEK LONG-TERM GROWTH OF
CAPITAL. The Fund invests in common stocks and other securities that SWIS
believes offer the potential for long-term growth of capital.
The Fund will under normal circumstances invest primarily in equity securities
SWIS believes to be undervalued. In selecting such securities, SWIS will focus
on industries and issuers it believes offer the possibility for growth of
capital from earnings potential and other factors not fully reflected in current
market prices. Such factors may include, for example, a company's probable
future earnings, the ratio of its market value to its book value, and its
dividends, cash flow, financial strength, debt-to-capital ratio, working assets,
and competitive position, as well as other factors SWIS may consider significant
in a particular industry or under varying market conditions. In identifying
undervalued securities, SWIS may make investment judgments contrary to those of
most investors.
The Fund may invest in securities of any kind SWIS believes consistent with the
Fund's objective of long-term growth of capital. The Fund will normally invest
at least 65% of its total assets in equity securities, including common and
preferred stocks and warrants to purchase common or preferred stocks. The Fund
may also invest in debt securities if SWIS believes they would help achieve the
Fund's objective and may hold a portion of its assets in cash or money market
instruments. Debt securities in which the Fund may invest will be rated, at the
time of investment, at least Baa by Moody's Investors
8
WSIS SERIES TRUST
<PAGE>
Service, Inc. or BBB by Standard & Poor's Corporation or, if unrated, determined
by SWIS at the time of investment to be of comparable quality. Securities rated
Baa or BBB lack outstanding investment characteristics and have speculative
characteristics and are subject to greater credit and market risks than higher
rated securities.
At times, SWIS may judge that conditions in the securities markets make pursuing
the Fund's basic investment strategy inconsistent with the best interests of its
shareholders. At such times, SWIS may temporarily use alternative investment
strategies primarily designed to reduce fluctuations in the value of the Fund's
assets. In implementing these "defensive" strategies, the Fund would invest in
high-quality debt securities, cash, or money market instruments to any extent
SWIS considers consistent with such defensive strategies. It is impossible to
predict when, or for how long, the Fund will use these alternative strategies.
WERTHEIM SMALL CAPITALIZATION VALUE FUND
WERTHEIM SMALL CAPITALIZATION VALUE FUND'S INVESTMENT OBJECTIVE IS TO SEEK
CAPITAL APPRECIATION. The Fund invests primarily in equity securities of
companies having a relatively small market capitalization (generally less than
$1 billion) that SWIS believes have potential for capital appreciation. In
choosing portfolio investments for the Fund, SWIS attempts to identify
securities whose potential for long-term capital appreciation is not fully
reflected in their market prices. This may be the result, for example, of the
market's undervaluation of a company's potential for earnings growth or of its
financial or business assets or other assets.
The companies in which the Fund invests may offer greater opportunities for
capital appreciation than larger companies, but investments in such companies
may involve certain special risks. Such companies may have limited product
lines, markets or financial resources and may be dependent on a limited
management group. While the markets in securities of such companies have grown
rapidly in recent years, such securities may trade less frequently and in
smaller volume than more widely held securities. The values of these securities
may fluctuate more sharply than other securities, and the Fund may experience
some difficulty in establishing or closing out positions in these securities at
prevailing market prices. There may be less publicly available information about
the issuers of these securities or less market interest in such securities than
in the case of larger companies, and it may take a longer period of time for the
prices of such securities to reflect the full value of their issuers' underlying
earnings potential or assets.
The Fund will normally invest at least 65% of its total assets in common and
preferred stocks, and warrants to purchase common or preferred stocks, of
companies having market capitalizations of less than $1 billion. The Fund may
invest the remainder of its assets in equity securities of larger companies and
in debt securities (including convertible bonds) and may hold a portion of its
assets in cash or money market instruments. Debt securities in which the Fund
may invest will be rated, at the time of investment, at least Baa by Moody's or
BBB by Standard & Poor's or, if unrated, determined by SWIS at the time of
investment to be of comparable quality. Securities rated Baa or BBB lack
outstanding investment characteristics and have speculative characteristics and
are subject to greater credit and market risks than higher rated securities.
9
WSIS SERIES TRUST
<PAGE>
At times SWIS may decide that conditions in the securities markets make pursuing
the Fund's basic investment strategy inconsistent with the best interests of its
shareholders. At such times, SWIS may temporarily use alternative investment
strategies primarily designed to reduce fluctuations in the value of the Fund's
assets. In implementing these "defensive" strategies, the Fund would invest any
portion of its assets in high-quality debt securities, or hold any portion of
its assets in cash or money market instruments, to the extent SWIS might
consider consistent with such defensive strategies. It is impossible to predict
when, or for how long, the Fund will use these alternative strategies.
WERTHEIM HIGH YIELD INCOME FUND
WERTHEIM HIGH YIELD INCOME FUND'S PRIMARY INVESTMENT OBJECTIVE IS TO SEEK HIGH
CURRENT INCOME. The Fund seeks capital growth as a secondary objective, to the
extent consistent with its objective of seeking high current income. The Fund
invests primarily in high-risk, high-yield, fixed-income securities constituting
a diversified portfolio which SWIS believes does not involve undue risk to
income or principal. The Fund is designed for investors willing to assume
additional risk in return for high current income.
The Fund seeks its secondary objective of capital growth, to the extent
consistent with its objective of seeking high current income, by investing in
securities of any kind which SWIS believes offer the potential for capital
growth. Such securities may include, for example, debt securities, preferred
stocks, common stocks, or any other securities which SWIS believes offer such
potential.
The Fund will generally invest in securities rated, at the time of purchase, at
least Caa by Moody's or CCC by Standard & Poor's, or in unrated securities SWIS
determines to be of comparable quality and will under normal circumstances
invest at least 65% of its total assets in debt securities rated Baa or below by
Moody's or BBB or below by Standard & Poor's or, if unrated, determined by SWIS
at the time of investment to be of comparable quality. The Fund may at times
invest up to 10% of its assets in securities rated in the lowest grades (Ca or C
in the case of Moody's and CC, C, or D in the case of Standard & Poor's) or in
unrated securities determined by SWIS to be of comparable quality, if SWIS
believes that there are prospects for an upgrade in a security's rating or a
favorable conversion of a security into other securities. The Fund might also
invest in such securities if SWIS were to believe that, upon completion of any
contemplated exchange offer or reorganization involving a security or its
issuer, the Fund would receive securities or other assets offering significant
opportunities for capital appreciation or future high rates of current income.
Securities rated below Baa by Moody's or BBB by Standard & Poor's are considered
to be of poor standing and predominantly speculative. Securities in the lowest
rating categories may have extremely poor prospects of attaining any real
investment standing and may be in default. The rating services' descriptions of
securities in the lower rating categories, including their speculative
characteristics, are set forth in the Appendix hereto.
Securities ratings are based largely on the issuer's historical financial
condition and the rating agencies' investment analysis at the time of rating.
Consequently, the rating assigned to any particular security is not necessarily
a reflection of the issuer's current financial condition, which may be better or
worse than the rating would indicate. Although SWIS considers security
10
WSIS SERIES TRUST
<PAGE>
ratings when making investment decisions, it performs its own investment
analysis and does not rely principally on the ratings assigned by the rating
services. SWIS's analysis may include consideration of the issuer's experience
and managerial strength, changing financial condition, borrowing requirements or
debt maturity schedules, and its responsiveness to changes in business
conditions and interest rates. It also considers relative values based on
anticipated cash flow, interest or dividend coverage, asset coverage, and
earnings prospects. Because of the greater number of investment considerations
involved in investing in lower rated securities, the achievement of the Fund's
objectives depends more on SWIS's analytical abilities than would be the case if
it were investing primarily in securities in the higher rating categories.
The table below shows the percentages of the Wertheim High Yield Income Fund's
assets invested during fiscal 1995 in securities assigned to the various rating
categories by Moody's and Standard & Poor's and in unrated securities determined
by SWIS to be of comparable quality:
<TABLE>
<CAPTION>
Unrated securities of
Rated securities comparable quality,
as percentage of as percentage of
Rating Fund's assets Fund's assets
- - ------------- ----------------- ---------------------
<S> <C> <C>
"AAA"/"Aaa" -- --
"AA"/"Aa" -- --
"A"/"A" -- --
"BBB"/"Baa" -- --
"BB"/"Ba" 28.80% --
"B"/"B" 44.62% 3.11%
"CCC"/"Can" 10.41% 4.31%
"CC"/"Ca" -- --
"C"/"C" -- --
"D" 1.50% --
</TABLE>
Securities rated at different levels by Moody's and Standard & Poor's are shown
as having been rated at the lower level.
At times SWIS may judge that conditions in the securities markets make pursuing
the Fund's basic investment strategy inconsistent with the best interests of its
shareholders. At such times SWIS may temporarily use alternative strategies,
primarily designed to reduce fluctuations in the value of the Fund's assets. In
implementing these "defensive" strategies, the Fund may invest in higher rated
fixed-income securities, money market instruments of all types, and any other
securities which SWIS considers consistent with such defensive strategies. The
yields on these securities would generally be lower than the yields on lower
rated fixed-income securities. It is impossible to predict when, or for how
long, the Fund will use these alternative strategies.
CERTAIN RISKS ASSOCIATED WITH INVESTMENTS IN LOWER RATED SECURITIES. Investors
should carefully consider their ability to assume the risks of owning shares of
a mutual fund that invests in lower rated securities (sometimes referred to as
"junk bonds") before making an investment in the Fund. The lower ratings of
certain securities held by the Fund reflect a greater
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possibility that adverse changes in the financial condition of the issuer, or in
general economic conditions, or both, or an unanticipated rise in interest
rates, may impair the ability of the issuer to make payments of interest and
principal. The inability (or perceived inability) of issuers to make timely
payment of interest and principal would likely make the values of securities
held by the Fund more volatile and could limit the Fund's ability to sell its
securities at prices approximating the values the Fund had placed on such
securities. It is possible that legislation may be adopted in the future
limiting the ability of certain financial institutions to purchase lower rated
securities; such legislation may adversely affect the liquidity of such
securities. In the absence of a liquid trading market for securities held by it,
the Fund may be unable at times to establish the fair market value of such
securities. The rating assigned to a security by Moody's or Standard & Poor's
does not reflect an assessment of the volatility of the security's market value
or of the liquidity of an investment in the security. For more information about
the rating services' descriptions of lower rated securities, see the Appendix to
this Prospectus.
Like those of other fixed-income securities, the values of lower rated
securities fluctuate in response to changes in interest rates. Thus, a decrease
in interest rates will generally result in an increase in the value of the
Fund's assets. Conversely, during periods of rising interest rates, the value of
the Fund's assets will generally decline. In addition, the values of such
securities are also affected by changes in general economic conditions and
business conditions affecting the specific industries of their issuers. Changes
by recognized rating services in their ratings of any fixed-income security and
in the ability of an issuer to make payments of interest and principal may also
affect the value of these investments. Changes in the value of portfolio
securities generally will not affect cash income derived from such securities,
but will affect the Fund's net asset value. The Fund will not necessarily
dispose of a security when its rating is reduced below its rating at the time of
purchase, although SWIS will monitor the investment to determine whether
continued investment in the security will assist in meeting the Fund's
investment objectives.
Issuers of lower-rated securities are often highly leveraged, so that their
ability to service their debt obligations during an economic downturn or during
sustained periods of rising interest rates may be impaired. In addition, such
issuers may not have more traditional methods of financing available to them,
and may be unable to repay debt at maturity by refinancing. The risk of loss due
to default in payment of interest or principal by such issuers is significantly
greater because such securities frequently are unsecured and subordinated to the
prior payment of senior indebtedness. Certain of the lower rated securities in
which the Fund invests are issued to raise funds in connection with the
acquisition of a company, in so-called "leveraged buy-out" transactions. The
highly leveraged capital structure of such issuers may make them especially
vulnerable to adverse changes in economic conditions.
The Fund may invest in securities which trade infrequently or in more limited
volume than higher-rated securities (including illiquid securities), or in
securities which are restricted as to resale. In addition, a substantial portion
of the Fund's assets may at times be invested in securities as to which the
Fund, by itself or together with other accounts managed by SWIS and its
affiliates, holds a major portion or all of such securities, which may limit the
liquidity of such securities. The Fund could find it difficult or impossible to
sell illiquid securities when SWIS believes it advisable to do so or may be able
to sell such securities only at prices lower than if such securities were more
widely held. In many cases, such securities may be purchased in private
placements and, accordingly, will be subject to restrictions on resale as a
matter of contract or under securities laws. Under such circumstances, it may
also be more difficult to determine the fair value of such securities for
purposes of computing the
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Fund's net asset value. In order to enforce its rights in the event of a default
under securities in cases where the Fund holds a major portion or all of the
outstanding issue, the Fund may be required to take possession of and manage
assets securing the issuer's obligations on such securities, which may increase
the Fund's operating expenses and adversely affect the Fund's net asset value.
The Fund may also be limited in its ability to enforce its rights and may incur
greater costs in enforcing its rights in the event an issuer becomes the subject
of bankruptcy proceedings. The Fund will not invest more than 15% of its assets
(determined at the time of investment) in securities determined by SWIS to be
illiquid.
The Fund may at times invest in so-called "zero-coupon" bonds and
"payment-in-kind" bonds. Zero-coupon bonds are issued at a significant discount
from face value and pay interest only at maturity rather than at intervals
during the life of the security. Payment-in-kind bonds allow the issuer, at its
option, to make current interest payments on the bonds either in cash or in
additional bonds. Because zero-coupon bonds do not pay current interest, their
value is subject to greater fluctuation in response to changes in market
interest rates than bonds that pay interest currently. Both zero-coupon and
payment-in-kind bonds allow an issuer to avoid the need to generate cash to meet
current interest payments. Accordingly, such bonds may involve greater credit
risks than bonds that pay interest currently. Even though such bonds do not pay
current interest in cash, the Fund is nonetheless required for Federal income
tax purposes to accrue interest income on such investments and to distribute
such amounts at least annually to shareholders. Thus, the Fund could be required
at times to liquidate other investments in order to satisfy this distribution
requirement.
Certain securities held by the Fund may permit the issuer at its option to
"call," or redeem, its securities. If an issuer were to redeem securities held
by the Fund during a time of declining interest rates, the Fund may not be able
to reinvest the proceeds in securities providing the same investment return as
the securities redeemed.
The Fund may at times invest in securities bearing coupon rates higher than
prevailing market rates. Such "premium" securities are typically purchased at
prices greater than the principal amounts payable on maturity. The Fund does not
amortize the premium paid for such securities in calculating its net investment
income. Consequently, if such premium securities are called or sold prior to
maturity, the Fund may recognize a capital loss to the extent the call or sale
price is less than the purchase price. Additionally, the Fund will recognize a
capital loss if its holds such securities to maturity.
SWIS seeks to minimize the risks involved in investing in lower rated securities
through diversification and careful investment analysis. When the Fund invests
in high yield securities in the lower rating categories, achievement of the
Fund's goals depends more on SWIS's investment analysis than would be the case
if the Fund were investing in securities in the higher rating categories.
WERTHEIM INVESTMENT GRADE INCOME FUND
WERTHEIM INVESTMENT GRADE INCOME FUND'S INVESTMENT OBJECTIVE IS TO SEEK CURRENT
INCOME CONSISTENT WITH PRESERVATION OF CAPITAL. Growth of capital is a secondary
objective, to the extent consistent with the Fund's principal objective. The
Fund may invest in debt securities, including securities issued or guaranteed as
to principal or interest by the U.S. Government or any of its agencies or
instrumentalities and corporate obligations, preferred stocks, and
dividend-paying
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common stocks. The Fund will normally invest at least 90% of its total assets in
U.S. Government securities and in debt securities and preferred stocks rated
investment grade (or, if unrated, considered by SWIS to be of comparable
quality). A security will be considered to be of "investment grade" if, at the
time of investment by the Fund, it is rated at least Baa3 by Moody's or BBB- by
Standard & Poor's or, if unrated, determined by SWIS to be of comparable
quality. The Fund will not invest in a security rated below A3 or A-if as a
result more than 25% of the Fund's assets would, at the time of such investment,
be invested in securities rated below those rating categories. The Fund may
invest in mortgage-backed certificates and other securities representing
ownership interests in mortgage pools, including collateralized mortgage
obligations, some of which may be backed by agencies or instrumentalities of the
U.S. Government. The Fund may hold a portion of its assets in cash or money
market instruments.
SWIS may take full advantage of the entire range of maturities of the securities
in which the Fund may invest and may adjust the average maturity of the Fund's
portfolio from time to time, depending on its assessment of relative yields on
securities of different maturities and expectations of future changes in
interest rates. Thus, at certain times the average maturity of the portfolio may
be relatively short (from under one year to five years, for example) and at
other times may be relatively long (more than 10 years, for example).
Higher-rated securities do not involve the degree of credit risk associated with
investments in lower quality fixed-income securities, although, as a result, the
yields available from higher-rated securities are generally lower than the
yields available from many other fixed-income securities. Like other fixed-
income securities, however, the values of higher-rated securities change as
interest rates fluctuate. Fluctuations in the value of the Fund's securities
generally will not affect interest income on securities already held by the
Fund, but will be reflected in the Fund's net asset value. Because the magnitude
of these fluctuations generally will be greater at times when the Fund's average
maturity is longer, under certain market conditions the Fund may invest in
short-term investments yielding lower current income rather than invest in
higher yielding longer-term securities. Securities rated Baa or BBB lack
outstanding investment characteristics and have speculative characteristics and
are subject to greater credit and market risks than higher-rated securities.
At times SWIS may decide that conditions in the securities markets make pursuing
the Fund's basic investment strategy inconsistent with the best interests of its
shareholders. At such times, SWIS may temporarily use alternative investment
strategies primarily designed to reduce fluctuations in the value of the Fund's
assets. In implementing these "defensive" strategies, the Fund would be
permitted to hold all or any portion of its assets in cash or money market
instruments. It is impossible to predict when, or for how long, the Fund will
use these alternative strategies.
WERTHEIM SHORT-TERM INVESTMENT FUND
WERTHEIM SHORT-TERM INVESTMENT FUND'S OBJECTIVE IS TO SEEK AS HIGH A RATE OF
INCOME AS SWIS BELIEVES IS CONSISTENT WITH PRESERVATION OF CAPITAL AND
MAINTENANCE OF LIQUIDITY. It is designed for investors seeking income with
relative stability of principal. While the Fund intends to declare and pay
dividends daily and invest in short-term securities, it is not a money-market
fund. The values of the securities owned by the Fund, and the Fund's net asset
value, will fluctuate based on changes in interest rates and other factors
affecting the values of securities in which the Fund may invest.
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The Fund will invest in a portfolio of high-quality short-term instruments
consisting of any or all of the following:
-PRIME COMMERCIAL PAPER: high-grade, short-term obligations issued by banks,
corporations, and other issuers, rated P-1 by Moody's or A-1 by Standard &
Poor's.
-U.S. GOVERNMENT SECURITIES: securities issued or guaranteed as to principal
or interest by the U.S. Government or by any of its agencies or
instrumentalities.
-CORPORATE OBLIGATIONS: high-grade, short-term corporate obligations other
than prime commercial paper, rated at least Aa by Moody's or AA by Standard
& Poor's.
-BANKERS' ACCEPTANCES: negotiable drafts or bills of exchange that have been
"accepted" by a bank, meaning, in effect, that the bank has unconditionally
agreed to pay the face value of the instrument on maturity.
-BANK CERTIFICATES OF DEPOSIT: certificates issued against funds deposited
in a commercial bank for a definite period of time and earning a specified
return. The Fund may also invest in bank time deposits.
-REPURCHASE AGREEMENTS: with respect to U.S. Government securities or any of
the other debt securities described above.
-OTHER SECURITIES: rated at least Aa or P-1 by Moody's or AA or A-1 by
Standard & Poor's. These may include investments in mortgage-backed
certificates and other securities representing ownership interests in
mortgage pools, including collateralized mortgage obligations, described
below.
All of the Fund's investments will normally have remaining maturities, at the
time of investment, of three years or less, and the average maturity of the
Fund's portfolio securities based on their dollar value will not exceed one year
at the time of each investment. When a security is subject to a repurchase
agreement, the amount and maturity of the Fund's investment will be determined
by reference to the amount and term of the repurchase agreement, not by
reference to the underlying security. The Fund will under normal circumstances
invest at least 65% of its assets in obligations with remaining maturities, at
the time of investment, of two years or less.
A portion of the securities held by the Fund may consist of mortgage-backed
certificates and other securities representing ownership interests in mortgage
pools, including collateralized mortgage obligations. SWIS will calculate the
'maturity' of such an obligation and other similar obligations, for purposes of
determining the Fund's compliance with the requirements set out above, based on
SWIS's estimate of the period of time remaining until all of the scheduled
payments in respect of that obligation will have been made. That period may be
shorter than the stated maturity of the obligation. The estimated remaining
maturity of a mortgage-backed security is highly dependent on prepayment
assumptions. If interest rates were to increase at a time when the Fund holds
such an obligation, the estimated maturity of the obligation might be increased
due to any anticipated reduction in prepayments on the mortgages underlying the
obligation. Some of the mortgage-backed certificates and other interests in
mortgage pools in which the Fund may invest may be backed by agencies or
instrumentalities of the U.S. Government. See "Other investment practices and
risk considerations -- Mortgage-backed securities" below.
Certain obligations purchased by the Fund may be variable or floating rate
instruments, may involve a demand feature, and may include variable amount
master demand notes. Variable or floating rate instruments bear interest at a
rate which varies with changes in market rates. The holder of an instrument with
a demand feature may tender the instrument back to the issuer at par value prior
to maturity.
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U.S. Government securities include a variety of securities that differ in their
interest rates, maturities, and dates of issue. Securities issued or guaranteed
by agencies or instrumentalities of the U.S. Government may or may not be
supported by the full faith and credit of the United States or by the right of
the issuer to borrow from the U.S. Treasury.
OTHER INVESTMENT PRACTICES AND RISK CONSIDERATIONS
The Funds may also engage in the following investment practices, each of which
involves certain special risks. The Statement of Additional Information contains
more detailed information about these practices (some of which may be considered
"derivative" investments), including limitations designed to reduce these risks.
OPTIONS AND FUTURES PORTFOLIO STRATEGIES. Each of the Funds may engage in a
variety of transactions involving the use of options and futures contracts for
purposes of increasing its investment return or hedging against market changes.
A Fund may seek to increase its current return by writing covered call options
and covered put options on its portfolio securities or other securities in which
it may invest. A Fund receives a premium from writing a call or put option,
which increases the Fund's return if the option expires unexercised or is closed
out at a net profit. A Fund may also buy and sell put and call options on such
securities for hedging purposes. When a Fund writes a call option on a portfolio
security, it gives up the opportunity to profit from any increase in the price
of the security above the exercise price of the option; when it writes a put
option, a Fund takes the risk that it will be required to purchase a security
from the option holder at a price above the current market price of the
security. A Fund may terminate an option that it has written prior to its
expiration by entering into a closing purchase transaction in which it purchases
an option having the same terms as the option written. A Fund may also from time
to time buy and sell combinations of put and call options on the same underlying
security to earn additional income.
A Fund may buy and sell index futures contracts. An "index future" is a contract
to buy or sell units of a particular index at an agreed price on a specified
future date. Depending on the change in value of the index between the time when
a Fund enters into and terminates an index future transaction, the Fund may
realize a gain or loss. A Fund may also purchase warrants, issued by banks or
other financial institutions, whose values are based on the values from time to
time of one or more securities indices.
A Fund may buy and sell futures contracts on U.S. Government securities or other
debt securities. A futures contract on a debt security is a contract to buy or
sell a certain amount of the debt security at an agreed price on a specified
future date. Depending on the change in the value of the security when the Fund
enters into and terminates a futures contract, the Fund realizes a gain or loss.
A Fund may purchase and sell options on futures contracts or on securities
indices in addition to or as an alternative to purchasing and selling futures
contracts.
A Fund may purchase and sell futures contracts, options on futures contracts,
and options on securities indices for hedging purposes or, to the extent
permitted by applicable law, to increase its current return.
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RISK FACTORS IN OPTIONS AND FUTURES TRANSACTIONS. Options and futures
transactions involve costs and may result in losses. The use of options and
futures involves certain special risks, including the risks that a Fund may be
unable at times to close out such positions, that hedging transactions may not
accomplish their purpose because of imperfect market correlations, or that SWIS
may not forecast market movements correctly.
The effective use of options and futures strategies is dependent on, among other
things, a Fund's ability to terminate options and futures positions at times
when SWIS deems it desirable to do so. Although a Fund will enter into an option
or futures contract position only if SWIS believes that a liquid secondary
market exists for that option or futures contract, there is no assurance that a
Fund will be able to effect closing transactions at any particular time or at an
acceptable price.
Each Fund generally expects that its options and futures contract transactions
will be conducted on recognized exchanges. In certain instances, however, a Fund
may purchase and sell options in the over-the-counter markets. A Fund's ability
to terminate options in the over-the-counter markets may be more limited than
for exchange-traded options and may also involve the risk that securities
dealers participating in such transactions would be unable to meet their
obligations to a Fund. A Fund will, however, engage in over-the-counter
transactions only when appropriate exchange-traded transactions are unavailable
and when, in the opinion of SWIS, the pricing mechanism and liquidity of the
over-the-counter markets are satisfactory and the participants are responsible
parties likely to meet their contractual obligations. A Fund will treat over-
the-counter options (and, in the case of options sold by the Fund, the
underlying securities held by the Fund) as illiquid investments as required by
applicable law.
The use of options and futures strategies also involves the risk of imperfect
correlation between movements in the prices of options and futures contracts and
movements in the value of the underlying securities or index, or in the prices
of the securities that are the subject of a hedge. The successful use of these
strategies further depends on the ability of SWIS to forecast market movements
correctly.
Because the markets for certain options and futures contracts in which a Fund
will invest (including markets located in foreign countries) are relatively new
and still developing and may be subject to regulatory restraints, a Fund's
ability to engage in transactions using such investments may be limited. A
Fund's ability to engage in hedging transactions may be limited by certain
regulatory and tax considerations. A Fund's hedging transactions may affect the
character or amount of its distributions.
For more information about any of the options or futures portfolio transactions
described above, see the Statement of Additional Information.
MORTGAGE-BACKED SECURITIES. A Fund may invest a portion of its assets in
mortgage-backed certificates and other securities representing ownership
interests in mortgage pools, including collateralized mortgage obligations.
Interest and principal payments on the mortgages underlying mortgage-backed
securities are passed through to the holder of the mortgage-backed securities.
Prepayments of principal and interest on mortgages underlying mortgage-backed
securities may shorten the
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effective maturity of certain of such obligations. Generally, prepayment rates
increase if interest rates fall and decrease if interest rates rise. For many
types of mortgage-backed securities, this can result in unfavorable changes in
price and yield characteristics in response to changes in interest rates and
other market considerations.
Mortgage-backed securities have yield and maturity characteristics that are
dependent upon the mortgages underlying them. Thus, unlike traditional debt
securities, which may pay a fixed rate of interest until maturity when the
entire principal amount comes due, payments on these securities may include both
interest and a partial payment of principal. In addition to scheduled loan
amortization, payments of principal may result from the voluntary prepayment,
refinancing, or foreclosure of the underlying mortgage loans. Such prepayments
may significantly shorten the effective maturities of mortgage-backed
securities, especially during periods of declining interest rates. Similarly,
during periods of rising interest rates, a reduction in the rate of prepayments
may significantly lengthen the effective maturities of such securities.
Mortgage-backed securities currently offer yields higher than those available
from many other types of debt securities, but their price volatility and yield
characteristics change based on increases and decreases in prepayment rates, and
they are less effective than other types of securities as a means of "locking
in" attractive long-term interest rates. This is caused by the need to reinvest
prepayments of principal generally and the possibility of significant
unscheduled prepayments resulting from declines in mortgage interest rates.
These prepayments would have to be reinvested at the lower rates. As a result, a
Fund's mortgage-backed securities may have less potential for capital
appreciation during periods of declining interest rates than other debt
securities of comparable maturities, although such obligations may have a
comparable risk of decline in market value during periods of rising interest
rates.
ZERO-COUPON BONDS. Each Fund which may invest in debt securities may invest in
zero-coupon securities. Zero-coupon bonds are issued at a significant discount
from face value and pay interest only at maturity rather than at intervals
during the life of the security. Zero-coupon bonds allow an issuer to avoid the
need to generate cash to meet current interest payments and, as a result, may
involve greater credit risks than bonds that pay interest currently. Additional
information concerning zero-coupon bonds is set out under "Wertheim High Yield
Income Fund" above and in the Statement of Additional Information.
SECURITIES LOANS, REPURCHASE AGREEMENTS, AND FORWARD COMMITMENTS. Each Fund may
lend portfolio securities amounting to not more than 25% of its assets to
broker-dealers, and may enter into repurchase agreements on up to 25% of its
assets. These transactions must be fully collateralized at all times, but
involve some risk to a Fund if the other party should default on its obligation
and the Fund is delayed or prevented from recovering the collateral. A Fund may
also purchase securities for future delivery, which may increase its overall
investment exposure and involves a risk of loss if the value of the securities
declines prior to the settlement date.
FOREIGN INVESTMENTS. Each Fund may invest without limit in securities
principally traded in foreign markets, although it is not currently expected
that any of the Funds will invest in securities of foreign issuers to a
substantial degree. Each Fund may also purchase Eurodollar certificates of
deposit without limitation. Because foreign securities are normally denominated
and traded in foreign currencies, the values of a Fund's assets may be affected
favorably or unfavorably by currency exchange rates and exchange control
regulations. There may be less information publicly available about a foreign
company than about a
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U.S. company, and foreign companies are not generally subject to accounting,
auditing, and financial reporting standards and practices comparable to those in
the United States. The securities of some foreign companies are less liquid and
at times more volatile than securities of comparable U.S. companies. Foreign
brokerage commissions and other fees are also generally higher than in the
United States. Foreign settlement procedures and trade regulations may involve
certain risks (such as delay in payment or delivery of securities or in the
recovery of a Fund's assets held abroad) and expenses not present in the
settlement of domestic investments.
In addition, with respect to certain foreign countries, there is a possibility
of nationalization or expropriation of assets, imposition of currency exchange
controls, confiscatory taxation, political or financial instability, and
diplomatic developments which could affect the value of investments in those
countries. In certain countries, legal remedies available to investors may be
more limited than those available with respect to investments in the United
States or other countries. The laws of some foreign countries may limit a Fund's
ability to invest in securities of certain issuers located in those countries.
Special tax considerations apply to foreign securities.
A Fund may buy or sell foreign currencies, foreign currency forward contracts,
and options on foreign currencies for hedging purposes in connection with its
foreign investments.
PORTFOLIO TURNOVER
The length of time a Fund has held a particular security is not generally a
consideration in investment decisions. The investment policies of a Fund may
lead to frequent changes in the Fund's investments, particularly in periods of
volatile market movements. A change in the securities held by a Fund is known as
"portfolio turnover." Portfolio turnover generally involves some expense to a
Fund, including brokerage commissions or dealer mark-ups and other transaction
costs on the sale of securities and reinvestment in other securities. Such sales
may result in realization of taxable capital gains. The portfolio turnover rate
for each of the Funds is set forth under "Financial Highlights."
HOW TO BUY SHARES
Shares of each of the Funds are sold at the net asset value per share of the
Fund next determined after Schroder Fund Advisors Inc., the principal
underwriter for the Trust, receives your order. In order for you to receive that
day's net asset value, Schroder Fund Advisors Inc. must receive your order
before the close of regular trading on the New York Stock Exchange.
The minimum initial investment in the Trust is $25,000 (which may be allocated
in any amounts among the various Funds), and the minimum for each subsequent
investment is $1,000. SWIS may, in its sole discretion, accept smaller initial
or subsequent investments so long as the investor is an employee of SWIS or any
of its affiliates or has an investment account with SWIS in amounts specified by
SWIS from time to time. None of the Funds will issue share certificates unless a
shareholder so requests.
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Shares of each Fund may be purchased for cash or in exchange for securities held
by the investor, subject to the determination by SWIS that the securities are
acceptable. (For purposes of determining whether securities will be acceptable,
SWIS will consider, among other things, whether they are liquid securities of a
type consistent with the investment objectives and policies of the Fund in
question and having a readily ascertainable value.) If a Fund receives
securities from an investor in exchange for shares of the Fund, the Fund will
under some circumstances have the same tax basis in the securities as the
investor had prior to the exchange (and the Fund's gain for tax purposes would
be calculated with regard to the investor's tax basis). Any gain on the sale of
those securities would be subject to distribution as capital gain to all of the
Fund's shareholders. SWIS reserves the right to reject any particular
investment. Securities accepted by SWIS will be valued in the same manner as are
the Trust's portfolio securities as of the time of the next determination of the
Funds' net asset value. All dividend, subscription, or other rights which are
reflected in the market price of accepted securities at the time of valuation
become the property of the relevant Fund and must be delivered to the Fund upon
receipt by the investor. A gain or loss for federal income tax purposes may be
realized by investors upon the exchange. Investors interested in purchases
through exchange should telephone SWIS at (800) 464-3108.
You can make regular investments of $1,000 or more per month through automatic
deductions from your bank checking account. Application forms are available from
the Trust's transfer agent, Boston Financial Data Services, Inc., Two Heritage
Drive, North Quincy, Massachusetts 02171 ("Boston Financial").
See "Distributions" below for additional information about how to purchase
shares of Wertheim Short-Term Investment Fund.
HOW TO SELL SHARES
Shares of each Fund may be redeemed on any business day by sending a letter of
instruction or stock power form to Boston Financial. The redemption price is the
net asset value per share next determined after receipt of the redemption
request in good order. A redemption request is in good order if it includes the
exact name in which the shares are registered, the investor's account number,
and the number of shares or the dollar amount of shares to be redeemed, and if
it is signed exactly in accordance with the registration form. Signatures must
be guaranteed by a bank, broker/dealer, or certain other financial institutions.
Boston Financial may require additional documentation from shareholders that are
corporations, partnerships, agents, fiduciaries, or surviving joint owners.
Payment on redemption will be made as promptly as possible and in any event
within seven days after the request for redemption is received in writing by
Boston Financial in good order. (The Trust generally sends payment for shares
the business day after a request is received.) Under unusual circumstances, the
Trust may suspend repurchases or postpone payment for more than seven days, as
permitted by law.
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EXCHANGES
You can exchange your shares of any Fund for shares of any other Fund at any
time at their respective net asset values. To exchange shares, you should
complete an exchange authorization form available from Boston Financial and mail
it to Boston Financial.
For federal income tax purposes, an exchange is treated as a sale of shares and
generally results in a capital gain or loss. The Trust reserves the right to
change or suspend the exchange privilege at any time. Shareholders would be
notified of any such change or suspension. Shares of the Funds are not available
to residents of all states.
DETERMINATION OF NET ASSET VALUE
EACH FUND CALCULATES THE NET ASSET VALUE OF A SHARE BY DIVIDING THE TOTAL VALUE
OF ITS ASSETS, LESS LIABILITIES, BY THE NUMBER OF SHARES OUTSTANDING. Shares are
valued as of the close of regular trading on the New York Stock Exchange each
day the Exchange is open. Portfolio securities for which market quotations are
readily available are stated at market value. Short-term investments that will
mature in 60 days or less are stated at amortized cost, which approximates
market value. All other securities and assets are valued at their fair value
following procedures approved by the Trustees.
DISTRIBUTIONS
WERTHEIM EQUITY VALUE FUND AND WERTHEIM SMALL CAPITALIZATION VALUE FUND. The
Equity Value Fund and the Small Capitalization Value Fund distribute any net
investment income and any net realized capital gains at least annually.
Distributions from net investment income, if any, are expected to be small.
Distributions from net capital gains are made after applying any available
capital loss carryovers.
WERTHEIM HIGH YIELD INCOME FUND AND WERTHEIM INVESTMENT GRADE INCOME FUND. The
High Yield Income Fund and the Investment Grade Income Fund distribute net
investment income monthly and any net realized capital gains at least annually.
Distributions from capital gains are made after applying any available capital
loss carryovers.
WERTHEIM SHORT-TERM INVESTMENT FUND. All of the net income of the Short-Term
Investment Fund is declared each day the Fund is open for business as a dividend
to shareholders of record at the time of the declaration. Shareholders begin
earning dividends on the day after the Fund receives Same Day Funds. "Same Day
Funds" are funds credited by the applicable regional Federal Reserve Bank to the
account of the Trust's designated bank. A Fund's net income for Saturdays,
Sundays, and holidays is declared as a dividend on the next business day. Each
month's dividends will be paid on the last day of that month (or, if that day is
not a business day, on the next business day). A shareholder who withdraws the
entire balance of an account at any time during the month will be paid all
dividends declared through the date of the withdrawal.
YOU CAN CHOOSE FROM THREE DISTRIBUTION OPTIONS: (1) reinvest all distributions
in additional Fund shares; (2) receive distributions from net investment income
in cash while reinvesting capital gains distributions in additional shares; or
21
WSIS SERIES TRUST
<PAGE>
(3) receive all distributions in cash. You can change your distribution option
by notifying Boston Financial in writing. If you do not select an option when
you open your account, all distributions by a Fund will be reinvested in shares
of that Fund. You will receive a statement confirming reinvestment of
distributions in additional Fund shares promptly following the period in which
the reinvestment occurs.
TAXES
Each Fund intends to qualify as a "regulated investment company" for federal
income tax purposes and to meet all other requirements that are necessary for it
to be relieved of federal taxes on income and gains it distributes to
shareholders. A Fund will distribute substantially all of its net investment
income and net capital gain income on a current basis.
All Fund distributions will be taxable to you as ordinary income, except that
any distributions of net long-term capital gains will be taxed as such,
regardless of how long you have held the shares. Distributions will be taxable
as described above whether received in cash or in shares through the
reinvestment of distributions.
Early in each year the Trust will notify you of the amount and tax status of
distributions paid to you by each of the Funds for the preceding year.
The foregoing is a summary of certain federal income tax consequences of
investing in a Fund. You should consult your tax adviser to determine the
precise effect of an investment in a Fund on your particular tax situation.
In order to permit Wertheim Investment Grade Income Fund and Wertheim High Yield
Income Fund to maintain a more stable monthly dividend, each of those Funds may
from time to time pay out less than the entire amount of net investment income
earned in any particular period. Any such amount retained by those Funds would
be available to stabilize future dividends. As a result, the dividends paid by
these Funds for any particular period may be more or less than the amount of net
investment income actually earned by these Funds during the period. None of the
Funds intends to distribute in respect of any taxable year more than the Fund's
net income for federal income tax purposes for that year, nor does any of the
Funds intend to stabilize its dividends in any year in such a manner as to cause
the Fund to pay federal tax.
In order to avoid dilution of the undistributed net investment income of
Wertheim Investment Grade Income Fund and Wertheim High Yield Income Fund, each
of those Funds follows an accounting practice known as "equalization." A portion
of the purchase price paid for shares of the Fund (including shares purchased by
reinvestment of Fund distributions) equal to the undistributed net investment
income per share of the Fund at the time of purchase is segregated for
accounting purposes and is available for payment of future dividends. As a
result, future dividends may include a non-taxable return of capital to
shareholders.
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WSIS SERIES TRUST
<PAGE>
MANAGEMENT OF THE TRUST
The Trustees of the Trust are responsible for generally overseeing the conduct
of the Trust's business. The Trust's investment adviser is SWIS. SWIS is a
wholly owned subsidiary of Schroder Wertheim Holdings Incorporated, an
investment banking, asset management, and securities firm. Schroder Wertheim
Holdings Incorporated and its affiliates have been investment managers since
1927. SWIS itself has been an investment manager since 1962, and serves as
investment manager for approximately $4.1 billion as of December 31, 1995.
Schroder Wertheim Holdings Incorporated is a wholly owned subsidiary of
Schroders Incorporated, which in turn is an indirect, wholly owned U.S.
subsidiary of Schroders Public Limited Company, a publicly owned holding company
organized under the laws of England. Schroders Public Limited Company and its
affiliates engage in international merchant banking and investment management
businesses, and as of December 31, 1995 had under management assets of
approximately $100 billion. Schroder Fund Advisors Inc. is a wholly owned
subsidiary of Schroder Capital Management International, Inc. Schroder Capital
Management International, Inc. is also a wholly owned subsidiary of Schroders
Incorporated.
Subject to such policies as the Trustees may determine, SWIS furnishes a
continuing investment program for the Funds and makes investment decisions on
their behalf. Subject to the control of the Trustees, SWIS also manages the
Trust's other affairs and business. The Trust's principal office is located at
787 Seventh Avenue, New York, New York 10019 (which is also the address of
SWIS's principal office), and its telephone number is (212) 492-6000. SWIS has
served as investment adviser to the Trust since its inception.
The Funds pay management fees to SWIS monthly at the following annual rates
(based on the assets of each Fund taken separately): Wertheim Equity Value Fund
- - -- .75% of the Fund's average net assets; Wertheim Small Capitalization Value
Fund -- .95% of the Fund's average net assets; Wertheim High Yield Income Fund
- - -- .90% of the Fund's average net assets; Wertheim Investment Grade Income Fund
- - -- .50% of the Fund's average net assets; and Wertheim Short-Term Investment
Fund -- .40% of the Fund's average net assets. In order to limit the Funds'
expenses, SWIS has voluntarily agreed to reduce its compensation (and, if
necessary, to pay certain expenses of each of the Funds) until October 31, 1996
with respect to each of the Funds to the extent that a Fund's expenses (other
than SWIS's compensation, brokerage, interest, taxes, deferred organizational
expenses, and extraordinary expenses) exceed the following annual rates:
Wertheim Equity Value Fund -- .80% of the Fund's average net assets; Wertheim
Small Capitalization Value Fund -- .75% of the Fund's average net assets;
Wertheim High Yield Income Fund -- .65% of the Fund's average net assets;
Wertheim Investment Grade Income Fund -- .62% of the Fund's average net assets;
and Wertheim Short-Term Investment Fund -- .63% of the Fund's average net
assets. The management fees paid by Wertheim Equity Value Fund, Wertheim Small
Capitalization Value Fund, and Wertheim High Yield Income Fund are higher than
those paid by most other investment companies. The Trust pays all expenses not
assumed by SWIS, including Trustees' fees, auditing, legal, custodial, and
investor servicing and shareholder reporting expenses.
SWIS's investment decisions for each of the Funds are generally made by a
committee of SWIS's investment professionals. Mr. E. William Smethurst, Jr.,
President and Chief Investment Officer at SWIS, is primarily responsible for
making recommendations to the committee for Wertheim Equity Value Fund. Mr.
Michael Lanier, First Vice President and Portfolio
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WSIS SERIES TRUST
<PAGE>
Manager at SWIS, is primarily responsible for making recommendations to the
committee for Wertheim High Yield Income Fund. Nancy B. Tooke, Director, Senior
Vice President and Portfolio Manager at SWIS, is primarily responsible for
making recommendations to the committee for Wertheim Small Capitalization Value
Fund. Gary S. Zeltzer, Group Vice President and Portfolio Manager at SWIS, is
primarily responsible for making recommendations to the committee for Wertheim
Investment Grade Income Fund and Wertheim Short-Term Investment Fund. Each of
the persons named has had that responsibility since the organization of the
Funds (other than Mr. Lanier, who has had that responsibility since November
1995) and has many years of experience in managing investment portfolios
comparable to those for which each has such responsibility.
SWIS places all orders for purchases and sales of the Funds' securities. In
selecting broker-dealers, SWIS may consider research and brokerage services
furnished to it and its affiliates. Schroder Wertheim & Co. Incorporated, an
affiliate of SWIS, may receive brokerage commissions from the Funds in
accordance with procedures adopted by the Trustees under the Investment Company
Act of 1940 which require periodic review of these transactions. Subject to
seeking the most favorable price and execution available, SWIS may consider
sales of shares of the Funds as a factor in the selection of broker-dealers.
PERFORMANCE INFORMATION
Yield and total return data may from time to time be included in advertisements
about the Funds. The "yield" of each Fund is calculated by dividing the Fund's
annualized net investment income per share during a recent 30-day period by the
net asset value per share on the last day of that period. "Total return" for the
life of a Fund through the most recent calendar quarter represents the average
annual compounded rate of return on an investment of $1,000 in the Fund during
that period. Total return for any period of one year or less represents the
actual rate of return on such an investment earned during the period.
ALL DATA IS BASED ON A FUND'S PAST INVESTMENT RESULTS AND DOES NOT PREDICT
FUTURE PERFORMANCE. Investment performance, which will vary, is based on many
factors, including market conditions, the composition of each Fund's portfolio,
and each Fund's operating expenses. Investment performance also often reflects
the risks associated with each Fund's investment objectives and policies.
Quotations of yield or total return for any period when an expense limitation is
in effect will be greater than if the limitation had not been in effect. These
factors should be considered when comparing a Fund's investment results to those
of other mutual funds and other investment vehicles. Each Fund's performance may
be compared to various indices. See the Statement of Additional Information for
a fuller discussion of performance information.
ADDITIONAL INFORMATION ABOUT THE TRUST
The Trust was established as a Massachusetts business trust in 1993. The Trust
has an unlimited number of shares of beneficial interest that may, without
shareholder approval, be divided into an unlimited number of series of such
shares, which, in turn, may be divided into an unlimited number of classes of
such shares. The Trust's shares of beneficial interest are presently divided
into five different series, including each of the Funds. Each share has one
vote, with fractional shares voting proportionally. Shares are freely
transferable, are entitled to dividends as declared by the Trustees, and, if a
Fund were
24
WSIS SERIES TRUST
<PAGE>
liquidated, would receive the net assets of the Fund. A Fund may suspend the
sale of shares at any time and may refuse any order to purchase shares. Although
the Trust is not required to hold annual meetings of its shareholders,
shareholders have the right to call a meeting to elect or remove Trustees, or to
take other actions as provided in the Declaration of Trust.
Due to their ownership of shares of each of the Funds, the Schroder Wertheim &
Co. Incorporated Profit-Sharing, Savings Incentive, and Pension Plans and the
Lewco Securities Corp. Profit-Sharing and Thrift Plans may be deemed to control
those Funds. See the Statement of Additional Information.
If you own fewer shares than a minimum amount set by the Trustees (presently 50
shares) of any Fund, the Trust may choose to redeem your shares in that Fund and
pay you for them. You will receive at least 30 days' written notice before the
Trust redeems your shares, and you may purchase additional shares at any time to
avoid a redemption. The Trust may also redeem shares if you own shares of any
Fund above a maximum amount set by the Trustees. There is currently no maximum,
but the Trustees may establish one at any time, which could apply to both
present and future shareholders.
Schroder Fund Advisors Inc., 787 Seventh Avenue, New York, New York 10019, is
the principal underwriter for the Trust. State Street Bank and Trust Company,
225 Franklin Street, Boston, Massachusetts 02110, is the Trust's administrator
and custodian. The Trust currently pays State Street fees for its services as
administrator at the annual rate of .08% of each Fund's average daily net assets
(subject to certain minimum charges). The Registrant's transfer agent and
registrar is Boston Financial Data Services, Inc., Two Heritage Drive, Quincy,
Massachusetts 02171.
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WSIS SERIES TRUST
<PAGE>
APPENDIX A
RATINGS DESCRIPTIONS
THE RATING SERVICES' DESCRIPTION OF CORPORATE DEBT SECURITIES ARE AS FOLLOWS:
MOODY'S INVESTORS SERVICE, INC.
AAA -- Securities which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
AA -- Securities which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high-grade securities. They are rated lower than the best securities because
margins of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in Aaa
securities.
A -- Securities which are rated A possess many favorable investment attributes
and are to be considered as upper medium-grade obligations. Factors giving
security to principal and interest are considered adequate but elements may be
present which suggest a susceptibility to impairment sometime in the future.
BAA -- Securities which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking, or may be characteristically
unreliable over any great length of time. Such securities lack outstanding
investment characteristics and in fact have speculative characteristics as well.
BA -- Securities which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during either good or bad times over the future. Uncertainty of
position characterizes securities in this class.
B -- Securities which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small.
CAA -- Securities which are rated Caa are of poor standing. Such issues may be
in default or there may be present elements of danger with respect to principal
or interest.
CA -- Securities which are rated Ca represent obligations which are speculative
in a high degree. Such issues are often in default or have other marked
shortcomings.
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WSIS SERIES TRUST
<PAGE>
C -- Bonds which are rated C are the lowest class of bonds and issues so rated
can be regarded as having extremely poor prospects of ever attaining any real
investment standing.
STANDARD & POOR'S CORPORATION
AAA -- Securities rated AAA have the highest rating assigned by Standard &
Poor's. Capacity to pay interest and repay principal is extremely strong.
AA -- Securities rated AA have a very strong capacity to pay interest and repay
principal and differ from the higher-rated issues only in small degree.
A -- Securities rated A have a strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than securities in higher-rated
categories.
BBB -- Securities rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
securities in this category than in higher-rated categories.
BB-B-CCC-CC OR C -- Bonds rated BB, B, CCC, CC or C are regarded, on balance, as
predominantly speculative with respect to the issuer's capacity to pay interest
and repay principal in accordance with the terms of the obligation. While such
bonds will likely have some quality and protective characteristics, these are
outweighed by large uncertainties or major risk exposures to adverse conditions.
D -- Debt rated D is in default and payment of interest and/or repayment of
principal is in arrears.
A-1 AND PRIME-1 COMMERCIAL PAPER RATINGS
The rating A-1 (including A-1+) is the highest commercial paper rating assigned
by S&P. Commercial paper rated A-1 by S&P has the following characteristics:
- liquidity ratios are adequate to meet cash requirements;
- long-term senior debt is rated "A" or better;
- the issuer has access to at least two additional channels of borrowing;
- basic earnings and cash flow have an upward trend with allowance made for
unusual circumstances;
- typically, the issuer's industry is well established and the issuer has a
strong position within the industry; and
- the reliability and quality of management are unquestioned.
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WSIS SERIES TRUST
<PAGE>
Relative strength or weakness of the above factors determines whether the
issuer's commercial paper is rated A-1, A-2 or A-3. Issues rated A-1 that are
determined by S&P to have overwhelming safety characteristics are designated
A-1+.
The rating Prime-1 is the highest commercial paper rating assigned by Moody's.
Among the factors considered by Moody's in assigning ratings are the following:
- evaluation of the management of the issuer;
- economic evaluation of the issuer's industry or industries and an
appraisal of speculative-type risks which may be inherent in certain
areas;
- evaluation of the issuer's products in relation to competition and
customer acceptance;
- liquidity;
- amount and quality of long-term debt;
- trend of earnings over a period of ten years;
- financial strength of parent company and the relationships which exist
with the issuer; and
- recognition by the management of obligations which may be present or may
arise as a result of public interest questions and preparations to meet
such obligations.
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WSIS SERIES TRUST
<PAGE>
- - -- --
WSIS SERIES TRUST
Wertheim Equity
Value Fund
Wertheim Small
Capitalization Value
Fund
Wertheim High Yield
Income Fund
Wertheim Investment
Grade Income Fund
Wertheim Short-Term
Investment
Fund
WSIS Series Trust
P.O. Box 8507
Boston, Mass. 02266
1-800-464-3108
039649
PROSPECTUS
March 1, 1996
<PAGE>
WSIS SERIES TRUST
FORM N-1A
PART B
STATEMENT OF ADDITIONAL INFORMATION
March 1, 1996
This Statement of Additional Information contains information that may be
of interest to investors but which is not included in the Prospectus of WSIS
Series Trust (the "Trust"). This Statement is not a prospectus and is only
authorized for distribution when accompanied or preceded by the Prospectus of
the Trust dated March 1, 1996. This Statement should be read together with the
Prospectus. Investors may obtain a free copy of the Prospectus by calling
Schroder Wertheim Investment Services, Inc., the Trust's investment adviser, at
1-800-464-3108.
<PAGE>
TABLE OF CONTENTS
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
INVESTMENT OBJECTIVES AND POLICIES OF THE TRUST
AND RISK CONSIDERATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
INVESTMENT RESTRICTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . .14
TRUSTEES AND OFFICERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
MANAGEMENT CONTRACT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
DETERMINATION OF NET ASSET VALUE . . . . . . . . . . . . . . . . . . . . . . .23
TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
PRINCIPAL HOLDERS OF SECURITIES. . . . . . . . . . . . . . . . . . . . . . . .27
PERFORMANCE INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . .28
ORGANIZATION AND CAPITALIZATION. . . . . . . . . . . . . . . . . . . . . . . .30
PRINCIPAL UNDERWRITER. . . . . . . . . . . . . . . . . . . . . . . . . . . . .30
PORTFOLIO TURNOVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
CUSTODIAN. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
INDEPENDENT AUDITORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
SHAREHOLDER LIABILITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32
<PAGE>
WSIS SERIES TRUST
STATEMENT OF ADDITIONAL INFORMATION
DEFINITIONS
The "Trust" -- WSIS Series Trust
"SWIS" -- Schroder Wertheim Investment
Services, Inc., the Trust's
investment adviser
INVESTMENT OBJECTIVES AND POLICIES OF THE TRUST AND RISK CONSIDERATIONS
The Trust currently offers shares of beneficial interest of five series
(the "Funds") with separate investment objectives and policies. The
investment objectives and policies of each of the Funds are described in the
Prospectus. This Statement contains additional information concerning certain
investment practices and investment restrictions of the Trust.
Except as described below under "Investment Restrictions", the investment
objectives and policies described in the Prospectus and in this Statement are
not fundamental, and the Trustees may change the investment objectives and
policies of a Fund without an affirmative vote of shareholders of the Fund.
Except as otherwise noted below, the following descriptions of certain
investment policies and techniques are applicable to all of the Funds.
OPTIONS
Each Fund may purchase and sell covered put and call options on its
portfolio securities to enhance investment performance and to protect against
changes in market prices.
COVERED CALL OPTIONS. A Fund may write covered call options on its
securities to realize a greater current return through the receipt of
premiums than it would realize on its securities alone. Such option
transactions may also be used as a limited form of hedging against a decline
in the price of securities owned by the Fund.
A call option gives the holder the right to purchase, and obligates the
writer to sell, a security at the exercise price at any time before the
expiration date. A call option is "covered" if the writer, at all times
while obligated as a writer, either owns the underlying securities (or
comparable securities satisfying the cover requirements of the securities
exchanges), or has the right to acquire such securities through immediate
conversion of securities.
-1-
<PAGE>
In return for the premium received when it writes a covered call option,
the Fund gives up some or all of the opportunity to profit from an increase
in the market price of the securities covering the call option during the
life of the option. The Fund retains the risk of loss should the price of
such securities decline. If the option expires unexercised, the Fund
realizes a gain equal to the premium, which may be offset by a decline in
price of the underlying security. If the option is exercised, the Fund
realizes a gain or loss equal to the difference between the Fund's cost for
the underlying security and the proceeds of sale (exercise price minus
commissions) plus the amount of the premium.
A Fund may terminate a call option that it has written before it expires by
entering into a closing purchase transaction. A Fund may enter into closing
purchase transactions in order to free itself to sell the underlying security or
to write another call on the security, realize a profit on a previously written
call option, or protect a security from being called in an unexpected market
rise. Any profits from a closing purchase transaction may be offset by a
decline in the value of the underlying security. Conversely, because increases
in the market price of a call option will generally reflect increases in the
market price of the underlying security, any loss resulting from a closing
purchase transaction is likely to be offset in whole or in part by unrealized
appreciation of the underlying security owned by the Trust.
COVERED PUT OPTIONS. A Fund may write covered put options in order to
enhance its current return. Such options transactions may also be used as a
limited form of hedging against an increase in the price of securities that
the Fund plans to purchase. A put option gives the holder the right to sell,
and obligates the writer to buy, a security at the exercise price at any time
before the expiration date. A put option is "covered" if the writer
segregates cash and high-grade short-term debt obligations or other
permissible collateral equal to the price to be paid if the option is
exercised.
In addition to the receipt of premiums and the potential gains from
terminating such options in closing purchase transactions, the Fund also
receives interest on the cash and debt securities maintained to cover the
exercise price of the option. By writing a put option, the Fund assumes the
risk that it may be required to purchase the underlying security for an exercise
price higher than its then current market value, resulting in a potential
capital loss unless the security later appreciates in value.
A Fund may terminate a put option that it has written before it expires
by a closing purchase transaction. Any loss from this transaction may be
partially or entirely offset by the premium received on the terminated option.
PURCHASING PUT AND CALL OPTIONS. A Fund may also purchase put options to
protect portfolio holdings against a decline in market value. This protection
lasts for the life of the put option because the Fund, as a holder of the
option, may sell the underlying security at the exercise price regardless of any
decline in its market price. In order for a put option to be profitable, the
market price of the underlying security must decline sufficiently below the
exercise price to cover the premium and transaction costs that the Fund must
pay. These costs will reduce any profit the Fund might have realized had it
sold the underlying security instead of buying the put option.
A Fund may purchase call options to hedge against an increase in the
price of securities that the Fund wants ultimately to buy. Such hedge
protection is provided during the life of the call option since the Fund, as
holder of the call option, is able to buy the underlying security at the
exercise price
-2-
<PAGE>
regardless of any increase in the underlying security's market price. In order
for a call option to be profitable, the market price of the underlying security
must rise sufficiently above the exercise price to cover the premium and
transaction costs. These costs will reduce any profit the Fund might have
realized had it bought the underlying security at the time it purchased the call
option.
A Fund may also purchase put and call options to enhance its current
return.
OPTIONS ON FOREIGN SECURITIES. A Fund may purchase and sell options on
foreign securities if in SWIS's opinion the investment characteristics of such
options, including the risks of investing in such options, are consistent with
the Fund's investment objectives. It is expected that risks related to such
options will not differ materially from risks related to options on U.S.
securities. However, position limits and other rules of foreign exchanges may
differ from those in the U.S. In addition, options markets in some countries,
many of which are relatively new, may be less liquid than comparable markets in
the U.S.
RISKS INVOLVED IN THE SALE OF OPTIONS. Options transactions involve
certain risks, including the risks that SWIS will not forecast interest rate
or market movements correctly, that a Fund may be unable at times to close
out such positions, or that hedging transactions may not accomplish their
purpose because of imperfect market correlations. The successful use of
these strategies depends on the ability of SWIS to forecast market and
interest rate movements correctly.
An exchange-listed option may be closed out only on an exchange which
provides a secondary market for an option of the same series. There is no
assurance that a liquid secondary market on an exchange will exist for any
particular option or at any particular time. If no secondary market were to
exist, it would be impossible to enter into a closing transaction to close
out an option position. As a result, a Fund may be forced to continue to
hold, or to purchase at a fixed price, a security on which it has sold an
option at a time when SWIS believes it is inadvisable to do so.
Higher than anticipated trading activity or order flow or other unforeseen
events might cause The Options Clearing Corporation or an exchange to institute
special trading procedures or restrictions that might restrict the Trust's use
of options. The exchanges have established limitations on the maximum number of
calls and puts of each class that may be held or written by an investor or group
of investors acting in concert. It is possible that the Trust and other clients
of SWIS may be considered such a group. These position limits may restrict the
Trust's ability to purchase or sell options on particular securities.
Options which are not traded on national securities exchanges may be closed
out only with the other party to the option transaction. For that reason, it
may be more difficult to close out unlisted options than listed options.
Furthermore, unlisted options are not subject to the protection afforded
purchasers of listed options by The Options Clearing Corporation.
Government regulations, particularly the requirements for qualification as
a "regulated investment company" under the Internal Revenue Code, may also
restrict the Trust's use of options.
FUTURES CONTRACTS
-3-
<PAGE>
In order to hedge against the effects of adverse market changes each Fund
that may invest in debt securities may buy and sell futures contracts on debt
securities of the type in which the Fund may invest and on indexes of debt
securities. In addition, each Fund that may invest in equity securities may
purchase and sell stock index futures to hedge against changes in stock market
prices. Each Fund may also, to the extent permitted by applicable law, buy and
sell futures contracts and options on futures contracts to increase the Fund's
current return. All such futures and related options will, as may be required
by applicable law, be traded on exchanges that are licensed and regulated by the
Commodity Futures Trading Commission (the "CFTC").
FUTURES ON DEBT SECURITIES AND RELATED OPTIONS. A futures contract on a
debt security is a binding contractual commitment which, if held to maturity,
will result in an obligation to make or accept delivery, during a particular
month, of securities having a standardized face value and rate of return. By
purchasing futures on debt securities -- assuming a "long" position -- a Fund
will legally obligate itself to accept the future delivery of the underlying
security and pay the agreed price. By selling futures on debt securities --
assuming a "short" position -- it will legally obligate itself to make the
future delivery of the security against payment of the agreed price. Open
futures positions on debt securities will be valued at the most recent
settlement price, unless that price does not, in the judgment of persons acting
at the direction of the Trustees as to the valuation of the Trust's assets,
reflect the fair value of the contract, in which case the positions will be
valued by the Trustees or such persons.
Positions taken in the futures markets are not normally held to maturity,
but are instead liquidated through offsetting transactions that may result in a
profit or a loss. While futures positions taken by a Fund will usually be
liquidated in this manner, a Fund may instead make or take delivery of the
underlying securities whenever it appears economically advantageous to the Fund
to do so. A clearing corporation associated with the exchange on which futures
are traded assumes responsibility for such closing transactions and guarantees
that a Fund's sale and purchase obligations under closed-out positions will be
performed at the termination of the contract.
Hedging by use of futures on debt securities seeks to establish more
certainly than would otherwise be possible the effective rate of return on
portfolio securities. A Fund may, for example, take a "short" position in the
futures market by selling contracts for the future delivery of debt securities
held by the Fund (or securities having characteristics similar to those held by
the Fund) in order to hedge against an anticipated rise in interest rates that
would adversely affect the value of the Fund's portfolio securities. When
hedging of this character is successful, any depreciation in the value of
portfolio securities may substantially be offset by appreciation in the value of
the futures position.
On other occasions, a Fund may take a "long" position by purchasing futures
on debt securities. This would be done, for example, when the Trust expects to
purchase for the Fund particular securities when it has the necessary cash, but
expects the rate of return available in the securities markets at that time to
be less favorable than rates currently available in the futures markets. If the
anticipated rise in the price of the securities should occur (with its
concomitant reduction in yield), the increased cost to the Fund of purchasing
the securities may be offset, at least to some extent, by the rise in the value
of the futures position taken in anticipation of the subsequent securities
purchase.
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Successful use by a Fund of futures contracts on debt securities is subject
to SWIS's ability to predict correctly movements in the direction of interest
rates and other factors affecting markets for debt securities. For example, if
a Fund has hedged against the possibility of an increase in interest rates which
would adversely affect the market prices of debt securities held by it and the
prices of such securities increase instead, the Fund will lose part or all of
the benefit of the increased value of its securities which it has hedged because
it will have offsetting losses in its futures positions. In addition, in such
situations, if the Fund has insufficient cash, it may have to sell securities to
meet daily maintenance margin requirements. The Fund may have to sell
securities at a time when it may be disadvantageous to do so.
A Fund may purchase and write put and call options on certain debt futures
contracts, as they become available. Such options are similar to options on
securities except that options on futures contracts give the purchaser the
right, in return for the premium paid, to assume a position in a futures
contract (a long position if the option is a call and a short position if the
option is a put) at a specified exercise price at any time during the period of
the option. As with options on securities, the holder or writer of an option
may terminate his position by selling or purchasing an option of the same
series. There is no guarantee that such closing transactions can be effected.
A Fund will be required to deposit initial margin and maintenance margin with
respect to put and call options on futures contracts written by it pursuant to
brokers' requirements, and, in addition, net option premiums received will be
included as initial margin deposits. See "Margin Payments" below. Compared to
the purchase or sale of futures contracts, the purchase of call or put options
on futures contracts involves less potential risk to a Fund because the maximum
amount at risk is the premium paid for the options plus transactions costs.
However, there may be circumstances when the purchase of call or put options on
a futures contract would result in a loss to a Fund when the purchase or sale of
the futures contracts would not, such as when there is no movement in the prices
of debt securities. The writing of a put or call option on a futures contract
involves risks similar to those risks relating to the purchase or sale of
futures contracts.
INDEX FUTURES CONTRACTS AND OPTIONS. Certain Funds may invest in debt
index futures contracts and stock index futures contracts, and in related
options. A debt index futures contract is a contract to buy or sell units of a
specified debt index at a specified future date at a price agreed upon when the
contract is made. A unit is the current value of the index. Debt index futures
in which the Funds are presently expected to invest are not now available,
although such futures contracts are expected to become available in the future.
A stock index futures contract is a contract to buy or sell units of a stock
index at a specified future date at a price agreed upon when the contract is
made. A unit is the current value of the stock index.
The following example illustrates generally the manner in which index
futures contracts operate. The Standard & Poor's 100 Stock Index is composed of
100 selected common stocks, most of which are listed on the New York Stock
Exchange. The S&P 100 Index assigns relative weightings to the common stocks
included in the Index, and the Index fluctuates with changes in the market
values of those common stocks. In the case of the S&P 100 Index, contracts are
to buy or sell 100 units. Thus, if the value of the S&P 100 Index were $180,
one contract would be worth $18,000 (100 units x $180). The stock index futures
contract specifies that no delivery of the actual stocks making up the index
will take place. Instead, settlement in cash must occur upon the termination of
the contract, with the settlement being the difference between the contract
price and the actual level of the stock index at the expiration of the contract.
For example, if a Fund enters into a futures contract
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to buy 100 units of the S&P 100 Index at a specified future date at a contract
price of $180 and the S&P 100 Index is at $184 on that future date, the Fund
will gain $400 (100 units x gain of $4). If the Fund enters into a futures
contract to sell 100 units of the stock index at a specified future date at a
contract price of $180 and the S&P 100 Index is at $182 on that future date, the
Fund will lose $200 (100 units x loss of $2).
A Fund may purchase or sell futures contracts with respect to any
securities indexes. Positions in index futures may be closed out only on an
exchange or board of trade which provides a secondary market for such futures.
In order to hedge a Fund's investments successfully using futures contracts
and related options, a Fund must invest in futures contracts with respect to
indexes or sub-indexes the movements of which will, in its judgment, have a
significant correlation with movements in the prices of the Fund's securities.
Options on index futures contracts are similar to options on securities
except that options on index futures contracts give the purchaser the right, in
return for the premium paid, to assume a position in an index futures contract
(a long position if the option is a call and a short position if the option is a
put) at a specified exercise price at any time during the period of the option.
Upon exercise of the option, the holder would assume the underlying futures
position and would receive a variation margin payment of cash or securities
approximating the increase in the value of the holder's option position. If an
option is exercised on the last trading day prior to the expiration date of the
option, the settlement will be made entirely in cash based on the difference
between the exercise price of the option and the closing level of the index on
which the futures contract is based on the expiration date. Purchasers of
options who fail to exercise their options prior to the exercise date suffer a
loss of the premium paid.
As an alternative to purchasing and selling call and put options on index
futures contracts, each of the Funds which may purchase and sell index futures
contracts may purchase and sell call and put options on the underlying indexes
themselves to the extent that such options are traded on national securities
exchanges. Index options are similar to options on individual securities in
that the purchaser of an index option acquires the right to buy (in the case of
a call) or sell (in the case of a put), and the writer undertakes the obligation
to sell or buy (as the case may be), units of an index at a stated exercise
price during the term of the option. Instead of giving the right to take or
make actual delivery of securities, the holder of an index option has the right
to receive a cash "exercise settlement amount". This amount is equal to the
amount by which the fixed exercise price of the option exceeds (in the case of a
put) or is less than (in the case of a call) the closing value of the underlying
index on the date of the exercise, multiplied by a fixed "index multiplier".
A Fund may purchase or sell options on stock indices in order to close out
its outstanding positions in options on stock indices which it has purchased. A
Fund may also allow such options to expire unexercised.
Compared to the purchase or sale of futures contracts, the purchase of call
or put options on an index involves less potential risk to a Fund because the
maximum amount at risk is the premium paid for the options plus transactions
costs. The writing of a put or call option on an index involves risks similar
to those risks relating to the purchase or sale of index futures contracts.
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MARGIN PAYMENTS. When a Fund purchases or sells a futures contract, it is
required to deposit with its custodian an amount of cash, U.S. Treasury bills,
or other permissible collateral equal to a small percentage of the amount of the
futures contract. This amount is known as "initial margin". The nature of
initial margin is different from that of margin in security transactions in that
it does not involve borrowing money to finance transactions. Rather, initial
margin is similar to a performance bond or good faith deposit that is returned
to a Fund upon termination of the contract, assuming a Fund satisfies its
contractual obligations.
Subsequent payments to and from the broker occur on a daily basis in a
process known as "marking to market". These payments are called "variation
margin" and are made as the value of the underlying futures contract fluctuates.
For example, when a Fund sells a futures contract and the price of the
underlying debt security rises above the delivery price, the Fund's position
declines in value. The Fund then pays the broker a variation margin payment
equal to the difference between the delivery price of the futures contract and
the market price of the securities underlying the futures contract. Conversely,
if the price of the underlying security falls below the delivery price of the
contract, the Fund's futures position increases in value. The broker then must
make a variation margin payment equal to the difference between the delivery
price of the futures contract and the market price of the securities underlying
the futures contract.
When a Fund terminates a position in a futures contract, a final
determination of variation margin is made, additional cash is paid by or to the
Fund, and the Fund realizes a loss or a gain. Such closing transactions involve
additional commission costs.
SPECIAL RISKS OF TRANSACTIONS IN FUTURES CONTRACTS AND RELATED OPTIONS
LIQUIDITY RISKS. Positions in futures contracts may be closed out only on
an exchange or board of trade which provides a secondary market for such
futures. Although the Trust intends to purchase or sell futures only on
exchanges or boards of trade where there appears to be an active secondary
market, there is no assurance that a liquid secondary market on an exchange or
board of trade will exist for any particular contract or at any particular time.
If there is not a liquid secondary market at a particular time, it may not be
possible to close a futures position at such time and, in the event of adverse
price movements, a Fund would continue to be required to make daily cash
payments of variation margin. However, in the event financial futures are used
to hedge portfolio securities, such securities will not generally be sold until
the financial futures can be terminated. In such circumstances, an increase in
the price of the portfolio securities, if any, may partially or completely
offset losses on the financial futures.
In addition to the risks that apply to all options transactions, there are
several special risks relating to options on futures contracts. The ability to
establish and close out positions in such options will be subject to the
development and maintenance of a liquid secondary market. It is not certain
that such a market will develop. Although a Fund generally will purchase only
those options for which there appears to be an active secondary market, there is
no assurance that a liquid secondary market on an exchange will exist for any
particular option or at any particular time. In the event no such market exists
for particular options, it might not be possible to effect closing transactions
in such options with the result that a Fund would have to exercise the options
in order to realize any profit.
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HEDGING RISKS. There are several risks in connection with the use by a
Fund of futures contracts and related options as a hedging device. One risk
arises because of the imperfect correlation between movements in the prices of
the futures contracts and options and movements in the underlying securities or
index or movements in the prices of a Fund's securities which are the subject of
a hedge. SWIS will, however, attempt to reduce this risk by purchasing and
selling, to the extent possible, futures contracts and related options on
securities and indexes the movements of which will, in its judgment, correlate
closely with movements in the prices of the underlying securities or index and a
Fund's portfolio securities sought to be hedged.
Successful use of futures contracts and options by a Fund for hedging
purposes is also subject to SWIS's ability to predict correctly movements in the
direction of the market. It is possible that, where a Fund has purchased puts
on futures contracts to hedge its portfolio against a decline in the market, the
securities or index on which the puts are purchased may increase in value and
the value of securities held in the portfolio may decline. If this occurred,
the Fund would lose money on the puts and also experience a decline in value in
its portfolio securities. In addition, the prices of futures, for a number of
reasons, may not correlate perfectly with movements in the underlying securities
or index due to certain market distortions. First, all participants in the
futures market are subject to margin deposit requirements. Such requirements
may cause investors to close futures contracts through offsetting transactions
which could distort the normal relationship between the underlying security or
index and futures markets. Second, the margin requirements in the futures
markets are less onerous than margin requirements in the securities markets in
general, and as a result the futures markets may attract more speculators than
the securities markets do. Increased participation by speculators in the
futures markets may also cause temporary price distortions. Due to the
possibility of price distortion, even a correct forecast of general market
trends by SWIS may still not result in a successful hedging transaction over a
very short time period.
OTHER RISKS. Funds will incur brokerage fees in connection with their
futures and options transactions. In addition, while futures contracts and
options on futures will be purchased and sold to reduce certain risks, those
transactions themselves entail certain other risks. Thus, while a Fund may
benefit from the use of futures and related options, unanticipated changes in
interest rates or stock price movements may result in a poorer overall
performance for the Fund than if it had not entered into any futures contracts
or options transactions. Moreover, in the event of an imperfect correlation
between the futures position 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.
FORWARD COMMITMENTS
Each Fund may enter into contracts to purchase securities for a fixed price
at a future date beyond customary settlement time ("forward commitments") if the
Fund holds, and maintains until the settlement date in a segregated account,
cash or high-grade debt obligations in an amount sufficient to meet the purchase
price, or if the Fund enters into offsetting contracts for the forward sale of
other securities it owns. Forward commitments may be considered securities in
themselves, and involve a risk of loss if the value of the security to be
purchased declines prior to the settlement date, which risk is in addition to
the risk of decline in the value of the Fund's other assets. Where such
purchases are made through dealers, the Funds rely on the dealer to consummate
the sale. The dealer's failure to do so may result in the loss to the Fund of
an advantageous yield or price.
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Although a Fund will generally enter into forward commitments with the
intention of acquiring securities for its portfolio or for delivery pursuant to
options contracts it has entered into, a Fund may dispose of a commitment prior
to settlement if SWIS deems it appropriate to do so. A Fund may realize short-
term profits or losses upon the sale of forward commitments.
REPURCHASE AGREEMENTS
Each Fund may enter into repurchase agreements. A repurchase agreement is
a contract under which the Fund acquires a security for a relatively short
period (usually not more than one week) subject to the obligation of the seller
to repurchase and the Fund to resell such security at a fixed time and price
(representing the Fund's cost plus interest). It is the Trust's present
intention to enter into repurchase agreements only with member banks of the
Federal Reserve System and securities dealers meeting certain criteria as to
creditworthiness and financial condition established by the Trustees of the
Trust and only with respect to obligations of the U.S. government or its
agencies or instrumentalities or other high quality short term debt obligations.
Repurchase agreements may also be viewed as loans made by a Fund which are
collateralized by the securities subject to repurchase. SWIS will monitor such
transactions to ensure that the value of the underlying securities will be at
least equal at all times to the total amount of the repurchase obligation,
including the interest factor. If the seller defaults, a Fund could realize a
loss on the sale of the underlying security to the extent that the proceeds of
sale including accrued interest are less than the resale price provided in the
agreement including interest. In addition, if the seller should be involved in
bankruptcy or insolvency proceedings, a Fund may incur delay and costs in
selling the underlying security or may suffer a loss of principal and interest
if a Fund is treated as an unsecured creditor and required to return the
underlying collateral to the seller's estate.
WHEN-ISSUED SECURITIES
Each Fund may from time to time purchase securities on a "when-issued"
basis. Debt securities are often issued on this basis. The price of such
securities, which may be expressed in yield terms, is fixed at the time a
commitment to purchase is made, but delivery and payment for the when-issued
securities take place at a later date. Normally, the settlement date occurs
within one month of the purchase. During the period between purchase and
settlement, no payment is made by a Fund and no interest accrues to the Fund.
To the extent that assets of a Fund are held in cash pending the settlement of a
purchase of securities, that Fund would earn no income. While a Fund may sell
its right to acquire when-issued securities prior to the settlement date, a Fund
intends actually to acquire such securities unless a sale prior to settlement
appears desirable for investment reasons. At the time a Fund makes the
commitment to purchase a security on a when-issued basis, it will record the
transaction and reflect the amount due and the value of the security in
determining the Fund's net asset value. The market value of the when-issued
securities may be more or less than the purchase price payable at the settlement
date. Each Fund will establish a segregated account in which it will maintain
cash and U.S. Government Securities or other high-grade debt obligations at
least equal in value to commitments for when-issued securities. Such segregated
securities either will mature or, if necessary, be sold on or before the
settlement date.
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LOANS OF FUND SECURITIES
A Fund may lend its portfolio securities, provided: (1) the loan is
secured continuously by collateral consisting of U.S. Government Securities,
cash, or cash equivalents adjusted daily to have market value at least equal to
the current market value of the securities loaned; (2) the Fund may at any time
call the loan and regain the securities loaned; (3) a Fund will receive any
interest or dividends paid on the loaned securities; and (4) the aggregate
market value of securities of any Fund loaned will not at any time exceed one-
third of the total assets of the Fund. In addition, it is anticipated that the
Fund may share with the borrower some of the income received on the collateral
for the loan or that it will be paid a premium for the loan. Before a Fund
enters into a loan, SWIS considers all relevant facts and circumstances
including the creditworthiness of the borrower. The risks in lending portfolio
securities, as with other extensions of credit, consist of possible delay in
recovery of the securities or possible loss of rights in the collateral should
the borrower fail financially. Although voting rights or rights to consent with
respect to the loaned securities pass to the borrower, a Fund retains the right
to call the loans at any time on reasonable notice, and it will do so in order
that the securities may be voted by a Fund if the holders of such securities are
asked to vote upon or consent to matters materially affecting the investment. A
Fund will not lend portfolio securities to borrowers affiliated with a Fund.
FOREIGN SECURITIES
Each Fund may invest in foreign securities and in certificates of deposit
issued by United States branches of foreign banks and foreign branches of United
States banks.
Investments in foreign securities may involve considerations different from
investments in domestic securities due to limited publicly available
information, non-uniform accounting standards, lower trading volume and possible
consequent illiquidity, greater volatility in price, the possible imposition of
withholding or confiscatory taxes, the possible adoption of foreign governmental
restrictions affecting the payment of principal and interest, expropriation of
assets, nationalization, or other adverse political or economic developments.
Foreign companies may not be subject to auditing and financial reporting
standards and requirements comparable to those which apply to U.S. companies.
Foreign brokerage commissions and other fees are generally higher than in the
United States. It may be more difficult to obtain and enforce a judgment
against a foreign issuer.
In addition, to the extent that any Fund's foreign investments are not
United States dollar-denominated, the Fund may be affected favorably or
unfavorably by changes in currency exchange rates or exchange control
regulations and may incur costs in connection with conversion between
currencies.
In determining whether to invest in securities of foreign issuers, the
investment advisor of a Fund seeking current income will consider the likely
impact of foreign taxes on the net yield available to the Fund and its
shareholders. Income received by a Fund from sources within foreign countries
may be reduced by withholding and other taxes imposed by such countries. Tax
conventions between certain countries and the United States may reduce or
eliminate such taxes. It is impossible to determine the effective rate of
foreign tax in advance since the amount of a Fund's assets to be invested in
various countries is not known, and tax laws and their interpretations may
change from
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time to time and may change without advance notice. Any such taxes paid by a
Fund will reduce its net income available for distribution to shareholders.
FOREIGN CURRENCY TRANSACTIONS
Each Fund may engage in currency exchange transactions to protect against
uncertainty in the level of future foreign currency exchange rates and to
increase current return. A Fund may engage in both "transaction hedging" and
"position hedging".
When it engages in transaction hedging, a Fund enters into foreign currency
transactions with respect to specific receivables or payables of a Fund
generally arising in connection with the purchase or sale of its portfolio
securities. A Fund will engage in transaction hedging when it desires to "lock
in" the U.S. dollar price of a security it has agreed to purchase or sell, or
the U.S. dollar equivalent of a dividend or interest payment in a foreign
currency. By transaction hedging a Fund will attempt to protect against a
possible loss resulting from an adverse change in the relationship between the
U.S. dollar and the applicable foreign currency during the period between the
date on which the security is purchased or sold or on which the dividend or
interest payment is declared, and the date on which such payments are made or
received.
A Fund may purchase or sell a foreign currency on a spot (or cash) basis at
the prevailing spot rate in connection with transaction hedging. A Fund may
also enter into contracts to purchase or sell foreign currencies at a future
date ("forward contracts") and purchase and sell foreign currency futures
contracts.
For transaction hedging purposes a Fund may also purchase exchange-listed
and over-the-counter call and put options on foreign currency futures contracts
and on foreign currencies. A put option on a futures contract gives a Fund the
right to assume a short position in the futures contract until expiration of the
option. A put option on currency gives a Fund the right to sell a currency at
an exercise price until the expiration of the option. A call option on a
futures contract gives a Fund the right to assume a long position in the futures
contract until the expiration of the option. A call option on currency gives a
Fund the right to purchase a currency at the exercise price until the expiration
of the option. A Fund will engage in over-the-counter transactions only when
appropriate exchange-traded transactions are unavailable and when, in SWIS's
opinion, the pricing mechanism and liquidity are satisfactory and the
participants are responsible parties likely to meet their contractual
obligations.
When it engages in position hedging, a Fund enters into foreign currency
exchange transactions to protect against a decline in the values of the foreign
currencies in which securities held by a Fund are denominated or are quoted in
their principal trading markets or an increase in the value of currency for
securities which a Fund expects to purchase. In connection with position
hedging, a Fund may purchase put or call options on foreign currency and foreign
currency futures contracts and buy or sell forward contracts and foreign
currency futures contracts. A Fund may also purchase or sell foreign currency
on a spot basis.
The precise matching of the amounts of foreign currency exchange
transactions and the value of the portfolio securities involved will not
generally be possible since the future value of such securities in foreign
currencies will change as a consequence of market movements in the values of
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those securities between the dates the currency exchange transactions are
entered into and the dates they mature.
It is impossible to forecast with precision the market value of a Fund's
portfolio securities at the expiration or maturity of a forward or futures
contract. Accordingly, it may be necessary for a Fund to purchase additional
foreign currency on the spot market (and bear the expense of such purchase) if
the market value of the security or securities being hedged is less than the
amount of foreign currency a Fund is obligated to deliver and if a decision is
made to sell the security or securities and make delivery of the foreign
currency. Conversely, it may be necessary to sell on the spot market some of
the foreign currency received upon the sale of the portfolio security or
securities of a Fund if the market value of such security or securities exceeds
the amount of foreign currency a Fund is obligated to deliver.
To offset some of the costs to a Fund of hedging against fluctuations in
currency exchange rates, a Fund may write covered call options on those
currencies.
Transaction and position hedging do not eliminate fluctuations in the
underlying prices of the securities which a Fund owns or intends to purchase or
sell. They simply establish a rate of exchange which one can achieve at some
future point in time. Additionally, although these techniques tend to minimize
the risk of loss due to a decline in the value of the hedged currency, they tend
to limit any potential gain which might result from the increase in the value of
such currency.
A Fund may also seek to increase its current return by purchasing and
selling foreign currency on a spot basis, and by purchasing and selling options
on foreign currencies and on foreign currency futures contracts, and by
purchasing and selling foreign currency forward contracts.
CURRENCY FORWARD AND FUTURES CONTRACTS. A forward foreign currency
exchange contract involves an obligation to purchase or sell a specific currency
at a future date, which may be any fixed number of days from the date of the
contract as agreed by the parties, at a price set at the time of the contract.
In the case of a cancelable forward contract, the holder has the unilateral
right to cancel the contract at maturity by paying a specified fee. The
contracts are traded in the interbank market conducted directly between currency
traders (usually large commercial banks) and their customers. A forward
contract generally has no deposit requirement, and no commissions are charged at
any stage for trades. A foreign currency futures contract is a standardized
contract for the future delivery of a specified amount of a foreign currency at
a future date at a price set at the time of the contract. Foreign currency
futures contracts traded in the United States are designed by and traded on
exchanges regulated by the CFTC, such as the New York Mercantile Exchange.
Forward foreign currency exchange contracts differ from foreign currency
futures contracts in certain respects. For example, the maturity date of a
forward contract may be any fixed number of days from the date of the contract
agreed upon by the parties, rather than a predetermined date in a given month.
Forward contracts may be in any amounts agreed upon by the parties rather than
predetermined amounts. Also, forward foreign exchange contracts are traded
directly between currency traders so that no intermediary is required. A
forward contract generally requires no margin or other deposit.
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At the maturity of a forward or futures contract, a Fund may either accept
or make delivery of the currency specified in the contract, or at or prior to
maturity enter into a closing transaction involving the purchase or sale of an
offsetting contract. Closing transactions with respect to forward contracts are
usually effected with the currency trader who is a party to the original forward
contract. Closing transactions with respect to futures contracts are effected
on a commodities exchange; a clearing corporation associated with the exchange
assumes responsibility for closing out such contracts.
Positions in foreign currency futures contracts and related options may be
closed out only on an exchange or board of trade which provides a secondary
market in such contracts or options. Although a Fund will normally purchase or
sell foreign currency futures contracts and related options only on exchanges or
boards of trade where there appears to be an active secondary market, there is
no assurance that a secondary market on an exchange or board of trade will exist
for any particular contract or option or at any particular time. In such event,
it may not be possible to close a futures or related option position and, in the
event of adverse price movements, a Fund would continue to be required to make
daily cash payments of variation margin on its futures positions.
FOREIGN CURRENCY OPTIONS. Options on foreign currencies operate similarly
to options on securities, and are traded primarily in the over-the-counter
market, although options on foreign currencies have recently been listed on
several exchanges. Such options will be purchased or written only when SWIS
believes that a liquid secondary market exists for such options. There can be
no assurance that a liquid secondary market will exist for a particular option
at any specific time. Options on foreign currencies are affected by all of
those factors which influence exchange rates and investments generally.
The value of a foreign currency option is dependent upon the value of the
foreign currency and the U.S. dollar, and may have no relationship to the
investment merits of a foreign security. Because foreign currency transactions
occurring in the interbank market involve substantially larger amounts than
those that may be involved in the use of foreign currency options, investors may
be disadvantaged by having to deal in an odd lot market (generally consisting of
transactions of less than $1 million) for the underlying foreign currencies at
prices that are less favorable than for round lots.
There is no systematic reporting of last sale information for foreign
currencies and there is no regulatory requirement that quotations available
through dealers or other market sources be firm or revised on a timely basis.
Available quotation information is generally representative of very large
transactions in the interbank market and thus may not reflect relatively smaller
transactions (less than $1 million) where rates may be less favorable. The
interbank market in foreign currencies is a global, around-the-clock market. To
the extent that the U.S. options markets are closed while the markets for the
underlying currencies remain open, significant price and rate movements may take
place in the underlying markets that cannot be reflected in the U.S. options
markets.
FOREIGN CURRENCY CONVERSION. Although foreign exchange dealers do not
charge a fee for currency conversion, they do realize a profit based on the
difference (the "spread") between prices at which they buy and sell various
currencies. Thus, a dealer may offer to sell a foreign currency to a Fund at
one rate, while offering a lesser rate of exchange should a Fund desire to
resell that currency to the dealer.
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ZERO-COUPON SECURITIES
Zero-coupon securities in which a Fund may invest are debt obligations
which are generally issued at a discount and payable in full at maturity, and
which do not provide for current payments of interest prior to maturity. Zero-
coupon securities usually trade at a deep discount from their face or par value
and are subject to greater market value fluctuations from changing interest
rates than debt obligations of comparable maturities which make current
distributions of interest. As a result, the net asset value of shares of a Fund
investing in zero-coupon securities may fluctuate over a greater range than
shares of other Funds of the Trust and other mutual funds investing in
securities making current distributions of interest and having similar
maturities.
Zero-coupon securities may include U.S. Treasury bills issued directly
by the U.S. Treasury or other short-term debt obligations, and longer-term
bonds or notes and their unmatured interest coupons which have been separated
by their holder, typically a custodian bank or investment brokerage firm. A
number of securities firms and banks have stripped the interest coupons from
the underlying principal (the "corpus") of U.S. Treasury securities and
resold them in custodial receipt programs with a number of different names,
including Treasury Income Growth Receipts ("TIGRS") and Certificates of
Accrual on Treasuries ("CATS"). CATS and TIGRS are not considered U.S.
Government Securities. The underlying U.S. Treasury bonds and notes
themselves are held in book-entry form at the Federal Reserve Bank or, in the
case of bearer securities (I.E., unregistered securities which are owned
ostensibly by the bearer or holder thereof), in trust on behalf of the owners
thereof.
In addition, the Treasury has facilitated transfers of ownership of zero-
coupon securities by accounting separately for the beneficial ownership of
particular interest coupons and corpus payments on Treasury securities through
the Federal Reserve book-entry record-keeping system. The Federal Reserve
program as established by the Treasury Department is known as "STRIPS" or
"Separate Trading of Registered Interest and Principal of Securities." Under
the STRIPS program, a Fund will be able to have its beneficial ownership of U.S.
Treasury zero-coupon securities recorded directly in the book-entry record-
keeping system in lieu of having to hold certificates or other evidences of
ownership of the underlying U.S. Treasury securities.
When debt obligations have been stripped of their unmatured interest
coupons by the holder, the stripped coupons are sold separately. The
principal or corpus is sold at a deep discount because the buyer receives
only the right to receive a future fixed payment on the security and does not
receive any rights to periodic cash interest payments. Once stripped or
separated, the corpus and coupons may be sold separately. Typically, the
coupons are sold separately or grouped with other coupons with like maturity
dates and sold in such bundled form. Purchasers of stripped obligations
acquire, in effect, discount obligations that are economically identical to
the zero-coupon securities issued directly by the obligor.
INVESTMENT RESTRICTIONS
The Trust has adopted the following investment restrictions which may
not be changed without the affirmative vote of a "majority of the outstanding
voting securities" of the affected Fund, which is defined in the Investment
Company Act of 1940 to mean the affirmative vote of the lesser of (1) more
than 50% of the outstanding shares and (2) 67% or more of the Shares present
at a meeting
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if more than 50% of the outstanding shares are represented at the meeting in
person or by proxy. A Fund may not:
1. Borrow money in excess of 10% of the value (taken at the lower of cost
or current value) of its total assets (not including the amount
borrowed) at the time the borrowing is made, and then only from banks
as a temporary measure (not for leverage) in situations which might
otherwise require the untimely disposition of portfolio investments or
for extraordinary or emergency purposes. Such borrowings will be
repaid before any additional investments are purchased.
2. Pledge, hypothecate, mortgage, or otherwise encumber its assets in
excess of 15% of its total assets (taken at the lower of cost and
current value) and then only in connection with borrowings permitted
by restriction 1 above.
3. Purchase securities on margin, except such short-term credits as may
be necessary for the clearance of purchases and sales of securities,
and except that it may make margin payments in connection with
transactions in futures contracts, options, and other financial
instruments.
4. Make short sales of securities or maintain a short position for the
account of a Fund unless at all times when a short position is open it
owns an equal amount of such securities or owns securities which,
without payment of any further consideration, are convertible into or
exchangeable for securities of the same issue as, and in equal
amount to, the securities sold short.
5. Underwrite securities issued by other persons except to the extent
that, in connection with the disposition of its portfolio investments,
it may be deemed to be an underwriter under the federal securities
laws.
6. Purchase or sell real estate or interests in real estate limited
partnerships, although it may purchase securities of issuers which
deal in real estate, securities which are secured by interests in real
estate, and securities representing interests in real estate, and it
may acquire and dispose of real estate or interests in real estate
acquired through the exercise of its rights as a holder of debt
obligations secured by real estate or interests therein.
7. Purchase or sell commodities or commodity contracts, except that it
may purchase or sell financial futures contracts and options and other
financial instruments.
8. Make loans, except by purchase of debt obligations in which a Fund may
invest consistent with its investment policies, by entering into
repurchase agreements with respect to not more than 25% of its total
assets (taken at current value), or through the lending of its
portfolio securities with respect to not more than 25% of its total
assets.
9. Invest in securities of any issuer, if officers and Trustees of the
Trust and officers and directors of SWIS who beneficially
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own more than 0.5% of the securities of that issuer together own more
than 5% of such securities.
10. As to 75% of its assets, invest in securities of any issuer if,
immediately after such investment, more than 5% of the total assets of
a Fund (taken at current value) would be invested in the securities of
such issuer; provided that this limitation does not apply to
securities issued or guaranteed as to principal or interest by the
U.S. Government or its agencies or instrumentalities.
11. Acquire more than 10% of the voting securities of any issuer.
12. Invest more than 25% of the value of its total assets in securities of
issuers in any one industry. (Securities issued or guaranteed as to
principal or interest by the U.S. Government or its agencies or
instrumentalities are not considered to represent industries.)
13. Buy or sell oil, gas, or other mineral leases, rights, or royalty
contracts, although it may purchase securities of issuers which deal
in, represent interests in, or are secured by interests in such
leases, rights, or contracts, and it may acquire or dispose of such
leases, rights, or contracts acquired through the exercise of its
rights as a holder of debt obligations secured thereby.
14. Make investments for the purpose of gaining control of a company's
management.
IT IS CONTRARY TO THE TRUST'S PRESENT POLICY, WHICH MAY BE CHANGED WITHOUT
SHAREHOLDER APPROVAL, FOR ANY OF THE FUNDS TO:
1. Invest in the securities of other registered investment companies,
except as they may be acquired as part of a merger or consolidation or
acquisition of assets.
2. Invest in securities which are not readily marketable if, as a
result of such investment, more than 15% of a Fund's assets are invested in
such securities. Securities which are restricted as to disposition are
included within this limitation.
3. Invest in warrants if, as a result of such investment, a Fund will
have more than 5% of its net assets invested in such securities. Of this
5% limitation, no more than 2% of a Fund's net assets may be invested in
warrants that are not listed on the New York Stock Exchange or the American
Stock Exchange. For purposes of this limitation, warrants acquired by a
Fund in units or attached to other securities are deemed to be without
value.
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All percentage limitations on investments will apply at the time of
investment and shall not be considered violated unless an excess or deficiency
occurs or exists immediately after and as a result of such investment. Except
for the investment restrictions listed above, the other investment policies
described in this Prospectus are not fundamental and may be changed by approval
of the Trustees. As a matter of policy, the Trustees would not materially
change a Fund's investment objectives without shareholder approval.
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TRUSTEES AND OFFICERS
The Trustees of the Trust are responsible for the general oversight of the
Trust's business. The Trustees and executive officers of the Trust and their
principal occupations during the last five years are set forth below. The
mailing address of each of the officers and Trustees is 787 Seventh Avenue, New
York, New York 10019.
David N. Dinkins, Trustee. 68. Professor, Columbia School of
International and Public Affairs. Director, Carver Federal Savings Bank.
Formerly, Mayor, City of New York.
Peter S. Knight, Trustee. 45. Partner, Wunder, Diefenderfer, Cannon &
Thelen.
Michael Steed, Trustee. 46. Senior Vice President, Investments, Union
Labor Life Insurance Company.
E. William Smethurst, Jr., Trustee and Chairman of the Trust. 65.
President, Chief Investment Officer, and Director of Schroder Wertheim
Investment Services, Inc.; Vice President and Director, Schroder Fund Advisors
Inc. Previously served as Managing Director, Investment Services Department,
Schroder Wertheim & Co. Incorporated.(a)
Laura E. Luckyn-Malone, President of the Trust. 43. Managing Director and
Senior Vice President, Schroder Capital Management International, Inc.;
Director, Schroder Wertheim Investment Services, Inc.; Director and President,
Schroder Fund Advisors Inc.
Robert Jackowitz, Treasurer of the Trust. 29. Vice President, Schroder
Capital Management International, Inc. since June 1995; Vice President and
Treasurer, Schroder Wertheim Investment Services, Inc.; Treasurer, Schroder Fund
Advisors Inc.
Catherine A. Mazza, Vice President and Clerk of the Trust. 36. Vice
President, Schroder Capital Management International, Inc. since October 1994;
Senior Vice President, Schroder Fund Advisors Inc. Previously served as Vice
President, Alliance Capital.
Mark J. Smith, Vice President of the Trust. 34. Director, Schroder
Capital Management International Ltd.
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Jane P. Lucas, Vice President of the Trust. 35. Director and Senior Vice
President, Schroder Capital Management International, Inc.; Director, Schroder
Wertheim Investment Services, Inc.; Assistant Director, Schroder Investment
Management Ltd.
David Gibson, Vice President of the Trust. 35. Director, Schroder
Wertheim Investment Services, Inc. and Schroder Investment Management Ltd.;
Director and Senior Vice President, Schroder Capital Management
International, Inc.
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(a) Trustee who is an "interested person" (as defined in the 1940 Act) of
the Trust, SWIS, or Schroder Fund Advisors Inc.
Except as otherwise noted, the principal occupations of the Trustees and
officers for the last five years have been with the employers shown above,
although in some cases they have held different positions with such employers or
their affiliates.
Each Trustee of the Trust who is not an interested person of the Trust,
SWIS, or Schroder Fund Advisors Inc. receives an annual fee of $5,000 and an
additional fee for each Trustees' meeting attended. Trustees who are not
interested persons of SWIS and who serve on committees of the Trustees
receive additional fees for attendance at certain committee meetings and for
special services rendered in that connection. The Trust paid Trustees' fees
aggregating $33,000 in fiscal 1995.
As of February 20, 1996, the Trustees of the Trust as a group, excluding
Mr. Smethurst, owned less than 1% of the outstanding shares of each Fund.
See "Principal Holders of Securities" for the information concerning Mr.
Smethurst's ownership of Fund shares.
The Agreement and Declaration of Trust of the Trust provides that the Trust
will indemnify its Trustees and officers against liabilities and expenses
incurred in connection with litigation in which they may be involved because of
their offices with the Trust, except if it is determined in the manner specified
in the Agreement and Declaration of Trust that they have not acted in good faith
in the reasonable belief that their actions were in the best interests of the
Trust or that such indemnification would relieve any officer or Trustee of any
liability to the Trust or its Shareholders by reason of willful misfeasance, bad
faith, gross negligence, or reckless disregard of his or her duties. The Trust,
at its expense, provides liability insurance for the benefit of its Trustees and
officers.
MANAGEMENT CONTRACT
Under a Management Contract between the Trust and SWIS (the "Management
Contract"), SWIS, at its expense, provides the Funds with investment advisory
services and advises and assists the officers of the Trust in taking such steps
as are necessary or appropriate to carry out the decisions of its Trustees
regarding the conduct of business of the Trust
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and each Fund. The fees to be paid under the Contract are set forth in the
Trust's prospectus.
In providing investment advisory services to the various Funds of the
Trust, SWIS regularly provides the Funds with investment research, advice,
and supervision and furnishes continuously investment programs consistent
with the investment objectives and policies of the various Funds, and
determines, for the various Funds, what securities shall be purchased, what
securities shall be held or sold, and what portion of a Fund's assets shall
be held uninvested, subject always to the provisions of the Trust's Agreement
and Declaration of Trust and By-laws, and of the Investment Company Act of
1940, and to a Fund's investment objectives, policies, and restrictions, and
subject further to such policies and instructions as the Trustees may from
time to time establish.
SWIS makes available to the Trust, without expense to the Trust, the
services of such of its directors, officers, and employees as may duly be
elected Trustees or officers of the Trust, subject to their individual
consent to serve and to any limitations imposed by law. SWIS pays the
compensation and expenses of officers and executive employees of the Trust.
SWIS also provides investment advisory research and statistical facilities
and all clerical services relating to such research, statistical, and
investment work. SWIS pays the Trust's office rent.
Under the Management Contract, the Trust is responsible for all its other
expenses, including clerical salaries not related to investment activities; fees
and expenses incurred in connection with membership in investment company
organizations; brokers' commissions; payment for portfolio pricing services to a
pricing agent, if any; legal expenses; auditing expenses; accounting expenses;
taxes and governmental fees; fees and expenses of the transfer agent and
investor servicing agent of the Trust; the cost of preparing share certificates
or any other expenses, including clerical expenses, incurred in connection with
the issue, sale, underwriting, redemption, or repurchase of shares; the expenses
of and fees for registering or qualifying securities for sale; the fees and
expenses of the Trustees of the Trust who are not affiliated with SWIS; the cost
of preparing and distributing reports and notices to shareholders; public and
investor relations expenses; and fees and disbursements of custodians of the
Funds' assets. The Trust is also responsible for its expenses incurred in
connection with litigation, proceedings and claims and the legal obligation it
may have to indemnify its officers and Trustees with respect thereto.
SWIS's compensation under the Management Contract may be reduced in any
year if a Fund's expenses exceed the limits on investment company expenses
imposed by any statute or regulatory authority of any jurisdiction in which
shares of the Fund are qualified for offer or sale. The term "expenses" is
defined in the statutes or regulations of such jurisdictions, and generally
excludes brokerage commissions, taxes, interest, and extraordinary expenses.
The only such limitation as of the date of this Statement was 2.5% of the
first $30 million of average net assets, 2% of the next $70 million, and 1.5%
of any excess over $100 million.
State Street Bank and Trust Company ("State Street") provides certain
accounting, transfer agency, and other services to the Trust. The Trust
reimburses State Street on a basis approved by the Trustees.
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<PAGE>
The Management Contract provides that SWIS shall not be subject to any
liability for any error of judgment or mistake of law or for any loss suffered
by the Trust in connection with rendering services to the Trust in the absence
of willful misfeasance, bad faith, gross negligence, or reckless disregard of
its duties.
The Management Contract may be terminated without penalty by vote of the
Trustees as to any Fund by the shareholders of that Fund, or by SWIS on 60 days'
written notice. The Management Contract also terminates without payment of any
penalty in the event of its assignment. In addition, the Management Contract
may be amended only by a vote of the shareholders of the affected Fund(s), and
the Contract provides that it will continue in effect from year to year only so
long as such continuance is approved at least annually with respect to a Fund by
vote of either the Trustees or the shareholders of the Fund, and, in either
case, by a majority of the Trustees who are not "interested persons" of SWIS.
In each of the foregoing cases, the vote of the shareholders is the affirmative
vote of a "majority of the outstanding voting securities" as defined in the
Investment Company Act of 1940.
RECENT MANAGEMENT FEES. For its fiscal years ended October 31, 1995, and
October 31, 1994, respectively, pursuant to the Management Contract, each Fund
paid fees to SWIS as follows: Wertheim Equity Value Fund, $252,615 and $72,738;
Wertheim Small Capitalization Value Fund, $349,672 and $58,538; Wertheim High
Yield Income Fund, $176,520 and $43,688; Wertheim Investment Grade Income Fund,
$98,478 and $17,751; and Wertheim Short-Term Investment Fund, $131,121 and
$46,643. Each Fund voluntarily waived fees in the following amounts during
fiscal years 1995 and 1994, respectively: Wertheim Equity Value Fund, $16,285
and $84,725; Wertheim Small Capitalization Value Fund, $22,164 and $104,661;
Wertheim High Yield Income Fund, $93,036 and $110,694; Wertheim Investment Grade
Income Fund, $88,653 and $109,927; and Wertheim Short-Term Investment Fund,
$42,642 and $103,477.
SWIS may place portfolio transactions with broker-dealers which furnish,
without cost, certain research, statistical, and quotation services of value to
SWIS and its affiliates in advising the Trust and other clients, provided that
it shall always seek best price and execution with respect to transactions.
Certain investments may be appropriate for the Trust and for other clients
advised by SWIS. Investment decisions for the Trust and other clients are made
with a view to achieving their respective investment objectives and after
consideration of such factors as their current holdings, availability of cash
for investment, and the size of their investments generally. Frequently, a
particular security may be bought or sold for only one client or in different
amounts and at different times for more than one but less than all clients.
Likewise, a particular security may be bought for one or more clients when one
or more other clients are selling the security. In addition, purchases or sales
of the same security may be made for two or more clients of SWIS on the same
day. In such event, such transactions will be allocated among the clients in a
manner believed by SWIS to be equitable to each. In some cases, this procedure
could have an adverse effect on the price or amount of the securities purchased
or sold by the Trust. Purchase and sale orders for the Trust may be combined
with those of other clients of SWIS in the interest of achieving the most
favorable net results for the Trust.
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BROKERAGE AND RESEARCH SERVICES. Transactions on U.S. stock exchanges and
other agency transactions involve the payment by the Trust of negotiated
brokerage commissions. Such commissions vary among different brokers. Also, a
particular broker may charge different commissions according to such factors as
the difficulty and size of the transaction. Transactions in foreign securities
often involve the payment of fixed brokerage commissions, which are generally
higher than those in the United States. There is generally no stated commission
in the case of securities traded in the over-the-counter markets, but the price
paid by the Trust usually includes an undisclosed dealer commission or mark-up.
In underwritten offerings, the price paid by the Trust includes a disclosed,
fixed commission or discount retained by the underwriter or dealer.
SWIS places all orders for the purchase and sale of portfolio securities
for the Trust and buys and sells securities for the Trust through a
substantial number of brokers and dealers. In so doing, it uses its best
efforts to obtain for the Trust the best price and execution available. In
seeking the best price and execution, SWIS, having in mind the Trust's best
interests, considers all factors it deems relevant, including, by way of
illustration, price, the size of the transaction, the nature of the market
for the security, the amount of the commission, the timing of the transaction
taking into account market prices and trends, the reputation, experience, and
financial stability of the broker-dealer involved, and the quality of service
rendered by the broker-dealer in other transactions.
It has for many years been a common practice in the investment advisory
business for advisers of investment companies and other institutional investors
to receive research, statistical, and quotation services from broker-dealers
which execute portfolio transactions for the clients of such advisers.
Consistent with this practice, SWIS receives research, statistical, and
quotation services from many broker-dealers with which it places the Trust's
portfolio transactions. These services, which in some cases may also be
purchased for cash, include such matters as general economic and security market
reviews, industry and company reviews, evaluations of securities, and
recommendations as to the purchase and sale of securities. Some of these
services are of value to SWIS and its affiliates in advising various of their
clients (including the Trust), although not all of these services are
necessarily useful and of value in managing the Trust. The management fee paid
by the Trust is not reduced because SWIS and its affiliates receive such
services.
As permitted by Section 28(e) of the Securities Exchange Act of 1934,
and by the Management Contract, SWIS may cause a Fund to pay a broker which
provides brokerage and research services to SWIS an amount of disclosed
commission for effecting a securities transaction for the Fund in excess of
the commission which another broker would have charged for effecting that
transaction. SWIS's authority to cause a Fund to pay any such greater
commissions in also subject to such policies as the Trustees may adopt from
time to time.
To the extent permitted by law, the Funds may engage in brokerage
transactions with Schroder Wertheim & Co. Incorporated ("Wertheim"), Lewco
Securities, Inc. ("Lewco") or with unaffiliated brokers who trade or clear
through Wertheim or Lewco. (The Investment Company Act of 1940 generally
prohibits the Funds from engaging in securities transactions with Wertheim and
Lewco or their affiliates, as principal, unless pursuant to an exemptive order
from the Securities and Exchange Commission.) Consistent with regulations
under the Investment Company Act of 1940, the Funds have adopted procedures
which are reasonably designed to provide that any
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<PAGE>
commissions or other remuneration they pay to Wertheim and Lewco do not exceed
the usual and customary broker's commission. In addition, the Funds will adhere
to the rule, under the Securities Exchange Act of 1934, governing floor trading.
This rule permits the Funds to effect, but not execute, exchange listed
securities transactions with Wertheim and Lewco. Also, due to securities law
limitations, the Funds will limit purchases of securities in a public offering
if Wertheim or Lewco or one of their affiliates is a member of the syndicate for
that offering.
During fiscal 1995 and fiscal 1994, respectively, the Funds paid brokerage
commissions in the following amounts: Wertheim Equity Value Fund - $78,776 and
$51,642; Wertheim Small Capitalization Value Fund - $125,945 and $43,183;
Wertheim High Yield Income Fund - $2,166 and $843; and Wertheim Investment Grade
Income Fund - $30 and $3. Wertheim Short-Term Investment Fund paid no brokerage
commissions in either fiscal year.
In fiscal 1995, SWIS, on behalf of the Trust, placed agency and
underwritten transactions having an approximate aggregate dollar value of
$91,372,800 (95.36% of the Trust's aggregate agency and underwritten
transactions, on which approximately $206,917 of commissions were paid) with
brokers and dealers (other than Wertheim and Lewco) whose research,
statistical, and quotation services SWIS considered to be particularly useful
to it and its affiliates. However, many of such transactions were placed
with such brokers and dealers without regard to the furnishing of such
services.
In fiscal 1995, the Trust paid brokerage commissions to Wertheim and Lewco,
each of which is an affiliate of SWIS, of $120 and $7,612, respectively.
Commissions paid to Wertheim constituted 0.05% of all of the Trust's brokerage
commissions paid during the year; transactions with respect to which those
commissions were paid constituted 0.13% of all the transactions on which the
Fund paid brokerage commissions during the year. Commissions paid to Lewco
constituted 3.68% of all of the Trust's brokerage commissions paid during the
year; transactions with respect to which those commissions were paid constituted
4.51% of all the transactions on which the Trust paid brokerage commissions
during the year. In fiscal 1994, the Trust paid brokerage commissions to
Wertheim and Lewco of $1,194 and $23,160, respectively. Commissions paid to
Wertheim constituted 1% of all of the Trust's brokerage commissions paid during
the year; transactions with respect to which those commissions were paid
constituted 1% of all the transactions on which the Fund paid brokerage
commissions during the year. Commissions paid to Lewco constituted 24% of all
of the Trust's brokerage commissions paid during the year; transactions with
respect to which those commissions were paid constituted 22% of all the
transactions on which the Trust paid brokerage commissions during the year.
DETERMINATION OF NET ASSET VALUE
The net asset value per share of each Fund is determined daily as of 4:00
p.m. New York time on each day the New York Stock Exchange is open for trading.
The New York Stock Exchange is normally closed on the following national
holidays: New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving, and Christmas.
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The net asset value of the shares of each of the Funds is determined by
dividing the total assets of the Fund, less all liabilities, by the total number
of shares outstanding. Securities traded on a national securities exchange or
quoted on the NASDAQ National Market System are valued at their last-reported
sale price on the principal exchange or reported by NASDAQ or, if there is no
reported sale, and in the case of over-the-counter securities not included in
the NASDAQ National Market System, at a bid price estimated by a broker or
dealer. Debt securities, including zero-coupon securities, and certain foreign
securities will be valued by a pricing service. Other foreign securities will
be valued by the Trust's custodian based on outside pricing sources. Securities
for which current market quotations are not readily available and all other
assets are valued at fair value as determined by SWIS in good faith in
accordance with procedures approved by the Trustees.
If any securities held by a Fund are restricted as to resale, their fair
value is generally determined as the amount which the Trust could reasonably
expect to realize from an orderly disposition of such securities over a
reasonable period of time. The valuation procedures applied in any specific
instance are likely to vary from case to case. However, consideration is
generally given to the financial position of the issuer and other fundamental
analytical data relating to the investment and to the nature of the restrictions
on disposition of the securities (including any registration expenses that might
be borne by the Trust in connection with such disposition). In addition,
specific factors are also generally considered, such as the cost of the
investment, the market value of any unrestricted securities of the same class
(both at the time of purchase and at the time of valuation), the size of the
holding, the prices of any recent transactions or offers with respect to such
securities, and any available analysts' reports regarding the issuer.
Generally, trading in certain securities (such as foreign securities) is
substantially completed each day at various times prior to the close of the New
York Stock Exchange. The values of these securities used in determining the net
asset value of the Trust's shares are computed as of such times. Also, because
of the amount of time required to collect and process trading information as to
large numbers of securities issues, the values of certain securities (such as
convertible bonds and U.S. Government Securities) are determined based on market
quotations collected earlier in the day at the latest practicable time prior to
the close of the Exchange. Occasionally, events affecting the value of such
securities may occur between such times and the close of the Exchange which will
not be reflected in the computation of the Trust's net asset value. If events
materially affecting the value of such securities occur during such period, then
these securities will be valued at their fair value, in the manner described
above.
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The proceeds received by each Fund for each issue or sale of its shares,
and all income, earnings, profits, and proceeds thereof, subject only to the
rights of creditors, will be specifically allocated to such Fund, and
constitute the underlying assets of that Fund. The underlying assets of each
Fund will be segregated on the Trust's books of account, and will be charged
with the liabilities in respect of such Fund and with a share of the general
liabilities of the Trust. Expenses with respect to any two or more Funds may
be allocated in proportion to the net asset values of the respective Funds
except where allocations of direct expenses can otherwise be fairly made.
TAXES
Each Fund intends to qualify each year and elect to be taxed as a regulated
investment company under Subchapter M of the United States Internal Revenue Code
of 1986, as amended (the "Code").
As a regulated investment company qualifying to have its tax liability
determined under Subchapter M, a Fund will not be subject to federal income tax
on any of its net investment income or net realized capital gains that are
distributed to the separate accounts of the Participating Insurance Companies
which hold its shares. As a Massachusetts business trust, a Fund under present
law will not be subject to any excise or income taxes in Massachusetts.
In order to qualify as a "regulated investment company," a Fund must, among
other things, (a) derive at least 90% of its gross income from dividends,
interest, payments with respect to securities loans, gains from the sale or
other dispositions of stock, securities, or foreign currencies, and other income
(including gains from options, futures, or forward contracts) derived with
respect to its business of investing in such stock, securities, or currencies;
(b) derive less than 30% of its gross income from the sale or other disposition
of certain assets (including stock and securities) held less than three months;
(c) diversify its holdings so that, at the close of each quarter of its taxable
year, (i) at least 50% of the value of its total assets consists of cash, cash
items, U.S. Government Securities, and other securities limited generally with
respect to any one issuer to not more than 5% of the total assets of the Fund
and not more than 10% of the outstanding voting securities of such issuer, and
(ii) not more than 25% of the value of its assets is invested in the securities
of any issuer (other than U.S. Government Securities). In order to receive the
favorable tax treatment accorded regulated investment companies and their
shareholders, moreover, a Fund must in general distribute at least 90% of its
interest, dividends, net short-term capital gain, and certain other income each
year.
With respect to investment income and gains received by a Fund from sources
outside the United States, such income and gains may be subject to foreign taxes
which are withheld at the source. The effective rate of foreign taxes in which
a Fund will be subject depends on the specific countries in which its assets
will be invested and the extent of the assets invested in each such country and
therefore cannot be determined in advance.
A Fund's ability to use options, futures, and forward contracts and other
hedging techniques, and to engage in certain other transactions, may be limited
by tax considerations. A Fund's transactions in foreign-currency-denominated
debt instruments and its hedging activities will likely produce a difference
between its book income and its taxable income. This difference may cause a
portion of the Fund's distributions of book income to constitute returns of
capital for tax purposes or
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require the Fund to make distributions exceeding book income in order to permit
the Trust to continue to qualify, and be taxed under Subchapter M of the Code,
as a regulated investment company.
Under federal income tax law, a portion of the difference between the
purchase price of zero-coupon securities in which a Fund has invested and their
face value ("original issue discount") is considered to be income to the Fund
each year, even though the Fund will not receive cash interest payments from
these securities. This original issue discount (imputed income) will comprise a
part of the net investment income of the Fund which must be distributed to
shareholders in order to maintain the qualification of the Fund as a regulated
investment company and to avoid federal income tax at the level of the Fund.
It is the policy of each of the Funds to meet the requirements of the
Code to qualify as a regulated investment company that is taxed pursuant to
Subchapter M of the Code. One of these requirements is that less than 30% of
a Fund's gross income must be derived from gains from sale or other
disposition of securities held for less than three months (with special rules
applying to so-called designated hedges). Accordingly, a Fund will be
restricted in selling securities held or considered under Code rules to have
been held less than three months, and in engaging in hedging or other
activities (including entering into options, futures, or short-sale
transactions) which may cause the Trust's holding period in certain of its
assets to be less than three months.
This discussion of the federal income tax and state tax treatment of the
Trust and its shareholders is based on the law as of the date of this Statement
of Additional Information.
PRINCIPAL HOLDERS OF SECURITIES
The following table shows the percentage of the outstanding shares of each
Fund owned as of January 31, 1996 by the Schroder Wertheim & Co. Incorporated
Profit-Sharing, Savings Incentive, and Pension Plans (the "Schroder Wertheim
Plans") (all located at 787 Seventh Avenue, New York, NY 10019), and the Lewco
Securities Corp. Profit Sharing and Thrift Plans (the "Lewco Plans") (located at
Lewco Securities Corp., 34 Exchange Place, Jersey City, NJ 07311). Certain of
the directors and officers of SWIS and Schroder Wertheim & Co. Incorporated, and
certain of the officers of the Trust, are participants in one or more of the
Schroder Wertheim Plans. Schroder Wertheim & Co. Incorporated owns 79.82% of
the outstanding voting securities of Lewco Securities Corp.
% of Fund Shares
Owned by
Schroder Wertheim and Lewco Plans
---------------------------------
Wertheim Equity Value Fund 68.00 %
Wertheim Small Capitalization Value Fund 16.80 %
Wertheim Investment Grade Income Fund 59.62 %
-27-
<PAGE>
Wertheim High Yield Income Fund 43.18 %
Wertheim Short-Term Investment Fund 86.71 %
___________________
None of the Trustees or officers of the Trust own beneficially more than 1% of
the outstanding shares of any Fund except that E. William Smethurst, Jr.,
Chairman of the Trust, owned approximately 1.35% of the outstanding shares of
Wertheim Short-Term Investment Fund as of February 21, 1996.
To the knowledge of the Trust, as of February 8, 1996, no other person
owned of record or beneficially more than 5% of the outstanding shares of any
Fund, except that Northern Trust Bank of Texas, 2701 Kirby Drive, Houston, TX
77098-1218 owned 9.23% of the outstanding shares of Wertheim Equity Value Fund
and 11.50% of the outstanding shares of Wertheim Small Capitalization Value
Fund; and Mr. Mike Futerman, 415 West Main Street, Rochester, NY 14608-1944
owned 6.72% of the outstanding shares of Wertheim High Yield Income Fund.
PERFORMANCE INFORMATION
The yield of the Fund is presented for a specified 30-day period (the "base
period"). Yield is based on the amount determined by (i) calculating the
aggregate of dividends and interest earned by the Fund during the base period
less expenses accrued for that period, and (ii) dividing that amount by the
product of (A) the average daily number of shares of the Fund outstanding during
the base period and entitled to receive dividends and (B) the net asset value
per share of the Fund on the last day of the base period. The result is
annualized on a compounding basis to determine the Fund's yield. For this
calculation, interest earned on debt obligations held by a Fund is generally
calculated using the yield to maturity (or first expected call date) of such
obligations based on their market values (or, in the case of receivables-backed
securities such as Ginnie Maes, based on cost). Dividends on equity securities
are accrued daily at their stated dividend rates.
Total return of a Fund for periods longer than one year is determined by
calculating the actual dollar amount of investment return on a $1,000 investment
in the Fund made at the beginning of each period, then calculating the average
annual compounded rate of return which would produce the same investment return
on the $1,000 investment over the same period. Total return for a period of one
year or less is equal to the actual investment return on a $1,000 investment in
the Fund during that period. Total return calculations assume that all Fund
distributions are reinvested at net asset value on their respective reinvestment
dates.
The total return of each of the Funds for the one-year period ending
October 31, 1995 and for the period from the commencement of its investment
operations until October 31, 1995 is
-28-
<PAGE>
set forth below. The yield of each of Wertheim Investment Grade Income Fund,
Wertheim High Yield Income Fund, and Wertheim Short-Term Investment Fund for the
thirty-day period ended October 31, 1995 is also set forth below.
<TABLE>
<CAPTION>
Total Return Total Return
(One-Year) (Life of Fund) Yield
<S> <C> <C> <C>
Wertheim Equity Value Fund (commencement of 18.63% 6.92% --
operations: February 16, 1994)
Wertheim High Yield Income Fund 9.16% 1.14% 8.65%
(commencement of operations: February 16,
1994)
- - -------------------------------------------------------------------------------------
-29-
<PAGE>
Wertheim Investment Grade Income Fund 15.62% 5.77% 5.22%
(commencement of operations: February 22,
1994)
Wertheim Short-Term Investment Fund 5.02% 3.79% 4.58%
(commencement of operations: January 11,
1994)
Wertheim Small Capitalization Value Fund 10.27% 4.46% --
(commencement of operations: February 16,
1994)
</TABLE>
From time to time, SWIS may reduce its compensation or assume expenses of a
Fund in order to reduce the Fund's expenses, as described in the Trust's current
prospectus. Any such waiver or assumption would increase a Fund's yield and
total return during the period of the waiver or assumption.
ORGANIZATION AND CAPITALIZATION
The Trust is an open-end investment company established under the laws of
The Commonwealth of Massachusetts by Agreement and Declaration of Trust dated
May 6, 1993.
Shares entitle their holders to one vote per share, with fractional shares
voting proportionally; however, separate vote will be taken by each Fund on
matters affecting an individual Fund. For example, a change in a fundamental
investment policy for a Fund would be voted upon only by shareholders of that
Fund. Additionally, approval of the Management Contract is a matter to be
determined separately by each Fund. Approval by the shareholders of one Fund is
effective as to that Fund. Shares have noncumulative voting rights. Although
the Trust is not required to hold annual meetings of its shareholders,
shareholders have the right to call a meeting to elect or remove Trustees or to
take other actions as provided in the Declaration of Trust. Shares have no
preemptive or subscription rights, and are transferable. Shares are entitled to
dividends as declared by the Trustees, and if a Fund were liquidated, the shares
of that Fund would receive the net assets of that Fund. The Trust may suspend
the sale of shares at any time and may refuse any order to purchase shares.
Additional Funds may be created from time to time with different investment
objectives. In addition, the Trustees have the right, subject to any necessary
regulatory approvals, to create more than one class of shares in a Fund, with
the classes being subject to different charges and expenses and having such
other different rights as the Trustees may prescribe and to terminate any Fund
of the Trust.
PRINCIPAL UNDERWRITER
Schroder Fund Advisors Inc. is the principal underwriter of the continually
offered shares of each of the Funds. Schroder Fund Advisors Inc. is not
obligated to sell any specific amount of shares of any Fund and will purchase
shares of a Fund for resale only against orders for shares.
-30-
<PAGE>
PORTFOLIO TURNOVER
The portfolio turnover rate of a Fund is defined by the Securities and
Exchange Commission as the ratio of the lesser of annual sales or purchases to
the monthly average value of the portfolio, excluding from both the numerator
and the denominator securities with maturities at the time of acquisition of one
year or less. Portfolio turnover generally involves some expense to a Fund,
including brokerage commissions or dealer mark-ups and other transaction costs
on the sale of securities and reinvestment in other securities.
CUSTODIAN
State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110 is the custodian of the Trust's assets. The custodian's
responsibilities include safeguarding and controlling the Trust's cash and
securities, handling the receipt and delivery of securities, and collecting
interest and dividends on the Trust's investments. The custodian does not
determine the investment policies of the Trust or decide which securities the
Trust will buy or sell. Boston Financial Data Services, Inc., Two Heritage
Drive, Quincy, Massachusetts 02171, serves as registrar and transfer agent for
the Trust.
INDEPENDENT AUDITORS
Arthur Andersen LLP, are the Trust's independent accountants, providing
audit services, tax return preparation services and assistance and consultation
in connection with review of various Securities and Exchange Commission filings.
SHAREHOLDER LIABILITY
Under Massachusetts law, shareholders could, under certain circumstances,
be held personally liable for the obligations of the Trust. However, the
Agreement and Declaration of Trust disclaims shareholder liability for acts or
obligations of the Trust and requires that notice of such disclaimer be given in
each agreement, obligation, or instrument entered into or executed by the Trust
or the Trustees. The Agreement and Declaration of Trust provides for
indemnification out of a Fund's property for all loss and expense of any
shareholder held personally liable for the obligations of a Fund. Thus the risk
of a shareholder's incurring financial loss on account of shareholder liability
is limited to circumstances in which the Fund would be unable to meet its
obligations.
-31-
<PAGE>
WSIS SERIES TRUST
WERTHEIM EQUITY VALUE FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1995
<TABLE>
<CAPTION>
Name of Issuer
and Title of Issue Shares Value
- - ------------------------------------------------------------------------------------------ ----------- -----------
<S> <C> <C>
COMMON STOCKS - 91.4%
BASIC INDUSTRY - (6.2%)
Ferro Corporation..................................................................... 27,000 $ 624,375
James River Corporation of Virginia................................................... 30,300 973,387
LTV Corporation New (1)............................................................... 55,000 770,000
-----------
2,367,762
CAPITAL GOODS - (14.5%)
Allied Signal, Incorporated........................................................... 26,300 1,117,750
General Electric Company.............................................................. 18,600 1,176,450
General Signal Corporation............................................................ 30,900 984,937
Minnesota Mining & Manufacturing Company.............................................. 15,500 881,562
Textron, Incorporated................................................................. 16,900 1,161,875
Trinova Corporation................................................................... 7,300 205,313
-----------
5,527,887
CONSUMER CYCLICAL - (16.4%)
Charming Shoppes, Incorporated........................................................ 71,600 205,850
Dillard Department Stores, Incorporated............................................... 23,800 645,575
General Motors Corporation............................................................ 25,600 1,120,000
May Department Stores Company......................................................... 27,700 1,087,225
Time Warner, Incorporated............................................................. 30,900 1,127,850
Toys "R" Us, Incorporated (1)......................................................... 43,900 960,312
Wal Mart Stores, Incorporated......................................................... 51,000 1,102,875
-----------
6,249,687
</TABLE>
See notes to financial statements.
32
WSIS SERIES TRUST
<PAGE>
WSIS SERIES TRUST
WERTHEIM EQUITY VALUE FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1995
-CONTINUED-
<TABLE>
<CAPTION>
Name of Issuer
and Title of Issue Shares Value
- - ------------------------------------------------------------------------------------------ ----------- -----------
<S> <C> <C>
COMMON STOCKS
CONSUMER STAPLES - (11.0%)
Colgate Palmolive Company............................................................. 18,100 $ 1,253,425
General Mills, Incorporated........................................................... 20,000 1,147,500
Heinz H J Company..................................................................... 23,400 1,088,100
Kimberly Clark Corporation............................................................ 9,500 689,938
-----------
4,178,963
ENERGY - (9.4%)
Amoco Corporation..................................................................... 18,200 1,162,525
Chevron Corporation................................................................... 23,100 1,079,925
Mobil Corporation..................................................................... 13,200 1,329,900
-----------
3,572,350
FINANCE - (12.9%)
Aetna Life & Casualty Company......................................................... 16,100 1,133,038
American International Group, Incorporated............................................ 17,100 1,442,812
BankAmerica Corporation............................................................... 17,600 1,012,000
General Reinsurance Corporation....................................................... 9,200 1,332,850
-----------
4,920,700
TECHNOLOGY - (9.9%)
BMC Software, Incorporated (1)........................................................ 22,100 787,313
Cisco Systems, Incorporated (1)....................................................... 11,900 922,250
International Business Machines....................................................... 12,100 1,176,725
Novell, Incorporated (1).............................................................. 52,800 871,200
-----------
3,757,488
TRANSPORTATION - (2.3%)
Conrail, Incorporated................................................................. 12,700 873,125
-----------
</TABLE>
See notes to financial statements.
33
WSIS SERIES TRUST
<PAGE>
WSIS SERIES TRUST
WERTHEIM EQUITY VALUE FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1995
-CONTINUED-
<TABLE>
<CAPTION>
Name of Issuer
and Title of Issue Shares Value
- - ------------------------------------------------------------------------------------------ ----------- -----------
<S> <C> <C>
COMMON STOCKS
UTILITIES - (8.8%)
GTE Corporation....................................................................... 37,700 $ 1,555,125
Northeast Utilities................................................................... 32,200 796,950
Public Service Enterprise Group....................................................... 34,500 1,013,438
-----------
3,365,513
-----------
TOTAL COMMON STOCKS - (COST $32,112,226) 34,813,475
-----------
</TABLE>
<TABLE>
<CAPTION>
Interest Repurchase Repurchase
Rate Date Price
---------- ----------- ----------
<S> <C> <C> <C> <C> <C>
SHORT TERM INVESTMENT - 6.4%
REPURCHASE AGREEMENT - (6.4%)
State Street Bank and Trust Company........... 5.250% 11/01/1995 $2,419,353 2,419,000
-----------
(Dated 10/31/95, collateralized by a
$2,330,000 United States Treasury Note,
7.125%, 2/29/00)
TOTAL SHORT TERM INVESTMENT - (COST $2,419,000) 2,419,000
-----------
TOTAL INVESTMENTS - (COST $34,531,226) 97.8% 37,232,475
OTHER ASSETS LESS LIABILITIES 2.2% 855,875
----- -----------
NET ASSETS 100.0% $38,088,350
----- -----------
----- -----------
</TABLE>
(1) Non-income producing security.
See notes to financial statements.
34
WSIS SERIES TRUST
<PAGE>
WSIS SERIES TRUST
WERTHEIM SMALL CAPITALIZATION VALUE FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1995
<TABLE>
<CAPTION>
Name of Issuer
and Title of Issue Shares Value
- - ------------------------------------------------------------------------------------------ ----------- -----------
<S> <C> <C>
COMMON STOCKS - 95.4%
AEROSPACE - (7.6%)
Whittaker Corporation (1)............................................................. 83,000 $ 1,649,625
Wyman Gordon Company (1).............................................................. 154,800 1,973,700
-----------
3,623,325
APPAREL & TEXTILES - (2.0%)
Fieldcrest Cannon, Incorporated (1)................................................... 50,000 962,500
-----------
BANKS - (6.4%)
Great Financial Corporation........................................................... 22,500 461,250
Hibernia Corporation.................................................................. 115,000 1,135,625
Roosevelt Financial Group, Incorporated............................................... 29,000 467,625
Union Planters Corporation............................................................ 33,000 1,010,625
-----------
3,075,125
BUSINESS SERVICES - (7.8%)
Banyan Systems, Incorporated (1)...................................................... 126,000 984,375
Interim Services, Incorporated (1).................................................... 45,800 1,362,550
Jacobs Engineering Group, Incorporated (1)............................................ 64,000 1,400,000
-----------
3,746,925
CHEMICALS - (3.0%)
Om Group Incorporated................................................................. 48,900 1,418,100
-----------
COMPUTERS & BUSINESS EQUIPMENT - (7.6%)
Data General Corporation (1).......................................................... 150,000 1,725,000
Stratus Computer, Incorporated (1).................................................... 62,000 1,929,750
-----------
3,654,750
</TABLE>
See notes to financial statements.
35
WSIS SERIES TRUST
<PAGE>
WSIS SERIES TRUST
WERTHEIM SMALL CAPITALIZATION VALUE FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1995
-CONTINUED-
<TABLE>
<CAPTION>
Name of Issuer
and Title of Issue Shares Value
- - ------------------------------------------------------------------------------------------ ----------- -----------
<S> <C> <C>
COMMON STOCKS
ELECTRONICS - (9.4%)
Augat, Incorporated................................................................... 75,000 $ 1,181,250
Dynatech Corporation (1).............................................................. 80,000 1,200,000
LTX Corporation (1)................................................................... 172,000 2,128,500
-----------
4,509,750
FOOD & BEVERAGES - (5.6%)
ACX Technologies, Incorporated (1).................................................... 68,000 1,054,000
Universal Foods Corporation........................................................... 47,000 1,609,750
-----------
2,663,750
GAS EXPLORATION - (5.9%)
Parker & Parsley Petroleum Company.................................................... 78,000 1,443,000
Seagull Energy Corporation (1)........................................................ 82,000 1,404,250
-----------
2,847,250
HOTELS & RESTAURANTS - (3.4%)
Marcus Corporation.................................................................... 47,500 1,644,687
-----------
HOUSEHOLD APPLIANCES & HOME FURNISHINGS - (3.2%)
First Alert, Incorporated (1)......................................................... 98,000 1,519,000
-----------
INDUSTRIAL MACHINERY - (8.4%)
Gerber Scientific, Incorporated....................................................... 88,000 1,485,000
Measurex Corporation.................................................................. 43,000 1,322,250
Watts Industries, Incorporated........................................................ 60,000 1,237,500
-----------
4,044,750
</TABLE>
See notes to financial statements.
36
WSIS SERIES TRUST
<PAGE>
WSIS SERIES TRUST
WERTHEIM SMALL CAPITALIZATION VALUE FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1995
-CONTINUED-
<TABLE>
<CAPTION>
Name of Issuer
and Title of Issue Shares Value
- - ------------------------------------------------------------------------------------------ ----------- -----------
<S> <C> <C>
COMMON STOCKS
INSURANCE - (4.2%)
Protective Life Corporation........................................................... 54,000 $ 1,539,000
Western National Corporation.......................................................... 35,000 481,250
-----------
2,020,250
MEDICAL PRODUCTS - (4.2%)
Allied Healthcare Products, Incorporated.............................................. 28,900 549,100
Gelman Sciences, Incorporated (1)..................................................... 68,000 1,453,500
-----------
2,002,600
OFFICE FURNISHINGS & SUPPLIES - (2.5%)
New England Business Service, Incorporated............................................ 62,900 1,210,825
-----------
PETROLEUM SERVICES - (3.1%)
Input/Output, Incorporated (1)........................................................ 39,000 1,457,625
-----------
PUBLISHING - (3.3%)
Interleaf, Incorporated (1)........................................................... 180,000 1,594,688
-----------
RETAIL TRADE - (3.1%)
TJX Companies, Incorporated........................................................... 110,900 1,497,150
-----------
SOFTWARE - (2.2%)
Keane, Incorporated (1)............................................................... 38,200 1,031,400
-----------
</TABLE>
See notes to financial statements.
37
WSIS SERIES TRUST
<PAGE>
WSIS SERIES TRUST
WERTHEIM SMALL CAPITALIZATION VALUE FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1995
-CONTINUED-
<TABLE>
<CAPTION>
Name of Issuer
and Title of Issue Shares Value
- - ------------------------------------------------------------------------------------------ ----------- -----------
<S> <C> <C>
COMMON STOCKS
TRANSPORTATION - (2.5%)
Wisconsin Central Transport Corporation (1)........................................... 20,000 $ 1,205,000
-----------
TOTAL COMMON STOCKS - (COST $40,868,358) 45,729,450
-----------
</TABLE>
<TABLE>
<CAPTION>
Interest Repurchase Repurchase
Rate Date Price
---------- ----------- ----------
<S> <C> <C> <C> <C> <C>
SHORT TERM INVESTMENT - 5.2%
REPURCHASE AGREEMENT - (5.2%)
State Street Bank and Trust Company........... 5.250% 11/01/1995 $2,470,360 2,470,000
-----------
(Dated 10/31/95, collateralized by a
$2,375,000 United States Treasury Note,
7.125%, 2/29/00)
TOTAL SHORT TERM INVESTMENT - (COST $2,470,000) 2,470,000
-----------
TOTAL INVESTMENTS - (COST $43,338,358) 100.6 % 48,199,450
LIABILITIES IN EXCESS OF OTHER ASSETS (0.6)% (270,496)
------ -----------
NET ASSETS 100.0 % $47,928,954
------ -----------
------ -----------
</TABLE>
(1) Non-income producing security.
See notes to financial statements.
38
WSIS SERIES TRUST
<PAGE>
WSIS SERIES TRUST
WERTHEIM HIGH YIELD INCOME FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1995
<TABLE>
<CAPTION>
Name of Issuer
and Title of Issue Shares Value
- - ------------------------------------------------------------------------------------------ ----------- -----------
<S> <C> <C>
WARRANTS - 0.0%
AEROSPACE - (0.0%)
Sabreliner Corporation................................................................ 115 $ 1,150
-----------
AIR TRANSPORT - (0.0%)
CHC Helicopter Corporation............................................................ 800 1,000
-----------
CONGLOMERATES - (0.0%)
Chatwins Group, Incorporated.......................................................... 300 300
-----------
GAMING - (0.0%)
Hemmeter Enterprises, Incorporated.................................................... 9,490 949
-----------
STEEL - (0.0%)
Gulf States Steel Incorporated Alabama (1)............................................ 325 1,625
-----------
TOTAL WARRANTS - (COST $32,399) 5,024
-----------
</TABLE>
<TABLE>
<CAPTION>
Interest Maturity Principal
Rate Date Amount
---------- ----------- ----------
<S> <C> <C> <C> <C>
BOND UNIT - 1.9%
DIRECT BROADCAST SATELLITE TV - (1.9%)
Echostar Communications Corporation (2)....... 12.875% 06/01/2004 $620,000 393,700
-----------
TOTAL BOND UNIT - (COST $355,729) 393,700
-----------
</TABLE>
See notes to financial statements.
39
WSIS SERIES TRUST
<PAGE>
WSIS SERIES TRUST
WERTHEIM HIGH YIELD INCOME FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1995
-CONTINUED-
<TABLE>
<CAPTION>
Name of Issuer Interest Maturity Principal
and Title of Issue Rate Date Amount Value
- - -------------------------------------------------- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
CORPORATE BONDS - 90.0%
AEROSPACE - (1.9%)
Sabreliner Corporation........................ 12.500% 04/15/2003 $425,000 $ 397,375
-----------
AIR TRANSPORT - (10.9%)
CHC Helicopter Corporation.................... 11.500% 07/15/2002 775,000 685,875
Northwest Airlines Trust...................... 13.875% 06/21/2008 925,000 1,063,750
United Air Lines, Incorporated................ 9.000% 12/15/2003 450,000 475,047
-----------
2,224,672
APPAREL & TEXTILES - (3.1%)
Guess, Incorporated........................... 9.500% 08/15/2003 625,000 625,000
-----------
BANKS - (0.2%)
California Federal Bank Los Angeles........... 10.000% 01/03/2003 45,000 47,250
-----------
BUILDING PRODUCTS - (3.0%)
Schuller International Group, Incorporated.... 10.875% 12/15/2004 550,000 613,250
-----------
CABLE TELEVISION - (11.2%)
CAI Wireless Systems, Incorporated............ 12.250% 09/15/2002 675,000 718,875
Heartland Wireless Commerce, Incorporated
(1)......................................... 13.000% 04/15/2003 725,000 808,375
Videotron Group Limited....................... 10.625% 02/15/2005 735,000 777,262
-----------
2,304,512
CHEMICALS - (6.0%)
Indspec Chemical Corporation (2).............. 11.500% 12/01/2003 975,000 689,813
TransResources, Incorporated.................. 11.875% 07/01/2002 575,000 546,250
-----------
1,236,063
</TABLE>
See notes to financial statements.
40
WSIS SERIES TRUST
<PAGE>
WSIS SERIES TRUST
WERTHEIM HIGH YIELD INCOME FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1995
-CONTINUED-
<TABLE>
<CAPTION>
Name of Issuer Interest Maturity Principal
and Title of Issue Rate Date Amount Value
- - -------------------------------------------------- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
CORPORATE BONDS
COMPUTERS & BUSINESS EQUIPMENT - (5.4%)
Dell Computer Corporation..................... 11.000% 08/15/2000 $550,000 $ 610,500
Genicom Corporation........................... 12.500% 02/15/1997 495,000 499,950
-----------
1,110,450
CONGLOMERATES - (2.3%)
Chatwins Group, Incorporated.................. 13.000% 05/01/2003 550,000 459,250
-----------
GAMING - (4.4%)
Pioneer Finance Corporation................... 13.500% 12/01/1998 250,000 202,500
Showboat, Incorporated........................ 9.250% 05/01/2008 700,000 690,375
-----------
892,875
GAS EXPLORATION - (3.8%)
TransTexas Gas Corporation.................... 11.500% 06/15/2002 750,000 785,625
-----------
HOMEBUILDERS - (1.3%)
Forecast Group................................ 11.375% 12/15/2000 475,000 270,750
-----------
HOTELS & RESTAURANTS - (3.6%)
Host Marriot Travel Plazas, Incorporated (1).. 9.500% 05/15/2005 750,000 736,875
-----------
LIFE INSURANCE - (1.8%)
Presidential Life Corporation................. 9.500% 12/15/2000 365,000 375,950
-----------
MEDICAL PRODUCTS - (3.6%)
Abbey Healthcare Group, Incorporated.......... 9.500% 11/01/2002 700,000 733,250
-----------
MEDICAL TECHNOLOGY - (3.0%)
Wright Medical Technology, Incorporated....... 10.750% 07/01/2000 600,000 615,000
-----------
</TABLE>
See notes to financial statements.
41
WSIS SERIES TRUST
<PAGE>
WSIS SERIES TRUST
WERTHEIM HIGH YIELD INCOME FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1995
-CONTINUED-
<TABLE>
<CAPTION>
Name of Issuer Interest Maturity Principal
and Title of Issue Rate Date Amount Value
- - -------------------------------------------------- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
CORPORATE BONDS
METALS - (3.8%)
Carbide/Graphite Group, Incorporated.......... 11.500% 09/01/2003 $725,000 $ 777,562
-----------
PAPER - (4.3%)
Malette, Incorporated......................... 12.250% 07/15/2004 650,000 731,250
Repap New Brunswick, Incorporated............. 9.875% 07/15/2000 150,000 153,750
-----------
885,000
PUBLISHING - (2.9%)
K-III Communications Corporation.............. 10.625% 05/01/2002 545,000 584,513
-----------
STEEL - (3.0%)
Gulf States Steel Incorporated Alabama........ 13.500% 04/15/2003 325,000 294,125
Sheffield Steel Corporation................... 12.000% 11/01/2001 345,000 310,500
-----------
604,625
TELECOMMUNICATIONS - (7.5%)
Mobile Telecommunication Tech Corp............ 13.500% 12/15/2002 775,000 875,750
Paging Network, Incorporated.................. 8.875% 02/01/2006 650,000 651,625
-----------
1,527,375
</TABLE>
See notes to financial statements.
42
WSIS SERIES TRUST
<PAGE>
WSIS SERIES TRUST
WERTHEIM HIGH YIELD INCOME FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1995
-CONTINUED-
<TABLE>
<CAPTION>
Name of Issuer Interest Maturity Principal
and Title of Issue Rate Date Amount Value
- - -------------------------------------------------- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
CORPORATE BONDS
TRANSPORTATION - (3.0%)
Sea Containers Limited Series A............... 12.500% 12/01/2004 $150,000 $ 162,750
Sea Containers Limited Series B............... 12.500% 12/01/2004 425,000 457,937
-----------
620,687
-----------
TOTAL CORPORATE BONDS - (COST $17,927,427) 18,427,909
-----------
<CAPTION>
Repurchase Repurchase
Date Amount
----------- ----------
<S> <C> <C> <C> <C> <C>
SHORT TERM INVESTMENT - 2.5%
REPURCHASE AGREEMENT - (2.5%)
State Street Bank and Trust Company........... 5.250% 11/01/1995 $516,075 516,000
-----------
(Dated 10/31/95, collateralized by a $500,000
United States Treasury Note, 7.125%, 2/29/00)
TOTAL SHORT TERM INVESTMENT - (COST $516,000) 516,000
-----------
TOTAL INVESTMENTS - (COST $18,831,555) 94.4% 19,342,633
OTHER ASSETS LESS LIABILITIES 5.6% 1,146,312
----- -----------
NET ASSETS 100.0% $20,488,945
----- -----------
----- -----------
</TABLE>
(1) Pursuant to Rule 144A of Securities Act of 1933, these securities may be
resold in transactions exempt from registration, normally to qualified
institutional buyers. At October 31, 1995, these securities aggregated
$1,546,875 or 7.5% of net assets of the Fund.
(2) For zero coupon bonds, coupon amount represents the yield to maturity.
See notes to financial statements.
43
WSIS SERIES TRUST
<PAGE>
WSIS SERIES TRUST
WERTHEIM INVESTMENT GRADE INCOME FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1995
<TABLE>
<CAPTION>
Name of Issuer Interest Maturity Principal
and Title of Issue Rate Date Amount Value
- - ---------------------------------------------- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
GOVERNMENT AND AGENCY SECURITIES - 41.7%
COLLATERALIZED MORTGAGE OBLIGATION - (1.0%)
Federal Home Loan Mortgage Corporation.... 6.000% 05/15/2008 $ 250,000 $ 244,450
-----------
FEDERALLY CHARTERED - (7.9%)
Federal National Mortgage Association..... 6.320% 12/23/2003 500,000 494,945
Federal National Mortgage Association..... 6.360% 08/16/2000 330,000 334,709
Federal National Mortgage Association..... 6.400% 09/27/2005 725,000 729,161
Federal National Mortgage Association..... 6.480% 02/18/2004 325,000 319,248
-----------
1,878,063
U.S. GOVERNMENT SECURITIES - (32.8%)
United States Treasury Notes.............. 6.125% 05/15/1998 1,990,000 2,011,054
United States Treasury Notes.............. 6.125% 07/31/2000 400,000 405,120
United States Treasury Notes.............. 6.250% 05/31/2000 415,000 422,395
United States Treasury Notes.............. 6.500% 05/15/2005 500,000 517,575
United States Treasury Notes.............. 7.250% 08/15/2004 1,250,000 1,353,588
United States Treasury Notes.............. 7.375% 11/15/1997 900,000 929,817
United States Treasury Notes.............. 7.500% 10/31/1999 950,000 1,007,618
United States Treasury Notes.............. 8.250% 07/15/1998 330,000 350,948
United States Treasury Bonds.............. 7.125% 02/15/2023 700,000 763,063
-----------
7,761,178
-----------
TOTAL GOVERNMENT AND AGENCY SECURITIES - (COST $9,443,176) 9,883,691
-----------
</TABLE>
See notes to financial statements.
44
WSIS SERIES TRUST
<PAGE>
WSIS SERIES TRUST
WERTHEIM INVESTMENT GRADE INCOME FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1995
-CONTINUED-
<TABLE>
<CAPTION>
Name of Issuer Interest Maturity Principal
and Title of Issue Rate Date Amount Value
- - ---------------------------------------------- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
CORPORATE BONDS - 49.2%
FINANCE & BANKING - (24.7%)
Associates Corporation North America...... 6.400% 10/20/2002 $350,000 $ 349,986
Chase Manhattan Corporation............... 6.500% 01/15/2009 400,000 379,600
Chemical New York Corporation............. 9.750% 06/15/1999 525,000 585,207
Chrysler Financial Corporation............ 7.310% 03/24/1998 400,000 409,692
Citicorp.................................. 7.125% 09/01/2005 500,000 514,655
Dean Witter Discover & Company............ 6.875% 03/01/2003 500,000 508,400
Ford Motor Credit Company................. 7.750% 03/15/2005 635,000 678,021
Ford Motor Credit Company................. 9.250% 06/15/1998 200,000 215,000
General Electric Capital Corporation...... 7.875% 12/01/2006 500,000 555,325
General Motors Acceptance Corporation..... 6.750% 07/18/2003 300,000 301,386
General Motors Acceptance Corporation..... 6.750% 10/06/2003 250,000 250,483
Household Finance Corporation............. 8.000% 08/01/2004 400,000 436,136
NCNB Corporation.......................... 10.200% 07/15/2015 100,000 128,774
Security Pacific Corporation.............. 9.750% 05/15/1999 490,000 541,891
-----------
5,854,556
INDUSTRIALS - (9.4%)
American General Corporation.............. 7.700% 10/15/1999 235,000 246,668
Eli Lilly & Company....................... 8.125% 12/01/2001 225,000 247,714
Nabisco Incorporated...................... 7.050% 07/15/2007 500,000 500,715
Pulte Corporation......................... 7.000% 12/15/2003 665,000 631,643
Reebok International Limited.............. 6.750% 05/15/2000 200,000 203,572
Western National Corporation.............. 7.125% 02/15/2004 400,000 401,248
-----------
2,231,560
LEISURE TIME - (5.3%)
Carnival Cruise Lines, Incorporated....... 6.150% 10/01/2003 650,000 630,207
Royal Caribbean Cruises Limited........... 8.250% 04/01/2005 575,000 616,918
-----------
1,247,125
</TABLE>
See notes to financial statements.
45
WSIS SERIES TRUST
<PAGE>
WSIS SERIES TRUST
WERTHEIM INVESTMENT GRADE INCOME FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1995
-CONTINUED-
<TABLE>
<CAPTION>
Name of Issuer Interest Maturity Principal
and Title of Issue Rate Date Amount Value
- - ---------------------------------------------- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
CORPORATE BONDS
OIL - (1.2%)
Chevron Corporation....................... 8.110% 12/01/2004 $ 265,000 $ 294,272
-----------
RETAIL STORES - (4.0%)
Penney J C Incorporated................... 6.500% 06/15/2002 600,000 603,138
Sears Roebuck & Company................... 9.250% 04/15/1998 325,000 348,104
-----------
951,242
TRANSPORTATION - (4.6%)
Federal Express Corporation............... 9.875% 04/01/2002 475,000 559,930
Southwest Airlines Company................ 7.875% 09/01/2007 300,000 320,085
Southwest Airlines Company................ 9.250% 02/15/1998 200,000 212,026
-----------
1,092,041
-----------
TOTAL CORPORATE BONDS - (COST $11,115,099) 11,670,796
-----------
<CAPTION>
Repurchase Repurchase
Date Amount
----------- ----------
<S> <C> <C> <C> <C>
SHORT TERM INVESTMENT - 9.3%
REPURCHASE AGREEMENT - (9.3%)
State Street Bank and Trust Company....... 5.250% 11/01/1995 $2,200,321 2,200,000
-----------
(Dated 10/31/95, collateralized by a
$2,115,000 United States Treasury Note,
7.125%, 2/29/00)
TOTAL SHORT TERM INVESTMENT - (COST $2,200,000) 2,200,000
-----------
TOTAL INVESTMENTS - (COST $22,758,275) 100.2% 23,754,487
LIABILITIES IN EXCESS OF OTHER ASSETS (0.2)% (50,524)
----- -----------
NET ASSETS 100.0% $23,703,963
----- -----------
----- -----------
</TABLE>
See notes to financial statements.
46
WSIS SERIES TRUST
<PAGE>
WSIS SERIES TRUST
WERTHEIM SHORT-TERM INVESTMENT FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1995
<TABLE>
<CAPTION>
Name of Issuer Interest Maturity Principal
and Title of Issue Rate Date Amount Value
- - ------------------------------------------------------- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
ASSET BACKED SECURITY - 1.3%
AUTO LOAN - (1.3%)
General Motors Acceptance Corporation Grantor
Trust............................................ 4.150% 03/15/1998 $ 450,649 $ 445,250
-----------
TOTAL ASSET BACKED SECURITY - (COST $449,873) 445,250
-----------
GOVERNMENT AND AGENCY SECURITIES - 57.6%
COLLATERALIZED MORTGAGE OBLIGATIONS (1) - (1.0%)
Federal National Mortgage Association REMIC (2).... 5.000% 03/25/2023 136,987 135,188
Federal National Mortgage Association REMIC (2).... 5.750% 07/25/2009 209,448 205,224
-----------
340,412
FEDERAL AGENCIES - (21.8%)
Federal Home Loan Bank Consolidated Discount
Notes............................................ 5.470% 04/11/1996 1,500,000 1,464,158
Federal Home Loan Bank Consolidated Discount
Notes............................................ 5.470% 04/18/1996 1,500,000 1,462,609
Federal Home Loan Bank Consolidated Discount
Notes............................................ 5.500% 12/26/1995 1,500,000 1,487,396
Federal Home Loan Bank Consolidated Discount
Notes............................................ 5.500% 01/25/1996 1,500,000 1,481,087
Federal Home Loan Bank Consolidated Discount
Notes............................................ 5.550% 01/11/1996 1,500,000 1,484,202
-----------
7,379,452
</TABLE>
See notes to financial statements.
47
WSIS SERIES TRUST
<PAGE>
WSIS SERIES TRUST
WERTHEIM SHORT-TERM INVESTMENT FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1995
-CONTINUED-
<TABLE>
<CAPTION>
Name of Issuer Interest Maturity Principal
and Title of Issue Rate Date Amount Value
- - ------------------------------------------------------- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
GOVERNMENT AND AGENCY SECURITIES
FEDERALLY CHARTERED - (34.8%)
Federal National Mortgage Association Discount
Notes............................................ 5.450% 04/29/1996 $1,500,000 $ 1,460,700
Federal National Mortgage Association Discount
Notes............................................ 5.460% 03/13/1996 1,500,000 1,470,574
Federal Home Loan Mortgage Discount Notes.......... 5.480% 02/05/1996 1,500,000 1,478,760
Federal National Mortgage Association Discount
Notes............................................ 5.480% 03/05/1996 1,500,000 1,472,344
Federal National Mortgage Association Discount
Notes............................................ 5.500% 02/20/1996 1,500,000 1,475,441
Federal National Mortgage Association Discount
Notes............................................ 5.540% 01/18/1996 1,500,000 1,482,645
Federal National Mortgage Association Discount
Notes............................................ 5.550% 12/15/1995 1,500,000 1,489,825
Federal National Mortgage Association Discount
Notes............................................ 5.550% 12/29/1995 1,500,000 1,486,587
-----------
11,816,876
-----------
TOTAL GOVERNMENT AND AGENCY SECURITIES - (COST $19,531,905) 19,536,740
-----------
CORPORATE NOTES - 8.8%
FINANCE & BANKING - (4.4%)
International Bank For Reconstruction & Development
Discount Note.................................... 5.570% 12/04/1995 1,500,000 1,492,341
-----------
INDUSTRIALS - (4.4%)
Smithkline Beecham, Plc............................ 5.250% 01/26/1996 1,500,000 1,498,395
-----------
TOTAL CORPORATE NOTES - (COST $2,975,796) 2,990,736
-----------
</TABLE>
See notes to financial statements.
48
WSIS SERIES TRUST
<PAGE>
WSIS SERIES TRUST
WERTHEIM SHORT-TERM INVESTMENT FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1995
-CONTINUED-
<TABLE>
<CAPTION>
Name of Issuer Interest Maturity Principal
and Title of Issue Rate Date Amount Value
- - ------------------------------------------------------- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
COMMERCIAL PAPER - 30.6%
FINANCIAL SERVICES - (30.6%)
American Express Company........................... 5.850% 11/20/1995 $1,500,000 $ 1,495,369
CIT Group Holdings, Incorporated................... 5.500% 03/11/1996 1,500,000 1,469,324
Ford Motor Credit Company.......................... 5.620% 02/23/1996 1,500,000 1,473,305
General Electric Capital Corporation............... 5.580% 04/01/1996 1,500,000 1,464,407
General Motors Acceptance Corporation.............. 5.810% 12/08/1995 1,500,000 1,491,043
John Deere Capital Corporation..................... 5.700% 11/07/1995 1,500,000 1,498,575
Prudential Funding Corporation..................... 5.700% 11/14/1995 1,500,000 1,496,912
-----------
TOTAL COMMERCIAL PAPER - (COST $10,389,844) 10,388,935
-----------
</TABLE>
<TABLE>
<CAPTION>
Repurchase Repurchase
Date Amount
----------- ----------
<S> <C> <C> <C> <C> <C>
OTHER SHORT TERM INVESTMENT - 1.7%
REPURCHASE AGREEMENT - (1.7%)
State Street Bank and Trust Company................ 5.250% 11/01/1995 $ 581,085 581,000
-----------
(Dated 10/31/95, collateralized by a
$560,000 United States Treasury Note,
7.125%, 2/29/00)
TOTAL OTHER SHORT TERM INVESTMENT - (COST $581,000) 581,000
-----------
TOTAL INVESTMENTS - (COST $33,928,418) 100.0% 33,942,661
LIABILITIES IN EXCESS OF OTHER ASSETS 0.0% (6,783)
----- -----------
NET ASSETS 100.0% $33,935,878
----- -----------
----- -----------
</TABLE>
(1) For collateralized mortgage obligations, the period of time that the Fund
expects to receive all scheduled principal payments may be shorter than the
stated maturity of the obligation.
(2) For zero coupon bonds, coupon amount represents the yield to maturity.
See notes to financial statements.
49
WSIS SERIES TRUST
<PAGE>
WSIS SERIES TRUST
STATEMENTS OF ASSETS AND LIABILITIES
OCTOBER 31, 1995
<TABLE>
<CAPTION>
Small
Equity Capitalization High Yield Investment Short-Term
Value Value Income Grade Income Investment
Fund Fund Fund Fund Fund
------------ ---------------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments in securities, at value
- Note 2.......................... $ 37,232,475 $ 48,199,450 $ 19,342,633 $23,754,487 $ 33,942,661
Cash................................ 237 728 989 566 780
Dividends receivable................ 31,730 12,784 0 0 0
Interest receivable................. 353 360 638,439 373,475 21,697
Receivable for securities sold...... 1,411,023 167,119 681,200 322,474 0
Receivable for trust shares sold.... 21,812 63,332 3,120 66 1,014
Deferred organizational costs....... 35,080 35,080 35,080 35,420 32,986
Prepaid expenses.................... 10,119 10,944 8,943 9,086 9,695
Due from Schroder Wertheim
Investment Services, Inc. - Note
3................................. 0 0 9,319 6,530 1,611
------------ ---------------- ------------ ------------ ------------
TOTAL ASSETS...................... 38,742,829 48,489,797 20,719,723 24,502,104 34,010,444
LIABILITIES
Payable for securities purchased.... 563,066 294,009 158,153 732,121 0
Payable for trust shares redeemed... 5,467 163,440 3,879 2,926 11,515
Advisory fee payable - Note 3....... 27,048 40,733 16,312 11,087 10,028
Accounts payable and accrued
expenses.......................... 58,898 62,661 48,487 47,407 52,933
Dividends payable................... 0 0 3,947 4,600 90
------------ ---------------- ------------ ------------ ------------
TOTAL LIABILITIES................. 654,479 560,843 230,778 798,141 74,566
------------ ---------------- ------------ ------------ ------------
NET ASSETS........................ $ 38,088,350 $ 47,928,954 $ 20,488,945 $23,703,963 $ 33,935,878
------------ ---------------- ------------ ------------ ------------
------------ ---------------- ------------ ------------ ------------
NET ASSETS
CAPITAL PAID-IN..................... $ 32,165,352 $ 43,044,976 $ 21,560,738 $22,413,024 $ 33,959,075
UNDISTRIBUTED (OVERDISTRIBUTED) NET
INVESTMENT INCOME................. 339,842 0 (429) (4,600) 89,297
ACCUMULATED NET REALIZED GAIN (LOSS)
ON INVESTMENTS.................... 2,881,907 22,886 (1,582,442) 299,327 (126,737)
NET UNREALIZED APPRECIATION OF
INVESTMENTS....................... 2,701,249 4,861,092 511,078 996,212 14,243
------------ ---------------- ------------ ------------ ------------
NET ASSETS........................ $ 38,088,350 $ 47,928,954 $ 20,488,945 $23,703,963 $ 33,935,878
------------ ---------------- ------------ ------------ ------------
------------ ---------------- ------------ ------------ ------------
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE........ $ 11.12 $ 10.77 $ 8.72 $ 9.93 $ 9.88
TOTAL SHARES OUTSTANDING AT END OF
YEAR.............................. 3,425,424 4,448,479 2,349,693 2,388,152 3,433,768
COST OF SECURITIES.................. $ 34,531,226 $ 43,338,358 $ 18,831,555 $22,758,275 $ 33,928,418
</TABLE>
See notes to financial statements.
50
WSIS SERIES TRUST
<PAGE>
WSIS SERIES TRUST
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 1995
<TABLE>
<CAPTION>
Small
Equity Capitalization High Yield Investment Short-Term
Value Value Income Grade Income Investment
Fund Fund Fund Fund Fund
------------ ---------------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividend income........................ $ 771,894 $ 283,467 $ 14,342 $ 0 $ 0
Interest income........................ 117,172 183,054 2,157,981 1,428,953 1,928,255
------------ ---------------- ------------ ------------ ------------
TOTAL INCOME......................... 889,066 466,521 2,172,323 1,428,953 1,928,255
EXPENSES
Investment advisory fees - Note 3...... 252,615 349,672 176,520 98,478 131,121
Administrative fees.................... 55,376 60,374 33,721 33,690 55,267
Custodian fees......................... 39,309 47,901 41,767 37,369 35,744
Audit fees............................. 21,000 21,000 21,000 21,000 19,000
Legal fees............................. 21,049 21,049 21,050 21,049 20,000
Printing expenses...................... 8,000 8,000 8,000 8,000 8,000
Trustees fees.......................... 7,600 7,600 7,600 7,600 7,600
Transfer agent fees.................... 47,086 47,393 43,516 40,419 43,036
Organizational expenses................ 9,647 9,647 9,647 9,647 9,647
Registration fees...................... 18,287 17,984 16,530 15,348 21,352
Insurance.............................. 1,189 1,189 1,189 1,189 1,189
Other.................................. 1,812 2,376 2,313 2,292 2,502
Expenses borne by Schroder Wertheim
Investment Services, Inc. - Note 3... (16,285) (22,164) (93,036) (88,653) (42,642)
------------ ---------------- ------------ ------------ ------------
TOTAL EXPENSES....................... 466,685 572,021 289,817 207,428 311,816
------------ ---------------- ------------ ------------ ------------
NET INVESTMENT INCOME/(LOSS)......... 422,381 (105,500) 1,882,506 1,221,525 1,616,439
------------ ---------------- ------------ ------------ ------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
NET REALIZED GAIN (LOSS) ON
INVESTMENTS.......................... 2,987,577 226,635 (1,236,881) 396,597 (76,414)
CHANGE IN NET UNREALIZED APPRECIATION
OF INVESTMENTS....................... 2,957,170 4,156,231 1,163,750 1,226,836 104,005
------------ ---------------- ------------ ------------ ------------
NET GAIN (LOSS)...................... 5,944,747 4,382,866 (73,131) 1,623,433 27,591
------------ ---------------- ------------ ------------ ------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS............................. $ 6,367,128 $ 4,277,366 $ 1,809,375 $ 2,844,958 $ 1,644,030
------------ ---------------- ------------ ------------ ------------
------------ ---------------- ------------ ------------ ------------
</TABLE>
See notes to financial statements.
51
WSIS SERIES TRUST
<PAGE>
WSIS SERIES TRUST
STATEMENTS OF CHANGES IN NET ASSETS
OCTOBER 31, 1995
<TABLE>
<CAPTION>
SMALL CAPITALIZATION
EQUITY VALUE FUND VALUE FUND
-------------------------- --------------------------
YEAR PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED
10/31/95 10/31/94(1) 10/31/95 10/31/94(1)
----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
INCREASE IN NET ASSETS
From operations:
Net investment income/(loss)........ $ 422,381 $ 132,970 $ (105,500) $ 10,391
Net realized gain (loss) on
investments....................... 2,987,577 (105,670) 226,635 (185,520)
Change in net unrealized
appreciation (depreciation) of
investments....................... 2,957,170 (255,921) 4,156,231 704,861
----------- ------------ ----------- ------------
Net increase (decrease) in net
assets resulting from
operations........................ 6,367,128 (228,621) 4,277,366 529,732
Net equalization credits - Note 2..... 0 0 0 0
Dividends and distributions to
Shareholders:
From net investment income.......... (217,293) 0 (11,130) 0
In excess of net investment
income............................ 0 0 0 0
Tax return of capital............... 0 0 0 0
Net increase from trust share
transactions........................ 10,629,016 21,518,120 22,469,797 20,643,189
----------- ------------ ----------- ------------
TOTAL INCREASE...................... 16,778,851 21,289,499 26,736,033 21,172,921
Net Assets
Beginning of period................. 21,309,499 20,000 21,192,921 20,000
----------- ------------ ----------- ------------
End of period (a)................... $38,088,350 $ 21,309,499 $47,928,954 $ 21,192,921
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
(a) Including undistributed
(overdistributed) net investment
income................................ $ 339,842 $ 132,970 $ 0 $ 10,391
</TABLE>
(1) For the period February 16, 1994 (commencement of investment operations)
through October 31, 1994.
(2) For the period February 22, 1994 (commencement of investment operations)
through October 31, 1994.
(3) For the period January 11, 1994 (commencement of investment operations)
through October 31, 1994.
See notes to financial statements.
52
WSIS SERIES TRUST
<PAGE>
<TABLE>
<CAPTION>
HIGH YIELD INVESTMENT GRADE SHORT-TERM
INCOME FUND INCOME FUND INVESTMENT FUND
-------------------------- -------------------------- --------------------------
YEAR PERIOD YEAR PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED
10/31/95 10/31/94(1) 10/31/95 10/31/94(2) 10/31/95 10/31/94(3)
----------- ------------ ----------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE IN NET ASSETS
From operations:
Net investment income/(loss)........ $ 1,882,506 $ 469,541 $ 1,221,525 $ 226,910 $ 1,616,439 $ 522,157
Net realized gain (loss) on
investments....................... (1,236,881) (266,898) 396,597 (88,586) (76,414) (4,524)
Change in net unrealized
appreciation (depreciation) of
investments....................... 1,163,750 (652,672) 1,226,836 (230,624) 104,005 (89,762)
----------- ------------ ----------- ------------ ----------- ------------
Net increase (decrease) in net
assets resulting from
operations........................ 1,809,375 (450,029) 2,844,958 (92,300) 1,644,030 427,871
Net equalization credits - Note 2..... 7,770 85,325 17,649 24,789 0 0
Dividends and distributions to
Shareholders:
From net investment income.......... (1,875,254) (469,541) (1,238,821) (226,910) (1,617,411) (521,908)
In excess of net investment
income............................ 0 (15,022) 0 (353) 0 0
Tax return of capital............... 0 (70,263) 0 (24,436) 0 0
Net increase from trust share
transactions........................ 4,591,461 16,855,123 9,174,957 13,204,430 3,137,885 30,845,411
----------- ------------ ----------- ------------ ----------- ------------
TOTAL INCREASE...................... 4,533,352 15,935,593 10,798,743 12,885,220 3,164,504 30,751,374
Net Assets
Beginning of period................. 15,955,593 20,000 12,905,220 20,000 30,771,374 20,000
----------- ------------ ----------- ------------ ----------- ------------
End of period (a)................... $20,488,945 $ 15,955,593 $23,703,963 $ 12,905,220 $33,935,878 $ 30,771,374
----------- ------------ ----------- ------------ ----------- ------------
----------- ------------ ----------- ------------ ----------- ------------
(a) Including undistributed
(overdistributed) net investment
income................................ $ (429) $ (15,022) $ (4,600) $ (353) $ 89,297 $ 249
</TABLE>
53
WSIS SERIES TRUST
<PAGE>
WSIS SERIES TRUST
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
SMALL CAPITALIZATION
EQUITY VALUE FUND VALUE FUND
--------------------------- ---------------------------
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1995 1994(1) 1995 1994(1)
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
NET ASSET VALUE AT BEGINNING
OF PERIOD................... $ 9.45 $ 10.00 $ 9.77 $ 10.00
INCOME FROM INVESTMENT
OPERATIONS:
Net Investment Income/(Loss)
(4)....................... 0.11 0.06 (0.03) 0.00
Net Realized and Unrealized
Gain (Loss) on
Investments............... 1.63 (0.61) 1.03 (0.23)
------------ ------------ ------------ ------------
TOTAL FROM INVESTMENT
OPERATIONS................ 1.74 (0.55) 1.00 (0.23)
------------ ------------ ------------ ------------
LESS DISTRIBUTIONS:
From Net Investment
Income.................... (0.07) 0.00 0.00 0.00
In Excess of Net Investment
Income.................... 0.00 0.00 0.00 0.00
Tax Return of Capital....... 0.00 0.00 0.00 0.00
------------ ------------ ------------ ------------
Total Distributions......... (0.07) 0.00 0.00 0.00
------------ ------------ ------------ ------------
NET ASSET VALUE AT END OF
PERIOD...................... $ 11.12 $ 9.45 $ 10.77 $ 9.77
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
TOTAL RETURN.................. 18.63% (5.50)%(5) 10.27% (2.30)%(5)
RATIOS & SUPPLEMENTAL DATA
Net Assets at End of Period
(000's)................... $ 38,088 $ 21,309 $ 47,929 $ 21,193
Ratio of Operating Expenses
to Average Net Assets
(4)....................... 1.40% 1.30%(6) 1.56% 1.45%(6)
Ratio of Net Investment
Income to Average Net
Assets.................... 1.27% 1.37%(6) (0.29)% 0.17%(6)
Portfolio Turnover Rate..... 83.15% 102.56% 45.74% 18.53%
</TABLE>
(1) For the period February 16, 1994 (commencement of investment operations)
through October 31, 1994.
(2) For the period February 22, 1994 (commencement of investment operations)
through October 31, 1994.
(3) For the period January 11, 1994 (commencement of investment operations)
through October 31, 1994.
Notes to Financial Highlights continued on page 41.
See notes to financial statements.
54
WSIS SERIES TRUST
<PAGE>
<TABLE>
<CAPTION>
HIGH YIELD INVESTMENT GRADE SHORT-TERM
INCOME FUND INCOME FUND INVESTMENT FUND
--------------------------- --------------------------- ---------------------------
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1995 1994(1) 1995 1994(2) 1995 1994(3)
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE AT BEGINNING
OF PERIOD................... $ 8.79 $ 10.00 $ 9.14 $ 10.00 $ 9.88 $ 10.00
INCOME FROM INVESTMENT
OPERATIONS:
Net Investment Income/(Loss)
(4)....................... 0.84 0.48 0.59 0.34 0.49 0.30
Net Realized and Unrealized
Gain (Loss) on
Investments............... (0.07) (1.14) 0.79 (0.83) 0.00 (0.12)
------------ ------------ ------------ ------------ ------------ ------------
TOTAL FROM INVESTMENT
OPERATIONS................ 0.77 (0.66) 1.38 (0.49) 0.49 0.18
------------ ------------ ------------ ------------ ------------ ------------
LESS DISTRIBUTIONS:
From Net Investment
Income.................... (0.84) (0.47) (0.59) (0.34) (0.49) (0.30)
In Excess of Net Investment
Income.................... 0.00 (0.01) 0.00 0.00 0.00 0.00
Tax Return of Capital....... 0.00 (0.07) 0.00 (0.03) 0.00 0.00
------------ ------------ ------------ ------------ ------------ ------------
Total Distributions......... (0.84) (0.55) (0.59) (0.37) (0.49) (0.30)
------------ ------------ ------------ ------------ ------------ ------------
NET ASSET VALUE AT END OF
PERIOD...................... $ 8.72 $ 8.79 $ 9.93 $ 9.14 $ 9.88 $ 9.88
------------ ------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------ ------------
TOTAL RETURN.................. 9.16% (6.60)%(5) 15.62% (4.90)%(5) 5.02% 1.83%(5)
RATIOS & SUPPLEMENTAL DATA
Net Assets at End of Period
(000's)................... $ 20,489 $ 15,956 $ 23,704 $ 12,905 $ 33,936 $ 30,771
Ratio of Operating Expenses
to Average Net Assets
(4)....................... 1.48% 1.30%(6) 1.06% 0.87%(6) 0.95% 0.78%(6)
Ratio of Net Investment
Income to Average Net
Assets.................... 9.67% 9.67%(6) 6.35% 6.39%(6) 4.91% 4.48%(6)
Portfolio Turnover Rate..... 149.58% 59.30% 113.50% 155.63% 27.86% 71.38%
</TABLE>
(4) Net Investment Income is after reimbursement of certain expenses by
Schroder Wertheim Investment Services, Inc. (See Note 3 to the Trust's
financial statements.) Had the Investment Adviser not undertaken to pay
or reimburse expenses related to the Funds, the Net Investment Income
per share and Ratio of Operating Expenses to Average Net Assets would
have been as follows: Wertheim Equity Value Fund: 1995 - $0.11 and
1.45%; 1994 - $0.02 and 2.17%; Wertheim Small Capitalization Value Fund:
1995 - ($0.03) and 1.62%; 1994 - ($0.04) and 3.15%; Wertheim High Yield
Income Fund: 1995 - $0.80 and 1.96%; 1994 - $0.44 and 3.59%, Wertheim
Investment Grade Income Fund: 1995 - $0.56 and 1.50%; 1994 - $0.21 and
3.98%; and Wertheim Short-Term Investment Fund: 1995 - $0.47 and 1.08%;
1994 - $0.24 and 1.66%, respectively.
(5) Not annualized.
(6) Annualized.
55
WSIS SERIES TRUST
<PAGE>
WSIS SERIES TRUST
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1995
NOTE 1 -- ORGANIZATION
WSIS Series Trust (the "Trust") is a diversified open-end series management
investment company registered under the Investment Company Act of 1940, as
amended. The Trust was organized as a business trust under the laws of The
Commonwealth of Massachusetts on May 6, 1993. The Trust has an unlimited number
of authorized shares, which are divided into five separate investment portfolios
- - --Wertheim Equity Value Fund, Wertheim Small Capitalization Value Fund, Wertheim
High Yield Income Fund, Wertheim Investment Grade Income Fund and Wertheim
Short-Term Investment Fund (collectively, the "Funds").
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES
VALUATION OF INVESTMENTS: Equity securities traded on a national securities
exchange are valued at their last reported sale price on the principal exchange;
or, if traded in the over-the-counter market or on a national securities
exchange for which no sales took place on the day of valuation, at the last
available bid price. Debt securities are valued on the basis of valuations
provided by a pricing service that determines valuations for normal
institutional size trading units of debt securities, or through obtaining
independent quotes from market makers. Short-term debt instruments with a
remaining maturity of 60 days or less are valued at amortized cost, which
approximates market value. Securities for which current market quotations are
not readily available are valued at fair value as determined in accordance with
procedures approved by the Trust's Board of Trustees.
REPURCHASE AGREEMENTS: Funds enter into repurchase agreements with approved
institutions and are collateralized by U.S. Government securities. The Trust's
custodian takes possession of the underlying securities, the market value of
which at the time of purchase at least equals the resale price, principal amount
plus interest, of the repurchase transaction. To the extent that any repurchase
transaction exceeds one business day, the value of the underlying securities is
marked-to-market on a daily basis to ensure the adequacy of the underlying
securities. Schroder Wertheim Investment Services, Inc. ("Schroder"), investment
adviser to the Trust, is responsible for determining that the value of the
underlying securities is at all times at least equal to the resale price. In the
event of default by the seller to repurchase the securities, a Fund could
realize a loss on the sale of the underlying securities to the extent that the
proceeds of sale, including accrued interest, is less than the resale price of
the repurchase agreement. If the seller should be involved in bankruptcy or
insolvency proceedings, realization and/or retention of the underlying
securities, or proceeds may be subject to legal proceedings.
INVESTMENT TRANSACTIONS: Investment security transactions are recorded as of
trade date. Realized gains and losses on sales of investments are determined on
the basis of identified cost.
56
WSIS SERIES TRUST
<PAGE>
WSIS SERIES TRUST
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1995
-CONTINUED-
INVESTMENT INCOME: Dividend income is recorded on the ex-dividend date. Interest
income is recorded on an accrual basis.
EXPENSES: Expenses are recorded on an accrual basis. Most of the expenses of the
Trust can be directly attributed to a specific Fund. Expenses not directly
attributed to a specific Fund are allocated among the Funds in such a manner as
deemed equitable by the Trustees.
DISTRIBUTIONS TO SHAREHOLDERS: Distributions to shareholders from net investment
income are declared and distributed at least annually for Wertheim Equity Value
Fund and Wertheim Small Capitalization Value Fund; declared and distributed
monthly for Wertheim High Yield Income Fund and Wertheim Investment Grade Income
Fund; and declared daily and distributed monthly for Wertheim Short-Term
Investment Fund. Distributions from net realized capital gains, if any, are
declared and distributed at least annually. Distributions are recorded on the
ex-dividend date.
DEFERRED ORGANIZATION COSTS: Costs and expenses of the Trust paid by Schroder
and its affiliates in connection with the organization of the Trust and the
initial public offering of its shares have been deferred by the Trust and are
being amortized on a straight-line basis from the date operations commenced over
a period that it is expected a benefit will be realized, not to exceed five
years.
Schroder has agreed with respect to each of the Funds that, if any of the
initial shares of a Fund are redeemed during such amortization period by any
holder thereof, the redemption proceeds will be reduced for any unamortized
organization expenses in the same ratio as the number of shares redeemed bears
to the number of initial shares held at the time of redemption.
EQUALIZATION: Wertheim High Yield Income Fund and Wertheim Investment Grade
Income Fund follow an accounting practice known as equalization by which a
portion of the proceeds from sales and costs of redemptions of Fund shares
equivalent, on a per share basis, to the amount of undistributed net investment
income on the date of the transaction is credited or charged to undistributed
net investment income. As a result, undistributed net investment income per
share is unaffected by sales and redemptions of the above listed Fund's shares.
FEDERAL INCOME TAXES: It is the intention of the Trust for each Fund to qualify
as a "regulated investment company" by complying with the requirements of
Subchapter M of the Internal Revenue Code of 1986, as amended. By so qualifying,
the Funds will not be subject to federal income taxes to the extent that, among
other things, they distribute substantially all
57
WSIS SERIES TRUST
<PAGE>
WSIS SERIES TRUST
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1995
-CONTINUED-
of their taxable income, including realized capital gains, for the fiscal year.
In addition, by distributing during each calendar year substantially all of
their net investment income, capital gains and certain other amounts, if any,
the Funds will not be subject to a federal excise tax.
As of October 31, 1995, realized capital loss carryforwards, for Federal income
tax purposes, available to be used to offset future realized capital gains are
as follows: Wertheim High Yield Income Fund has $1,582,442 ($247,397 expiring on
October 31, 2002 and $1,335,045 expiring on October 31, 2003); and Wertheim
Short-Term Investment Fund has $126,737 ($4,524 expiring on October 31, 2002 and
$122,213 expiring on October 31, 2003).
Income and capital gain distributions are determined in accordance with income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments for market discount,
losses deferred due to wash sales and excise tax regulations.
At October 31, 1995, the Trust reclassified the following amounts between
paid-in capital, accumulated undistributed net realized gain (loss) and
accumulated undistributed net investment income
<TABLE>
<CAPTION>
Increase/(Decrease)
Increase/(Decrease) Accumulated
Increase/(Decrease) Undistributed Net Realized
Paid-in Capital Investment Income Gain/(Loss)
------------------ ------------------ ------------------
<S> <C> <C> <C>
Wertheim Equity Value Fund......................... $ (1,045) $ 1,045 $ 0
Wertheim Small Capitalization Value Fund........... (87,271) 105,500 (18,229)
Wertheim High Yield Income Fund.................... 79,092 (429) (78,663)
Wertheim Investment Grade Income Fund.............. 13,284 (4,600) (8,684)
Wertheim Short-Term Investment Fund................ (43,498) 89,297 (45,799)
</TABLE>
These reclassifications had no impact on the net asset value of the Funds and
are designed to present each Fund's capital accounts on a tax basis.
NOTE 3 -- INVESTMENT ADVISORY FEES AND ADMINISTRATION AGREEMENT
The Trust has entered into an investment advisory agreement with Schroder. Under
the agreement, Schroder provides investment management services, and receives
for its services compensation monthly at the following annual rates based on
58
WSIS SERIES TRUST
<PAGE>
WSIS SERIES TRUST
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1995
-CONTINUED-
average daily net assets of each Fund taken separately: 0.75% for Wertheim
Equity Value Fund; 0.95% for Wertheim Small Capitalization Value Fund; 0.90% for
Wertheim High Yield Income Fund; 0.50% for Wertheim Investment Grade Income
Fund; and 0.40% for Wertheim Short-Term Investment Fund.
The Trust has also entered into an Administration Agreement with State Street
Bank and Trust Company ("State Street"). Under the Administration Agreement, the
Trust pays compensation to State Street at the following annual rates based on
the average daily net assets of each Fund taken separately: 0.08% of the first
$125 million of each Fund's average daily net assets, 0.06% of the next $125
million of each Fund's average daily net assets and 0.04% of each Fund's average
daily net assets in excess of $250 million, subject to certain minimum
requirements.
In order to limit the Funds' expenses, Schroder voluntarily agreed to reduce its
compensation and, if necessary, to pay certain expenses of each of the Funds
until March 1, 1995, with respect to each of the Funds to the extent that a
Fund's expenses, other than Schroder's compensation, brokerage, interest, taxes,
deferred organizational expenses, and extraordinary expenses exceed the
following annual rates: 0.55% of average daily net assets of Wertheim Equity
Value Fund; 0.50% of average daily net assets of Wertheim Small Capitalization
Value Fund; 0.40% of average daily net assets of Wertheim High Yield Income
Fund; 0.37% of average daily net assets of Wertheim Investment Grade Income
Fund; and 0.38% of average daily net assets of Wertheim Short-Term Investment
Fund. Schroder has voluntarily agreed to extend the limitation until October 31,
1996, at the following annual rates: 0.80% of average daily net assets of
Wertheim Equity Value Fund; 0.75% of average daily net assets of Wertheim Small
Capitalization Value Fund; 0.65% of average daily net assets of Wertheim High
Yield Income Fund; 0.62% of average daily net assets of Wertheim Investment
Grade Income Fund; and 0.63% of average daily net assets of Wertheim Short-Term
Investment Fund. The Trust pays all expenses not assumed by Schroder, including
Trustees' fees, auditing, legal, custodial, and investor servicing and
shareholder reporting expenses.
NOTE 4 -- TRANSACTIONS WITH AFFILIATES
BROKERAGE COMMISSIONS: Brokerage commissions received by affiliates of the
Trust's investment adviser, from portfolio transactions conducted with the Funds
during the year ended October 31, 1995, amounted to $7,732.
TRUSTEES' FEES: The Trust pays no compensation to Trustees who are employees of
Schroder. Trustees who are not Schroder employees receive an annual fee of
$5,000 and an additional fee of $1,500 for each Trustees' meeting attended.
59
WSIS SERIES TRUST
<PAGE>
WSIS SERIES TRUST
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1995
-CONTINUED-
NOTE 5 -- INVESTMENT TRANSACTIONS
Purchases and proceeds from sales and maturities of investments, excluding
short-term securities for each Fund, for the year ended October 31, 1995 were as
follows:
<TABLE>
<CAPTION>
Non- Non-
Government Government Government Government
Purchases Purchases Sales Sales
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Wertheim Equity Value Fund........................ $34,732,072 $ 0 $25,884,564 $ 0
Wertheim Small Capitalization Value Fund.......... 37,194,710 0 15,329,651 0
Wertheim High Yield Income Fund................... 30,970,119 0 27,234,448 0
Wertheim Investment Grade Income Fund............. 12,465,486 16,837,158 10,263,150 10,693,230
Wertheim Short-Term Investment Fund............... 2,993,280 0 3,819,462 15,072,673
</TABLE>
The identified cost for federal income tax purposes of investments owned by each
Fund and their respective gross unrealized appreciation and depreciation at
October 31, 1995 were as follows:
<TABLE>
<CAPTION>
Gross Unrealized Net Unrealized
Identified Appreciation Appreciation
Cost (Depreciation) (Depreciation)
------------ ------------------------ ---------------
<S> <C> <C> <C> <C>
Wertheim Equity Value Fund.......................... $34,577,510 $3,687,734 $(1,032,769) $2,654,965
Wertheim Small Capitalization Value Fund............ 43,341,246 7,097,964 (2,239,760) 4,858,204
Wertheim High Yield Income Fund..................... 18,831,566 839,683 (328,616) 511,067
Wertheim Investment Grade Income Fund............... 22,758,621 1,004,369 (8,503) 995,866
Wertheim Short-Term Investment Fund................. 33,928,418 23,835 (9,592) 14,243
</TABLE>
60
WSIS SERIES TRUST
<PAGE>
WSIS SERIES TRUST
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1995
-CONTINUED-
NOTE 6 -- SHAREHOLDERS' TRANSACTIONS
Following is a summary of shareholder transactions for each Fund:
<TABLE>
<CAPTION>
Period from February 16,
Year Ended 1994
October 31, 1995 to October 31, 1994
Shares Dollars Shares Dollars
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
WERTHEIM EQUITY VALUE FUND
Shares sold....................................... 2,234,169 $ 21,323,054 4,996,170 $ 48,195,340
Shares issued to shareholders in reinvestment..... 23,861 216,153 0 0
Shares redeemed................................... (1,087,443) (10,910,191) (2,743,333) (26,677,220)
---------- ------------ ---------- ------------
Net increase...................................... 1,170,587 $ 10,629,016 2,252,837 $ 21,518,120
---------- ------------ ---------- ------------
---------- ------------ ---------- ------------
<CAPTION>
Period from February 16,
Year Ended 1994
October 31, 1995 to October 31, 1994
Shares Dollars Shares Dollars
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
WERTHEIM SMALL CAPITALIZATION VALUE FUND
Shares sold....................................... 3,098,020 $30,759,624 2,308,194 $22,011,948
Shares issued to shareholders in reinvestment..... 1,129 10,971 0 0
Shares redeemed................................... (820,811) (8,300,798) (140,053) (1,368,759)
---------- ------------ ---------- ------------
Net increase...................................... 2,278,338 $22,469,797 2,168,141 $20,643,189
---------- ------------ ---------- ------------
---------- ------------ ---------- ------------
<CAPTION>
Period from February 16,
Year Ended 1994
October 31, 1995 to October 31, 1994
Shares Dollars Shares Dollars
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
WERTHEIM HIGH YIELD INCOME FUND
Shares sold....................................... 1,003,992 $ 8,719,371 1,909,620 $17,802,573
Shares issued to shareholders in reinvestment..... 201,685 1,754,861 57,625 515,036
Shares redeemed................................... (671,847) (5,875,001) (153,382) (1,377,161)
Income equalization received...................... 0 (7,770) 0 (85,325)
---------- ------------ ---------- ------------
Net increase...................................... 533,830 $ 4,591,461 1,813,863 $16,855,123
---------- ------------ ---------- ------------
---------- ------------ ---------- ------------
</TABLE>
61
WSIS SERIES TRUST
<PAGE>
WSIS SERIES TRUST
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1995
-CONTINUED-
<TABLE>
<CAPTION>
Period from February 22,
Year Ended 1994
October 31, 1995 to October 31, 1994
Shares Dollars Shares Dollars
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
WERTHEIM INVESTMENT GRADE INCOME FUND
Shares sold....................................... 1,636,204 $ 15,312,312 2,269,033 $ 21,290,294
Shares issued to shareholders in reinvestment..... 124,830 1,193,295 24,801 230,657
Shares redeemed................................... (785,028) (7,313,001) (883,688) (8,291,732)
Income equalization received...................... 0 (17,649) 0 (24,789)
---------- ------------ ---------- ------------
Net increase...................................... 976,006 $ 9,174,957 1,410,146 $ 13,204,430
---------- ------------ ---------- ------------
---------- ------------ ---------- ------------
<CAPTION>
Period from January 11,
Year Ended 1994
October 31, 1995 to October 31, 1994
Shares Dollars Shares Dollars
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
WERTHEIM SHORT-TERM INVESTMENT FUND
Shares sold....................................... 2,016,637 $ 19,914,676 6,613,581 $ 65,551,871
Shares issued to shareholders in reinvestment..... 162,019 1,599,931 44,254 437,876
Shares redeemed................................... (1,860,847) (18,376,722) (3,543,876) (35,144,336)
---------- ------------ ---------- ------------
Net increase...................................... 317,809 $ 3,137,885 3,113,959 $ 30,845,411
---------- ------------ ---------- ------------
---------- ------------ ---------- ------------
</TABLE>
NOTE 7 -- BENEFICIAL INTEREST
The following schedule shows the number of shareholders each owning 5% or more
of a Fund and the total percentage of the Fund held by such shareholders.
<TABLE>
<CAPTION>
5% or Greater Shareholders
------------------------------
Number % of Fund Held
------------- ---------------
<S> <C> <C>
Wertheim Equity Value Fund...................................................... 2 27.04%
Wertheim Small Capitalization Value Fund........................................ 2 19.80%
Wertheim High Yield Income Fund................................................. 2 22.94%
Wertheim Investment Grade Income Fund........................................... 4 54.86%
</TABLE>
62
WSIS SERIES TRUST
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and
Board of Trustees of WSIS Series Trust:
We have audited the accompanying statements of assets and liabilities, including
the schedules of investments, of WSIS Series Trust (a Massachusetts business
trust comprising, respectively, the Wertheim Equity Value Fund, Wertheim Small
Capitalization Value Fund, Wertheim High Yield Income Fund, Wertheim Investment
Grade Income Fund and Wertheim Short-Term Investment Fund) as of October 31,
1995 and the related statements of operations for the year then ended, and the
statements of changes in net assets and the financial highlights for the year
then ended and the period ended October 31, 1994. These financial statements and
financial highlights are the responsibility of the Trust's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1995 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the respective funds constituting the WSIS Series Trust as of October 31,
1995 the results of their operations for the year then ended, and the changes in
their net assets and the financial highlights for the year then ended and the
period ended October 31, 1994 in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
New York, New York
December 14, 1995
63
WSIS SERIES TRUST
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements Included in Parts A and B:
(1) Report of Independent Auditors
(2) Statements of assets and liabilities, October 31, 1995.
Statements of Operations -- period ended October 31, 1995.
Statements of Changes in net assets -- period ended
October 31, 1995.
Financial Highlights -- period ended October 31, 1995.
Notes to Financial Statements.
Included in Part C: None.
(b) Exhibits
(1) - Agreement and Declaration of Trust*
(2) - Bylaws*
(3) - Inapplicable
(4)(A) - Forms of certificate representing shares of beneficial
interest*
(B) - Portions of Agreement and Declaration of Trust Relating
to Shareholders' Rights*
(C) - Portions of Bylaws Relating to Shareholders' Rights*
(5) - Form of Management Contract*
(6) - Form of Distributor's Contract*
(7) - Inapplicable
(8) - Form of Custodian Agreement*
(9)(A) - Form of Transfer Agent and Servicing Agreement*
(B) - Form of Administration Agreement*
(10) - Opinion and Consent of Ropes & Gray*
(11) - Consent of Independent Public Accountants
(12) - Inapplicable
(13) - Form of Initial Capital Agreement*
(14) - Inapplicable
(15) - Inapplicable
(16) - Schedule for Computation of Performance Information*
(17) - Financial Data Schedules
(18) - Inapplicable
__________________________________
<PAGE>
* Previously filed.
-2-
<PAGE>
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
The Schroder Wertheim & Co. Incorporated Profit-Sharing and Savings
Incentive Plans and the Lewco Securities Corp. Profit Sharing and Thrift Plans,
and the Schroder Wertheim & Co. Pension Plan may be deemed to "control" certain
of the Funds. See "Principal Holders of Securities" in the Statement of
Additional Information.
ITEM 26. NUMBER OF RECORD HOLDERS OF SECURITIES
As of November 30, 1995, the number of shareholders of record of each Fund
was as follows:
Fund # record shareholders
- - ---- ---------------------
Wertheim Equity Value Fund 1,255
Wertheim Small Capitalization
Value Fund 1,320
Wertheim Investment Grade
Income Fund 696
Wertheim High Yield Income Fund 790
Wertheim Short-Term Investment Fund 980
ITEM 27. INDEMNIFICATION
Article VIII of the Registrant's Agreement and Declaration of Trust
provides as follows:
SECTION 1. The Trust shall indemnify each of its Trustees and officers
(including persons who serve at the Trust's request as directors, officers or
trustees of another organization in which the Trust has any interest as a
shareholder, creditor or otherwise) (hereinafter referred to as a "Covered
Person") against all liabilities and expenses, including but not limited to
amounts paid in satisfaction of judgments, in compromise or as fines and
penalties, and counsel fees reasonably incurred by any Covered Person in
connection with the defense or disposition of any action, suit or other
-3-
<PAGE>
proceeding, whether civil or criminal, before any court or administrative or
legislative body, in which such Covered Person may be or may have been involved
as a party or otherwise or with which such Covered Person may be or may have
been threatened, while in office or thereafter, by reason of being or having
been such a Covered Person except with respect to any matter as to which such
Covered Person shall have been finally adjudicated in any such action, suit or
other proceeding (a) not to have acted in good faith in the reasonable belief
that such Covered Person's action was in the best interests of the Trust or (b)
to be liable to the Trust or its Shareholders by reason of willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in the
conduct of such Covered Person's office. Expenses, including counsel fees so
incurred by any such Covered Person (but excluding amounts paid in satisfaction
of judgments, in compromise or as fines or penalties), shall be paid from time
to time by the Trust in advance of the final disposition of any such action,
suit or proceeding upon receipt of an undertaking by or on behalf of such
Covered Person to repay amounts so paid to the Trust if it is ultimately
determined that indemnification of such expenses is not authorized under this
Article, provided, however, that either (a) such Covered Person shall have
provided appropriate security for such undertaking, (b) the Trust shall be
insured against losses arising from any such advance payments or (c) either a
majority of the disinterested Trustees acting on the matter (provided that a
majority of the uninterested Trustees then in office act on the matter), or
independent legal counsel in a written opinion, shall have determined, based
upon a review of readily available facts (as opposed to a full trial type
inquiry), that there is reason to believe that such Covered Person will be found
entitled to indemnification under this Article.
SECTION 2. As to any matter disposed of (whether by a compromise payment,
pursuant to a consent decree or otherwise) without an adjudication by a court,
or by any other body before which the proceeding was brought, that such Covered
Person either (a) did not act in good faith in the reasonable belief that his or
her action was in the best interests of the Trust or (b) is liable to the Trust
or its Shareholders by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his or
her office, indemnification shall be provided if (a) approved as in the best
interests of the Trust, after notice that it involves such indemnification, by
at least a majority of the disinterested Trustees acting on the matter (provided
that a majority of the disinterested Trustees then in office act on the matter)
upon a determination, based upon a review of readily available facts (as opposed
to a full trial type inquiry) that such Covered Person acted in good faith in
the reasonable belief that his or her action was in the best interests of the
Trust and is not liable to the Trust or its Shareholders by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his or her office, or (b) there has been obtained an
opinion in writing of independent legal counsel, based upon a review of readily
available facts (as opposed to a full trial type inquiry), to the effect that
such Covered Person appears to have acted in good faith in the reasonable belief
that his or her action was in the best interests of the Trust and that such
indemnification would not protect such Covered Person against any liability to
the Trust to which he or she would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his or her office. Any approval pursuant to this
Section shall not prevent the recovery from any Covered Person of any amount
paid to such Covered Person in accordance with this Section as indemnification
if such Covered Person is subsequently adjudicated by a court of competent
jurisdiction not to have acted in good faith in the reasonable belief that such
Covered Person's action was in the best interests of the Trust or to have been
liable to the Trust or its Shareholders by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of such Covered Person's office.
-4-
<PAGE>
SECTION 3. The right of indemnification hereby provided shall not be
exclusive of or affect any other rights to which such Covered Person may be
entitled. As used in this Article VIII, the term "Covered Person" shall include
such person's heirs, executors and administrators, and a "disinterested Trustee"
is a Trustee who is not an "interested person" of the Trust as defined in
Section 2(a)(19) of the 1940 Act (or who has been exempted from being an
"interested person" by any rule, regulation or order of the Securities and
Exchange Commission) and against whom none of such actions, suits or other
proceedings or another action, suit or other proceeding on the same or similar
grounds is then or has been pending. Nothing contained in this Article shall
affect any rights to indemnification to which personnel of the trust, other than
Trustees or officers, and other persons may be entitled by contract or otherwise
under law, nor the power of the Trust to purchase and maintain liability
insurance on behalf of any such person.
---------------------
Reference is made to the Distributor's Contract, previously filed, which
contains provisions for the indemnification by Schroder Wertheim & Co.
Incorporated of the Registrant and Trustees and officers of the Registrant under
certain circumstances. Insofar as indemnification for liability arising under
the Securities Act of 1933 may be permitted to Trustees and officers of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a Trustee or officer of the Registrant in the successful defense of
any action, suit, or proceeding) is asserted by such Trustee or officer in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
The directors and officers of the Registrant's investment adviser have been
engaged during the past two fiscal years in no business, vocation, or employment
of a substantial nature other than as directors or officers of the investment
adviser or certain of its corporate affiliates. The address of the investment
adviser and its corporate affiliates is 787 Seventh Avenue, New York, New York
10019.
ITEM 29. PRINCIPAL UNDERWRITERS
(a) Schroder Fund Advisors Inc. currently acts as the principal underwriter
for Schroder Capital Funds (Delaware), Schroder U.S. Equity Fund, Schroder
Emerging Markets Fund Institutional Portfolio, Schroder U.S. Smaller Companies
Fund, and International Equity Fund.
(b) The directors and officers of the Registrant's principal underwriter
are:
-5-
<PAGE>
Positions and
Offices with Positions and Offices
Name Registrant with Underwriter
- - ---- ------------- ---------------------
Kathleen Adams None Vice President
Margaret Douglas-Hamilton None Secretary
Sharon L. Haugh None Director
Mark J. Smith Vice President Director; Vice President
John A. Troiano None Director
Laura E. Luckyn-Malone President Chairman; President
E. William Smethurst, Jr. Trustee; Chairman Director; Vice President
Catherine A. Mazza Vice President; Senior Vice President
Clerk
Robert Jackowitz Treasurer Treasurer
Anita L. Whelan None Vice President
Barbara Gottlieb Assistant Clerk Assistant Vice President
Sean Keegan None Assistant Vice President
-6-
<PAGE>
The principal business address of each person listed above is 787 Seventh
Avenue, New York, New York 10019.
(c) Inapplicable.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
Persons maintaining physical possession of accounts, books and other
documents required to be maintained by Section 31(a) of the Investment Company
Act of 1940 and the Rules promulgated thereunder are Registrant's Clerk,
Catherine A. Mazza; Registrant's investment adviser, Schroder Wertheim
Investment Services, Inc.; Registrant's custodian, State Street Bank & Trust
Company; and Registrant's transfer agent and registrar, Boston Financial Data
Services, Inc. The address of the Clerk and investment adviser is Equitable
Center, 787 Seventh Avenue, New York, New York 10019. The address of the
custodian is 225 Franklin Street, Boston, Massachusetts 02110. The address of
the transfer agent and registrar is Two Heritage Drive, Quincy, Massachusetts,
02171.
ITEM 31. MANAGEMENT SERVICES
None.
ITEM 32. UNDERTAKINGS
(a) Inapplicable.
(b) Inapplicable.
(c) The Registrant undertakes to furnish each person to whom a prospectus
is delivered with a copy of the Registrant's latest annual report to
shareholders upon request and without charge.
(d) The Registrant undertakes, if requested to do so by the holders of at
least 10% of the Registrant's outstanding shares of beneficial
interest, to call a meeting of shareholders for the purpose of voting
upon the question of removal of a Trustee or Trustees and to
-7-
<PAGE>
assist in communications with other shareholders as required by
Section 16(c) of the Investment Company Act of 1940.
NOTICE
A copy of the Agreement and Declaration of Trust of WSIS Series Trust is on
file with the Secretary of State of The Commonwealth of Massachusetts, and
notice is hereby given that this instrument is executed on behalf of the
Registrant by an officer of the Registrant as an officer and not individually
and that the obligations of or arising out of this instrument are not binding
upon any of the Trustees, officers, or shareholders individually but are binding
only upon the assets and property of the Registrant.
-8-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereto
duly authorized, in the City of New York and the State of New York, on this
28th day of February, 1996.
WSIS SERIES TRUST
By: /s/ E. William Smethurst, Jr.
------------------------------
Name: E. William Smethurst, Jr.
Title: Chairman of the Trust
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated on the 28th day of February, 1996.
SIGNATURE TITLE
/s/ E. William Smethurst, Jr. Chairman of the Trust;
- - ----------------------------- Trustee
E. William Smethurst, Jr.
/s/ Robert Jackowitz Treasurer; Principal Financial
- - ------------------------------ Officer; Principal Accounting
Robert Jackowitz Officer
* Trustee
- - ------------------------------
Peter S. Knight
Trustee
- - ------------------------------
David N. Dinkins
* Trustee
- - ------------------------------
Michael Steed
* By /s/ E. William Smethurst, Jr.
------------------------------
E. William Smethurst, Jr.
Attorney-in-Fact
-11-
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. TITLE PAGE
- - ----------- ----- ----
(11) Consent of Independent Public
Accountants
(27) Financial Data Schedule -
Equity Value Fund
(27) Financial Data Schedule -
Small Capitalization Value Fund
(27) Financial Data Schedule -
High Yield Income Fund
(27) Financial Data Schedule -
Investment Grade Income Fund
(27) Financial Data Schedule -
Short-Term Investment Fund
-11-
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
dated December 14, 1995 on the financial statements of WSIS Series Trust for the
period ended October 31, 1995 and to all references to our Firm included in or
made part of the registration statement of WSIS Series Trust filed on Form N-1A
(Amendment No. 5), Investment Company Act File No. 811-7840 with the Securities
and Exchange Commission.
Arthur Andersen LLP
February 27, 1996
New York, New York
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<EXPENSES-NET> 466685
<NET-INVESTMENT-INCOME> 422381
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<EXPENSES-NET> 572021
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<DISTRIBUTIONS-OF-INCOME> (11130)
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<NUMBER-OF-SHARES-SOLD> 3098020
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<ACCUMULATED-NET-GAINS> (1582442)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 511078
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<NET-INVESTMENT-INCOME> 1882506
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<NET-INVESTMENT-INCOME> 1221525
<REALIZED-GAINS-CURRENT> 396597
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<ACCUMULATED-GAINS-PRIOR> (88586)
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<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 14243
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<INTEREST-INCOME> 1928255
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<EXPENSES-NET> 311816
<NET-INVESTMENT-INCOME> 1616439
<REALIZED-GAINS-CURRENT> (76414)
<APPREC-INCREASE-CURRENT> 104005
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<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2016637
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<SHARES-REINVESTED> 162019
<NET-CHANGE-IN-ASSETS> 3164504
<ACCUMULATED-NII-PRIOR> 249
<ACCUMULATED-GAINS-PRIOR> (4524)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 131121
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<GROSS-EXPENSE> 354458
<AVERAGE-NET-ASSETS> 32952358
<PER-SHARE-NAV-BEGIN> 9.880
<PER-SHARE-NII> 0.490
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