Filed with the Securities and Exchange Commission on August 12, 1999
1933 Act Registration File No.33-84762
1940 Act File No. 811-8648
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
--
Pre-Effective Amendment No.
------ --
--
Post- Effective Amendment No. 8 X
------ --
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
--
Amendment No 11 X
----- --
WT MUTUAL FUND
(Formerly known as Kiewit Mutual Fund)
(Exact Name of Registrant as Specified in Charter)
1100 NORTH MARKET STREET, WILMINGTON, DE 19890
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (800) 254-3948
Robert J. Christian, President Copy to:
Wilmington Trust Company Joseph V. Del Raso, Esq.
1100 North Market Street Pepper Hamilton LLP
Wilmington, DE 19890 3000 Two Logan Square
(Name and Address of Agent for Service) Philadelphia, PA 19103
It is proposed that this filing will become effective
___ immediately upon filing pursuant to paragraph (b)
___ on ________ pursuant to paragraph (b)
___ 60 days after filing pursuant to paragraph (a)(1)
___ on ________ pursuant to paragraph (a)1
___ 75 days after filing pursuant to paragraph (a)(2)
_X_ on October 29, 1999 pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
___ This post-effective amendment designates a new effective date
for a previously filed post-effective amendment.
<PAGE>
THE WILMINGTON LARGE CAP GROWTH PORTFOLIO
THE WILMINGTON LARGE CAP CORE PORTFOLIO
THE WILMINGTON SMALL CAP CORE PORTFOLIO
THE WILMINGTON LARGE CAP VALUE PORTFOLIO
THE WILMINGTON MID CAP VALUE PORTFOLIO
THE WILMINGTON SMALL CAP VALUE PORTFOLIO
THE WILMINGTON INTERNATIONAL MULTI-MANAGER PORTFOLIO
OF WT MUTUAL FUND
================================================================================
PROSPECTUS DATED______, 1999
This prospectus gives vital information about these mutual funds, including
information on investment policies, risks and fees. For your own benefit and
protection, please read it before you invest, and keep it on hand for future
reference.
Please note that these mutual funds:
[BULLET] are not bank deposits
[BULLET] are not obligations of, or guaranteed or endorsed by Wilmington Trust
Company or any of its affiliates
[BULLET] are not federally insured
[BULLET] are not obligations of, or guaranteed or endorsed or otherwise
supported by the U.S. Government, the Federal Deposit Insurance
Corporation, the Federal Reserve Board or any other governmental agency
[BULLET] are not guaranteed to achieve their goal(s)
Like all mutual fund shares, the Securities and Exchange Commission has not
approved or disapproved the Portfolios' shares or determined whether this
prospectus is accurate or complete. Anyone who tells you otherwise is committing
a crime.
<PAGE>
TABLE OF CONTENTS
A LOOK AT THE GOALS, STRATEGIES, PORTFOLIO DESCRIPTION
RISKS, EXPENSES AND FINANCIAL Summary.............................
HISTORY OF EACH PORTFOLIO. Performance Information.............
Fees and Expenses...................
Investment Objectives...............
Primary Investment Strategies.......
Additional Risk Information.........
Financial Highlights................
DETAILS ABOUT THE SERVICE MANAGEMENT OF THE PORTFOLIOS
PROVIDERS. Investment Advisers.................
Service Providers...................
POLICIES AND INSTRUCTIONS FOR SHAREHOLDER INFORMATION
OPENING, MAINTAINING AND Pricing of Shares...................
CLOSING AN ACCOUNT IN ANY OF Purchase of Shares..................
THE PORTFOLIOS. Redemption of Shares................
Exchange of Shares..................
Distributions.......................
Taxes...............................
DETAILS ON DISTRIBUTION DISTRIBUTION ARRANGEMENTS
PLANS AND THE PORTFOLIOS' Rule 12b-1 Fees.....................
MASTER/FEEDER FUND Master/Feeder Structure.............
ARRANGEMENT. Share Class.........................
FOR MORE INFORMATION......back cover
For information about key terms and concepts, look for our "PLAIN TALK"
explanations.
2
<PAGE>
THE WILMINGTON LARGE CAP GROWTH PORTFOLIO
THE WILMINGTON LARGE CAP CORE PORTFOLIO
THE WILMINGTON SMALL CAP CORE PORTFOLIO
THE WILMINGTON LARGE CAP VALUE PORTFOLIO
THE WILMINGTON MID CAP VALUE PORTFOLIO
THE WILMINGTON SMALL CAP VALUE PORTFOLIO
THE WILMINGTON INTERNATIONAL MULTI-MANAGER PORTFOLIO
PORTFOLIO DESCRIPTION
PLAIN TALK
-----------------------------------------------------------------------
WHAT IS A MUTUAL FUND?
A mutual fund pools shareholders' money and, using a professional
investment manager, invests it in securities like stocks and bonds.
Each Portfolio is a separate mutual fund.
-----------------------------------------------------------------------
SUMMARY
PLAIN TALK
-----------------------------------------------------------------------
WHAT IS "CAP"?
Cap or the market capitalization of a company means the value of the
company's common stock in the stock market.
-----------------------------------------------------------------------
Investment Objective [BULLET] The LARGE CAP GROWTH PORTFOLIO and
the SMALL CAP CORE PORTFOLIO each seek superior
long-term growth of capital.
[BULLET] The LARGE CAP CORE PORTFOLIO, the LARGE CAP
VALUE PORTFOLIO, the MID CAP VALUE PORTFOLIO and
the SMALL CAP VALUE PORTFOLIO each seek to
achieve long-term capital appreciation.
[BULLET] The INTERNATIONAL MULTI-MANAGER PORTFOLIO seeks
superior long-term capital appreciation.
- -------------------------- -----------------------------------------------------
Investment Focus [BULLET] Equity (or related) securities
- -------------------------- -----------------------------------------------------
Share Price
Volatility [BULLET] Moderate to high
- -------------------------- -----------------------------------------------------
Principal Investment [BULLET] Each Portfolio operates as a "feeder fund" which
Strategy means that the Portfolio does not buy individual
securities directly. Instead, it invests in a
corresponding mutual fund or "master fund,"
which in turn purchases investment securities.
The Portfolios invest all of their assets in
master funds which are separate series of WT
Investment Trust I. Each Portfolio and its
corresponding Series have the same investment
objective, policies and limitations.
[BULLET] The LARGE CAP GROWTH PORTFOLIO invests in the WT
Large Cap Growth Series, which invests at least
65% of its total assets in a diversified
portfolio of U.S. equity (or related) securities
of corporations with a market cap of $2 billion
or more, which have above average earnings
potential compared to the securities market as a
whole.
[BULLET] The LARGE CAP CORE PORTFOLIO invests in the
Large Cap Core Series, which invests at least
65% of its total assets, under normal
conditions, primarily in a diversified portfolio
of U.S. equity (or related) securities or medium
and large cap corporations with strong growth
and value characteristics.
[BULLET] The SMALL CAP CORE PORTFOLIO invests in the
Small Cap Core Series, which invests at least
65% of its total assets in a diversified
portfolio of U.S. equity (or related) securities
with a market cap of $2 billion or less at the
time of purchase. The Series' investment
3
<PAGE>
adviser employs a combined growth and value
investment approach and invests in the stocks of
companies with the most attractive combination
of long-term earnings, growth and valuation.
[BULLET] The INTERNATIONAL MULTI-MANAGER PORTFOLIO
invests in the International Multi-Manager
Series, which invests at least 85% of its total
assets in a diversified portfolio of equity (or
related) securities of foreign issuers.
[BULLET] The LARGE CAP VALUE PORTFOLIO invests in the
Large Cap Value Series, which invests at least
65% of its total assets in a diversified
portfolio of U.S. equity (or related) securities
with a market cap of $10 billion or higher at
the time of purchase. The Series invests in
securities believed to be undervalued as
compared to the company's potential
profitability.
[BULLET] The MID CAP VALUE PORTFOLIO invests in the Mid
Cap Value Series, which invests at least 65% of
its total assets in a diversified portfolio of
U.S. equity (or related) securities with a
market cap between $1 and $10 billion at the
time of purchase. The Series invests in
securities believed to be undervalued as
compared to the company's potential
profitability.
[BULLET] The SMALL CAP VALUE PORTFOLIO invests in the
Small Cap Value Series, which invests at least
65% of its total assets in a diversified
portfolio of U.S. equity (or related) securities
with a market cap of $1 billion or less at the
time of purchase. The Series invests in
securities believed to be undervalued as
compared to the company's potential
profitability.
- -------------------------- -----------------------------------------------------
Principal Risks [BULLET] An investment in a Portfolio is not a
deposit of Wilmington Trust Company or any of
its affiliates and is not insured or guaranteed
by the Federal Deposit Insurance Corporation or
any other government agency.
[BULLET] It is possible to lose money by investing in a
Portfolio.
[BULLET] A Portfolio's share price will fluctuate in
response to changes in the market value of the
Portfolio's investments. Market value changes
result from business developments affecting an
issuer as well as general market and economic
conditions.
[BULLET] Small cap companies may be more vulnerable than
larger companies to adverse business or economic
developments, and their securities may be less
liquid and more volatile than securities of
larger companies.
[BULLET] The International Multi-Manager Portfolio is
subject to foreign security risk and the risk of
losses caused by changes in foreign currency
exchange rates.
[BULLET] The International Multi-Manager Series is not
authorized to depart from their primary
investment policies and temporarily pursue a
defensive investment policy, even during periods
of declining markets. Consequently, they are
subject to a greater risk of capital loss if
adverse market conditions arise and persist in
the future than funds which are permitted to
adopt a defensive position.
[BULLET] Growth-oriented investments may be more volatile
than the rest of the U.S. stock market as a
whole.
[BULLET] A value-oriented investment approach is subject
to the risk that a security believed to be
undervalued does not appreciate in value as
anticipated.
[BULLET] The performance of a Portfolio will depend on
whether or not the adviser or sub-adviser is
successful in pursuing an investment strategy.
[BULLET] The Portfolios are also subject to other risks
which are described under "Additional Risk
Information."
- --------------------------------------------------------------------------------
Investor Profile [BULLET] Investors who want the value of their
investment to grow and who are willing to accept
more volatility for the possibility of higher
returns.
- --------------------------------------------------------------------------------
4
<PAGE>
PERFORMANCE INFORMATION
WILMINGTON LARGE CAP GROWTH PORTFOLIO
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Portfolio. Of course, past performance does
not necessarily indicate how the Portfolio will perform in the future.
[INSERT BAR CHART]
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE PORTFOLIO'S INSTITUTIONAL
SHARES FROM CALENDAR YEAR TO CALENDAR YEAR. THE BAR CHART DOES NOT REFLECT
DEDUCTIONS FOR RULE 12b-1 DISTRIBUTION FEES. IF SUCH AMOUNTS WERE REFLECTED,
RETURNS WOULD BE LESS.
BEST QUARTER WORST QUARTER
25.34% -17.12%
(December 31, 1998) (September 30, 1990)
PLAIN TALK
-----------------------------------------------------------------------
WHAT IS AN INDEX?
An index is a broad measure of the market performance of a specific
group of securities in a particular market, or securities in a market
sector. You cannot invest directly in an index. An index does not have
an investment adviser and does not pay any commissions or expenses. If
an index had expenses, its performance would be lower.
-----------------------------------------------------------------------
Institutional Shares
AVERAGE ANNUAL RETURNS AS OF 12/31/98 1 YEAR 5 YEARS 10 YEARS
Large Cap Growth Portfolio 23.58% 20.19% 17.67%
S&P 500 Index*
- -------------------------
* The S&P 500 Index is the Standard and Poor's Composite Index of 500 stocks, a
widely recognized, unmanaged index of common stock prices.
PLAIN TALK
-----------------------------------------------------------------------
WHAT IS TOTAL RETURN?
Total return is a measure of the per-share change in the total value of
a fund's portfolio, including any distributions paid to you. It is
measured from the beginning to the end of a specific time period.
-----------------------------------------------------------------------
WILMINGTON LARGE CAP CORE PORTFOLIO
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Portfolio. Of course, past performance does
not necessarily indicate how the Portfolio will perform in the future.
[INSERT BAR CHART]
5
<PAGE>
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE PORTFOLIO'S INSTITUTIONAL
SHARES FROM CALENDAR YEAR TO CALENDAR YEAR. THE BAR CHART DOES NOT REFLECT
DEDUCTIONS FOR 12b-1 DISTRIBUTION FEES, IF SUCH AMOUNTS WERE REFLECTED, RETURNS
WOULD BE LESS.
BEST QUARTER WORST QUARTER
--% --%
(___, 199_) (___, 199_)
Institutional Shares Since Inception
AVERAGE ANNUAL RETURNS AS OF 12/31/98 1 YEAR (JANUARY 1995)
- ------------------------------------- ------ --------------
Large Cap Core Portfolio
S&P 500 Index*
- -------------------------
* The S&P 500 Index is the Standard and Poor's Composite Index of 500 stocks, a
widely recognized, unmanaged index of common stock pieces.
WILMINGTON SMALL CAP CORE PORTFOLIO
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Portfolio and its predecessor the Small Cap
Stock Fund, a collective investment fund. The Small Cap Stock Fund's performance
has been included for the periods prior to July 1, 1998 and has been adjusted to
reflect the annual deduction of fees and expenses applicable to shares of the
Small Cap Equity Portfolio (i.e. adjusted to reflect anticipated expenses,
absent investment advisory fees waivers). The Small Cap Stock Fund was not
registered as a mutual fund under Investment Company Act of 1940 and therefore
was not subject to certain investment restrictions, limitations and
diversification requirements imposed by the 1940 Act and the Internal Revenue
Service Code. If the Small Cap Stock Fund had been registered under the 1940
Act, its performance may have been different. Of course, past performance does
not necessarily indicate how the Portfolio will perform in the future.
[INSERT BAR CHART]
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE PORTFOLIO'S INSTITUTIONAL
SHARES FROM CALENDAR YEAR TO CALENDAR YEAR. THE BAR CHART DOES NOT REFLECT
DEDUCTIONS FOR RULE 12b-1 DISTRIBUTION FEES, IF SUCH AMOUNTS WERE REFLECTED,
RETURNS WOULD BE LESS.
BEST QUARTER WORST QUARTER
20.59% 17.92%
(September 30, 1997) (June 30, 1998)
Institutional Shares SINCE INCEPTION
AVERAGE ANNUAL RETURNS AS OF 12/31/98 1 YEAR (APRIL 1, 1997)
Small Cap Core Portfolio -2.32% 17.40%
Russell 2000 Index* -2.54% 13.99%
- -------------------------
* The Russell 2000 Index is a market weighted index composed of 2000 companies
with market capitalizations from $50 million to $1.8 billion. The Index is
unmanaged and reflects the reinvestment of dividends.
6
<PAGE>
WILMINGTON INTERNATIONAL MULTI-MANAGER PORTFOLIO
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Portfolio and its predecessor the
International Stock Fund, a collective investment fund. The International Stock
Fund's performance has been included for periods prior to July 1, 1998 and has
been adjusted to reflect the annual deduction of fees and expenses applicable to
shares of the International Equity Portfolio (i.e. adjusted to reflect
anticipated expenses, absent investment advisory fees waivers). The
International Stock Fund was not registered as a mutual fund under the 1940 Act
and therefore was not subject to certain investment restrictions, limitations
and diversification requirements imposed by the 1940 Act and the Internal
Revenue Code. If the International Stock Fund had been registered under the 1940
Act, its performance may have been different. Of course, the past performance
does not necessarily indicate how the Portfolio will perform in the future.
[INSERT BAR CHART]
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE PORTFOLIO'S INSTITUTIONAL
SHARES FROM CALENDAR YEAR TO CALENDAR YEAR. THE BAR CHART DOES NOT REFLECT
DEDUCTIONS FOR RULE 12b-1 DISTRIBUTION FEES. IF SUCH AMOUNTS WERE REFLECTED,
RETURNS WOULD BE LESS.
BEST QUARTER WORST QUARTER
16.21% -22.76%
(September 30, 1989) (September 30, 1990)
Institutional Shares
AVERAGE ANNUAL RETURNS AS OF 12/31/98 1 YEAR 5 YEARS 10 YEARS
- ------------------------------------- ------ ------- --------
International Multi-Manager Portfolio 13.48% 6.17% 9.06%
Morgan Stanley Capital International Europe,
Australasia and Far East Index 20.00% 9.19% 5.54%
- -------------------------
WILMINGTON LARGE CAP VALUE PORTFOLIO
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Portfolio. Of course, past performance does
not necessarily indicate how the Portfolio will perform in the future.
[INSERT BAR CHART]
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE PORTFOLIO'S INSTITUTIONAL
SHARES FROM CALENDAR YEAR TO CALENDAR YEAR. THE BAR CHART DOES NOT REFLECT
DEDUCTIONS FOR RULE 12b-1 DISTRIBUTION FEES. IF SUCH AMOUNTS WERE REFLECTED,
RETURNS WOULD BE LESS.
7
<PAGE>
BEST QUARTER WORST QUARTER
13.48% 10.62%
(June 30, 1997) (September 30, 1998)
Institutional Shares SINCE INCEPTION
AVERAGE ANNUAL RETURNS AS OF 12/31/98 1 YEAR 5 YEARS (DECEMBER 1, 1991)
- ------------------------------------- ------ ------- ------------------
Large Cap Value Portfolio -2.75% 14.30% 15.29%
S&P 500 Index 28.58% 24.06% 21.08%
- -------------------------
WILMINGTON MID CAP VALUE PORTFOLIO
The Portfolio has not been in operation for a full calendar year.
Institutional Shares SINCE INCEPTION
AVERAGE ANNUAL RETURNS AS OF 12/31/98 1 YEAR (JANUARY 6, 1998)
- ------------------------------------- ------ -----------------
Mid Cap Value Portfolio _____% _____%
Russell Mid Cap Index* 10.10% _____%
- -------------------------
* The Russell Mid Cap Index measures the performance of the 800 smallest
companies in the Russell 1000 Index, which represent approximately 35% of the
total market capitalization of the Russell 1000 Index.
WILMINGTON SMALL CAP VALUE PORTFOLIO
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Portfolio. Of course, past performance does
not necessarily indicate how the Portfolio will perform in the future.
[INSERT BAR CHART]
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE PORTFOLIO'S INSTITUTIONAL
SHARES FROM CALENDAR YEAR TO CALENDAR YEAR. THE BAR CHART DOES NOT REFLECT
DEDUCTIONS FOR RULE 12b-1 DISTRIBUTION FEES. IF SUCH AMOUNTS WERE REFLECTED,
RETURNS WOULD BE LESS.
BEST QUARTER WORST QUARTER
--% --%
(___, 199_) (___, 199_)
Institutional Shares SINCE INCEPTION
AVERAGE ANNUAL RETURNS AS OF 12/31/98 1 YEAR (OCTOBER 1, 1995)
- ------------------------------------- ------ -----------------
Small Cap Value Portfolio -12.21% -2.24%
Russell 2000 Index* 15.40% 11.45%
- -------------------------
* The Russell 2000 Index is a market weighted index composed of 2000 companies
with market capitalizations from $50 million to $1.8 billion. The Index is
unmanaged and reflects the reinvestment of dividends.
8
<PAGE>
FEES AND EXPENSES
PLAIN TALK
-----------------------------------------------------------------------
WHAT ARE FUND EXPENSES?
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, distribution, administration and custody
services. Each Portfolio's expenses in the table below are shown as a
percentage of its net assets. These expenses are deducted from
Portfolio assets.
-----------------------------------------------------------------------
The table below describes the fees and expenses that you may pay if you buy and
hold shares of a Portfolio. No sales charges or other fees are paid directly
from your investment.
<TABLE>
<CAPTION>
INSTITUTIONAL SHARES
ANNUAL FUND OPERATING INTERNATIONAL
EXPENSES (EXPENSES THAT ARE LARGE CAP GROWTH LARGE CAP CORE SMALL CAP CORE MULTI-MANAGER
DEDUCTED FROM PORTFOLIO ASSETS) 1 PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Management fees 0.55% 0.70% 0.60% 0.65%
Distribution (12b-1) fees 0.00% 0.00% 0.00% 0.00%
Other expenses % % % %
TOTAL ANNUAL OPERATING EXPENSES 2 % % % %
Waivers/reimbursements % % % %
Net expenses 0.75% 0.80% 0.80% 1.00%
</TABLE>
<TABLE>
<CAPTION>
INSTITUTIONAL SHARES CONTINUED....
ANNUAL FUND OPERATING
EXPENSES (EXPENSES THAT ARE LARGE CAP VALUE MID CAP VALUE SMALL CAP VALUE
DEDUCTED FROM PORTFOLIO ASSETS) 1 PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- ---------
<S> <C> <C> <C>
Management fees 0.55% 0.75% 0.75%
Distribution (12b-1) fees 0.00% 0.00% 0.00%
Other expenses % % %
TOTAL ANNUAL OPERATING EXPENSES 2 % % %
Waivers/reimbursements % % %
Net expenses 0.75% 1.50% 1.38%
</TABLE>
- -------------------------
1 The table above and the Example below each reflect the aggregate annual
operating expenses of each Portfolio and the corresponding Series of the
Trust in which the Portfolio invests.
2 For Institutional Shares, WTC has agreed to waive a portion of its advisory
fee or reimburse expenses to the extent total annual operating expenses for
Institutional shares exceed 0.75% for the Large Cap Growth Portfolio; .80%
for the Large Core Portfolio; 0.75% for the Large Cap Value Portfolio;
0.80% for the Small Cap Core Portfolio; and 1.00% for the International
Multi-Manager Portfolio. This waiver will remain in place until the Board
of Trustees approves its termination. The management fees, other expenses
and total annual operating expenses reflected in the table above are based
on the Portfolios' actual expenses for the fiscal year ended June 30, 1999,
adjusted to reflect current fee arrangements.
9
<PAGE>
<TABLE>
<CAPTION>
INVESTOR SHARES
ANNUAL FUND OPERATING INTERNATIONAL
EXPENSES (EXPENSES THAT ARE LARGE CAP GROWTH LARGE CAP CORE SMALL CAP CORE MULTI-MANAGER
DEDUCTED FROM PORTFOLIO ASSETS) 1 PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Management fees 0.55% 0.70% 0.60% 0.65%
Distribution (12b-1) fees 0.25% 0.25% 0.25% 0.25%
Other expenses % % % %
TOTAL ANNUAL OPERATING EXPENSES 2 % % % %
Waivers/reimbursements % % % %
Net expenses 1.00% 1.05% 1.05% 1.25%
</TABLE>
<TABLE>
<CAPTION>
INVESTOR SHARES CONTINUED....
ANNUAL FUND OPERATING
EXPENSES (EXPENSES THAT ARE LARGE CAP VALUE MID CAP VALUE SMALL CAP VALUE
DEDUCTED FROM PORTFOLIO ASSETS) 1 PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- ---------
<S> <C> <C> <C>
Management fees 0.55% 0.75% 0.75%
Distribution (12b-1) fees 0.25% 0.25% 0.25%
Other expenses % % %
TOTAL ANNUAL OPERATING EXPENSES 2 % % %
Waivers/reimbursements % % %
Net expenses 1.00% 1.75% 1.63%
</TABLE>
- -------------------------
1 The table above and the Example below each reflect the aggregate annual
operating expenses of each Portfolio and the corresponding Series of the
Trust in which the Portfolio invests.
2 For Investor Shares, WTC has agreed to waive a portion of its advisory fee
or reimburse expenses to the extent total annual operating expenses for
Investor shares exceed 1.00% for the Large Cap Growth Portfolio, 1.05% for
the Large Cap Core Portfolio, 1.05% for the Small Cap Core Portfolio, 1.25%
for the International Multi-Manager Portfolio and 1.00% for the Large Cap
Value Portfolio of Trustees. This waiver will remain in place until the
Board of Trustees approves its termination. The management fees, other
expenses and total annual operating expenses reflected in the table above
are based on the Portfolios' actual expenses for the fiscal year ended June
30, 1999, adjusted to reflect current fee arrangements.
EXAMPLE
This example is intended to help you compare the cost of investing in a
Portfolio with the cost of investing in other mutual funds. The table below
shows what you would pay if you invested $10,000 over the various time frames
indicated. The example assumes that:
[BULLET] you reinvested all dividends and other distributions;
[BULLET] the average annual return was 5%;
[BULLET] the Portfolio's maximum (without regard to waivers or expenses) total
operating expenses are charged and remain the same over the time
periods; and
[BULLET] you redeemed all of your investment at the end of the time period.
10
<PAGE>
Although your actual cost may be higher or lower, based on these assumptions,
your costs would be:
<TABLE>
<CAPTION>
INSTITUTIONAL SHARES 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -------------------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
Large Cap Growth Portfolio $90 $281 $488 $1084
Large Cap Core Portfolio $ $ $ $
Small Cap Core Portfolio $97 $303 $525 $1166
International Multi-Manager Portfolio $112 $350 $606 $1340
Large Cap Value Portfolio $90 $281 $488 $1084
Mid Cap Value Portfolio $ $ $ $
Small Cap Value Portfolio $ $ $ $
INVESTOR SHARES 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------- ------ ------- ------- --------
Large Cap Growth Portfolio $ $ $ $
Large Cap Core Portfolio $ $ $ $
Small Cap Core Portfolio $ $ $ $
International Multi-Manager Portfolio $ $ $ $
Large Cap Value Portfolio $ $ $ $
Mid Cap Value Portfolio $ $ $ $
Small Cap Value Portfolio $ $ $ $
</TABLE>
THE ABOVE EXAMPLE IS FOR COMPARISON PURPOSES ONLY AND IS NOT A REPRESENTATION OF
A PORTFOLIO'S ACTUAL EXPENSES AND RETURNS, EITHER PAST OR FUTURE.
INVESTMENT OBJECTIVES
The LARGE CAP GROWTH PORTFOLIO and the SMALL CAP CORE PORTFOLIO each seek
superior long-term growth of capital. The LARGE CAP CORE PORTFOLIO, , the LARGE
CAP VALUE PORTFOLIO, the MID CAP VALUE PORTFOLIO and the SMALL CAP VALUE
PORTFOLIO each seek to achieve long-term capital appreciation. The INTERNATIONAL
MULTI-MANAGER PORTFOLIO seeks superior long-term capital appreciation. The
investment objectives for each Portfolio except Large Cap Core Portfolio may not
be changed without shareholder approval. There is no guarantee that a Portfolio
will achieve its investment objective.
For purposes of these investment objectives, "superior" long-term growth of
capital means to exceed the long-term growth of capital from an investment in
the securities comprising the S&P 500 Index (for the Large Cap Growth , Large
Cap Core and Large Cap Value Portfolios); the Russell 2000 Index, (for the Small
Cap Core, and the Small Cap Value Portfolios); and the Russell Mid Cap Index
(for the Mid Cap Value Portfolio), the Morgan Stanley Capital International
Europe, Australasia and Far East Index (for the International Multi-Manager
Portfolio). For more information on the specific Indexes, see the Section
entitled "Primary Investment Strategies."
11
<PAGE>
PRIMARY INVESTMENT STRATEGIES
PLAIN TALK
-----------------------------------------------------------------------
WHAT ARE GROWTH FUNDS?
Growth funds invest in the common stock of growth-oriented companies
seeking maximum growth of earnings and share price with little regard
for dividend earnings. Generally, companies with high relative rates of
growth tend to reinvest more of their profits into the company and pay
out less to shareholders in the form of dividends. As a result,
investors in growth funds tend to receive most of their return in the
form of capital appreciation.
-----------------------------------------------------------------------
The LARGE CAP GROWTH PORTFOLIO invests its assets in the WT Large Cap Growth
Series, which, under normal market conditions, invests at least 65% of its total
assets in the following equity (or related) securities:
[BULLET] common stocks of U.S. corporations that are judged by the adviser to
have strong growth characteristics and have a market capitalization of
$2 billion or higher at the time of purchase;
[BULLET] options on, or securities convertible (such as convertible preferred
stock and convertible bonds) into, the common stock of U.S.
corporations described above;
[BULLET] options on indexes of the common stock of U.S. corporations described
above; and
[BULLET] contracts for either the future delivery, or payment in respect of the
future market value, of certain indexes of the common stock of U.S.
corporations described above, and options upon such futures contracts.
The adviser looks for high quality, sustainable growth stocks while paying
careful attention to valuation. Research is bottom-up, emphasizing business
fundamentals, including financial statement analysis and industry and competitor
evaluations. The adviser selects stocks it believes exhibit consistent,
above-average earnings growth, superior quality and attractive risk/reward
characteristics. These dominant companies are expected to generate consistent
earnings growth in a variety of economic environments.
The adviser also seeks to provide a greater margin of safety and stability in
the Series. Superior earnings growth is expected to translate ultimately into
superior compounding of returns. Additionally, several valuation tools are used
to avoid over-paying for growth or chasing "hot" stocks. Over time, the adviser
believes these favorable characteristics will produce superior returns with less
risk than many growth styles.
The adviser's research team analyzes a broad universe of over 2,000 companies.
Industry specialists search for high-quality companies growing at roughly double
the market's average. Approximately 150 stocks pass these initial screens and
are subject to thorough research. Dominant market share, strong financials, the
power to price, significant free cash flow and shareholder-oriented management
are critical variables.
Final purchase candidates are selected by the adviser's investment committee
based on attractive risk/reward characteristics and diversification guidelines.
Certain industries may be over or
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under-weighted by the adviser based upon favorable growth rates or valuation
parameters.
The adviser attempts to maintain portfolio continuity by purchasing sustainable
growth companies that are less sensitive to short-term economic trends than
cyclical, low quality companies. The adviser generally sells stocks when the
risk/reward characteristics of a stock turn negative, company fundamentals
deteriorate, or the stock underperforms the market or its peer group. The latter
device is employed to minimize mistakes and protect capital.
The Series combines three distinct components, each of which is intended to
enhance returns and add balance.
LARGE CAP GROWTH STOCKS (over $5 billion in total market cap) - Up to 100%, but
not less than 65%, of the Series' total assets:
[BULLET] Mature, predictable businesses
[BULLET] Capital appreciation and income
[BULLET] Highest liquidity
MEDIUM CAP GROWTH STOCKS (between $1 and $5 billion in total market cap) - Up to
20% of the Series' total assets:
[BULLET] Superior long-term potential
[BULLET] Strong niche or franchise
[BULLET] Seasoned management
SPECIAL SITUATIONS GROWTH OPPORTUNITIES - Up to 20% of the Series' total assets:
[BULLET] Stable return, independent of the market
[BULLET] Unusually favorable risk/reward characteristics
[BULLET] Typically involve corporate restructuring
In order to respond to adverse market, economic, political or other conditions,
the Series may assume a temporary defensive position and invest without limit in
commercial paper and other money market instruments that are rated investment
grade. The result of this action may be that the Series will be unable to
achieve its investment objective.
The LARGE CAP CORE PORTFOLIO invests its assets in the Large Cap Core Series,
which, under normal market conditions, invests at least 65% of its total assets
in the following equity (or related) securities:
[BULLET] securities of U.S. corporations that are judged by the adviser to have
strong growth and valuation characteristics;
[BULLET] options on, or securities convertible (such as convertible preferred
stock and convertible bonds) into, the common stock of U.S.
corporations described above;
[BULLET] receipts or American Depositary Receipts ("ADRs"), which are typically
issued by a U.S. bank or trust company as evidence of ownership of
underlying securities issued by a foreign corporation; and
[BULLET] cash reserves and money market instruments (including securities issued
or guaranteed by the
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U.S. Government, its agencies or instrumentalities, repurchase
agreements, certificates of deposit and bankers' acceptances issued by
banks or savings and loan associations, and commercial paper).
The Large Cap Core Series is a diversified portfolio of U.S. equity (or related)
securities, including common stocks, preferred stocks and securities convertible
into common stock of companies with market capitalizations of at least $2
billion. Dividend income is an incidental consideration compared to growth in
capital in the selection of securities. The adviser seeks securities that
possess strong growth and value characteristics based on the evaluation of the
issuer's background, industry position, historical returns and the experience
and qualifications of the management team. The adviser may rotate the Series'
holdings among various market sectors based on economic analysis of the overall
business cycle.
As a temporary defensive investment policy, the Large Cap Core Series may invest
up to 100% of its assets in money market instruments and other short-term debt
instruments, rated investment grade or higher at the time of purchase, and may
hold a portion of its assets in cash. The result of this action may be that the
Series will be unable to achieve its investment objective.
PLAIN TALK
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WHAT ARE SMALL CAP FUNDS?
Small cap funds invest in the common stock of companies with smaller
market capitalizations. Small cap stocks may provide the potential for
higher growth, but they also typically have greater risk and more
volatility.
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The SMALL CAP CORE PORTFOLIO invests its assets in the Small Cap Core Series,
which, under normal market conditions, invests at least 65% of its total assets
in the following equity (or related) securities:
[BULLET] common stocks of U.S. corporations that are judged by the adviser to
have strong growth characteristics or to be undervalued in the
marketplace relative to underlying profitability and have a market
capitalization of less than $2 billion at the time of purchase;
[BULLET] options on, or securities convertible (such as convertible preferred
stock and convertible bonds) into, the common stock of U.S.
corporations described above;
[BULLET] options on indexes of the common stock of U.S. corporations described
above; and
[BULLET] contracts for either the future delivery, or payment in respect of the
future market value, of certain indexes of the common stock of U.S.
corporations described above, and options upon such futures contracts.
The Small Cap Core Series is a diversified portfolio of small cap U.S. equity
(or related) securities with a market capitalization of $2 billion or less at
the time of purchase. To achieve the Series' objective of long-term growth of
capital, the Series' adviser employs a combined growth and value investment
approach. The adviser uses proprietary quantitative research techniques to find
companies with long-term growth potential or that seem undervalued. After
analyzing those companies, the adviser invests the Series' assets in the stocks
of companies with the most attractive combination of long-term earnings, growth
and valuation. Securities will be sold to
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make room for new companies with superior growth, valuation and projected return
characteristics or to preserve capital where the original assessment of the
company's growth prospects and earnings power has not proven optimistic.
In the Series' efforts to achieve its investment objective, it seeks to
outperform the Russell 2000 Index (assuming a similar investment in the
securities comprising this index would reinvest dividends and capital gains
distributions). The Russell 2000 Index is a passive index of the smallest 2000
stocks in the Russell 3000 Index of the 3000 largest stocks in the U.S. as
measured by market capitalization.
PLAIN TALK
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WHAT ARE INTERNATIONAL FUNDS?
International funds invest in securities traded in markets of at least
three different countries outside of the United States. An investor in
an international fund can avoid the hassles of investing directly in
foreign securities and let that fund's adviser handle the foreign laws,
trading practices, customs and time zones of the foreign countries.
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The INTERNATIONAL MULTI-MANAGER PORTFOLIO invests its assets in the
International Multi-Manager Series, which, at all times, invests at least 85% of
its total assets in the following equity (or related) securities:
[BULLET] common stocks of foreign issuers;
[BULLET] preferred stocks and/or debt securities that are convertible securities
of such foreign issuers; and
[BULLET] open or closed-end investment companies (mutual funds) that invest
primarily in the equity securities of issuers in countries where it is
impossible or impractical to invest directly.
The International Multi-Manager Series is a diversified portfolio of equity
securities (including convertible securities) of issuers located outside of the
United States. The Series may use forward currency contracts, options, futures
contracts and options on futures contracts to attempt to hedge actual or
anticipated investment security positions. Three sub-advisers, Clemente Capital,
Inc., Invista Capital Management Inc., and Scudder Kemper Investments, Inc.,
manage the assets of the Series. The adviser allocates the Series' assets among
each sub-adviser in roughly equal portions and then allows each sub-adviser to
use its own investment approach and strategy to achieve the Series' objective.
Clemente's investment approach begins with a global outlook, identifying the
major forces (i.e., political events, social developments, trade and capital
flows) affecting the global environment and then identifying the themes (i.e.,
corporate restructuring, infrastructure spending, consumer's coming of age) that
are responding to the major forces. The third step is to decide which countries
or sectors will benefit from these themes and then seek companies with favorable
growth characteristics in those countries or sectors. The next steps are to
research and identify specific holdings and ongoing monitoring and evaluation of
the Series. Series holdings are sold when shares reach the target price, the
fundamentals of a company have deteriorated or when
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new companies with superior growth and valuation characteristics have been
identified.
Invista's investment approach focuses on identifying opportunities through a
fundamentally sound, economic value driven process applied evenly across all
international markets. Candidates for purchase are companies whose current price
is substantially below investment value as determined by Invista's estimate of
future free cash flows. Once this evaluation process is applied, purchases are
made among those companies that provide optimal combinations of valuation,
growth and risk. Series holdings are sold when the relative attractiveness of a
security is not as great as additions proposed by a member of the investment
team.
Scudder Kemper's investment approach involves a top-down/bottom-up approach with
a focus on fundamental research. Investment ideas are generated by regional
analysts, global industry analysts and portfolio managers through the
integration of three analytical disciplines; global themes (identification of
sectors and industries likely to gain or lose during specific phases of a
theme's cycle); country analysis (quantitative assessment of each country's
fundamental and political characteristics combined with an objective,
quantitative analysis of market and economic data); and company analysis
(identification of company opportunities by searching for unique attributes such
as franchise or monopoly, above average growth potential, innovation or
scarcity). Series holdings are sold when the analysts indicate that the
underlying fundamentals are no longer strong.
The Series utilizes this multiple sub-adviser arrangement to reduce volatility
through multiple investment approaches, a strategy used by many institutional
investors. For example, a particular investment approach used by a sub-adviser
may be successful in a bear (falling) market, while another investment approach
used by a different sub-adviser may be more successful in a bull (rising)
market. The multiple investment approach is designed to soften the impact of a
single sub-adviser's performance in a market cycle during which that
sub-adviser's investment approach is less successful. Because each sub-adviser
has different investment approaches, the performance of one or more of the
sub-advisers is expected to offset the impact of any other sub-adviser's poor
performance, regardless of the market cycle. Unfortunately, this also works the
opposite way. The successful performance of a sub-adviser will be diminished by
the less successful performances of the other sub-advisers. There can be no
guarantee that the expected advantages of the multiple adviser technique will be
achieved.
In the Series' efforts to achieve its investment objective, it seeks to
outperform the Morgan Stanley Capital International Europe, Australasia & Far
East ("EAFE") Index (assuming a similar investment in the securities comprising
this index would reinvest dividends and capital gains distributions). The EAFE
Index is an unmanaged index comprised of the stocks of approximately 1100
companies, screened for liquidity, cross ownership and industry representation
and listed on major stock exchanges in Europe, Australasia and the Far East.
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PLAIN TALK
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WHAT ARE VALUE FUNDS?
Value funds invest in the common stock of companies that are considered
by the adviser to be undervalued relative to their underlying
profitability, or rather their stock price does not reflect the value
of the company.
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THE VALUE PORTFOLIOS: Through their investment in corresponding Series, the
Large Cap Value, Mid Cap Value and Small Cap Value Portfolios seek to invest in
stocks that are less expensive than comparable companies, as determined by
price/earnings ratios, cash flows or other measures. Value investing therefore
may reduce risk while offering potential for capital appreciation as a stock
gains favor among other investors and its price rises.
The Series are managed using investment ideas that the adviser has used
for over twenty-five years. The Series' adviser relies on selecting individual
stocks and does not try to predict when the stock market might rise or fall. It
seeks out those stocks that are undervalued and, in some cases, neglected by
financial analysts. The adviser evaluates the degree of analyst recognition by
monitoring the number of analysts who follow the company and recommend its
purchase or sale to investors.
The adviser starts by identifying early change in a company's
operations, finances or management. The adviser is attracted to companies which
will look different tomorrow - operationally, financially, managerially when
compared to yesterday. This type of dynamic change often creates confusion and
misunderstandings and may lead to a drop in the company's stock price. Examples
of change include mergers, acquisitions, divestitures, restructuring, change of
management, new market/product/means of production/distribution, regulatory
change, etc. Once change is identified, the adviser evaluates the company on
several levels. It analyzes:
[BULLET] Financial models based principally upon projected cash flows
[BULLET] The price of the company's stock in the context of what the market is
willing to pay for stock of comparable companies and what a strategic
buyer would pay for the whole company
[BULLET] The extent of management's ownership interest in the company
[BULLET] The company's market by corroborating its observations and assumptions
by meeting with management, customers and suppliers
The adviser also evaluates the degree of recognition of the business by
the investors by monitoring the number of sell side analysts who closely follow
the company and the nature of the shareholder base. Before deciding to purchase
a stock, the adviser conducts an extensive amount of business due diligence to
corroborate its observations and assumptions.
The identification of change comes from a variety of sources including
the private capital network which the adviser has established among its clients,
historical investments and intermediaries. The adviser also makes extensive use
of clipping services and regional brokers
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and bankers to identify elements of change. The investment professionals
regularly meet companies around the country and sponsor more than 200
company/management meetings in its New York office.
By reviewing historical relationships and understanding the
characteristics of a business, the adviser establishes valuation parameters
using relative ratios or target prices. In its overall assessment, the adviser
seeks stocks that it believes have a greater upside potential than downside risk
over an 18 to 24-month holding period.
An important function of the adviser is to set a price target, that is,
the price at which the stock will be sold when there has been no fundamental
change in the investment case. The adviser constantly monitors the companies
held by the Series to determine if there have been any fundamental changes in
the reasons that prompted the initial purchase of the stock. If significant
changes for the better have not materialized, the stock will be sold. The
initial investment case for stock purchase, which has been documented, is
examined by the adviser's investment professionals. A final decision on selling
the stock is made after all such factors are analyzed.
The LARGE CAP VALUE PORTFOLIO invests its assets in the Large Cap Value Series,
which, under normal conditions, invests at least 65% of its total assets in the
following equity (or related) securities:
[BULLET] common stocks of U.S. corporations that are judged by the adviser to be
undervalued in the marketplace relative to underlying profitability and
have a market capitalization of $10 billion or higher at the time of
purchase;
[BULLET] options on, or securities convertible (such as convertible preferred
stock and convertible bonds) into, the common stock of U.S.
corporations described above;
[BULLET] options on indexes of the common stock of U.S. corporations described
above;
[BULLET] contracts for either the future delivery, or payment in respect of the
future market value, of certain indexes of the common stock of U.S.
corporations described above, and options upon such futures contracts;
and
[BULLET] without limit in commercial paper and other money market instruments
rated in one of the two highest rating categories by a nationally
recognized statistical rating organization ("NSRO"), in response to
adverse market conditions, as a temporary defensive position. The
result of this action may be that the Series will be unable to achieve
its investment objective.
The Large Cap Value Series is a diversified portfolio of large cap U.S. equity
(or related) securities that are deemed by the adviser to be undervalued as
compared to the company's profitability potential.
The MID CAP VALUE PORTFOLIO invests its assets in the Mid Cap Value Series,
which, under normal conditions, invests at least 65% of its total assets in the
following equity (or related) securities:
[BULLET] common and preferred stocks of U.S. corporations that are judged by the
adviser to be undervalued in the marketplace relative to underlying
profitability and have a market capitalization between $1 and $10
billion at the time of purchase;
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[BULLET] securities convertible (such as convertible preferred stock and
convertible bonds) into, the common stock of U.S. corporations
described above;
[BULLET] warrants; and
[BULLET] without limit in commercial paper and other money market instruments
rated in one of the two highest rating categories by a "NRSRO", in
response to adverse market conditions, as a temporary defensive
position. The result of this action may be that the Series will be
unable to achieve its investment objective.
The Mid Cap Value Series is a diversified portfolio of medium cap U.S. equity
(or related) securities that are deemed by the adviser to be undervalued as
compared to the company's profitability potential.
The SMALL CAP VALUE PORTFOLIO invests its assets in the Small Cap Value Series,
which, under normal conditions, invests at least 65% of its total assets in the
following equity (or related) securities:
[BULLET] common and preferred stocks of U.S. corporations that are judged by the
adviser to be undervalued in the marketplace relative to underlying
profitability and have a market capitalization of $1 billion or less at
the time of purchase;
[BULLET] securities convertible (such as convertible preferred stock and
convertible bonds) into, the common stock of U.S. corporations
described above;
[BULLET] warrants; and
[BULLET] without limit in commercial paper and other money market instruments
rated in one of the two highest rating categories by a NRSRO, in
response to adverse market conditions, as a temporary defensive
position. The result of this action may be that the Series will be
unable to achieve its investment objective.
The Small Cap Value Series is a diversified portfolio of large cap U.S. equity
(or related) securities that are deemed by the adviser to be undervalued as
compared to the company's profitability potential.
ALL SERIES. The frequency of portfolio transactions and a Series' turnover rate
will vary from year to year depending on the market. Increased turnover rates
incur the cost of additional brokerage commissions and may cause you to receive
larger capital gain distributions. Series turnover rate is normally expected to
be less than 100% for each of the Series.
Each Series also may use other strategies and engage in other investment
practices, which are described in detail in our Statement of Additional
Information.
ADDITIONAL RISK INFORMATION
The following is a list of certain risks that may apply to your investment in a
Portfolio, unless otherwise indicated. Further information about investment
risks is available in our Statement of Additional Information:
[BULLET] CURRENCY RISK: The risk related to investments denominated in foreign
currencies. Foreign
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securities are usually denominated in foreign currency therefore
changes in foreign currency exchange rates can affect the net asset
value of the International Multi-Manager Portfolio. (International
Multi-Manager Portfolio)
[BULLET] DERIVATIVES RISK: Some of the Series' investments may be referred to as
"derivatives" because their value depends on, or derives from, the
value of an underlying asset, reference rate or index. These
investments include options, futures contracts and similar investments
that may be used in hedging and related income strategies. The market
value of derivative instruments and securities is sometimes more
volatile than that of other investments, and each type of derivative
may pose its own special risks. As a fundamental policy, no more than
15% of a Series' total assets may at any time be committed or exposed
to derivative strategies.
[BULLET] FOREIGN SECURITY RISK: The risk of losses due to political, regulatory,
economic, social or other uncontrollable forces in a foreign country
not normally associated with investing in the U.S. markets.
(International Multi-Manager Portfolio and the Large Cap Core
Portfolio)
[BULLET] GROWTH-ORIENTED INVESTING RISK: The risk that an investment in a
growth-oriented portfolio, which invests in growth-oriented companies,
will be more volatile than the rest of the U.S. market as a whole.
(Large Cap Growth, Large Cap Core and Small Cap Core Portfolios)
[BULLET] MARKET RISK: The risk that the market value of a security may move up
and down, sometimes rapidly and unpredictably. The prices of equity
securities change in response to many factors including the historical
and prospective earnings of the issuer, the value of its assets,
general economic conditions, interest rates, investor perceptions and
market liquidity.
[BULLET] MASTER/FEEDER RISK: The Portfolios' master/feeder structure is
relatively new and more complex. While this structure is designed to
reduce costs, it may not do so, and the Portfolios might encounter
operational or other complications.
[BULLET] OPPORTUNITY RISK: The risk of missing out on an investment opportunity
because the assets necessary to take advantage of it are tied up in
less advantageous investments.
[BULLET] SMALL CAP RISK: Small cap companies may be more vulnerable than larger
companies to adverse business or economic developments. Small cap
companies may also have limited product lines, markets or financial
resources, may be dependent on relatively small or inexperienced
management groups and may operate in industries characterized by rapid
technological obsolescence. Securities of such companies may be less
liquid and more volatile than securities of larger companies and
therefore may involve greater risk than investing in larger companies.
(Small Cap Core Portfolio)
[BULLET] VALUATION RISK: The risk that a Series has valued certain of its
securities at a higher price than it can sell them
[BULLET] VALUE INVESTING RISK: The risk that a portfolio's investment in
companies whose securities are believed to be undervalued, relative to
their underlying profitability, do not appreciate in value as
anticipated. (Large Cap Value, Mid Cap Value, Small Cap Value and Small
Cap Core Portfolios)
[BULLET] YEAR 2000 COMPLIANCE RISK: Like other organizations around the world,
the Portfolios could be adversely affected if the computer systems used
by their various service providers (or the market in general) do not
properly operate after January 1, 2000. The Portfolios are taking steps
to address the Year 2000 issue with respect to the computer systems
that they
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rely on. There can be no assurance, however, that these steps will be
sufficient to avoid a temporary service disruption or any adverse
impact on the Portfolios.
Additionally, if a company in which a Series is invested is adversely
affected by Year 2000 problems, it is likely that the price of that
company's securities will also be adversely affected. A decrease in one
or more of a Series' holdings may have a similar impact on the price of
the Series' shares. Each Series' adviser or sub-adviser will relay on
public filings and other statements made by companies about their Year
2000 readiness. Issuers in countries outside the U.S. present a greater
Year 2000 readiness risk because they may not be required to make the
same level of disclosure about Year 2000 readiness as is required in
the U.S. The adviser is not able to audit any company and its major
suppliers to verify their Year 2000 readiness.
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand each
Portfolio's financial performance for the past 5 years or since the Portfolio's
inception, is shorter. Certain information reflects financial results for a
single share of a Portfolio. The total returns in the table represent the rate
that a shareholder would have earned (or lost) on an investment in a Portfolio
(assuming reinvestment of all dividends and other distributions). This
information has been audited by ______, whose report, along with each
Portfolio's financial statements, is included in the Annual Report, which is
available without charge upon request.
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[INSERT FINANCIAL HIGHLIGHTS TABLES]
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MANAGEMENT OF THE FUND
The Board of Trustees for each Portfolio supervises the management, activities
and affairs of the Portfolio and has approved contracts with various financial
organizations to provide, among other services, the day-to-day management
required by a Portfolio and its shareholders.
INVESTMENT ADVISER
PLAIN TALK
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WHAT IS AN INVESTMENT ADVISER?
The investment adviser makes investment decisions for a mutual fund and
continuously reviews, supervises and administers the fund's investment
program. The Board of Trustees supervises the investment adviser and
establishes policies that the adviser must follow in its management
activities.
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Wilmington Trust Company, the investment adviser for the Large Cap Core Series,
the Small Cap Core Series and the International Multi-Manager Series, is located
at 1100 North Market Street, Wilmington, Delaware 19890. WTC is a wholly owned
subsidiary of Wilmington Trust Corporation, which is a publicly held bank
holding company. WTC, subject to the supervision of the Board of Trustees,
directs the investments of these Series in accordance with their respective
investment objectives, policies and limitations. For the International
Multi-Manager Series, WTC allocates the Series' assets equally among the
sub-advisers and then oversees their investment activities. In addition to
serving as investment adviser for the Series, WTC is engaged in a variety of
investment advisory activities, including the management of other mutual funds
and collective investment pools.
Under an advisory agreement, the Large Cap Core Series pays a monthly fee to WTC
at the annual rate of 0.70% of the Series' first $1 billion of average daily net
assets; 0.65% of the Series' next $1 billion of average daily net assets; and
0.60% of the Series' average daily net assets over $2 billion. The Small Cap
Core Series pays WTC a monthly advisory fee at the annual rate of 0.60% of the
Series' first $1 billion of average daily net assets; 0.55% of the Series' next
$1 billion of average daily net assets; and 0.50% of the Series' average daily
net assets over $2 billion. The International Multi-Manager Series pays WTC a
monthly advisory fee at the annual rate of 0.65% of the Series' average daily
net assets. Prior to October ___, 1998, WTC served as investment adviser to the
Large Cap Growth Series and the Large Cap Value Series. For the twelve months
ended June 30, 1999, WTC received the following fees (after fee waivers), as a
percentage of each Series, average daily net assets:
WT Large Cap Growth Series %
Large Cap Value Series %
Small Cap Core Series %
International Multi-Manager Series %
For the period from October 20, 1998 to June 30, 1999, WTC received advisory
fees of ___% from the Large Cap Core Series. The Series' previous adviser,
Kiewit Investment Management Corp., received advisory fees of ___% for the
period from July 1 to October 19, 1998.
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Cramer Rosenthal McGlynn, LLC, 707 Westchester Avenue, White Plains, New York
10604, serves as the investment adviser to the Large Cap Value Series, the Mid
Cap Value Series and the Small Cap Value Series. Subject to the supervision of
the Board of Trustees, CRM makes investment decisions for these Series. CRM and
its predecessors have managed investments in small and medium capitalization
companies for more than twenty-five years. As of ___, 1999, CRM has over $___
billion of assets under management.
Under the advisory agreement, the Large Cap Value Series pays a monthly advisory
fee to CRM at the annual rate of 0.55% of its first 1 billion of average daily
net assets; 0.50% of the Series' next $1 billion of average daily net assets;
and 0.45% of the Series' average daily net assets over $2 billion. The Mid Cap
Value Series and the Small Cap Value Series each pay CRM a monthly advisory fee
of 0.75% of the Series' first $1 billion of average daily net assets; 0.70% of
the Series' next $1 billion of average daily net assets; and 0.55% of the
Series' average daily net assets over $2 billion. For the twelve months ended
June 30, 1999, CRM received advisory fees of ___% for the Large Cap Value
Series, ___% for Mid Cap Value Series and ___% for Small Cap Value Series, as a
percentage of the Series' average daily net assets.
Roxbury Capital Management, Inc., 100 Wilshire Boulevard, Suite 600, Santa
Monica, California 90401, serves as the investment adviser for the WT Large Cap
Growth Series, the master fund in which the Portfolio invests. Under an advisory
agreement, Roxbury, subject to the supervision of the Board of Trustees, directs
the investments of the Series in accordance with its investment objective,
policies and limitations. In addition to servicing as adviser to the Series,
Roxbury is engaged in a variety of investment advisory activities, including the
management of separately managed accounts.
Under the advisory agreement, the WT Large Cap Growth Series pays a monthly
advisory fee to Roxbury at the annual rate of 0.55% of the Series' first $1
billion of average daily net assets; 0.50% of the Series next $1 billion of
average daily net assets; and 0.45% of the Series' average daily net assets.
PORTFOLIO MANAGERS
E. MATTHEW BROWN, Vice President, leads a "growth" team and is responsible for
the day-to-day management of the Large Cap Core Series. Mr. Brown joined WTC in
October of 1996. Prior to joining WTC, he served as Chief Investment Officer of
PNC Bank, Delaware, from 1993 through 1996.
Mr. Brown also is responsible for co-management of the Small Cap Core Series.
THOMAS P. NEALE, CFA, Vice President, Equity Research Division, is a member of
the "growth" team and is responsible for the co-management of the Small Cap Core
Series. Mr. Neale joined Wilmington Trust in 1986 as an Institutional
Multi-Manager Portfolio Manager. Currently he specializes in managing taxable
accounts for Delaware holding companies and has equity research responsibilities
following the insurance and brokerage industries.
ROBERT J. CHRISTIAN, Chief Investment Officer of WTC, or his delegate, is
primarily responsible for monitoring the day-to-day investment activities of the
sub-advisers to the International Multi-Manager Series. Mr. Christian has been a
Director of Wilmington Management Corporation since February 1996, and was
Chairman and Director of PNC Equity Advisors Company, and
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President and Chief Investment Officer of PNC Asset Management Group, Inc. from
1994 to 1996. He was Chief Investment Officer of PNC Bank, N.A. from 1992 to
1996 and Director of Provident Capital Management from 1993 to 1996.
The day-to-day management of the Large Cap Value Series, the Mid Cap Value
Series and the Small Cap Value Series is shared by a team of individuals
employed by the CRM. Ronald H. McGlynn and Jay B. Abramson are responsible for
the overall management of these Series. In addition, Michael A. Prober is part
of the team responsible for the management of Mid Cap Value Series; Scott L.
Scher and Christopher Fox are part of the team responsible for the management of
Small Cap Value Series; and Kevin M. Chin and Adam L. Starr are part of the team
responsible for the management of the Large Cap Value Series. Each portfolio
manager's business experience and educational background is as follows:
RONALD H. MCGLYNN President and Chief Executive Officer since 1983 and Co-Chief
Investment Officer of CRM. He has been with CRM for twenty-five years and is
responsible for investment policy, portfolio management and investment research.
Prior to his association with CRM, Mr. McGlynn was a Portfolio Manager at
Oppenheimer & Co. He received a B.A. from Williams College and a M.B.A. from
Columbia University.
JAY B. ABRAMSON, CPA Executive Vice President since 1989 and Director of
Research and Co-Chief Investment Officer of CRM. He has been with CRM for twelve
years and is responsible for investment research and portfolio management. Mr.
Abramson received a B.S.E. and J.D. from the University of Pennsylvania Wharton
School and Law School, respectively, and is a Certified Public Accountant.
MICHAEL A. PROBER Vice President of CRM since 1993 where he is responsible for
investment research. Prior to joining CRM in 1993, he worked in corporate
finance and commercial banking at Chase Manhattan Bank and as a Research Analyst
for Alpha Capital Venture Partners. Mr. Prober received a B.B.A. from the
University of Michigan and an M.M. from the Northwestern University J.L. Kellogg
Graduate School of Management.
SCOTT L. SCHER, CFA Vice President of CRM since 1995 where he is responsible for
investment research. Prior to joining CRM in 1995, he worked as an
analyst/portfolio manager at The Prudential from 1988. Mr. Scher received a B.A.
from Harvard College, a M.B.A. from Columbia Business School and is a Chartered
Financial Analyst.
KEVIN M. CHIN is a Vice President at Cramer Rosenthal McGlynn, LLC. Kevin joined
CRM in 1989. He is responsible for investment research. Formerly, Kevin was a
Financial Analyst for the Mergers and Acquisitions Department of Morgan Stanley
and a risk arbitraguer with The First Boston Corporation. He received a BS from
Columbia University School of Engineering and Applied Science.
CHRISTOPHER S. FOX, CFA joined CRM in 1999 as a Vice President and has over
fifteen years experience in the Investment business. In 1995 Chris co-founded
Schaenen Fox Capital Management, LLC, a hedged fund with small cap value
investments. He previously was at
25
<PAGE>
Schaenen Wood & Associates, Inc. as Vice President and Senior Manager/Analyst;
Chemical Bank's Private Banking Division as a portfolio manager and analyst; and
Drexel Burnham Lambert, Inc. as a financial analyst. Chris earned a BA in
Economics from the State University of New York at Albany and an MBA in Finance
from New York University's Stern School of Business.
ADAM L. STARR joined CRM in 1999 as a Vice President and is responsible for
investment research. Prior to CRM, he was a Partner and Portfolio Manager at
Weiss, Peck & Greer, LLC. Previously, he was an Analyst and Portfolio Manager at
Charter Oak Partners and First Manhattan Company. Adam earned an MBA from
Columbia University.
The day-to-day management of the Large Cap Growth Series is the responsibility
of Roxbury's Investment Committee. The Investment Committee meets regularly to
make investment decisions for the Series and relies on Roxbury's research team.
SUB-ADVISERS
The International Multi-Manager Series has three sub-advisers, Clemente Capital
Inc., Invista Capital Management, Inc. and Scudder Kemper Investments, Inc.
Clemente, located at Carnegie Hall Tower, 152 West 57th Street, 25th Floor, New
York, New York 10019, registered as an investment adviser in 1979. Clemente
manages in excess of $500 million in assets. Leopoldo M. Clemente, President and
Chief Investment Officer serves as portfolio manager for the portion of the
International Multi-Manager Series' assets under Clemente's management. Mr.
Clemente has been responsible for portfolio management and security selection
for the past eight years.
Invista, located at 1800 Hub Tower, 699 Walnut Street, Des Moines, Iowa 50309,
is a registered investment adviser organized in 1984. Invista is an indirect,
wholly owned subsidiary of Principal Mutual Life Insurance Company. Invista
manages in excess of $26 billion in assets, of which approximately $3.8 billion
are in foreign equities in separately managed accounts and mutual funds for
public funds, corporations, endowments and foundations, insurance companies and
individuals. Scott D. Opsal, CFA, Executive Vice President and lead portfolio
manager of international equities for Invista, is the portfolio manager for the
portion of the International Multi-Manager Series under Invista's management.
Mr. Opsal joined Invista at its inception in 1985 and assumed his current
responsibilities in 1993. Before 1993, his responsibilities included security
analysis and portfolio management activities for various U.S. equity portfolios,
managing the firm's convertible securities and overseeing Invista's index fund
and derivatives positions. Kurtis D. Spieler, CFA, Vice President and manager of
the firm's dedicated emerging market portfolios, is Mr. Opsal's backup. Mr.
Spieler has been Invista's emerging markets portfolio manager since joining
Invista in 1995.
Scudder Kemper, located at 345 Park Avenue, New York, New York 10154, was
founded as America's first independent investment counselor and has served as
investment adviser, administrator and distributor of mutual funds since 1928.
Scudder Kemper manages in excess of $200 billion in assets, with approximately
$30 billion of those assets in foreign investments in separately managed
accounts for pension funds, foundations, educational institutions and government
entities and in open-end and closed-end investment companies. Irene T. Cheng
26
<PAGE>
serves as the lead portfolio manager for the portion of the International
Multi-Manager Series' assets under Scudder Kemper's management. Ms. Cheng has
been in the asset management business for over nine years and joined Scudder
Kemper as a portfolio manager in 1993.
SERVICE PROVIDERS
The chart below provides information on the Portfolios' primary service
providers.
27
<PAGE>
Asset Shareholder
Management Services
- --------------------------- -------------------------------
INVESTMENT ADVISER TRANSFER AGENT
WILMINGTON TRUST COMPANY PFPC INC.
RODNEY SQUARE NORTH 400 BELLEVUE PARKWAY
1100 N. MARKET STREET WILMINGTON, DE 19809
WILMINGTON, DE 19890-0001
Handles Shareholder services,
including recordkeeping and
Manages each Portfolio's statements, payment of
business and investment distribution and processing of
activities. buy and sell requests.
- --------------------------- -------------------------------
Fund -------------------- Asset
Operations Safe Keeping
- -------------------------- THE WT MUTUAL FUND -----------------------------
ADMINISTRATOR AND CUSTODIAN
ACCOUNTING AGENT --------------------
PFPC INC. PFPC TRUST COMPANY
400 BELLEVUE PARKWAY 200 STEVENS DRIVE
WILMINGTON, DE 19809 LESTER, PA 19113
Provides facilities, Hold each Portfolio's
equipment and personnel assets, settle all
to carry out administrative portfolio trades and collect
services related to each most of the valuation data
Portfolio and calculates required for calculating
each Portfolio's NAV per each Portfolio's NAV
share and distributions. per share.
- -------------------------- -----------------------------
Distribution
-----------------------------------
DISTRIBUTOR
PROVIDENT DISTRIBUTORS INC.
FOUR FALLS CORPORATE CENTER
WEST CONSHOHOCKEN, PA 19428
Distributes each Portfolio's shares.
-----------------------------------
28
<PAGE>
SHAREHOLDER INFORMATION
PRICING OF SHARES
The Portfolios value their assets based on current market values when such
values are available. These prices normally are supplied by a pricing service.
Any assets held by a Portfolio that are denominated in foreign currencies are
valued daily in U.S. dollars at the foreign currency exchange rates that are
prevailing at the time that PFPC determines the daily net asset value. To
determine the value of those securities, PFPC may use a pricing service that
takes into account not only developments related to specific securities, but
also transactions in comparable securities. Securities that do not have a
readily available current market value are valued in good faith under the
direction of the Board of Trustees.
PLAIN TALK
-----------------------------------------------------------------------
WHAT IS THE NET ASSET VALUE or "NAV"?
NAV = Assets - Liabilities
--------------------
Outstanding Shares
-----------------------------------------------------------------------
PFPC determines the NAV per share of each Portfolio as of the close of regular
trading on the New York Stock Exchange (currently 4:00 p.m., Eastern time), on
each Business Day (a day that the Exchange, the Transfer Agent and the
Philadelphia branch of the Federal Reserve Bank are open for business). The NAV
is calculated by adding the value of all securities and other assets in a
Portfolio, deducting its liabilities and dividing the balance by the number of
outstanding shares in that Portfolio.
Shares will not be priced on those days the Portfolios are closed. As of the
date of this prospectus, those days are:
New Year's Day Memorial Day Veterans Day
Martin Luther King, Jr. Day Independence Day Thanksgiving Day
President's Day Labor Day Christmas Day
Good Friday Columbus Day
PURCHASE OF SHARES
PLAIN TALK
-----------------------------------------------------------------------
HOW TO PURCHASE SHARES:
[BULLET] Directly by mail or by wire
[BULLET] As a client of WTC through a trust account or a corporate
cash management account
[BULLET] As a client of a Service Organization
-----------------------------------------------------------------------
Portfolio shares are offered on a continuous basis and are sold without any
sales charges. The minimum initial investment in Investor or Institutional class
shares of each Portfolio is $1,000, but additional investments may be made in
any amount. You may purchase shares as specified below.
29
<PAGE>
You may also purchase shares if you are a client of WTC through your trust or
corporate cash management accounts. If you are a client of an institution (such
as a bank or broker-dealer) that has entered into a servicing agreement with the
distributor ("Service Organization"), you may also purchase shares through such
Service Organization. You should also be aware that you may be charged a fee by
WTC or the Service Organization in connection with your investment in the
Portfolios. If you wish to purchase Portfolio shares through your account at WTC
or a Service Organization, you should contact that entity directly for
information and instructions on purchasing shares.
BY MAIL: You may purchase shares by sending a check drawn on a U.S. bank payable
to WT Mutual Fund, indicating the name of the Portfolio, along with a completed
application (included at the end of this prospectus). If a subsequent investment
is being made, the check should also indicate your Portfolio account number.
When you make purchases by check, each Portfolio may withhold payment on
redemptions until it is reasonably satisfied that the funds are collected (which
can take up to 10 days). If you purchase shares with a check that does not
clear, your purchase will be canceled and you will be responsible for any losses
or fees incurred in that transaction. Send the check and application to:
BY REGULAR MAIL: BY OVERNIGHT MAIL:
WT Mutual Fund WT Mutual Fund
c/o PFPC Inc. c/o PFPC Inc.
P.O. Box _____ 400 Bellevue Parkway, Suite 108
Wilmington, DE 19899 Wilmington, DE 19809
BY WIRE: You may purchase shares by wiring federal funds readily available.
Please call PFPC at (800) ______ for instructions and to make specific
arrangements before making a purchase by wire, and if making an initial
purchase, to also obtain an account number.
ADDITIONAL INFORMATION REGARDING PURCHASES: Purchase orders received by the
Transfer Agent before the close of regular trading on the Exchange on any
Business Day will be priced at the NAV that is determined as of the close of
trading. Purchase orders received after the close of regular trading on the
Exchange will be priced as of the close of regular trading on the following
Business Day.
Any purchase order may be rejected if a Portfolio determines that accepting the
order would not be in the best interest of the Portfolio or its shareholders.
It is the responsibility of WTC or the Service Organization to transmit orders
for the purchase of shares by its customers to the Transfer Agent and to deliver
required funds on a timely basis, in accordance with the procedures stated
above.
For information on other ways to purchase shares, including through an
individual retirement account (IRA), an automatic investment plan or a payroll
investment plan, please refer to the Statement of Additional Information.
30
<PAGE>
REDEMPTION OF SHARES
PLAIN TALK
-----------------------------------------------------------------------
HOW TO REDEEM (SELL) SHARES:
[BULLET] By mail
[BULLET] By telephone
-----------------------------------------------------------------------
You may sell your shares on any Business Day as described below. Redemptions are
effected at the NAV next determined after the Transfer Agent has received your
redemption request. There is no fee when Portfolio shares are redeemed. It is
the responsibility of WTC or the Service Organization to transmit redemption
orders and credit their customers' accounts with redemption proceeds on a timely
basis. Redemption checks are mailed on the next Business Day following receipt
by the Transfer Agent of redemption instructions, but never later than 7 days
following such receipt. Amounts redeemed by wire are normally wired on the date
of receipt of redemption instructions (if received by the Transfer Agent before
4:00 p.m. Eastern time), or the next Business Day (if received after 4:00 p.m.
Eastern time, or on a non-Business Day), but never later than 7 days following
such receipt. If you purchased your shares through an account at WTC or a
Service Organization, you should contact WTC or the Service Organization for
information relating to redemptions. The Portfolio's name and your account
number should accompany any redemption requests.
BY MAIL: If you redeem your shares by mail, you should submit written
instructions with a "signature guarantee." A signature guarantee verifies the
authenticity of your signature. You can obtain one from most banking
institutions or securities brokers, but not from a notary public. You must
indicate the Portfolio name, your account number and your name. The written
instructions and signature guarantee should be mailed to:
BY REGULAR MAIL: BY OVERNIGHT MAIL:
WT Mutual Fund WT Mutual Fund
c/o PFPC Inc. c/o PFPC Inc.
P.O. Box _____ 400 Bellevue Parkway, Suite 108
Wilmington, DE 19899 Wilmington, DE 19809
BY TELEPHONE: If you prefer to redeem your shares by telephone you may elect to
do so. However there are certain risks. The Portfolios have certain safeguards
and procedures to confirm the identity of callers and to confirm that the
instructions communicated are genuine. If such procedures are followed, you will
bear the risk of any losses.
ADDITIONAL INFORMATION REGARDING REDEMPTIONS: Redemption proceeds may be wired
to your predesignated bank account in any commercial bank in the United States
if the amount is $1,000 or more. The receiving bank may charge a fee for this
service. Proceeds may also be mailed to your bank or, for amounts of $10,000 or
less, mailed to your Portfolio account address of record if the address has been
established for at least 60 days. In order to authorize the Transfer Agent to
mail redemption proceeds to your Portfolio account address of record, complete
the appropriate
31
<PAGE>
section of the Application for Telephone Redemptions or include your Portfolio
account address of record when you submit written instructions. You may change
the account that you have designated to receive amounts redeemed at any time.
Any request to change the account designated to receive redemption proceeds
should be accompanied by a guarantee of your signature by an eligible
institution. A signature and a signature guarantee are required for each person
in whose name the account is registered. Further documentation will be required
to change the designated account when a corporation, other organization, trust,
fiduciary or other institutional investor holds the Portfolio shares.
If shares to be redeemed represent a recent investment made by check, each
Portfolio reserves the right not to make the redemption proceeds available until
it has reasonable grounds to believe that the check has been collected (which
could take up to 10 days).
SMALL ACCOUNTS: If the value of your Portfolio account falls below $500, the
Portfolio may ask you to increase your balance. If the account value is still
below such amount after 60 days, the Portfolio may close your account and send
you the proceeds. The Portfolio will not close your account if it falls below
$500 solely as a result of a reduction in your account's market value.
The Mid Cap Value, Small Cap Value and Large Cap Value Portfolios reserve the
right to make "redemptions in kind" - payments of redemption proceeds in
portfolio securities rather than cash - if the amount redeemed is large enough
to affect their respective Series' operations (for example, if it represents
more than 1% of the Series' assets).
For information on other ways to redeem shares, please refer to the Statement of
Additional Information.
EXCHANGE OF SHARES
PLAIN TALK
-----------------------------------------------------------------------
WHAT IS AN EXCHANGE OF SHARES?
An exchange of shares allows you to move your money from one fund to
another fund within the family of funds.
-----------------------------------------------------------------------
You may exchange all or a portion of your shares in a Portfolio for the same
class of shares of certain other Portfolios of the Fund. These other Portfolios
are:
Wilmington Prime Money Market Portfolio
Wilmington U.S. Government Portfolio
Wilmington Tax-Exempt Portfolio
Wilmington Premier Money Market Portfolio
Wilmington Short/Intermediate Bond Portfolio
Wilmington Intermediate Bond Portfolio
Wilmington Municipal Bond Portfolio
Wilmington Large Cap Growth Portfolio
Wilmington Large Cap Core Portfolio
32
<PAGE>
Wilmington Small Cap Core Portfolio
Wilmington Large Cap Value Portfolio
Wilmington Mid Cap Value Portfolio
Wilmington Small Cap Value Portfolio
Wilmington International Equity Portfolio
Redemption of shares through an exchange will be effected at the NAV per share
next determined after the Transfer Agent receives your request. A purchase of
shares through an exchange will be effected at the NAV per share determined at
that time or as next determined thereafter.
Exchange transactions will be subject to the minimum initial investment and
other requirements of the Portfolio into which the exchange is made. An exchange
may not be made if the exchange would leave a balance in a shareholder's account
of less than $500.
To obtain prospectuses of the other Portfolios, you may call (800) ______ . To
obtain more information about exchanges, or to place exchange orders, contact
the Transfer Agent, or, if your shares are held in a trust account with WTC or
in an account with a Service Organization, contact WTC or the Service
Organization. The Portfolios may terminate or modify the exchange offer
described here and will give you 60 days' notice of such termination or
modification. This exchange offer is valid only in those jurisdictions where the
sale of Portfolio shares to be acquired through such exchange may be legally
made.
DISTRIBUTIONS
PLAIN TALK
-----------------------------------------------------------------------
WHAT IS NET INVESTMENT INCOME?
Net investment income consists of interest and dividends earned by a
fund on its investments less accrued expenses.
-----------------------------------------------------------------------
Distributions from the net investment income of each Portfolio dividends are
declared and paid annually to you. Any net capital gain realized by a Portfolio
will be distributed annually. Net realized gains or losses from foreign currency
transactions in the International Multi-Manager Portfolio are included as a
component of net investment income.
Distributions are payable to the shareholders of record at the time the
distributions are declared (including holders of shares being redeemed, but
excluding holders of shares being purchased). All distributions are reinvested
in additional Portfolio shares unless you have elected to receive the
distributions in cash.
TAXES
As long as a Portfolio meets the requirements for being a "regulated investment
company," it pays no Federal income tax on the earnings and gains it distributes
to shareholders. While each Portfolio may invest in Securities that earn
interest exempt from Federal income tax, the Portfolios invest primarily in
taxable Securities. Each Portfolio will notify you following the end
33
<PAGE>
of the calendar year of the amount of dividends and other distributions paid
that year.
Dividends you receive from the Portfolio, whether reinvested in Portfolio shares
or taken as cash, are generally taxable to you as ordinary income. The
Portfolios' distributions of a net capital gain, whether received in cash or
reinvested in additional Portfolio shares, are taxable to you as long-term
capital gain, regardless of the length of time you have held your shares. You
should be aware that if Portfolio shares are purchased shortly before the record
date for any dividend or capital gain distribution, you will pay the full price
for the shares and will receive some portion of the price back as a taxable
distribution. Each of the Large Cap Growth Portfolio, the Small Cap Core
Portfolio and the International Multi-Manager Portfolio, anticipates the
distribution of net capital gain. Each of the Large Cap Value Portfolio, the Mid
Cap Value Portfolio and the Small Cap Value Portfolio anticipates the
distribution of net investment income.
It is a taxable event for you if you sell or exchange shares of any Portfolio.
Depending on the purchase price and the sale price of the shares you exchange,
you may have a taxable gain or loss on the transaction. You are responsible for
any tax liability generated by your transactions.
STATE AND LOCAL INCOME TAXES: You should consult your tax advisers concerning
state and local taxes, which may have different consequences from those of the
Federal income tax law.
This section is only a summary of some important income tax considerations that
may affect your investment in a Portfolio. More information regarding those
considerations appears in our Statement of Additional Information. You are urged
to consult your tax adviser regarding the effects of an investment on your tax
situation.
DISTRIBUTION ARRANGEMENTS
Provident Distributors, Inc. ("PDI") manages the Portfolios' distribution
efforts and provides assistance and expertise in developing marketing plans and
materials, enters into dealer agreement with broker-dealers to sell shares and
provides shareholder support services, directly or through affiliates. The
Portfolios do not charge any sales loads, deferred sales loads or other fees in
connection with the purchase of shares.
RULE 12B-1 FEES
PLAIN TALK
-----------------------------------------------------------------------
WHAT ARE 12b-1 FEES?
12b-1 fees, charged by some funds, are deducted from fund assets to pay
for marketing and advertising expenses or, more commonly, to compensate
sales professionals for selling fund shares.
-----------------------------------------------------------------------
The Investor class of each Portfolio has adopted a distribution plan under Rule
12b-1 that allows a Portfolio to pay a fee to PDI for the sale and distribution
of Investor class shares, and for services provided to Investor class
shareholders. Because these fees are paid out of a Portfolio's assets
continuously, over time these fees will increase the cost of your investment and
may cost
34
<PAGE>
you more than paying other types of sales charges. For the Investor class of
shares, the maximum distribution fees as a percentage of average daily net
assets are as follows:
Large Cap Growth Portfolio Investor Class 0.25%
Large Cap Core Portfolio Investor Class 0.25%
Small Cap Core Portfolio Investor Class 0.25%
International Multi-Manager Portfolio Investor Class 0.25%
Large Cap Value Portfolio Investor Class 0.25%
Mid Cap Value Portfolio Investor Class 0.25%
Small Cap Value Portfolio Investor Class 0.25%
MASTER/FEEDER STRUCTURE
Other institutional investors, including other mutual funds, may invest in the
master funds. The master/feeder structure enables various institutional
investors, including a Portfolio, to pool their assets, which may be expected to
result in economies by spreading certain fixed costs over a larger asset base.
Each shareholder of a master fund, including a Portfolio, will pay its
proportionate share of the master fund's expenses.
For reasons relating to costs or a change in investment goal, among others, a
Portfolio could switch to another master fund or decide to manage its assets
itself. No Portfolio is currently contemplating such a move.
SHARE CLASS
The Portfolios issue Investor and Institutional classes. The Investor class pays
an additional 12b-1 fee. The Institutional class is offered to retirement plans.
Other investors may purchase the Investor Class.
35
<PAGE>
FOR MORE INFORMATION
FOR INVESTORS WHO WANT MORE INFORMATION ON THE PORTFOLIOS, THE FOLLOWING
DOCUMENTS ARE AVAILABLE FREE UPON REQUEST:
ANNUAL/SEMI-ANNUAL REPORTS: Contain performance data and information on
portfolio holdings, operating results and a discussion of the market conditions
and investment strategies that significantly affect the Portfolios' performance
for the most recently completed fiscal year or half-year.
STATEMENT OF ADDITIONAL INFORMATION (SAI): Provides a complete technical and
legal description of the Portfolios' policies, investment restrictions, risks,
and business structure. This prospectus incorporates the SAI by reference.
Copies of these documents and answers to questions about the Portfolios may be
obtained without charge by contacting:
WT Mutual Fund
c/o PFPC Inc.
400 Bellevue Parkway
Suite 108
Wilmington, Delaware 19809
(800) ______
9:00 a.m. to 5:00 p.m. Eastern time
Information about the Portfolios (including the SAI) can be reviewed and copied
at the Public Reference Room of the Securities and Exchange Commission in
Washington, D.C. Copies of this information may be obtained, upon payment of a
duplicating fee, by writing the Public Reference Room of the SEC, Washington,
DC, 20549-6009. Information on the operation of the Public Reference Room may be
obtained by calling the SEC at 1-(800)-SEC-0330. Reports and other information
about the Portfolios may be viewed on-screen or downloaded from the SEC's
Internet site at http://www.sec.gov.
FOR MORE INFORMATION ON OPENING A NEW ACCOUNT, MAKING
CHANGES TO EXISTING ACCOUNTS, PURCHASING, EXCHANGING
OR REDEEMING SHARES, OR OTHER INVESTOR SERVICES,
PLEASE CALL 1-(800)-___-____.
The investment company registration number for the WT Mutual Fund is 811-08648.
36
<PAGE>
THE WILMINGTON SHORT/INTERMEDIATE BOND PORTFOLIO
THE WILMINGTON INTERMEDIATE BOND PORTFOLIO
THE WILMINGTON MUNICIPAL BOND PORTFOLIO
================================================================================
PROSPECTUS DATED _______, 1999
This prospectus gives vital information about these mutual funds, including
information on investment policies, risks and fees. For your own benefit and
protection, please read it before you invest, and keep it on hand for future
reference.
Please note that these Portfolios:
(BULLET) are not bank deposits
(BULLET) are not obligations of, or guaranteed or endorsed by Wilmington Trust
Company or any of its affiliates
(BULLET) are not federally insured
(BULLET) are not obligations of, or guaranteed or endorsed or otherwise
supported by the U.S. Government, the Federal Deposit Insurance
Corporation, the Federal Reserve Board or any other governmental agency
(BULLET) are not guaranteed to achieve their goal(s)
Like all mutual fund shares, the Securities and Exchange Commission has not
approved or disapproved the Portfolios' shares or determined whether this
prospectus is accurate or complete. Anyone who tells you otherwise is committing
a crime.
<PAGE>
TABLE OF CONTENTS
A LOOK AT THE GOALS, STRATEGIES, PORTFOLIO DESCRIPTION
RISKS, EXPENSES AND FINANCIAL Summary.....................................
HISTORY OF EACH PORTFOLIO. Performance Information.....................
Fees and Expenses...........................
Investment Objectives.......................
Primary Investment Strategies...............
Additional Risk Information.................
Financial Highlights........................
DETAILS ABOUT THE SERVICE MANAGEMENT OF THE PORTFOLIOS
PROVIDERS. Investment Adviser..........................
Service Providers...........................
POLICIES AND INSTRUCTIONS FOR SHAREHOLDER INFORMATION
OPENING, MAINTAINING AND Pricing of Shares...........................
CLOSING AN ACCOUNT IN ANY OF Purchase of Shares..........................
THE PORTFOLIOS. Redemption of Shares........................
Exchange of Shares..........................
Distributions...............................
Taxes.......................................
DETAILS ON DISTRIBUTION DISTRIBUTION ARRANGEMENTS
PLANS AND THE PORTFOLIOS' Rule 12b-1 Fees.............................
MASTER/FEEDER ARRANGEMENTS. Master/Feeder Structure.....................
Share Class.................................
FOR MORE INFORMATION..............BACK COVER
For information about key terms and concepts, look for our "PLAIN TALK"
explanations.
2
<PAGE>
WILMINGTON SHORT/INTERMEDIATE BOND PORTFOLIO
WILMINGTON INTERMEDIATE BOND PORTFOLIO
WILMINGTON MUNICIPAL BOND PORTFOLIO
PORTFOLIO DESCRIPTION
PLAIN TALK
- --------------------------------------------------------------------------------
WHAT IS A MUTUAL FUND?
A mutual fund pools shareholders' money and, using a professional
investment manager, invests it in securities like stocks and bonds.
Each Portfolio described in this prospectus is a separate mutual fund.
- --------------------------------------------------------------------------------
SUMMARY
Investment Objective (BULLET) The SHORT/INTERMEDIATE BOND PORTFOLIO
and the INTERMEDIATE BOND PORTFOLIO each seeks
a high total return, consistent with high
current income.
(BULLET) The MUNICIPAL BOND PORTFOLIO seeks a high
level of income exempt from federal income tax,
consistent with the preservation of capital.
- --------------------------------------------------------------------------------
Investment Focus (BULLET) Fixed income securities
- --------------------------------------------------------------------------------
Share Price Volatility (BULLET) Moderate
- --------------------------------------------------------------------------------
Principal Investment (BULLET) Each Portfolio operates as a "feeder fund"
Strategy which means that the Portfolio does not buy
individual securities directly.Instead, it
invests in a corresponding mutual fund or
"master fund," which in turn purchases
investment securities. The Portfolios invest
all of their assets in master funds which are
separate series of WT Investment Trust I.
Each Portfolio and its corresponding Series
have the same investment objective, policies
and limitations.
(BULLET) The SHORT/INTERMEDIATE BOND PORTFOLIO invests
in the Short/Intermediate Bond Series,which
invests at least 85% of its total assets in
various types of investment grade fixed income
securities.
(BULLET) The INTERMEDIATE BOND PORTFOLIO invests in the
Intermediate Bond Series, which invests at
least 85% of its total assets in various types
of investment grade fixed income securities.
(BULLET) The MUNICIPAL BOND PORTFOLIO invests in the
Municipal Bond Series, which invests at least
80% of its net assets in municipal securities
that provide interest exempt from federal
income tax.
- -------------------------- -----------------------------------------------------
Principal Risks (BULLET) An investment in a Portfolio is not a deposit
of Wilmington Trust Company or any of its
affiliates and is not insured or guaranteed by
the Federal Deposit Insurance Corporation or
any other government agency.
(BULLET) It is possible to lose money by investing in a
Portfolio.
(BULLET) The fixed income securities in which the
Portfolios invest through their corresponding
Series are subject to credit risk,prepayment
risk, market risk, liquidity risk and interest
rate risk. Typically, when interest rates rise,
the market prices of fixed income securities go
down.
(BULLET) The performance of a Portfolio will depend on
whether or not the adviser is successful in
pursuing an investment strategy.
(BULLET) The Portfolios are also subject to other risks,
which are described under "Additional Risk
Information."
- -------------------------- -----------------------------------------------------
Investor Profile (BULLET) Investors who want income from their
investments without the volatility of an equity
portfolio.
- -------------------------- -----------------------------------------------------
3
<PAGE>
PERFORMANCE INFORMATION
PLAIN TALK
-----------------------------------------------------------------------
WHAT IS TOTAL RETURN?
Total return is a measure of the per-share change in the total
value of a fund's portfolio,including any distributions paid to
you. It is measured from the beginning to the end of a specific
time period.
-----------------------------------------------------------------------
WILMINGTON SHORT/INTERMEDIATE BOND PORTFOLIO
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Portfolio. Of course, the Portfolio's past
performance does not necessarily indicate how the Portfolio will perform in the
future.
[INSERT BAR CHART]
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE PORTFOLIO'S INSTITUTIONAL
SHARES FROM CALENDAR YEAR TO CALENDAR YEAR. THE BAR CHART DOES NOT REFLECT
DEDUCTIONS FOR 12b-1 DISTRIBUTION FEES. IF SUCH AMOUNTS WERE REFLECTED, RETURNS
WOULD BE LESS.
BEST QUARTER WORST QUARTER
5.13% -1.81%
(June 30, 1995) (March 31, 1994)
PLAIN TALK
-----------------------------------------------------------------------
WHAT IS AN INDEX?
An index is a broad measure of the market performance of a specific
group of securities in a particular market, or securities in a
market sector. You cannot invest directly in an index. An index does
not have an investment adviser and does not pay any commissions or
expenses. If an index had expenses, its performance would be lower.
-----------------------------------------------------------------------
SINCE INCEPTION
AVERAGE ANNUAL RETURNS AS OF 12/31/98 1 YEAR 5 YEAR (APRIL 1991)
- ------------------------------------- ------ ------ ------------
Short/Intermediate Bond Portfolio 7.74% 6.17% 7.23%
Merrill Lynch 1-10 Year U.S. Treasury Index* 8.63% 6.50% 7.61%
Lehman Intermediate Government/Corporate Index** 8.44% 6.60% 7.76%
- -------------------------
* The Merrill Lynch 1 to 10 Year U.S. Treasury Index is an unmanaged index of
fixed rate coupon bearing U.S. Treasury securities with a maturity range of 1 to
10 years.
** The Lehman Intermediate Government/Corporate Index is an unmanaged index of
fixed rate U.S. Treasury Bonds and Notes, U.S. Government Agency obligations and
investment grade corporate debt obligations with maturities between 1 to 10
years.
WILMINGTON INTERMEDIATE BOND PORTFOLIO
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Portfolio and its predecessor, the Bond Fund,
a collective investment fund. The Bond Fund's performance has been included for
the periods prior to July 1, 1998 and has been adjusted to reflect the annual
deduction of fees and expenses applicable to shares of the Intermediate Bond
Portfolio (i.e. adjusted to reflect anticipated expenses, absent investment
advisory fees waivers). The Bond Fund was not registered as a mutual fund under
the Investment Company Act of 1940,
4
<PAGE>
and therefore was not subject to certain investment restrictions, limitations
and diversification requirements imposed by the 1940 Act and the Internal
Revenue Code. If the Bond Fund had been registered under the 1940 Act, its
performance may have been different. Of course, the Portfolio's past performance
does not necessarily indicate how the Portfolio will perform in the future.
[INSERT BAR CHART]
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE PORTFOLIO'S INSTITUTIONAL
SHARES FROM CALENDAR YEAR TO CALENDAR YEAR. THE BAR CHART DOES NOT REFLECT
DEDUCTIONS FOR RULE 12b-1 DISTRIBUTION FEES. IF SUCH AMOUNTS WERE REFLECTED,
RETURNS WOULD BE LESS.
BEST QUARTER WORST QUARTER
6.54% -3.41%
(June 30, 1995) (March 31, 1994)
SINCE INCEPTION
AVERAGE ANNUAL RETURNS AS OF 12/31/98 1 YEAR 5 YEAR (DECEMBER 1990)
- ------------------------------------- ------ ------ ---------------
Intermediate Bond Portfolio 8.73% 6.56% 8.03%
Merrill Lynch U.S. Treasury Master Index* 10.03% 7.22% 8.60%
Lehman Government/Corporate Index** 9.47% 7.30% 8.87%
- -------------------------
* The Merrill Lynch U.S. Treasury Master Index is an unmanaged index of fixed
rate coupon bearing U.S. Treasury securities with a maturity range of 1 to 30
years.
** The Lehman Government/Corporate Index is an unmanaged index of fixed rate
U.S. Treasury Bonds and Notes, U.S. Government Agency obligations and investment
grade corporate debt obligations with maturities no less than 1 year.
WILMINGTON MUNICIPAL BOND PORTFOLIO
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Portfolio. Of course, the Portfolio's past
performance does not necessarily indicate how the Portfolio will perform in the
future.
[INSERT BAR CHART]
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE PORTFOLIO'S INSTITUTIONAL
SHARES FROM CALENDAR YEAR TO CALENDAR YEAR. THE BAR CHART DOES NOT REFLECT
DEDUCTIONS FOR RULE 12b-1 DISTRIBUTION FEES. IF SUCH AMOUNTS WERE REFLECTED,
RETURNS WOULD BE LESS.
BEST QUARTER WORST QUARTER
5.86% -4.79%
(March 31, 1995) (March 31, 1994)
SINCE INCEPTION
AVERAGE ANNUAL RETURNS AS OF 12/31/98 1 YEAR 5 YEAR (NOVEMBER 1, 1993)
- ------------------------------------- ------ ------ ------------------
Municipal Bond Portfolio 5.24% 5.00% 5.11%
Merrill Lynch Intermediate Municipal Index* 6.27% 5.76% 5.71%
- -------------------------
* The Merrill Lynch Intermediate Municipal Index is an unmanaged weighted index
including investment grade tax-exempt bonds with a maturity range of 0 to 22
years.
5
<PAGE>
PLAIN TALK
-----------------------------------------------------------------------
WHAT IS YIELD?
Yield is a measure of the income (dividends and interest) earned by
the securities in a fund's portfolio and paid to you over a specified
time period. The yield is expressed as a percentage of the offering
price per share on a specified date.
-----------------------------------------------------------------------
You may call (800) ____ to obtain a Portfolio'scurrent yield.
FEES AND EXPENSES
PLAIN TALK
-----------------------------------------------------------------------
WHAT ARE FUND EXPENSES?
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder distribution, administration and
custody services. Each Portfolio's expenses in the table below are
shown as a percentage of its net assets. These expenses are deducted
from Portfolio assets.
-----------------------------------------------------------------------
The table below describes the fees and expenses that you may pay if you buy and
hold shares of a Portfolio.
<TABLE>
<CAPTION>
INSTITUTIONAL SHARES
ANNUAL FUND OPERATING SHORT/INTERMEDIATE INTERMEDIATE MUNICIPAL
EXPENSES (EXPENSES THAT ARE DEDUCTED BOND PORTFOLIO BOND PORTFOLIO BOND PORTFOLIO
FROM PORTFOLIO ASSETS) 1
<S> <C> <C> <C>
Management fees 0.35% 0.35% 0.35%
Distribution (12b-1) fees 0.00% 0.00% 0.00%
Other expenses ___% ___% ___%
TOTAL ANNUAL OPERATING EXPENSES 2 ___% ___% ___%
Waivers/reimbursements ___% ___% ___%
Net annual operating expenses 0.55% 0.55% 0.75%
<FN>
- -----------------------
1 The table above and the Example below each reflect the aggregate annual
operating expenses of each Portfolio and the corresponding Series of the Trust
in which the Portfolio invests.
2 For Institutional shares, WTC has agreed to waive a portion of its advisory
fee or reimburse expenses to the extent total annual operating expenses exceed
0.55% for the Short/Intermediate Bond Portfolio; 0.55% for the Intermediate Bond
Portfolio; and 0.75% for the Municipal Bond Portfolio. This waiver will remain
in place until the Board of Trustees approves its termination. The management
fees, other expenses and total annual operating expenses reflected in the table
above are based on the Portfolios' actual expenses for the fiscal year ended
June 30, 1999, adjusted to reflect current fee arrangements.
</FN>
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
INVESTOR SHARES
ANNUAL FUND OPERATING SHORT/INTERMEDIATE INTERMEDIATE MUNICIPAL
EXPENSES (EXPENSES THAT ARE DEDUCTED BOND PORTFOLIO BOND PORTFOLIO BOND PORTFOLIO
FROM PORTFOLIO ASSETS) 1
<S> <C> <C> <C>
Management fees 0.35% 0.35% 0.35%
Distribution (12b-1) fees 0.25% 0.25% 0.25%
Other expenses ___% ___% ___%
TOTAL ANNUAL OPERATING EXPENSES 2 ___% ___% ___%
Waivers/reimbursements ___% ___% ___%
Net annual operating expenses 0.80% 0.80% 1.00%
<FN>
- -----------------------
1 The table above and the Example below each reflect the aggregate annual
operating expenses of each Portfolio and the corresponding Series of the Trust
in which the Portfolio invests.
2 For Investor shares, WTC has agreed to waive a portion of its advisory fee or
reimburse expenses to the extent total annual operating expenses for Investor
shares exceed 0.80% for the Short/Intermediate Portfolio, 0.80% for the
Intermediate Bond Portfolio and 1.00% for the Municipal Bond Portfolio. This
waiver will remain in place until the Board of Trustees approves its
termination. The management fees, other expenses and total annual operating
expenses reflected in the table above are based on the Portfolios' actual
expenses for the fiscal year ended June 30, 1999, adjusted to reflect current
fee arrangements.
</FN>
</TABLE>
EXAMPLE
This example is intended to help you compare the cost of investing in a
Portfolio with the cost of investing in other mutual funds. The table below
shows what you would pay if you invested $10,000 over the various time frames
indicated.The example assumes that:
(BULLET) you reinvested all dividends and other distributions;
(BULLET) the average annual return was 5%;
(BULLET) the Portfolio's maximum (without regard to waivers or expenses) total
operating expenses are charged and remain the same over the time
periods; and
(BULLET) you redeemed all of your investment at the end of the time period.
Although your actual cost may be higher or lower, based on these assumptions,
your costs would be:
<TABLE>
<CAPTION>
INSTITUTIONAL SHARES 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -------------------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
Short/Intermediate Bond Portfolio $76 $237 $411 $918
Intermediate Bond Portfolio $67 $211 $368 $822
Municipal Bond Portfolio $98 $306 $531 $1178
INVESTOR SHARES 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------- ------ ------- ------- --------
Short/Intermediate Bond Portfolio $82 $255 $444 $990
Intermediate Bond Portfolio $82 $255 $444 $990
Municipal Bond Portfolio $102 $318 $552 $1,225
</TABLE>
THE ABOVE EXAMPLE IS FOR COMPARISON PURPOSES ONLY AND IS NOT A REPRESENTATION OF
A PORTFOLIO'S ACTUAL EXPENSES AND RETURNS, EITHER PAST OR FUTURE.
7
<PAGE>
INVESTMENT OBJECTIVES
The SHORT/INTERMEDIATE BOND PORTFOLIO and the INTERMEDIATE BOND PORTFOLIO each
seek a high total return, consistent with high current income. The MUNICIPAL
BOND PORTFOLIO seeks a high level of income exempt from federal income tax,
consistent with the preservation of capital. These investment objectives may not
be changed without shareholder approval. There is no guarantee that a Portfolio
will achieve its investment objective.
PRIMARY INVESTMENT STRATEGIES
PLAIN TALK
-----------------------------------------------------------------------
WHAT ARE FIXED INCOME SECURITIES?
Fixed income securities are generally bonds, which is a type of
security that functions like a loan. Bonds are IOUs issued by private
companies, municipalities or government agencies. By comparison, when
you buy a stock, you are buying ownership in a company. With a bond,
your "loan" is for a specific period, usually 5 to 30 years. You
receive regular interest payments at the rate stated when you bought
the bond. Hence, the term "fixed income" security.
-----------------------------------------------------------------------
The SHORT/INTERMEDIATE BOND PORTFOLIO invests its assets in the
Short/Intermediate Bond Series, which:
(BULLET) will invest at least 85% of its total assets in various types of
investment grade fixed income securities;
(BULLET) may invest up to 10% of its total assets in investment grade fixed
income securities of foreign issuers;
(BULLET) will, as a matter of fundamental policy, maintain a short-to-
intermediate average duration (2-1/2 to 4 years); and
(BULLET) the average dollar-weighted duration of securities held by the
Short/Intermediate Bond Series will normally fall within a range of
2-1/2 to 4 years.
PLAIN TALK
-----------------------------------------------------------------------
WHAT IS DURATION?
Duration measures the sensitivity of fixed income securities held by a
Portfolio to a change in interest rates. The value of a security with a
longer duration will normally fluctuate to a greater degree than will
the value of a security with a shorter duration should interest rates
change. For example, if interest rates were to move 1%, a bond with a
3-year duration would experience approximately a 3% change in principal
value. An identical bond with a 5-year duration would experience
approximately a 5% change in its principal value.
-----------------------------------------------------------------------
The INTERMEDIATE BOND PORTFOLIO invests its assets in the Intermediate Bond
Series, which:
(BULLET) will invest at least 85% of its total assets in various types of
investment grade fixed income securities;
(BULLET) may invest up to 10% of its total assets in investment grade fixed
income securities of foreign issuers;
8
<PAGE>
(BULLET) will, as a matter of fundamental policy, maintain an intermediate
average duration (4 to 7 years); and
(BULLET) the average dollar-weighted duration of securities held by the
Intermediate Bond Series will normally fall within a range of 4 to 7
years.
PLAIN TALK
-----------------------------------------------------------------------
WHAT ARE INVESTMENT GRADE SECURITIES?
Investment grade securities are securities that have been determined
by a rating agency to have a medium to high probability of being paid,
although there is always a risk of default. Investment grade
securities are rated BBB, A, AA or AAA by Standard & Poor's
Corporation or Baa, A, Aa or Aaa by Moody's Investors Service.
-----------------------------------------------------------------------
PLAIN TALK
-----------------------------------------------------------------------
WHAT ARE MUNICIPAL SECURITIES?
Municipal securities are bonds issued by state and local governments
to raise money for their activities.
-----------------------------------------------------------------------
The MUNICIPAL BOND PORTFOLIO invests its assets in the Municipal Bond Series,
which:
(BULLET) will, as a fundamental policy, invest substantially all (at least 80%)
of its net assets in a diversified portfolio of municipal securities
that provide interest that is exempt from federal income tax;
(BULLET) may invest up to 20% of its net assets in other types of fixed income
securities that provide income that is subject to federal tax; and
(BULLET) will, as a matter of fundamental policy, maintain an intermediate
average duration (4 to 8 years); and
(BULLET) the average dollar-weighted duration of securities held by the
Municipal Bond Series will normally fall within a range of 4 to 8
years.
The Municipal Bond Series may not invest more than 25% of its total assets in
any one industry. You should note that governmental issuers of municipal
securities are not considered part of any industry. The 25% limitation applies
to municipal securities backed by the assets and revenues of non-governmental
users, such as private operators of educational, hospital or housing facilities.
However, the investment adviser may decide that the yields available from
concentrating in obligations of a particular market sector or political
subdivision justify the risk that the performance of the Municipal Bond Series
may be adversely affected by such concentration. Under such market conditions,
the Municipal Bond Series may invest more than 25% of its assets in sectors of
the municipal securities market, such as health care or housing, or in
securities relating to one political subdivision, such as a given state or U.S.
territory. Under these conditions, the Municipal Bond Series' vulnerability to
any special risks that affects that sector or jurisdiction could have an adverse
impact on the value of an investment in the Series. There are no limitations on
the Municipal Bond Series' investment in any one of the three
9
<PAGE>
general categories of municipal obligations: general obligation bonds, revenue
(or special)obligation bonds and private activity bonds.
SERIES COMPOSITION. The composition of each Series' holdings varies, depending
upon the investment adviser's analysis of the fixed income markets, the
municipal securities market and the expected trends in those markets. The
securities purchased by the Series may be purchased based upon their yield, the
income earned by the security, or their potential capital appreciation, the
potential increase in the security's value, or both. The investment adviser
seeks to protect the Series' principal value by reducing fluctuations in value
relative to those that may be experienced by fixed income funds with a longer
average duration. This strategy may reduce the level of income attained by the
Series. There is no guarantee that principal value can be protected during
periods of extreme interest volatility.
PLAIN TALK
-----------------------------------------------------------------------
CORPORATE BONDS VS. GOVERNMENT BONDS:
Bonds issued by corporations generally pay a higher interest rate than
government bonds. That's because corporate bonds are somewhat riskier
than government bonds and the interest payments on government bonds are
exempt from some or all taxes. For example, if you live in Delaware and
buy a bond issued by the state of Delaware or by any other government
or municipal agency in Delaware, your interest on the bond is exempt
from state and federal income taxes. But if your bond is issued by any
state other than the one in which you reside, the interest would only
be exempt from federal income tax and you would have to pay your state
income tax. Interest payments on U.S. Treasury bonds are exempt from
state and local taxes.
-----------------------------------------------------------------------
The Series invest only in securities that are rated, at the time of purchase, in
the top four categories by a rating agency such as Moody's Investors Service,
Inc. or Standard & Poor's. If the securities are not rated, then the investment
adviser must determine that they are of comparable quality.
The table below shows each Series' principal investments. These are the types of
securities that will most likely help a Series achieve its investment objective.
- --------------------------------------------------------------------------------
SHORT/INTERMEDIATE INTERMEDIATE MUNICIPAL
BOND BOND BOND
- --------------------------------------------------------------------------------
Asset-Backed Securities (check mark) (check mark)
- --------------------------------------------------------------------------------
Bank Obligations (check mark) (check mark)
- --------------------------------------------------------------------------------
Corporate Bonds, Notes
and Commercial Paper (check mark) (check mark)
- --------------------------------------------------------------------------------
Mortgage-Backed Securities (check mark) (check mark)
- --------------------------------------------------------------------------------
Municipal Securities (check mark) (check mark) (check mark)
- --------------------------------------------------------------------------------
Obligations Issued By
Supranational Agencies (check mark) (check mark)
- --------------------------------------------------------------------------------
U.S. Government Obligations (check mark) (check mark)
- --------------------------------------------------------------------------------
10
<PAGE>
Each Series also may use other strategies and engage in other investment
practices, which are described in detail in our Statement of Additional
Information. The investments and strategies listed above and described
throughout this prospectus are those that we use under normal market conditions.
ADDITIONAL RISK INFORMATION
The following is a list of certain risks that may apply to your investment in a
Portfolio. Further information about investment risks is available in our
Statement of Additional Information:
(BULLET) CREDIT RISK: The risk that the issuer of a security, or the
counterparty to a contract, will default or otherwise become unable to
honor a financial obligation.
(BULLET) FOREIGN SECURITY RISK: The risk of losses due to political, regulatory,
economic, social or other uncontrollable forces in a foreign country
(Short/Intermediate Bond and Intermediate Bond Portfolios only).
(BULLET) INTEREST RATE RISK: The risk of market losses attributable to changes
in interest rates. With fixed-rate securities, a rise in interest rates
typically causes a fall in values, while a fall in rates typically
causes a rise in values. The yield earned by a Portfolio will vary with
changes in interest rates.
(BULLET) LEVERAGE RISK: The risk associated with securities or practices (such
as when-issued and forward commitment transactions) that multiply small
market movements into larger changes in value.
(BULLET) LIQUIDITY RISK: The risk that certain securities may be difficult or
impossible to sell at the time and the price that the seller would
like.
(BULLET) MARKET RISK: The risk that the market value of a security may move up
and down, sometimes rapidly and unpredictably.
(BULLET) MASTER/FEEDER RISK: The Portfolios' master/feeder structure is
relatively new and more complex. While this structure is designed to
reduce costs, it may not do so, and the Portfolios might encounter
operational or other complications.
(BULLET) OPPORTUNITY RISK: The risk of missing out on an investment opportunity
because the assets necessary to take advantage of it are tied up in
less advantageous investments.
(BULLET) PREPAYMENT RISK: The risk that a debt security may be paid off and
proceeds invested earlier than anticipated. Depending on market
conditions, the new investments may or may not carry the same interest
rate.
(BULLET) VALUATION RISK: The risk that a Series has valued certain of its
securities at a higher price than it can sell them for.
(BULLET) YEAR 2000 READINESS RISK: Like other organizations around the world,
the Portfolios could be adversely affected if the computer systems used
by their various service providers (or the market in general) do not
properly operate after January 1, 2000. The Portfolios are taking steps
to address the Year 2000 issue with respect to the computer systems
that they rely on. There can be no assurance, however, that these steps
will be sufficient to avoid a temporary service disruption or any
adverse impact on the Portfolios.
Additionally, if a company in which a Series is invested is adversely
affected by Year 2000 problems, it is likely that the price of that
company's securities will also be adversely affected. A decrease in
one or more of a Series' holdings may have a similar impact on the
11
<PAGE>
price of the Series' shares. The Series' adviser will rely on public
filings and other statements made by companies about their Year 2000
readiness. Issuers in countries outside the U.S. present a greater
Year 2000 readiness risk because they may not be required to make the
same level of disclosure about Year 2000 readiness as is required in
the U.S. The adviser is not able to audit any company and its major
suppliers to verify their year 2000 readiness.
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand each
Portfolio's financial performance for the past 5 years or since the Portfolio's
inception, if shorter. Certain information reflects financial results for a
single share of a Portfolio. The total returns in the table represent the rate
that you would have earned (or lost) on an investment in a Portfolio (assuming
reinvestment of all dividends and other distributions). This information has
been audited by ____________, whose report, along with each Portfolio's
financial statements, is included in the Annual Report, which is available
without charge upon request.
12
<PAGE>
[INSERT FINANCIAL HIGHLIGHTS for Portfolios]
13
<PAGE>
MANAGEMENT OF THE PORTFOLIOS
The Board of Trustees for each Portfolio supervises the management, activities
and affairs of the Portfolio and has approved contracts with various
organizations to provide, among other services, day-to-day management required
by the Portfolio and its shareholders.
INVESTMENT ADVISER
PLAIN TALK
-----------------------------------------------------------------------
The investment adviser makes investment decisions for a mutual fund
and continuously reviews, supervises and administers the fund's
investment program. The Board of Trustees supervises the investment
adviser and establishes policies that the adviser must follow in its
management activities.
-----------------------------------------------------------------------
Wilmington Trust Company, the Series' investment adviser, is located at 1100
North Market Street, Wilmington, Delaware 19890. WTC is a wholly owned
subsidiary of Wilmington Trust Corporation, which is a publicly held bank
holding company. WTC, subject to the supervision of the Board of Trustees,
directs the investments of each Series in accordance with its investment
objective, policies and limitations. In addition to serving as investment
adviser for the Series, WTC is engaged in a variety of investment advisory
activities, including the management of other mutual funds and collective
investment pools.
Under an advisory agreement, each Series pays a monthly fee to WTC at the annual
rate of 0.35% of the Series' first $1 billion of average daily net assets; 0.30%
of the Series' next $1 billion of average daily net assets; and 0.25% of the
Series' average daily net assets over $2 billion. For the twelve months ended
June 30, 1999, WTC received the following fees (after fee waivers) as a
percentage of each Series' average daily net assets for investment advisory
services:
Short/Intermediate Bond Series %
Intermediate Bond Series %
Municipal Bond Series %
PORTFOLIO MANAGERS
Eric K. Cheung, Vice President and Manager of the Fixed Income Management
Division, Clayton M. Albright, III, Vice President of the Fixed Income
Management Division and Dominick J. D'Eramo, CFA, Vice President of the Fixed
Income Management Division, all of the Asset Management Department of WTC, are
primarily responsible for the day-to-day management of the Short/Intermediate
Bond Series and the Intermediate Bond Series. From 1978 until 1986, Mr. Cheung
was the Portfolio Manager for fixed income assets of the Meritor Financial
Group. In 1986, Mr. Cheung joined WTC. In 1991, he became the Division Manager
for all fixed income products. Mr. Albright has been employed at WTC since 1976.
In 1987, he joined the Fixed Income Management Division and since then has
specialized in the management
14
<PAGE>
of intermediate and long-term fixed income portfolios. Mr. D'Eramo began his
career with WTC in 1986 as a fixed income trader and was promoted to portfolio
manager in _____.
Lisa More, Assistant Vice President of Credit Research and Municipal Trading
within the Fixed Income Management Divisions of Asset Management Department of
WTC is primarily responsible for the day-to-day management of the Municipal Bond
Portfolio. Mrs. More has been employed at WTC since 1988. In 1990, she joined
the Fixed Income Division specializing in the management of municipal income
portfolios.
SERVICE PROVIDERS
The chart below provides information on the Portfolios' primary service
providers.
15
<PAGE>
Asset Shareholder
Management Services
- --------------------------- -------------------------------
INVESTMENT ADVISER TRANSFER AGENT
WILMINGTON TRUST COMPANY PFPC INC.
RODNEY SQUARE NORTH 400 BELLEVUE PARKWAY
1100 N. MARKET STREET WILMINGTON, DE 19809
WILMINGTON, DE 19890-0001
Handles Shareholder services,
including recordkeeping and
Manages each Portfolio's statements, payment of
business and investment distribution and processing of
activities. buy and sell requests.
- --------------------------- -------------------------------
Fund -------------------- Asset
Operations Safe Keeping
- -------------------------- THE WT MUTUAL FUND -----------------------------
ADMINISTRATOR AND CUSTODIAN
ACCOUNTING AGENT --------------------
PFPC INC. PFPC TRUST COMPANY
400 BELLEVUE PARKWAY 200 STEVENS DRIVE
WILMINGTON, DE 19809 LESTER, PA 19113
Provides facilities, Hold each Portfolio's
equipment and personnel assets, settle all
to carry out administrative portfolio trades and collect
services related to each most of the valuation data
Portfolio and calculates required for calculating
each Portfolio's NAV per each Portfolio's NAV
share and distributions. per share.
- -------------------------- -----------------------------
Distribution
-----------------------------------
DISTRIBUTOR
PROVIDENT DISTRIBUTORS INC.
FOUR FALLS CORPORATE CENTER
WEST CONSHOHOCKEN, PA 19428
Distributes each Portfolio's shares.
-----------------------------------
16
<PAGE>
SHAREHOLDER INFORMATION
PRICING OF SHARES
The Portfolios value their assets based on current market value when such values
are available. Prices for fixed income securities normally are supplied by a
pricing service. Fixed income securities maturing within 60 days of the
valuation date are valued at amortized cost. Securities that do not have a
readily available current market value are valued in good faith under the
direction of the Series' Board of Trustees.
The assets held by the Short/Intermediate Bond Series and the Intermediate Bond
Series that are denominated in foreign currencies are valued daily in U.S.
dollars at the foreign currency exchange rates that are prevailing at the time
that PFPC determines the daily net asset value per share.
PLAIN TALK
-----------------------------------------------------------------------
WHAT IS THE NET ASSET VALUE or "NAV"?
NAV = Assets - Liabilities
--------------------
Outstanding Shares
-----------------------------------------------------------------------
PFPC determines the NAV per share of each Portfolio as of the close of regular
trading on the New York Stock Exchange (currently 4:00 p.m., Eastern time), on
each Business Day (a day that the Exchange, the Transfer Agent and the
Philadelphia branch of the Federal Reserve Bank are open for business).The NAV
is calculated by adding the value of all securities and other assets in a
Portfolio, deducting its liabilities and dividing the balance by the number of
outstanding shares in that Portfolio.
Shares will not be priced on those days the Portfolios are closed. As of the
date of this prospectus, those days are:
New Year's Day Memorial Day Veterans Day
Martin Luther King, Jr. Day Independence Day Thanksgiving Day
President's Day Labor Day Christmas Day
Good Friday Columbus Day
PURCHASE OF SHARES
PLAIN TALK
-----------------------------------------------------------------------
HOW TO PURCHASE SHARES:
(BULLET) Directly by mail or by wire
(BULLET) As a client of WTC through a trust account or a corporate
cash management account
(BULLET) As a client of a Service Organization
-----------------------------------------------------------------------
Portfolio shares are offered on a continuous basis and are sold without any
sales charges. The minimum initial investment in Investor or Institutional class
shares of the Portfolios is $1,000,
17
<PAGE>
but additional investments may be made in any amount. You may purchase shares as
specified below.
You may also purchase shares if you are a client of WTC through your trust or
corporate cash management accounts. If you are a client of an institution (such
as a bank or broker-dealer) that has entered into a servicing agreement with the
Portfolios' distributor ("Service Organization"), you may also purchase shares
through such Service Organization. You should also be aware that you may be
charged a fee by WTC or the Service Organization in connection with your
investment in the Portfolios. If you wish to purchase Portfolio shares through
your account at WTC or a Service Organization, you should contact that entity
directly for information and instructions on purchasing shares.
BY MAIL: You may purchase shares by sending a check drawn on a U.S. bank payable
to WT Mutual Fund, indicating the name of the Portfolio, along with a completed
application (included at the end of this prospectus). If a subsequent investment
is being made, the check should also indicate your Portfolio account number.
When you make purchases by check, each Portfolio may withhold payment on
redemptions until it is reasonably satisfied that the funds are collected (which
can take up to 10 days). If you purchase shares with a check that does not
clear, your purchase will be canceled and you will be responsible for any losses
or fees incurred in that transaction. Send the check and application to:
REGULAR MAIL: OVERNIGHT MAIL:
WT Mutual Fund WT Mutual Fund
c/o PFPC Inc. c/o PFPC Inc.
P.O. Box ____ 400 Bellevue Parkway, Suite 108
Wilmington, DE 19899 Wilmington, DE 19809
BY WIRE: You may purchase shares by wiring federal funds readily available.
Please call PFPC at (800) _____for instructions and to make specific
arrangements before making a purchase by wire, and if making an initial
purchase, to also obtain an account number.
ADDITIONAL INFORMATION REGARDING PURCHASES: Purchase orders received by the
Transfer Agent before the close of regular trading on the Exchange on any
Business Day will be priced at the NAV that is determined as of the close of
trading. Purchase orders received after the close of regular trading on the
Exchange will be priced as of the close of regular trading on the following
Business Day.
Any purchase order may be rejected if a Portfolio determines that accepting the
order would not be in the best interest of the Portfolio or its shareholders.
It is the responsibility of WTC or the Service Organization to transmit orders
for the purchase of shares by its customers to the Transfer Agent and to deliver
required funds on a timely basis, in accordance with the procedures stated
above.
18
<PAGE>
For information on other ways to purchase shares, including through an
individual retirement account (IRA), an Automatic Investment Plan or a Payroll
Investment Plan, please refer to the Statement of Additional Information.
REDEMPTION OF SHARES
PLAIN TALK
-----------------------------------------------------------------------
HOW TO REDEEM (SELL) SHARES:
(BULLET) By mail
(BULLET) By telephone
-----------------------------------------------------------------------
You may sell your shares on any Business Day as described below. Redemptions are
effected at the NAV next determined after the Transfer Agent has received your
redemption request. There is no fee when Portfolio shares are redeemed. It is
the responsibility of WTC or the Service Organization to transmit redemption
orders and credit their customers' accounts with redemption proceeds on a timely
basis. Redemption checks are mailed on the next Business Day following receipt
by the Transfer Agent of redemption instructions, but never later than 7 days
following such receipt. Amounts redeemed by wire are normally wired on the date
of receipt of redemption instructions (if received by the Transfer Agent before
4:00 p.m. Eastern time) or the next Business Day (if received after 4:00 p.m.
Eastern time, or on a non-Business Day), but never later than 7 days following
such receipt. If you purchased your shares through an account at WTC or a
Service Organization, you should contact WTC or the Service Organization for
information relating to redemptions. The Portfolio's name and your account
number should accompany any redemption requests.
BY MAIL: If you redeem your shares by mail, you should submit written
instructions with a "signature guarantee". A signature guarantee verifies the
authenticity of your signature. You can obtain one from most banking
institutions or securities brokers, but not from a notary public. You must
indicate the Portfolio name, your account number and your name. The written
instructions and signature guarantee should be mailed to:
REGULAR MAIL: OVERNIGHT MAIL:
WT Mutual Fund WT Mutual Fund
c/o PFPC Inc. c/o PFPC Inc.
P.O. Box ____ 400 Bellevue Parkway, Suite 108
Wilmington, DE 19899 Wilmington, DE 19809
BY TELEPHONE: If you prefer to redeem your shares by telephone, you may elect to
do so. However there are certain risks. The Portfolios have certain safeguards
and procedures to confirm the identity of callers and to confirm that the
instructions communicated are genuine. If such procedures are followed, you will
bear the risk of any losses.
ADDITIONAL INFORMATION REGARDING REDEMPTIONS: Redemption proceeds may be wired
to your predesignated bank account in any commercial bank in the United States
if the amount is $1,000
19
<PAGE>
or more. The receiving bank may charge a fee for this service. Proceeds may also
be mailed to your bank or, for amounts of $10,000 or less, mailed to your
Portfolio account address of record if the address has been established for at
least 60 days. In order to authorize the Transfer Agent to mail redemption
proceeds to your Portfolio account address of record, complete the appropriate
section of the Application for Telephone Redemptions or include your Portfolio
account address of record when you submit written instructions. You may change
the account that you have designated to receive amounts redeemed at any time.
Any request to change the account designated to receive redemption proceeds
should be accompanied by a guarantee of your signature by an eligible
institution. A signature and a signature guarantee are required for each person
in whose name the account is registered. Further documentation will be required
to change the designated account when a corporation, other organization, trust,
fiduciary or other institutional investor holds the Portfolio shares.
If shares to be redeemed represent a recent investment made by check, each
Portfolio reserves the right not to make the redemption proceeds available until
it has reasonable grounds to believe that the check has been collected (which
could take up to 10 days).
SMALL ACCOUNTS: If the value of your Portfolio account falls below $500, the
Portfolio may ask you to increase your balance. If the account value is still
below $500 after 60 days, the Portfolio may close your account and send you the
proceeds. The Portfolio will not close your account if it falls below $500
solely as a result of a reduction in your account's market value.
For information on other ways to redeem shares, please refer to the Statement of
Additional Information.
EXCHANGE OF SHARES
PLAIN TALK
-----------------------------------------------------------------------
WHAT IS AN EXCHANGE OF SHARES?
An exchange of shares allows you to move your money from one fund to
another fund within a family of funds.
-----------------------------------------------------------------------
You may exchange all or a portion of your shares in a Portfolio for the same
class of shares of certain other Portfolios of the Fund. These other Portfolios
are:
Wilmington Prime Money Market Portfolio
Wilmington U.S. Government Portfolio
Wilmington Tax-Exempt Portfolio
Wilmington Premier Money Market Portfolio
Wilmington Short/Intermediate Bond Portfolio
Wilmington Intermediate Bond Portfolio
Wilmington Municipal Bond Portfolio
Wilmington Large Cap Growth Portfolio
Wilmington Large Cap Core Portfolio
Wilmington Small Cap Core Portfolio
Wilmington International Multi-Manager Portfolio
Wilmington Large Cap Value Portfolio
Wilmington Mid Cap Value Portfolio
20
<PAGE>
Wilmington Small Cap Value Portfolio
Redemption of shares through an exchange will be effected at the NAV per share
next determined after the Transfer Agent receives your request. A purchase of
shares through an exchange will be effected at the NAV per share determined at
that time or as next determined thereafter.
Exchange transactions will be subject to the minimum initial investment and
other requirements of the Portfolio into which the exchange is made. An exchange
may not be made if the exchange would leave a balance in a shareholder's account
of less than $500.
To obtain prospectuses of the other Portfolios, you may call (800) _____. To
obtain more information about exchanges, or to place exchange orders, contact
the Transfer Agent, or, if your shares are held in a trust account with WTC or
in an account with a Service Organization, contact WTC or the Service
Organization. The Portfolios may terminate or modify the exchange offer
described here and will give you 60 days' notice of such termination or
modification. This exchange offer is valid only in those jurisdictions where the
sale of the Portfolio shares to be acquired through such exchange may be legally
made.
DISTRIBUTIONS
PLAIN TALK
-----------------------------------------------------------------------
WHAT IS NET INVESTMENT INCOME?
Net investment income consists of interest and dividends (and, in the
case of the Municipal Bond Portfolio, market discount on tax-exempt
securities) earned by a fund on its investments less accrued expenses.
-----------------------------------------------------------------------
As a shareholder of a Portfolio, you are entitled to receive dividends and other
distributions arising from the net investment income and net realized gains, if
any, earned on the investments held by the Portfolio. Generally, dividends are
declared daily and paid monthly. Each Portfolio expects to distribute any net
realized gains once a year. The Short/Intermediate Bond Portfolio and the
Intermediate Bond Portfolio will distribute net realized gains from foreign
currency transactions, if any, after the end of the fiscal year in which the
gain was realized by them.
Distributions are payable to the shareholders of record at the time the
distributions are declared (including holders of shares being redeemed, but
excluding holders of shares being purchased). All distributions are reinvested
in additional shares, unless you elect to receive distributions in cash. Shares
become entitled to receive distributions on the day after the shares are issued.
Any net capital gain realized by a Portfolio will be distributed at least
annually.
TAXES
Each Portfolio generally intends to operate in a manner such that it will not be
liable for Federal income or excise tax. The Portfolios' distributions of net
investment income (which include net
21
<PAGE>
short-term capital gains), whether received in cash or reinvested in additional
Portfolio shares, may be taxable to you as ordinary income. Each Portfolio will
notify you following the end of the calendar year of the amount of dividends
paid that year. Dividend distributions by the Municipal Bond Portfolio of the
excess of its interest income on tax-exempt securities over certain amounts
disallowed as deductions ("exempt-interest dividends") may be treated by you as
interest excludable from your gross income. The Municipal Bond Portfolio intends
to distribute income that is exempt from federal income tax, though it may
invest a portion of its assets in securities that generate taxable income.
Income exempt from federal income tax may be subject to state and local income
tax. Additionally, any capital gains distributed by the Portfolio may be
taxable.
It is a taxable event for you if you sell or exchange shares of any Portfolio,
including the Municipal Bond Portfolio. Depending on the purchase price and the
sale price of the shares you exchange, you may have a taxable gain or loss on
the transaction. You are responsible for any tax liability generated by your
transactions.
This section is only a summary of some important income tax considerations that
may affect your investment in a Portfolio. More information regarding those
considerations appears in our Statement of Additional Information. You are urged
to consult your tax adviser regarding the effects of an investment on your tax
situation.
DISTRIBUTION ARRANGEMENTS
Provident Distributors, Inc. ("PDI") manages the Portfolios' distribution
efforts and provides assistance and expertise in developing marketing plans and
materials, enters into dealer agreement with broker-dealers to sell shares and
provides shareholder support services, directly or through affiliates. The
Portfolios do not charge any sales loads, deferred sales loads or other fees in
connection with the purchase of shares.
RULE 12B-1 FEES
PLAIN TALK
-----------------------------------------------------------------------
WHAT ARE 12b-1 FEES?
12b-1 fees, charged by some funds, are deducted from fund assets to pay
for marketing and advertising expenses or, more commonly, to compensate
sales professionals for selling fund shares.
-----------------------------------------------------------------------
The Investor class of each Portfolio has adopted a distribution plan under Rule
12b-1 that allows a Portfolio to pay a fee to PDI for the sale and distribution
of Investor class shares, and for services provided to Investor class
shareholders. Because these fees are paid out of a Portfolio's assets
continuously, over time these fees will increase the cost of your investment and
may cost you more than paying other types of sales charges. For the Investor
class of shares, maximum distribution fees as a percentage of average daily net
assets, are as follows:
Short/Intermediate Bond Portfolio - Investor Class 0.25%
Intermediate Bond Portfolio - Investor Class 0.25%
22
<PAGE>
Municipal Bond Portfolio - Investor Class 0.25%
MASTER/FEEDER STRUCTURE
Other institutional investors, including other mutual funds, may invest in the
master funds. The master/feeder structure enables various institutional
investors, including a Portfolio, to pool their assets, which may be expected to
result in economies by spreading certain fixed costs over a larger asset base.
Each shareholder of a master fund, including a Portfolio, will pay its
proportionate share of the master fund's expenses.
For reasons relating to costs or a change in investment goal, among others, a
Portfolio could switch to another master fund or decide to manage its assets
itself. No Portfolio is currently contemplating such a move.
SHARE CLASS
The Portfolios issue Investor and Institutional classes of shares. The Investor
class pays an additional 12b-1 fee. The Institutional class of shares is offered
to retirement plans. Other investors may purchase Investor class shares.
23
<PAGE>
FOR MORE INFORMATION
FOR INVESTORS WHO WANT MORE INFORMATION ON THE PORTFOLIOS, THE FOLLOWING
DOCUMENTS ARE AVAILABLE FREE UPON REQUEST:
ANNUAL/SEMI-ANNUAL REPORTS: Contain performance data and information on
portfolio holdings, operating results, and a discussion of the market conditions
and investment strategies that significantly affect the Portfolios' performance
for the most recently completed fiscal year or half-year.
STATEMENT OF ADDITIONAL INFORMATION (SAI): Provides a complete technical and
legal description of the Portfolios' policies, investment restrictions, risks,
and business structure. This prospectus incorporates the SAI by reference.
Copies of these documents and answers to questions about the Portfolios may be
obtained without charge by contacting:
WT Mutual Fund
c/o PFPC Inc.
400 Bellevue Parkway
Suite 108
Wilmington, Delaware 19809
(800) _____
9:00 a.m. to 5:00 p.m. Eastern time
Information about the Portfolios (including the SAI) can be reviewed and copied
at the Public Reference Room of the Securities and Exchange Commission in
Washington, D.C. Copies of this information may be obtained, upon payment of a
duplicating fee, by writing the Public Reference Room of the SEC, Washington,
DC, 20549-6009. Information on the operation of the Public Reference Room may be
obtained by calling the SEC at 1-(800)-SEC-0330. Reports and other information
about the Portfolios may be viewed on-screen or downloaded from the SEC's
Internet site at http://www.sec.gov.
FOR MORE INFORMATION ON OPENING A NEW ACCOUNT, MAKING
CHANGES TO EXISTING ACCOUNTS, PURCHASING, EXCHANGING
OR REDEEMING SHARES, OR OTHER INVESTOR SERVICES,
PLEASE CALL 1-(800)-_____.
The investment company registration number for the WT Mutual Fund is 811-08648.
24
<PAGE>
THE WILMINGTON PRIME MONEY MARKET PORTFOLIO
THE WILMINGTON U.S. GOVERNMENT PORTFOLIO
THE WILMINGTON PREMIER MONEY MARKET PORTFOLIO
THE WILMINGTON TAX-EXEMPT PORTFOLIO
OF WT MUTUAL FUND
================================================================================
PROSPECTUS DATED _______, 1999
This prospectus gives vital information about these money market mutual funds,
including information on investment policies, risks and fees. For your own
benefit and protection, please read it before you invest, and keep it on hand
for future reference.
Please note that these Portfolios:
(BULLET) are not bank deposits
(BULLET) are not obligations of, or guaranteed or endorsed by Wilmington Trust
Company or any of its affiliates
(BULLET) are not federally insured
(BULLET) are not obligations of, or guaranteed or endorsed or otherwise
supported by the U.S. Government, the Federal Deposit Insurance
Corporation, the Federal Reserve Board or any other governmental agency
(BULLET) are not guaranteed to achieve their goal(s)
(BULLET) may not be able to maintain a stable $1 share price
Like all mutual fund shares, the Securities and Exchange Commission has not
approved or disapproved the Portfolios' shares or determined whether this
prospectus is accurate or complete. Anyone who tells you otherwise is committing
a crime.
<PAGE>
TABLE OF CONTENTS
A LOOK AT THE GOALS, STRATEGIES, PORTFOLIO DESCRIPTION
RISKS, EXPENSES AND FINANCIAL Summary....................................3
HISTORY OF EACH PORTFOLIO. Performance Information....................4
Fees and Expenses..........................6
Investment Objectives......................7
Primary Investment Strategies..............8
Additional Risk Information................9
Financial Highlights......................10
DETAILS ABOUT THE SERVICE MANAGEMENT OF THE PORTFOLIOS
PROVIDERS. Investment Adviser........................11
Service Providers.........................11
POLICIES AND INSTRUCTIONS FOR SHAREHOLDER INFORMATION
OPENING, MAINTAINING AND Pricing of Shares.........................13
CLOSING AN ACCOUNT IN ANY OF Purchase of Shares........................13
THE PORTFOLIOS. Redemption of Shares......................15
Exchange of Shares........................17
Distributions.............................18
Taxes.....................................18
DETAILS ON DISTRIBUTION DISTRIBUTION ARRANGEMENTS
PLANS AND THE PORTFOLIOS' Rule 12b-1 Fees...........................19
MASTER/FEEDER FUND Master/Feeder Structure...................19
ARRANGEMENT. Share Class...............................19
FOR MORE INFORMATION..............BACK COVER
For information about key terms and concepts, look for our "PLAIN TALK"
explanations.
2
<PAGE>
THE WILMINGTON PRIME MONEY MARKET PORTFOLIO
THE WILMINGTON U.S. GOVERNMENT PORTFOLIO
THE WILMINGTON PREMIER MONEY MARKET PORTFOLIO
THE WILMINGTON TAX-EXEMPT PORTFOLIO
PORTFOLIO DESCRIPTION
PLAIN TALK
-----------------------------------------------------------------------
WHAT ARE MONEY MARKET FUNDS?
Money market funds invest only in high quality, short-term debt
securities, commonly known as money market instruments. Money market
funds follow strict rules about credit risk, maturity and
diversification of their investments. An investment in a money market
fund is not a bank deposit. Although a money market fund seeks to keep
a constant share price of $1.00, you may lose money by investing in a
money market fund.
-----------------------------------------------------------------------
SUMMARY
Investment Objective (BULLET) The PRIME MONEY MARKET, U.S. GOVERNMENT AND
PREMIER MONEY MARKET PORTFOLIOS each seek high
current income, while preserving capital and
liquidity.
(BULLET) The TAX EXEMPT PORTFOLIO seeks high current
interest income exempt from federal income
taxes while preserving principal.
- --------------------------------------------------------------------------------
Investment Focus (BULLET) Money market instruments.
- --------------------------------------------------------------------------------
Share Price Volatility (BULLET) Each Portfolio will strive to maintain a
stable $1.00 share price.
- --------------------------------------------------------------------------------
Principal Investment
Strategy (BULLET) Each Portfolio operates as a "feeder fund"
which means that the Portfolio does not buy
individual securities directly. Instead, it
invests in a corresponding mutual fund or
"master fund," which in turn purchases
investment securities. The Portfolios invest
all of their assets in master funds, which are
separate series of WT Investment Trust I. Each
Portfolio and its corresponding Series have the
same investment objective, policies and
limitations.
(BULLET) The U.S. GOVERNMENT PORTFOLIO invests in the
U.S. Government Series, which invests at least
65% of its assets in U.S. Government
obligations and repurchase agreements
collateralized by such obligations.
(BULLET) The PRIME MONEY MARKET PORTFOLIO invests in the
Prime Money Market Series, which invests in
money market instruments, including bank
obligations, high quality commercial paper and
U.S. Government obligations.
(BULLET) The TAX-EXEMPT PORTFOLIO invests in the
Tax-Exempt Series, which invests in high
quality municipal obligations, municipal bonds
and other instruments exempt from federal
income tax.
(BULLET) The PREMIER MONEY MARKET PORTFOLIO invests in
the Premier Money Market Series, which invests
in money market instruments, including bank
obligations, high quality commercial paper and
U.S. Government obligations.
(BULLET) Each of the U.S. Government Portfolio, Prime
Money Market Portfolio and Premier Money Market
Portfolio, through its corresponding Series,
may invest more than 25% of its total assets in
the obligations of banks and finance companies.
- --------------------------------------------------------------------------------
Principal Risks (BULLET) An investment in a Portfolio is not a deposit
of Wilmington Trust Company or any of its
affiliates and is not insured or guaranteed by
the Federal Deposit Insurance Corporation or
any other government agency. Although each
Portfolio seeks to preserve the value of your
investment at $1.00 per share, it
3
<PAGE>
- --------------------------------------------------------------------------------
is possible to lose money by investing in a
Portfolio.
(BULLET) The obligations in which the Portfolios invest
through their corresponding Series are subject
to credit risk and interest rate risk.
Typically, when interest rates rise, the market
prices of debt securities go down.
(BULLET) The performance of a Portfolio will depend on
whether or not the adviser is successful in
pursuing an investment strategy.
(BULLET) The Portfolios are also subject to other risks
that are described under "Additional Risk
Information."
- --------------------------------------------------------------------------------
Investor Profile (BULLET) Conservative
- --------------------------------------------------------------------------------
PERFORMANCE INFORMATION
THE WILMINGTON PRIME MONEY MARKET PORTFOLIO
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Portfolio. Of course, past performance is not
necessarily an indicator of how the Portfolio will perform in the future.
[BAR CHART]
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE PORTFOLIO'S INVESTOR
SHARES FROM CALENDAR YEAR TO CALENDAR YEAR. THE BAR CHART DOES REFLECT
DEDUCTIONS FOR RULE 12b-1 DISTRIBUTION FEES. IF SUCH AMOUNTS WERE NOT REFLECTED,
RETURNS WOULD BE HIGHER.
BEST QUARTER WORST QUARTER
2.36% 0.70%
(June 30, 1989) (June 30, 1993)
AVERAGE ANNUAL RETURNS AS OF 12/31/98 1 YEAR 5 YEAR 10 YEAR
- ------------------------------------- ------ ------ -------
Prime Money Market Portfolio 5.17% 5.00% 5.46%%
THE WILMINGTON U.S. GOVERNMENT PORTFOLIO
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Portfolio. Of course, past performance is not
necessarily an indicator of how the Portfolio will perform in the future.
[BAR CHART]
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE PORTFOLIO'S INVESTOR
SHARES FROM CALENDAR YEAR TO CALENDAR YEAR. THE BAR CHART DOES REFLECT
DEDUCTIONS FOR RULE 12b-1 DISTRIBUTION FEES. IF SUCH AMOUNTS WERE NOT REFLECTED,
RETURNS WOULD BE HIGHER.
BEST QUARTER WORST QUARTER
2.31% 0.69%
(June 30, 1989) (March 31, 1993)
4
<PAGE>
AVERAGE ANNUAL RETURNS AS OF 12/31/98 1 YEAR 5 YEAR 10 YEAR
- ------------------------------------- ------ ------ -------
U.S. Government Portfolio 5.07% 4.90% 5.31%%
THE WILMINGTON PREMIER MONEY MARKET PORTFOLIO
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Portfolio. Of course, past performance is not
necessarily an indicator of how the Portfolio will perform in the future.
[BAR CHART]
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE PORTFOLIO'S INSTITUTIONAL
SHARES FROM CALENDAR YEAR TO CALENDAR YEAR.
BEST QUARTER WORST QUARTER
1.47% 1.28%
(June 30, 1995) (December 31, 1994)
SINCE INCEPTION
AVERAGE ANNUAL RETURNS AS OF 12/31/98 1 YEAR (DECEMBER 6, 1994)
- ------------------------------------- ------ ------------------
Premier Money Market Portfolio 5.49% %
THE WILMINGTON TAX-EXEMPT PORTFOLIO
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Portfolio. Of course, past performance is not
necessarily an indicator of how the Portfolio will perform in the future.
[BAR CHART]
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE PORTFOLIO'S INVESTOR
SHARES FROM CALENDAR YEAR TO CALENDAR YEAR. THE BAR CHART DOES REFLECT
DEDUCTIONS FOR RULE 12b-1 DISTRIBUTION FEES. IF SUCH AMOUNTS WERE NOT REFLECTED,
RETURNS WOULD BE HIGHER.
BEST QUARTER WORST QUARTER
1.61% 0.47%
(June 30, 1989) (March 31, 1994)
AVERAGE ANNUAL RETURNS AS OF 12/31/98 1 YEAR 5 YEAR 10 YEAR
- ------------------------------------- ------ ------ -------
Tax-Exempt Portfolio 2.98% 3.00% 3.54%%
5
<PAGE>
PLAIN TALK
-----------------------------------------------------------------------
WHAT IS YIELD?
Yield is a measure of the income (dividends and interest) earned by the
securities in a fund's portfolio and paid to you over a specified time
period. The yield is expressed as a percentage of the offering price
per share on a specified date.
-----------------------------------------------------------------------
You may call (800) ________ to obtain a Portfolio's current 7-day
yield.
FEES AND EXPENSES
PLAIN TALK
-----------------------------------------------------------------------
WHAT ARE MUTUAL FUND EXPENSES?
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, distribution, administration and custody
services. The Portfolios' expenses in the table below are shown as a
percentage of the Portfolios' net assets. These expenses are deducted
from Portfolio assets.
-----------------------------------------------------------------------
The table below describes the fees and expenses that you may pay if you buy and
hold shares of a Portfolio.
<TABLE>
<CAPTION>
INSTITUTIONAL CLASS
ANNUAL FUND OPERATING
EXPENSES (EXPENSES THAT ARE
DEDUCTED FROM PORTFOLIO THE PRIME MONEY THE U.S. GOVERNMENT THE TAX-EXEMPT THE PREMIER MONEY
ASSETS) 1 MARKET PORTFOLIO PORTFOLIO PORTFOLIO MARKET PORTFOLIO
---------------- --------- --------- ----------------
<S> <C> <C> <C> <C>
Management fees 0.47% 0.47% 0.47% .20%
Distribution (12b-1) fees 0.00% 0.00% 0.00% 0.00%
Other expenses ___% ___% ___% ___%
TOTAL ANNUAL OPERATING EXPENSES 2 ___% ___% ___% ___%
Waivers/reimbursements ___% ___% ___% ___%
Net annual operating expenses ___% ___% ___% 0.20%
<FN>
-------------------------------------------
1 The table above and the Example below each reflect the aggregate
annual operating expenses of each Portfolio and the corresponding
Series of the Trust in which the Portfolio invests.
2 For Institutional shares, WTC has agreed to waive a portion of its
advisory fee or reimburse expenses to the extent total operating
expenses exceed 0.20% for the Premier Money Market Portfolio. This
waiver will remain in place until the Board of Trustees approves
its termination. The management fees, other expenses and total
annual operating expenses reflected in the table above are based
on the Portfolios' actual expenses for the fiscal year ended June
30, 1999, adjusted to reflect current fee arrangements.
</FN>
</TABLE>
<TABLE>
<CAPTION>
INVESTOR CLASS
ANNUAL FUND OPERATING
EXPENSES (EXPENSES THAT ARE THE PRIME MONEY THE U.S. GOVERNMENT THE TAX-EXEMPT
DEDUCTED FROM PORTFOLIO MARKET PORTFOLIO PORTFOLIO PORTFOLIO
ASSETS) 1 ---------------- ------------------- --------------
<S> <C> <C> <C>
Management fees 0.47% 0.47% 0.47%
Distribution (12b-1) fees 2 0.05% 0.05% 0.05%
Other expenses ___% ___% ___%
TOTAL ANNUAL OPERATING EXPENSES ___% ___% ___%
6
<PAGE>
Waivers/reimbursements ___% ___% ___%
Net annual operating expenses ___% ___% ___%
<FN>
- -------------------------------------------
1 The table above and the Example below each reflect the aggregate annual
operating expenses of each Portfolio and the corresponding Series of the
Trust in which the Portfolio invests.
2 While the Distribution (12b-1) Plan provides for reimbursement of up to
0.20% of each Portfolio's average net assets, the Boards of Trustees have
authorized annual payments of up to 0.05% of each Portfolio's average net
assets for the current fiscal year.
</FN>
</TABLE>
EXAMPLE
This example is intended to help you compare the cost of investing in a
Portfolio with the cost of investing in other mutual funds. The tables below
show what you would pay if you invested $10,000 over the various time frames
indicated. The example assumes that:
(BULLET) you reinvested all dividends;
(BULLET) the average annual return was 5%;
(BULLET) the Portfolio's maximum total operating expenses are charged and remain
the same over the time periods; and
(BULLET) you redeemed all of your investment at the end of the time period.
Although your actual cost may be higher or lower, based on these assumptions,
your costs would be:
INSTITUTIONAL SHARES 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
Prime Money Market Portfolio $57 $179 $313 $701
U.S. Government Portfolio $59 $186 $324 $726
Tax-Exempt Portfolio $60 $189 $329 $738
INVESTOR SHARES 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------- ------- ------- --------
Prime Money Market Portfolio $ $ $ $
U.S. Government Portfolio $ $ $ $
Tax-Exempt Portfolio $ $ $ $
THE ABOVE EXAMPLE IS FOR COMPARISON PURPOSES ONLY AND IS NOT A REPRESENTATION OF
A PORTFOLIO'S ACTUAL EXPENSES AND RETURNS, EITHER PAST OR FUTURE.
INVESTMENT OBJECTIVES
(BULLET) The PRIME MONEY MARKET PORTFOLIO, the U.S. GOVERNMENT PORTFOLIO and
PREMIER MONEY MARKET PORTFOLIO each seek a high level of current income
consistent with the preservation of capital and liquidity.
(BULLET) The TAX-EXEMPT PORTFOLIO seeks as high a level of interest income
exempt from federal income tax as is consistent with preservation of
principal.
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The investment objectives for each Portfolio, except the Premier Money Market
Portfolio, may not be changed without shareholder approval. Each Portfolio is a
money market fund and intends to maintain a stable $1 share price, although this
may not be possible under certain circumstances. There can be no guarantee that
any Portfolio will achieve its investment objective.
PRIMARY INVESTMENT STRATEGIES
The PRIME MONEY MARKET PORTFOLIO invests its assets in the Prime Money Market
Series, which in turn invests in:
(BULLET) U.S. dollar-denominated obligations of major U.S. and foreign banks and
their branches located outside of the United States, of U.S. branches
of foreign banks, of foreign branches of foreign banks, of U.S.
agencies of foreign banks and wholly-owned banking subsidiaries of
foreign banks;
(BULLET) high quality commercial paper and corporate obligations;
(BULLET) U.S. Government obligations;
(BULLET) high quality municipal securities; and
(BULLET) repurchase agreements that are fully collateralized by U.S. Government
obligations.
U.S. Government obligations are debt securities issued or guaranteed by the
U.S. Government, its agencies or instrumentalities.
The U.S. GOVERNMENT PORTFOLIO invests its assets in the U.S. Government Series,
which in turn invests at least 65% of its total assets in:
(BULLET) U.S. Government obligations; and
(BULLET) repurchase agreements that are fully collateralized by such
obligations.
The PREMIER MONEY MARKET PORTFOLIO invests its assets in the Premier Money
Market Series, which in turn invests in:
(BULLET) U.S. dollar-denomination obligations of major U.S. and foreign banks
and their branches located outside of the United States, of U.S.
branches of foreign banks, of foreign branches of foreign banks, of
U.S. agencies of foreign banks and wholly-owned banking subsidiaries of
foreign banks;
(BULLET) commercial paper rated, at the time of purchase, in the highest
category of short-term debt ratings of any two nationally recognized
statistical rating organizations ("NRSRO");
(BULLET) corporate obligations having a remaining maturity of 397 calendar days
or less, issued by corporations having outstanding comparable
obligations that are (a) rated in the two highest categories of any two
NRSROs or (b) rated no lower than the two highest long-term debt
ratings categories by any NRSRO.
(BULLET) U.S. Government obligations;
(BULLET) high quality municipal securities; and
(BULLET) repurchase agreements that are fully collateralized by U.S. Government
obligations.
The TAX-EXEMPT PORTFOLIO invests its assets in the Tax-Exempt Series, which
in turn invests in:
(BULLET) high quality municipal obligations and municipal bonds;
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(BULLET) floating and variable rate obligations;
(BULLET) participation interests;
(BULLET) high quality tax-exempt commercial paper; and
(BULLET) high quality short-term municipal notes.
The Tax-Exempt Series has adopted a policy that, under normal circumstances, at
least 80% of its annual income will be exempt from federal income tax.
Additionally, at least 80% of its annual income will not be a tax preference
item for purposes of the federal alternative minimum tax.
High quality securities include those that (1) are rated in one of the two
highest short-term rating categories by two NRSRO, such as S&P, Moody's and
Fitch IBCA (or by one NRSRO if only one NRSRO has issued a rating) or; (2) if
unrated are issued by an issuer with comparable outstanding debt that is rated
or are otherwise unrated and determined by the investment adviser to be of
comparable quality.
Each Series also may invest in other securities, use other strategies and engage
in other investment practices, which are described in detail in our Statement of
Additional Information.
ADDITIONAL RISK INFORMATION
The following is a list of certain risks that may apply to your investment in a
Portfolio. Further information about investment risks is available in our
Statement of Additional Information:
(BULLET) CREDIT RISK: The risk that the issuer of a security, or the
counterparty to a contract, will default or otherwise become unable to
honor a financial obligation.
(BULLET) FOREIGN SECURITY RISK: The risk of losses due to political, regulatory,
economic, social or other uncontrollable forces in a foreign country.
(BULLET) INTEREST RATE RISK: The risk of market losses attributable to changes
in interest rates. With fixed-rate securities, a rise in interest rates
typically causes a fall in values, while a fall in rates typically
causes a rise in values. The yield paid by a Portfolio will vary with
changes in interest rates.
(BULLET) MARKET RISK: The risk that the market value of a security may move up
and down, sometimes rapidly and unpredictably.
(BULLET) MASTER/FEEDER RISK: The Portfolios' master/feeder structure is
relatively new and more complex. While this structure is designed to
reduce costs, it may not do so, and the Portfolios might encounter
operational or other complications.
(BULLET) PREPAYMENT RISK: The risk that a debt security may be paid off and
proceeds invested earlier than anticipated. Depending on market
conditions, the new investments may or may not carry the same interest
rate.
(BULLET) YEAR 2000 COMPLIANCE RISK: Like other organizations around the world,
the Portfolios could be adversely affected if the computer systems used
by their various service providers (or the market in general) do not
properly operate after January 1, 2000. The Portfolios are taking steps
to address the Year 2000 issue with respect to the computer systems
that they rely on. There can be no assurance, however, that these steps
will be sufficient to avoid a temporary service disruption or any
adverse impact on the Portfolios.
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<PAGE>
Additionally, if a company in which a Series is invested is adversely
affected by Year 2000 Problems, it is likely that the price of that
company's securities will also be adversely affected. A decrease in one
or more of a Series' holdings may have a similar impact on the price of
the Series' shares. The Series' adviser will rely on public filings and
other statements by companies about their Year 2000 readiness. Issuers
in countries outside the U.S. present a greater Year 2000 readiness
risk because they may not be required to make the same level of
disclosure about Year 2000 readiness as is required in the U.S. The
adviser is not able to audit any company and its major suppliers to
verify their Year 2000 readiness.
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand each
Portfolio's financial performance for the past 5 years or since the inception of
the Portfolio, if shorter. Certain information reflects financial results for a
single share of a Portfolio. The total returns in the table represent the rate
that you would have earned (or lost) on an investment in a Portfolio (assuming
reinvestment of all dividends and other distributions). This information has
been audited by ____________, whose report, along with each Portfolio's
financial statements, is included in the Annual Report, which is available
without charge upon request.
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<PAGE>
MANAGEMENT OF THE PORTFOLIOS
The Board of Trustees for each Portfolio supervises the management, activities
and affairs of the Portfolio and has approved contracts with various
organizations to provide, among other services, the day-to-day management
required by the Portfolio and its shareholders.
PLAIN TALK
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WHAT IS AN INVESTMENT ADVISER?
The investment adviser makes investment decisions for a mutual fund and
continuously reviews, supervises and administers the fund's investment
program. The Board of Trustees supervises the investment adviser and
establishes policies that the adviser must follow in its management
activities.
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INVESTMENT ADVISER
Rodney Square Management Corporation, the Series' investment adviser, is located
at 1100 North Market Street, Wilmington, Delaware 19890. RSMC is a wholly owned
subsidiary of Wilmington Trust Company, which is wholly owned by Wilmington
Trust Corporation. RSMC also provides asset management services to collective
investment funds maintained by WTC. In the past, RSMC has provided asset
management services to individuals, personal trusts, municipalities,
corporations and other organizations.
Each of the U.S. Government Series, the Prime Money Market Series, and the
Tax-Exempt Series pays a monthly fee to RSMC at the annual rate of 0.47% of the
Series' first $1 billion of average daily net assets; 0.43% of the Series' next
$500 million of average daily net assets; 0.40% of the Series' next $500 million
of average daily net assets; and 0.37% of the Series' average daily net assets
in excess of $2 billion, as determined at the close of business on each day
throughout the month. The Premier Money Market Series pays a monthly fee to RSMC
at the annual rate of 0.20%. Out of its fees, RSMC makes payments to PFPC Inc.
for the provision of administration, accounting and transfer agency services and
to PFPC Trust Company for provision of custodial services.
For the twelve months ended June 30, 1999, the U.S. Government Series, Prime
Money Market Series and Tax-Exempt Series paid RSMC ___%, ___% and ___%,
respectively, of the Series' average daily net assets for investment advisory
services. Prior to October ____, 1999, WTC served as investment adviser to the
Premier Money Market Series. For the period from October 20, 1998 to June 30,
1999, the Premier Money Market Series paid WTC ___% of the Series' average daily
net assets for investment advisory services. The Series' previous investment
adviser, Kiewit Investment Management Corp., received advisory fees of ___% for
the period from July 1, 1998 to October 19, 1998.
SERVICE PROVIDERS
The chart below provides information on the Portfolios' primary service
providers.
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- --------------------------------------------------------------------------------
WT MUTUAL FUND
- --------------------------------------------------------------------------------
Asset Management
- --------------------------------------------------------------------------------
INVESTMENT ADVISER
RODNEY SQUARE MANAGEMENT CORP.
RODNEY SQUARE NORTH
1100 N. MARKET STREET
WILMINGTON, DE 19890-0001
Manages each Portfolio's business and
investment activities.
- --------------------------------------------------------------------------------
Fund Operations
- --------------------------------------------------------------------------------
ADMINISTRATOR AND
ACCOUNTING AGENT
PFPC INC.
400 BELLEVUE PARKWAY
WILMINGTON, DE 19809
Provides facilities, equipment and
personnel to carry out administrative
services related to each Portfolio and
calculates each Portfolio's NAV per share
and distributions.
- --------------------------------------------------------------------------------
Distribution
- --------------------------------------------------------------------------------
DISTRIBUTOR
PROVIDENT DISTRIBUTORS INC.
FOUR FALLS CORPORATE CENTER
WEST CONSHOHOCKEN, PA 19428
Distributes each Portfolio's shares.
- --------------------------------------------------------------------------------
Shareholder Services
- --------------------------------------------------------------------------------
TRANSFER AGENT
PFPC INC.
400 BELLEVUE PARKWAY
WILMINGTON, DE 19809
Handles shareholder sevices, including
recordkeeping and statements, payment of
distribution and processing of buy and sell
requests.
- --------------------------------------------------------------------------------
Asset Safe Keeping
- --------------------------------------------------------------------------------
CUSTODIAN
PFPC TRUST COMPANY
200 STEVENS DRIVE
LESTER, PA 19113
Hold each Portfolio's assets, settle all
portfolio trades and collect most of the
valuation data required for calculating each
Portfolio's NAV per share.
- --------------------------------------------------------------------------------
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<PAGE>
SHAREHOLDER INFORMATION
PRICING OF SHARES
Each Portfolio uses its best effort to maintain its $1 constant share price and
values its securities at cost. This involves valuing a security initially at its
cost and thereafter assuming a constant amortization to maturity of any discount
or premium, regardless of fluctuating interest rates on the market value of the
security. All cash, receivables and current payables are carried at their face
value. Other assets, if any, are valued at fair value as determined in good
faith by, or under the direction of, the Board of Trustees.
PLAIN TALK
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WHAT IS THE NET ASSET VALUE or "NAV"?
NAV = Assets - Liabilities
--------------------
Outstanding Shares
-----------------------------------------------------------------------
PFPC determines the NAV per share of each Portfolio as of 12:00 p.m. Eastern
time for the Tax-Exempt Portfolio and as of 2:00 p.m. Eastern Time for the U.S.
Government Portfolio, the Prime Money Market Portfolio, and the Premier Money
Market Portfolio, on each Business Day (a day that the New York Stock Exchange,
the Transfer Agent and the Philadelphia branch of the Federal Reserve Bank are
open for business). The NAV is calculated by adding the value of all securities
and other assets in a Portfolio, deducting its liabilities and dividing the
balance by the number of outstanding shares in that Portfolio.
Shares will not be priced on those days the Portfolios are closed. As of the
date of this prospectus, those days are:
New Year's Day Memorial Day Veterans Day
Martin Luther King, Jr. Day Independence Day Thanksgiving Day
President's Day Labor Day Christmas Day
Good Friday Columbus Day
PURCHASE OF SHARES
PLAIN TALK
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HOW TO PURCHASE SHARES:
(BULLET) Directly by mail or by wire
(BULLET) As a client of WTC through a trust account or a corporate cash
management account
(BULLET) As a client of a Service Organization
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Portfolio shares are offered on a continuous basis and are sold without any
sales charges. The minimum initial investment in Investor or Institutional
shares of the U.S. Government Portfolio, the Prime Money Market Portfolio and
the Tax-Exempt Portfolio is $1,000. The minimum initial purchase for the Premier
Money Market Portfolio is $10,000,000. Additional investments in any Portfolio
may be made in any amount. You may purchase shares as specified below.
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<PAGE>
You may also purchase shares if you are a client of WTC through your trust or
corporate cash management accounts. If you are a client of an institution (such
as a bank or broker-dealer) that has entered into a servicing agreement with the
Portfolios' distributor ("Service Organization"), you may also purchase shares
through such Service Organization. You should also be aware that you may be
charged a fee by WTC or the Service Organization in connection with your
investment in the Portfolios. If you wish to purchase Portfolio shares through
your account at WTC or a Service Organization, you should contact that entity
directly for information and instructions on purchasing shares.
BY MAIL: You may purchase shares by sending a check drawn on a U.S. bank payable
to WT Mutual Fund, indicating the name of the Portfolio, along with a completed
application (included at the end of this prospectus). If a subsequent investment
is being made, the check should also indicate your Portfolio account number.
When you make purchases by check, each Portfolio may withhold payment on
redemptions until it is reasonably satisfied that the funds are collected (which
can take up to 10 days). If you purchase shares with a check that does not
clear, your purchase will be canceled and you will be responsible for any losses
or fees incurred in that transaction. Send the check and application to:
REGULAR MAIL: OVERNIGHT MAIL:
WT Mutual Fund WT Mutual Fund
c/o PFPC Inc. c/o PFPC Inc.
P.O. Box ____ 400 Bellevue Parkway, Suite 108
Wilmington, DE 19899 Wilmington, DE 19809
BY WIRE: You may purchase shares by wiring federal funds readily available.
Please call PFPC at (800) ________ for instructions and to make specific
arrangements before making a purchase by wire, and if making an initial
purchase, to also obtain an account number.
ADDITIONAL INFORMATION REGARDING PURCHASES: Investments in a Portfolio are
accepted on the Business Day that federal funds are deposited for your account
on or before 12:00 p.m. Eastern time for the Tax-Exempt Portfolio and on or
before 2:00 p.m. Eastern Time for the U.S. Government Portfolio, the Prime Money
Market Portfolio, and the Premier Money Market Portfolio. Monies immediately
convertible to federal funds are deposited for your account on or before 12:00
p.m. Eastern time for the Tax-Exempt Portfolio and on or before 2:00 p.m.
Eastern Time for the U.S. Government Portfolio, the Prime Money Market
Portfolio, and the Premier Money Market Portfolio, or checks deposited for your
account have been converted to federal funds (usually within two Business Days
after receipt). All investments in a Portfolio are credited to your account as
shares of the Portfolio immediately upon acceptance and become entitled to
dividends declared as of the day and time of investment.
Any purchase order may be rejected if a Portfolio determines that accepting the
order would not be in the best interest of the Portfolio or its shareholders.
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<PAGE>
It is the responsibility of WTC or the Service Organization to transmit orders
for the purchase of shares by its customers to the Transfer Agent and to deliver
required funds on a timely basis, in accordance with the procedures stated
above.
For information on other ways to purchase shares, including through an
individual retirement account (IRA), an automatic investment plan or a payroll
investment plan, please refer to the Statement of Additional Information.
REDEMPTION OF SHARES
PLAIN TALK
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HOW TO REDEEM (SELL) SHARES:
(BULLET) By mail
(BULLET) By telephone
(BULLET) By check
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You may sell your shares on any Business Day, as described below. Redemptions
are effected at the NAV next determined after the Transfer Agent has received
your redemption request. There is no fee when Portfolio shares are redeemed. It
is the responsibility of WTC or the Service Organization to transmit redemption
orders and credit their customers' accounts with redemption proceeds on a timely
basis. Redemption checks are mailed on the next Business Day following receipt
by the Transfer Agent of redemption instructions, but never later than 7 days
following such receipt. Amounts redeemed by wire are normally wired on the date
of receipt of redemption instructions or the next Business Day (if received
after 12:00 p.m. Eastern time for the Tax-Exempt Portfolio and after 2:00 p.m.
Eastern Time for the U.S. Government Portfolio, the Prime Money Market
Portfolio, and the Premier Money Market Portfolio, or on a non-Business Day),
but never later than 7 days following such receipt. If you purchased your shares
through an account at WTC or a Service Organization, you should contact WTC or
the Service Organization for information relating to redemptions. The
Portfolio's name and your account number should accompany any redemption
requests.
BY MAIL: If you redeem your shares by mail, you should submit written
instructions with a "signature guarantee." A signature guarantee verifies the
authenticity of your signature. You can obtain one from most banking
institutions or securities brokers, but not from a notary public. You must
indicate the Portfolio name, your account number and your name. The written
instructions and signature guarantee should be mailed to:
REGULAR MAIL: OVERNIGHT MAIL:
WT Mutual Fund WT Mutual Fund
c/o PFPC Inc. c/o PFPC Inc.
P.O. Box ____ 400 Bellevue Parkway, Suite 108
Wilmington, DE 19899 Wilmington, DE 19809
BY TELEPHONE: If you prefer to redeem your shares by telephone you may elect to
do so. However there are certain risks. The Portfolios have certain safeguards
and procedures to
15
<PAGE>
confirm the identity of callers and to confirm that the instructions
communicated are genuine. If such procedures are followed, you will bear the
risk of any losses.
BY CHECK: You may use the checkwriting option to redeem Portfolio shares by
drawing a check for $500 or more against a Portfolio account, except for the
Wilmington Premier Money Market Portfolio. When the check is presented for
payment, a sufficient number of shares will be redeemed from your account to
cover the amount of the check. This procedure enables you to continue receiving
dividends on those shares until the check is presented for payment. Because the
aggregate amount of Portfolio shares owned is likely to change each day, you
should not attempt to redeem all shares held in your account by using the
checkwriting procedure. Charges will be imposed for specially imprinted checks,
business checks, copies of canceled checks, stop payment orders, checks returned
due to "nonsufficient funds" and other returned checks. These charges will be
paid by redeeming automatically an appropriate number of Portfolio shares. Each
Portfolio and the Transfer Agent reserve the right to terminate or alter the
checkwriting service at any time. The Transfer Agent also reserves the right to
impose a service charge in connection with the checkwriting service. If you are
interested in the check writing service, contact the Transfer Agency for further
information. This service is generally not available for clients of WTC through
their trust or corporate cash management accounts, since it is already provided
for these customers through WTC. The service may also not be available for
Service Organization clients who are provided a similar service by those
organizations.
ADDITIONAL INFORMATION REGARDING REDEMPTIONS: Redemption proceeds may be wired
to your predesignated bank account in any commercial bank in the United States
if the amount is $1,000 or more. The receiving bank may charge a fee for this
service. Proceeds may also be mailed to your bank or, for amounts of $10,000 or
less, mailed to your Portfolio account address of record if the address has been
established for at least 60 days. In order to authorize the Transfer Agent to
mail redemption proceeds to your Portfolio account address of record, complete
the appropriate section of the Application for Telephone Redemptions or include
your Portfolio account address of record when you submit written instructions.
You may change the account that you have designated to receive amounts redeemed
at any time. Any request to change the account designated to receive redemption
proceeds should be accompanied by a guarantee of your signature by an eligible
institution. A signature and a signature guarantee are required for each person
in whose name the account is registered. Further documentation will be required
to change the designated account when a corporation, other organization, trust,
fiduciary or other institutional investor holds the Portfolio shares.
If the shares to be redeemed represent a recent investment made by a check, each
Portfolio reserves the right not to send the redemption proceeds until it
believes that the check has been collected (which could take up to 10 days).
SMALL ACCOUNTS: If the value of your Portfolio account falls below $500, the
Portfolio may ask you to increase your balance. If the account value is still
below $500 after 60 days, the Portfolio may close your account and send you the
proceeds. The Portfolio will not close your account if it falls below $500
solely as a result of a reduction in your account's market value.
16
<PAGE>
For additional information on other ways to redeem shares, please refer to the
Statement of Information.
EXCHANGE OF SHARES
PLAIN TALK
-----------------------------------------------------------------------
WHAT IS AN EXCHANGE OF SHARES?
An exchange of shares allows you to move your money from one fund to
another fund within a family of funds.
-----------------------------------------------------------------------
You may exchange all or a portion of your shares in a Portfolio for the same
class of shares of certain other Portfolios of the Fund. These other Portfolios
are:
Wilmington Prime Money Market Portfolio
Wilmington U.S. Goverment Portfolio
Wilmington Premier Money Market Portfolio
Wilmington Tax-Exempt Portfolio
Wilmington Short/Intermediate Bond Portfolio
Wilmington Intermediate Bond Portfolio
Wilmington Municipal Bond Portfolio
Wilmington Large Cap Growth Portfolio
Wilmington Large Cap Core Portfolio
Wilmington Small Cap Core Portfolio
Wilmington International Multi-Manager Portfolio
Wilmington Large Cap Value Portfolio
Wilmington Mid Cap Value Portfolio
Wilmington Small Cap Value Portfolio
Redemption of shares through an exchange will be effected at the NAV per share
next determined after the Transfer Agent receives your request. A purchase of
shares through an exchange will be effected at the NAV per share determined at
that time or as next determined thereafter.
Exchange transactions will be subject to the minimum initial investment and
other requirements of the Portfolio into which the exchange is made. An exchange
may not be made if the exchange would leave a balance in a shareholder's account
of less than $500.
To obtain prospectuses of the other Portfolios, you may call (800) ________. To
obtain more information about exchanges, or to place exchange orders, contact
the Transfer Agent, or, if your shares are held in a trust account with WTC or
in an account with a Service Organization, contact WTC or the Service
Organization. The Portfolios may terminate or modify the exchange offer
described here and will give you 60 days' notice of such termination or
modification. This exchange offer is valid only in those jurisdictions where the
sale of the Portfolio shares to be acquired through such exchange may be legally
made.
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DISTRIBUTIONS
PLAIN TALK
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WHAT IS NET INVESTMENT INCOME?
Net investment income consists of interest and dividends earned by a
fund on its investments less accrued expenses.
-----------------------------------------------------------------------
Distributions from the net investment income of each Portfolio are declared
daily as a dividend and paid monthly to you. Any net capital gain realized by a
Portfolio will be distributed annually.
All distributions are reinvested in additional shares, unless you elect to
receive distributions in cash. Shares become entitled to receive distributions
on the day after the shares are issued.
TAXES
As long as a Portfolio meets the requirements for being a "regulated investment
company," it pays no Federal income tax on the earnings and gains it distributes
to Shareholders. The Portfolios' distributions of net investment income (which
include net short-term capital gains), whether received in cash or reinvested in
additional Portfolio shares, are taxable to you as ordinary income. Each
Portfolio will notify you following the end of the calendar year of the amount
of dividends paid that year.
You will not recognize any gain or loss on the sale (redemption) or exchange of
shares of a Portfolio so long as that Portfolio maintains a stable price of
$1.00 a share. Dividend distributions by the Tax-Exempt Portfolio of the excess
of its interest income on tax-exempt securities over certain amounts disallowed
as deductions ("exempt-interest dividends") may be treated by you as interest
excludable from your gross income. The Tax-Exempt Portfolio intends to
distribute income that is exempt from federal income tax, though it may invest a
portion of its assets in securities that generate taxable income. Income exempt
from federal income tax may be subject to state and local income tax.
Additionally, any capital gains distributed by the Tax-Exempt Portfolio may be
taxable.
STATE AND LOCAL INCOME TAXES: You should consult your tax advisers concerning
state and local taxes, which may have different consequences from those of the
Federal income law.
This section is only a summary of some important income tax considerations that
may affect your investment in a Portfolio. More information regarding those
considerations appears in our Statement of Additional Information. You are urged
to consult your tax adviser regarding the effects of an investment on your tax
situation.
DISTRIBUTION ARRANGEMENTS
Provident Distributors, Inc. ("PDI") manages the Portfolios' distribution
efforts and provides assistance and expertise in developing marketing plans and
materials, enters into dealer agreement with broker-dealers to sell shares and
provides shareholder support services, directly
18
<PAGE>
or through affiliates. The Portfolios do not charge any sales loads, deferred
sales loads or other fees in connection with the purchase of shares.
RULE 12B-1 FEES
PLAIN TALK
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WHAT ARE 12b-1 FEES?
12b-1 fees, charged by some funds, are deducted from fund assets to pay
for marketing and advertising expenses or, more commonly, to compensate
sales professionals for selling fund shares.
-----------------------------------------------------------------------
The Investor class of each Portfolio, except for the Premier Money Market
Portfolio, has adopted a distribution plan under Rule 12b-1 that allows a
Portfolio to pay a fee to PDI for the sale and distribution of Investor class
shares, and for services provided to Investor class shareholders. Because these
fees are paid out of a Portfolio's assets continuously, over time these fees
will increase the cost of your investment and may cost you more than paying
other types of sales charges. For the current fiscal year, the maximum
distribution fees for Investor shares as a percentage of average daily net
assets are as follows:
Prime Money Market Portfolio - Investor Class 0.05%
U.S. Government Portfolio - Investor Class 0.05%
Tax-Exempt Portfolio - Investor Class 0.05%.
MASTER/FEEDER STRUCTURE
Other institutional investors, including other mutual funds, may invest in the
master funds. The master/feeder structure enables various institutional
investors, including a Portfolio, to pool their assets, which may be expected to
result in economies by spreading certain fixed costs over a larger asset base.
Each shareholder of a master fund, including a Portfolio, will pay its
proportionate share of the master fund's expenses.
For reasons relating to costs or a change in investment goal, among others, a
Portfolio could switch to another master fund or decide to manage its assets
itself. No Portfolio is currently contemplating such a move.
SHARE CLASS
The Prime Money Market, U.S. Government and Tax-Exempt Portfolios issue Investor
and Institutional share classes. The Investor class pays a 12b-1 fee. The
Institutional class is offered to retirement plans and the Investor class is
offered to all other investors.
19
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FOR MORE INFORMATION
FOR INVESTORS WHO WANT MORE INFORMATION ON THE PORTFOLIOS, THE FOLLOWING
DOCUMENTS ARE AVAILABLE FREE UPON REQUEST:
ANNUAL/SEMI-ANNUAL REPORTS: Contain performance data and information on
portfolio holdings and operating results for a Portfolio's most recently
completed fiscal year or half-year.
STATEMENT OF ADDITIONAL INFORMATION (SAI): Provides a complete technical and
legal description of a Portfolio's policies, investment restrictions, risks, and
business structure. This prospectus incorporates the SAI by reference.
Copies of these documents and answers to questions about the Portfolios may be
obtained without charge by contacting:
WT Mutual Fund
c/o PFPC Inc.
400 Bellevue Parkway
Suite 108
Wilmington, Delaware 19809
(800) ____
9:00 a.m. to 5:00 p.m., Eastern time
Information about the Portfolios (including the SAI) can be reviewed and copied
at the Public Reference Room of the Securities and Exchange Commission in
Washington, D.C. Copies of this information may be obtained, upon payment of a
duplicating fee, by writing the Public Reference Room of the SEC, Washington,
DC, 20549-6009. Information on the operation of the Public Reference Room may be
obtained by calling the SEC at 1-(800)-SEC-0330. Reports and other information
about the Portfolios may be viewed on-screen or downloaded from the SEC's
Internet site at http://www.sec.gov.
FOR MORE INFORMATION ON OPENING A NEW ACCOUNT, MAKING CHANGES
TO EXISTING ACCOUNTS, PURCHASING, EXCHANGING OR REDEEMING
SHARES, OR OTHER INVESTOR SERVICES, PLEASE CALL 1-(800)-_____.
The investment company registration number for WT Mutual Fund 811-08648.
<PAGE>
THE CRM LARGE CAP VALUE FUND
THE CRM MID CAP VALUE FUND
THE CRM SMALL CAP VALUE FUND
================================================================================
PROSPECTUS DATED______, 1999
This prospectus gives vital information about these mutual funds, including
information on investment policies, risks and fees. For your own benefit and
protection, please read it before you invest, and keep it on hand for future
reference.
Like all mutual fund shares, the Securities and Exchange Commission has not
approved or disapproved the Funds' shares or determined whether this prospectus
is accurate or complete. Anyone who tells you otherwise is committing a crime.
<PAGE>
TABLE OF CONTENTS
A LOOK AT THE GOALS, STRATEGIES, FUND DESCRIPTION
RISKS, EXPENSES AND FINANCIAL Summary....................................3
HISTORY OF EACH FUND. Performance Information....................4
Fees and Expenses..........................5
Investment Objectives......................7
Primary Investment Strategies..............7
Additional Risk Information...............10
Financial Highlights......................11
DETAILS ABOUT THE SERVICE MANAGEMENT OF THE FUND
PROVIDERS. Investment Adviser........................13
Service Providers.........................15
POLICIES AND INSTRUCTIONS FOR SHAREHOLDER INFORMATION
OPENING, MAINTAINING AND Pricing of Shares.........................17
CLOSING AN ACCOUNT IN ANY OF Purchase of Shares........................17
THE FUNDS. Redemption of Shares......................19
Exchange of Shares........................20
Dividends and Distributions...............21
Taxes.....................................21
DETAILS ON THE FUNDS' SHARE DISTRIBUTION ARRANGEMENTS
CLASSES AND MASTER/FEEDER Master/Feeder Structure...................22
ARRANGEMENT. Share Class...............................22
FOR MORE INFORMATION..............BACK COVER
For information about key terms and concepts, look for our "PLAIN TALK"
explanations.
2
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THE CRM LARGE CAP VALUE FUND
THE CRM MID CAP VALUE FUND
THE CRM SMALL CAP VALUE FUND
FUND DESCRIPTION
PLAIN TALK
- --------------------------------------------------------------------------------
WHAT IS A MUTUAL FUND?
A mutual fund pools shareholders' money and, using a professional
investment manager, invests it in securities like stocks and bonds.
Each Fund is a separate mutual fund.
- --------------------------------------------------------------------------------
SUMMARY
PLAIN TALK
- --------------------------------------------------------------------------------
WHAT IS "CAP"?
Cap or the market capitalization of a company means the value of the
company's common stock in the stock market.
- --------------------------------------------------------------------------------
Investment Objective [BULLET] The LARGE CAP VALUE FUND, MID CAP VALUE FUND
and SMALL CAP VALUE FUND each seek to achieve
long-term capital appreciation.
- --------------------------------------------------------------------------------
Investment Focus [BULLET] Equity (or related) securities
- --------------------------------------------------------------------------------
Share Price Volatility [BULLET] Moderate to high
- --------------------------------------------------------------------------------
Principal Investment [BULLET] Each Fund operates as a "feeder fund," which
Strategy means that the Fund does not buy individual
securities directly. Instead, the Fund's
invest in a corresponding mutual fund or
"master fund," which in turn purchases
investment securities. Each Fund invests all
of its assets in a master fund which is a
separate series of another mutual fund. The
Funds and their corresponding Series have the
same investment objective, policies and
limitations.
[BULLET] The LARGE CAP VALUE FUND will invest its
assets in the Large Cap Value Series, which
invests at least 65% of its total assets in a
diversified fund of U.S. equity (or related)
securities with a market cap of $10 billion or
higher at the time of purchase. The Series
invests in securities whose prices are low
relative to comparable companies.
[BULLET] The MID CAP VALUE FUND will invest its assets
in the Mid Cap Value Series, which invests at
least 65% of its total assets in a diversified
fund of U.S. equity (or related) securities
with a market cap between $1 and $10 billion
at the time of purchase. The Series invests in
securities whose prices are low relative to
comparable companies.
[BULLET] The SMALL CAP VALUE FUND will invest its
assets in the Small Cap Value Series, which
invests at least 65% of its total assets in a
diversified fund of U.S. equity (or related)
securities with a market cap of $1 billion or
less at the time of purchase. The Series
invests in securities whose prices are low
relative to comparable companies.
- --------------------------------------------------------------------------------
Principal Risks [BULLET] It is possible to lose money by investing in a
Fund.
[BULLET] A Fund's share price will fluctuate in
response to changes in the market value of the
Fund's investments. Market value changes
result from business developments affecting an
issuer as well as general market and economic
conditions.
[BULLET] A value-oriented investment approach is
subject to the risk that a security believed
to be undervalued does not appreciate in value
as anticipated.
[BULLET] Small cap companies may be more vulnerable
than larger companies to adverse business or
economic developments, and their securities
may be less liquid and more volatile than
securities of larger companies.
[BULLET] The performance of a Fund will depend on
whether or not the adviser is successful in
- --------------------------------------------------------------------------------
3
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pursuing an investment strategy.
[BULLET] The Funds are also subject to other risks,
which are described under "Additional Risk
Information."
- --------------------------------------------------------------------------------
Investor Profile [BULLET] Investors who want the value of their
investment to grow and who are willing to
accept more volatility for the possibility of
higher returns.
- --------------------------------------------------------------------------------
PERFORMANCE INFORMATION
CRM LARGE CAP VALUE FUND
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, the Fund's past performance
does not necessarily indicate how the Fund will perform in the future.
[INSERT BAR CHART]
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE FUND'S INSTITUTIONAL
SHARES FROM CALENDAR YEAR TO CALENDAR YEAR. THE BAR CHART DOES NOT REFLECT
DEDUCTIONS FOR SHAREHOLDER SERVICE FEES. IF SUCH FEES HAD BEEN REFLECTED,
RETURNS WOULD BE LESS THAN THOSE SHOWN BELOW.
BEST QUARTER WORST QUARTER
13.48% -10.62%
(June 30, 1997) (September 30, 1998)
PLAIN TALK
- --------------------------------------------------------------------------------
WHAT IS AN INDEX?
An index is a broad measure of the market performance of a specific group of
securities in a particular market or securities in a market sector. You cannot
invest directly in an index. An index does not have an investment adviser and
does not pay any commissions or expenses. If an index had expenses, its
performance would be lower.
- --------------------------------------------------------------------------------
Institutional Shares
AVERAGE ANNUAL RETURNS AS OF 12/31/98 1 YEAR 5 YEAR 10 YEAR
- ------------------------------------- ------ ------ -------
Large Cap Value Fund -2.75% 14.30% 15.29%
S&P 500 Index* 28.58% 24.06% 21.08%
- -------------------------
* The S&P 500 Index is the Standard and Poor's Composite Index of 500 Stocks, a
widely recognized, unmanaged index of common stock prices.
CRM MID CAP VALUE FUND
The Fund has not been in operation for a full calendar year.
Institutional Shares
SINCE INCEPTION
AVERAGE ANNUAL RETURNS AS OF 12/31/98 (JANUARY 6, 1998)
- ------------------------------------- -----------------
Mid Cap Value Fund
Russell Mid Cap Index*
- -------------------------
* The Russell Mid Cap Index measures the performance of the 800 smallest
companies in the Russell 1000 Index, which represent approximately 35% of the
total market capitalization of the Russell 1000 Index.
4
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CRM SMALL CAP VALUE FUND
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, the Fund's past performance
does not necessarily indicate how the Fund will perform in the future.
[INSERT BAR CHART]
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE FUND'S INSTITUTIONAL
SHARES FROM CALENDAR YEAR TO CALENDAR YEAR. THE BAR CHART DOES NOT REFLECT
DEDUCTIONS FOR SHAREHOLDER SERVICE FEES. IF SUCH FEES HAD BEEN REFLECTED,
RETURNS WOULD BE LESS THAN THOSE SHOWN BELOW.
BEST QUARTER WORST QUARTER
17.44% -22.80%
(June 30, 1997) (September 30, 1998)
Institutional Shares
SINCE INCEPTION
AVERAGE ANNUAL RETURNS AS OF 12/31/98 1 YEAR (OCTOBER 1, 1995)
- ------------------------------------- ------ -----------------
Small Cap Value Fund -12.21% 15.40%
Russell 2000 Index* -2.24% 11.45%
- -------------------------
* The Russell 2000 Index is a market weighted index composed of 2000 companies
with market capitalizations from $50 million to $1.8 billion. The Index is
unmanaged and reflects the reinvestment of dividends.
FEES AND EXPENSES
PLAIN TALK
- --------------------------------------------------------------------------------
WHAT ARE FUND EXPENSES?
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, distribution, administration and custody services. Each
Fund's expenses in the table below are shown as a percentage of its net assets.
These expenses are deducted from Fund assets.
- --------------------------------------------------------------------------------
The table below describes the fees and expenses that you may pay if you buy and
hold shares of a Fund. No sales charges or other fees are paid directly from
your investment.
5
<PAGE>
INSTITUTIONAL SHARES
ANNUAL FUND OPERATING
EXPENSES (EXPENSES THAT ARE LARGE CAP VALUE MID CAP VALUE SMALL CAP VALUE
DEDUCTED FROM FUND ASSETS) 1 FUND FUND FUND
---- ---- ----
Management fees 0.55% 0.75% 0.75%
Distribution (12b-1) fees 0.00% 0.00% 0.00%
Other Expenses ____% ____% ____%
TOTAL ANNUAL OPERATING EXPENSES 2 ____% ____% ____%
Fee Waiver ____% ____% ____%
Net Expenses ____% 1.15% 1.15%
- -------------------------
1 The table above and the Example below each reflect the aggregate annual
operating expenses of each Fund and the corresponding Series in which the
Fund invests.
2 The adviser has voluntarily undertaken to waive a portion of its fees and
assume certain expenses of the above Funds to the extent that the total
annual operating expenses exceed 1.15% of net assets. This undertaking may
be terminated at any time.
INVESTOR SHARES
ANNUAL FUND OPERATING
EXPENSES (EXPENSES THAT ARE LARGE CAP VALUE MID CAP VALUE SMALL CAP VALUE
DEDUCTED FROM FUND ASSETS) 1 FUND FUND FUND
---- ---- ----
Management fees 0.55% 0.75% 0.75%
Distribution (12b-1) fees 0.00% 0.00% 0.00%
Other Expenses ____% ____% ____%
Shareholder Servicing fees 0.25% 0.25% 0.25%
TOTAL ANNUAL OPERATING EXPENSES 2 ____% ____% ____%
Fee Waiver ____% ____% ____%
Net Expenses ____% 1.40% 1.40%
- -------------------------
1 The table above and the Example below each reflect the aggregate annual
operating expenses of each Fund and the corresponding Series in which the
Fund invests.
2 The adviser has voluntarily undertaken to waive a portion of its fees and
assume certain expenses of the above Funds to the extent that the total
annual operating expenses exceed 1.40% of net assets. This undertaking may
be terminated at any time.
EXAMPLE
This example is intended to help you compare the cost of investing in a Fund
with the cost of investing in other mutual funds. The table below shows what you
would pay if you invested $10,000 over the various time frames indicated. The
example assumes that:
you reinvested all dividends and other distributions
[BULLET] the average annual return was 5%
[BULLET] the Fund's maximum (without regard to waivers or expenses) total
operating expenses are charged and remain the same over the time
periods
[BULLET] you redeemed all of your investment at the end of the time period.
Although your actual cost may be higher or lower, based on these assumptions,
your costs would be:
6
<PAGE>
INSTITUTIONAL SHARES 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -------------------- ------ ------- ------- --------
Large Cap Value Fund $ $ $ $
Mid Cap Value Fund $ $ $ $
Small Cap Value Fund $ $ $ $
INVESTOR SHARES 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------- ------ ------- ------- --------
Large Cap Value Fund $ $ $ $
Mid Cap Value Fund $ $ $ $
Small Cap Value Fund $ $ $ $
THE ABOVE EXAMPLE IS FOR COMPARISON PURPOSES ONLY AND IS NOT A REPRESENTATION OF
A FUND'S ACTUAL EXPENSES AND RETURNS, EITHER PAST OR FUTURE.
INVESTMENT OBJECTIVES
The Large Cap Value Fund, Mid Cap Value Fund and Small Cap Value Fund each seek
to achieve long-term capital appreciation. These investment objectives may not
be changed without shareholder approval. There is no guarantee that a Fund will
achieve its investment objective.
PRIMARY INVESTMENT STRATEGIES
PLAIN TALK
- --------------------------------------------------------------------------------
WHAT ARE VALUE FUNDS?
Value funds invest in the common stock of companies that are considered by the
adviser to be undervalued relative to their underlying profitability, or rather
their stock price does not reflect the value of the company.
- --------------------------------------------------------------------------------
VALUE INVESTING. Through their investment in corresponding Series, the Large Cap
Value, Mid Cap Value and Small Cap Value Funds seek to invest in stocks that are
less expensive than comparable companies, as determined by price/earnings
ratios, cash flows or other measures. Value investing therefore may reduce risk
while offering potential for capital appreciation as a stock gains favor among
other investors and its price rises.
The Series are managed using investment ideas that the adviser has used for over
twenty-five years. The Series' adviser relies on selecting individual stocks and
does not try to predict when the stock market might rise or fall. It seeks out
those stocks that are undervalued and, in some cases, neglected by financial
analysts. The adviser evaluates the degree of analyst recognition by monitoring
the number of analysts who follow the company and recommend its purchase or sale
to investors.
THE ADVISER'S PROCESS. The adviser starts by identifying early change in a
company's operations, finances or management. The adviser is attracted to
companies which will look different tomorrow - operationally, financially,
managerially - when compared to yesterday. This type of dynamic change often
creates confusion and misunderstanding and may lead to a drop in the company's
stock price. Examples of change include mergers, acquisitions, divestitures,
restructuring, change of management, new market/product/means of
7
<PAGE>
production/distribution, regulatory change, etc. Once change is identified, the
adviser evaluates the company on several levels. It analyzes:
[BULLET] Financial models based principally upon projected cash flows
[BULLET] The price of the company's stock in the context of what the
market is willing to pay for stoc of comparable companies and
what a strategic buyer would pay for the whole company
[BULLET] The extent of management's ownership interest in the company
[BULLET] The company's market by corroborating its observations and
assumptions by meeting with management, customers and suppliers
The adviser also evaluates the degree of recognition of the business by
investors by monitoring the number of sell side analysts who closely follow the
company and nature of the shareholder base. Before deciding to purchase a stock,
the adviser conducts an extensive amount of business due diligence to
corroborate its observations and assumptions.
The identification of change comes from a variety of sources including the
private capital network which the adviser has established among its clients,
historical investments and intermediaries. The advisor also makes extensive use
of clipping services and regional brokers and bankers to identify elements of
change. The investment professionals regularly meet companies around the country
and sponsor more than 200 company/management meetings in its New York office.
By reviewing historical relationships and understanding the characteristics of a
business, the adviser establishes valuation parameters using relative ratios or
target prices. In its overall assessment, the adviser seeks stocks that it
believes have a greater upside potential than downside risk over an 18 to
24-month holding period.
An important function of the adviser is to set a price target, that is, the
price at which the stock will be sold when there has been no fundamental change
in the investment case. The adviser constantly monitors the companies held by
the Series to determine if there have been any fundamental changes in the
reasons that prompted the initial purchase of the stock. If significant changes
for the better have not materialized, the stock will be sold. The initial
investment case for stock purchase, which has been documented, is examined by
the adviser's investment professionals. A final decision on selling the stock is
made after all such factors are analyzed.
The LARGE CAP VALUE FUND invests its assets in the Large Cap Value Series,
which, under normal conditions, invests at least 65% of its total assets in the
following equity (or related) securities:
[BULLET] common stocks of U.S. corporations that are judged by the adviser to
be undervalued in the marketplace relative to underlying profitability
and have a market capitalization of $10 billion or higher at the time
of purchase;
[BULLET] options on, or securities convertible (such as convertible preferred
stock and convertible bonds) into, the common stock of U.S.
corporations described above;
8
<PAGE>
[BULLET] options on indexes of the common stock of U.S. corporations described
above;
[BULLET] contracts for either the future delivery, or payment in respect of the
future market value, of certain indexes of the common stock of U.S.
corporations described above, and options upon such futures contracts;
and
[BULLET] without limit in commercial paper and other money market instruments
rated in one of the two highest rating categories by a nationally
recognized statistical rating organization ("NRSRO"), in response to
adverse market conditions, as a temporary defensive position. The
result of this action may be that the Series will be unable to achieve
its investment objective.
The Large Cap Value Series is a diversified fund of large cap U.S. equity (or
related) securities that are deemed by the adviser to be undervalued as compared
to the company's profitability potential.
The MID CAP VALUE FUND invests its assets in the Mid Cap Value Series, which,
under normal conditions, invests at least 65% of its total assets in the
following equity (or related) securities:
[BULLET] common and preferred stocks of U.S. corporations that are judged by
the adviser to be undervalued in the marketplace relative to
underlying profitability and have a market capitalization between $1
and $10 billion at the time of purchase;
[BULLET] securities convertible (such as convertible preferred stock and
convertible bonds) into, the common stock of U.S. corporations
described above;
[BULLET] warrants; and
[BULLET] without limit in commercial paper and other money market instruments
rated in one of the two highest rating categories by a NRSRO, in
response to adverse market conditions, as a temporary defensive
position. The result of this action may be that the Series will be
unable to achieve its investment objective.
The Mid Cap Value Series is a diversified fund of medium cap U.S. equity (or
related) securities that are deemed by the adviser to be undervalued as compared
to the company's profitability potential.
PLAIN TALK
- --------------------------------------------------------------------------------
WHAT ARE SMALL CAP FUNDS?
Small cap funds invest in the common stock of companies with smaller market
capitalizations. Small cap stocks may provide the potential for higher growth
but they also typically have greater risk and more volatility.
- --------------------------------------------------------------------------------
The SMALL CAP VALUE FUND invests its assets in the Small Cap Value Series,
which, under normal conditions, invests at least 65% of its total assets in the
following equity (or related) securities:
[BULLET] common and preferred stocks of U.S. corporations that are judged by
the adviser to be undervalued in the marketplace relative to
underlying profitability and have a market capitalization of $1
billion or less at the time of purchase;
[BULLET] securities convertible (such as convertible preferred stock and
convertible bonds) into, the
9
<PAGE>
common stock of U.S. corporations described above;
[BULLET] warrants; and
[BULLET] without limit in commercial paper and other money market instruments
rated in one of the two highest rating categories by a NRSRO, in
response to adverse market conditions, as a temporary defensive
position. The result of this action may be that the Series will be
unable to achieve its investment objective.
The Small Cap Value Series is a diversified fund of large cap U.S. equity (or
related) securities that are deemed by the adviser to be undervalued as compared
to the company's profitability potential.
ALL SERIES. The frequency of fund transactions and a Series' turnover rate will
vary from year to year depending on the market. Increased turnover rates incur
the cost of additional brokerage commissions and may cause you to receive larger
capital gain distributions. Series turnover rate is normally expected to be less
than 100% for each of the Series.
Each Series also may use other strategies and engage in other investment
practices, which are described in detail in our Statement of Additional
Information.
ADDITIONAL RISK INFORMATION
The following is a list of certain risks that may apply to your investment in
the Funds unless otherwise indicated. Further information about a Fund's
investments is available in our Statement of Additional Information:
[BULLET] DERIVATIVES RISK: Some of the Series' investments may be referred to
as "derivatives" because their value depends on, or derives from, the
value of an underlying asset, reference rate or index. These
investments include options, futures contracts and similar investments
that may be used in hedging and related income strategies. The market
value of derivative instruments and securities is sometimes more
volatile than that of other investments, and each type of derivative
may pose its own special risks. As a fundamental policy, no more than
15% of a Series' total assets may at any time be committed or exposed
to derivative strategies.
[BULLET] MARKET RISK: The risk that the market value of a security may move up
and down, sometimes rapidly and unpredictably. The prices of equity
securities change in response to many factors including the historical
and prospective earnings of the issuer, the value of its assets,
general economic conditions, interest rates, investor perceptions and
market liquidity.
[BULLET] MASTER/FEEDER RISK: The master/feeder structure is relatively new and
more complex. While this structure is designed to reduce costs, it may
not do so, and there may be operational or other complications.
[BULLET] OPPORTUNITY RISK: The risk of missing out on an investment opportunity
because the assets necessary to take advantage of it are tied up in
less advantageous investments.
[BULLET] SMALL CAP RISK: Small cap companies may be more vulnerable than larger
companies to adverse business or economic developments. Small cap
companies may also have limited product lines, markets or financial
resources, may be dependent on relatively small or inexperienced
management groups and may operate in industries characterized by rapid
10
<PAGE>
technological obsolescence. Securities of such companies may be less
liquid and more volatile than securities of larger companies and
therefore may involve greater risk than investing in larger companies.
(Small Cap Value Fund)
[BULLET] VALUATION RISK: The risk that a Series has valued certain of its
securities at a higher price than it can sell them.
[BULLET] VALUE INVESTING RISK: The risk that a Series' investment in companies
whose securities are believed to be undervalued, relative to their
underlying profitability, do not appreciate in value as anticipated.
(Large Cap Value, Mid Cap Value, Small Cap Value Funds)
[BULLET] YEAR 2000 COMPLIANCE RISK: Like other organizations around the world,
the Series could be adversely affected if the computer systems used by
their various service providers (or the market in general) do not
properly operate after January 1, 2000. The Series are taking steps to
address the Year 2000 issue with respect to the computer systems that
they rely on. There can be no assurance, however, that these steps
will be sufficient to avoid a temporary service disruption or any
adverse impact on the Series.
Additionally, if a company in which a Series is invested is adversely
affected by Year 2000 problems, it is likely that the price of that
company's securities will also be adversely affected. A decrease in
one or more of a Series' holdings may have a similar impact on the
price of the Series' shares. The Series' adviser will relay on public
filings and other statements made by companies about their Year 2000
readiness. The adviser is not able to audit any company and its major
suppliers to verify their Year 2000 readiness.
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand each Fund's
financial performance for the past 5 years or since the Fund's inception, if
shorter. Certain information reflects financial results for a single share of a
Fund. The total returns in the table represent the rate that a shareholder would
have earned (or lost) on an investment in a Fund (assuming reinvestment of all
dividends and other distributions). This information has been audited by ______,
whose report, along with each Fund's financial statements, is included in the
Annual Report, which is available without charge upon request.
11
<PAGE>
[INSERT FINANCIAL HIGHLIGHTS TABLES]
12
<PAGE>
MANAGEMENT OF THE FUND
The Board of Trustees for each Fund supervises the management, activities and
affairs of the Fund and has approved contracts with various financial
organizations to provide, among other services, the day-to-day management
required by a Fund and its shareholders.
INVESTMENT ADVISER
PLAIN TALK
- --------------------------------------------------------------------------------
WHAT IS AN INVESTMENT ADVISER?
The investment adviser makes investment decisions for a mutual fund and
continuously reviews, supervises and administers the fund's investment program.
The Board of Trustees supervises the investment adviser and establishes policies
that the adviser must follow in its management activities.
- --------------------------------------------------------------------------------
Cramer Rosenthal McGlynn, LLC, 707 Westchester Avenue, White Plains, New York
10604, serves as the investment adviser to the Large Cap Value Series, the Mid
Cap Value Series and the Small Cap Value Series. Subject to the general control
of the Board of Trustees, CRM makes investment decisions for these Series. CRM
and its predecessors have managed investments in small and medium capitalization
companies for more than twenty-five years. As of ___, 1999, CRM has over $___
billion of assets under management.
Under the advisory agreement, the Large Cap Value Series pays a monthly advisory
fee to CRM at the annual rate of 0.55% of the Series' first $1 billion of
average daily net assets; 0.50% of the Series' next $1 billion of average daily
net assets; and 0.45% of the Series' average daily net assets over $2 billion.
The Mid Cap Value Series and the Small Cap Value Series each pay a monthly
advisory fee to CRM at the annual rate of 0.75% of the Series' first $1 billion
of average daily net assets; 0.70% of the Series' next $1 billion of average
daily net assets; and 0.65% of the Series' average daily net assets over $2
billion.
For the twelve months ended June 30, 1999, CRM received investment advisory fees
of ___% for Large Cap Value Series, ___% for Mid Cap Value Series and ___% for
Small Cap Value Series, as a percentage of the Series' average daily net assets.
MID CAP VALUE STYLE PERFORMANCE INFORMATION
The following reflects the historical performance of the portfolios of all
private accounts managed by CRM that have investment objectives, policies and
strategies substantially similar to that of CRM Mid Cap Value Fund. This data
does not reflect the performance of the Funds. This data compares the
performance of these private accounts against the Russell Midcap Index. This
performance data should not be considered as an indication of future performance
of any Fund or of CRM.
PERIOD CRM ADVISER 1 RUSSELL MIDCAP INDEX 2
20 Years: 1/1/79-12/31/98 17.39% 17.32%
15 Years: 1/1/84-12/31/98 15.77% 15.68%
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<PAGE>
10 Years: 1/1/89-12/31/98 16.32% 16.69%
5 Years: 1/1/94-12/31/98 15.31% 17.34%
3 Years: 1/1/96-12/31/98 18.62% 19.12%
1 Year: 1/1/98-12/31/98 4.51% 10.10%
1 These results are a dollar weighted composite of tax-exempt, fully
discretionary, separately managed accounts that are over $1 million in size
and were under the Adviser's and its predecessor's management for at least
3 months. As of December 31, 1998, the composite consists of 67 accounts
with $1.51 billion in assets (73% of tax-exempt equity assets and 42% of
all equity assets) and has been calculated in accordance with standards set
by the Association for Investment Management and Research (AIMR), since
January 1, 1989. The Funds' performance will be calculated using the method
required by the SEC, which differs from the method used to calculate the
performance of the private accounts. The composite does not reflect all of
the assets under the Adviser's management and may not accurately reflect
the performance of all accounts it manages. The separately managed accounts
in the composite are not subject to the same types of expenses to which the
Fund is subject nor to the diversification requirements, specific tax
restrictions and investment limitations imposed by the 1940 Act or Internal
Revenue Code. All returns reflect the deduction of advisory fees, brokerage
commissions and execution costs paid by the Adviser's private accounts,
without provision for federal or state income taxes. The net effect of the
deduction of the operating expenses of the Funds on the annualized
performance, including the effect of compounding over time, may be
substantial. Consequently, the performance results for the accounts could
have been adversely affected if the accounts included in the composite had
been regulated as an investment company under the federal securities law.
In addition, the Fund's returns would be reduced to the extent their fees
and expenses are higher than the fees and expenses incurred by the private
accounts.
2 As of the latest reconstitution, the average market capitalization of the
Russell Midcap Index was approximately $6.52 billion; the median market
capitalization was approximately $2.78 billion. The larger company in the
index had an approximate market capitalization of $26.78 billion.
FUND MANAGERS
The day-to-day management of the Large Cap Value Series, the Mid Cap Value
Series and the Small Cap Value Series is shared by a team of individuals
employed by the CRM. Ronald H. McGlynn and Jay B. Abramson are responsible for
the management of each of these Series. In addition, Kevin M. Chin and Adam L.
Starr are part of the team responsible for the management of Large Cap Value
Fund; Michael A. Prober is part of the team responsible for the management of
Mid Cap Value Fund; and Scott L. Scher and Christopher S. Fox are part of the
team responsible for the management of Small Cap Value Fund. Each fund manager's
business experience and educational background is as follows:
RONALD H. MCGLYNN President and Chief Executive Officer since 1983 and Co-Chief
Investment Officer of the CRM. He has been with the CRM for twenty-five years
and is responsible for investment policy, portfolio management and investment
research. Prior to his
14
<PAGE>
association with the CRM, Mr. McGlynn was a Portfolio Manager at Oppenheimer &
Co. He received a B.A. from Williams College and an M.B.A. from Columbia
University.
JAY B. ABRAMSON, CPA Executive Vice President since 1989 and Director of
Research and Co-Chief Investment Officer of the CRM. He has been with the CRM
for twelve years and is responsible for investment research and portfolio
management. Mr. Abramson received a B.S.E. and J.D. from the University of
Pennsylvania Wharton School and Law School, respectively, and is a Certified
Public Accountant.
MICHAEL A. PROBER Vice President of the CRM since 1993 where he is responsible
for investment research. Prior to joining the CRM in 1993, he worked in
corporate finance and commercial banking at Chase Manhattan Bank and as a
Research Analyst for Alpha Capital Venture Partners. Mr. Prober received a
B.B.A. from the University of Michigan and an M.M. from the Northwestern
University J.L. Kellogg Graduate School of Management.
SCOTT L. SCHER, CFA Vice President of the CRM since 1995 where he is responsible
for investment research. Prior to joining the CRM in 1995, he worked as an
analyst/portfolio manager at The Prudential from 1988. Mr. Scher received a B.A.
from Harvard College, an M.B.A. from Columbia Business School and is a Chartered
Financial Analyst.
KEVIN M. CHIN Vice President at CRM. Kevin joined CRM in 1989 and is responsible
for Investment research. Formerly, Kevin was a Financial Analyst for the Mergers
and Acquisitions Department of Morgan Stanley and a risk arbitrageur with The
First Boston Corporation. He received a B.S. from Columbia University School of
Engineering & Applied Science.
CHRISTOPHER S. FOX, CFA joined CRM in 1999 as a Vice President and has over
fifteen years experience in the Investment business. In 1995 Chris co-founded
Schaenen Fox Capital Management, LLC, a hedge fund with small cap value
investments. He previously was at Schaenen Wood & Associates, Inc. as Vice
President and Senior Manager/Analyst; Chemical Bank's Private Banking Division
as a portfolio manager and analyst; and Drexel Burnham Lambert, Inc. as a
financial analysts. Chris earned a B.A. in Economics from the State University
of New York at Albany and an MBA in Finance from New York University's Stern
School of Business.
ADAM L. STARR joined CRM in 1999 as a Vice President and is responsible for
investment research. Prior to CRM he was a Partner and Portfolio Manager at
Weiss, Peck & Greer, LLC. Previously he was an Analyst and Portfolio Manager at
Charter Oak Partners and First Manhattan Company. Adam earned an MBA from
Columbia University.
SERVICE PROVIDERS
The chart below provides information on the Funds' primary service providers.
15
<PAGE>
Asset Shareholder
Managment Services
- ----------------------------- ---------------------
INVESTMENT ADVISER TRANSFER AGENT
CRAMER ROSENTHAL MCGLYNN, LLC PFPC, Inc
707 WESTCHESTER AVENUE 400 BELLEVUE PARKWAY
WHITE PLAINS, NY 10604 WILMINGTON, DE 19809
Handles shareholder
services, including
recordkeeping and
statements, payment
of distribution and
Manages each Fund's business processing of buy and
and investment activities. sell requests.
- ----------------------------- ---------------------
-------------------
CRM LARGE CAP VALUE
CRM MID CAP VALUE
CRM SMALL CAP VALUE
-------------------
Fund Asset
Operations Safe Keeping
- ------------------------------- ---------------------------
ADMINISTATOR AND CUSTODIAN
ACCOUNTING AGENT
PFPC INC. PFPC TRUST COMPANY
400 BELLEVUE PARKWAY 200 STEVENS DRIVE
WILMINGTON, DE 19809 LESTER, PA 19113
Provides facilities, equipmnent Hold's each Fund's assets,
and personnel to carry out settle all portfolio trades
administrative services related and collect most of the
to each Fund and calculates valuation data required for
each Fund's NAV per share and calculating each Fund's NAV
distributions. per share.
- ------------------------------- ---------------------------
Distribution
-------------------------------
DISTRIBUTOR
PROVIDENT DISTRIBUTORS, INC.
FOUR FALLS CORPORATE CENTER
WEST CONSHOHOCKEN, PA 19428
Distributes each Fund's shares.
-------------------------------
16
<PAGE>
SHAREHOLDER INFORMATION
PRICING OF SHARES
The Funds value their assets based on current market values when such values are
readily available. These prices normally are supplied by a pricing service. Any
assets held by a Fund that are denominated in foreign currencies are valued
daily in U.S. dollars at the foreign currency exchange rates that are prevailing
at the time that PFPC Inc. determines the daily net asset value. To determine
the value of those securities, PFPC may use a pricing service that takes into
account not only developments related to specific securities, but also
transactions in comparable securities. Securities that do not have a readily
available current market value are valued in good faith under the direction of
the Board of Trustees.
PLAIN TALK
- --------------------------------------------------------------------------------
WHAT IS THE NET ASSET VALUE or "NAV"?
NAV = Assets - Liabilities
---------------------
Outstanding Shares
- --------------------------------------------------------------------------------
PFPC determines the NAV per share of each Fund as of the close of regular
trading on the New York Stock Exchange (currently 4:00 p.m., Eastern time), on
each Business Day (a day that the Exchange, the Transfer Agent and the
Philadelphia branch of the Federal Reserve Bank are open for business). The NAV
is calculated by adding the value of all securities and other assets in a Fund,
deducting its liabilities and dividing the balance by the number of outstanding
shares in that Fund.
Shares will not be priced on those days the Funds are closed. As of the date of
this prospectus, those days are:
New Year's Day Memorial Day Independence Day Veterans Day
Martin Luther King, Jr. Day Labor Day Thanksgiving Day
President's Day Columbus Day Christmas Day
Good Friday
PURCHASE OF SHARES
PLAIN TALK
- --------------------------------------------------------------------------------
HOW TO PURCHASE SHARES:
[BULLET] Directly by mail or by wire
[BULLET] As a client of a Third Party
- --------------------------------------------------------------------------------
Fund shares are offered on a continuous basis and are sold without any sales
charges. The minimum initial investment in the Fund's Investor and Institutional
class shares is $10,000 and $1,000,000, respectively. The Funds, in their sole
discretion, may waive the minimum initial amount to establish certain
Institutional share accounts. Additional investments may be made in any amount.
You may purchase shares as specified below.
17
<PAGE>
You may also purchase shares if you are a client of a broker or other financial
institution, a "Third Party." The policies and fees charged by the Third Party
may be different than those charged by a Fund. Banks, brokers, retirement plans
and financial advisers may charge transaction fees and may set different minimum
investments or limitations on buying or selling shares. Consult a representative
of your financial institution or retirement plan for further information.
BY MAIL: You may purchase shares by sending a check drawn on a U.S. bank payable
to CRM Funds, indicating the name of the Fund, along with a completed
application (included at the end of this prospectus). If a subsequent investment
is being made, the check should also indicate your Fund account number. When you
make purchases by check, each Fund may withhold payment on redemptions until it
is reasonably satisfied that the funds are collected (which can take up to 10
days). If you purchase shares with a check that does not clear, your purchase
will be canceled and you will be responsible for any losses or fees incurred in
that transaction. Send the check and application to:
REGULAR MAIL: OVERNIGHT MAIL:
CRM Funds CRM Funds
c/o PFPC Inc. c/o PFPC Inc.
P.O. Box ____ 400 Bellevue Parkway, Suite 108
Wilmington, DE 19899 Wilmington, DE 19809
BY WIRE: You may purchase shares by wiring federal funds readily available.
Please call PFPC at (800) ______ for instructions and to make specific
arrangements before making a purchase by wire, and if making an initial
purchase, to also obtain an account number.
ADDITIONAL INFORMATION REGARDING PURCHASES: Purchase orders received by the
Transfer Agent before the close of regular trading on the Exchange on any
Business Day will be priced at the NAV that is determined as of the close of
trading. Purchase orders received after the close of regular trading on the
Exchange will be priced as of the close of regular trading on the following
Business Day.
Any purchase order may be rejected if a Fund determines that accepting the order
would not be in the best interest of the Fund or its shareholders.
It is the responsibility of the Third Party to transmit orders for the purchase
of shares by its customers to the Transfer Agent and to deliver required funds
on a timely basis, in accordance with the procedures stated above.
18
<PAGE>
For information on other ways to purchase shares, including through an
individual retirement account (IRA), or an automatic investment plan, please
refer to the Statement of Additional Information.
REDEMPTION OF SHARES
PLAIN TALK
- --------------------------------------------------------------------------------
HOW TO REDEEM (SELL) SHARES:
[BULLET] By mail
[BULLET] By telephone
- --------------------------------------------------------------------------------
You may sell your shares on any Business Day as described below. Redemptions are
effected at the NAV next determined after the Transfer Agent has received your
redemption request. There is no fee when Fund shares are redeemed. It is the
responsibility of the Third Party to transmit redemption orders and credit their
customers' accounts with redemption proceeds on a timely basis. Redemption
checks are mailed on the next Business Day following receipt by the Transfer
Agent of redemption instructions, but never later than 7 days following such
receipt. Amounts redeemed by wire are normally wired on the date of receipt of
redemption instructions (if received by the Transfer Agent before 4:00 p.m.
Eastern time), or the next Business Day (if received after 4:00 p.m. Eastern
time, or on a non-Business Day), but never later than 7 days following such
receipt. If you purchased your shares through an account at a Third Party, you
should contact the Third Party for information relating to redemptions. The
Fund's name and your account number should accompany any redemption requests.
BY MAIL: If you redeem your shares by mail, you should submit written
instructions with a "signature guarantee". A signature guarantee verifies the
authenticity of your signature. You can obtain one from most banking
institutions or securities brokers, but not from a notary public. You must
indicate the Fund name, your account number and your name. The written
instructions and signature guarantee should be mailed to:
REGULAR MAIL: OVERNIGHT MAIL:
CRM Funds CRM Funds
c/o PFPC Inc. c/o PFPC Inc.
P.O. Box ____ 400 Bellevue Parkway, Suite 108
Wilmington, DE 19899 Wilmington, DE 19809
BY TELEPHONE: If you prefer to redeem your shares by telephone you may elect to
do so. However there are certain risks. The Fund has certain safeguards and
procedures to confirm the identity of callers and to confirm that the
instructions communicated are genuine. If such procedures are followed, you will
bear the risk of any losses.
ADDITIONAL INFORMATION REGARDING REDEMPTIONS: Redemption proceeds may be wired
to your predesignated bank account in any commercial bank in the United States
if the amount is $1,000 or more. The receiving bank may charge a fee for this
service. Proceeds may also be mailed to
19
<PAGE>
your bank or, for amounts of $10,000 or less, mailed to your Fund account
address of record if the address has been established for at least 60 days. In
order to authorize the Transfer Agent to mail redemption proceeds to your Fund
account address of record, complete the appropriate section of the Application
for Telephone Redemptions or include your Fund account address of record when
you submit written instructions. You may change the account that you have
designated to receive amounts redeemed at any time. Any request to change the
account designated to receive redemption proceeds should be accompanied by a
guarantee of your signature, as the shareholder, by an eligible institution. A
signature and a signature guarantee are required for each person in whose name
the account is registered. Further documentation will be required to change the
designated account when a corporation, other organization, trust, fiduciary or
other institutional investor holds the Fund shares.
If shares to be redeemed represent a recent investment made by check, each Fund
reserves the right not to make the redemption proceeds available until it has
reasonable grounds to believe that the check has been collected (which could
take up to 10 days).
SMALL ACCOUNTS: If the value of your Fund account falls below $10,000 for
Investor share accounts $1,000,000 for Institutional share accounts ($2000 for
IRAs or automatic investment plans), the Fund may ask you to increase your
balance. If the account value is still below such amounts after 60 days, the
Fund may close your account and send you the proceeds. The Fund will not close
your account if it falls below these amounts solely as a result of a reduction
in your account's market value.
REDEMPTIONS IN KIND: The Funds reserve the right to make redemptions in kind" -
payments of redemption proceeds in fund securities rather than cash -- if the
amount redeemed is large enough to affect the Series' operations (for example,
if it represents more than 1% of a Series' assets).
EXCHANGE OF SHARES
PLAIN TALK
- --------------------------------------------------------------------------------
WHAT IS AN EXCHANGE OF SHARES?
An exchange of shares allows you to move your money from one fund to
another fund within a family of funds.
- --------------------------------------------------------------------------------
You may exchange all or a portion of your shares in a Fund for the same class of
shares of certain other CRM Funds. These other Funds are the:
CRM Prime Money Market Fund
CRM Tax-Exempt Fund
CRM Intermediate Bond Fund
CRM Municipal Bond Fund
CRM Large Cap Value Fund
CRM Mid Cap Value Fund
CRM Small Cap Value Fund
Redemption of shares through an exchange will be effected at the NAV per share
next determined after the Transfer Agent receives your request. A purchase of
shares through an exchange will be effected at the NAV per share determined at
that time or as next determined thereafter.
20
<PAGE>
Exchange transactions will be subject to the minimum initial investment and
other requirements of the Fund into which the exchange is made. An exchange may
not be made if the exchange would leave a balance in a shareholder's account of
less than $10,000 for Investor share accounts or $1,000,000 for Institutional
share accounts.
To obtain prospectuses of the other Funds, you may call (800) ______ . To obtain
more information about exchanges, or to place exchange orders, contact the
Transfer Agent, or, if your shares are held in an account with a Third Party,
contact the Third Party. The Funds may terminate or modify the exchange offer
described here and will give you 60 days' notice of such termination or
modification. This exchange offer is valid only in those jurisdictions where the
sale of Prospectus shares to be acquired through such exchange may be legally
made.
DIVIDENDS AND OTHER DISTRIBUTIONS
PLAIN TALK
- --------------------------------------------------------------------------------
WHAT IS NET INVESTMENT INCOME?
Net investment income consists of interest and dividends earned by a
fund on its investments less accrued expenses.
- --------------------------------------------------------------------------------
As a shareholder of a Fund, you are entitled to dividends and other
distributions arising from the net investment income and net realized gains, if
any, earned on the investments held by the Funds. Dividends are declared and
paid annually to you. Each Fund expects to distribute any net realized gains
once a year.
Distributions are payable to the shareholders of record at the time the
distributions are declared (including holders of shares being redeemed, but
excluding holders of shares being purchased). All distributions are reinvested
in additional Fund shares unless you have elected to receive the distributions
in cash.
TAXES
FEDERAL INCOME TAX: As long as a Fund meets the requirements for being a
"regulated investment company," it pays no Federal income tax on the earnings
and gains it distributes to shareholders. While each Fund may invest in
securities that earn interest exempt from Federal income tax, the Funds invest
primarily in taxable securities. Each Fund will notify you following the end of
the calendar year of the amount of dividends and other distributions paid that
year.
Dividends you receive from a Fund, whether reinvested in Fund shares or taken as
cash, are generally taxable to you as ordinary income. Distributions of a Fund's
net capital gain whether reinvested in Fund shares or taken as cash, when
designated as such, are taxable to you as long-term capital gain, regardless of
the length of time you have held your shares. You should be aware that if Fund
shares are purchased shortly before the record date for any dividend or capital
gain distribution, you will pay the full price for the shares and will receive
some portion of the price back as a taxable distribution. Each the Large Cap
Value Fund, the Mid Cap Value Fund and the Small Cap Value Fund, anticipates the
distribution of net investment income.
21
<PAGE>
It is a taxable event for you if you sell or exchange shares of any Fund.
Depending on the purchase price and the sale price of the shares you exchange,
you may have a taxable gain or loss on the transaction. You are responsible for
any tax liability generated by your transactions.
STATE AND LOCAL INCOME TAXES: You should consult your tax advisers concerning
state and local taxes, which may have different consequences from those of the
Federal income tax law.
This section is only a summary of some important income tax considerations that
may affect your investment in a Fund. More information regarding those
considerations appears in our Statement of Additional Information. You are urged
to consult your tax adviser regarding the effects of an investment on your tax
situation.
DISTRIBUTION ARRANGEMENTS
Provident Distributors, Inc. ("PDI") manages the Funds' distribution efforts and
provides assistance and expertise in developing marketing plans and materials,
enters into dealer agreement with broker-dealers to sell shares and provides
shareholder support services, directly or through affiliates. The Funds do not
charge any sales loads, deferred sales loads or other fees in connection with
the purchase of shares.
MASTER/FEEDER STRUCTURE
Other institutional investors, including other mutual funds, may invest in the
master funds. The master/feeder structure enables various institutional
investors, including a Fund, to pool their assets, which may be expected to
result in economies by spreading certain fixed costs over a larger asset base.
Each shareholder of a master fund, including a Fund, will pay its proportionate
share of the master fund's expenses.
For reasons relating to costs or a change in investment goal, among others, a
Fund could switch to another master fund or decide to manage its assets itself.
No Fund is currently contemplating such a move.
SHARE CLASS
Each Fund issues Investor and Institutional share classes, which classes have
different minimum investment requirements and fees. Institutional shares are
offered only to those investors who invest in the Fund through an intermediary
(i.e. broker) or through a consultant and who invest $1,000,000 or more or where
related accounts total $1,000,000 or more when combined. Other investors
investing $10,000 or more may purchase Investor shares.
22
<PAGE>
FOR MORE INFORMATION
FOR INVESTORS WHO WANT MORE INFORMATION ON THE FUNDS, THE FOLLOWING DOCUMENTS
ARE AVAILABLE FREE UPON REQUEST:
ANNUAL/SEMI-ANNUAL REPORTS: Contain performance data and information on fund
holdings, operating results and a discussion of the market conditions and
investment strategies that significantly affect the Funds' performance for the
most recently completed fiscal year or half-year.
STATEMENT OF ADDITIONAL INFORMATION (SAI): Provides a complete technical and
legal description of the Funds' policies, investment restrictions, risks, and
business structure. This prospectus incorporates the SAI by reference.
Copies of these documents and answers to questions about the Funds may be
obtained without charge by contacting:
CRM Funds
c/o PFPC Inc.
400 Bellevue Parkway
Suite 108
Wilmington, Delaware 19809
(800) ______
9:00 a.m. to 5:00 p.m. Eastern time
Information about the Funds (including the SAI) can be reviewed and copied at
the Public Reference Room of the Securities and Exchange Commission in
Washington, D.C. Copies of this information may be obtained, upon payment of a
duplicating fee, by writing the Public Reference Room of the SEC, Washington,
DC, 20549-6009. Information on the operation of the Public Reference Room may be
obtained by calling the SEC at 1-(800)-SEC-0330. Reports and other information
about the Funds may be viewed on-screen or downloaded from the SEC's Internet
site at http://www.sec.gov.
FOR MORE INFORMATION ON OPENING A NEW ACCOUNT, MAKING
CHANGES TO EXISTING ACCOUNTS, PURCHASING, EXCHANGING
OR REDEEMING SHARES, OR OTHER INVESTOR SERVICES,
PLEASE CALL 1-(800)-_______.
The investment company registration number is 811-08648.
23
<PAGE>
THE CRM INTERMEDIATE BOND FUND
THE CRM MUNICIPAL BOND FUND
================================================================================
PROSPECTUS DATED _______, 1999
This prospectus gives vital information about these mutual funds, including
information on investment policies, risks and fees. For your own benefit and
protection, please read it before you invest, and keep it on hand for future
reference.
Please note that these Funds:
(BULLET) are not bank deposits
(BULLET) are not obligations of, or guaranteed or endorsed by the Funds'
investment adviser, Wilmington Trust Company, or any of its affiliates
(BULLET) are not federally insured
(BULLET) are not obligations of, or guaranteed or endorsed or otherwise
supported by the U.S. Government, the Federal Deposit Insurance
Corporation, the Federal Reserve Board or any other governmental agency
(BULLET) are not guaranteed to achieve their goal(s)
Like all mutual fund shares, the Securities and Exchange Commission has not
approved or disapproved the Funds' shares or determined whether this prospectus
is accurate or complete. Anyone who tells you otherwise is committing a crime.
<PAGE>
TABLE OF CONTENTS
A LOOK AT THE GOALS, STRATEGIES, FUND DESCRIPTION
RISKS, EXPENSES AND FINANCIAL Summary....................................3
HISTORY OF EACH FUND. Performance Information....................4
Fees and Expenses..........................5
Investment Objectives......................7
Primary Investment Strategies..............7
Additional Risk Information...............10
DETAILS ABOUT THE SERVICE MANAGEMENT OF THE FUND
PROVIDERS. Investment Adviser........................13
Service Providers.........................14
POLICIES AND INSTRUCTIONS FOR SHAREHOLDER INFORMATION
OPENING, MAINTAINING AND Pricing of Shares.........................16
CLOSING AN ACCOUNT IN ANY OF Purchase of Shares........................16
THE FUNDS. Redemption of Shares......................18
Exchange of Shares........................19
Dividends and Distributions...............20
Taxes.....................................20
DETAILS ON THE FUNDS' DISTRIBUTION ARRANGEMENTS
SHARE CLASSES AND MASTER/ Master/Feeder Structure...................21
FEEDER ARRANGEMENTS. Share Classes.............................21
FOR MORE INFORMATION..............BACK COVER
For information about key terms and concepts, look for our "PLAIN TALK"
explanations.
2
<PAGE>
CRM INTERMEDIATE BOND FUND
CRM MUNICIPAL BOND FUND
FUND DESCRIPTION
PLAIN TALK
- --------------------------------------------------------------------------------
WHAT IS A MUTUAL FUND?
A mutual fund pools shareholders' money and, using a professional
investment manager, invests it in securities like stocks and bonds.
Each Fund is a separate mutual fund.
- --------------------------------------------------------------------------------
SUMMARY
Investment Objective (BULLET) The INTERMEDIATE BOND FUND seeks a high total
return, consistent with high current income.
(BULLET) The MUNICIPAL BOND FUND seeks a high level of
income exempt from federal income tax,
consistent with the preservation of capital.
- --------------------------------------------------------------------------------
Investment Focus (BULLET) Fixed income securities
- --------------------------------------------------------------------------------
Share Price Volatility (BULLET) Moderate
- --------------------------------------------------------------------------------
Principal Investment (BULLET) Each Fund operates as a "feeder fund," which
Strategy means that a Fund does not buy individual
securities directly. Instead, the Funds invest
in a corresponding mutual fund or "master fund,"
which in turn purchases investment securities.
Each Fund invests all of its assets in a master
fund which is a separate series of another
mutual fund. The Funds and their corresponding
Series have the same investment objectives,
policies and limitations.
(BULLET) The INTERMEDIATE BOND FUND invests in the
Intermediate Bond Series, which invests at least
85% of its total assets in various types of
investment grade fixed income securities.
(BULLET) The MUNICIPAL BOND FUND invests in the Municipal
Bond Series, which invests at least 80% of its
net assets in municipal securities that provide
interest exempt from federal income tax.
- --------------------------------------------------------------------------------
Principal Risks (BULLET) An investment in a Fund is not a deposit of
Wilmington Trust Company, the Funds' investment
adviser, or any of its affiliates and is not
insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government
agency.
(BULLET) It is possible to lose money by investing in a
Fund.
(BULLET) The fixed income securities in which the Funds
invest through their corresponding Series are
subject to credit risk, prepayment risk, market
risk, liquidity risk and interest rate risk.
Typically, when interest rates rise, the market
prices of fixed income securities go down.
(BULLET) The performance of a Fund will depend on whether
or not the adviser is successful in pursuing an
investment strategy.
(BULLET) The Funds are also subject to other risks, which
are described under "Additional Risk
Information."
- --------------------------------------------------------------------------------
Investor Profile (BULLET) Investors who want income from their investments
without the volatility of an equity portfolio.
- --------------------------------------------------------------------------------
3
<PAGE>
PERFORMANCE INFORMATION
PLAIN TALK
- --------------------------------------------------------------------------------
WHAT IS TOTAL RETURN?
Total return is a measure of the per-share change in the total value of
a fund's portfolio, including any distributions paid to you. It is
measured from the beginning to the end of a specific time period.
- --------------------------------------------------------------------------------
CRM INTERMEDIATE BOND FUND
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund and for its predecessor, the Bond Fund,
a collective investment fund. The Bond Fund's performance has been included for
the periods prior to July 1, 1998 and has been adjusted to reflect the annual
deduction of fees and expenses applicable to shares of the Intermediate Bond
Fund (i.e., adjusted to reflect anticipated expenses, absent investment advisory
fee waivers). The Bond Fund was not registered as a mutual fund under the
Investment Company Act of 1940 and therefore was not subject to certain
investment restrictions, limitations and diversification requirements imposed by
the 1940 Act and the Internal Revenue Code of 1986. If the Bond Fund had been
registered under the 1940 Act, its performance may have been different. Of
course, past performance does not necessarily indicate how the Fund will perform
in the future.
[INSERT BAR CHART]
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE FUND'S INSTITUTIONAL
SHARES FROM CALENDAR YEAR TO CALENDAR YEAR. THE BAR CHART DOES NOT REFLECT
DEDUCTIONS OF SHAREHOLDER SERVICING FEES. IF SUCH AMOUNTS WERE REFLECTED,
RETURNS WOULD BE LESS.
PLAIN TALK
- --------------------------------------------------------------------------------
WHAT IS AN INDEX?
An index is a broad measure of the market performance of a specific
group of securities in a particular market, or securities in a market
sector. You cannot invest directly in an index. An index does not have
an investment adviser and does not pay any commissions or expenses. If
an index had expenses, its performance would be lower.
- --------------------------------------------------------------------------------
BEST QUARTER WORST QUARTER
6.54% -3.41%
(June 30, 1995) (March 31, 1994)
Institutional Shares SINCE INCEPTION
AVERAGE ANNUAL RETURNS AS OF 12/31/98 1 YEAR 5 YEAR (DECEMBER 1990)
- ------------------------------------- ------ ------ ---------------
Intermediate Bond Fund 8.73% 6.56% 8.03%
Merrill Lynch U.S. Treasury Master Index* 10.03% 7.22% 8.60%
Lehman Intermediate Government/Corporate Index** 9.47% 7.30% 8.87%
- -------------------------
* The Merrill Lynch U.S. Treasury Master Index is an unmanaged index of fixed
rate coupon bearing U.S. Treasury securities with a maturity range of 1 to 30
years.
** The Lehman Intermediate Government/Corporate Index is an unmanaged index of
fixed rate U.S. Treasury Bonds and Notes, U.S. Government Agency obligations and
investment grade corporate debt obligations with maturities no less than 1 year.
4
<PAGE>
CRM MUNICIPAL BOND FUND
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, the Fund's past performance
does not necessarily indicate how the Fund will perform in the future.
[INSERT BAR CHART]
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE FUND'S INSTITUTIONAL
SHARES FROM CALENDAR YEAR TO CALENDAR YEAR. THE BAR CHART DOES NOT REFLECT
DEDUCTIONS OF SHAREHOLDER SERVICING FEES. IF SUCH AMOUNTS WERE REFLECTED,
RETURNS WOULD BE LESS.
BEST QUARTER WORST QUARTER
5.86% -4.79%
(March 31, 1995) (March 31, 1994)
Institutional Shares SINCE INCEPTION
AVERAGE ANNUAL RETURNS AS OF 12/31/98 1 YEAR 5 YEAR (NOVEMBER 1, 1993)
- ------------------------------------- ------ ------ ------------------
Municipal Bond Fund 5.24% 5.00% 5.11%
Merrill Lynch Intermediate Municipal Index* 6.27% 5.76% 5.71%
- -------------------------
* The Merrill Lynch Intermediate Municipal Index is an unmanaged weighted index
including investment grade tax-exempt bonds with a maturity range of 0 to 22
years.
PLAIN TALK
- --------------------------------------------------------------------------------
WHAT IS YIELD?
Yield is a measure of the income (dividends and interest) earned by the
securities in a fund's portfolio and paid to you over a specified time
period. The yield is expressed as a percentage of the offering price
per share on a specified date.
- --------------------------------------------------------------------------------
You may call (800) ____ to obtain a Fund's current yield.
FEES AND EXPENSES
PLAIN TALK
- --------------------------------------------------------------------------------
WHAT ARE FUND EXPENSES?
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder distribution, administration and
custody services. Each Fund's expenses in the table below are shown as
a percentage of its net assets. These expenses are deducted from Fund
assets.
- --------------------------------------------------------------------------------
5
<PAGE>
The table below describes the fees and expenses that you may pay if you buy and
hold shares of a Fund.
INSTITUTIONAL SHARES
ANNUAL FUND OPERATING Intermediate Municipal
EXPENSES (EXPENSES THAT ARE DEDUCTED Bond Fund Bond Fund
FROM FUND ASSETS)1 --------- ---------
Management fees 0.35% 0.35%
Distribution (12b-1) fees 0.00% 0.00%
Other expenses ___% ___%
TOTAL ANNUAL OPERATING EXPENSES 2 ___% ___%
Waivers/reimbursements ___% ___%
Net annual operating expenses 0.55% 0.75%
- ----------------------
1 The table above and the Example below each reflect the aggregate annual
operating expenses of each Fund and the corresponding Series in which the Fund
invests.
2 For Institutional shares, Cramer Rosenthal McGlynn LLC has agreed to waive
a portion of its advisory fee or reimburse expenses to the extent total
operating expenses exceed 0.55% for the Intermediate Bond Fund and 0.75% for the
Municipal Bond Fund. This waiver will remain in place until the Board of
Trustees approves its termination. The management fees, other expenses and total
annual operating expenses reflected in the table above are based on the Funds'
actual expenses for the fiscal year ended June 30, 1999, adjusted to reflect
current fee arrangements.
INVESTOR SHARES
ANNUAL FUND OPERATING Intermediate Municipal
EXPENSES (EXPENSES THAT ARE DEDUCTED Bond Fund Bond Fund
FROM FUND ASSETS) 1 --------- ---------
Management fees 0.35% 0.35%
Distribution (12b-1) fees ___% ___%
Other expenses ___% ___%
Shareholder Servicing fees 0.25% 0.25%
TOTAL ANNUAL OPERATING EXPENSES 2 ___% ___%
Waivers/reimbursements ___% ___%
Net annual operating expenses 0.80% 1.00%
- -----------------------
1 The table above and the Example below each reflect the aggregate annual
operating expenses of each Fund and the corresponding Series in which the Fund
invests.
2 For Investor shares, Cramer Rosenthal McGlynn LLC has agreed to waive a
portion of its advisory fee or reimburse expenses to the extent total operating
expenses for Investor shares exceed 0.80% for the Intermediate Bond Fund and
1.00% for the Municipal Bond Fund. This waiver will remain in place until the
Board of Trustees approves its termination. The management fees, other expenses
and total annual operating expenses reflected in the table above are based on
the Funds' actual expenses for the fiscal year ended June 30, 1999, adjusted to
reflect current fee arrangements.
EXAMPLE
This example is intended to help you compare the cost of investing in a Fund
with the cost of investing in other mutual funds. The table below shows what you
would pay if you invested $10,000 over the various time frames indicated. The
example assumes that:
(BULLET) you reinvested all dividends and other distributions
(BULLET) the average annual return was 5%
(BULLET) the Fund's maximum (without regard to waivers or expenses) total
operating expenses are charged and remain the same over the time
periods
6
<PAGE>
(BULLET) you redeemed all of your investment at the end of the time period.
Although your actual cost may be higher or lower, based on these assumptions,
your costs would be:
INSTITUTIONAL SHARES 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -------------------- ------ ------- ------- --------
Intermediate Bond Fund $67 $211 $368 $822
Municipal Bond Fund $98 $306 $531 $1178
INVESTOR SHARES 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------- ------ ------- ------- --------
Intermediate Bond Fund $ $ $ $
Municipal Bond Fund $ $ $ $
THE ABOVE EXAMPLE IS FOR COMPARISON PURPOSES ONLY AND IS NOT A REPRESENTATION OF
A FUND'S ACTUAL EXPENSES AND RETURNS, EITHER PAST OR FUTURE.
INVESTMENT OBJECTIVES
The INTERMEDIATE BOND FUND seeks a high total return, consistent with high
current income. The MUNICIPAL BOND Fund seeks a high level of income exempt from
federal income tax, consistent with the preservation of capital. These
investment objectives may not be changed without shareholder approval. There is
no guarantee that a Fund will achieve its investment objective.
PRIMARY INVESTMENT STRATEGIES
PLAIN TALK
- --------------------------------------------------------------------------------
WHAT ARE FIXED INCOME SECURITIES?
Fixed income securities are generally bonds, which is a type of
security that functions like a loan. Bonds are IOUs issued by private
companies, municipalities or government agencies. By comparison, when
you buy a stock, you are buying ownership in a company. With a bond,
your "loan" is for a specific period, usually 5 to 30 years. You
receive regular interest payments at the rate stated when you bought
the bond. Hence, the term "fixed income" security.
- --------------------------------------------------------------------------------
PLAIN TALK
- --------------------------------------------------------------------------------
WHAT ARE INVESTMENT GRADE SECURITIES?
Investment grade securities are securities that have been determined by
a rating agency to have a medium to high probability of being paid,
although there is always a risk of default. Investment grade securities
are rated BBB, A, AA or AAA by Standard & Poor's Corporation or Baa, A,
Aa or Aaa by Moody's Investors Service.
- --------------------------------------------------------------------------------
The INTERMEDIATE BOND FUND invests its assets in the Intermediate Bond Series,
which:
(BULLET) will invest at least 85% of its total assets in various types of
investment grade fixed income securities;
7
<PAGE>
(BULLET) may invest up to 10% of its total assets in investment grade fixed
income securities of foreign issuers; and
(BULLET) will, as a matter of fundamental policy, maintain an intermediate
average duration. The average dollar-weighted duration of securities
held by the Intermediate Bond Series will normally fall within a range
of 5 to 7 years.
PLAIN TALK
- --------------------------------------------------------------------------------
WHAT IS DURATION?
Duration measures the sensitivity of fixed income securities held by a
Fund to a change in interest rates. The value of a security with a
longer duration will normally fluctuate to a greater degree than will
the value of a security with a shorter duration should interest rates
change. For example, if interest rates were to move 1%, a bond with a
3-year duration would experience approximately a 3% change in principal
value. An identical bond with a 5-year duration would experience
approximately a 5% change in its principal value.
- --------------------------------------------------------------------------------
PLAIN TALK
- --------------------------------------------------------------------------------
WHAT ARE MUNICIPAL SECURITIES?
Municipal securities are bonds issued by state and local governments to
raise money for their activities.
- --------------------------------------------------------------------------------
The MUNICIPAL BOND FUND invests its assets in the Municipal Bond Series, which:
(BULLET) will, as a fundamental policy, invest substantially all (at least 80%)
of its net assets in a diversified fund of municipal securities that
provide interest that is exempt from federal income tax;
(BULLET) may invest up to 20% of its net assets in other types of fixed income
securities that provide income that is subject to federal tax; and
(BULLET) will, as a matter of fundamental policy, maintain an intermediate
average duration. The average dollar-weighted duration of securities
held by the Municipal Bond Series will normally fall within a range of
4 to 8 years.
The Municipal Bond Series may not invest more than 25% of its total assets in
any one industry. You should note that governmental issuers of municipal
securities are not considered part of any industry. The 25% limitation applies
to municipal securities backed by the assets and revenues of non-governmental
users, such as private operators of educational, hospital or housing facilities.
However, the investment adviser may decide that the yields available from
concentrating in obligations of a particular market sector or political
subdivision justify the risk that the performance of the Municipal Bond Series
may be adversely affected by such concentration. Under such market conditions,
the Municipal Bond Series may invest more than 25% of its assets in sectors of
the municipal securities market, such as health care or housing, or in
securities relating to one political subdivision, such as a given state or U.S.
territory. Under these conditions, the Municipal Bond Series' vulnerability to
any special risks that affects that sector or jurisdiction could have an adverse
impact on the value of an investment in the Series. There are no limitations on
the Municipal Bond Series' investment in any one of the three
8
<PAGE>
general categories of municipal obligations: general obligation bonds, revenue
(or special) obligation bonds and private activity bonds.
SERIES COMPOSITION. The composition of each Series' holdings varies, depending
upon the investment adviser's analysis of the fixed income markets, the
municipal securities market and the expected trends in those markets. The
securities purchased by the Series may be purchased based upon their yield, the
income earned by the security, or their potential capital appreciation, the
potential increase in the security's value, or both. The investment adviser
seeks to protect the Series' principal value by reducing fluctuations in value
relative to those that may be experienced by fixed income funds with a longer
average duration. This strategy may reduce the level of income attained by the
Series. There is no guarantee that principal value can be protected during
periods of extreme interest volatility.
PLAIN TALK
- --------------------------------------------------------------------------------
CORPORATE BONDS VS. GOVERNMENT BONDS:
Bonds issued by corporations generally pay a higher interest rate than
government bonds. That's because corporate bonds are somewhat riskier
than government bonds and the interest payments on government bonds are
exempt from some or all taxes. For example, if you live in Delaware and
buy a bond issued by the state of Delaware or by any other government
or municipal agency in Delaware, your interest on the bond is exempt
from state and federal income taxes. But if your bond is issued by any
state other than the one in which you reside, the interest would only
be exempt from federal income tax and you would have to pay your state
income tax. Interest payments on U.S. Treasury bonds are exempt from
state and local taxes.
- --------------------------------------------------------------------------------
The Series invest only in securities that are rated, at the time of purchase, in
the top four categories by a rating agency such as Moody's Investors Service,
Inc. or Standard & Poor's. If the securities are not rated, then the investment
adviser must determine that they are of comparable quality.
The table below shows each Series' principal investments. These are the types of
securities that will most likely help a Series achieve its investment objective.
- --------------------------------------------------------------------------------
INTERMEDIATE BOND MUNICIPAL BOND
- --------------------------------------------------------------------------------
Asset-Backed Securities (CHECK MARK)
- --------------------------------------------------------------------------------
Bank Obligations (CHECK MARK)
- --------------------------------------------------------------------------------
Corporate Bonds, Notes and Commercial Paper (CHECK MARK)
- --------------------------------------------------------------------------------
Mortgage-Backed Securities (CHECK MARK)
- --------------------------------------------------------------------------------
Municipal Securities (CHECK MARK) (CHECK MARK)
- --------------------------------------------------------------------------------
Obligations Issued By Supranational Agencies (CHECK MARK)
- --------------------------------------------------------------------------------
U.S. Government Obligations (CHECK MARK)
- --------------------------------------------------------------------------------
9
<PAGE>
Each Series also may use other strategies and engage in other investment
practices, which are described in detail in our Statement of Additional
Information. The investments and strategies listed above and described
throughout this prospectus are those that we use under normal market conditions.
ADDITIONAL RISK INFORMATION
The following is a list of certain risks that apply to your investment in a
Fund. Further information about investment risks is available in our Statement
of Additional Information:
(BULLET)CREDIT RISK: The risk that the issuer of a security, or the counterparty
to a contract, will default or otherwise become unable to honor a
financial obligation.
(BULLET)FOREIGN SECURITY RISK: The risk of losses due to political, regulatory,
economic, social or other uncontrollable forces in a foreign country
(Intermediate Bond Fund only).
(BULLET)INTEREST RATE RISK: The risk of market losses attributable to changes in
interest rates. With fixed-rate securities, a rise in interest rates
typically causes a fall in values, while a fall in rates typically
causes a rise in values. The yield earned by a Series will vary with
changes in interest rates.
(BULLET)LEVERAGE RISK: The risk associated with securities or practices (such as
when-issued and forward commitment transactions) that multiply small
market movements into larger changes in value.
(BULLET)LIQUIDITY RISK: The risk that certain securities may be difficult or
impossible to sell at the time and the price that the seller would like.
(BULLET)MARKET RISK: The risk that the market value of a security may move up
and down, sometimes rapidly and unpredictably.
(BULLET)MASTER/FEEDER RISK: The master/feeder structure is relatively new and
more complex. While this structure is designed to reduce costs, it may
not do so, and there may be operational or other complications.
(BULLET)OPPORTUNITY RISK: The risk of missing out on an investment opportunity
because the assets necessary to take advantage of it are tied up in less
advantageous investments.
(BULLET)PREPAYMENT RISK: The risk that a debt security may be paid off and
proceeds invested earlier than anticipated. Depending on market
conditions, the new investments may or may not carry the same interest
rate.
(BULLET)VALUATION RISK: The risk that a Series has valued certain of its
securities at a higher price than it can sell them for.
(BULLET)YEAR 2000 READINESS RISK: Like other organizations around the world, the
Series could be adversely affected if the computer systems used by their
various service providers ( or the market in general ) do not properly
operate after January 1, 2000. The Series are taking steps to address
the Year 2000 issue with respect to the computer systems that they rely
on. There can be no assurance, however, that these steps will be
sufficient to avoid a temporary service disruption or any adverse impact
on the Series.
Additionally, if a company in which a Series is invested is adversely
affected by Year 2000 problems, it is likely that the price of that
company's securities will also be adversely affected. A decrease in one or
more of a Series' holdings may have a similar impact on the price of the
Series' shares. The Series' adviser will rely on public filings and other
10
<PAGE>
statements made by companies about their Year 2000 readiness. Issuers in
countries outside the U.S. present a greater Year 2000 readiness risk
because they may not be required to make the same level of disclosure about
Year 2000 readiness as is required in the U.S. The adviser is not able to
audit any company and its major suppliers to verify their year 2000
readiness.
11
<PAGE>
MANAGEMENT OF THE FUNDS
The Board of Trustees for each Fund supervises the management, activities and
affairs of the Fund and has approved contracts with various organizations to
provide, among other services, day-to-day management required by the Fund and
its shareholders.
INVESTMENT ADVISER
PLAIN TALK
- --------------------------------------------------------------------------------
WHAT IS AN INVESTMENT ADVISER?
The investment adviser makes investment decisions for a mutual fund and
continuously reviews, supervises and administers the fund's investment
program. The Board of Trustees supervises the investment adviser and
establishes policies that the adviser must follow in its management
activities.
- --------------------------------------------------------------------------------
Wilmington Trust Company, the Series' investment adviser, is located at 1100
North Market Street, Wilmington, Delaware 19890. WTC owns a controlling interest
in Cramer Rosenthal McGlynn, LLC, the Funds' sponsor. WTC is a wholly owned
subsidiary of Wilmington Trust Corporation, which is a publicly held bank
holding company. Under an advisory agreement, WTC, subject to the supervision of
the Board of Trustees, directs the investments of each Series in accordance with
its investment objective, policies and limitations. In addition to serving as
investment adviser for the Series, WTC is engaged in a variety of investment
advisory activities, including the management of other mutual funds and
collective investment pools.
Under the advisory agreement, each Series pays a monthly fee to WTC at the
annual rate of 0.35% of the Series' first $1 billion of average daily net
assets; 0.30% of the Series' next $1 billion of average daily net assets; and
0.25% of the Series' average daily net assets over $2 billion. For the twelve
months ended June 30, 1999, WTC received the following fees (after fee waivers)
as a percentage of each Series' average daily net assets for investment advisory
services:
Intermediate Bond Series %
Municipal Bond Series %
FUND MANAGERS
Eric K. Cheung, Vice President and Manager of the Fixed Income Management
Division, Clayton M. Albright, III, Vice President of the Fixed Income
Management Division and Dominick J. D'Eramo, CFA, Vice President of the Fixed
Income Management Division, all of the Asset Management Department of WTC, are
primarily responsible for the day-to-day management of the Short/Intermediate
Bond Series and the Intermediate Bond Series. From 1978 until 1986, Mr. Cheung
was the Portfolio Manager for fixed income assets of the Meritor Financial
Group. In 1986, Mr. Cheung joined WTC. In 1991, he became the Division Manager
for all fixed income products. Mr. Albright has been employed at WTC since 1976.
In 1987, he joined the Fixed Income Management Division and since then has
specialized in the management
12
<PAGE>
of intermediate and long-term fixed income portfolios. Mr. D'Eramo began his
career with WTC in 1986 as a fixed-income trader and was promoted to portfolio
manager in 1990.
Lisa More, Assistant Vice President of Credit Research and Municipal Trading
within the Fixed Income Management Divisions of Asset Management Department of
WTC is primarily responsible for the day-to-day management of the municipal Bond
Portfolio. Mrs. More has been employed at WTC since 1988. In 1990, she joined
the Fixed Income Division specializing in the management of municipal income
portfolios.
SERVICE PROVIDERS
The chart below provides information on the Funds' primary service providers.
13
<PAGE>
Asset Shareholder
Management Services
- --------------------------------- ------------------------------------
INVESTMENT ADVISER TRANSFER AGENT
WILMINGTON TRUST COMPANY PFPC INC.
RODNEY SQUARE NORTH 400 BELLEVUE PARKWAY
1100 N. MARKET STREET WILMINGTON, DE 19809
WILMINGTON, DE 19890-0001
Handles shareholder services,
including recordkeeping and
Manages each Fund's business and statements, payment of distribution
investment activies. and processing of buy and sell
request.
- --------------------------------- ------------------------------------
--------------------------
CRM INTERMEDIATE BOND
CRM MUNICIPAL BOND
--------------------------
Fund Asset
Operations Safe Keeping
- --------------------------------- ------------------------------------
ADMINISTRATOR AND CUSTODIAN
ACCOUNTING AGENT PFPC TRUST COMPANY
PFPC INC. 200 STEVENS DRIVE
400 BELLEVUE PARKWAY LESTER, PA 19113
WILMINGTON, DE 19809
Provides facilities, equipment Hold each Fund's assets, settle all
and personnel to carry out portfolio trades and collect most
administrative services related of the valuation data required for
to each Fund and calculates each calculating each Fund's NAV per
Fund's NAV per share and share.
distributions.
- --------------------------------- ------------------------------------
Distribution
-------------------------------
DISTRIBUTOR
PROVIDENT DISRIBUTORS INC.
FOUR FALLS CORPORATE CENTER
WEST CONSHOHOCKEN, PA 19428
Distributes each Fund's shares.
-------------------------------
14
<PAGE>
SHAREHOLDER INFORMATION
PRICING OF SHARES
The Funds value their assets based on current market value when such values are
available. Prices for fixed income securities normally are supplied by a pricing
service. Fixed income securities maturing within 60 days of the valuation date
are valued at amortized cost. Securities that do not have a readily available
current market value are valued in good faith under the direction of the Series'
Board of Trustees.
The assets held by the Intermediate Bond Series that are denominated in foreign
currencies are valued daily in U.S. dollars at the foreign currency exchange
rates that are prevailing at the time that PFPC determines the daily net asset
value per share.
PLAIN TALK
- --------------------------------------------------------------------------------
WHAT IS THE NET ASSET VALUE or "NAV"?
NAV = Assets - Liabilities
--------------------
Outstanding Shares
- --------------------------------------------------------------------------------
PFPC determines the NAV per share of each Fund as of the close of regular
trading on the New York Stock Exchange (currently 4:00 p.m., Eastern time), on
each Business Day (a day that the Exchange, the Transfer Agent and the
Philadelphia branch of the Federal Reserve Bank are open for business). The NAV
is calculated by adding the value of all securities and other assets in a Fund,
deducting its liabilities and dividing the balance by the number of outstanding
shares in that Fund.
Shares will not be priced on those days the Funds are closed. As of the date of
this prospectus, those days are:
New Year's Day Memorial Day Veterans Day
Martin Luther King, Jr. Day Independence Day Thanksgiving Day
President's Day Labor Day Christmas Day
Good Friday Columbus Day
PURCHASE OF SHARES
PLAIN TALK
- --------------------------------------------------------------------------------
HOW TO PURCHASE SHARES:
(BULLET) Directly by mail or by wire
(BULLET) As a client of a Third Party
- --------------------------------------------------------------------------------
Fund shares are offered on a continuous basis and are sold without any sales
charges. The minimum initial investment in the Fund's Investor and Institutional
class shares is $10,000 and $1,000,000, respectively. The Funds, in their sole
discretion, may waive the minimum initial amount to establish certain
Institutional share accounts. Additional investments may be made in any amount.
You may purchase shares as specified below.
15
<PAGE>
You may also purchase shares if you are a client of an institution (such as a
bank or broker-dealer) that has entered into a servicing agreement with the
Funds' distributor ("Third Party"). You should also be aware that you may be
charged a fee by the Third Party in connection with your investment in the
Funds. If you wish to purchase Fund shares through your account at a Third
Party, you should contact that entity directly for information and instructions
on purchasing shares.
BY MAIL: You may purchase shares by sending a check drawn on a U.S. bank payable
to CRM Funds, indicating the name of the Fund, along with a completed
application (included at the end of this prospectus). If a subsequent investment
is being made, the check should also indicate your Fund account number. When you
make purchases by check, each Fund may withhold payment on redemptions until it
is reasonably satisfied that the funds are collected (which can take up to 10
days). If you purchase shares with a check that does not clear, your purchase
will be canceled and you will be responsible for any losses or fees incurred in
that transaction. Send the check and application to:
REGULAR MAIL: OVERNIGHT MAIL:
CRM Funds CRM Funds
c/o PFPC Inc. c/o PFPC Inc.
P.O. Box ____ 400 Bellevue Parkway, Suite 108
Wilmington, DE 19899 Wilmington, DE 19809
BY WIRE: You may purchase shares by wiring federal funds readily available.
Please call PFPC at (800) _____for instructions and to make specific
arrangements before making a purchase by wire, and if making an initial
purchase, to also obtain an account number.
ADDITIONAL INFORMATION REGARDING PURCHASES: Purchase orders received by the
Transfer Agent before the close of regular trading on the Exchange on any
Business Day will be priced at the NAV that is determined as of the close of
trading. Purchase orders received after the close of regular trading on the
Exchange will be priced as of the close of regular trading on the following
Business Day.
Any purchase order may be rejected if a Fund determines that accepting the order
would not be in the best interest of the Fund or its shareholders.
It is the responsibility of the Third Party to transmit orders for the purchase
of shares by its customers to the Transfer Agent and to deliver required funds
on a timely basis, in accordance with the procedures stated above.
16
<PAGE>
For information on other ways to purchase shares, including through an
individual retirement account (IRA) or an automatic investment plan or a payroll
investment plan, please refer to the Statement of Additional Information.
REDEMPTION OF SHARES
PLAIN TALK
- --------------------------------------------------------------------------------
HOW TO REDEEM (SELL) SHARES:
(BULLET) By mail
(BULLET) By telephone
- --------------------------------------------------------------------------------
You may sell your shares on any Business Day as described below. Redemptions are
effected at the NAV next determined after the Transfer Agent has received your
redemption request. There is no fee when Fund shares are redeemed. It is the
responsibility of the Third Party to transmit redemption orders and credit their
customers' accounts with redemption proceeds on a timely basis. Redemption
checks are mailed on the next Business Day following acceptance by the Transfer
Agent of redemption instructions, but never later than 7 days following such
receipt and acceptance. Amounts redeemed by wire are normally wired on the date
of receipt and acceptance of redemption instructions (if received by the
Transfer Agent before 4:00 p.m. Eastern time) or the next Business Day (if
received after 4:00 p.m. Eastern time, or on a non-Business Day), but never
later than 7 days following such receipt and acceptance. If you purchased your
shares through an account at a Third Party, you should contact the Third Party
for information relating to redemptions. The Fund's name and your account number
should accompany any redemption requests.
BY MAIL: If you redeem your shares by mail, you should submit written
instructions with a "signature guarantee". A signature guarantee verifies the
authenticity of your signature. You can obtain one from most banking
institutions or securities brokers, but not from a notary public. You must
indicate the Fund name, your account number and your name. The written
instructions and signature guarantee should be mailed to:
REGULAR MAIL: OVERNIGHT MAIL:
CRM Funds CRM Funds
c/o PFPC Inc. c/o PFPC Inc.
P.O. Box ____ 400 Bellevue Parkway, Suite 108
Wilmington, DE 19899 Wilmington, DE 19809
BY TELEPHONE: If you prefer to redeem your shares by telephone, you may elect to
do so. However there are certain risks. The Fund has certain safeguards and
procedures to confirm the identity of callers and to confirm that the
instructions communicated are genuine. If such procedures are followed, you will
bear the risk of any losses.
ADDITIONAL INFORMATION REGARDING REDEMPTIONS: Redemption proceeds may be wired
to your predesignated bank account in any commercial bank in the United States
if the amount is $1,000
17
<PAGE>
or more. The receiving bank may charge a fee for this service. Proceeds may also
be mailed to your bank or, for amounts of $10,000 or less, mailed to your Fund
account address of record if the address has been established for at least 60
days. In order to authorize the Transfer Agent to mail redemption proceeds to
your Fund account address of record, complete the appropriate section of the
Application for Telephone Redemptions or include your Fund account address of
record when you submit written instructions. You may change the account that you
have designated to receive amounts redeemed at any time. Any request to change
the account designated to receive redemption proceeds should be accompanied by a
guarantee of your signature by an eligible institution. A signature and a
signature guarantee are required for each person in whose name the account is
registered. Further documentation will be required to change the designated
account when a corporation, other organization, trust, fiduciary or other
institutional investor holds the Fund shares.
If shares to be redeemed represent a recent investment made by check, each Fund
reserves the right not to make the redemption proceeds available until it has
reasonable grounds to believe that the check has been collected (which could
take up to 10 days).
SMALL ACCOUNTS: If the value of your Fund account falls below $10,000 for
Investor shares or $1,000,000 for Institutional shares ($2,000 for IRAs or
automatic investment plans), the Fund may ask you to increase your balance. If
the account value is still below such amounts after 60 days, the Fund may close
your account and send you the proceeds. The Fund will not close your account if
it falls below these amounts solely as a result of a reduction in your account's
market value.
REDEMPTIONS IN KIND: The Funds reserve the right to make "redemptions in kind" -
payments of redemption proceeds in fund securities rather than cash - if the
amount redeemed is large enough to affect the Series' operations (for example,
if it represents more than 1% of a Series' assets).
EXCHANGE OF SHARES
PLAIN TALK
- --------------------------------------------------------------------------------
WHAT IS AN EXCHANGE OF SHARES?
An exchange of shares allows you to move your money from one fund to
another fund within a family of funds.
- --------------------------------------------------------------------------------
You may exchange all or a portion of your shares in a Fund for the same class of
shares of certain other Funds. These other Funds are:
CRM Prime Money Market Fund
CRM Tax-Exempt Fund
CRM Intermediate Bond Fund
CRM Municipal Bond Fund
CRM Large Cap Value Fund
CRM Mid Cap Value Fund
CRM Small Cap Value Fund
Redemption of shares through an exchange will be effected at the NAV per share
next determined after the Transfer Agent receives your request. A purchase of
shares through an
18
<PAGE>
exchange will be effected at the NAV per share determined at that time or as
next determined thereafter.
Exchange transactions will be subject to the minimum initial investment and
other requirements of the Fund into which the exchange is made. An exchange may
not be made if the exchange would leave a balance in a shareholder's account of
less than $10,000 for Investor share accounts or $1,000,000 for Institutional
share accounts.
To obtain prospectuses of the other CRM Funds, you may call (800) _____. To
obtain more information about exchanges, or to place exchange orders, contact
the Transfer Agent, or, if your shares are held in a trust account with a Third
Party, contact the Third Party. The Funds may terminate or modify the exchange
offer described here and will give you 60 days' notice of such termination or
modification. This exchange offer is valid only in those jurisdictions where the
sale of the CRM Fund shares to be acquired through such exchange may be legally
made.
DIVIDENDS AND OTHER DISTRIBUTIONS
PLAIN TALK
- --------------------------------------------------------------------------------
WHAT IS NET INVESTMENT INCOME?
Net investment income consists of interest and dividends (and, in the
case of the Municipal Bond Fund, market discount on tax-exempt
securities) earned by a fund on its investments less accrued expenses.
- --------------------------------------------------------------------------------
As a shareholder of a Fund, you are entitled to receive dividends and other
distributions arising from the net investment income and net realized gains, if
any, earned on the investments held by the Fund. Generally, dividends are
declared daily and paid monthly. Each Fund expects to distribute any net
realized gains once a year. CRM Intermediate Bond Fund will distribute net
realized gains from foreign currency transactions, if any, after the end of the
fiscal year in which the gain was realized by them.
A distribution is payable to the shareholders of record at the time the
distribution is declared (including holders of shares being redeemed, but
excluding holders of shares being purchased). Shares become entitled to receive
distributions on the day after the shares are issued.
Distributions are automatically reinvested and are paid in the form of
additional Fund shares unless you have elected to receive the distributions in
cash.
Any net capital gain realized by a Fund will be distributed at least annually.
Shares become entitled to receive distributions on the day after the shares are
issued.
TAXES
Each Fund generally intends to operate in a manner such that it will not be
liable for Federal income or excise tax. The Funds' distributions of net
investment income (which include net
19
<PAGE>
short-term capital gains), whether received in cash or reinvested in additional
Fund shares, may be subject to federal income tax. Each Fund will notify you
following the end of the calendar year of the amount of dividends paid that
year.
Dividend distributions by the Municipal Bond Fund of the excess of its interest
income on tax-exempt securities over certain amounts disallowed as deductions
("exempt-interest dividends") may be treated by you as interest excludable from
your gross income. The Municipal Bond Fund intends to distribute income that is
exempt from federal income tax, though it may invest in a portion of its assets
in securities that generate taxable income. Income exempt from federal income
tax may be subject to state and local income tax. Additionally, any capital
gains distributed by the Municipal Bond Fund may be taxable.
It is a taxable event for you if you sell or exchange shares of any Fund,
including the Municipal Bond Fund. Depending on the purchase price and the sale
price of the shares you exchange, you may have a taxable gain or loss on the
transaction. You are responsible for any tax liability generated by your
transactions.
This section is only a summary of some important income tax considerations that
may affect your investment in a Fund. More information regarding those
considerations appears in our Statement of Additional Information. You are urged
to consult your tax adviser regarding the effects of an investment on your tax
situation.
DISTRIBUTION ARRANGEMENTS
Provident Distributors, Inc. ("PDI") manages the Funds' distribution efforts and
provides assistance and expertise in developing marketing plans and materials,
enters into dealer agreement with broker-dealers to sell shares and provides
shareholder support services, directly or through affiliates. The Funds do not
charge any sales loads, deferred sales loads or other fees in connection with
the purchase of shares.
MASTER/FEEDER STRUCTURE
Other institutional investors, including other mutual funds, may invest in the
master funds. The master/feeder structure enables various institutional
investors, including a Fund, to pool their assets, which may be expected to
result in economies by spreading certain fixed costs over a larger asset base.
Each shareholder of a master fund, including a Fund, will pay its proportionate
share of the master fund's expenses.
For reasons relating to costs or a change in investment goal, among others, a
Fund could switch to another master fund or decide to manage its assets itself.
No Fund is currently contemplating such a move.
SHARE CLASSES
Each Fund issues Investor and Institutional share classes, which classes have
different minimum investment requirements and fees. Institutional shares are
offered only to those investors who invest in a Fund through an intermediary
(i.e., broker) or through a consultant and who invest
20
<PAGE>
$1,000,000 or more or where related accounts total $1,000,000 or more when
combined. Other investors investing $10,000 or more may purchase Investor
shares.
21
<PAGE>
FOR MORE INFORMATION
FOR INVESTORS WHO WANT MORE INFORMATION ON THE FUNDS, THE FOLLOWING DOCUMENTS
ARE AVAILABLE FREE UPON REQUEST:
ANNUAL/SEMI-ANNUAL REPORTS: Contain performance data and information on fund
holdings and operating results for the Fund's most recently completed fiscal
year or half-year.
STATEMENT OF ADDITIONAL INFORMATION (SAI): Provides a complete technical and
legal description of the Funds' policies, investment restrictions, risks, and
business structure. This prospectus incorporates the SAI by reference.
Copies of these documents and answers to questions about the Funds may be
obtained without charge by contacting:
CRM Funds
c/o PFPC Inc.
400 Bellevue Parkway
Suite 108
Wilmington, Delaware 19809
(800) _____
9:00 a.m. to 5:00 p.m. Eastern time
Information about the Funds (including the SAI) can be reviewed and copied at
the Public Reference Room of the Securities and Exchange Commission in
Washington, D.C. Copies of this information may be obtained, upon payment of a
duplicating fee, by writing the Public Reference Room of the SEC, Washington,
DC, 20549-6009. Information on the operation of the Public Reference Room may be
obtained by calling the SEC at 1-(800)-SEC-0330. Reports and other information
about the Funds may be viewed on-screen or downloaded from the SEC's Internet
site at http://www.sec.gov.
FOR MORE INFORMATION ON OPENING A NEW ACCOUNT, MAKING
CHANGES TO EXISTING ACCOUNTS, PURCHASING, EXCHANGING
OR REDEEMING SHARES, OR OTHER INVESTOR SERVICES,
PLEASE CALL 1-(800)-_____.
The investment company registration number is 811-08648.
22
<PAGE>
THE CRM PRIME MONEY MARKET FUND
THE CRM TAX EXEMPT FUND
================================================================================
PROSPECTUS DATED _______, 1999
This prospectus gives vital information about this money market mutual fund,
including information on investment policies, risks and fees. For your own
benefit and protection, please read it before you invest, and keep it on hand
for future reference.
Please note that the Funds:
(BULLET) are not bank deposits
(BULLET) are not obligations of, or guaranteed or endorsed by the Funds'
investment adviser, Wilmington Trust Company, or any of its affiliates
(BULLET) are not federally insured
(BULLET) are not obligations of, or guaranteed or endorsed or otherwise
supported by the U.S. Government, the Federal Deposit Insurance
Corporation, the Federal Reserve Board or any other governmental agency
(BULLET) are not guaranteed to achieve their goal(s)
(BULLET) may not be able to maintain a stable $1 share price
Like all mutual fund shares, the Securities and Exchange Commission has not
approved or disapproved the Funds' shares or determined whether this prospectus
is accurate or complete. Anyone who tells you otherwise is committing a crime.
<PAGE>
TABLE OF CONTENTS
A LOOK AT THE GOALS, STRATEGIES, FUND DESCRIPTION
RISKS, EXPENSES AND FINANCIAL Summary................................3
HISTORY OF THE FUNDS. Performance Information................4
Fees and Expenses......................5
Investment Objective...................6
Primary Investment Strategies..........6
Additional Risk Information............7
DETAILS ABOUT THE SERVICE MANAGEMENT OF THE FUNDS
PROVIDERS. Investment Adviser.....................9
Service Providers.....................10
POLICIES AND INSTRUCTIONS FOR SHAREHOLDER INFORMATION
OPENING, MAINTAINING AND Pricing of Shares.....................11
CLOSING AN ACCOUNT IN THE Purchase of Shares....................11
FUNDS. Redemption of Shares..................13
Exchange of Shares....................15
Distributions.........................15
Taxes.................................16
DETAILS ON THE FUNDS' MASTER/ DISTRIBUTION ARRANGEMENTS
FEEDER ARRANGEMENT. Share Class...........................17
Master/Feeder Structure...............17
FOR MORE INFORMATION..........back cover
For information about key terms and concepts, look for our "PLAIN TALK"
explanations.
2
<PAGE>
THE CRM PRIME MONEY MARKET FUND
THE CRM TAX-EXEMPT FUND
FUND DESCRIPTION
PLAIN TALK
-----------------------------------------------------------------------
WHAT ARE MONEY MARKET FUNDS?
Money market funds invest only in high quality, short-term debt
securities, commonly known as money market instruments. Money market
funds follow strict rules about credit risk, maturity and
diversification of their investments. An investment in a money market
fund is not a bank deposit. Although a money market fund seeks to keep
a constant share price of $1.00, you may lose money by investing in a
money market fund.
-----------------------------------------------------------------------
SUMMARY
Investment Objective (BULLET) The PRIME MONEY MARKET FUND seeks high
current income, while preserving
capital and liquidity.
(BULLET) The TAX EXEMPT FUND seeks high current
interest income exempt from federal
income taxes while preserving
principal.
- --------------------------------------------------------------------------------
Investment Focus (BULLET) Money market instruments
- --------------------------------------------------------------------------------
Share Price Volatility (BULLET) The Funds will strive to maintain a
stable $1.00 share price.
- --------------------------------------------------------------------------------
Principal Investment (BULLET) The Funds operate as "feeder funds"
Strategy which means that the Funds do not buy
individual securities directly.
Instead, each Fund invests in a
corresponding mutual fund or "master
fund," which in turn purchases
investment securities. The Funds invest
all of their assets in master funds,
which are separate series of another
mutual fund. The Funds and
corresponding Series have the same
investment objective, policies and
limitations.
(BULLET) The PRIME MONEY MARKET FUND invests in
the Prime Money Market Series, which
invests in money market instruments,
including bank obligations, high
quality commercial paper and U.S.
Government obligations.
(BULLET) The TAX-EXEMPT FUND invests in the
Tax-Exempt Series, which invests in
high quality municipal obligations,
municipal bonds and other instruments
exempt from federal income tax.
(BULLET) The Prime Money Market Fund, through
its corresponding Series, may invest
more than 25% of its total assets in
the obligations of banks and finance
companies.
- --------------------------------------------------------------------------------
Principal Risks (BULLET) An investment in a Fund is not a
deposit of Wilmington Trust Company,
the Funds' investment adviser or any of
its affiliates and is not insured or
guaranteed by the Federal Deposit
Insurance Corporation or any other
government agency. Although each Fund
seeks to preserve the value of your
investment at $1.00 per share, it is
possible to lose money by investing in
a Fund.
(BULLET) The obligations, in which the Funds
invest through their corresponding
Series, are subject to credit risk and
interest rate risk. Typically, when
interest rates rise, the market prices
of debt securities go down.
(BULLET) The performance of a Fund will depend
on whether or not the adviser is
successful in pursuing an investment
strategy.
(BULLET) The Funds are also subject to other
risks, which are described under
"Additional Risk Information."
- --------------------------------------------------------------------------------
Investor Profile (BULLET) Conservative
- --------------------------------------------------------------------------------
3
<PAGE>
PERFORMANCE INFORMATION
THE CRM PRIME MONEY MARKET FUND
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, past performance is not
necessarily an indicator of how the Fund will perform in the future.
[BAR CHART]
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE FUND'S INSTITUTIONAL
SHARES FROM CALENDAR YEAR TO CALENDAR YEAR. THE BAR CHART DOES REFLECT
DEDUCTIONS FOR RULE 12b-1 DISTRIBUTION FEES. IF SUCH AMOUNTS WERE NOT REFLECTED,
RETURNS WOULD BE HIGHER.
BEST QUARTER WORST QUARTER
2.36% 0.70%
(June 30, 1998) (June 30, 1993)
AVERAGE ANNUAL RETURNS AS OF 12/31/98 1 YEAR 5 YEARS 10 YEARS
Prime Money Market Fund 5.17% 5.00% 5.46%
PLAIN TALK
-----------------------------------------------------------------------
WHAT IS YIELD?
Yield is a measure of the income (dividends and interest) earned by the
securities in a fund's portfolio and paid to you over a specified time
period. The yield is expressed as a percentage of the offering price
per share on a specified date.
-----------------------------------------------------------------------
You may call (800) ________ to obtain the Fund's current 7-day yield.
THE CRM TAX-EXEMPT FUND
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, past performance is not
necessarily an indicator of how the Fund will perform in the future.
[BAR CHART]
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE FUND'S INSTITUTIONAL
SHARES FROM CALENDAR YEAR TO CALENDAR YEAR. THE BAR CHART DOES REFLECT
DEDUCTIONS FOR RULE 12b-1 DISTRIBUTION FEES. IF SUCH AMOUNTS WERE NOT REFLECTED,
RETURNS WOULD BE HIGHER.
BEST QUARTER WORST QUARTER
1.61% 0.47%
(June 30, 1989) (March 31, 1994)
AVERAGE ANNUAL RETURNS AS OF 12/31/98 1 YEAR 5 YEARS 10 YEARS
Tax-Exempt Fund 2.98% 3.00% 3.54%
You may call (800) ________ to obtain the Fund's current 7-day yield.
4
<PAGE>
FEES AND EXPENSES
PLAIN TALK
-----------------------------------------------------------------------
WHAT ARE MUTUAL FUND EXPENSES?
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, distribution, administration and custody
services. The Fund's expenses in the table below are shown as a
percentage of the Fund's net assets. These expenses are deducted from
Fund assets.
-----------------------------------------------------------------------
The table below describes the fees and expenses that you may pay if you buy and
hold shares of the Fund.
INSTITUTIONAL SHARES
ANNUAL FUND OPERATING THE PRIME MONEY THE TAX-EXEMPT
EXPENSES (EXPENSES THAT ARE MARKET FUND FUND
ARE DEDUCTED FROM FUND --------------- --------------
ASSETS) 1
Management fees 0.47% 0.47%
Distribution (12b-1) fees None None
Other expenses % %
TOTAL ANNUAL OPERATING EXPENSES % %
Waivers/reimbursements % %
Net annual operating expenses % %
- -------------------------------
1 The table above and the Example below each reflect the aggregate annual
operating expenses of the Fund and the corresponding Series in which the Fund
invests.
INVESTOR SHARES
ANNUAL FUND OPERATING THE PRIME MONEY THE TAX-EXEMPT
EXPENSES (EXPENSES THAT ARE MARKET FUND FUND
ARE DEDUCTED FROM FUND --------------- --------------
ASSETS) 1
Management fees 0.47% 0.47%
Distribution (12b-1) fees 0.00% 0.00%
Other expenses % %
Shareholder Servicing fees 0.25% 0.25%
TOTAL ANNUAL OPERATING EXPENSES % %
Waivers/reimbursements % %
Net annual operating expenses
- -------------------------------------------
1 The table above and the Example below each reflect the aggregate annual
operating expenses of the Fund and the corresponding Series in which the Fund
invests.
EXAMPLE
This example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The table below shows what you
would pay if you invested $10,000 over the various time frames indicated. The
example assumes that:
(BULLET) you reinvested all dividends;
(BULLET) the average annual return was 5%;
5
<PAGE>
(BULLET) the Fund's maximum total operating expenses are charged and remain
the same over the time periods; and
(BULLET) you redeemed all of your investment at the end of the time period.
Although your actual cost may be higher or lower, based on these assumptions,
your costs would be:
INSTITUTIONAL SHARES 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
Prime Money Market Fund $57 $179 $313 $701
Tax-Exempt Fund $60 $189 $329 $738
Investor Shares 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
Prime Money Market Fund $___ $___ $___ $___
Tax-Exempt Fund $___ $___ $___ $___
THE ABOVE EXAMPLES ARE FOR COMPARISON PURPOSES ONLY AND ARE NOT A REPRESENTATION
OF THE FUNDS' ACTUAL EXPENSES AND RETURNS, EITHER PAST OR FUTURE.
INVESTMENT OBJECTIVE
(BULLET) The PRIME MONEY MARKET FUND seeks a high level of current income
consistent with the preservation of capital and liquidity.
(BULLET) The TAX-EXEMPT FUND seeks as high a level of interest income exempt
from federal income tax as is consistent with preservation of
principal.
The investment objectives for each Fund may not be changed without shareholder
approval. Each of the Funds is a money market fund and intends to maintain a
stable $1 share price, although this may not be possible under certain
circumstances. There can be no guarantee that any Fund will achieve its
investment objective.
PRIMARY INVESTMENT STRATEGIES
The PRIME MONEY MARKET FUND invests its assets in the Prime Money Market Series,
which in turn invests in:
(BULLET) U.S. dollar-denominated obligations of major U.S. and foreign banks
and their branches located outside of the United States, of U.S.
branches of foreign banks, of foreign branches of foreign banks, of
U.S. agencies of foreign banks and wholly-owned banking subsidiaries
of foreign banks;
(BULLET) high quality commercial paper and corporate obligations;
(BULLET) U.S. Government obligations, which are debt securities issued or
guaranteed by the U.S. Government, its agencies or instrumentalities;
(BULLET) high quality municipal securities; and
(BULLET) repurchase agreements that are fully collateralized by the U.S.
Government obligations.
The TAX-EXEMPT FUND invests its assets in the Tax-Exempt Series, which in turn
invests in:
(BULLET) high quality municipal obligations and municipal bonds;
(BULLET) floating and variable rate obligations;
(BULLET) participation interests;
6
<PAGE>
(BULLET) high quality tax-exempt commercial paper; and
(BULLET) high quality short-term municipal notes.
The Tax-Exempt Series has adopted a policy that, under normal circumstances, at
least 80% of its annual income will be exempt from federal income tax.
Additionally, at least 80% of its annual income will not be a tax preference
item for purposes of the federal alternative minimum tax.
High quality securities include those that (1) are rated in one of the two
highest short-term rating categories by two NRSRO, such as S&P, Moody's and
Fitch IBCA (or by one NRSRO if only one NRSRO has issued a rating) or; (2) if
unrated are issued by an issuer with comparable outstanding debt that is rated
or are otherwise unrated and determined by the investment adviser to be of
comparable quality.
The Series also may invest in other securities, use other strategies and engage
in other investment practices, which are described in detail in our Statement of
Additional Information.
ADDITIONAL RISK INFORMATION
The following is a list of certain risks that may apply to your investment in a
Fund. Further information about investment risks is available in our Statement
of Additional Information:
(BULLET) CREDIT RISK: The risk that the issuer of a security, or the
counterparty to a contract, will default or otherwise become unable
to honor a financial obligation.
(BULLET) FOREIGN SECURITY RISK: The risk of losses due to political,
regulatory, economic, social or other uncontrollable forces in a
foreign country.
(BULLET) INTEREST RATE RISK: The risk of market losses attributable to changes
in interest rates. With fixed-rate securities, a rise in interest
rates typically causes a fall in values, while a fall in rates
typically causes a rise in values. The yield paid by a Fund will vary
with changes in interest rates.
(BULLET) MARKET RISK: The risk that the market value of a security may move up
and down, sometimes rapidly and unpredictably.
(BULLET) MASTER/FEEDER RISK: The Funds' master/feeder structure is relatively
new and more complex. While this structure is designed to reduce
costs, it may not do so, and the Fund might encounter operational or
other complications.
(BULLET) PREPAYMENT RISK: The risk that a debt security may be paid off and
proceeds invested earlier than anticipated. Depending on market
conditions, the new investments may or may not carry the same
interest rate.
(BULLET) YEAR 2000 COMPLIANCE RISK: Like other organizations around the world,
the Funds could be adversely affected if the computer systems used by
its various service providers (or the market in general) do not
properly operate after January 1, 2000. The Funds are taking steps to
address the Year 2000 issue with respect to the computer systems that
they rely on. There can be no assurance, however, that these steps
will be sufficient to avoid a temporary service disruption or any
adverse impact on the Funds.
Additionally, if a company in which a Series is invested is adversely
affected by Year 2000 Problems, it is likely that the price of that
company's securities will also be adversely affected. A decrease in
one or more of a Series' holdings may have a similar impact on the
price of the Series' shares. The Series' adviser will rely on public
filings and other statements by companies about their Year 2000
readiness. Issuers in countries outside the U.S. present a
7
<PAGE>
greater Year 2000 readiness risk because they may not be required to
make the same level of disclosure about Year 2000 readiness as is
required in the U.S. The adviser is not able to audit any company and
its major suppliers to verify their Year 2000 readiness.
8
<PAGE>
MANAGEMENT OF THE FUND
The Board of Trustees for each Fund supervises the management, activities and
affairs of the Fund and has approved contracts with various organizations to
provide, among other services, the day-to-day management required by the Fund
and its shareholders.
PLAIN TALK
-----------------------------------------------------------------------
WHAT IS AN INVESTMENT ADVISER?
The investment adviser makes investment decisions for a mutual fund and
continuously reviews, supervises and administers the fund's investment
program. The Board of Trustees supervises the investment adviser and
establishes policies that the adviser must follow in its management
activities.
-----------------------------------------------------------------------
INVESTMENT ADVISER
Rodney Square Management Corporation ("RSMC"), the Series' investment adviser,
is located at 1100 North Market Street, Wilmington, Delaware 19890. RSMC is a
wholly owned subsidiary of Wilmington Trust Company ("WTC"), which is wholly
owned by Wilmington Trust Corporation. WTC owns a controlling interest in Cramer
Rosenthal McGlynn, LLC, the Fund's sponsor. RSMC also provides asset management
services to collective investment funds maintained by WTC. In the past, RSMC has
provided asset management services to individuals, personal trusts,
municipalities, corporations and other organizations.
The Prime Money Market Series and the Tax-Exempt Series each pays a monthly fee
to RSMC at the annual rate of 0.47% of the Series' first $1 billion of average
daily net assets; 0.43% of the Series' next $500 million of average daily net
assets; 0.40% of the Series' next $500 million of average daily net assets; and
0.37% of the Series' average daily net assets in excess of $2 billion, as
determined at the close of business on each day throughout the month. For the
twelve months ended June 30, 1999, the Prime Money Market Series and the
Tax-Exempt Series paid RSMC ___% and ___%, respectively, for its services as
investment adviser. Out of its fee, RSMC makes payments to PFPC Inc. for the
provision of administration, accounting and transfer agency services and to PFPC
Trust Company for provision of custodial services.
SERVICE PROVIDERS
The chart below provides information on the Fund's primary service providers.
9
<PAGE>
Asset Shareholder
Management Services
- -------------------------------- -------------------------------------------
INVESTMENT ADVISER TRANSFER AGENT
RODNEY SQUARE MANAGEMENT CORP. PFPC INC.
RODNEY SQUARE NORTH 400 BELLEVUE PARKWAY
1100 N. MARKET STREET WILMINGTON, DE 19809
WILMINGTON, DE 19890-0001
Manages the Fund's business and Handles shareholder services, including
investment activities. recordkeeping and statements, payment of
distribution and processing of buy and sell
requests.
- -------------------------------- -------------------------------------------
--------------
CRM PRIME
MONEY MARKET
&
CRM TAX-EXEMPT
--------------
Fund Asset
Operations Safe Keeping
- -------------------------------------- -----------------------------------
ADMINISTRATOR AND CUSTODIAN
ACCOUNTING AGENT
PFPC INC. PFPC TRUST COMPANY
400 BELLEVUE PARKWAY 200 STEVENS DRIVE
WILMINGTON, DE 19809 LESTER, PA 19113
Provides facilities, equipment and Hold the Fund's assets, settle
personnel to carry out administrative all portfolio trades and collect
services related to the Fund and most of the valuation data required
calculates the Fund's NAV per share for calculating the Fund's NAV
and distributions. per share.
- -------------------------------------- -----------------------------------
Distribution
------------------------------
DISTRIBUTOR
PROVIDENT DISTRIBUTORS INC.
FOUR FALLS CORPORATE CENTER
WEST CONSHOHOCKEN, PA 19428
Distributes the Fund's shares.
------------------------------
10
<PAGE>
SHAREHOLDER INFORMATION
PRICING OF SHARES
Each Fund uses its best effort to maintain its $1 constant share price and
values its securities at cost. This involves valuing a security initially at its
cost and thereafter assuming a constant amortization to maturity of any discount
or premium, regardless of fluctuating interest rates on the market value of the
security. All cash, receivables and current payables are carried at their face
value. Other assets, if any, are valued at fair value as determined in good
faith by, or under the direction of, the Board of Trustees.
PLAIN TALK
-----------------------------------------------------------------------
WHAT IS THE NET ASSET VALUE or "NAV"?
NAV = Assets - Liabilities
--------------------
Outstanding Shares
-----------------------------------------------------------------------
PFPC determines the NAV per share of each Fund, as of 12:00 p.m. Eastern Time
for the Tax-Exempt Fund and as of 2:00 p.m. Eastern Time for the Prime Money
Market Fund, on each Business Day (a day that the New York Stock Exchange, the
Transfer Agent and the Philadelphia branch of the Federal Reserve Bank are open
for business). The NAV is calculated by adding the value of all securities and
other assets in a Fund, deducting its liabilities and dividing the balance by
the number of outstanding shares in that Fund.
Shares will not be priced on those days the Funds are closed. As of the date of
this prospectus, those days are:
New Year's Day Memorial Day Veterans Day
Martin Luther King, Jr. Day Independence Day Thanksgiving Day
President's Day Labor Day Christmas Day
Good Friday Columbus Day
PURCHASE OF SHARES
PLAIN TALK
-----------------------------------------------------------------------
HOW TO PURCHASE SHARES:
(BULLET) Directly by mail or by wire
(BULLET) As a client of a Third Party
-----------------------------------------------------------------------
Fund shares are offered on a continuous basis and are sold without any sales
charges. The minimum initial investment in each Fund's Investor and
Institutional class shares is $10,000 and $1,000,000, respectively. Each Fund,
in its sole discretion, may waive the minimum initial amount to establish
certain Institutional share accounts. Additional investments in any Fund may be
made in any amount. You may purchase shares by mail or by wire, as specified
below.
You may also purchase shares if you are a client of an institution (such as a
bank or broker-dealer) that has entered into a servicing agreement with the
Funds' distributor ("Third Party") you may also purchase shares through such
Third Party. You should also be aware that you may be charged a fee by the Third
Party in connection with your investment in a Fund. If you wish to purchase Fund
shares through your account at a Third Party, you should contact that entity
directly for information and instructions on purchasing shares.
11
<PAGE>
BY MAIL: You may purchase shares by sending a check drawn on a U.S. bank payable
to CRM Funds, indicating the name of the Fund, along with a completed
application (included at the end of this prospectus). If a subsequent investment
is being made, the check should also indicate your account number. When you make
purchases by check, each Fund may withhold payment on redemptions until it is
reasonably satisfied that the funds are collected (which can take up to 10
days). If you purchase shares with a check that does not clear, your purchase
will be canceled and you will be responsible for any losses or fees incurred in
that transaction. Send the check and application to:
REGULAR MAIL: OVERNIGHT MAIL:
CRM Funds CRM Funds
c/o PFPC Inc. c/o PFPC Inc.
P.O. Box ____ 400 Bellevue Parkway, Suite 108
Wilmington, DE 19899 Wilmington, DE 19809
BY WIRE: You may purchase shares by wiring federal funds readily available.
Please call PFPC at (800) ________ for instructions and to make specific
arrangements before making a purchase by wire, and if making an initial
purchase, to also obtain an account number.
ADDITIONAL INFORMATION REGARDING PURCHASES: Investments in a Fund are accepted
on the Business Day that federal funds are deposited for your account on or
before 12:00 p.m. Eastern Time for the Tax-Exempt Fund or on or before 2:00 p.m.
Eastern Time for the Prime Money Market Fund. Monies immediately convertible to
federal funds are deposited for your account on or before 12:00 p.m. for the
Tax-Exempt Fund or on or before 2:00 p.m. Eastern Time for the Prime Money
Market Fund, or checks deposited for your account have been converted to federal
funds (usually within two Business Days after receipt). All investments in a
Fund are credited to your account as shares of the Fund immediately upon
acceptance and become entitled to dividends declared as of the day and time of
investment.
Any purchase order may be rejected if a Fund determines that accepting the order
would not be in the best interest of the Fund or its shareholders.
It is the responsibility of the Third Party to transmit orders for the purchase
of shares by its customers to the Transfer Agent and to deliver required funds
on a timely basis, in accordance with the procedures stated above.
For information on other ways to purchase shares, including through an
individual retirement account (IRA) or an automatic investment plan, please
refer to the Statement of Additional Information.
REDEMPTION OF SHARES
PLAIN TALK
-----------------------------------------------------------------------
HOW TO REDEEM (SELL) SHARES:
(BULLET) By mail
(BULLET) By telephone
(BULLET) By check
-----------------------------------------------------------------------
You may sell your shares on any Business Day by mail, telephone or check, as
described below. Redemptions are effected at the NAV next determined after the
Transfer Agent has received your
12
<PAGE>
redemption request. There is no fee when Fund shares are redeemed. It is the
responsibility of the Third Party to transmit redemption orders and credit their
customers' accounts with redemption proceeds on a timely basis. Redemption
checks are mailed on the next Business Day following receipt by the Transfer
Agent of redemption instructions, but never later than 7 days following such
receipt. Amounts redeemed by wire are normally wired on the date of receipt of
redemption instructions or the next Business Day (if received after 12:00 p.m.
Eastern Time for the Tax-Exempt Fund or after 2:00 p.m. Eastern Time for the
Prime Money Market Fund, or on a non-Business Day), but never later than 7 days
following such receipt. If you purchased your shares through an account at a
Third Party, you should contact the Third Party for information relating to
redemptions. The Fund's name and your account number should accompany any
redemption requests.
BY MAIL: If you redeem your shares by mail, you should submit written
instructions with a "signature guarantee." A signature guarantee verifies the
authenticity of your signature. You can obtain one from most banking
institutions or securities brokers, but not from a notary public. You must
indicate the Fund name, your account number and your name. The written
instructions and signature guarantee should be mailed to:
REGULAR MAIL: OVERNIGHT MAIL:
CRM Funds CRM Funds
c/o PFPC Inc. c/o PFPC Inc.
P.O. Box ____ 400 Bellevue Parkway, Suite 108
Wilmington, DE 19899 Wilmington, DE 19809
BY TELEPHONE: If you prefer to redeem your shares by telephone you may elect to
do so. However there are certain risks. The Funds have certain safeguards and
procedures to confirm the identity of callers and to confirm that the
instructions communicated are genuine. If such procedures are followed, you will
bear the risk of any losses.
BY CHECK: You may use the check writing option to redeem Fund shares by drawing
a check for $500 or more against your Fund account. When the check is presented
for payment, a sufficient number of shares will be redeemed from your account to
cover the amount of the check. This procedure enables you to continue receiving
dividends on those shares until the check is presented for payment. Because the
aggregate amount of fund shares owned is likely to change each day, you should
not attempt to redeem all shares held in your account by using the check writing
procedure. Charges will be imposed for specially imprinted checks, business
checks, copies of canceled checks, stop payment orders, checks returned due to
"non-sufficient funds" and other returned checks. These charges will be paid
automatically by redeeming an appropriate number of Fund shares. Each Fund and
the Transfer Agency also reserve the right to terminate or alter the check
writing service at any time. The Transfer Agent also reserves the right to
impose a service charge in connection with the check writing service. If you are
interested in the check writing service, contact the Transfer Agency for further
information.
ADDITIONAL INFORMATION REGARDING REDEMPTION: Redemption proceeds may be wired to
your predesignated bank account in any commercial bank in the United States if
the amount is $1,000 or more. The receiving bank may charge a fee for this
service. Proceeds may also be mailed to your bank or, for amounts of $10,000,000
or less, mailed to your Fund account address of record if the address has been
established for at least 60 days. In order to authorize the Transfer Agent to
mail redemption proceeds to your Fund account address of record, complete the
appropriate section of
13
<PAGE>
the Application for Telephone Redemptions or include your Fund account address
of record when you submit written instructions. You may change the account that
you have designated to receive amounts redeemed at any time. Any request to
change the account designated to receive redemption proceeds should be
accompanied by a guarantee of the shareholder's signature by an eligible
institution. A signature and a signature guarantee are required for each person
in whose name the account is registered. Further documentation will be required
to change the designated account when a corporation, other organization, trust,
fiduciary or other institutional investor holds Fund shares.
If the shares to be redeemed represent a recent investment made by a check, each
Fund reserves the right not to send the redemption proceeds until it believes
that the check has been collected (which could take up to 10 days).
SMALL ACCOUNTS: If the value of your Fund account falls below $10,000 for
Investor share accounts or $1,000,000 for Institutional share accounts ($2000
for IRAs or automatic investment plans), the Funds may ask you to increase your
balance. If the account value is still below such amounts after 60 days, the
Funds may close your account and send you the proceeds. The Funds will not close
your account if it falls below these amounts solely as a result of a reduction
in your account's market value.
REDEMPTIONS IN KIND: The Funds reserve the right to make redemptions in kind" -
payments of redemption proceeds in fund securities rather than cash -- if the
amount redeemed is large enough to affect the Series' operations (for example,
if it represents more than 1% of the Series' assets).
For additional information on other ways to redeem shares, please refer to the
Statement of Additional Information.
EXCHANGE OF SHARES
PLAIN TALK
-----------------------------------------------------------------------
WHAT IS AN EXCHANGE OF SHARES?
An exchange of shares allows you to move your money from one fund to
another fund within a family of funds.
-----------------------------------------------------------------------
You may exchange all or a portion of your shares in a Fund for the same class of
shares of certain other CRM Funds. These other Funds are:
CRM Prime Money Market Fund
CRM Tax-Exempt Fund
CRM Intermediate Bond Fund
CRM Municipal Bond Fund
CRM Large Cap Value Fund
CRM Mid Cap Value Fund
CRM Small Cap Value Fund
Redemption of shares through an exchange will be effected at the NAV per share
next determined after the Transfer Agent receives your request. A purchase of
shares through an exchange will be effected at the NAV per share determined at
that time or as next determined thereafter.
14
<PAGE>
Exchange transactions will be subject to the minimum initial investment and
other requirements of the Fund into which the exchange is made. An exchange may
not be made if the exchange would leave a balance in a shareholder's account of
less than $10,000 for Investor share accounts or $1,000,000 for Institutional
share accounts.
To obtain prospectuses of the other Funds, you may call (800) ________. To
obtain more information about exchanges, or to place exchange orders, contact
the Transfer Agent, or, if your shares are held in an account with a Third
Party, contact the Third Party. The Funds may terminate or modify the exchange
offer described here and will give you 60 days' notice of such termination or
modification. This exchange offer is valid only in those jurisdictions where the
sale of the Fund shares to be acquired through such exchange may be legally
made.
DISTRIBUTIONS
PLAIN TALK
-----------------------------------------------------------------------
WHAT IS NET INVESTMENT INCOME?
Net investment income consists of interest and dividends earned by a
fund on its investments less accrued expenses.
-----------------------------------------------------------------------
Distributions from the net investment income of each Fund are declared daily as
a dividend and paid monthly to you. Any net capital gain realized by a Fund will
be distributed annually.
All distributions are reinvested in additional shares, unless you elect to
receive distributions in cash. Shares become entitled to receive distributions
on the day after the shares are issued.
TAXES
As long as a Fund meets the requirements for being a "regulated investment
company," it pays no Federal income tax on the earnings and gains it distributes
to shareholders. The Funds' distributions of net investment income (which
include net short-term capital gains), whether received in cash or reinvested in
additional Fund shares, are taxable to you as ordinary income. Each Fund will
notify you following the end of the calendar year of the amount of dividends
paid that year.
You will not recognize any gain or loss on the sale (redemption) or exchange of
shares of a Fund so long as that Fund maintains a stable price of $1.00 a share.
Dividend distributions by the Tax-Exempt Fund of the excess of its interest
income on tax-exempt securities over certain amounts disallowed as deductions
("exempt-interest dividends") may be treated by you as interest excludable from
your gross income. The Tax-Exempt Fund intends to distribute income that is
exempt from federal income tax, though it may invest a portion of its assets in
securities that generate taxable income. Income exempt from federal income tax
may be subject to state and local income tax. Additionally, any capital gains
distributed by the Tax-Exempt Fund may be taxable.
STATE AND LOCAL INCOME TAXES: You should consult your tax advisers concerning
state and local taxes, which may have different consequences from those of the
Federal income law.
This section is only a summary of some important income tax considerations that
may affect your investment in a Fund. More information regarding those
considerations appears in our Statement of Additional Information. You are urged
to consult your tax adviser regarding the effects of an investment on your tax
situation.
15
<PAGE>
DISTRIBUTION ARRANGEMENTS
Provident Distributors, Inc. ("PDI") manages the Funds' distribution efforts and
provides assistance and expertise in developing marketing plans and materials,
enters into dealer agreement with broker-dealers to sell shares and provides
shareholder support services, directly or through affiliates. The Funds do not
charge any sales loads, deferred sales loads or other fees in connection with
the purchase of shares.
SHARE CLASSES
The Funds issue Investor and Institutional share classes. Each class of the
Funds has different minimum investment requirements and fees. Institutional
shares are offered only to those investors who invest in the Fund through an
intermediary (i.e., broker) or through a consultant AND who invest $1,000,000 or
more or where related accounts, when combined total $1,000,000 or more. Other
investors investing $10,000 or more may purchase Investor shares.
MASTER/FEEDER STRUCTURE
Other institutional investors, including other mutual funds, may invest in the
master funds. The master/feeder structure enables various institutional
investors, including a Fund, to pool their assets, which may be expected to
result in economies by spreading certain fixed costs over a larger asset base.
Each shareholder of a master fund, including a Fund, will pay its proportionate
share of the master fund's expenses.
For reasons relating to costs or a change in investment goal, among others, a
Fund could switch to another master fund or decide to manage its assets itself.
The Funds are not currently contemplating such a move.
16
<PAGE>
FOR MORE INFORMATION
FOR INVESTORS WHO WANT MORE INFORMATION ON THE FUND, THE FOLLOWING DOCUMENTS ARE
AVAILABLE FREE UPON REQUEST:
ANNUAL/SEMI-ANNUAL REPORTS: Contain performance data and information on the
Funds' holdings and operating results for the Funds' most recently completed
fiscal year or half-year.
STATEMENT OF ADDITIONAL INFORMATION (SAI): Provides a complete technical and
legal description of the Funds' policies, investment restrictions, risks, and
business structure. This prospectus incorporates the SAI by reference.
Copies of these documents and answers to questions about the Funds may be
obtained without charge by contacting:
CRM Funds
c/o PFPC Inc.
400 Bellevue Parkway
Suite 108
Wilmington, Delaware 19809
(800) 254-3948
9:00 a.m. to 5:00 p.m., Eastern time
Information about the Funds (including the SAI) can be reviewed and copied at
the Public Reference Room of the Securities and Exchange Commission in
Washington, D.C. Copies of this information may be obtained, upon payment of a
duplicating fee, by writing the Public Reference Room of the SEC, Washington,
DC, 20549-6009. Information on the operation of the Public Reference Room may be
obtained by calling the SEC at 1-(800)-SEC-0330. Reports and other information
about the Fund may be viewed on-screen or downloaded from the SEC's Internet
site at http://www.sec.gov.
FOR MORE INFORMATION ON OPENING A NEW ACCOUNT, MAKING CHANGES TO EXISTING
ACCOUNTS, PURCHASING, EXCHANGING OR REDEEMING SHARES, OR OTHER INVESTOR
SERVICES, PLEASE CALL 1-(800)-_______.
The investment company registration number is 811-08648.
17
<PAGE>
THE ROXBURY LARGE CAP GROWTH PORTFOLIO
OF WT MUTUAL FUND
================================================================================
PROSPECTUS DATED______, 1999
This prospectus gives vital information about the Portfolio, including
information on investment policies, risks and fees. For your own benefit and
protection, please read it before you invest, and keep it on hand for future
reference.
Like all mutual fund shares, the Securities and Exchange Commission has not
approved or disapproved the Portfolio's shares or determined whether this
prospectus is accurate or complete. Anyone who tells you otherwise is committing
a crime.
<PAGE>
TABLE OF CONTENTS
A LOOK AT THE GOALS, STRATEGIES, PORTFOLIO DESCRIPTION
RISKS AND EXPENSES OF THE Summary.....................................3
PORTFOLIO. Fees and Expenses...........................4
Adviser Prior Performance...................5
Investment Objective........................7
Primary Investment Strategies...............8
Additional Risk Information.................9
DETAILS ABOUT THE SERVICE MANAGEMENT OF THE PORTFOLIO
PROVIDERS. Investment Adviser.........................11
Service Providers..........................11
POLICIES AND INSTRUCTIONS FOR SHAREHOLDER INFORMATION
OPENING, MAINTAINING AND Pricing of Shares..........................13
CLOSING AN ACCOUNT IN THE Selecting the Correct Class of Shares......13
PORTFOLIO. Sales Charges..............................14
Sales Charge Reduction and Waivers.........16
Purchase of Shares.........................17
Redemption of Shares.......................19
Distributions..............................20
Taxes......................................20
DETAILS ON DISTRIBUTION PLANS, DISTRIBUTION ARRANGEMENTS
DISTRIBUTION FEES AND THE Rule 12b-1 fees............................21
PORTFOLIO'S MASTER/FEEDER Master/Feeder Structure....................22
ARRANGEMENT.
FOR MORE INFORMATION...............back cover
For information about key terms and concepts, look for our "PLAIN TALK"
explanations.
2
<PAGE>
THE ROXBURY LARGE CAP GROWTH PORTFOLIO
PORTFOLIO DESCRIPTION
PLAIN TALK
-----------------------------------------------------------------------
WHAT IS A MUTUAL FUND?
A mutual fund pools shareholders' money and, using a professional
investment manager, invests it in securities like stocks and bonds.
-----------------------------------------------------------------------
SUMMARY
PLAIN TALK
-----------------------------------------------------------------------
WHAT DOES "CAP" MEAN?
Cap or the market capitalization of a company means the value of the
company's common stock in the stock market.
-----------------------------------------------------------------------
Investment Objective (BULLET) The LARGE CAP GROWTH PORTFOLIO seeks
superior long-term growth of capital.
- --------------------------------------------------------------------------------
Investment Focus (BULLET) Equity (or related) securities
- --------------------------------------------------------------------------------
Share Price Volatility (BULLET) Moderate to high
- --------------------------------------------------------------------------------
Principal Investment (BULLET) The Portfolio operates as a "feeder fund"
Strategy which means that the Portfolio does buy
individual securities directly. Instead, it
invests in a corresponding mutual fund or
"master fund," which in turn purchases
investment securities. The Portfolio invests
all of its assets in a master fund which is
a separate series of WT Investment Trust I.
The Portfolio and the Series have the same
investment objective, policies and
limitations.
(BULLET) The LARGE CAP GROWTH PORTFOLIO invests in
the LARGE CAP GROWTH SERIES which invests at
least 65% of its total assets in a
diversified portfolio of U.S. equity (or
related) securities of corporations with a
market cap of $2 billion or more which also
have above average earnings potential,
compared to the securities market as a
whole.
- --------------------------------------------------------------------------------
Principal Risks (BULLET) It is possible to lose money by investing in
the Portfolio.
(BULLET) The Portfolio's share price will fluctuate
in response to changes in the market value
of the Portfolio's investments. Market value
changes result from business developments
affecting an issuer as well as general
market and economic conditions.
(BULLET) Growth-oriented investments may be more
volatile than the rest of the U.S. stock
market as a whole.
(BULLET) The performance of the Portfolio will depend
on whether or not the adviser is successful
in pursuing an investment strategy.
(BULLET) The Portfolio is subject to other risks that
are described under "Additional Risk
Information."
- --------------------------------------------------------------------------------
Investor Profile (BULLET) Investors who want the value of their
investment to grow and who are willing to
accept more volatility for the possibility
of higher returns.
- --------------------------------------------------------------------------------
3
<PAGE>
FEES AND EXPENSES
PLAIN TALK
-----------------------------------------------------------------------
WHAT ARE FUND EXPENSES?
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, distribution, administration and custody
services. The Portfolio's expenses in the table below are shown as a
percentage of its net assets. These expenses are deducted from
Portfolio assets.
-----------------------------------------------------------------------
The table below describes the fees and expenses that you may pay if you buy and
hold shares of the Portfolio. No sales charges or other fees are paid directly
from your investment.
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM
YOUR INVESTMENT) CLASS A CLASS B(a) CLASS C
------- ---------- -------
Maximum sales charge (load) 6.00%(b) None None
imposed on purchases (as a
percentage of offering price)
Maximum deferred sales charge None(c) 6.00%(d) 1.00(e)
Maximum sales charge imposed on None None None
reinvested dividends (and other
distributions) (as a percentage of
amount invested)
Redemption fee (as a percentage of None(g) None None
amount redeemed, if applicable)(f)
- -------------------------
(a) Class B shares convert to Class A shares automatically at the beginning
of the seventh year after purchase.
(b) Reduced for purchases of $25,000 and more. Class A purchases of
$1,000,000 or more will not be subject to an initial sales charge.
(c) Class A shares are not subject to a contingent deferred sales charge (a
"CDSC"); except certain purchases of $1,000,000 or more that are not
subject to an initial sales charge may instead be subject to a CDSC of
1.00% of amounts redeemed within the first year of purchase. Such a
CDSC may be waived in connection with redemptions to participants in
certain fee-based programs.
(d) 6.00% during the first year, 5.00% during the second year, 4.00% during
the third year; 3.00% during the fourth year, 2.00% during the fifth
year and 1.00% during the sixth year. Class B shares automatically
convert into Class A shares at the beginning of the seventh year after
purchase and thereafter will not be subject to a CDSC.
(e) Class C shares are subject to a 1.00% CDSC if redeemed within the first
year after purchase.
(f) Shareholders effecting redemptions via wire transfer may be required to
pay fees, including a $10 wire fee and other fees, that will be
directly deducted from redemption proceeds. Shareholders who request
redemption checks to be sent by overnight mail may be required to pay a
$10 fee that will be directly deducted from redemption proceeds. See
"Redemption of Shares."
(g) Class A shares that (i) were not purchased through certain fee-based
programs or (ii) were not subject to an initial sales charge or CDSC
will be subject to a redemption fee of 1.00% on amounts redeemed within
the first year of purchase.
4
<PAGE>
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT
ARE DEDUCTED FROM PORTFOLIO ASSETS) CLASS A CLASS B CLASS C
------- ------- -------
Management fees 0.55% 0.55% 0.55%
Distribution (12b-1) and service fees 0.00% 0.75% 0.75%
Other expenses 0.55% 0.55% 0.55%
TOTAL ANNUAL OPERATING EXPENSES 1 1.10% 1.85% 1.85%
Waivers/reimbursements 2 0.15% 0.15% 0.15%
Net expenses 2 0.95% 1.70% 1.70%
- -------------------------
1 The table above and the Example below each reflect the aggregate annual
operating expenses of the Portfolio and the Large Cap Growth Series.
2 The adviser has agreed to reduce its fees and/or reimburse expenses to limit
the combined total annual operating expenses to 0.95% (for Class A Shares) and
1.70% (for Class B shares and Class C shares). This waiver will remain in place
until the Board of Trustees approves its termination.
EXAMPLE
This example is intended to help you compare the cost of investing in the
Portfolio with the cost of investing in other mutual funds. The table below
shows what you would pay if you invested $10,000 over the various time frames
indicated. The example assumes that:
(BULLET) you reinvested all dividends and other distributions
(BULLET) the average annual return was 5%
(BULLET) the Portfolio's maximum total operating expenses are charged and
remain the same over the time periods
(BULLET) you redeemed all of your investment at the end of the time period.
Although your actual cost may be higher or lower, based on these assumptions,
your costs would be:
ROXBURY LARGE CAP GROWTH PORTFOLIO 1 YEAR 3 YEARS
Class A 1 $705 $929
Class B $188 $582
Class B (assuming complete redemption at $777 $1,147
end of period)2
Class C $188 $582
Class C (assuming complete redemption at $97 $303
end of period)
1 Assumes deduction at time of purchase of maximum sales charge.
2 Assumes deduction at redemption of maximum deferred sales charge.
THE ABOVE EXAMPLE IS FOR COMPARISON PURPOSES ONLY AND IS NOT A REPRESENTATION OF
THE PORTFOLIO'S ACTUAL EXPENSES AND RETURNS, EITHER PAST OR FUTURE.
ADVISER PRIOR PERFORMANCE
The table below shows relevant performance data for the adviser and its
predecessors' investment advisory accounts (the "Accounts") during the period
April 1, 1986 through March
5
<PAGE>
31, 1999, using the same investment approach specified for the Large Cap Growth
Series under "Investment Objective" and "Primary Investment Strategies."
The results for the period April 1, 1986 through June 30, 1986 are the results
of A.H. Browne & Company, the predecessor to Roxbury Capital Management, Inc., a
California corporation. The results for the period July 1, 1986 through July 31,
1998 are the results of Roxbury Capital Management Inc., the predecessor to
Roxbury Capital Management, LLC.
The Accounts constitute the accounts managed by the adviser (and its
predecessors) that have an identical or substantially similar investment
objective or investment approach as the Large Cap Growth Series and that met
certain basic criteria as to minimum account value, discretionary status,
tax-exempt status and period of management of more than one month. The Accounts
were managed for tax-exempt clients and, therefore, may have been managed
differently than for taxable clients. Large Cap Growth Series will be managed
primarily for taxable investors. The Accounts were not subject to the same types
of expenses to which the Portfolio is subject, nor to the diversification
requirements, specific tax restrictions and investment limitations imposed on
the Portfolio by the Investment Company Act of 1940, or the Internal Revenue
Code. The performance of the Accounts may have been adversely affected had they
been subject to the same expenses, restrictions and limitations. The adviser
believes that any adverse effect would not have been significant. The results
presented are not intended to predict or suggest the return to be experienced by
the Portfolio or the return you might achieve by investing in the Portfolio. You
should not rely on the following performance data as an indication of future
performance of the adviser or of the Portfolio.
TOTAL RETURN OF ACCOUNTS
- --------------------------------------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
Average Annual Return for ENDED ENDED ENDED ENDED
the Periods Specified: MAR. 31, MAR. 31, MAR. 31, MAR. 31,
1999 1999 1999 1999
-------- -------- -------- ---------
The Accounts............... 31.57% 31.14% 26.51% 19.21%
S&P 500 Index.............. 18.45% 28.07% 26.33% 18.94%
- --------------------------------------------------------------------------------
Please read the following important notes concerning the Accounts:
1. The results for the Accounts reflects both income and capital appreciation
or depreciation (total return). Dividends are accounted for on a cash
basis; other items of income are accounted for on an accrual basis. Returns
are time-weighted and represent the dollar-weighted average of the
Accounts. Return figures are net of applicable fees and expenses (other
than separate custody fees). As of April 1, 1995 the Accounts were valued
daily.
2. The S&P 500 Index consists of 500 stocks chosen by Standard & Poor's for
market size, liquidity and industry group representation. It is a
market-value weighted unmanaged index
6
<PAGE>
(stock price times number of shares outstanding), with each stock's weight
in the S&P 500 Index proportionate to its market value.
PLAIN TALK
-----------------------------------------------------------------------
WHAT IS AN INDEX?
An index is a broad measure of the market performance of a specific
group of securities in a particular market, or securities in a market
sector. You cannot invest directly in an index. An index does not have
an investment adviser and does not pay any commissions or expenses. If
an index had expenses, its performance would be lower.
-----------------------------------------------------------------------
SPECIAL NOTE CONCERNING ADVISER INVESTMENT RETURNS: You should note that
the Portfolio will compute and disclose its average annual compounded rate
of return using the standard formula set forth in SEC rules, which differs
in certain respects from the method used to compute the returns for the
Accounts noted above. The SEC total return calculation method calls for
computation and disclosure of an average annual compounded rate of return
for one, five and ten year periods or shorter periods from inception. The
SEC formula provides a rate of return that equates a hypothetical initial
investment of $10,000 to an ending redeemable value. The returns shown for
the Accounts are net of advisory fees in accordance with the SEC
calculation formula, which requires that returns shown for a fund be net of
advisory fees as well as all other applicable fund operating expenses.
Performance was calculated on a trade date basis.
INVESTMENT OBJECTIVE
The LARGE CAP GROWTH PORTFOLIO and the Large Cap Growth Series seek superior
long-term growth of capital.
For purposes of this investment objective, "superior" long-term growth of
capital means long-term growth of capital from an investment in the securities
comprising the S&P 500 Index that exceeds the return of the S&P 500 Index. This
investment objective may not be changed without shareholder approval. There is
no guarantee that the Portfolio will achieve its investment objective.
7
<PAGE>
PRIMARY INVESTMENT STRATEGIES
PLAIN TALK
-----------------------------------------------------------------------
WHAT ARE GROWTH FUNDS?
Growth funds invest in the common stock of growth-oriented companies
seeking maximum growth of earnings and share price with little regard
for dividend earnings. Generally, companies with high relative rates of
growth tend to reinvest more of their profits into the company and pay
out less to shareholders in the form of dividends. As a result,
investors in growth funds tend to receive most of their return in the
form of capital appreciation.
-----------------------------------------------------------------------
The LARGE CAP GROWTH PORTFOLIO invests its assets in the Large Cap Growth
Series, which, under normal market conditions, invest at least 65% of its total
assets in the following equity (or related) securities:
(BULLET) common stocks of U.S. corporations that are judged by the adviser to
have strong growth characteristics and, with respect to at least 65% of
the Portfolio's total assets, have a market capitalization of $2
billion or higher at the time of purchase;
(BULLET) options on, or securities convertible (such as convertible preferred
stock and convertible bonds) into, the common stock of U.S.
corporations described above;
(BULLET) options on indexes of the common stock of U.S. corporations described
above; and
(BULLET) contracts for either the future delivery, or payment in respect of the
future market value, of certain indexes of the common stock of U.S.
corporations described above, and options upon such futures contracts.
The adviser looks for high quality, sustainable growth stocks while paying
careful attention to valuation. Research is bottom-up, emphasizing business
fundamentals, including financial statement analysis and industry and competitor
evaluations. The adviser selects stocks it believes exhibit consistent,
above-average earnings growth, superior quality and attractive risk/reward
characteristics. These dominant companies are expected to generate consistent
earnings growth in a variety of economic environments.
The adviser also seeks to provide a greater margin of safety and stability in
the Series. Superior earnings growth is expected to translate ultimately into
superior compounding of returns. Additionally, several valuation tools are used
to avoid over-paying for growth or chasing "hot" stocks. Over time, the adviser
believes these favorable characteristics will produce superior returns with less
risk than many growth styles.
The adviser's research team analyzes a broad universe of over 2,000 companies.
Industry specialists search for high-quality companies growing at roughly double
the market's average. Approximately 150 stocks pass these initial screens and
are subject to thorough research. Dominant market share, strong financials, the
power to price, significant free cash flow and shareholder-oriented management
are critical variables.
8
<PAGE>
Final purchase candidates are selected by the adviser's investment committee
based on attractive risk/reward characteristics and diversification guidelines.
Certain industries may be over or under-weighted by the adviser based upon
favorable growth rates or valuation parameters.
The adviser attempts to maintain portfolio continuity by purchasing sustainable
growth companies that are less sensitive to short-term economic trends than
cyclical, low quality companies. The adviser generally sells stocks when the
risk/reward characteristics of a stock turn negative, company fundamentals
deteriorate, or the stock underperforms the market or its peer group. The latter
device is employed to minimize mistakes and protect capital.
The Series combines three distinct components, each of which is intended to
enhance returns and add balance.
LARGE CAP GROWTH STOCKS (over $5 billion in total market cap) - Up to 100%,
but not less than 65%, of the Series' total assets:
(BULLET) Mature, predictable businesses
(BULLET) Capital appreciation and income
(BULLET) Highest liquidity
MEDIUM CAP GROWTH STOCKS (between $1 and $5 billion in total market cap) - Up to
20% of the Series' total assets:
(BULLET) Superior long-term potential
(BULLET) Strong niche or franchise
(BULLET) Seasoned management
SPECIAL SITUATIONS GROWTH OPPORTUNITIES - Up to 20% of the Series' total assets:
(BULLET) Stable return, independent of the market
(BULLET) Unusually favorable risk/reward characteristics
(BULLET) Typically involve corporate restructuring
In order to respond to adverse market, economic, political or other conditions
the Series may assume a temporary defensive position and invest without limit in
commercial paper and other money market instruments that are rated investment
grade. The result of this action may be that the Series will be unable to
achieve its investment objective. The Series also may use other strategies and
engage in other investment practices, which are described in detail in our
Statement of Additional Information.
ADDITIONAL RISK INFORMATION
The following is a list of certain risks that may apply to your investment in
the Portfolio. Further information about investment risk is available in our
Statement of Additional Information:
(BULLET) DERIVATIVES RISK: Some of the Series' investments may be referred to
as "derivatives"
9
<PAGE>
because their value depends on, or derives from, the value of an
underlying asset, reference rate or index. These investments include
options, futures contracts and similar investments that may be used
in hedging and related income strategies. The market value of
derivative instruments and securities is sometimes more volatile than
that of other investments, and each type of derivative may pose its
own special risks. As a fundamental policy, no more than 15% of the
Series' total assets may at any time be committed or exposed to
derivative strategies.
(BULLET) GROWTH-ORIENTED INVESTING RISK: The risk that an investment in a
growth-oriented portfolio, which invests in growth-oriented
companies, will be more volatile than the rest of the U.S. market as
a whole.
(BULLET) MARKET RISK: The risk that the market value of a security may move up
and down, sometimes rapidly and unpredictably. The prices of equity
securities change in response to many factors including the
historical and prospective earnings of the issuer, the value of its
assets, general economic conditions, interest rates, investor
perceptions and market liquidity.
(BULLET) MASTER/FEEDER RISK: The master/feeder structure is relatively new and
more complex. While this structure is designed to reduce costs, it
may not do so, and there may be operational or other complications.
(BULLET) OPPORTUNITY RISK: The risk of missing out on an investment
opportunity because the assets necessary to take advantage of it are
tied up in less advantageous investments.
(BULLET) VALUATION RISK: The risk that the Series has valued certain of its
securities at a higher price than it can sell them.
(BULLET) YEAR 2000 COMPLIANCE RISK: Like other organizations around the world,
the Series could be adversely affected if the computer systems used
by its various service providers (or the market in general) do not
properly operate after January 1, 2000. The Series is taking steps to
address the Year 2000 issue with respect to the computer systems that
it relies on. There can be no assurance, however, that these steps
will be sufficient to avoid a temporary service disruption or any
adverse impact on the Series.
Additionally, if a company in which the Series is invested is
adversely affected by Year 2000 problems, it is likely that the price
of that company's securities will also be adversely affected. A
decrease in one or more of the Series' holdings may have a similar
impact on the price of the Series' shares. The adviser will rely on
public filings and other statements made by companies about their
Year 2000 readiness. The adviser is not able to audit any company and
its major suppliers to verify their Year 2000 readiness.
10
<PAGE>
MANAGEMENT OF THE FUND
The Board of Trustees supervises the management, activities and affairs of the
Portfolio and has approved contracts with various financial organizations to
provide, among other services, the day-to-day management required by the
Portfolio and its shareholders.
INVESTMENT ADVISER
PLAIN TALK
-----------------------------------------------------------------------
WHAT IS AN INVESTMENT ADVISER?
The investment adviser makes investment decisions for a mutual fund and
continuously reviews, supervises and administers the fund's investment
program. The Board of Trustees supervises the adviser and establishes
policies that the adviser must follow in its management activities.
-----------------------------------------------------------------------
Roxbury Capital Management, Inc., 100 Wilshire Boulevard, Suite 600, Santa
Monica, California 90401, serves as the investment adviser for the Large Cap
Growth Series, the master fund in which the Portfolio invests. Under an advisory
agreement, Roxbury, subject to the supervision of the Board of Trustees, directs
the investments of the Series in accordance with its investment objective,
policies and limitations. In addition to serving as adviser to the Series,
Roxbury is engaged in a variety of investment advisory activities, including the
management of separately managed accounts. The Large Cap Growth Series pays a
monthly advisory fee to Roxbury at the annual rate of 0.55% of the Series' first
$1 billion of average daily net assets; 0.50% of the Series' next $1 billion of
average daily net assets; and 0.45% of the Series average daily net assets over
$2 billion.
PORTFOLIO MANAGERS
The day-to-day management of the Large Cap Growth Series is the responsibility
of Roxbury's Investment Committee. The Investment Committee meets regularly to
make investment decisions for the Series and relies on Roxbury's research team.
SERVICE PROVIDERS
The chart below provides information on the Portfolio's primary service
providers.
11
<PAGE>
Asset Shareholder
Management Services
- -------------------------------- -------------------------------------------
INVESTMENT ADVISER TRANSFER AGENT
ROXBURY CAPITAL MANAGMENT, INC. PFPC INC.
100 WILSHIRE BOULEVARD 400 BELLEVUE PARKWAY
SUITE 600 WILMINGTON, DE 19809
SANTA MONICA, CA 90401
Manages the business and Handles shareholder services, including
investment activities of the recordkeeping and statements, payment of
Portfolio's master fund. distribution and processing of buy and sell
requests.
- -------------------------------- -------------------------------------------
--------------
ROXBURY
LARGE CAP GROWTH
PORTFOLIO
--------------
Fund Asset
Operations Safe Keeping
- -------------------------------------- -----------------------------------
ADMINISTRATOR AND CUSTODIAN
ACCOUNTING AGENT
PFPC INC. PFPC TRUST COMPANY
400 BELLEVUE PARKWAY 200 STEVENS DRIVE
WILMINGTON, DE 19809 LESTER, PA 19113
Provides facilities, equipment and Hold the Portfolio's assets, settle
personnel to carry out administrative all portfolio trades and collect
services related to the Portfolio and most of the valuation data required
calculates the Portfolio's NAV per share for calculating the Portfolio's NAV
and distributions. per share.
- -------------------------------------- -----------------------------------
Distribution
------------------------------
DISTRIBUTOR
PROVIDENT DISTRIBUTORS INC.
FOUR FALLS CORPORATE CENTER
WEST CONSHOHOCKEN, PA 19428
Distributes the Portfolio's shares.
-----------------------------------
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<PAGE>
SHAREHOLDER INFORMATION
PRICING OF SHARES
The Portfolio values its assets based on current market values when such values
are readily available. These prices normally are supplied by a pricing service.
Any assets held by the Portfolio that are denominated in foreign currencies are
valued daily in U.S. dollars at the foreign currency exchange rates that are
prevailing at the time that the accounting agent determines the Portfolio's
daily net asset value. To determine the value of those securities, PFPC may use
a pricing service that takes into account not only developments related to
specific securities, but also transactions in comparable securities. Securities
that do not have a readily available current market value are valued in good
faith under the direction of the Board of Trustees.
PLAIN TALK
-----------------------------------------------------------------------
WHAT IS THE NET ASSET VALUE or "NAV"?
NAV = Assets - Liabilities
--------------------
Outstanding Shares
-----------------------------------------------------------------------
PFPC determines the NAV per share of the Portfolio as of the close of regular
trading on the New York Stock Exchange (currently 4:00 p.m., Eastern time), on
each Business Day (a day that the Exchange, the Transfer Agent and the
Philadelphia branch of the Federal Reserve Bank are open for business). The NAV
is calculated by adding the value of all securities and other assets in the
Portfolio, deducting its liabilities and dividing the balance by the number of
outstanding shares in the Portfolio.
Shares will not be priced on those days the Portfolio is closed. As of the date
of this prospectus, those days are:
New Year's Day Memorial Day Veterans Day
Martin Luther King, Jr. Day Independence Day Thanksgiving Day
President's Day Labor Day Christmas Day
Good Friday Columbus Day
SELECTING THE CORRECT CLASS OF SHARES
This prospectus offers Class A, Class B and Class C shares of the Portfolio.
Each class has its own cost structure, allowing you to choose the one that best
meets your requirements. Your financial consultant can help you decide. For
estimated expenses of each class, see the table under "Fees and Expenses"
earlier in this prospectus.
CLASS A SHARES--INITIAL SALES CHARGE
Purchasers of Class A shares will incur a sales charge at the time of purchase
(a "front-end load") based on the dollar amount of the purchase. The maximum
initial sales charge is 6.0%, which is reduced for purchases of $25,000 and
over. Sales charges also may be reduced by using the accumulation privilege
described under "Sales Charge Reductions and Waivers." Class A shares are
subject to an ongoing shareholder servicing fee of 0.25% of the Portfolio's
average net assets
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<PAGE>
attributable to Class A shares. Class A shares will not be subject to any
contingent deferred sales charge (CDSC or "back end load") when they are
redeemed. Although purchases of $1,000,000 or more may not be subject to an
initial sales charge, if the initial sales charge is waived, such purchases may
be subject to a CDSC of 1.00% if the shares are redeemed within one year after
purchase. Class A shares that (i) were not purchased through certain fee-based
programs or (ii) were not subject to an initial sales charge or CDSC will be
subject to a redemption fee of 1.00% on amounts redeemed within the first year
of purchase. Class A shares also will be issued upon conversion of Class B
shares, as described below under "Class B Shares."
CLASS B SHARES--DEFERRED SALES CHARGE
Purchases of Class B shares will not incur a sales charge at the time of
purchase, but they are subject to an ongoing Rule 12b-1 distribution fee of
0.75% and an ongoing shareholder servicing fee of 0.25%. Class B shares are
subject to a CDSC if you redeem them within six years of purchase. At the
beginning of the seventh year after purchase, Class B shares will automatically
convert into Class A shares of the Portfolio, which are subject to the same
shareholder servicing fee of 0.25%. Automatic conversion of Class B shares into
Class A shares will occur at least once a month on the basis of the relative net
asset values of the shares of the two classes on the conversion date, without
the imposition of any sales load, fee or other charge. Conversion of Class B
shares to Class A shares will not be deemed a purchase or sale of the shares for
federal income tax purposes. Shares purchased through reinvestment of dividends
and other distributions on Class B shares also will convert automatically to
Class A shares based on the portion of purchased shares that convert.
CLASS C SHARES--PAY AS YOU GO
Class C shares do not incur a sales charge at the time of purchase, but they are
subject to an ongoing Rule 12b-1 distribution fee of 0.75% and an ongoing
shareholder servicing fee of 0.25%. Class C shares also are subject to a 1.00%
CDSC if you redeem them within one year of purchase. Although Class C shares are
subject to a CDSC for only one year (as compared to six years for Class B),
Class C shares have no conversion feature and, accordingly, if you purchase
Class C shares, those shares will be subject to the 0.75% distribution fee for
as long as you own your Class shares.
SALES CHARGES
CLASS A SHARES
Part of the front-end sales charge is paid directly to the selling broker-dealer
(the "dealer reallowance"). The remainder is retained by the distributor and may
be used either to promote the sale of the Portfolio's shares or to compensate
the distributor for its efforts to sell the shares of the Portfolio.
14
<PAGE>
- --------------------------------------------------------------------------------
DEALER
YOUR INVESTMENT AS A PERCENTAGE AS A PERCENTAGE REALLOWANCE AS
OF OFFERING OF YOUR A PERCENTAGE OF
PRICE INVESTMENT OFFERING PRICE
- ----------------------------------------------------------------------------
Less than $25,000 6.00% 6.38% 5.50%
- ----------------------------------------------------------------------------
$25,000 or more,
but less than $50,000 5.00% 5.26% 4.50%
- ----------------------------------------------------------------------------
$50,000 or more,
but less than $100,000 4.25% 4.44% 3.75%
- ----------------------------------------------------------------------------
$100,000 or more,
but less than $250,000 3.50% 3.63% 3.00%
- ----------------------------------------------------------------------------
$250,000 or more,
but less than $500,000 2.75% 2.83% 2.50%
- ----------------------------------------------------------------------------
$500,000 or more,
but less than $1,000,000 2.00% 2.04% 1.75%
- ----------------------------------------------------------------------------
$1,000,000 or more 0.00%* 0.00%* 0.00%*
- ----------------------------------------------------------------------------
* The distributor may pay a dealer reallowance on purchases of $1 million or
more during a 13-month period. The dealer reallowance, as a percentage of
offering price, is as follows: 1.00% on purchases between $1 million and $2
million; plus 0.80% on the amount between $2 million and $3 million; plus
0.50% on the amount between $3 million and $50 million; plus 0.25% on the
amount between $50 million and $100 million; plus 0.15% of the amount
exceeding $100 million. Class A shares that (i) were not purchased through
certain fee-based programs or (ii) were not subject to an initial sales
charge or CDSC will be subject to a redemption fee of 1.00% on amounts
redeemed within the first year of purchase.
CLASS B SHARES
Class B shares are offered at their net asset value per share, without any
initial sales charge, but are subject to a CDSC if you redeem them within six
years of purchase. The distributor pays the selling broker-dealer a 5.00%
commission at the time of sale.
CLASS C SHARES
Class C shares are offered at their net asset value per share without any
initial sales charge. Class C shares, however, are subject to a CDSC if you
redeemed them within one year of purchase. The Distributor may pay the selling
broker-dealer up to a 1.00% commission at the time of sale.
CONTINGENT DEFERRED SALES CHARGE (CDSC)
You may be subject to a CDSC upon redemption of your Class B and Class C shares
under the following conditions:
(BULLET) Class B Shares
---------------------------------------------------------------
YEARS AFTER PURCHASE CDSC ON SHARES BEING REDEEMED
---------------------------------------------------------------
1st year 6.00%
---------------------------------------------------------------
2nd year 5.00%
---------------------------------------------------------------
3rd year 4.00%
---------------------------------------------------------------
4th year 3.00%
---------------------------------------------------------------
5th year 2.00%
---------------------------------------------------------------
6th year 1.00%
---------------------------------------------------------------
After 6 years None
---------------------------------------------------------------
Class B shares will be automatically converted to Class A shares at the
beginning of the seventh year after purchase.
15
<PAGE>
(BULLET) Class C Shares
If you redeem Class C shares within one year of purchase, you will be
charged a CDSC of 1.00% of shares redeemed. There is no CDSC imposed on
Class C shares acquired through reinvestment of dividends or capital
gains.
(BULLET) Class B and C Shares
The CDSC will be imposed on the lesser of the original purchase price
or the net asset value of the redeemed shares at the time of the
redemption. CDSC calculations are based on the specific shares
involved, not the value of the account. To keep your CDSC as low as
possible, each time you place a request to sell shares, we will first
sell any shares in your account that are not subject to a CDSC. If
there are not enough of these shares to meet your request, we will sell
your shares on a first-in, first-out basis. Your financial consultant
or institution may elect to waive some or all of the payment, thereby
reducing or eliminating the otherwise applicable CDSC.
SALES CHARGE REDUCTIONS AND WAIVERS
REDUCING SALES CHARGES ON YOUR CLASS A SHARES. There are several ways you can
combine multiple purchases of Class A shares to take advantage of the
breakpoints in the sales charge schedule. These can be combined in any manner:
(BULLET) Accumulation privilege--lets you add the value of shares of any Class
A shares you and your immediate family already own to the amount of
your next investment for purposes of calculating sales charges
(BULLET) Letter of intent--lets you purchase Class A shares over a 13-month
period and receive the same sales charge as if all shares had been
purchased at once. See the new account application and the Statement
of Additional Information for terms and conditions.
To use these privileges: Complete the appropriate section on your new account
application, or contact your financial consultant or the Portfolio to add these
options to an existing account.
CDSC WAIVERS. In general, the CDSC may be waived on shares you sell for the
following reasons:
(BULLET) Payments through certain systematic retirement plans and other
employee benefit plans
(BULLET) Qualifying distributions from qualified retirement plans and other
employee benefit plans
(BULLET) Distributions from custodial accounts under section 403(b)(7) of the
Internal Revenue Code as well as from Individual Retirement Accounts
(IRAs) due to death, disability or attainment of age 59 1/2
(BULLET) Participation in certain fee-based programs
To use any of these waivers: Contact your financial consultant or the Portfolio.
16
<PAGE>
REINSTATEMENT PRIVILEGE. If you sell shares of the Portfolio, you may invest
some or all of the proceeds in the Portfolio within 90 days without a sales
charge. If you paid a CDSC when you sold your shares, you will be credited with
the amount of the CDSC. All accounts involved must have the same registration.
To use this privilege: Contact your financial consultant or the Portfolio.
NET ASSET VALUE PURCHASES. Class A shares may be sold at net asset value to:
(BULLET) Current or retired trustees, officers and employees of the Portfolio,
the distributor, the transfer agent, the adviser and its members,
certain family members of the above persons, and trusts or plans
primarily for such persons or their family members;
(BULLET) Current or retired registered representatives or full-time employees
and their spouses and minor children and plans of broker-dealers or
other institutions that have selling agreements with the distributor;
(BULLET) Investors who exchange their shares from an unaffiliated investment
company that has a comparable sales charge, so long as shares are
purchased within 60 days of the redemption;
(BULLET) Trustees or other fiduciaries purchasing shares for certain
retirement plans of organizations with 50 or more eligible employees
(BULLET) Investment advisers, financial planners and certain financial
institutions that place trades for their own accounts or the accounts
of their clients either individually or through a master account and
who charge a management, consulting or other fee for their services;
(BULLET) Employer-sponsored benefit plans in connection with purchases of
shares of Class A shares made as a result of participant-directed
exchanges between options in such a plan;
(BULLET) "Wrap accounts" for the benefit of clients of broker-dealers,
financial institutions or financial planners having sales or service
agreements with the distributor or another broker-dealer or financial
institution with respect to sales of Class A shares;
(BULLET) Such other persons as are determined by the adviser to have acquired
shares under circumstances where the Portfolio has not incurred any
sales expense.
PURCHASE OF SHARES
PLAIN TALK
-----------------------------------------------------------------------
HOW TO PURCHASE SHARES:
(BULLET) Directly by mail or by wire
(BULLET) As a client of a Third Party
-----------------------------------------------------------------------
Shares are sold at a public offering price based on the net asset value for the
class of shares selected, next determined after receipt of the order. Investors
may purchase shares of the Portfolio from a "Third Party" such as selected
financial professionals, securities brokers, dealers or through financial
intermediaries such as benefit plan administrators. Investors should contact
these agents directly for appropriate instructions, as well as for information
pertaining to accounts and any servicing or transaction fees that may be
charged. Some of these agents may
17
<PAGE>
appoint subagents. The Portfolio's shares are also offered for sale directly by
calling, (800) ___-____.
The minimum initial investment in the Portfolio is $2,000 (including IRAs) and
$500 for subsequent investments. The adviser or the distributor, at its
discretion, may waive these minimums. The Portfolio does not accept third-party
checks or cash investments. Checks must be in U.S. dollars and, to avoid fees
and delays, drawn only on banks located in the United States. Purchases may also
be made in certain circumstances by payment of securities. See our Statement of
Additional Information for further details.
See "Sales Charge Reductions and Waivers" for ways to make your initial
investment go farther.
BY MAIL: You may purchase shares by sending a check drawn on a U.S. bank payable
to Roxbury Large Cap Growth Portfolio, indicating the name of the Portfolio,
along with a completed application (included at the end of this prospectus). If
a subsequent investment is being made, the check should also indicate your
Portfolio account number. When you make purchases by check, the Portfolio may
withhold payment on redemptions until it is reasonably satisfied that the funds
are collected (which can take up to 10 days). If you purchase shares with a
check that does not clear, your purchase will be canceled and you will be
responsible for any losses or fees incurred in that transaction. Send the check
and application to:
BY REGULAR MAIL BY OVERNIGHT MAIL
Roxbury Large Cap Growth Portfolio Roxbury Large Cap Growth Portfolio
c/o PFPC Inc. c/o PFPC Inc.
P.O. Box _____ 400 Bellevue Parkway
Wilmington, DE 19809 Wilmington, DE 19809
BY WIRE: You may purchase shares by wiring federal funds readily available.
Please call PFPC at (800) ______ for instructions and to make specific
arrangements before making a purchase by wire, and if making an initial
purchase, to also obtain an account number.
ADDITIONAL INFORMATION REGARDING PURCHASES: Purchase orders received by the
Transfer Agent before the close of regular trading on the Exchange on any
Business Day will be priced at the NAV that is determined as of the close of
trading. Purchase orders received after the close of regular trading on the
Exchange will be priced as of the close of regular trading on the following
Business Day.
Any purchase order may be rejected if the Portfolio determines that accepting
the order would not be in the best interest of the Portfolio or its
shareholders.
It is the responsibility of the Third Party to transmit orders for the purchase
of shares by its customers to the Transfer Agent and to deliver required funds
on a timely basis, in accordance with the procedures stated above.
18
<PAGE>
For information on other ways to purchase shares, including through an
individual retirement account (IRA), an automatic investment plan or a payroll
investment plan, see our Statement of Additional Information
REDEMPTION OF SHARES
PLAIN TALK
-----------------------------------------------------------------------
HOW TO REDEEM (SELL) SHARES:
(BULLET) By mail
(BULLET) By telephone
-----------------------------------------------------------------------
You may sell your shares on any Business Day as described below. Redemptions are
effected at the NAV next determined after the Transfer Agent has received your
redemption request. It is the responsibility of the Third Party to transmit
redemption orders and credit their customers' accounts with redemption proceeds
on a timely basis. Redemption checks are mailed on the next Business Day
following receipt by the Transfer Agent of redemption instructions, but never
later than 7 days following such receipt. Amounts redeemed by wire are normally
wired on the date of receipt of redemption instructions (if received by the
Transfer Agent before 4:00 p.m. Eastern time), or the next Business Day (if
received after 4:00 p.m. Eastern time, or on a non-Business Day), but never
later than 7 days following such receipt. If you purchased your shares through
an account at a Third Party, you should contact the Third Party for information
relating to redemptions. The Portfolio's name and your account number should
accompany any redemption requests.
BY MAIL: If you redeem your shares by mail, you should submit written
instructions with a "signature guarantee." A signature guarantee verifies the
authenticity of your signature. You can obtain one from most banking
institutions or securities brokers, but not from a Notary Public. You must
indicate the Portfolio name, your account number and your name. The written
instructions and signature guarantee should be mailed to:
BY REGULAR MAIL BY OVERNIGHT MAIL
Roxbury Large Cap Growth Portfolio Roxbury Large Cap Growth Portfolio
c/o PFPC Inc. c/o PFPC Inc.
P.O. Box _____ 400 Bellevue Parkway
Wilmington, DE 19809 Wilmington, DE 19809
BY TELEPHONE: If you prefer to redeem your shares by telephone you may elect to
do so. However there are certain risks. The Portfolio has certain safeguards and
procedures to confirm the identity of callers and to confirm that the
instructions communicated are genuine. If such procedures are followed, you will
bear the risk of any losses.
ADDITIONAL INFORMATION REGARDING REDEMPTIONS: Redemption proceeds may be wired
to your predesignated bank account in any commercial bank in the United States
if the amount is $1,000 or more. The receiving bank may charge a fee for this
service. Proceeds may also be mailed to
19
<PAGE>
your bank or, for amounts of $10,000 or less, mailed to your Portfolio account
address of record if the address has been established for at least 60 days. In
order to authorize the Transfer Agent to mail redemption proceeds to your
Portfolio account address of record, complete the appropriate section of the
Application for Telephone Redemptions or include your Portfolio account address
of record when you submit written instructions. You may change the account that
you have designated to receive amounts redeemed at any time. Any request to
change the account designated to receive redemption proceeds should be
accompanied by a guarantee of your signature by an eligible institution. A
signature and a signature guarantee are required for each person in whose name
the account is registered. Further documentation will be required to change the
designated account when a corporation, other organization, trust, fiduciary or
other institutional investor holds the Portfolio shares.
If shares to be redeemed represent a recent investment made by check, each
Portfolio reserves the right not to make the redemption proceeds available until
it has reasonable grounds to believe that the check has been collected (which
could take up to 10 days).
SMALL ACCOUNTS: If the value of your Portfolio accounts falls below $500, the
Portfolio may ask you to increase your balance. If the account balance is still
below $500 after 60 days, the Portfolio may close your account and send you the
proceeds. The Portfolio will not close your account if it falls below $500
solely as a result of a reduction in your account's market value.
For information on other ways to redeem shares, please refer to the Statement of
Additional Information.
DISTRIBUTIONS
PLAIN TALK
-----------------------------------------------------------------------
WHAT IS NET INVESTMENT INCOME?
Net investment income consists of interest and dividends earned by a
fund on its investments less accrued expenses.
-----------------------------------------------------------------------
Distributions from the net investment income of the Portfolio are declared and
paid annually to you. Any net capital gain realized by the Portfolio will be
distributed annually.
Distributions are payable to the shareholders of record at the time the
distributions are declared (including holders of shares being redeemed, but
excluding holders of shares being purchased). All distributions are reinvested
in additional Portfolio shares, unless you have elected to receive the
distributions in cash.
TAXES
FEDERAL INCOME TAX: As long as the Portfolio meets the requirements for being a
"regulated investment company," it pays no Federal income tax on the earnings
and gains it distributes to shareholders. While the Portfolio may invest in
securities that earn interest subject to Federal income tax and securities that
earn interest exempt from that tax, under normal conditions the Portfolio
invests primarily in taxable securities. The Portfolio will notify you following
the end
20
<PAGE>
of the calendar year of the amount of dividends and other distributions paid
that year.
Dividends you receive from the Portfolio, whether reinvested in Portfolio shares
or taken as cash, are generally taxable to you as ordinary income. The
Portfolio's distribution of net capital gain, whether received in cash or
reinvested in additional Portfolio shares, are taxable to you as long-term
capital gain, regardless of the length of time you have held your shares. You
should be aware that if Portfolio shares are purchased shortly before the record
date for any dividend or capital gain distribution, you will pay the full price
for the shares and will receive some portion of the price back as a taxable
distribution. The Portfolio anticipates the distribution of net capital gain.
It is a taxable event for you if you sell or exchange shares of the Portfolio.
Depending on the purchase price and the sale price of the shares you exchange,
you may have a taxable gain or loss on the transaction. You are responsible for
any tax liability generated by your transactions.
STATE AND LOCAL INCOME TAXES: You should consult your tax advisers concerning
state and local taxes, which may have different consequences from those of the
Federal income tax law.
This section is only a summary of some important income tax considerations that
may affect your investment in the Portfolio. More information regarding those
considerations appears in our Statement of Additional Information. You are urged
to consult your tax adviser regarding the effects of an investment on your tax
situation.
DISTRIBUTION ARRANGEMENTS
Provident Distributors, Inc. ("PDI") manages the Portfolio's distribution
efforts and provides assistance and expertise in developing marketing plans and
materials, enters into dealer agreement with broker-dealers to sell shares and
provides shareholder support services, directly or through affiliates.
RULE 12B-1 FEES
PLAIN TALK
-----------------------------------------------------------------------
WHAT ARE 12b-1 FEES?
12b-1 fees, charged by some funds, are deducted from fund assets to pay
for marketing and advertising expenses or, more commonly, to compensate
sales professionals for selling fund shares.
-----------------------------------------------------------------------
The Portfolio has adopted a distribution plan under Rule 12b-1 that allows the
Portfolio to pay a fee to PDI for the sale and distribution of its shares.
Because these fees are paid out of the Portfolio's assets continuously, over
time these fees will increase the cost of your investment and may cost you more
than paying other types of sales charges.
Rule 12b-1 permits an investment company directly or indirectly to pay expenses
associated with the distribution of its shares in accordance with a plan adopted
by the Board of Trustees and approved by its shareholders. Pursuant to the Rule,
the Board has approved, and the Portfolio has
21
<PAGE>
entered into, a Distribution Plan with PDI, for the Class B and Class C shares.
Under the Distribution Plan, the Portfolio will pay distribution fees to PDI at
a maximum annual rate of 0.75% of its aggregate average daily net assets
attributable to its Class B and Class C shares.
The Distribution Plan provides that the distributor may use the distribution
fees received from a class of shares to pay for the distribution expenses of
that class, including, but not limited to (i) incentive compensation paid to the
directors, officers and employees of, agents for and consultants to, the
distributor or any other broker-dealer or financial institution that engages in
the distribution of that class; and (ii) compensation to broker-dealers,
financial institutions or other persons for providing distribution assistance
with respect to that class. Distribution fees may also be used for (i) marketing
and promotional activities, including, but not limited to, direct mail
promotions and television, radio, newspaper, magazine and other mass media
advertising for that class; (ii) costs of printing and distributing
prospectuses, Statements of Additional Information and reports of the Portfolio
to prospective investors in that class; (iii) costs involved in preparing,
printing and distributing sales literature pertaining to the Portfolio and that
class; and (iv) costs involved in obtaining whatever information, analysis and
reports with respect to marketing and promotional activities that the Portfolio
may, from time to time, deem advisable with respect to the distribution of that
class. Distribution fees are accrued daily and paid monthly, and are charged as
expenses of, respectively, Class B and Class C shares as accrued.
The distribution fees applicable to the Class B and Class C shares are designed
to permit an investor to purchase Class B and Class C shares through
broker-dealers without the assessment of a front-end sales charge and at the
same time to permit the distributor to compensate broker-dealers on an ongoing
basis in connection with assets in the Class B and Class C shares attributable
to those broker-dealers. Because these fees are paid out of Portfolio assets on
an on-going basis, over time these fees will increase the cost of your
investment and may cost you more than other types of sales charges.
MASTER/FEEDER STRUCTURE
Other institutional investors, including other mutual funds, may invest in the
master funds. The master/feeder structure enables various institutional
investors, including the Portfolio, to pool their assets, which may be expected
to result in economies by spreading certain fixed costs over a larger asset
base. Each shareholder of a master fund, including the Portfolio, will pay its
proportionate share of the master fund's expenses.
For reasons relating to costs or a change in investment goal, among others, the
Portfolio could switch to another master fund or decide to manage its assets
itself. The Portfolio is not currently contemplating such a move.
22
<PAGE>
FOR MORE INFORMATION
FOR INVESTORS WHO WANT MORE INFORMATION ON THE PORTFOLIO, THE FOLLOWING
DOCUMENTS ARE AVAILABLE FREE UPON REQUEST:
ANNUAL/SEMI-ANNUAL REPORTS: Contain performance data and information on
portfolio holdings, operating results and a discussion of the market conditions
and investment strategies that significantly affect the Portfolio's performance
for the most recently completed fiscal year or half-year.
STATEMENT OF ADDITIONAL INFORMATION (SAI): Provides a complete technical and
legal description of the Portfolio's policies, investment restrictions, risks,
and business structure. This prospectus incorporates the SAI by reference.
Copies of these documents and answers to questions about the Portfolio may be
obtained without charge by contacting:
Roxbury Large Cap Growth Portfolio
c/o PFPC Inc.
400 Bellevue Parkway
Suite 108
Wilmington, Delaware 19809
(800) ______
9:00 a.m. to 5:00 p.m. Eastern time
Information about the Portfolio (including the SAI) can be reviewed and copied
at the Public Reference Room of the Securities and Exchange Commission in
Washington, D.C. Copies of this information may be obtained, upon payment of a
duplicating fee, by writing the Public Reference Room of the SEC, Washington,
DC, 20549-6009. Information on the operation of the Public Reference Room may be
obtained by calling the SEC at 1-(800)-SEC-0330. Reports and other information
about the Portfolio may be viewed on-screen or downloaded from the SEC's
Internet site at http://www.sec.gov.
FOR MORE INFORMATION ON OPENING A NEW ACCOUNT, MAKING
CHANGES TO EXISTING ACCOUNTS, PURCHASING, EXCHANGING
OR REDEEMING SHARES, OR OTHER INVESTOR SERVICES,
PLEASE CALL 1-(800)-_______.
The investment company registration number is 811-08648.
23
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WT MUTUAL FUND
WILMINGTON PRIME MONEY MARKET PORTFOLIO
WILMINGTON PREMIER MONEY MARKET PORTFOLIO
WILMINGTON U.S. GOVERNMENT PORTFOLIO
WILMINGTON TAX-EXEMPT PORTFOLIO
WILMINGTON SHORT/INTERMEDIATE BOND PORTFOLIO
WILMINGTON INTERMEDIATE BOND PORTFOLIO
WILMINGTON MUNICIPAL BOND PORTFOLIO
WILMINGTON LARGE CAP GROWTH PORTFOLIO
WILMINGTON LARGE CAP CORE PORTFOLIO
WILMINGTON SMALL CAP CORE PORTFOLIO
WILMINGTON INTERNATIONAL MULTI-MANAGER PORTFOLIO
WILMINGTON LARGE CAP VALUE PORTFOLIO
WILMINGTON MID CAP VALUE PORTFOLIO
WILMINGTON SMALL CAP VALUE PORTFOLIO
400 Bellevue Parkway
Wilmington, Delaware 19809
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STATEMENT OF ADDITIONAL INFORMATION
_______, 1999
- --------------------------------------------------------------------------------
This Statement of Additional Information is not a prospectus and should be read
in conjunction with the Portfolios' current prospectus, dated ______, 1999, as
amended from time to time. A copy of the current prospectus and annual report
may be obtained without charge, by writing to Provident Distributors, Inc.
("PDI"), Four Falls Corporate Center, West Conshohocken, PA 19428, and from
certain institutions such as banks or broker-dealers that have entered into
servicing agreements with PDI or by calling (800) _____.
Each Portfolio's audited financial statements for the year ended June 30, 1999,
included in the Annual Report to shareholders, are incorporated into this SAI by
reference.
<PAGE>
TABLE OF CONTENTS
GENERAL INFORMATION 2
INVESTMENT POLICIES 2
INVESTMENT LIMITATIONS 16
TRUSTEES AND OFFICERS 21
INVESTMENT ADVISORY AND OTHER SERVICES 24
RODNEY SQUARE MANAGEMENT CORPORATION 24
WILMINGTON TRUST COMPANY 24
SUB-ADVISORY SERVICES 26
DISTRIBUTION OF SHARES AND RULE 12B-1 PLAN 29
BROKERAGE ALLOCATION AND OTHER PRACTICES 30
CAPITAL STOCK AND OTHER SECURITIES 31
PURCHASE, REDEMPTION AND PRICING OF SHARES 31
DIVIDENDS 34
TAXATION OF THE PORTFOLIOS 35
CALCULATION OF PERFORMANCE INFORMATION 39
TAX-EQUIVALENT YIELD TABLE 41
FINANCIAL STATEMENTS 45
APPENDIX A - OPTIONS, FUTURES AND FORWARD CURRENCY CONTRACT STRATEGIES A-1
APPENDIX B - DESCRIPTION OF RATINGS B-1
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GENERAL INFORMATION
WT Mutual Fund (the "Fund") is a diversified, open-end management investment
company organized as a Delaware business trust on June 1, 1994. The name of the
Fund was changed from Kiewit Mutual Fund to WT Mutual Fund on October 20, 1998.
The Fund has established the following Portfolios described in this Statement of
Additional Information: Wilmington Prime Money Market, Wilmington Premier Money
Market, Wilmington U.S. Government, Wilmington Tax-Exempt, Wilmington
Short/Intermediate Bond, Wilmington Intermediate Bond, Wilmington Municipal
Bond, Wilmington Large Cap Growth, Wilmington Large Cap Core, Wilmington Small
Cap Core, Wilmington International Multi-Manager, Wilmington Large Cap Value,
Wilmington Mid Cap Value and Wilmington Small Cap Value Portfolios. Each of
these Portfolios issues Institutional and Investor class shares, except for
Wilmington Premier Money Market which issues only Institutional class shares.
INVESTMENT POLICIES
The following information supplements the information concerning each
Portfolio's investment objective, policies and limitations found in the
prospectus. Unless otherwise indicated, it applies to the Portfolios through
their investment in corresponding master funds, which are series of WT
Investment Trust I (the "Series").
MONEY MARKET PORTFOLIOS
The "Money Market Portfolios" are the Prime Money Market, the Premier Money
Market, the U.S. Government and the Tax-Exempt Portfolios. Each has adopted a
fundamental policy requiring it to maintain a constant net asset value of $1.00
per share, although this may not be possible under certain circumstances. Each
Portfolio values its portfolio securities on the basis of amortized cost (see
"Purchase, Redemption and Pricing of Shares") pursuant to Rule 2a-7 under the
Investment Company Act of 1940 (the "1940 Act"). As conditions of that Rule, the
Board of Trustees has established procedures reasonably designed to stabilize
each Portfolio's price per share at $1.00 per share. Each Portfolio maintains a
dollar-weighted average portfolio maturity of 90 days or less; purchases only
instruments with effective maturities of 397 days or less; and invests only in
securities which are of high quality as determined by major rating services or,
in the case of instruments which are not rated, of comparable quality as
determined by the investment adviser, Rodney Square Management Corporation,
under the direction of and subject to the review of the Board of Trustees.
BANK OBLIGATIONS. The Prime Money Market and the Premier Money Market Portfolios
may invest in U.S. dollar-denominated obligations of major banks,including
certificates of deposits, time deposits and bankers' acceptances of major U.S.
and foreign banks and their branches located outside of the United States, of
U.S. branches of foreign banks, of foreign branches of foreign banks, of U.S.
agencies of foreign banks and of wholly owned banking subsidiaries of such
foreign banks located in the United States.
Obligations of foreign branches of U.S. banks and U.S. branches of wholly owned
subsidiaries of foreign banks may be general obligations of the parent bank, of
the issuing branch or subsidiary, or both, or may be limited by the terms of a
specific obligation or by governmental regulation. Because such obligations are
issued by foreign entities, they are subject to the risks of foreign investing.
A brief description of some typical types of bank obligations follows:
(BULLET) BANKERS' ACCEPTANCES. The Prime Money Market, the Premier Money
Market and the Tax-Exempt Portfolios may invest in bankers'
acceptances, which are credit instruments evidencing the
obligation of a bank to pay a draft that has been drawn on it by
a customer. These instruments reflect the obligation of both the
bank and the drawer to pay the face amount of the instrument upon
maturity.
(BULLET) CERTIFICATES OF DEPOSIT. The Prime Money Market, the Premier
Money Market and the Tax-Exempt Portfolios may invest in
certificates evidencing the indebtedness of a commercial
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bank to repay funds deposited with it for a definite period of
time (usually from 14 days to one year) at a stated or variable
interest rate. Variable rate certificates of deposit provide that
the interest rate will fluctuate on designated dates based on
changes in a designated base rate (such as the composite rate for
certificates of deposit established by the Federal Reserve Bank
of New York).
(BULLET) TIME DEPOSITS. The Prime Money Market and the Premier Money
Market Portfolios may invest in time deposits, which are bank
deposits for fixed periods of time.
CERTIFICATES OF PARTICIPATION. The Tax-Exempt Portfolio may invest in
certificates of participation, which give the investor an undivided interest in
the municipal obligation in the proportion that the investor's interest bears to
the total principal amount of the municipal obligation.
CORPORATE BONDS, NOTES AND COMMERCIAL PAPER. The Prime Money Market and the
Premier Money Market Portfolios may invest in corporate bonds, notes and
commercial paper. These obligations generally represent indebtedness of the
issuer and may be subordinated to other outstanding indebtedness of the issuer.
Commercial paper consists of short-term promissory notes issued by corporations
in order to finance their current operations. The Portfolios will only invest in
commercial paper rated, at the time of purchase, in the highest category by a
nationally recognized statistical rating organization ("NRSRO"), such as Moody's
or S&P or, if not rated, determined by the adviser to be of comparable quality.
See "Appendix B - Description of Ratings." The Portfolios may invest in
asset-backed commercial paper subject to Rule 2a-7 restrictions on investments
in asset-backed securities, which include a requirement that the security must
have received a rating from a NRSRO.
FOREIGN SECURITIES. At the present time, portfolio securities of the Prime Money
Market and the Premier Money Market Portfolios that are purchased outside the
United States are maintained in the custody of foreign branches of U.S. banks.
To the extent that the Portfolios may maintain portfolio securities in the
custody of foreign subsidiaries of U.S. banks, and foreign banks or clearing
agencies in the future, those sub-custodian arrangements are subject to
regulations under the 1940 Act that govern custodial arrangements with entities
incorporated or organized in countries outside of the United States.
ILLIQUID SECURITIES. The Money Market Portfolios may not invest more than 10% of
the value of its net assets in securities that at the time of purchase have
legal or contractual restrictions on resale or are otherwise illiquid. Illiquid
securities are securities that cannot be disposed of within seven days at
approximately the value at which they are being carried on a Portfolio's books.
The Board of Trustees has the ultimate responsibility for determining whether
specific securities are liquid or illiquid. The Board has delegated the function
of making day to day determinations of liquidity to the adviser, pursuant to
guidelines approved by the Board. The adviser will monitor the liquidity of
securities held by a Portfolio and report periodically on such decisions to the
Board.
INVESTMENT COMPANY SECURITIES. The Money Market Portfolios may invest in the
securities of other money market mutual funds, within the limits prescribed by
the 1940 Act. These limitations currently provide, in part, that a Portfolio may
not purchase shares of an investment company if (a) such a purchase would cause
the Portfolio to own in the aggregate more than 3% of the total outstanding
voting stock of the investment company or (b) such a purchase would cause the
Portfolio to have more than 5% of its total assets invested in the investment
company or (c) more than 10% of the Portfolio's total assets to be invested in
the aggregate in all investment companies. As a shareholder in an investment
company, the Portfolio would bear its pro rata portion of the investment
company's expenses, including advisory fees, in addition to its own expenses.
The Portfolios' investments of their assets in the corresponding Series pursuant
to the master/feeder structure are excepted from the above limitations.
MUNICIPAL SECURITIES. The Prime Money Market, the Premier Money Market and the
Tax-Exempt Portfolios each may invest in debt obligations issued by states,
municipalities and public authorities ("Municipal Securities") to obtain funds
for various public purposes. Yields on Municipal Securities are the product of a
variety of factors, including the general conditions of the money market and of
the
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municipal bond and municipal note markets, the size of a particular offering,
the maturity of the obligation and the rating of the issue. Although the
interest on Municipal Securities may be exempt from federal income tax,
dividends paid by a Portfolio to its shareholders may not be tax-exempt. A brief
description of some typical types of municipal securities follows:
(BULLET) GENERAL OBLIGATION SECURITIES are backed by the taxing power of
the issuing municipality and are considered the safest type of
municipal bond.
(BULLET) REVENUE OR SPECIAL OBLIGATION SECURITIES are backed by the
revenues of a specific project or facility tolls from a toll
bridge, for example.
(BULLET) BOND ANTICIPATION NOTES normally are issued to provide interim
financing until long-term financing can be arranged. The
long-term bonds then provide money for the repayment of the
Notes.
(BULLET) TAX ANTICIPATION NOTES finance working capital needs of
municipalities and are issued in anticipation of various seasonal
tax revenues, to be payable for these specific future taxes.
(BULLET) REVENUE ANTICIPATION NOTES are issued in expectation of receipt
of other kinds of revenue, such as federal revenues available
under the Federal Revenue Sharing Program.
(BULLET) INDUSTRIAL DEVELOPMENT BONDS ("IDBs") and Private Activity Bonds
("PABs") are specific types of revenue bonds issued on or behalf
of public authorities to finance various privately operated
facilities such as solid waste facilities and sewage plants. PABs
generally are such bonds issued after April 15, 1986. These
obligations are included within the term "municipal bonds" if the
interest paid on them is exempt from federal income tax in the
opinion of the bond issuer's counsel. IDBs and PABs are in most
case revenue bonds and thus are not payable from the unrestricted
revenues of the issuer. The credit quality of the IDBs and PABs
is usually directly related to the credit standing of the user of
the facilities being financed, or some form of credit enhancement
such as a letter of credit.
(BULLET) TAX-EXEMPT COMMERCIAL PAPER AND SHORT-TERM MUNICIPAL NOTES
provide for short-term capital needs and usually have maturities
of one year or less. They include tax anticipation notes, revenue
anticipation notes and construction loan notes.
(BULLET) CONSTRUCTION LOAN NOTES are sold to provide construction
financing. After successful completion and acceptance, many
projects receive permanent financing through the Federal Housing
Administration by way of "Fannie Mae" (the Federal National
Mortgage Association) or "Ginnie Mae" (the Government National
Mortgage Association).
(BULLET) PUT BONDS are municipal bonds which give the holder the right to
sell the bond back to the issuer or a third party at a specified
price and exercise date, which is typically well in advance of
the bond's maturity date.
REPURCHASE AGREEMENTS. The Money Market Portfolios may invest in repurchase
agreements. A repurchase agreement is a transaction in which a Portfolio
purchases a security from a bank or recognized securities dealer and
simultaneously commits to resell that security to a bank or dealer at an agreed
date and price reflecting a market rate of interest, unrelated to the coupon
rate or the maturity of the purchased security. While it is not possible to
eliminate all risks from these transactions (particularly the possibility of a
decline in the market value of the underlying securities, as well as delays and
costs to the Portfolio if the other party to the repurchase agreement becomes
bankrupt), it is the policy of a Portfolio to limit repurchase transactions to
primary dealers and banks whose creditworthiness has been reviewed and found
satisfactory by the adviser. Repurchase agreements maturing in more than seven
days are considered illiquid for purposes of a Portfolio's investment
limitations.
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SECURITIES LENDING. The Money Market Portfolios may from time to time lend its
portfolio securities to brokers, dealers and financial institutions. Such loans
by a Portfolio will in no event exceed one-third of that Portfolio's total
assets and will be secured by collateral in the form of cash or securities
issued or guaranteed by the U.S. Government, its agencies or instrumentalities,
which will be maintained in an amount equal to the current market value of the
loaned securities at all times the loan is outstanding. Each Portfolio will make
loans of securities only to firms deemed credit worthy by the adviser.
STANDBY COMMITMENTS. The Money Market Portfolios may invest in standby
commitments. It is expected that stand-by commitments will generally be
available without the payment of any direct or indirect consideration. However,
if necessary and advisable, the Portfolios may pay for standby commitments
either separately in cash or by paying a higher price for the obligations
acquired subject to such a commitment (thus reducing the yield to maturity
otherwise available for the same securities). Standby commitments purchased by
the Portfolios will be valued at zero in determining net asset value and will
not affect the valuation of the obligations subject to the commitments. Any
consideration paid for a standby commitment will be accounted for as unrealized
depreciation and will be amortized over the period the commitment is held by a
Portfolio.
U.S. GOVERNMENT OBLIGATIONS. The Money Market Portfolios may invest in debt
securities issued or guaranteed by the U.S. Government, its agencies or
instrumentalities. Although all obligations of agencies and instrumentalities
are not direct obligations of the U.S. Treasury, payment of the interest and
principal on these obligations is generally backed directly or indirectly by the
U.S. Government. This support can range from securities supported by the full
faith and credit of the United States (for example, securities of the Government
National Mortgage Association), to securities that are supported solely or
primarily by the creditworthiness of the issuer, such as securities of the
Federal National Mortgage Association, Federal Home Loan Mortgage Corporation,
Tennessee Valley Authority, Federal Farm Credit Banks and the Federal Home Loan
Banks. In the case of obligations not backed by the full faith and credit of the
United States, a Portfolio must look principally to the agency or
instrumentality issuing or guaranteeing the obligation for ultimate repayment
and may not be able to assert a claim against the United States itself in the
event the agency or instrumentality does not meet its commitments.
VARIABLE AND FLOATING RATE SECURITIES. The Money Market Portfolios may invest in
variable and floating rate securities. The terms of variable and floating rate
instruments provide for the interest rate to be adjusted according to a formula
on certain pre-determined dates. Certain of these obligations also may carry a
demand feature that gives the holder the right to demand prepayment of the
principal amount of the security prior to maturity. An irrevocable letter of
credit or guarantee by a bank usually backs the demand feature. Portfolio
investments in these securities must comply with conditions established by the
SEC under which they may be considered to have remaining maturities of 397 days
or less.
WHEN-ISSUED SECURITIES. The Money Market Portfolios may buy when-issued
securities or sell securities on a delayed-delivery basis. This means that
delivery and payment for the securities normally will take place approximately
15 to 90 days after the date of the transaction. The payment obligation and the
interest rate that will be received are each fixed at the time the buyer enters
into the commitment. During the period between purchase and settlement, the
purchaser makes no payment and no interest accrues to the purchaser. However,
when a security is sold on a delayed-delivery basis, the seller does not
participate in further gains or losses with respect to the security. If the
other party to a when-issued or delayed-delivery transaction fails to transfer
or pay for the securities, the Portfolio could miss a favorable price or yield
opportunity or could suffer a loss.
A Portfolio will make a commitment to purchase when-issued securities only with
the intention of actually acquiring the securities, but the Portfolio may
dispose of the commitment before the settlement date if it is deemed advisable
as a matter of investment strategy. A Portfolio may also sell the underlying
securities before they are delivered, which may result in gains or losses. A
separate account for each Portfolio is established at the custodian bank, into
which cash and/or liquid securities equal to the amount of when-issued purchase
commitments is deposited. If the market value of the deposited securities
declines additional cash or securities will be placed in the account on a daily
basis to cover the Portfolio's outstanding commitments.
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When a Portfolio purchases a security on a when-issued basis, the security is
recorded as an asset on the commitment date and is subject to changes in market
value generally, based upon changes in the level of interest rates. Thus, upon
delivery, the market value of the security may be higher or lower than its cost,
and this may increase or decrease the Portfolio's net asset value. When payment
for a when-issued security is due, a Portfolio will meet its obligations from
then-available cash flow, the sale of the securities held in the separate
account, the sale of other securities or from the sale of the when-issued
securities themselves. The sale of securities to meet a when-issued purchase
obligation carries with it the potential for the realization of capital gains or
losses.
THE BOND PORTFOLIOS
The "Bond Portfolios" are the Short/Intermediate Bond, the Intermediate Bond and
the Municipal Bond Portfolios. Wilmington Trust Company, the investment adviser
for the Bond Portfolios, employs an investment process that is disciplined,
systematic and oriented toward a quantitative assessment and control of
volatility. The Bond Portfolios' exposure to credit risk is moderated by
limiting their investments to securities that, at the time of purchase, are
rated investment grade by a nationally recognized statistical rating
organization such as Moody's, S&P, or, if unrated, are determined by the adviser
to be of comparable quality. See "Appendix B - Description of Ratings." Ratings,
however, are not guarantees of quality or of stable credit quality. Not even the
highest rating constitutes assurance that the security will not fluctuate in
value or that a Portfolio will receive the anticipated yield on the security.
WTC continuously monitors the quality of the Portfolios' holdings, and should
the rating of a security be downgraded or its quality be adversely affected, WTC
will determine whether it is in the best interest of the affected Portfolio to
retain or dispose of the security.
The effect of interest rate fluctuations in the market on the principal value of
the Bond Portfolios is moderated by limiting the average dollar-weighted
duration of their investments -- in the case of the Short/Intermediate Bond
Portfolio to a range of 2 1/2 to 4 years, in the case of the Intermediate Bond
Portfolio to a range of 4 to 7 years, and in the case of the Municipal Bond
Portfolio to a range of 4 to 8 years. Investors may be more familiar with the
term "average effective maturity" (when, on average, the fixed income securities
held by the Portfolio will mature), which is sometimes used to express the
anticipated term of the Portfolios' investments. Generally, the stated maturity
of a fixed income security is longer than it's projected duration. Under normal
market conditions, the average effective maturity, in the case of the
Short/Intermediate Bond Portfolio, is expected to fall within a range of
approximately 3 to 5 years, in the case of the Intermediate Bond Portfolio,
within a range of approximately 7 to 12 years, and in the case of the Municipal
Bond Portfolio, within a range of approximately 5 to 10 years. In the event of
unusual market conditions, the average dollar-weighted duration of the
Portfolios may fall within a broader range. Under those circumstances, the
Short/Intermediate Bond and the Intermediate Bond Portfolios may invest in fixed
income securities with an average dollar-weighted duration of 1 to 6 years and 2
to 10 years, respectively.
WTC's goal in managing the Short/Intermediate Bond and the Intermediate Bond
Portfolios is to gain additional return by analyzing the market complexities and
individual security attributes which affect the returns of fixed income
securities. The Bond Portfolios are intended to appeal to investors who want a
thoughtful exposure to the broad fixed income securities market and the high
current returns that characterize the short-term to intermediate-term sector of
that market.
Given the average duration of the holdings of the Bond Portfolios and the
current interest rate environment, the Portfolios should experience smaller
price fluctuations than those experienced by longer-term bond and municipal bond
funds and a higher yield than fixed-price money market and tax-exempt money
market funds. Of course, the Portfolios will likely experience larger price
fluctuations than money market funds and a lower yield than longer-term bond and
municipal bond funds. Given the quality of the Portfolios' holdings, which must
be investment grade (rated within the top four categories) or comparable to
investment grade securities at the time of purchase, the Portfolios will accept
lower yields in order to avoid the credit concerns experienced by funds that
invest in lower quality fixed income securities. In addition, although the
Municipal Bond Portfolio expects to invest substantially all of its net assets
in municipal securities that provide interest income that is exempt from federal
income tax, it may invest up to 20% of its net assets in other types of fixed
income securities that provide federally taxable income.
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The composition of each Portfolio's holdings varies depending upon WTC's
analysis of the fixed income markets and the municipal securities markets (for
the Municipal Bond Portfolio), including analysis of the most attractive
segments of the yield curve, the relative value of the different market sectors,
expected trends in those markets and supply versus demand pressures. Securities
purchased by the Portfolios may be purchased on the basis of their yield or
potential capital appreciation or both. By maintaining each Portfolio's
specified average duration, WTC seeks to protect the Portfolio's principal value
by reducing fluctuations in value relative to those that may be experienced by
bond funds with longer average durations. This strategy may reduce the level of
income attained by the Portfolios. Of course, there is no guarantee that
principal value can be protected during periods of extreme interest rate
volatility.
WTC may make frequent changes in the Portfolios' investments, particularly
during periods of rapidly fluctuating interest rates. These frequent changes
would involve transaction costs to the Portfolios and could result in taxable
capital gains.
ASSET-BACKED SECURITIES. The Bond Portfolios may purchase interests in pools of
obligations, such as credit card or automobile loan receivables, purchase
contracts and financing leases. Such securities are also known as "asset-backed
securities," and the holders thereof may be entitled to receive a fixed rate of
interest, a variable rate that is periodically reset to reflect the current
market rate or an auction rate that is periodically reset at auction.
Asset-backed securities are typically supported by some form of credit
enhancement, such as cash collateral, subordinated tranches, a letter of credit,
surety bond or limited guaranty. Credit enhancements do not provide protection
against changes in the market value of the security. If the credit enhancement
is exhausted or withdrawn, security holders may experience losses or delays in
payment if required payments of principal and interest are not made with respect
to the underlying obligations. Except in very limited circumstances, there is no
recourse against the vendors or lessors that originated the underlying
obligations.
Asset-backed securities are likely to involve unscheduled prepayments of
principal that may affect yield to maturity, result in losses, and may be
reinvested at higher or lower interest rates than the original investment. The
yield to maturity of asset-backed securities that represent residual interests
in payments of principal or interest in fixed income obligations is particularly
sensitive to prepayments.
The value of asset-backed securities may change because of changes in the
market's perception of the creditworthiness of the servicing agent for the pool
of underlying obligations, the originator of those obligations or the financial
institution providing credit enhancement.
BANK OBLIGATIONS. The Bond Portfolios may invest in the same U.S.
dollar-denominated obligations of major banks as the Money Market Portfolios.
(See "Bank Obligations.")
CORPORATE BONDS, NOTES AND COMMERCIAL PAPER. The Bond Portfolios may invest in
corporate bonds, notes and commercial paper. These obligations generally
represent indebtedness of the issuer and may be subordinated to other
outstanding indebtedness of the issuer. Commercial paper consists of short-term
unsecured promissory notes issued by corporations in order to finance their
current operations. The Portfolios will only invest in commercial paper rated,
at the time of purchase, in the highest category by a nationally recognized
statistical rating organization, such as Moody's or S&P or, if not rated,
determined by WTC to be of comparable quality.
FIXED INCOME SECURITIES WITH BUY-BACK FEATURES. Fixed income securities with
buy-back features enable the Bond Portfolios to recover principal upon tendering
the securities to the issuer or a third party. Letters of credit issued by
domestic or foreign banks often supports these buy-back features. In evaluating
a foreign bank's credit, WTC considers whether adequate public information about
the bank is available and whether the bank may be subject to unfavorable
political or economic developments, currency controls or other governmental
restrictions that could adversely affect the bank's ability to honor its
commitment under the letter of credit. The Municipal Bond Portfolio will not
acquire municipal securities with buy-back features if, in the opinion of
counsel, the existence of a buy-back feature would alter the tax-exempt nature
of interest payments on the underlying securities and cause those payments to be
taxable to that Portfolio and its shareholders.
Buy-back features include standby commitments, put bonds and demand features.
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(BULLET) STANDBY COMMITMENTS. The Bond Portfolios may acquire standby
commitments from broker-dealers, banks or other financial
intermediaries to enhance the liquidity of portfolio securities. A
standby commitment entitles a Portfolio to same day settlement at
amortized cost plus accrued interest, if any, at the time of exercise.
The amount payable by the issuer of the standby commitment during the
time that the commitment is exercisable generally approximates the
market value of the securities underlying the commitment. Standby
commitments are subject to the risk that the issuer of a commitment
may not be in a position to pay for the securities at the time that
the commitment is exercised.
Ordinarily, a Portfolio will not transfer a standby commitment to a
third party, although the Portfolio may sell securities subject to a
standby commitment at any time. A Portfolio may purchase standby
commitments separate from or in conjunction with the purchase of the
securities subject to the commitments. In the latter case, the
Portfolio may pay a higher price for the securities acquired in
consideration for the commitment.
(BULLET) PUT BONDS. A put bond (also referred to as a tender option or third
party bond) is a bond created by coupling an intermediate or long-term
fixed rate bond with an agreement giving the holder the option of
tendering the bond to receive its par value. As consideration for
providing this tender option, the sponsor of the bond (usually a bank,
broker-dealer or other financial intermediary) receives periodic fees
that equal the difference between the bond's fixed coupon rate and the
rate (determined by a remarketing or similar agent) that would cause
the bond, coupled with the tender option, to trade at par. By paying
the tender offer fees, a Portfolio in effect holds a demand obligation
that bears interest at the prevailing short-term rate.
In selecting put bonds for the Bond Portfolios, WTC takes into
consideration the creditworthiness of the issuers of the underlying
bonds and the creditworthiness of the providers of the tender option
features. A sponsor may withdraw the tender option feature if the
issuer of the underlying bond defaults on interest or principal
payments, the bond's rating is downgraded or, in the case of a
municipal bond, the bond loses its tax-exempt status.
(BULLET) DEMAND FEATURES. Many variable rate securities carry demand features
that permit the holder to demand repayment of the principal amount of
the underlying securities plus accrued interest, if any, upon a
specified number of days' notice to the issuer or its agent. A demand
feature may be exercisable at any time or at specified intervals.
Variable rate securities with demand features are treated as having a
maturity equal to the time remaining before the holder can next demand
payment of principal. The issuer of a demand feature instrument may
have a corresponding right to prepay the outstanding principal of the
instrument plus accrued interest, if any, upon notice comparable to
that required for the holder to demand payment.
GUARANTEED INVESTMENT CONTRACTS. A guaranteed investment contract ("GIC") is a
general obligation of an insurance company. A GIC is generally structured as a
deferred annuity under which the purchaser agrees to pay a given amount of money
to an insurer (either in a lump sum or in installments) and the insurer promises
to pay interest at a guaranteed rate (either fixed or variable) for the life of
the contract. Some GICs provide that the insurer may periodically pay
discretionary excess interest over and above the guaranteed rate. At the GIC's
maturity, the purchaser generally is given the option of receiving payment or an
annuity. Certain GICs may have features that permit redemption by the issuer at
a discount from par value.
Generally, GICs are not assignable or transferable without the permission of the
issuer. As a result, the acquisition of GICs is subject to the limitations
applicable to each Portfolio's acquisition of illiquid and restricted
securities. The holder of a GIC is dependent on the creditworthiness of the
issuer as to whether
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the issuer is able to meet its obligations. No Portfolio intends to invest more
than 5% of its net assets in GICs.
ILLIQUID SECURITIES. The Bond Portfolios may not invest more than 15% of the
value of its net assets in securities that at the time of purchase have legal or
contractual restrictions on resale or are otherwise illiquid.
MONEY MARKET FUNDS. The Bond Portfolios may invest in the securities of money
market mutual funds, within the limits prescribed by the 1940 Act. (See
"Investment Company Securities.")
MORTGAGE-BACKED SECURITIES. Mortgage-backed securities are securities
representing interests in a pool of mortgages secured by real property.
Government National Mortgage Association ("GNMA") mortgage-backed securities are
securities representing interests in pools of mortgage loans to residential home
buyers made by lenders such as mortgage bankers, commercial banks and savings
associations and are either guaranteed by the Federal Housing Administration or
insured by the Veterans Administration. Timely payment of interest and principal
on each mortgage loan is backed by the full faith and credit of the U.S.
Government.
The Federal National Mortgage Association ("FNMA") and Federal Home Loan
Mortgage Corporation ("FHLMC") both issue mortgage-backed securities that are
similar to GNMA securities in that they represent interests in pools of mortgage
loans. FNMA guarantees timely payment of interest and principal on its
certificates and FHLMC guarantees timely payment of interest and ultimate
payment of principal. FHLMC also has a program under which it guarantees timely
payment of scheduled principal as well as interest. FNMA and FHLMC guarantees
are backed only by those agencies and not by the full faith and credit of the
U.S. Government.
In the case of mortgage-backed securities that are not backed by the U.S.
Government or one of its agencies, a loss could be incurred if the collateral
backing these securities is insufficient. This may occur even though the
collateral is U.S. Government-backed.
Most mortgage-backed securities pass monthly payment of principal and interest
through to the holder after deduction of a servicing fee. However, other payment
arrangements are possible. Payments may be made to the holder on a different
schedule than that on which payments are received from the borrower, including,
but not limited to, weekly, bi-weekly and semiannually. The monthly principal
and interest payments also are not always passed through to the holder on a PRO
RATA basis. In the case of collateralized mortgage obligations ("CMOs"), the
pool is divided into two or more tranches and special rules for the disbursement
of principal and interest payments are established.
CMO residuals are derivative securities that generally represent interests in
any excess cash flow remaining after making required payments of principal and
interest to the holders of the CMOs described above. Yield to maturity on CMO
residuals is extremely sensitive to prepayments. In addition, if a series of a
CMO includes a class that bears interest at an adjustable rate, the yield to
maturity on the related CMO residual also will be extremely sensitive to the
level of the index upon which interest rate adjustments are based.
Stripped mortgage-backed securities ("SMBS") are derivative multi-class mortgage
securities and may be issued by agencies or instrumentalities of the U.S.
Government or by private mortgage lenders. SMBS usually are structured with two
classes that receive different proportions of the interest and/or principal
distributions on a pool of mortgage assets. A common type of SMBS will have one
class of holders receiving all interest payments --"interest only" or "IO" --and
another class of holders receiving the principal repayments -- "principal only"
or "PO." The yield to maturity of IO and PO classes is extremely sensitive to
prepayments on the underlying mortgage assets.
MUNICIPAL SECURITIES. Municipal securities are debt obligations issued by or on
behalf of states, territories and possessions of the United States, the District
of Columbia and their sub-divisions, agencies and instrumentalities, the
interest on which is, in the opinion of bond counsel, exempt from federal income
tax. These debt obligations are issued to obtain funds for various public
purposes, such as the construction of
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public facilities, the payment of general operating expenses or the refunding of
outstanding debts. They may also be issued to finance various privately owned or
operated activities. The three general categories of municipal securities are
general obligation, revenue or special obligation and private activity municipal
securities. A brief description of typical municipal securities follows:
(BULLET) GENERAL OBLIGATION SECURITIES are backed by the taxing power of
the issuing municipality and are considered the safest type of
municipal bond. The proceeds from general obligation securities
are used to fund a wide range of public projects, including the
construction or improvement of schools, highways and roads, and
water and sewer systems.
(BULLET) REVENUE OR SPECIAL OBLIGATION SECURITIES are backed by the
revenues of a specific project or facility - tolls from a toll
bridge, for example. The proceeds from revenue or special
obligation securities are used to fund a wide variety of capital
projects, including electric, gas, water and sewer systems;
highways, bridges and tunnels; port and airport facilities;
colleges and universities; and hospitals. Many municipal issuers
also establish a debt service reserve fund from which principal
and interest payments are made. Further security may be available
in the form of the state's ability, without obligation, to make
up deficits in the reserve fund.
(BULLET) MUNICIPAL LEASE OBLIGATIONS may take the form of a lease, an
installment purchase or a conditional sale contract issued by
state and local governments and authorities to acquire land,
equipment and facilities. Usually, the Portfolios will purchase a
participation interest in a municipal lease obligation from a
bank or other financial intermediary. The participation interest
gives the holder a pro rata, undivided interest in the total
amount of the obligation.
Municipal leases frequently have risks distinct from those
associated with general obligation or revenue bonds. The interest
income from the lease obligation may become taxable if the lease
is assigned. Also, to free the municipal issuer from
constitutional or statutory debt issuance limitations, many
leases and contracts include non-appropriation clauses providing
that the municipality has no obligation to make future payments
under the lease or contract unless money is appropriated for that
purpose by the municipality on a yearly or other periodic basis.
Finally, the lease may be illiquid.
(BULLET) RESOURCE RECOVERY BONDS are affected by a number of factors,
which may affect the value and credit quality of these revenue or
special obligations. These factors include the viability of the
project being financed, environmental protection regulations and
project operator tax incentives.
(BULLET) PRIVATE ACTIVITY SECURITIES are specific types of revenue bonds
issued on behalf of public authorities to finance various
privately operated facilities such as educational, hospital or
housing facilities, local facilities for water supply, gas,
electricity, sewage or solid waste disposal, and industrial or
commercial facilities. The payment of principal and interest on
these obligations generally depends upon the credit of the
private owner/user of the facilities financed and, in certain
instances, the pledge of real and personal property by the
private owner/user. The interest income from certain types of
private activity securities may be considered a tax preference
item for purposes of the federal alternative minimum tax ("Tax
Preference Item").
Short-term municipal securities in which the Portfolios may invest include Tax
Anticipation, Revenue Anticipation, Bond Anticipation and Construction Loan
Notes. These were previously described for the Money Market Portfolios. (See
"Municipal Securities.")
OPTIONS, FUTURES AND FORWARD CURRENCY CONTRACT STRATEGIES. Although the
Municipal Bond Portfolio has no current intention of so doing, each of the Bond
Portfolios may use options and futures contracts. The Short/Intermediate Bond
and the Intermediate Bond Portfolios may use forward currency contracts.
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For additional information regarding such investment strategies, see Appendix A
to this Statement of Additional Information.
PARTICIPATION INTERESTS. The Bond Portfolios may invest in participation
interests in fixed income securities. A participation interest provides the
certificate holder with a specified interest in an issue of fixed income
securities.
Some participation interests give the holders differing interests in the
underlying securities, depending upon the type or class of certificate
purchased. For example, coupon strip certificates give the holder the right to
receive a specific portion of interest payments on the underlying securities;
principal strip certificates give the holder the right to receive principal
payments and the portion of interest not payable to coupon strip certificate
holders. Holders of certificates of participation in interest payments may be
entitled to receive a fixed rate of interest, a variable rate that is
periodically reset to reflect the current market rate or an auction rate that is
periodically reset at auction. Asset-backed residuals represent interests in any
excess cash flow remaining after required payments of principal and interest
have been made.
More complex participation interests involve special risk considerations. Since
these instruments have only recently been developed, there can be no assurance
that any market will develop or be maintained for the instruments. Generally,
the fixed income securities that are deposited in trust for the holders of these
interests are the sole source of payments on the interests; holders cannot look
to the sponsor or trustee of the trust or to the issuers of the securities held
in trust or to any of their affiliates for payment.
Participation interests purchased at a discount may experience price volatility.
Certain types of interests are sensitive to fluctuations in market interest
rates and to prepayments on the underlying securities. A rapid rate of
prepayment can result in the failure to recover the holder's initial investment.
The extent to which the yield to maturity of a participation interest is
sensitive to prepayments depends, in part, upon whether the interest was
purchased at a discount or premium, and if so, the size of that discount or
premium. Generally, if a participation interest is purchased at a premium and
principal distributions occur at a rate faster than that anticipated at the time
of purchase, the holder's actual yield to maturity will be lower than that
assumed at the time of purchase. Conversely, if a participation interest is
purchased at a discount and principal distributions occur at a rate faster than
that assumed at the time of purchase, the investor's actual yield to maturity
will be higher than that assumed at the time of purchase.
Participation interests in pools of fixed income securities backed by certain
types of debt obligations involve special risk considerations. The issuers of
securities backed by automobile and truck receivables typically file financing
statements evidencing security interests in the receivables, and the servicers
of those obligations take and retain custody of the obligations. If the
servicers, in contravention of their duty to the holders of the securities
backed by the receivables, were to sell the obligations, the third party
purchasers could acquire an interest superior to the interest of the security
holders. Also, most states require that a security interest in a vehicle must be
noted on the certificate of title and the certificate of title may not be
amended to reflect the assignment of the lender's security interest. Therefore,
the recovery of the collateral in some cases may not be available to support
payments on the securities. Securities backed by credit card receivables are
generally unsecured, and both federal and state consumer protection laws may
allow set-offs against certain amounts owed.
The Municipal Bond Portfolio will only invest in participation interests in
municipal securities, municipal leases or in pools of securities backed by
municipal assets if, in the opinion of counsel, any interest income on the
participation interest will be exempt from federal income tax to the same extent
as the interest on the underlying securities.
REPURCHASE AGREEMENTS. The Bond Portfolios may invest in the same repurchase
agreements as the Money Market Portfolios. (See "Repurchase Agreements.")
SECURITIES LENDING. The Bond Portfolios may lend securities pursuant to
agreements, which require that the loans be continuously secured by collateral
equal to 100% of the market value of the loaned securities. Such collateral
consists of cash, securities of the U.S. Government or its agencies, or any
combination of cash and such securities. Such loans will not be made if, as a
result, the aggregate amount of all outstanding securities loans for a Portfolio
exceed one-third of the value of the Portfolio's total assets taken
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at fair market value. A Portfolio will continue to receive interest on the
securities lent while simultaneously earning interest on the investment of the
cash collateral in U.S. Government securities. However, a Portfolio will
normally pay lending fees to such broker-dealers and related expenses from the
interest earned on invested collateral. There may be risks of delay in receiving
additional collateral or risks of delay in recovery of the securities and even
loss of rights in the collateral should the borrower of the securities fail
financially. However, loans are made only to borrowers deemed by the adviser to
be of good standing and when, in the judgment of the adviser, the consideration
that can be earned currently from such securities loans justifies the attendant
risk. Either party upon reasonable notice to the other party may terminate any
loan. The Municipal Bond Portfolio has no current intention of lending its
portfolio securities and would do so only under unusual market conditions since
the interest income that a Portfolio receives from lending its securities is
taxable.
U.S. GOVERNMENT OBLIGATIONS. The Bond Portfolios may invest in the same debt
securities issued or guaranteed by the U.S. Government, its agencies or
instrumentalities as the Money Market Portfolios. (See "U.S. Government
Obligations.")
VARIABLE AND FLOATING RATE SECURITIES. The Bond Portfolios may invest in
variable and floating rate securities. The terms of variable and floating rate
instruments provide for the interest rate to be adjusted according to a formula
on certain pre-determined dates. Certain of these obligations also may carry a
demand feature that gives the holder the right to demand prepayment of the
principal amount of the security prior to maturity. An irrevocable letter of
credit or guarantee by a bank usually backs the demand feature. Portfolio
investments in these securities must comply with conditions established by the
SEC under which they may be considered to have remaining maturities of 397 days
or less.
Each of the Bond Portfolios may also purchase inverse floaters that are floating
rate instruments whose interest rates bear an inverse relationship to the
interest rate on another security or the value of an index. Changes in the
interest rate on the other security or index inversely affect the interest rate
paid on the inverse floater, with the result that the inverse floater's price is
considerably more volatile than that of a fixed rate security. For example, an
issuer may decide to issue two variable rate instruments instead of a single
long-term, fixed rate bond. The interest rate on one instrument reflects
short-term interest rates, while the interest rate on the other instrument (the
inverse floater) reflects the approximate rate the issuer would have paid on a
fixed rate bond multiplied by two minus the interest rate paid on the short-term
instrument. Depending on market availability, the two variable rate instruments
may be combined to form a fixed rate bond. The market for inverse floaters is
relatively new.
WHEN-ISSUED SECURITIES. The Bond Portfolios may buy when-issued securities or
sell securities on a delayed-delivery basis. This means that delivery and
payment for the securities normally will take place approximately 15 to 90 days
after the date of the transaction. The payment obligation and the interest rate
that will be received are each fixed at the time the buyer enters into the
commitment. During the period between purchase and settlement, the purchaser
makes no payment and no interest accrues to the purchaser. However, when a
security is sold on a delayed-delivery basis, the seller does not participate in
further gains or losses with respect to the security. If the other party to a
when-issued or delayed-delivery transaction fails to transfer or pay for the
securities, the Portfolio could miss a favorable price or yield opportunity or
could suffer a loss.
A Portfolio will make a commitment to purchase when-issued securities only with
the intention of actually acquiring the securities, but the Portfolio may
dispose of the commitment before the settlement date if it is deemed advisable
as a matter of investment strategy. A Portfolio may also sell the underlying
securities before they are delivered, which may result in gains or losses. A
separate account for each Portfolio is established at the custodian bank, into
which cash and/or liquid securities equal to the amount of when-issued purchase
commitments is deposited. If the market value of the deposited securities
declines additional cash or securities will be placed in the account on a daily
basis to cover the Portfolio's outstanding commitments.
When a Portfolio purchases a security on a when-issued basis, the security is
recorded as an asset on the commitment date and is subject to changes in market
value generally, based upon changes in the level of interest rates. Thus, upon
delivery, the market value of the security may be higher or lower than its cost,
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and this may increase or decrease the Portfolio's net asset value. When payment
for a when-issued security is due, a Portfolio will meet its obligations from
then-available cash flow, the sale of the securities held in the separate
account, the sale of other securities or from the sale of the when-issued
securities themselves. The sale of securities to meet a when-issued purchase
obligation carries with it the potential for the realization of capital gains or
losses.
The Municipal Bond Portfolio may purchase securities on a when-issued basis in
connection with the refinancing of an issuer's outstanding indebtedness
("refunding contracts"). These contracts require the issuer to sell and the
Portfolio to buy municipal obligations at a stated price and yield on a
settlement date that may be several months or several years in the future. The
offering proceeds are then used to refinance existing municipal obligations.
Although the Municipal Bond Portfolio may sell its rights under a refunding
contract, the secondary market for these contracts may be less liquid than the
secondary market for other types of municipal securities. The Portfolio
generally will not be obligated to pay the full purchase price if it fails to
perform under a refunding contract. Instead, refunding contracts usually provide
for payment of liquidated damages to the issuer (currently 15-20% of the
purchase price). The Portfolio may secure its obligation under a refunding
contract by depositing collateral or a letter of credit equal to the liquidated
damages provision of the refunding contract. When required by Securities and
Exchange Commission ("SEC") guidelines, the Portfolio will place liquid assets
in a segregated custodial account equal in amount to its obligations under
outstanding refunding contracts.
ZERO COUPON BONDS. The Bond Portfolios may invest in zero coupon bonds of
governmental or private issuers that generally pay no interest to their holders
prior to maturity. Since zero coupon bonds do not make regular interest
payments, they allow an issuer to avoid the need to generate cash to meet
current interest payments and may involve greater credit risks than bonds paying
interest currently. Tax laws requiring the distribution of accrued discount on
the bonds, even though no cash equivalent thereto has been paid, may cause a
Portfolio to liquidate investments in order to make the required distributions.
RISK FACTORS APPLICABLE TO THE MUNICIPAL BOND PORTFOLIO:
HEALTH CARE SECTOR. The health care industry is subject to regulatory action by
a number of private and governmental agencies, including federal, state and
local governmental agencies. A major source of revenues for the industry is
payments from the Medicare and Medicaid programs. As a result, the industry is
sensitive to legislative changes and reductions in governmental spending for
those programs. Numerous other factors may affect the industry, such as general
and local economic conditions; demand for services; expenses (including
malpractice insurance premiums) and competition among health care providers. In
the future, the following may adversely affect the industry: adoption of
legislation proposing a national health insurance program; medical and
technological advances which alter the demand for health services or the way in
which such services are provided; and efforts by employers, insurers and
governmental agencies to reduce the costs of health insurance and health care
services.
Health care facilities include life care facilities, nursing homes and
hospitals. The Municipal Bond Portfolio may invest in bonds to finance these
facilities which are typically secured by the revenues from the facilities and
not by state or local government tax payments. Moreover, in the case of life
care facilities, since a portion of housing, medical care and other services may
be financed by an initial deposit, there may be a risk of default in the payment
of principal or interest on a bond issue if the facility does not maintain
adequate financial reserves for debt service.
HOUSING SECTOR. The Municipal Bond Portfolio may invest in housing revenue bonds
which typically are issued by state, county and local housing authorities and
are secured only by the revenues of mortgages originated by those authorities
using the proceeds of the bond issues. Factors that may affect the financing of
multi-family housing projects include acceptable completion of construction,
proper management, occupancy and rent levels, economic conditions and changes in
regulatory requirements.
Since the demand for mortgages from the proceeds of a bond issue cannot be
precisely predicted, the proceeds may be in excess of demand, which would result
in early retirement of the bonds by the issuer. Since the cash flow from
mortgages cannot be precisely predicted, differences in the actual cash flow
from the assumed cash flow could have an adverse impact upon the issuer's
ability to make scheduled payments of principal and interest or could result in
early retirement of the bonds.
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Scheduled principal and interest payments are often made from reserve or sinking
funds. These reserves are funded from the bond proceeds, assuming certain rates
of return on investment of the reserve funds. If the assumed rates of return are
not realized because of changes in interest rate levels or for other reasons,
the actual cash flow for scheduled payments of principal and interest on the
bonds may be inadequate.
ELECTRIC UTILITIES SECTOR. The electric utilities industry has experienced, and
may experience in the future: problems in financing large construction programs
in an inflationary period; cost increases and delays caused by environmental
considerations (particularly with respect to nuclear facilities); difficulties
in obtaining fuel at reasonable prices; the effects of conservation on the
demand for energy; increased competition from alternative energy sources; and
the effects of rapidly changing licensing and safety requirements.
PROPOSED LEGISLATION. From time to time, proposals have been introduced before
Congress for the purpose of restricting or eliminating the federal income tax
exemption for interest on debt obligations issued by states and their political
subdivisions. For example, federal tax law now limits the types and amounts of
tax-exempt bonds issuable for industrial development and other types of private
activities. These limitations may affect the future supply and yields of private
activity securities. Further proposals affecting the value of tax-exempt
securities may be introduced in the future. In addition, proposals have been
made, such as that involving the "flat tax," that could reduce or eliminate the
value of that exemption. If the availability of municipal securities for
investment or the value of the Municipal Bond Portfolio's holdings could be
materially affected by such changes in the law, the Trustees would reevaluate
the Portfolio's investment objective and policies or consider the Portfolio's
dissolution.
PORTFOLIO TURNOVER. Portfolio turnover rates for the past 2 years, (or since the
date of inception, if applicable) were:
- ------------------------------------- ----------------------------------- ------
12 MONTHS ENDED 12 MONTHS ENDED
JUNE 30, 1999 JUNE 30, 1998
------------- -------------
- ----------------------- --------------------------- ----------------------------
Short/Intermediate Bond % %
- ----------------------- --------------------------- ----------------------------
Intermediate Bond % %
- ----------------------- --------------------------- ----------------------------
Municipal Bond % %
- ----------------------- --------------------------- ----------------------------
THE EQUITY PORTFOLIOS
The "Equity Portfolios" are the Large Cap Growth, the Large Cap Core, the Small
Cap Core, the International Multi-Manager, the Large Cap Value, the Mid Cap
Value and the Small Cap Value Portfolios.
AMERICAN DEPOSITARY RECEIPTS (ADRS) AND EUROPEAN DEPOSITARY RECEIPTS (EDRS). The
International Multi-Manager and Large Cap Core Portfolios each may invest in
ADRs and EDRs. ADRs and EDRs are securities, typically issued by a U.S.
financial institution or a non-U.S. financial institution in the case of an EDR
(a "depositary"). The institution has ownership interests in a security, or a
pool of securities, issued by a foreign issuer and deposited with the
depositary. ADRs and EDRs may be available through "sponsored" or "unsponsored"
facilities. A sponsored facility is established jointly by the issuer of the
security underlying the receipt and a depositary. An unsponsored facility may be
established by a depositary without participation by the issuer of the
underlying security. Holders of unsponsored depositary receipts generally bear
all the costs of the unsponsored facility. The depositary of an unsponsored
facility frequently is under no obligation to distribute shareholder
communications received from the issuer of the deposited security or to pass
through, to the holders of the receipts, voting rights with respect to the
deposited securities.
CASH MANAGEMENT. The Large Cap Growth, Small Cap Core and the International
Multi-Manager Portfolios each may invest no more than 15% of its total assets in
cash and cash equivalents including high-quality money market instruments and
money market funds in order to manage cash flow in the Portfolio. The other
Equity Portfolios are not subject to specific percentage limitations on such
investments. Certain of these instruments are described below.
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(BULLET) MONEY MARKET FUNDS. The Equity Portfolios may invest in the
securities of other money market mutual funds, within the limits
prescribed by the 1940 Act.
The International Multi-Manager Portfolio may invest in
securities of open-end and closed-end investment companies that
invest primarily in the equity securities of issuers in countries
where it is impossible or impractical to invest directly. Such
investments will be subject to the limits described above.
(BULLET) U.S. GOVERNMENT OBLIGATIONS. The Equity Portfolios may invest in
the same debt securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities as the Money Market
Portfolios. (See "U.S. Government Obligations.")
(BULLET) COMMERCIAL PAPER. The Equity Portfolios may invest in commercial
paper. Commercial paper consists of short-term (up to 270 days)
unsecured promissory notes issued by corporations in order to
finance their current operations. The Portfolios may invest only
in commercial paper rated A-1 or higher by S&P or Moody's or if
not rated, determined by the adviser or sub-adviser to be of
comparable quality.
(BULLET) BANK OBLIGATIONS. The Equity Portfolios may invest in the same
obligations of U.S. banks as the Money Market Portfolios. (See
"Bank Obligations.")
CONVERTIBLE SECURITIES. Convertible securities have characteristics similar to
both fixed income and equity securities. Because of the conversion feature, the
market value of convertible securities tends to move together with the market
value of the underlying stock. As a result, a Portfolio's selection of
convertible securities is based, to a great extent, on the potential for capital
appreciation that may exist in the underlying stock. The value of convertible
securities is also affected by prevailing interest rates, the credit quality of
the issuers and any call provisions.
The Equity Portfolios may invest in convertible securities that are rated, at
the time of purchase, in the three highest rating categories by a nationally
recognized statistical rating organization ("NRSRO") such as Moody's or S&P, or
if unrated, are determined by the adviser or a sub-adviser, as applicable, to be
of comparable quality. In addition, the International Multi-Manager Portfolio
may invest in non-convertible debt securities issued by foreign governments,
international agencies, and private foreign issuers that, at the time of
purchase, are rated A or better by a NRSRO, or, if not rated, are judged by the
adviser or one or more of the sub-advisers to be of comparable quality. Ratings
represent the rating agency's opinion regarding the quality of the security and
are not a guarantee of quality. Should the rating of a security be downgraded
subsequent to a Portfolio's purchase of the security, the adviser or a
sub-adviser, as applicable, will determine whether it is in the best interest of
the Portfolio to retain the security.
DEBT SECURITIES. Debt securities represent money borrowed that obligates the
issuer (e.g., a corporation, municipality, government, government agency) to
repay the borrowed amount at maturity (when the obligation is due and payable)
and usually to pay the holder interest at specific times.
HEDGING STRATEGIES. The Equity Portfolios may engage in certain hedging
strategies that involve options, futures and, in the case of the International
Multi-Manager Portfolio, forward currency exchange contracts. These hedging
strategies are described in detail in the Appendix.
ILLIQUID SECURITIES. Each of the Large Cap Value, Mid Cap Value and Small Cap
Value Portfolios may invest no more than 10% of its net assets in securities
that at the time of purchase have legal or contractual restrictions on resale or
are otherwise illiquid. Each of the Large Cap Growth, Large Cap Core, Small Cap
Core and International Multi-Manager Portfolios may invest no more than 15% of
its net assets in securities that at the time of purchase have legal or
contractual restrictions on resale or are otherwise illiquid. If the limitations
on illiquid securities are exceeded, other than by a change in market values,
the condition will be reported by the Portfolio's investment adviser to the
Board of Trustees.
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OPTIONS ON SECURITIES AND SECURITIES INDEXES. The Large Cap Growth, Large Cap
Value and Small Cap Core Portfolios each may purchase call options on securities
that the adviser intends to include in the Portfolios in order to fix the cost
of a future purchase or attempt to enhance return by, for example, participating
in an anticipated increase in the value of a security. The Portfolios may
purchase put options to hedge against a decline in the market value of
securities held in the Portfolios or in an attempt to enhance return. The
Portfolios may write (sell) put and covered call options on securities in which
they are authorized to invest. The Portfolios may also purchase put and call
options, and write put and covered call options on U.S. securities indexes.
Stock index options serve to hedge against overall fluctuations in the
securities markets rather than anticipated increases or decreases in the value
of a particular security. Of the 85% of the total assets of a Portfolio that are
invested in equity (or related) securities, the Portfolio may not invest more
than 10% of such assets in covered call options on securities and/or options on
securities indices.
REPURCHASE AGREEMENTS. The Equity Portfolios may invest in the same repurchase
agreements as the Money Market Portfolios. (See "Repurchase Agreements.")
RESTRICTED SECURITIES. Restricted securities are securities that may not be sold
to the public without registration under the Securities Act of 1933 or an
exemption from registration. Each of the Equity Portfolios may invest up to 15%
of its net assets in illiquid securities, subject to a Portfolio's investment
limitations on the purchase of illiquid securities. Restricted securities,
including securities eligible for re-sale under 1933 Act Rule 144A, that are
determined to be liquid are not subject to this limitation. This determination
is to be made by the adviser or a sub-adviser pursuant to guidelines adopted by
the Board of Trustees. Under these guidelines, the adviser or a sub-adviser will
consider the frequency of trades and quotes for the security, the number of
dealers in, and potential purchasers for, the securities, dealer undertakings to
make a market in the security, and the nature of the security and of the
marketplace trades. In purchasing such restricted securities, the adviser or a
sub-adviser intends to purchase securities that are exempt from registration
under Rule 144A under the 1933 Act.
SECURITIES LENDING. The Equity Portfolios may lend securities subject to the
same conditions applicable to the Bond Portfolios. (See "Securities Lending.")
PORTFOLIO TURNOVER. Portfolio turnover rates for the past 2 years, (or since
inception, if applicable) were:
- --------------------------- -------------------------- -------------------------
12 MONTHS ENDED 12 MONTHS ENDED
JUNE 30, 1999 JUNE 30, 1998
------------- -------------
- --------------------------- -------------------------- -------------------------
Large Cap Growth % %
- --------------------------- -------------------------- -------------------------
Large Cap Core % %
- --------------------------- -------------------------- -------------------------
Small Cap Core % %
- --------------------------- -------------------------- -------------------------
Large Cap Value % %
- --------------------------- -------------------------- -------------------------
Mid Cap Value % %
- --------------------------- -------------------------- -------------------------
Small Cap Value % %
- --------------------------- -------------------------- -------------------------
International Multi-Manager % %
- --------------------------- -------------------------- -------------------------
INVESTMENT LIMITATIONS
Except as otherwise provided, the Portfolios and their corresponding master
series have adopted the investment limitations set forth below. Limitations
which are designated as fundamental policies may not be changed without the
affirmative vote of the lessor of (i) 67% or more of the shares of a Portfolio
present at a shareholders meeting if holders of more than 50% of the outstanding
shares of the Portfolio are present in person or by proxy or (ii) more than 50%
of the outstanding shares of a Portfolio. If any percentage restriction on
investment or utilization of assets is adhered to at the time an investment is
made, a later
16
<PAGE>
change in percentage resulting from a change in the market values of a
Portfolio's assets or redemptions of shares will not be considered a violation
of the limitation.
MONEY MARKET PORTFOLIOS:
Each Portfolio will not as a matter of fundamental policy:
1. purchase the securities of any one issuer if, as a result, more than 5% of
the Portfolio's total assets would be invested in the securities of such issuer,
or the Portfolio would own or hold 10% or more of the outstanding voting
securities of that issuer, provided that (1) each Portfolio may invest up to 25%
of its total assets without regard to these limitations; and (2) these
limitations do not apply to securities issued or guaranteed by the
U.S. Government, its agencies or instrumentalities;
2. purchase the securities of any issuer if, as a result, more than 25% of the
Portfolio's total assets would be invested in the securities of one or more
issuers having their principal business activities in the same industry,
provided, that each of the Prime Money Market and Premier Money Market
Portfolios may invest more than 25% of its total assets in the obligations of
banks;
3. borrow money, except (1) from a bank for temporary or emergency purposes (not
for leveraging or investment) or (2) by engaging in reverse repurchase
agreements if the Portfolio's borrowings do not exceed an amount equal to 33
1/3% of the current value of its assets taken at market value, less liabilities
other than borrowings;
4. make loans to other persons, except by (1) purchasing debt securities in
accordance with its investment objective, policies and limitations; (2) entering
into repurchase agreements; or (3) engaging in securities loan transactions
limited to 33 1/3% of the value of the Portfolio's total assets;
5. underwrite any issue of securities, except to the extent that the Portfolio
may be considered to be acting as underwriter in connection with the disposition
of any portfolio security;
6. purchase or sell real estate, provided that the Portfolio may invest in
obligations secured by real estate or interests therein or obligations issued by
companies that invest in real estate or interests therein;
7. purchase or sell physical commodities or contracts, provided that currencies
and currency-related contracts will not be deemed physical commodities; or
8. with respect to the Tax-Exempt Portfolio only, issue senior securities,
except as appropriate to evidence indebtedness that the Portfolio is permitted
to incur, provided that the Portfolio's use of options, futures contracts and
options thereon or currency-related contracts will not be deemed to be senior
securities for this purpose.
THE INVESTMENT LIMITATIONS DESCRIBED ABOVE DO NOT PROHIBIT A PORTFOLIO FROM
INVESTING ALL OR SUBSTANTIALLY ALL OF ITS ASSETS IN THE SHARES OF ANOTHER
REGISTERED OPEN-END INVESTMENT COMPANY SUCH AS THE CORRESPONDING SERIES OF WT
INVESTMENT TRUST I.
With respect to the exclusion from the investment limitation described in number
2 above, the Fund has been advised that it is the SEC staff's current position,
that the exclusion may be applied only to U.S. bank obligations; the Prime Money
Market and Premier Money Market Portfolios, however, will consider both foreign
and U.S. bank obligations within this exclusion.
The following non-fundamental policies apply to each Money Market Portfolio
unless otherwise indicated, and the Board of Trustees may change them without
shareholder approval.
Each Portfolio will not:
1. make short sales of securities except short sales against the box;
17
<PAGE>
2. purchase securities on margin except for the use of short-term credit
necessary for the clearance of purchases and sales of portfolio securities;
3. purchase portfolio securities if its outstanding borrowings exceed 5% of the
value of its total assets, and if at any time the Portfolio's bank borrowings
exceed its fundamental borrowing limitations due to a decline in net assets,
such borrowings will be promptly (within 3 days) reduced to the extent necessary
to comply with such limitations;
4. make loans of portfolio securities unless such loans are fully collateralized
by cash, securities issued or guaranteed by the U.S. Government, its agencies or
instrumentalities, or any combination of cash and securities, marked to market
daily; or
5. with respect to the U.S. Government, Prime Money Market and Premier Money
Market Portfolios only, purchase the securities of any one issuer if as a result
more than 5% of the Portfolio's total assets would be invested in the securities
of such issuer, provided that this limitation does not apply to securities
issued or guaranteed by the U.S. Government, its agencies or instrumentalities.
BOND PORTFOLIOS:
Each Portfolio will not as a matter of fundamental policy:
1. purchase the securities of any one issuer if, as a result, more than 5% of
the Portfolio's total assets would be invested in the securities of such issuer,
or the Portfolio would own or hold 10% or more of the outstanding voting
securities of that issuer, provided that (1) each Portfolio may invest up to 25%
of its total assets without regard to these limitations; and (2) these
limitations do not apply to securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities;
2. purchase the securities of any issuer if, as a result, more than 25% of the
Portfolio's total assets would be invested in the securities of one or more
issuers having their principal business activities in the same industry,
provided that this limitation does not apply to securities issued or guaranteed
by the U.S. Government, its agencies or instrumentalities (including repurchase
agreements fully collateralized by U.S. Government obligations) or to tax-exempt
municipal securities;
3. borrow money, provided that the Portfolio may borrow money from banks for
temporary or emergency services (not for leveraging or investment) or by
engaging in reverse repurchase agreements if the Portfolio's borrowings do not
exceed an amount equal to 33 1/3% of the current value of its assets taken at
market value, less liabilities other than borrowings;
4. make loans to other persons, except by (1) purchasing debt securities in
accordance with its investment objective, policies and limitations; (2) entering
into repurchase agreements; or (3) engaging in securities loan transactions
limited to 33 1/3% of the value of the Portfolio's total assets;
5. underwrite any issue of securities, except to the extent that the Portfolio
may be considered to be acting as underwriter in connection with the disposition
of any portfolio security;
6. purchase or sell real estate or real estate limited partnership interests,
provided that the Portfolio may invest in obligations secured by real estate or
interests therein or obligations issued by companies that invest in real estate
or interests therein, including real estate investment trusts;
7. purchase or sell physical commodities or commodities contracts except
financial and foreign currency futures contracts and options thereon, options on
foreign currencies and forward currency contracts; or
8. issue senior securities, except as appropriate to evidence indebtedness that
the Portfolio is permitted to incur, provided that futures, options and forward
currency transactions will not be deemed to be senior securities for purposes of
this limitation.
18
<PAGE>
THE INVESTMENT LIMITATIONS DESCRIBED ABOVE DO NOT PROHIBIT A PORTFOLIO FROM
INVESTING ALL OR SUBSTANTIALLY ALL OF ITS ASSETS IN THE SHARES OF ANOTHER
REGISTERED OPEN-END INVESTMENT COMPANY SUCH AS THE CORRESPONDING SERIES OF WT
INVESTMENT TRUST I.
The following non-fundamental policies apply to each Portfolio and may be
changed by the Board of Trustees without shareholder approval. Each Portfolio
will not:
1. pledge, mortgage or hypothecate its assets, except the Portfolio may pledge
securities having a market value at the time of the pledge not exceeding 33 1/3%
of the value of its total assets to secure borrowings, and the Portfolio may
deposit initial and variation margin in connection with transactions in futures
contracts and options on futures contracts;
2. make short sales of securities except short sales against the box;
3. purchase securities on margin except for the use of short-term credit
necessary for the clearance of purchases and sales of portfolio securities,
provided that the Portfolio may make initial and variation margin deposits in
connection with permitted transactions in options or futures;
4. purchase portfolio securities if its outstanding borrowings exceed 5% of the
value of its total assets;
5. when engaging in options, futures and forward currency contract strategies, a
Portfolio will either: (1) set aside cash or liquid securities in a segregated
account with the Fund's custodian in the prescribed amount; or (2) hold
securities or other options or futures contracts whose values are expected to
offset ("cover") its obligations thereunder. Securities, currencies or other
options or futures contracts used for cover cannot be sold or closed out while
the strategy is outstanding, unless they are replaced with similar assets;
6. purchase or sell non-hedging futures contracts or related options if
aggregate initial margin and premiums required to establish such positions would
exceed 5% of the Portfolio's total assets. For purposes of this limitation,
unrealized profits and unrealized losses on any open contracts are taken into
account, and the in-the-money amount of an option that is in-the-money at the
time of purchase is excluded; or
7. write put or call options having aggregate exercise prices greater than 25%
of the Portfolio's net assets, except with respect to options attached to or
acquired with or traded together with their underlying securities and securities
that incorporate features similar to options.
EQUITY PORTFOLIOS:
Each Portfolio will not as a matter of fundamental policy:
1. purchase the securities of any one issuer, if as a result, more than 5% of
the Portfolio's total assets would be invested in the securities of such issuer,
or the Portfolio would own or hold 10% or more of the outstanding voting
securities of that issuer, provided that (1) each Portfolio may invest up to 25%
of its total assets without regard to these limitations; (2) these limitations
do not apply to securities issued or guaranteed by the U.S. Government, its
agencies or instrumentalities; and (3) for the Large Cap Growth, Large Cap Core,
Small Cap Core and International Multi-Manager Portfolios, repurchase agreements
fully collateralized by U.S. Government obligations will be treated as U.S.
Government obligations;
2. purchase securities of any issuer if, as a result, more than 25% of the
Portfolio's total assets would be invested in the securities of one or more
issuers having their principal business activities in the same industry,
provided, that (1) for the Large Cap Value, Small Cap Value and Mid Cap Value
Portfolios, this limitation does not apply to investments in short-term
obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities; and (2) the Large Cap Growth, Large Cap Core, Small Cap
19
<PAGE>
Core and International Multi-Manager Portfolios, this limitation does not apply
to debt obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities;
3. borrow money, provided that (1) each of the Large Cap Value, Small Cap Value
and Mid Cap Value Portfolios may borrow money for temporary or emergency
purposes, including the meeting of redemption requests, in amounts up to 33 1/3%
of a Portfolio's assets; and (2) each of the Large Cap Growth, Large Cap Core,
Small Cap Core and International Multi-Manager Portfolios may borrow money for
temporary or emergency purposes, and then in an aggregate amount not in excess
of 10% of a Portfolio's total assets;
4. make loans to other persons, except by (1) purchasing debt securities in
accordance with its investment objective, policies and limitations; (2) entering
into repurchase agreements; or (3) engaging in securities loan transactions;
5. underwrite any issue of securities, except to the extent that the Portfolio
may be considered to be acting as underwriter in connection with the disposition
of any portfolio security;
6. purchase or sell real estate, provided that (1) the Large Cap Value, Small
Cap Value and Mid Cap Value Portfolios additionally may not invest in any
interest in real estate except securities issued or guaranteed by corporate or
governmental entities secured by real estate or interests therein, such as
mortgage pass-throughs and collateralized mortgage obligations, or issued by
companies that invest in real estate or interests therein; (2) the Large Cap
Growth, Large Cap Core, Small Cap Core and International Multi-Manager
Portfolios each may invest in obligations secured by real estate or interests
therein or obligations issued by companies that invest in real estate or
interests therein, including real estate investment trusts;
7. purchase or sell physical commodities, provided that (1) the Large Cap Value,
Small Cap Value and Mid Cap Value Portfolios additionally are restricted from
purchasing or selling contracts, options or options on contracts to purchase or
sell physical commodities; and (2) the Large Cap Growth, Large Cap Core, Small
Cap Core and International Multi-Manager Portfolios each may invest in,
purchase, sell or enter into financial options and futures, forward and spot
currency contracts, swap transactions and other derivative financial
instruments; or
8. issue senior securities, except to the extent permitted by the 1940 Act,
provided that each of the Large Cap Value, Small Cap Value and Mid Cap Value
Portfolios may borrow money subject to its investment limitation on borrowing.
THE INVESTMENT LIMITATIONS DESCRIBED ABOVE DO NOT PROHIBIT A PORTFOLIO FROM
INVESTING ALL OR SUBSTANTIALLY ALL OF ITS ASSETS IN THE SHARES OF ANOTHER
REGISTERED OPEN-END INVESTMENT COMPANY SUCH AS THE CORRESPONDING SERIES OF WT
INVESTMENT TRUST I.
The following non-fundamental policies apply to each Portfolio unless otherwise
indicated, and the Board of Trustees may change them without shareholder
approval. Each Portfolio will not:
1. pledge, mortgage or hypothecate its assets except to secure indebtedness
permitted to be incurred by the Portfolio, provided that (1) this limitation
does not apply to the Large Cap Growth, Large Cap Core and Small Cap Core
Portfolios; and (2) with respect to the Large Cap Value, Small Cap Value, Mid
Cap Value and International Multi-Manager Portfolios, the deposit in escrow of
securities in connection with the writing of put and call options,
collateralized loans of securities and collateral arrangements with respect to
margin for future contracts are not deemed to be pledges or hypothecations for
this purpose;
2. make short sales of securities except short sales against the box;
3. purchase securities on margin except for the use of short-term credit
necessary for the clearance of purchases and sales of portfolio securities,
provided that Large Cap Value, Small Cap Value and Mid Cap
20
<PAGE>
Value Portfolios may make initial and variation margin deposits in connection
with permitted transactions in options without violating this limitation;
4. purchase portfolio securities if its outstanding borrowings exceed 5% of the
value of its total assets, provided that (1) the Large Cap Value, Small Cap
Value and Mid Cap Value Portfolios may not borrow for purposes other than
meeting redemptions in an amount exceeding 5% of the value of its total assets
at the time the borrowing is made.
TRUSTEES AND OFFICERS
The Board of Trustees supervises the Portfolios' activities and reviews
contractual arrangements with the Portfolios' service providers. The Trustees
and officers are listed below. All persons named as Trustees and officers also
serve in a similar capacity for WT Investment Trust I. An asterisk (*) indicates
those Trustees who are "interested persons".
- -------------------------- ------------- ---------------------------------------
POSITION(S) PRINCIPAL OCCUPATION(S) DURING THE PAST
NAME, ADDRESS AND DATE OF HELD WITH FIVE YEARS
BIRTH THE FUND
- -------------------------- ------------- ---------------------------------------
ROBERT ARNOLD Trustee In 1989, Mr. Arnold founded, and
152 W. 57th Street, 44th currently co-manages, R. H. Arnold &
Floor Co., Inc., an investment banking
New York, NY 10019 company. Prior to forming R. H. Arnold
Date of Birth: 3/44 & Co., Inc., Mr. Arnold was Executive
Vice President and a director to
Cambrian Capital Corporation, an
investment banking firm he co-founded
in 1987.
- -------------------------- ------------- ---------------------------------------
ROBERT J. CHRISTIAN* Trustee, Mr. Christian has been Chief Investment
Rodney Square North President Officer of Wilmington Trust Company
1100 N. Market Street since February 1996 and Director of
Wilmington, DE 19890 Rodney Square Management Corporation
Date of Birth: 2/49 since 1996. He was Chairman and
Director of PNC Equity Advisors
Company, and President and Chief
Investment Officer of PNC Asset
Management Group Inc. from 1994 to
1996. He was Chief Investment Officer
of PNC Bank from 1992 to 1996 and
Director of Provident Capital
Management from 1993 to 1996.
- -------------------------- ------------- ---------------------------------------
NICHOLAS A. GIORDANO Trustee Mr. Giordano was appointed interim
LaSalle University President of LaSalle University on July
Philadelphia, PA 19141 1, 1998 and was a consultant for
Date of Birth: 3/43 financial services organizations from
late 1997 through 1998. He served as
president and chief executive officer
of the Philadelphia Stock Exchange from
1981 through August 1997, and also
served as chairman of the board of the
exchange's two subsidiaries: Stock
Clearing Corporation of Philadelphia
and Philadelphia Depository Trust
Company. Before joining the
Philadelphia Stock Exchange, Mr.
Giordano served as chief financial
officer at two brokerage firms
(1968-1971). A certified public
accountant, he began his career at
Price Waterhouse in 1965.
- ------------------------- ------------- ----------------------------------------
LAWRENCE B. THOMAS Trustee Mr. Thomas retired in October 1996,
7813 Pierce Circle after having served in numerous
Omaha, NE 68124 financial positions at ConAgra, Inc.
Date of Birth: 3/46 (an international food company)
including Treasurer, Secretary, Risk
Officer, and Senior Vice
President-Finance (Principal Financial
Officer). In his thirty-six years at
ConAgra, he also served as director and
officer of its numerous subsidiaries.
- -------------------------- ------------- ---------------------------------------
21
<PAGE>
- -------------------------- ------------- ---------------------------------------
POSITION(S) PRINCIPAL OCCUPATION(S) DURING THE PAST
NAME, ADDRESS AND DATE OF HELD WITH FIVE YEARS
BIRTH THE FUND
- -------------------------- ------------- ---------------------------------------
ERIC K. CHEUNG Vice From 1978 to 1986, Mr. Cheung was the
Rodney Square North President Portfolio Manager for fixed income
1100 N. Market Street assets of the Meritor Financial Group.
Wilmington, DE 19890 In 1986, Mr. Cheung joined Wilmington
Date of Birth: 12/54 Trust Company and in 1991, he became
the Division Manager for all fixed
income products.
- -------------------------- ------------- ---------------------------------------
PAT COLLETTI Vice Mr. Colletti is Vice President and
400 Bellevue Parkway President Director of Investment Accounting and
Wilmington, DE 19809 and Treasurer Administration of PFPC Inc. since April
Date of Birth: 11/58 1999. Prior to joining PFPC, Mr.
Colletti was Controller for the Reserve
Funds since 1986.
- -------------------------- ------------- ---------------------------------------
GARY M. GARDNER Secretary Mr. Gardner has been a Senior Vice
400 Bellevue Parkway President of PFPC Inc. since January
Wilmington, DE 19809 1994. Previously, Mr. Gardner had
Date of Birth: 2/51 provided legal and regulatory advice to
mutual funds and their management for
more than twenty years at Federated
Investors, Inc., SunAmerica Asset
Management Corp. and The Boston
Company, Inc.
- -------------------------- ------------- ---------------------------------------
On July 1, 1999, the Trustees and officers of the Fund, as a group, owned
beneficially, or may be deemed to have owned beneficially, less than 1% of the
outstanding shares of each Portfolio.
The fees and expenses of the Trustees who are not "interested persons" of the
Fund ("Independent Trustees"), as defined in the 1940 Act are paid by each
Portfolio. The following table shows the fees paid during the fiscal year ended
June 30, 1999 to the Independent Trustees for their service to the Fund and the
total compensation paid to the Trustees by the WT Fund Complex, which consists
of the Fund and WT Investment Trust I.
TRUSTEES FEES FOR THE FISCAL YEAR ENDED JUNE 30, 1999
AGGREGATE TOTAL COMPENSATION
COMPENSATION FROM THE FROM THE WT FUND
INDEPENDENT TRUSTEE FUND COMPLEX
- ------------------- ---- -------
Robert Arnold $ $
Nicholas Giordano $ $
Lawrence Thomas $ $
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
Persons or organizations beneficially owning 25% or more of the outstanding
shares of a Portfolio may be presumed to "control" the Portfolio. As a result,
those persons or organizations could have the ability to vote a majority of the
shares of the Portfolio on any matter requiring the approval of the shareholders
of that Portfolio. As of July 1, 1999, the following entities were known to own
beneficially 5% or more of the outstanding shares the Premier Money Market
Portfolio:
Kiewit Construction Company 15.84%
One Thousand Kiewit Plaza
Omaha, NE 68131
Global Surety & Insurance Co. 6.90%
One Thousand Kiewit Plaza
Omaha, NE 68131
22
<PAGE>
Peter Kiewit Sons Inc. 5.93%
One Thousand Kiewit Plaza
Omaha, NE 68131
Wasatch Construction AJV 20.49%
One Thousand Kiewit Plaza
Omaha, NE 68131
Kiewit-Granite AJV 5.45%
One Thousand Kiewit Plaza
Omaha, NE 68131
Gilbert/Black & Veatch Texas LP 10.89%
One Thousand Kiewit Plaza
Omaha, NE 68131
As of July 1, 1999, the following entities were known to own beneficially 5% or
more of the outstanding shares of the Short/Intermediate Bond Portfolio:
Northern Trust Company 33.64%
Trustee for Continental Kiewit Inc. Pension Plan
P.O. Box 92956
Chicago, IL 60675
Decker Coal Reclamation 38.44%
One Thousand Kiewit Plaza
Omaha, NE 68131
Wilmington Trust Company 7.16%
Trustee for Black Butte Coal Co. Pension Plan
1100 N. Market Street
Wilmington, DE 19890
Wilmington Trust Company 7.02%
Trustee for Kiewit Construction Corp Retirement
Savings Plan
1100 N. Market Street
Wilmington, DE 19890
Wilmington Trust Company 7.10%
Trustee for Decker Coal Co. Pension Plan
1100 N. Market Street
Wilmington, DE 19890
As of July 1, 1999, the following entities were known to own beneficially 5% or
more of the outstanding shares of the Large Cap Core Portfolio:
Northern Trust Company 28.58%
Trustee for Continental Kiewit Inc. Pension Plan
P.O. Box 92956
Chicago, IL 60675
Decker Coal Reclamation 22.27%
One Thousand Kiewit Plaza
Omaha, NE 68131
Wilmington Trust Company 34.64%
23
<PAGE>
Trustee for Kiewit Construction Corp Retirement
Savings Plan
1100 N. Market Street
Wilmington, DE 19890
Wilmington Trust Company 6.45%
Trustee for Decker Coal Co. Pension Plan
1100 N. Market Street
Wilmington, DE 19890
INVESTMENT ADVISORY AND OTHER SERVICES
RODNEY SQUARE MANAGEMENT CORPORATION
RSMC serves as the investment adviser to the Prime Money Market, Premier Money
Market, the U.S. Government and the Tax-Exempt Series. RSMC is a Delaware
corporation organized on September 17, 1981. It is a wholly owned subsidiary of
WTC, a state-chartered bank organized as a Delaware corporation in 1903. WTC is
a wholly owned subsidiary of Wilmington Trust Corporation, a publicly held bank
holding company. RSMC may occasionally consult, on an informal basis, with
personnel of WTC's investment departments.
Several affiliates of RSMC are also engaged in the investment advisory business.
Wilmington Trust FSB and Wilmington Brokerage Services Company, both wholly
owned subsidiaries of WTC, are registered investment advisers. In addition, WBSC
is a registered broker-dealer.
WTC previously served as the investment adviser of the Premier Money Market
Series until ______, 1999. For information regarding the fees WTC received, and
waived, for its services, please see below.
For its services as adviser, RSMC received the following fees:
12 MONTHS ENDED 12 MONTHS ENDED 12 MONTHS ENDED
6/30/99 6/30/98 6/30/97
------- ------- -------
Prime Money Market Series
U.S. Government Series
Tax-Exempt Series
For its services as adviser, RSMC waived the following fees:
12 MONTHS ENDED 12 MONTHS ENDED 12 MONTHS ENDED
6/30/99 6/30/98 6/30/97
------- ------- -------
Prime Money Market Series
U.S. Government Series
Tax-Exempt Series
WILMINGTON TRUST COMPANY
Wilmington Trust Company, the parent of RSMC, is a state-chartered bank
organized as a Delaware corporation in 1903. WTC is a wholly owned subsidiary of
Wilmington Trust Corporation, a publicly held bank holding company. WTC is
engaged in a variety of investment advisory activities, including the management
of collective investment pools, and has nearly a century of experience managing
the personal investments of high net-worth individuals. WTC also manages over
$3.8 billion in fixed income assets and $1.4 billion in equity assets for
various other institutional clients.
WTC serves as the adviser to the Short/Intermediate Bond Series, the
Intermediate Bond Series, the Municipal Bond Series, the Large Cap Core Series,
the Small Cap Core Series and the International Multi-Manager Series.
For WTC's services as investment adviser to each Series, WTC received the
following fees:
<TABLE>
<CAPTION>
OCTOBER 20, 1998 TO 12 MONTHS ENDED 12 MONTHS ENDED 12 MONTHS ENDED
JUNE 30, 1999 6/30/99 6/30/98 6/30/97
------------- ------- ------- -------
<S> <C> <C> <C> <C>
Premier Money Market Series $ N/A N/A N/A
24
<PAGE>
Short/Intermediate Bond Series $ N/A N/A N/A
Large Cap Core Series $ N/A N/A N/A
Intermediate Bond Series N/A $ $ $
Municipal Bond Series N/A $ $ $
WT Large Cap Growth Series N/A $ $ $
Small Cap Core Series N/A $ $ $
International Multi-Manager Series N/A $ $ $
</TABLE>
For its services as adviser, WTC waived the following fees:
<TABLE>
<CAPTION>
OCTOBER 20, 1998 TO 12 MONTHS ENDED 12 MONTHS ENDED 12 MONTHS ENDED
JUNE 30, 1999 6/30/99 6/30/98 6/30/97
------------- ------- ------- -------
<S> <C> <C> <C> <C>
Premier Money Market Series $ N/A N/A N/A
Short/Intermediate Bond Series $ N/A N/A N/A
Large Cap Core Series $ N/A N/A N/A
Intermediate Bond Series N/A $ $ $
Municipal Bond Series N/A $ $ $
WT Large Cap Growth Series N/A $ $ $
Small Cap Core Series N/A $ $ $
International Multi-Manager Series N/A $ $ $
</TABLE>
Prior to October 19, 1998, Kiewit Investment Management Corp. served as
investment adviser to the Premier Money Market, Short/Intermediate Bond and
Large Cap Core Series. Pursuant to investment management agreements then in
effect, the following fees were payable to Kiewit:
<TABLE>
<CAPTION>
JULY 1, 1998 TO THE FISCAL YEAR ENDED THE FISCAL YEAR ENDED
OCTOBER 19, 1998 JUNE 30, 1998 JUNE 30, 1997
---------------- ------------- -------------
<S> <C> <C> <C>
Premier Money Market Series $ $983,634 $833,621
Short/Intermediate Bond Series $ $579,830 $544,147
Large Cap Core Series $ $695,586 $517,000
</TABLE>
Kiewit Investment Management Corp., waived the following fees for:
<TABLE>
<CAPTION>
JULY 1, 1998 TO THE FISCAL YEAR ENDED THE FISCAL YEAR ENDED
OCTOBER 19, 1998 JUNE 30, 1998 JUNE 30, 1997
---------------- ------------- -------------
<S> <C> <C> <C>
Premier Money Market Series $ $519,887 $334,909
Short/Intermediate Bond Series $ $115,748 $ 92,541
Large Cap Core Series $ $126,953 $109,204
</TABLE>
For Institutional shares, WTC, or RSMC , as applicable, have agreed to waive a
portion of their advisory fees or reimburse expenses to the extent total
operating expenses exceed 0.20% for the Premier Money Market Series, 0.55% for
the Short/Intermediate Bond Series; 0.55% for the Intermediate Bond Series;
0.75% for the Municipal Bond Series, 0.75% for the Large Cap Growth Series; .80%
for the Large Core Series; 0.75% for the Large Cap Value Series; 0.80% for the
Small Cap Core Series; and 1.00% for the International Multi-Manager Series.
This waiver will remain in place until the Board of Trustees approves its
termination.
CRAMER ROSENTHAL MCGLYNN, LLC
CRM serves as investment adviser to the Large Cap Value, the Mid Cap Value and
the Small Cap Series. CRM and its predecessors have managed investments in small
and medium capitalization companies for over 25 years. CRM is 76% owned (and
therefore controlled) by Cramer, Rosenthal, McGlynn, Inc. ("CRM") and its
shareholders. CRM is registered as an investment adviser with the SEC.
For its services as adviser, CRM received the following fees:
12 MONTHS ENDED 12 MONTHS ENDED 12 MONTHS ENDED
6/30/99 6/30/98 6/30/97
------- ------- -------
Large Cap Value Series
25
<PAGE>
Mid Cap Value Series
Small Cap Value Series
For its services as adviser, CRM waived the following fees.
12 MONTHS ENDED 12 MONTHS ENDED 12 MONTHS ENDED
6/30/99 6/30/98 6/30/97
------- ------- -------
Large Cap Value Series
Mid Cap Value Series
Small Cap Value Series
For Institutional shares, CRM has voluntarily undertaken to waive a portion of
its fees and assume certain expenses of the above Series to the extent that the
total annual operating expenses exceed 1.40% of net assets.
This undertaking may be terminated at any time.
ROXBURY CAPITAL MANAGEMENT Roxbury serves as the investment adviser to the
corresponding Series of the Large Cap Growth Portfolio.
The WT Large Cap Growth Series pays a monthly advisory fee to Roxbury at the
annual rate of 0.55% of the Series' first $1 billion of average daily net
assets; .50% of the Series' next $1 billion of average daily net assets; and
.45% of the Series average daily net assets over $2 billion.
For Institutional shares, Roxbury has agreed to waive a portion of its advisory
fee or reimburse expenses to the extent total operating expenses exceed 0.75%
for the WT Large Cap Growth Series. This waiver will remain in place until the
Board of Trustees approves its termination.
ADVISORY SERVICES. Under the terms of advisory agreements, each adviser agrees
to: (a) direct the investments of each Series, subject to and in accordance with
the Series' investment objective, policies and limitations set forth in the
Prospectus and this Statement of Additional Information; (b) purchase and sell
for each Series, securities and other investments consistent with the Series'
objectives and policies; (c) supply office facilities, equipment and personnel
necessary for servicing the investments of the Series; (d) pay the salaries of
all personnel of the Series and the adviser performing services relating to
research, statistical and investment activities on behalf of the Series; (e)
make available and provide such information as the Series and/or its
administrator may reasonably request for use in the preparation of its
registration statement, reports and other documents required by any applicable
federal, foreign or state statutes or regulations; (f) make its officers and
employees available to the Trustees and officers of the Fund for consultation
and discussion regarding the management of each Series and its investment
activities. Additionally, each adviser agrees to create and maintain all
necessary records in accordance with all applicable laws, rules and regulations
pertaining to the various functions performed by it and not otherwise created
and maintained by another party pursuant to contract with the Fund. Each adviser
may at any time or times, upon approval by the Board of Trustees, enter into one
or more sub-advisory agreements with a sub-advisor pursuant to which the adviser
delegates any or all of its duties as listed. The agreements provide that each
adviser shall not be liable for any error of judgment or mistake of law or for
any loss suffered by a Series in connection with the matters to which the
Agreement relates, except to the extent of a loss resulting from willful
misfeasance, bad faith or gross negligence on its part in the performance of its
obligations and duties under the agreement.
The salaries of any officers and the interested Trustees of the Funds who are
affiliated with an adviser and the salaries of all personnel of each adviser
performing services for each Fund relating to research, statistical and
investment activities are paid by the adviser.
SUB-ADVISORY SERVICES
INTERNATIONAL MULTI-MANAGER SERIES ONLY:
The sub-advisers to the Series are:
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CLEMENTE CAPITAL, INC. is located at Carnegie Hall Tower, 152 West 57th Street,
New York, New York 10019. Clemente has been a registered investment adviser
since 1979. SCUDDER KEMPER INVESTMENTS, INC. is located at 345 Park Avenue, New
York, New York 10154. Scudder Kemper was founded as America's first independent
investment counselor and has served as investment adviser, administrator and
distributor of mutual funds since 1928. INVISTA CAPITAL MANAGEMENT, INC., a
registered investment adviser since 1984, is located at 1800 Hub Tower, 699
Walnut Street, Des Moines, Iowa 50309. Invista is an indirect, wholly owned
subsidiary of Principal Mutual Life Insurance Company.
SUB-ADVISORY AGREEMENTS. For services furnished pursuant to each Sub-Advisory
Agreement, WTC pays each sub-adviser a monthly portfolio management fee at an
annual rate of 0.50% of the average daily net assets under the sub-adviser's
management.
Each Sub-Advisory Agreement provides that the sub-adviser has discretionary
investment authority (including the selection of brokers and dealers for the
execution of the Series' portfolio transactions) with respect to the portion of
the Series' assets allocated to it by WTC, subject to the restrictions of the
1940 Act, the Internal Revenue Code of 1986, as amended, applicable state
securities laws, applicable statutes and regulations of foreign jurisdictions,
the Series' investment objective, policies and restrictions and the instructions
of the Board of Trustees and WTC.
Each Sub-Advisory Agreement provides that the sub-adviser will not be liable for
any action taken, omitted or suffered to be taken except if such acts or
omissions are the result of willful misfeasance, bad faith, gross negligence or
reckless disregard of duty. Each Agreement continues in effect for two years and
then from year to year so long as continuance of each such Agreement is approved
at least annually (i) by the vote of a majority of the Independent Trustees at a
meeting called for the purpose of voting on such approval and (ii) by the vote
of a majority of the Trustees or by the vote of a majority of the outstanding
voting securities of the Portfolio. Each Sub-Advisory Agreement terminates
automatically in the event of its assignment and is terminable on written notice
by the Fund (without penalty, by action of the Board of Trustees or by vote of a
majority of the Portfolio's outstanding voting securities) or by WTC or the
sub-adviser. Each Agreement provides that written notice of termination must be
provided sixty days prior to the termination date, absent mutual agreement for a
shorter notice period.
ADMINISTRATION AND ACCOUNTING SERVICES
Under separate Administration and Accounting Services Agreements, PFPC Inc., 400
Bellevue Parkway, Wilmington, Delaware 19809 performs certain administrative and
accounting services for WT Mutual Fund and WT Investment Trust I. These services
include preparing shareholder reports, providing statistical and research data,
assisting the advisers in compliance monitoring activities, and preparing and
filing federal and state tax returns on behalf of the Fund and the Trust. In
addition, PFPC prepares and files various reports with the appropriate
regulatory agencies and prepares materials required by the SEC or any state
securities commission having jurisdiction over the Fund. The accounting services
performed by PFPC include determining the net asset value per share of each
Portfolio and maintaining records relating to the securities transactions of the
Fund. The Administration and Accounting Services Agreements provides that PFPC
and its affiliates shall not be liable for any error of judgment or mistake of
law or for any loss suffered by the Fund or its Portfolios, except to the extent
of a loss resulting from willful misfeasance, bad faith or gross negligence on
their part in the performance of their obligations and duties under the
Administration and Accounting Services Agreements.
For its administrative and accounting services, PFPC received the following
fees:
12 MONTHS ENDED FOR THE PERIOD
6/30/99 2/2/98 TO 6/30/98
------- -----------------
Prime Money Market Series
U.S. Government Series
Tax-Exempt Series
Short/Intermediate Bond Series
Intermediate Bond Series
27
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Municipal Bond Series
WT Large Cap Growth Series
Large Cap Value Series
Small Cap Core Series
International Multi-Manager Series
Prior to February 2, 1998, RSMC provided administrative and accounting services
and was paid the following fees:
FOR THE PERIOD 12 MONTHS ENDED
7/1/97 TO 2/2/98 6/30/97
---------------- -------
Prime Money Market Series
U.S. Government Series
Tax-Exempt Series
Short/Intermediate Bond Series
Intermediate Bond Series
Municipal Bond Series
WT Large Cap Growth Series
Large Cap Value Series
Small Cap Core Series
International Multi-Manager Series
For its administrative and accounting services, PFPC received the following
fees:
12 MONTHS ENDED FOR THE PERIOD
6/30/99 1/5/98 TO 6/30/98
------- -----------------
Premier Money Market Series
Short/Intermediate Bond Series
Large Cap Core Series
Prior to January 5, 1998, RSMC provided administrative and accounting services
and was paid the following fees:
FOR THE PERIOD 12 MONTHS ENDED
7/1/97 TO 1/4/98 6/30/97
---------------- -------
Premier Money Market Series
Short/Intermediate Bond Series
Large Cap Core Series
ADDITIONAL SERVICE PROVIDERS
INDEPENDENT AUDITORS. _________________________________, serves as the
independent auditor, providing services which include (1) auditing the annual
financial statements for the Portfolios, (2) assistance and consultation in
connection with SEC filings and (3) preparation of the annual federal income tax
returns filed on behalf of each Portfolio.
LEGAL COUNSEL. Pepper Hamilton LLP, 3000 Two Logan Square, 18th and Arch
Streets, Philadelphia, PA 19103, serves as counsel to the Fund and WT Investment
Trust I.
CUSTODIAN. PFPC Trust Company, 200 Stevens Drive, Lester, PA 19113, serves as
the Custodian.
TRANSFER AGENT. PFPC Inc., 400 Bellevue Parkway, Wilmington, DE 19890-0001,
serves as the Transfer Agent and Dividend Paying Agent.
28
<PAGE>
DISTRIBUTION OF SHARES AND RULE 12B-1 PLAN
Provident Distributors, Inc. Four Falls Corporate Center, West Conshohocken, PA
19428, serves as the underwriter of the Portfolios' shares pursuant to a
Distribution Agreement with the Fund. Pursuant to the terms of the Distribution
Agreement, PDI is granted the right to sell the shares of the Portfolios as
agent for the Fund. Shares of the Portfolios are offered continuously.
Under the terms of the Distribution Agreement, PDI agrees to use all reasonable
efforts to secure purchasers for Investor class shares of the Portfolios and to
pay expenses of printing and distributing prospectuses, statements of additional
information and reports prepared for use in connection with the sale of Investor
class shares and any other literature and advertising used in connection with
the offering, out of the compensation it receives pursuant to the Portfolios'
Plans of Distribution adopted pursuant to Rule 12b-1 under the 1940 Act (the
"12b-1 Plans"). PDI receives no underwriting commissions or Rule 12b-1 fees in
connection with the sale of the Portfolios' Institutional class shares.
The Distribution Agreement provides that PDI, in the absence of willful
misfeasance, bad faith or gross negligence in the performance of its duties or
by reason of reckless disregard of its obligations and duties under the
Agreements, will not be liable to the Portfolios or their shareholders for
losses arising in connection with the sale of Portfolio shares.
The Distribution Agreement became effective as of February 25, 1998 and
continues in effect for a period of two years. Thereafter, the agreement may
continue in effect for successive annual periods provided such continuance is
approved at least annually by a majority of the Trustees, including a majority
of the Independent Trustees. The Distribution Agreement terminates automatically
in the event of an assignment. The Agreement is also terminable without payment
of any penalty with respect to any Portfolio (i) (by vote of a majority of the
Trustees of the Portfolio who are not interested persons of the Portfolio and
who have no direct or indirect financial interest in the operation of any Rule
12b-1 Plan of the Portfolio or any agreements related to a 12b-1 Plan, or by
vote of a majority of the outstanding voting securities of the applicable
Portfolio) on sixty (60) days' written notice to PDI; or (ii) by PDI on sixty
(60) days' written notice to the Portfolio.
PDI will be compensated for distribution services according to the Investor
class 12b-1 Plan, which became effective _____, 1999, regardless of PDI's
expenses. The Investor class 12b-1 Plan provides that PDI will be paid for
distribution activities such as public relations services, telephone services,
sales presentations, media charges, preparation, printing and mailing
advertising and sales literature, data processing necessary to support a
distribution effort and printing and mailing of prospectuses to prospective
shareholders. Additionally, PDI may pay certain financial institutions such as
banks or broker-dealers who have entered into servicing agreements with PDI
("Service Organizations") and other financial institutions for distribution and
shareholder servicing activities.
The Investor class 12b-1 Plan further provides that payment shall be made for
any month only to the extent that such payment does not exceed (i) 0.25% on an
annualized basis of the Investor Class shares of each Portfolio's average net
assets; and (ii) limitations set from time to time by the Board of Trustees. The
Board of Trustees has only authorized implementation of each 12b-1 Plan for
annual payments of up to 0.05% of the Investor class shares of each of the Money
Market Portfolio's average net assets to reimburse PDI for making payments to
certain Service Organizations who have sold Investor class shares of the
Portfolios and for other distribution expenses.
PAYMENTS MADE PURSUANT TO THE PRIME MONEY MARKET U.S.GOVERNMENT TAX-EXEMPT
12B-1 PLAN FOR THE 12 MONTHS ENDED MARKET SERIES SERIES SERIES
6/30/99
Trail Commissions: $ $ $
Preparation and Distribution of $ $ $
Marketing Materials:
Total: $ $ $
29
<PAGE>
Under the Investor class 12b-1 Plans, if any payments made by the adviser out of
its advisory fee, not to exceed the amount of that fee, to any third parties
(including banks), including payments for shareholder servicing and transfer
agent functions, were deemed to be indirect financing by each Portfolio of the
distribution of its Investor class shares, such payments are authorized. Each
Series may execute portfolio transactions with and purchase securities issued by
depository institutions that receive payments under the 12b-1 Plans. No
preference for instruments issued by such depository institutions is shown in
the selection of investments.
BROKERAGE ALLOCATION AND OTHER PRACTICES
The advisers and sub-advisers place all portfolio transactions on behalf of each
Series. Debt securities purchased and sold by the Series are generally traded on
the dealer market on a net basis (i.e., without commission) through dealers
acting for their own account and not as brokers, or otherwise involve
transactions directly with the issuer of the instrument. This means that a
dealer (the securities firm or bank dealing with a Series) makes a market for
securities by offering to buy at one price and sell at a slightly higher price.
The difference between the prices is known as a spread. When securities are
purchased in underwritten offerings, they include a fixed amount of compensation
to the underwriter.
The primary objective of the advisers and sub-advisers in placing orders on
behalf of the Series for the purchase and sale of securities is to obtain best
execution at the most favorable prices through responsible brokers or dealers
and, where the spread or commission rates are negotiable, at competitive rates.
In selecting a broker or dealer, each adviser considers, among other things: (i)
the price of the securities to be purchased or sold; (ii) the rate of the spread
or commission; (iii) the size and difficulty of the order; (iv) the nature and
character of the spread or commission for the securities to be purchased or
sold; (v) the reliability, integrity, financial condition, general execution and
operational capability of the broker or dealer; and (vi) the quality of any
research or statistical services provided by the broker or dealer to the Series
or to the advisers.
The advisers cannot readily determine the extent to which spreads or commission
rates or net prices charged by brokers or dealers reflect the value of their
research, analysis, advice and similar services. In such cases, each adviser
receives services it otherwise might have had to perform itself. The research,
analysis, advice and similar services provided by brokers or dealers can be
useful to the advisers in serving its other clients, as well as in serving the
Series. Conversely, information provided to the advisers by brokers or dealers
who have executed transaction orders on behalf of other clients of the adviser
may be useful in providing services to the Series. During the twelve-month
periods ended June 30, 1999, 1998 and 1997, the Series paid the following
brokerage commissions:
12 MONTHS ENDED 12 MONTHS ENDED 12 MONTHS ENDED
6/30/99 6/30/98 6/30/97
------- ------- -------
Premier Money Market Series
Prime Money Market Series N/A N/A N/A
U.S. Government Series N/A N/A N/A
Tax-Exempt Series N/A N/A N/A
Short/Intermediate Bond Series N/A N/A N/A
Intermediate Bond Series N/A N/A N/A
Municipal Bond Series N/A N/A N/A
WT Large Cap Growth Series
Large Cap Core Series
Small Cap Core Series
Large Cap Value Series
Mid Cap Value Series
Small Cap Value Series
International Multi-Manager Series
30
<PAGE>
Some of the advisers' other clients have investment objectives and programs
similar to that of the Series. Occasionally, recommendations made to other
clients may result in their purchasing or selling securities simultaneously with
the Series. Consequently, the demand for securities being purchased or the
supply of securities being sold may increase, and this could have an adverse
effect on the price of those securities. It is the policy of the advisers not to
favor one client over another in making recommendations or in placing orders. In
the event of a simultaneous transaction, purchases or sales are averaged as to
price, transaction costs are allocated between a Series and other clients
participating in the transaction on a pro rata basis and purchases and sales are
normally allocated between the Series and the other clients as to amount
according to a formula determined prior to the execution of such transactions.
CAPITAL STOCK AND OTHER SECURITIES
The Fund issues two separate classes of shares, Institutional and Investor
shares, for each Portfolio, except Premier Money Market Portfolio, with a par
value of $.01 per share. The shares of each Portfolio, when issued and paid for
in accordance with the prospectus, will be fully paid and non-assessable shares,
with equal voting rights and no preferences as to conversion, exchange,
dividends, redemption or any other feature.
The separate classes of shares each represent interests in the same portfolio of
investments, have the same rights and are identical in all respects, except that
the Investor class shares bear Rule 12b-1 distribution expenses, and have
exclusive voting rights with respect to the Rule 12b-1 Plan pursuant to which
the distribution fee may be paid. The net income attributable to Investor shares
and the dividends payable on Investor shares will be reduced by the amount of
the distribution fees; accordingly, the net asset value of the Investor shares
will be reduced by such amount to the extent the Portfolio has undistributed net
income.
Shares of a Portfolio entitle holders to one vote per share and fractional votes
for fractional shares held. Shares have non-cumulative voting rights, do not
have preemptive or subscription rights and are transferable. Each Portfolio and
class takes separate votes on matters affecting only that Portfolio or class.
For example, a change in the fundamental investment policies for a Portfolio
would be voted upon only by shareholders of that Portfolio.
The Portfolios do not hold annual meetings of shareholders. The Trustees are
required to call a meeting of shareholders for the purpose of voting upon the
question of removal of any Trustee when requested in writing to do so by the
shareholders of record owning not less than 10% of a Portfolio's outstanding
shares.
PURCHASE, REDEMPTION AND PRICING OF SHARES
PURCHASE OF SHARES. Information regarding the purchase of shares is discussed in
the "Purchase of Shares" section of the prospectus. Additional methods to
purchase shares are as follows:
INDIVIDUAL RETIREMENT ACCOUNTS: You may purchase shares of the Portfolios for a
tax-deferred retirement plan such as an individual retirement account ("IRA").
To order an application for an IRA and a brochure describing a Portfolio IRA,
call the Transfer Agent at (800) _____. PFPC Trust Company, as custodian for
each IRA account receives an annual fee of $10 per account, paid directly to
PFPC Trust Company by the IRA shareholder. If the fee is not paid by the due
date, the appropriate number of Portfolio shares owned by the IRA will be
redeemed automatically as payment.
AUTOMATIC INVESTMENT PLAN: You may purchase Portfolio shares through an
Automatic Investment Plan ("AIP"). Under the AIP, the Transfer Agent, at regular
intervals, will automatically debit your bank checking account in an amount of
$50 or more (after the $1,000 minimum initial investment). You may elect to
invest the specified amount monthly, bimonthly, quarterly, semiannually or
annually. The purchase of Portfolio shares will be effected at their offering
price at 12:00 p.m. Eastern time for the Tax-Exempt Portfolio, at 2:00 p.m.
Eastern Time for the Prime Money Market, Premier Money Market and U.S.
Government Portfolios, or at the close of regular trading on the New York Stock
Exchange ("Exchange") (currently 4:00 p.m., Eastern time), for the Bond and
Equity Portfolios, on or about the 20th day of the month. For an application for
the Automatic Investment Plan, check the appropriate box of the application
31
<PAGE>
or call the Transfer Agent at (800) _____. This service is generally not
available for WTC trust account clients, since similar services are provided
through WTC. This service also may not be available for Service Organization
clients who are provided similar services through those organizations.
PAYROLL INVESTMENT PLAN: The Payroll Investment Plan ("PIP") permits you to make
regularly scheduled purchases of Portfolio shares through payroll deductions. To
open a PIP account, you must submit a completed account application, payroll
deduction form and the minimum initial deposit to your employer's payroll
department. Then, a portion of your paychecks will automatically be transferred
to your PIP account for as long as you wish to participate in the plan. It is
the sole responsibility of your employer, not the Fund, the distributor, the
advisers or the transfer agent, to arrange for transactions under the PIP. The
Fund reserves the right to vary its minimum purchase requirements for employees
participating in a PIP.
REDEMPTION OF SHARES. Information regarding the redemption of shares is
discussed in the "Redemption of Shares" section of the prospectus. Additional
methods to redeem shares are as follows:
BY CHECK: You may utilize the check writing option to redeem shares of the Prime
Money Market, the U.S. Government and the Tax-Exempt Portfolios by drawing a
check for $500 or more against a Portfolio account. When the check is presented
for payment, a sufficient number of shares will be redeemed from your Portfolio
account to cover the amount of the check. This procedure enables you to continue
receiving dividends on those shares until the check is presented for payment.
Because the aggregate amount of Portfolio shares owned is likely to change each
day, you should not attempt to redeem all shares held in your account by using
the check writing procedure. Charges will be imposed for specially imprinted
checks, business checks, copies of canceled checks, stop payment orders, checks
returned due to "nonsufficient funds" and returned checks. These charges will be
paid by redeeming an appropriate number of Portfolio shares automatically. Each
Portfolio and the Transfer Agent reserve the right to terminate or alter the
check writing service at any time. The Transfer Agent also reserves the right to
impose a service charge in connection with the check writing service. If you are
interested in the check writing service, contact the Transfer Agency for further
information. This service is generally not available for clients of WTC through
their trust or corporate cash management accounts, since it is already provided
for these customers through WTC. The service may also not be available for
Service Organization clients who are provided a similar service by those
organizations.
BY WIRE: Redemption proceeds may be wired to your predesignated bank account in
any commercial bank in the United States if the amount is $1,000 or more. The
receiving bank may charge a fee for this service. Proceeds may also be mailed to
your bank or, for amounts of $10,000 or less, mailed to your Portfolio account
address of record if the address has been established for at least 60 days. In
order to authorize the Transfer Agent to mail redemption proceeds to your
Portfolio account address of record, complete the appropriate section of the
Application for Telephone Redemptions or include your Portfolio account address
of record when you submit written instructions. You may change the account that
you have designated to receive amounts redeemed at any time. Any request to
change the account designated to receive redemption proceeds should be
accompanied by a guarantee of the shareholder's signature by an eligible
institution. A signature and a signature guarantee are required for each person
in whose name the account is registered. Further documentation will be required
to change the designated account when a corporation, other organization, trust,
fiduciary or other institutional investor holds the Portfolio shares.
SYSTEMATIC WITHDRAWAL PLAN: If you own shares of a Portfolio with a value of
$10,000 or more you may participate in the Systematic Withdrawal Plan ("SWP").
Under the SWP, you may automatically redeem a portion of your account monthly,
bimonthly, quarterly, semiannually or annually. The minimum withdrawal available
is $100. The redemption of Portfolio shares will be effected at the NAV
determined on or about the 25th day of the month. This service is generally not
available for WTC trust accounts or certain Service Organizations, because a
similar service is provided through those organizations.
ADDITIONAL INFORMATION REGARDING REDEMPTIONS: To ensure proper authorization
before redeeming shares of the Portfolios, the Transfer Agent may require
additional documents such as, but not restricted to, stock
32
<PAGE>
powers, trust instruments, death certificates, appointments as fiduciary,
certificates of corporate authority and waivers of tax required in some states
when settling estates.
Clients of WTC who have purchased shares through their trust accounts at WTC and
clients of Service Organizations who have purchased shares through their
accounts with those Service Organizations should contact WTC or the Service
Organization prior to submitting a redemption request to ensure that all
necessary documents accompany the request. When shares are held in the name of a
corporation, other organization, trust, fiduciary or other institutional
investor, the Transfer Agent requires, in addition to the stock power, certified
evidence of authority to sign the necessary instruments of transfer. THESE
PROCEDURES ARE FOR THE PROTECTION OF SHAREHOLDERS AND SHOULD BE FOLLOWED TO
ENSURE PROMPT PAYMENT. Redemption requests must not be conditional as to date or
price of the redemption. Proceeds of a redemption will be sent within 7 days of
acceptance of shares tendered for redemption. Delay may result if the purchase
check has not yet cleared, but the delay will be no longer than required to
verify that the purchase check has cleared, and the Funds will act as quickly as
possible to minimize delay.
The value of shares redeemed may be more or less than the shareholder's cost,
depending on the net asset value at the time of redemption. Redemption of shares
may result in tax consequences (gain or loss) to the shareholder, and the
proceeds of a redemption may be subject to backup withholding.
A shareholder's right to redeem shares and to receive payment therefore may be
suspended when (a) the Exchange is closed, other than customary weekend and
holiday closings, (b) trading on the Exchange is restricted, (c) an emergency
exists as a result of which it is not reasonably practicable to dispose of a
Portfolio's securities or to determine the value of a Portfolio's net assets, or
(d) ordered by a governmental body having jurisdiction over a Portfolio for the
protection of the Portfolio's shareholders, provided that applicable rules and
regulations of the SEC (or any succeeding governmental authority) shall govern
as to whether a condition described in (b), (c) or (d) exists. In case of such
suspension, shareholders of the affected Portfolio may withdraw their requests
for redemption or may receive payment based on the net asset value of the
Portfolio next determined after the suspension is lifted.
Each Portfolio reserves the right, if conditions exist which make cash payments
undesirable, to honor any request for redemption by making payment in whole or
in part with readily marketable securities chosen by the Portfolio and valued in
the same way as they would be valued for purposes of computing the net asset
value of the applicable Portfolio. If payment is made in securities, a
shareholder may incur transaction expenses in converting these securities into
cash. Each Portfolio has elected, however, to be governed by Rule 18f-1 under
the 1940 Act, as a result of which a Portfolio is obligated to redeem shares
solely in cash if the redemption requests are made by one shareholder account up
to the lesser of $250,000 or 1% of the net assets of the applicable Portfolio
during any 90-day period. This election is irrevocable unless the SEC permits
its withdrawal.
PRICING OF SHARES. Each of the Money Market Portfolios' securities is valued on
the basis of the amortized cost valuation technique. This involves valuing a
security initially at its cost and thereafter assuming a constant amortization
to maturity of any discount or premium, regardless of fluctuating interest rates
on the market value of the security. The valuation of a Money Market Portfolio's
securities based upon their amortized cost and the accompanying maintenance of
each Portfolio's per share net asset value of $1.00 is permitted in accordance
with Rule 2a-7 under the 1940 Act. Certain conditions imposed by that Rule are
set forth under "Investment Policies." In connection with the use of the
amortized cost valuation technique, each Portfolio's Board of Trustees has
established procedures delegating to the adviser the responsibility for
maintaining a constant net asset value per share. Such procedures include a
daily review of each Portfolio's holdings to determine whether a Portfolio's net
asset value, calculated based upon available market quotations, deviates from
$1.00 per share. Should any deviation exceed 1/2 of 1% of $1.00, the Trustees
will promptly consider whether any corrective action should be initiated to
eliminate or reduce material dilution or other unfair results to shareholders.
Such corrective action may include selling of portfolio securities prior to
maturity to realize capital gains or losses, shortening average portfolio
maturity, withholding dividends, redeeming shares in kind and establishing a net
asset value per share based upon available market quotations.
33
<PAGE>
Should a Money Market Portfolio incur or anticipate any unusual expense or loss
or depreciation that would adversely affect its net asset value per share or
income for a particular period, the Trustees would at that time consider whether
to adhere to the current dividend policy or to revise it in light of the then
prevailing circumstances. For example, if a Portfolio's net asset value per
share were reduced, or were anticipated to be reduced, below $1.00, the Trustees
could suspend or reduce further dividend payments until the net asset value
returned to $1.00 per share. Thus, such expenses or losses or depreciation could
result in investors receiving no dividends or reduced dividends for the period
during which they held their shares or in their receiving upon redemption a
price per share lower than that which they paid.
For the Bond Portfolios and the Equity Portfolios, the net asset value per share
of each Portfolio is determined by dividing the value of the Portfolio's net
assets by the total number of Portfolio shares outstanding. This determination
is made by PFPC, as of the close of regular trading on the Exchange (currently
4:00 p.m., Eastern Time) each day the Portfolios are open for business. The
Portfolios are open for business on days when the Exchange, PFPC and the
Philadelphia branch office of the Federal Reserve are open for business.
In valuing a Portfolio's assets, a security listed on the Exchange (and not
subject to restrictions against sale by the Portfolio on the Exchange) will be
valued at its last sale price on the Exchange on the day the security is valued.
Lacking any sales on such day, the security will be valued at the mean between
the closing asked price and the closing bid price. Securities listed on other
exchanges (and not subject to restriction against sale by the Portfolio on such
exchanges) will be similarly valued, using quotations on the exchange on which
the security is traded most extensively. Unlisted securities that are quoted on
the National Association of Securities Dealers' National Market System, for
which there have been sales of such securities on such day, shall be valued at
the last sale price reported on such system on the day the security is valued.
If there are no such sales on such day, the value shall be the mean between the
closing asked price and the closing bid price. The value of such securities
quoted on the NASDAQ Stock Market System, but not listed on the National Market
System, shall be valued at the mean between the closing asked price and the
closing bid price. Unlisted securities that are not quoted on the NASDAQ Stock
Market System and for which over-the-counter market quotations are readily
available will be valued at the mean between the current bid and asked prices
for such security in the over-the-counter market. Other unlisted securities (and
listed securities subject to restriction on sale) will be valued at fair value
as determined in good faith under the direction of the Board of Trustees
although the actual calculation may be done by others. Short-term investments
with remaining maturities of less than 61 days are valued at amortized cost.
Trading in securities on European and Far Eastern securities exchanges and
over-the-counter markets is normally completed well before the close of business
on each Business Day. In addition, European or Far Eastern securities trading
generally or in a particular country or countries may not take place on all
Business Days. Furthermore, trading takes place in Japanese markets on certain
Saturdays and in various foreign markets on days which are not Business Days and
on which the International Multi-Manager Portfolio's net asset value is not
calculated and investors will be unable to buy or sell shares of the Portfolio.
Calculation of the Portfolio's net asset value does not take place
contemporaneously with the determination of the prices of the majority of the
portfolio securities used in such calculation. If events materially affecting
the value of such securities occur between the time when their price is
determined and the time when the Portfolio's net asset value is calculated, such
securities may be valued at fair value as determined in good faith by or under
the direction of the Board of Trustees.
DIVIDENDS
Dividends from the Money Market Portfolios are declared on each Business Day.
The dividend for a Business Day immediately preceding a weekend or holiday
normally includes an amount equal to the net income for the subsequent
non-Business Days on which dividends are not declared. However, no such dividend
includes any amount of net income earned in a subsequent semiannual accounting
period. A portion of the dividends paid by the U.S. Government Portfolio
may be exempt from state taxes.
Dividends from the Bond Portfolios' net investment income are declared on each
Business Day and paid to
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<PAGE>
shareholders ordinarily on the first Business Day of the following month. The
dividend for a Business Day immediately preceding a weekend or holiday normally
includes an amount equal to the net income expected for the subsequent
non-Business Days on which dividends are not declared. However, no such dividend
included any amount of net income earned in a subsequent semiannual period. Net
short-term capital gain and net capital gain (the excess of net long-term
capital gain over the short-term capital loss) realized by each Portfolio, after
deducting any available capital loss carryovers, are declared and paid annually.
Dividends from the Equity Portfolios' net investment income and distributions of
(1) net short-term capital gain and net capital gain (the excess of net
long-term capital gain over the short-term capital loss) realized by each
Portfolio, after deducting any available capital loss carryovers, and (2) in the
case of the International Multi-Manager Portfolio, net gains realized from
foreign currency transactions are declared and paid to its shareholders
annually.
TAXATION OF THE PORTFOLIOS
GENERAL. Each Portfolio is treated as a separate corporation for federal income
tax purposes. To qualify or continue to qualify for treatment as a regulated
investment company ("RIC") under the Internal Revenue Code of 1986, as amended
(the "Code"), each Portfolio must distribute to its shareholders for each
taxable year at least 90% of its investment company taxable income (consisting
generally of net investment income, net short-term capital gain and, in the case
of the International Multi-Manager Portfolio, net gains from certain foreign
currency transactions) and must meet several additional requirements. For each
Portfolio, these requirements include the following: (1) the Portfolio must
derive at least 90% of its gross income each taxable year from dividends,
interest, payments with respect to securities loans and gains from the sale or
other disposition of securities or foreign currencies, or other income
(including gains from options, futures and forward contracts) derived with
respect to its business of investing in securities or those currencies; (2) at
the close of each quarter of the Portfolio's taxable year, at least 50% of the
value of its total assets must be represented by cash and cash items, U.S.
Government securities, securities of other RICs and other securities, with these
other securities limited, in respect of any one issuer, to an amount that does
not exceed 5% of the value of the Portfolio's total assets and that does not
represent more than 10% of the issuer's outstanding voting securities; and (3)
at the close of each quarter of the Portfolio's taxable year, not more than 25%
of the value of its total assets may be invested in securities (other than U.S.
Government securities or the securities of other RICs) of any one issuer.
If a Portfolio failed to qualify for treatment as a RIC in any taxable year, it
would be subject to tax on its taxable income at corporate rates and all
distributions from earnings and profits, including any distributions from net
capital gain (the excess of net long-term capital gain over net short-term
capital loss), would be taxable to its shareholders as ordinary income. In
addition, the Portfolio could be required to recognize unrealized gains, pay
substantial taxes and interest and make substantial distributions before
qualifying again for RIC treatment.
Each Portfolio will be subject to a nondeductible 4% excise tax to the extent it
fails to distribute by the end of any calendar year substantially all of its
ordinary income for that year and capital gain net income for the one-year
period ending on October 31 of that year, plus certain other amounts.
Dividends and other distributions declared by a Portfolio in October, November
or December of any year and payable to shareholders of record on a date in one
of those months will be deemed to have been paid by the Portfolio and received
by the shareholders on December 31 of that year if they are paid by the
Portfolio during the following January. Accordingly, such distributions will be
taxed to the shareholders for the year in which that December 31 falls.
Investors should be aware that if Portfolio shares are purchased shortly before
the record date for any dividend (other than an exempt-interest dividend) or
capital gain distribution, the shareholder will pay full price for the shares
and will receive some portion of the price back as a taxable distribution.
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If a Portfolio makes a distribution to shareholders in excess of its current and
accumulated earnings and profits in any taxable year, the excess distribution
will be treated by each shareholder as a return of capital to the extent of the
shareholder's tax basis and thereafter as capital gain.
MONEY MARKET PORTFOLIOS:
With respect to the U.S. Government Portfolio, Premier Money Market Portfolio
and Prime Money Market Portfolio, distributions from a Portfolio's investment
company taxable income, if any, are taxable to its shareholders as ordinary
income to the extent of the Portfolio's earnings and profits. Because each of
the Portfolios' net investment income is derived from interest rather than
dividends, no portion of the distributions thereof is eligible for the
dividends-received deduction allowed to corporations.
BOND PORTFOLIOS:
Each Bond Portfolio may acquire zero coupon securities issued with original
issue discount. As a holder of those securities, a Portfolio must take into
account the original issue discount that accrues on the securities during the
taxable year, even if it receives no corresponding payment on them during the
year. Because each Portfolio annually must distribute substantially all of its
investment company taxable income and net tax-exempt income, including any
original issue discount, to satisfy the distribution requirements for RICs under
the Code and (except with respect to tax-exempt income) avoid imposition of the
Excise Tax, a Portfolio may be required in a particular year to distribute as a
dividend an amount that is greater than the total amount of cash it actually
receives. Those distributions will be made from a Portfolio's cash assets or
from the proceeds of sales of portfolio securities, if necessary. A Portfolio
may realize capital gains or losses from those sales, which would increase or
decrease its investment company taxable income and/or net capital gain.
TAX-EXEMPT PORTFOLIO AND MUNICIPAL BOND PORTFOLIO: Each of these Portfolios will
be able to pay exempt-interest dividends to its shareholders only if, at the
close of each quarter of its taxable year, at least 50% of the value of its
total assets consists of obligations the interest on which is excludable from
gross income under section 103(a) of the Code; both Portfolios intend to
continue to satisfy this requirement. Distributions that a Portfolio properly
designates as exempt-interest dividends are treated by its shareholders as
interest excludable from their gross income for federal income tax purposes but
may be tax preference items. The aggregate dividends excludable from the
shareholders' gross income may not exceed a Portfolio's net tax-exempt income.
The shareholders' treatment of dividends from a Portfolio under state and local
income tax laws may differ from the treatment thereof under the Code. In order
to qualify to pay exempt-interest dividends, each Portfolio may be limited in
its ability to engage in taxable transactions such as repurchase agreements,
options and futures strategies and portfolio securities lending.
Tax-exempt interest attributable to certain "private activity bonds" ("PABs")
(including, in the case of a RIC receiving interest on those bonds, a
proportionate part of the exempt-interest dividends paid by the RIC) is a tax
preference item. Furthermore, even interest on tax-exempt securities held by a
Portfolio that are not PABs, which interest otherwise would not be a tax
preference item, nevertheless may be indirectly subject to the federal
alternative minimum tax in the hands of corporate shareholders when distributed
to them by the Portfolio. PABs are issued by or on behalf of public authorities
to finance various privately operated facilities. Entities or persons who are
"substantial users" (or persons related to "substantial users") of facilities
financed by industrial development bonds or PABs should consult their tax
advisers before purchasing a Portfolio's shares. For these purposes, the term
"substantial user" is defined generally to include a "non-exempt person" who
regularly uses in trade or business a part of a facility financed from the
proceeds of such bonds.
Up to 85% of Social Security and railroad retirement benefits may be included in
taxable income for recipients whose adjusted gross income (including income from
tax-exempt sources such as the Tax-Exempt and Municipal Bond Portfolios) plus
50% of their benefits exceeds certain base amounts. Exempt-interest dividends
from each Portfolio still are tax-exempt to the extent described in the
prospectus; they are only included in the calculation of whether a recipient's
income exceeds the established amounts.
If a Portfolio invests in any instruments that generate taxable income, under
the circumstances described in the prospectus, distributions of the interest
earned thereon will be taxable to its shareholders as ordinary
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income to the extent of its earnings and profits. Moreover, if a Portfolio
realizes capital gain as a result of market transactions, any distribution of
that gain will be taxable to its shareholders.
The Municipal Bond Portfolio may invest in municipal bonds that are purchased
with "market discount." For these purposes, market discount is the amount by
which a bond's purchase price is exceeded by its stated redemption price at
maturity or, in the case of a bond that was issued with original issue discount
("OID"), the sum of its issue price plus accrued OID, except that market
discount less than the product of (1) 0.25% of the redemption price at maturity
times and (2) the number of complete years to maturity after the taxpayer
acquired the bond is disregarded. Market discount generally is accrued ratably,
on a daily basis, over the period from the acquisition date to the date of
maturity. Gain on the disposition of such a bond (other than a bond with a fixed
maturity date within one year from its issuance) generally is treated as
ordinary (taxable) income, rather than capital gain, to the extent of the bond's
accrued market discount at the time of disposition. In lieu of treating the
disposition gain as above, the Municipal Bond Portfolio may elect to include
market discount in its gross income currently, for each taxable year to which it
is attributable.
The Tax-Exempt and Municipal Bond Portfolios inform shareholders within 60 days
after their fiscal year-end (August 31) of the percentage of its income
distributions designated as exempt-interest dividends. The percentage is applied
uniformly to all distributions made during the year, so the percentage
designated as tax-exempt for any particular distribution may be substantially
different from the percentage of a Portfolio's income that was tax-exempt during
the period covered by the distribution.
SHORT/INTERMEDIATE BOND PORTFOLIO AND THE INTERMEDIATE BOND PORTFOLIO: Interest
and dividends received by the Short/Intermediate Bond Portfolio and the
Intermediate Bond Portfolio, and gains realized thereby, may be subject to
income, withholding or other taxes imposed by foreign countries and U.S.
possessions that would reduce the yield and/or total return on their securities.
Tax conventions between certain countries and the United States may reduce or
eliminate these taxes, however, and many foreign countries do not impose taxes
on capital gains in respect of investments by foreign investors.
EQUITY PORTFOLIOS:
It is anticipated that all or a portion of the dividends from the net investment
income of each Equity Portfolio, other than the International Multi-Manager
Portfolio, will qualify for the dividends-received deduction allowed to
corporations. The qualifying portion may not exceed the aggregate dividends
received by the Portfolio from U.S. corporations. However, dividends received by
a corporate shareholder and deducted by it pursuant to the dividends-received
deduction are subject indirectly to the federal alternative minimum tax.
Moreover, the dividends-received deduction will be reduced to the extent the
shares with respect to which the dividends are received are treated as
debt-financed and will be eliminated if those shares are deemed to have been
held for less than 46 days. Distributions of net short-term capital gain and net
capital gain are not eligible for the dividends-received deduction.
Any loss realized by a shareholder on the redemption of shares within six months
from the date of their purchase will be treated as a long-term, instead of a
short-term, capital loss to the extent of any capital gain distributions to that
shareholder with respect to those shares.
FOREIGN SECURITIES. Dividends and interest received, and gains realized, by the
International Multi-Manager Portfolio may be subject to income, withholding or
other taxes imposed by foreign countries or U.S. possessions (collectively,
"foreign taxes") that would reduce the yield on its securities. Tax conventions
between certain countries and the United States may reduce or eliminate foreign
taxes, however, and many foreign countries do not impose taxes on capital gains
in respect of investments by foreign investors.
If more than 50% of the value of the International Multi-Manager Portfolio's
total assets at the close of its taxable year consists of securities of foreign
corporations, the Portfolio will be eligible to, and may, file an election with
the Internal Revenue Service that will enable its shareholders, in effect, to
benefit from any foreign tax credit or deduction that is available with respect
to foreign taxes paid by the Portfolio. If the election is made, the Portfolio
will treat those taxes as dividends paid to its shareholders and each
shareholder (1) will be required to include in gross income, and treat as paid
by the shareholder, a
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<PAGE>
proportionate share of those taxes, (2) will be required to treat that share of
those taxes and of any dividend paid by the Portfolio that represents income
from foreign or U.S. possessions sources as the shareholder's own income from
those sources and (3) may either deduct the taxes deemed paid by the shareholder
in computing taxable income or, alternatively, use the foregoing information in
calculating the foreign tax credit against the shareholder's federal income tax.
The Portfolio will report to its shareholders shortly after each taxable year
their respective shares of its income from sources within, and taxes paid to,
foreign countries and U.S. possessions if it makes this election. If the
Portfolio makes this election, individuals who have no more than $300 ($600 for
married persons filing jointly) of creditable foreign taxes included on Forms
1099 and all of whose foreign source income is "qualified passive income" may
elect each year to be exempt from the extremely complicated foreign tax credit
limitation and will be able to claim a foreign tax credit without having to file
the detailed Form 1116 that otherwise is required.
The International Multi-Manager Portfolio may invest in the stock of passive
foreign investment companies ("PFICs"). A PFIC is a foreign corporation -- other
than a "controlled foreign corporation" (I.E., a foreign corporation in which,
on any day during its taxable year, more than 50% of the total voting power of
all voting stock therein or the total value of all stock therein is owned,
directly, indirectly, or constructively, by "U.S. shareholders," defined as U.S.
persons that individually own, directly, indirectly, or constructively, at least
10% of that voting power) as to which the Portfolio is a U.S. shareholder
- --that, in general, meets either of the following tests: (a) at least 75% of its
gross income is passive or (b) an average of at least 50% of its assets produce,
or are held for the production of, passive income. If the Portfolio acquires
stock in a PFIC and holds the stock beyond the end of the year of acquisition,
the Portfolio will be subject to federal income tax on a portion of any "excess
distribution" received on the stock or of any gain from disposition of the stock
(collectively, "PFIC income"), plus interest thereon, even if the Portfolio
distributes the PFIC income as a taxable dividend to its shareholders. The
balance of the PFIC income will be included in the Portfolio's investment
company taxable income and, accordingly, will not be taxable to it to the extent
that income is distributed to its shareholders.
If the International Multi-Manager Portfolio invests in a PFIC and elects to
treat the PFIC as a "qualified electing fund" ("QEF"), then in lieu of the
foregoing tax and interest obligation, the Portfolio will be required to include
in income each year its pro rata share of the QEF's annual ordinary earnings and
net capital gain, even if they are not distributed to the Portfolio by the QEF;
those amounts most likely would have to be distributed by the Fund to satisfy
the Distribution Requirement and avoid imposition of the Excise Tax. It may be
very difficult, if not impossible, to make this election because of certain
requirements thereof.
The International Multi-Manager Portfolio may elect to "mark to market" its
stock in any PFIC. "Marking-to-market," in this context, means including in
ordinary income each taxable year the excess, if any, of the fair market value
of the stock over the Portfolio's adjusted basis therein as of the end of that
year. Pursuant to the election, the Portfolio also will be allowed to deduct (as
an ordinary, not capital, loss) the excess, if any, of its adjusted basis in
PFIC stock over the fair market value thereof as of the taxable year-end, but
only to the extent of any net mark-to-market gains with respect to that stock
included in income by the Portfolio for prior taxable years. The Portfolio's
adjusted basis in each PFIC's stock subject to the election will be adjusted to
reflect the amounts of income included and deductions taken thereunder.
HEDGING TRANSACTIONS. The use of hedging strategies, such as writing (selling)
and purchasing options and futures contracts and entering into forward currency
contracts, involves complex rules that will determine for federal income tax
purposes the amount, character and timing of recognition of the gains and losses
a Portfolio realizes in connection therewith. Gains from the disposition of
foreign currencies (except certain gains that may be excluded by future
regulations) and gains from options, futures and foreign currency contracts
derived by a Portfolio with respect to its business of investing in securities
qualify as permissible income under the Income Requirement.
Futures and foreign currency contracts that are subject to section 1256 of the
Code (other than such contracts that are part of a "mixed straddle" with respect
to which a Portfolio has made an election not to have the following rules apply)
("Section 1256 Contracts") and that are held by a Portfolio at the end of its
taxable year generally will be "marked-to-market" (that is, deemed to have been
sold for their market
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value) for federal income tax purposes. Sixty percent of any net gain or loss
recognized on these deemed sales, and 60% of any net realized gain or loss from
any actual sales of Section 1256 Contracts, will be treated as long-term capital
gain or loss, and the balance will be treated as short-term capital gain or
loss. As of the date of this Statement of Additional Information, it is not
entirely clear whether that 60% portion will qualify for the reduced maximum tax
rates on non-corporate taxpayers' net capital gain enacted by the Taxpayer
Relief Act of 1997 -- 20% (10% for taxpayers in the 15% marginal tax bracket)
for gain recognized on capital assets held for more than 18 months --instead of
the 28% rate in effect before that legislation, which now applies to gain
recognized on capital assets held for more than one year but not more than 18
months. However, technical correction legislation passed by the House of
Representatives late in 1997 would clarify that the lower rates apply. Section
1256 Contracts also may be marked-to-market for purposes of the Excise Tax.
Section 988 of the Code also may apply to forward currency contracts and options
on foreign currencies. Under section 988, each foreign currency gain or loss
generally is computed separately and treated as ordinary income or loss. In the
case of overlap between sections 1256 and 988, special provisions determine the
character and timing of any income, gain or loss. The International
Multi-Manager Portfolio attempts to monitor its section 988 transactions to
minimize any adverse tax impact.
Code section 1092 (dealing with straddles) also may affect the taxation of
options and futures contracts in which a Portfolio may invest. Section 1092
defines a "straddle" as offsetting positions with respect to personal property;
for these purposes, options and futures contracts are personal property. Under
section 1092, any loss from the disposition of a position in a straddle
generally may be deducted only to the extent the loss exceeds the unrealized
gain on the offsetting position(s) of the straddle. Section 1092 also provides
certain "wash sale" rules, which apply to transactions where a position is sold
at a loss and a new offsetting position is acquired within a prescribed period,
and "short sale" rules applicable to straddles. If a Portfolio makes certain
elections, the amount, character and timing of the recognition of gains and
losses from the affected straddle positions would be determined under rules that
vary according to the elections made. Because only a few of the regulations
implementing the straddle rules have been promulgated, the tax consequences to a
Portfolio of straddle transactions are not entirely clear.
If a Portfolio has an "appreciated financial position" -- generally, an interest
(including an interest through an option, futures or forward contract or short
sale) with respect to any stock, debt instrument (other than "straight debt") or
partnership interest the fair market value of which exceeds its adjusted basis
- -- and enters into a "constructive sale" of the same or substantially similar
property, the Portfolio will be treated as having made an actual sale thereof,
with the result that gain will be recognized at that time. A constructive sale
generally consists of a short sale, an offsetting notional principal contract or
futures or forward contract entered into by a Portfolio or a related person with
respect to the same or substantially similar property. In addition, if the
appreciated financial position is itself a short sale or such a contract,
acquisition of the underlying property or substantially similar property will be
deemed a constructive sale.
The foregoing tax discussion is a summary included for general informational
purposes only. Each shareholder is advised to consult its own tax adviser with
respect to the specific tax consequences to it of an investment in a Portfolio,
including the effect and applicability of state, local, foreign and other tax
laws and the possible effects of changes in federal or other tax laws.
Shortly after the end of each year, PFPC calculates the federal income tax
status of all distributions made during the year. In addition to federal income
tax, shareholders may be subject to state and local taxes on distributions from
a Portfolio. Shareholders should consult their tax advisers regarding specific
questions relating to federal, state and local taxes.
CALCULATION OF PERFORMANCE INFORMATION
The performance of a Portfolio may be quoted in terms of its yield and its total
return in advertising and other promotional materials. Performance data quoted
represents past performance and is not intended to indicate future performance.
Performance of the Portfolios will vary based on changes in market
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conditions and the level of each Portfolio's expenses. These performance figures
are calculated in the following manner:
MONEY MARKET PORTFOLIOS:
A. YIELD for a money market fund is the net annualized yield for a
specified 7 calendar days calculated at simple interest rates. Yield
is calculated by determining the net change, exclusive of capital
changes, in the value of a hypothetical pre-existing account having a
balance of one share at the beginning of the period, subtracting a
hypothetical charge reflecting deductions from shareholder accounts,
and dividing the difference by the value of the account at the
beginning of the base period to obtain the base period return. The
yield is annualized by multiplying the base period return by 365/7.
The yield figure is stated to the nearest hundredth of one percent.
The yield for the 7-day period ended June 30, 1999 was:
U.S. Government Portfolio %
Prime Money Market Portfolio %
Premier Money Market Portfolio %
Tax-Exempt Portfolio %
B. EFFECTIVE YIELD is the net annualized yield for a specified 7 calendar
days assuming reinvestment of income or compounding. Effective yield
is calculated by the same method as yield except the yield figure is
compounded by adding 1, raising the sum to a power equal to 365
divided by 7, and subtracting 1 from the result, according to the
following formula:
Effective yield = [(Base Period Return + 1) 365/7] - 1.
The effective yield for the 7-day period ended June 30, 1999 was:
U.S. Government Portfolio %
Prime Money Market Portfolio %
Premier Money Market Portfolio %
Tax-Exempt Portfolio %
C. TAX-EQUIVALENT YIELD is the net annualized taxable yield needed to
produce a specified tax-exempt yield at a given tax rate based on a
specified 7-day period assuming a reinvestment of all dividends paid
during such period. Tax-equivalent yield is calculated by dividing
that portion of the Tax-Exempt Portfolio's yield (computed as in the
yield description above) which is tax-exempt by 1 minus a stated
income tax rate and adding the quotient to that portion, if any, of
the yield of the Tax-Exempt Portfolio that is not tax-exempt.
The Tax-Exempt Portfolio's tax-equivalent yield for the 7-day period
ended June 30, 1999 was:
28% tax bracket %
31% tax bracket %
36% tax bracket %
39.6% tax bracket %
The following table, which is based upon federal income tax rates in
effect on the date of this Statement of Additional Information,
illustrates the yields that would have to be achieved on taxable
investments to produce a range of hypothetical tax-equivalent yields:
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TAX-EQUIVALENT YIELD TABLE
FEDERAL MARGINAL
INCOME TAX BRACKET TAX-EQUIVALENT YIELDS BASED ON TAX-EXEMPT YIELDS OF:
- ------------------ ----------------------------------------------------
2% 3% 4% 5% 6% 7% 8%
-- -- -- -- -- -- --
28% 2.8 4.2 5.6 6.9 8.3 9.7 11.1
31% 2.9 4.3 5.8 7.2 8.7 10.1 11.6
36% 3.1 4.7 6.3 7.8 9.4 10.9 12.5
39.6% 3.3 5.0 6.6 8.3 9.9 11.6 13.2
ALL PORTFOLIOS:
A. AVERAGE ANNUAL TOTAL RETURN is the average annual compound rate of
return for the periods of one year, five years, ten years and the life
of a Portfolio, where applicable, all ended on the last day of a
recent calendar quarter. Average annual total return quotations
reflect changes in the price of a Portfolio's shares, if any, and
assume that all dividends during the respective periods were
reinvested in Portfolio shares. Average annual total return is
calculated by finding the average annual compound rates of return of a
hypothetical investment over such periods, according to the following
formula (average annual total return is then expressed as a
percentage):
T = (ERV/P)1/n - 1
Where: P = a hypothetical initial investment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value: ERV is
the value, at the end of the
applicable period, of a hypothetical
$1,000 investment made at the
beginning of the applicable period.
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AVERAGE ANNUAL TOTAL RETURN FOR PERIODS ENDED JUNE 30, 1999
- --------------------------------------------------------------------------------
1 YEAR 5 YEAR 10 YEAR
- -------------------- -------- -------- -------
U.S. Government % % %
- -------------------- -------- -------- -------
Prime Money Market % % %
- -------------------- -------- -------- -------
Premier Money Market % % %
- -------------------- -------- -------- -------
Tax-Exempt % % %
- -------------------- -------- -------- -------
Short/Intermediate % % N/A
Bond
- -------------------- -------- -------- -------
Intermediate Bond % % N/A
- -------------------- -------- -------- -------
Municipal Bond % % N/A
- -------------------- -------- -------- -------
WT Large Cap Growth % % %
- -------------------- -------- -------- -------
Large Cap Core % % %
- -------------------- -------- -------- -------
Small Cap Core % N/A N/A
- -------------------- -------- -------- -------
International % % %
Multi-Manager
- -------------------- -------- -------- -------
Large Cap Value % % N/A
- -------------------- -------- -------- -------
Mid Cap Value % N/A N/A
- -------------------- -------- -------- -------
Small Cap Value % N/A N/A
- --------------------------------------------------------
B. YIELD CALCULATIONS. From time to time, an Equity or Bond Portfolio may
advertise its yield. Yield for these Portfolios is calculated by dividing the
Portfolio's investment income for a 30-day period, net of expenses, by the
average number of shares entitled to receive dividends during that period
according to the following formula:
YIELD = 2[((A-B)/CD + 1)6-1]
where:
a = dividends and interest earned during the period;
b = expenses accrued for the period (net of reimbursements);
c = the average daily number of shares outstanding during the
period that were entitled to receive dividends; and
d = the maximum offering price per share on the last day of the period.
The result is expressed as an annualized percentage (assuming semiannual
compounding) of the maximum offering price per share at the end of the period.
Except as noted below, in determining interest earned during the period
(variable "a" in the above formula), pfpc calculates the interest earned on each
debt instrument held by a Portfolio during the period by: (i) computing the
instrument's yield to maturity, based on the value of the instrument (including
actual accrued interest) as of the last business day of the period or, if the
instrument was purchased during the period, the purchase price plus accrued
interest; (ii) dividing the yield to maturity by 360; and (iii) multiplying the
resulting quotient by the value of the instrument (including actual accrued
interest). Once interest earned is calculated in this fashion for each debt
instrument held by the Portfolio, interest earned during the period is then
determined by totaling the interest earned on all debt instruments held by the
Portfolio.
For purposes of these calculations, the maturity of a debt instrument
with one or more call provisions is assumed to be the next date on which the
instrument reasonably can be expected to be called
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or, if none, the maturity date. In general, interest income is reduced with
respect to debt instruments trading at a premium over their par value by
subtracting a portion of the premium from income on a daily basis, and increased
with respect to debt instruments trading at a discount by adding a portion of
the discount to daily income.
In determining dividends earned by any preferred stock or other equity
securities held by a Portfolio during the period (variable "a" in the above
formula), PFPC accrues the dividends daily at their stated dividend rates.
Capital gains and losses generally are excluded from yield calculations.
Because yield accounting methods differ from the accounting methods
used to calculate net investment income for other purposes, a Portfolio's yield
may not equal the dividend income actually paid to investors or the net
investment income reported with respect to the Portfolio in the Fund's financial
statements.
Yield information may be useful in reviewing a Portfolio's performance
and in providing a basis for comparison with other investment alternatives.
However, the Portfolios' yields fluctuate, unlike investments that pay a fixed
interest rate over a stated period of time. Investors should recognize that in
periods of declining interest rates, the Portfolios' yields will tend to be
somewhat higher than prevailing market rates, and in periods of rising interest
rates, the Portfolios' yields will tend to be somewhat lower. Also, when
interest rates are falling, the inflow of net new money to the Portfolios from
the continuous sale of their shares will likely be invested in instruments
producing lower yields than the balance of the Portfolios' holdings, thereby
reducing the current yields of the Portfolios. In periods of rising interest
rates, the opposite can be expected to occur.
COMPARISON OF PORTFOLIO PERFORMANCE. A comparison of the quoted performance
offered for various investments is valid only if performance is calculated in
the same manner. Since there are many methods of calculating performance,
investors should consider the effects of the methods used to calculate
performance when comparing performance of a Portfolio with performance quoted
with respect to other investment companies or types of investments. For example,
it is useful to note that yields reported on debt instruments are generally
prospective, contrasted with the historical yields reported by a Portfolio.
In connection with communicating its performance to current or prospective
shareholders, a Portfolio also may compare these figures to the performance of
other mutual funds tracked by mutual fund rating services or to unmanaged
indices which may assume reinvestment of dividends but generally do not reflect
deductions for administrative and management costs.
From time to time, in marketing and other literature, a Money Market Portfolio's
performance may be compared to the performance of broad groups of comparable
mutual funds or unmanaged indexes of comparable securities such as the IBC First
Tier Money Market Index for the Prime and Premier Money Market Portfolios, the
IBC U.S. Government and Agency Index for the U.S. Government Portfolio and the
IBC Stockbroker and general purpose funds for the Tax-Exempt Portfolio. Yield
and performance over time may also be compared to the performance of bank money
market deposit accounts and fixed-rate insured certificates of deposit (CDs), or
unmanaged indices of securities that are comparable to money market funds in
their terms and intent, such as Treasury bills, bankers' acceptances, negotiable
order of withdrawal accounts, and money market certificates. Most bank CDs
differ from money market funds in several ways: the interest rate is fixed for
the term of the CD, there are interest penalties for early withdrawal of the
deposit from a CD, and the deposit principal in a CD is insured by the FDIC.
From time to time, in marketing and other literature, the Bond and Equity
Portfolios' performance may be compared to the performance of broad groups of
comparable mutual funds or unmanaged indexes of comparable securities with
similar investment goals, as tracked by independent organizations such as
Investment Company Data, Inc. (an organization which provides performance
ranking information for broad classes of mutual funds), Lipper Analytical
Services, Inc. ("Lipper") (a mutual fund research firm which analyzes over 1,800
mutual funds), CDA Investment Technologies, Inc. (an organization which provides
mutual fund performance and ranking information), Morningstar, Inc. (an
organization which analyzes over 2,400 mutual funds) and other independent
organizations. When Lipper's tracking results are used, a Portfolio will be
compared to Lipper's appropriate fund category, that is, by fund objective and
portfolio holdings. Rankings may be listed among one or more of the asset-size
classes as determined by
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Lipper. When other organizations' tracking results are used, a Portfolio will be
compared to the appropriate fund category, that is, by fund objective and
portfolio holdings, or to the appropriate volatility grouping, where volatility
is a measure of a fund's risk.
Since the assets in all funds are always changing, a Portfolio may be ranked
within one asset-size class at one time and in another asset-size class at some
other time. In addition, the independent organization chosen to rank a Portfolio
in marketing and promotional literature may change from time to time depending
upon the basis of the independent organization's categorizations of mutual
funds, changes in a Portfolio's investment policies and investments, a
Portfolio's asset size and other factors deemed relevant. Advertisements and
other marketing literature will indicate the time period and Lipper asset-size
class or other performance ranking company criteria, as applicable, for the
ranking in question.
Evaluations of Portfolio performance made by independent sources may also be
used in advertisements concerning a Portfolio, including reprints of or
selections from, editorials or articles about the Portfolio. Sources for
performance information and articles about a Portfolio may include the
following:
BARRON'S, a Dow Jones and Company, Inc. business and financial weekly that
periodically reviews mutual fund performance data.
CDA INVESTMENT TECHNOLOGIES, INC., an organization that provides performance and
ranking information through examining the dollar results of hypothetical mutual
fund investments and comparing these results against appropriate market indices.
CHANGING TIMES, THE KIPLINGER MAGAZINE, a monthly investment advisory
publication that periodically features the performance of a variety of
securities.
CONSUMER DIGEST, a monthly business/financial magazine that includes a "Money
Watch" section featuring financial news.
FINANCIAL WORLD, a general business/financial magazine that includes a "Market
Watch" department reporting on activities in the mutual fund industry.
FORBES, a national business publication that from time to time reports the
performance of specific investment companies in the mutual fund industry.
FORTUNE, a national business publication that periodically rates the performance
of a variety of mutual funds.
IBC'S MONEY FUND REPORT, a weekly publication of IBC/Donoghue, Inc., of Ashland,
Massachusetts, reporting on the performance of the nation's money market funds,
summarizing money market fund activity, and including certain averages as
performance benchmarks, specifically "IBC's Money Fund Average," and "IBC's
Government Money Fund Average."
IBC'S MONEY FUND DIRECTORY, an annual directory ranking money market mutual
funds.
INVESTMENT COMPANY DATA, INC., an independent organization which provides
performance ranking information for broad classes of mutual funds.
INVESTOR'S DAILY, a daily newspaper that features financial, economic, and
business news.
LIPPER ANALYTICAL SERVICES, INC.'S MUTUAL FUND PERFORMANCE ANALYSIS, a weekly
publication of industry-wide mutual fund averages by type of fund.
MONEY, a monthly magazine that from time to time features both specific funds
and the mutual fund industry as a whole.
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MUTUAL FUND VALUES, a biweekly Morningstar, Inc. publication that provides
ratings of mutual funds based on fund performance risk and portfolio
characteristics.
THE NEW YORK TIMES, a nationally distributed newspaper which regularly covers
financial news.
PERSONAL INVESTING NEWS, a monthly news publication that often reports on
investment opportunities and market conditions.
PERSONAL INVESTOR, a monthly investment advisory publication that includes a
"Mutual Funds Outlook" section reporting on mutual fund performance measures,
yields, indices and portfolio holdings.
SUCCESS, a monthly magazine targeted to the world of entrepreneurs and growing
business, often featuring mutual fund performance data.
USA TODAY, the nation's number one daily newspaper.
U.S. NEWS AND WORLD REPORT, a national business weekly that periodically reports
mutual fund performance data.
WALL STREET JOURNAL, a Dow Jones and Company, Inc. newspaper that regularly
covers financial news.
WIESENBERGER INVESTMENT COMPANIES SERVICES, an annual compendium of information
about mutual funds and other investment companies, including comparative data on
funds' backgrounds, management policies, salient features, management results,
income and dividend records, and price ranges.
FINANCIAL STATEMENTS
Each Portfolio's audited financial statements and the audited financial
statements of its corresponding Series for the fiscal year ended June 30, 1999,
including notes thereto and the report of __________thereon, are incorporated
herein by reference to the Portfolio's Annual Report to Shareholders.
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APPENDIX A
OPTIONS, FUTURES AND FORWARD CURRENCY CONTRACT STRATEGIES
REGULATION OF THE USE OF OPTIONS, FUTURES AND FORWARD CURRENCY CONTRACT
STRATEGIES. As discussed in the prospectus, in managing a Portfolio's
corresponding Series, the adviser or the sub-advisers (for International
Multi-Manager Series) may engage in certain options, futures and forward
currency contract strategies for certain bona fide hedging, risk management or
other portfolio management purposes. Certain special characteristics of and
risks associated with using these strategies are discussed below. Use of
options, futures and forward currency contracts is subject to applicable
regulations and/or interpretations of the SEC and the several options and
futures exchanges upon which these instruments may be traded. The Board of
Trustees has adopted investment guidelines (described below) reflecting these
regulations.
In addition to the products, strategies and risks described below and in the
prospectus, the adviser expects to discover additional opportunities in
connection with options, futures and forward currency contracts. These new
opportunities may become available as new techniques develop, as regulatory
authorities broaden the range of permitted transactions and as new options,
futures and forward currency contracts are developed. These opportunities may be
utilized to the extent they are consistent with each Portfolio's investment
objective and limitations and permitted by applicable regulatory authorities.
The registration statement for the Portfolios will be supplemented to the extent
that new products and strategies involve materially different risks than those
described below and in the prospectus.
COVER REQUIREMENTS. The Series will not use leverage in their options, futures,
and in the case of the International Multi-Manager Series, its forward currency
contract strategies. Accordingly, the Series will comply with guidelines
established by the SEC with respect to coverage of these strategies by either
(1) setting aside cash or liquid, unencumbered, daily marked-to-market
securities in one or more segregated accounts with the custodian in the
prescribed amount; or (2) holding securities or other options or futures
contracts whose values are expected to offset ("cover") their obligations
thereunder. Securities, currencies, or other options or futures contracts used
for cover cannot be sold or closed out while these strategies are outstanding,
unless they are replaced with similar assets. As a result, there is a
possibility that the use of cover involving a large percentage of the Series'
assets could impede portfolio management, or the Series' ability to meet
redemption requests or other current obligations.
OPTIONS STRATEGIES. With the exception of the International Multi-Manager
Series, a Series may purchase and write (sell) only those options on securities
and securities indices that are traded on U.S. exchanges. Exchange-traded
options in the U.S. are issued by a clearing organization affiliated with the
exchange, on which the option is listed, which, in effect, guarantees completion
of every exchange-traded option transaction. The International Multi-Manager
Series may purchase and write (sell) options only on securities and securities
indices that are traded on foreign exchanges.
Each Series may purchase call options on securities in which it is authorized to
invest in order to fix the cost of a future purchase. Call options also may be
used as a means of enhancing returns by, for example, participating in an
anticipated price increase of a security. In the event of a decline in the price
of the underlying security, use of this strategy would serve to limit the
potential loss to the Series to the option premium paid; conversely, if the
market price of the underlying security increases above the exercise price and
the Series either sells or exercises the option, any profit eventually realized
would be reduced by the premium paid.
Each Series may purchase put options on securities that it holds in order to
hedge against a decline in the market value of the securities held or to enhance
return. The put option enables the Series to sell the underlying security at the
predetermined exercise price; thus, the potential for loss to the Series below
the exercise price is limited to the option premium paid. If the market price of
the underlying security is higher than the exercise price of the put option, any
profit the Series realizes on the sale of the security is reduced by the premium
paid for the put option less any amount for which the put option may be sold.
Each Series may on certain occasions wish to hedge against a decline in the
market value of securities that it holds at a time when put options on those
particular securities are not available for purchase. At those times, the Series
may purchase a put option on other carefully selected securities in which it is
authorized to invest, the
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values of which historically have a high degree of positive correlation to the
value of the securities actually held. If the adviser's judgment is correct,
changes in the value of the put options should generally offset changes in the
value of the securities being hedged. However, the correlation between the two
values may not be as close in these transactions as in transactions in which a
Series purchases a put option on a security that it holds. If the value of the
securities underlying the put option falls below the value of the portfolio
securities, the put option may not provide complete protection against a decline
in the value of the portfolio securities.
Each Series may write covered call options on securities in which it is
authorized to invest for hedging purposes or to increase return in the form of
premiums received from the purchasers of the options. A call option gives the
purchaser of the option the right to buy, and the writer (seller) the obligation
to sell, the underlying security at the exercise price during the option period.
The strategy may be used to provide limited protection against a decrease in the
market price of the security, in an amount equal to the premium received for
writing the call option less any transaction costs. Thus, if the market price of
the underlying security held by the Series declines, the amount of the decline
will be offset wholly or in part by the amount of the premium received by the
Series. If, however, there is an increase in the market price of the underlying
security and the option is exercised, the Series will be obligated to sell the
security at less than its market value.
Each Series may also write covered put options on securities in which it is
authorized to invest. A put option gives the purchaser of the option the right
to sell, and the writer (seller) the obligation to buy, the underlying security
at the exercise price during the option period. So long as the obligation of the
writer continues, the writer may be assigned an exercise notice by the
broker-dealer through whom such option was sold, requiring it to make payment of
the exercise price against delivery of the underlying security. The operation of
put options in other respects, including their related risks and rewards, is
substantially identical to that of call options. If the put option is not
exercised, the Series will realize income in the amount of the premium received.
This technique could be used to enhance current return during periods of market
uncertainty. The risk in such a transaction would be that the market price of
the underlying securities would decline below the exercise price less the
premiums received, in which case the Series would expect to suffer a loss.
Each Series may purchase put and call options and write covered put and call
options on indexes in much the same manner as the more traditional options
discussed above, except that index options may serve as a hedge against overall
fluctuations in the securities markets (or a market sector) rather than
anticipated increases or decreases in the value of a particular security. An
index assigns values to the securities included in the index and fluctuates with
changes in such values. Settlements of index options are effected with cash
payments and do not involve delivery of securities. Thus, upon settlement of an
index option, the purchaser will realize, and the writer will pay, an amount
based on the difference between the exercise price and the closing price of the
index. The effectiveness of hedging techniques using index options will depend
on the extent to which price movements in the index selected correlate with
price movements of the securities in which a Series invests. Perfect correlation
is not possible because the securities held or to be acquired by the Series will
not exactly match the composition of indexes on which options are purchased or
written.
Each Series may purchase and write covered straddles on securities or indexes. A
long straddle is a combination of a call and a put purchased on the same
security where the exercise price of the put is less than or equal to the
exercise price on the call. The Series would enter into a long straddle when the
adviser believes that it is likely that prices will be more volatile during the
term of the options than is implied by the option pricing. A short straddle is a
combination of a call and a put written on the same security where the exercise
price on the put is less than or equal to the exercise price of the call where
the same issue of the security is considered "cover" for both the put and the
call. The Series would enter into a short straddle when the adviser believes
that it is unlikely that prices will be as volatile during the term of the
options as is implied by the option pricing. In such case, the Series will set
aside cash and/or liquid, unencumbered securities in a segregated account with
its custodian equivalent in value to the amount, if any, by which the put is
"in-the-money," that is, that amount by which the exercise price of the put
exceeds the current market value of the underlying security. Because straddles
involve multiple trades, they result in higher transaction costs and may be more
difficult to open and close out.
Each Series may purchase put and call warrants with values that vary depending
on the change in the value of one or more specified indexes ("index warrants").
An index warrant is usually issued by a bank or other financial institution and
gives the Series the right, at any time during the term of the warrant, to
receive upon exercise of
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the warrant a cash payment from the issuer of the warrant based on the value of
the underlying index at the time of exercise. In general, if a Series holds a
call warrant and the value of the underlying index rises above the exercise
price of the warrant, the Series will be entitled to receive a cash payment from
the issuer upon exercise based on the difference between the value of the index
and the exercise price of the warrant; if the Series holds a put warrant and the
value of the underlying index falls, the Series will be entitled to receive a
cash payment from the issuer upon exercise based on the difference between the
exercise price of the warrant and the value of the index. The Series holding a
call warrant would not be entitled to any payments from the issuer at any time
when the exercise price is greater than the value of the underlying index; the
Series holding a put warrant would not be entitled to any payments when the
exercise price is less than the value of the underlying index. If the Series
does not exercise an index warrant prior to its expiration, then the Series
loses the amount of the purchase price that it paid for the warrant.
Each Series will normally use index warrants as it may use index options. The
risks of the Series' use of index warrants are generally similar to those
relating to its use of index options. Unlike most index options, however, index
warrants are issued in limited amounts and are not obligations of a regulated
clearing agency, but are backed only by the credit of the bank or other
institution which issues the warrant. Also, index warrants generally have longer
terms than index options. Index warrants are not likely to be as liquid as index
options backed by a recognized clearing agency. In addition, the terms of index
warrants may limit the Series' ability to exercise the warrants at any time or
in any quantity.
OPTIONS GUIDELINES. In view of the risks involved in using the options
strategies described above, each Series has adopted the following investment
guidelines to govern its use of such strategies; these guidelines may be
modified by the Board of Trustees without shareholder approval:
(1) each Series will write only covered options, and each
such option will remain covered so long as the Series
is obligated thereby; and
(2) no Series will write options (whether on securities
or securities indexes) if aggregate exercise prices
of previous written outstanding options, together
with the value of assets used to cover all
outstanding positions, would exceed 25% of its total
net assets.
SPECIAL CHARACTERISTICS AND RISKS OF OPTIONS TRADING. A Series may effectively
terminate its right or obligation under an option by entering into a closing
transaction. If a Series wishes to terminate its obligation to purchase or sell
securities under a put or a call option it has written, the Series may purchase
a put or a call option of the same series (that is, an option identical in its
terms to the option previously written). This is known as a closing purchase
transaction. Conversely, in order to terminate its right to purchase or sell
specified securities under a call or put option it has purchased, a Series may
sell an option of the same series as the option held. This is known as a closing
sale transaction. Closing transactions essentially permit a Series to realize
profits or limit losses on its options positions prior to the exercise or
expiration of the option. If a Series is unable to effect a closing purchase
transaction with respect to options it has acquired, the Series will have to
allow the options to expire without recovering all or a portion of the option
premiums paid. If a Series is unable to effect a closing purchase transaction
with respect to covered options it has written, the Series will not be able to
sell the underlying securities or dispose of assets used as cover until the
options expire or are exercised, and the Series may experience material losses
due to losses on the option transaction itself and in the covering securities.
In considering the use of options to enhance returns or for hedging purposes,
particular note should be taken of the following:
(1) The value of an option position will reflect, among other
things, the current market price of the underlying security or
index, the time remaining until expiration, the relationship
of the exercise price to the market price, the historical
price volatility of the underlying security or index, and
general market conditions. For this reason, the successful use
of options depends upon the adviser's ability to forecast the
direction of price fluctuations in the underlying securities
markets or, in the case of index options, fluctuations in the
market sector represented by the selected index.
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(2) Options normally have expiration dates of up to three years.
An American style put or call option may be exercised at any
time during the option period while a European style put or
call option may be exercised only upon expiration or during a
fixed period prior to expiration. The exercise price of the
options may be below, equal to or above the current market
value of the underlying security or index. Purchased options
that expire unexercised have no value. Unless an option
purchased by the Series is exercised or unless a closing
transaction is effected with respect to that position, the
Series will realize a loss in the amount of the premium paid
and any transaction costs.
(3) A position in an exchange-listed option may be closed out only
on an exchange that provides a secondary market for identical
options. Although the Series intends to purchase or write only
those exchange-traded options for which there appears to be a
liquid secondary market, there is no assurance that a liquid
secondary market will exist for any particular option at any
particular time. A liquid market may be absent if: (i) there
is insufficient trading interest in the option; (ii) the
exchange has imposed restrictions on trading, such as trading
halts, trading suspensions or daily price limits; (iii) normal
exchange operations have been disrupted; or (iv) the exchange
has inadequate facilities to handle current trading volume.
(4) With certain exceptions, exchange listed options generally
settle by physical delivery of the underlying security. Index
options are settled exclusively in cash for the net amount, if
any, by which the option is "in-the-money" (where the value of
the underlying instrument exceeds, in the case of a call
option, or is less than, in the case of a put option, the
exercise price of the option) at the time the option is
exercised. If the Series writes a call option on an index, the
Series will not know in advance the difference, if any,
between the closing value of the index on the exercise date
and the exercise price of the call option itself and thus will
not know the amount of cash payable upon settlement. If the
Series holds an index option and exercises it before the
closing index value for that day is available, the Series runs
the risk that the level of the underlying index may
subsequently change.
(5) A Series' activities in the options markets may result in a
higher Series turnover rate and additional brokerage costs;
however, the Series also may save on commissions by using
options as a hedge rather than buying or selling individual
securities in anticipation of, or as a result of, market
movements.
FUTURES AND RELATED OPTIONS STRATEGIES. Each Series may engage in futures
strategies for certain non-trading bona fide hedging, risk management and
portfolio management purposes.
Each Series may sell securities index futures contracts in anticipation of a
general market or market sector decline that could adversely affect the market
value of the Series' securities holdings. To the extent that a portion of a
Series' holdings correlate with a given index, the sale of futures contracts on
that index could reduce the risks associated with a market decline and thus
provide an alternative to the liquidation of securities positions. For example,
if a Series correctly anticipates a general market decline and sells index
futures to hedge against this risk, the gain in the futures position should
offset some or all of the decline in the value of the Series' holdings. A Series
may purchase index futures contracts if a significant market or market sector
advance is anticipated. Such a purchase of a futures contract would serve as a
temporary substitute for the purchase of the underlying securities, which may
then be purchased, in an orderly fashion. This strategy may minimize the effect
of all or part of an increase in the market price of securities that a Series
intends to purchase. A rise in the price of the securities should be in part or
wholly offset by gains in the futures position.
As in the case of a purchase of an index futures contract, a Series may purchase
a call option on an index futures contract to hedge against a market advance in
securities that the Series plans to acquire at a future date. The Series may
write covered put options on index futures as a partial anticipatory hedge, and
may write covered call options on index futures as a partial hedge against a
decline in the prices of securities held by the Series. This is analogous to
writing covered call options on securities. The Series also may purchase put
options on index futures contracts. The purchase of put options on index futures
contracts is analogous to the purchase of
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protective put options on individual securities where a level of protection is
sought below which no additional economic loss would be incurred by the Series.
The International Multi-Manager Series may sell foreign currency futures
contracts to hedge against possible variations in the exchange rates of foreign
currencies in relation to the U.S. dollar. In addition, the Series may sell
foreign currency futures contracts when a sub-adviser anticipates a general
weakening of foreign currency exchange rates that could adversely affect the
market values of the Series' foreign securities holdings. In this case, the sale
of futures contracts on the underlying currency may reduce the risk to the
Series of a reduction in market value caused by foreign currency exchange rate
variations and, by so doing, provide an alternative to the liquidation of
securities positions and resulting transaction costs. When a sub-adviser
anticipates a significant foreign currency exchange rate increase while
intending to invest in a security denominated in that currency, the Series may
purchase a foreign currency futures contract to hedge against that increase
pending completion of the anticipated transaction. Such a purchase would serve
as a temporary measure to protect the Series against any rise in the foreign
exchange rate that may add additional costs to acquiring the foreign security
position. The Series may also purchase call or put options on foreign currency
futures contracts to obtain a fixed foreign exchange rate at limited risk. The
Series may purchase a call option on a foreign currency futures contract to
hedge against a rise in the foreign exchange rate while intending to invest in a
security denominated in that currency. The Series may purchase put options on
foreign currency futures contracts as a partial hedge against a decline in the
foreign exchange rates or the value of its foreign portfolio securities. The
Series may write a call option on a foreign currency futures contract as a
partial hedge against the effects of declining foreign exchange rates on the
value of foreign securities.
FUTURES AND RELATED OPTIONS GUIDELINES. In view of the risks involved in using
the futures strategies that are described above, each Series has adopted the
following investment guidelines to govern its use of such strategies. The Board
of Trustees may modify these guidelines without shareholder vote.
(1) The Series will engage only in covered futures
transactions, and each such transaction will remain
covered so long as the Series is obligated thereby.
(2) The Series will not write options on futures
contracts if aggregate exercise prices of previously
written outstanding options (whether on securities or
securities indexes), together with the value of
assets used to cover all outstanding futures
positions, would exceed 25% of its total net assets.
SPECIAL CHARACTERISTICS AND RISKS OF FUTURES AND RELATED OPTIONS TRADING. No
price is paid upon entering into a futures contract. Instead, upon entering into
a futures contract, a Series is required to deposit with its custodian, in a
segregated account in the name of the futures broker through whom the
transaction is effected, an amount of cash, U.S. Government securities or other
liquid instruments generally equal to 10% or less of the contract value. This
amount is known as "initial margin." When writing a call or a put option on a
futures contract, margin also must be deposited in accordance with applicable
exchange rules. Unlike margin in securities transactions, initial margin on
futures contracts does not involve borrowing to finance the futures
transactions. Rather, initial margin on a futures contract is in the nature of a
performance bond or good-faith deposit on the contract that is returned to a
Series upon termination of the transaction, assuming all obligations have been
satisfied. Under certain circumstances, such as periods of high volatility, a
Series may be required by a futures exchange to increase the level of its
initial margin payment. Additionally, initial margin requirements may be
increased generally in the future by regulatory action. Subsequent payments,
called "variation margin," to and from the broker, are made on a daily basis as
the value of the futures or options position varies, a process known as "marking
to market." For example, when a Series purchases a contract and the value of the
contract rises, the Series receives from the broker a variation margin payment
equal to that increase in value. Conversely, if the value of the futures
position declines, a Series is required to make a variation margin payment to
the broker equal to the decline in value. Variation margin does not involve
borrowing to finance the futures transaction, but rather represents a daily
settlement of a Series' obligations to or from a clearing organization.
Buyers and sellers of futures positions and options thereon can enter into
offsetting closing transactions, similar to closing transactions on options on
securities, by selling or purchasing an offsetting contract or option. Futures
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contracts or options thereon may be closed only on an exchange or board of trade
providing a secondary market for such futures contracts or options.
Under certain circumstances, futures exchanges may establish daily limits on the
amount that the price of a futures contract or related option may vary either up
or down from the previous day's settlement price. Once the daily limit has been
reached in a particular contract, no trades may be made that day at a price
beyond that limit. The daily limit governs only price movements during a
particular trading day and therefore does not limit potential losses, because
prices could move to the daily limit for several consecutive trading days with
little or no trading and thereby prevent prompt liquidation of unfavorable
positions. In such event, it may not be possible for the Series to close a
position and, in the event of adverse price movements, the Series would have to
make daily cash payments of variation margin (except in the case of purchased
options). However, if futures contracts have been used to hedge portfolio
securities, such securities will not be sold until the contracts can be
terminated. In such circumstances, an increase in the price of the securities,
if any, may partially or completely offset losses on the futures contract.
However, there is no guarantee that the price of the securities will, in fact,
correlate with the price movements in the contracts and thus provide an offset
to losses on the contracts.
In considering a Series' use of futures contracts and related options,
particular note should be taken of the following:
(1) Successful use by a Series of futures contracts and related
options will depend upon the adviser's ability to predict
movements in the direction of the securities markets, which
requires different skills and techniques than predicting
changes in the prices of individual securities. Moreover,
futures contracts relate not only to the current price level
of the underlying securities, but also to anticipated price
levels at some point in the future. There is, in addition, the
risk that the movements in the price of the futures contract
will not correlate with the movements in the prices of the
securities being hedged. For example, if the price of an index
futures contract moves less than the price of the securities
that are the subject of the hedge, the hedge will not be fully
effective, but if the price of the securities being hedged has
moved in an unfavorable direction, a Series would be in a
better position than if it had not hedged at all. If the price
of the securities being hedged has moved in a favorable
direction, the advantage may be partially offset by losses in
the futures position. In addition, if a Series has
insufficient cash, it may have to sell assets to meet daily
variation margin requirements. Any such sale of assets may or
may not be made at prices that reflect a rising market.
Consequently, a Series may need to sell assets at a time when
such sales are disadvantageous to the Series. If the price of
the futures contract moves more than the price of the
underlying securities, a Series will experience either a loss
or a gain on the futures contract that may or may not be
completely offset by movements in the price of the securities
that are the subject of the hedge.
(2) In addition to the possibility that there may be an imperfect
correlation, or no correlation at all, between price movements
in the futures position and the securities being hedged,
movements in the prices of futures contracts may not correlate
perfectly with movements in the prices of the hedged
securities due to price distortions in the futures market.
There may be several reasons unrelated to the value of the
underlying securities that cause this situation to occur.
First, as noted above, all participants in the futures market
are subject to initial and variation margin requirements. If,
to avoid meeting additional margin deposit requirements or for
other reasons, investors choose to close a significant number
of futures contracts through offsetting transactions,
distortions in the normal price relationship between the
securities and the futures markets may occur. Second, because
the margin deposit requirements in the futures market are less
onerous than margin requirements in the securities market,
there may be increased participation by speculators in the
futures market. Such speculative activity in the futures
market also may cause temporary price distortions. As a
result, a correct forecast of general market trends may not
result in successful hedging through the use of futures
contracts over the short term. In addition, activities of
large traders in both the futures and securities markets
involving arbitrage and other investment strategies may result
in temporary price distortions.
A-6
<PAGE>
(3) Positions in futures contracts may be closed out only on an
exchange or board of trade that provides a secondary market
for such futures contracts. Although each Series intends to
purchase and 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 at any
particular time. In such event, it may not be possible to
close a futures position, and in the event of adverse price
movements, a Series would continue to be required to make
variation margin payments.
(4) Like options on securities, options on futures contracts have
limited life. The ability to establish and close out options
on futures will be subject to the development and maintenance
of liquid secondary markets on the relevant exchanges or
boards of trade. There can be no certainty that such markets
for all options on futures contracts will develop.
(5) Purchasers of options on futures contracts pay a premium in
cash at the time of purchase. This amount and the transaction
costs are all that is at risk. Sellers of options on futures
contracts, however, must post initial margin and are subject
to additional margin calls that could be substantial in the
event of adverse price movements. In addition, although the
maximum amount at risk when the Series purchases an option is
the premium paid for the option and the transaction costs,
there may be circumstances when the purchase of an option on a
futures contract would result in a loss to the Series when the
use of a futures contract would not, such as when there is no
movement in the level of the underlying index value or the
securities or currencies being hedged.
(6) As is the case with options, a Series' activities in the
futures markets may result in a higher portfolio turnover rate
and additional transaction costs in the form of added
brokerage commissions. However, a Series also may save on
commissions by using futures contracts or options thereon as a
hedge rather than buying or selling individual securities in
anticipation of, or as a result of, market movements.
HEDGING STRATEGIES. The International Multi-Manager Series' sub-advisers may use
forward currency contracts, options and futures contracts and related options to
attempt to hedge securities held by the Series. There can be no assurance that
such efforts will succeed. Hedging strategies, if successful, can reduce risk of
loss by wholly or partially offsetting the negative effect of unfavorable price
movements in the investments being hedged. However, hedging strategies can also
reduce opportunity for gain by offsetting the positive effect of favorable price
movements in the hedged investment.
The International Multi-Manager Series may enter into forward currency contracts
either with respect to specific transactions or with respect to the Series'
positions. When WTC or a sub-adviser believes that a particular currency may
decline compared to the U.S. dollar, the Series may enter into a forward
contract to sell the currency that the adviser or the sub-adviser expects to
decline in an amount approximating the value of some or all of the Series'
securities denominated in that currency. Such contracts may only involve the
sale of a foreign currency against the U.S. dollar. In addition, when the Series
anticipates purchasing or selling a security, it may enter into a forward
currency contract in order to set the rate (either relative to the U.S. dollar
or another currency) at which a currency exchange transaction related to the
purchase or sale will be made.
The International Multi-Manager Series also may sell (write) and purchase put
and call options and futures contracts and related options on foreign currencies
to hedge against movements in exchange rates relative to the U.S. dollar. In
addition, the Series may write and purchase put and call options on securities
and stock indexes to hedge against the risk of fluctuations in the prices of
securities held by the Series or which the adviser or a sub-adviser intends to
include in the portfolio. Stock index options serve to hedge against overall
fluctuations in the securities markets rather than anticipated increases or
decreases in the value of a particular security. The Series also may sell and
purchase stock index futures contracts and related options to protect against a
general stock market decline that could adversely affect the Series' securities
or to hedge against a general stock market or market sector advance to lessen
the cost of future securities acquisitions. The Series may use interest rate
futures contracts and related options thereon to hedge the debt portion of its
portfolio against changes in the general level of interest rates.
A-7
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The International Multi-Manager Series will not enter into an options, futures
or forward currency contract transaction that exposes the Series to an
obligation to another party unless the Series either (i) owns an offsetting
("covered") position in securities, currencies, options, futures or forward
currency contracts or (ii) has cash, receivables and liquid securities with a
value sufficient at all times to cover its potential obligations to the extent
not covered as provided in (i) above.
SPECIAL RISKS RELATED TO FOREIGN CURRENCY OPTIONS AND FUTURES CONTRACTS
Options and futures contracts on foreign currencies are affected by all of those
factors that influence foreign exchange rates and investments generally. The
value of a foreign currency option or futures contract depends upon the value of
the underlying currency relative to the U.S. dollar. As a result, the price of
the International Multi-Manager Series' position in a foreign currency option or
currency contract may vary with changes in the value of either or both
currencies 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 or futures transactions, investors may be
disadvantaged by having to deal in an odd lot market (generally consisting of
transactions of less than $1 million) at prices that are less favorable than for
round lots.
There is no systematic reporting of last sale information for foreign currencies
or any regulatory requirement that quotations available through dealers or other
market sources be firm or revised on a timely basis. Quotation information
available is generally representative of very large transactions in the
interbank market and thus may not reflect relatively smaller transactions (that
is, 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 or futures 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 options or
futures markets until they reopen.
As with other options and futures positions, the International
Multi-Manager Series' ability to establish and close out such positions in
foreign currencies is subject to the maintenance of a liquid secondary market.
Trading of some such positions is relatively new. Although the Series will not
purchase or write such positions unless and until, in the adviser's or the
sub-adviser's opinion, the market for them has developed sufficiently to ensure
that the risks in connection with such positions are not greater than the risks
in connection with the underlying currency, there can be no assurance that a
liquid secondary market will exist for a particular option or futures contract
at any specific time. Moreover, the Series will not enter into OTC options that
are illiquid if, as a result, more than 15% of its net assets would be invested
in illiquid securities.
Settlement of a foreign currency futures contract must occur within the country
issuing the underlying currency. Thus, the Series must accept or make delivery
of the underlying foreign currency in accordance with any U.S. or foreign
restrictions or regulations regarding the maintenance of foreign banking
arrangements by U.S. residents, and it may be required to pay any fees, taxes
and charges associated with such delivery that are assessed in the issuing
country.
FORWARD CURRENCY CONTRACTS. The International Multi-Manager Series may use
forward currency contracts to protect against uncertainty in the level of future
foreign currency exchange rates.
The Series may enter into forward currency contracts with respect to specific
transactions. For example, when the Series enters into a contract for the
purchase or sale of a security denominated in a foreign currency or anticipates
the receipt in a foreign currency of dividend or interest payments on a security
that it holds or anticipates purchasing, the Series may desire to "lock in" the
U.S. dollar price of the security or the U.S. dollar equivalent of such payment,
as the case may be, by entering into a forward contract for the sale, for a
fixed amount of U.S. dollars, of the amount of foreign currency involved in the
underlying transaction. The Series will thereby be able to protect itself
against a possible loss resulting from an adverse change in the relationship
between the currency exchange rates during the period between the date on which
the security is purchased or sold, or on which the payment is declared, and the
date on which such payments are made or received.
The Series also may hedge by using forward currency contracts in connection with
portfolio positions to lock in the U.S. dollar value of those positions or to
increase its exposure to foreign currencies that the adviser or the
A-8
<PAGE>
sub-advisers believe may rise in value relative to the U.S. dollar. For example,
when the adviser or the sub-advisers believe that the currency of a particular
foreign country may suffer a substantial decline relative to the U.S. dollar, it
may enter into a forward contract to sell the amount of the former foreign
currency approximating the value of some or all of the Series' securities
holdings denominated in such foreign currency.
The precise matching of the forward contract amounts and the value of the
securities involved will not generally be possible because the future value of
such securities in foreign currencies will change as a consequence of market
movements in the value of those securities between the date the forward contract
is entered into and the date it matures. Accordingly, it may be necessary for
the Series to purchase additional foreign currency on the spot (that is, cash)
market (and bear the expense of such purchase) if the market value of the
security is less than the amount of foreign currency the Series is obligated to
deliver and if a decision is made to sell the security 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 security holding if
the market value of the security exceeds the amount of foreign currency the
Series is obligated to deliver. The projection of short-term currency market
movements is extremely difficult and the successful execution of a short-term
hedging strategy is highly uncertain. Forward contracts involve the risk that
anticipated currency movements might not be accurately predicted, causing the
Series to sustain losses on these contracts and transaction costs. Under normal
circumstances, consideration of the prospect for currency parities will be
incorporated into the longer-term investment decisions made with regard to
overall diversification strategies. However, the adviser and the sub-advisers
believe that it is important to have the flexibility to enter into such forward
contracts when it determines that the best interests of the Series will be
served.
At or before the maturity date of a forward contract requiring the Series to
sell a currency, the Series may either sell a security holding and use the sale
proceeds to make delivery of the currency or retain the security and offset its
contractual obligation to deliver the currency by purchasing a second contract
pursuant to which the Series will obtain, on the same maturity date, the same
amount of the currency that it is obligated to deliver. Similarly, the Series
may close out a forward contract requiring it to purchase a specified currency
by entering into a second contract entitling it to sell the same amount of the
same currency on the maturity date of the first contract. The Series would
realize a gain or loss as a result of entering into such an offsetting forward
currency contract under either circumstance to the extent the exchange rate or
rates between the currencies involved moved between the execution dates of the
first contract and the offsetting contract.
The cost to the Series of engaging in forward currency contracts varies with
factors such as the currencies involved, the length of the contract period and
the market conditions then prevailing. Because forward currency contracts are
usually entered into on a principal basis, no fees or commissions are involved.
The use of forward currency contracts does not eliminate fluctuations in the
prices of the underlying securities the Series owns or intends to acquire, but
it does fix a rate of exchange in advance. In addition, although forward
currency contracts limit the risk of loss due to a decline in the value of the
hedged currencies, at the same time they limit any potential gain that might
result should the value of the currencies increase.
Although the Series values its assets daily in terms of U.S. dollars, it does
not intend to convert its holdings of foreign currencies into U.S. dollars on a
daily basis. The Series may convert foreign currency from time to time, and
investors should be aware of the costs of currency conversion. Although foreign
exchange dealers do not charge a fee for conversion, they do realize a profit
based on the difference between the prices at which they are buying and selling
various currencies. Thus, a dealer may offer to sell a foreign currency to the
Series at one rate, while offering a lesser rate of exchange should the Series
desire to resell that currency to the dealer.
A-9
<PAGE>
APPENDIX B
DESCRIPTION OF RATINGS
Moody's and S&P are private services that provide ratings of the credit quality
of debt obligations. A description of the ratings assigned by Moody's and S&P to
the securities in which the Portfolios' corresponding Series may invest is
discussed below. These ratings represent the opinions of these rating services
as to the quality of the securities that they undertake to rate. It should be
emphasized, however, that ratings are general and are not absolute standards of
quality. The advisers and sub-advisers attempt to discern variations in credit
rankings of the rating services and to anticipate changes in credit ranking.
However, subsequent to purchase by a Series, an issue of securities may cease to
be rated or its rating may be reduced below the minimum rating required for
purchase by the Series. In that event, an adviser or sub-adviser will consider
whether it is in the best interest of the Series to continue to hold the
securities.
MOODY'S RATINGS
CORPORATE AND MUNICIPAL BONDS.
Aaa: Bonds that 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
edged." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa: Bonds that are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements present that make the
long-term risk appear somewhat larger than the Aaa securities.
A: Bonds that 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 some time in the future.
Baa: Bonds that are rated Baa are considered as medium-grade obligations (i.e.,
they are neither highly protected nor poorly secured). Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
CORPORATE AND MUNICIPAL COMMERCIAL PAPER. The highest rating for corporate and
municipal commercial paper is "P-1" (Prime-1). Issuers rated P-1 (or supporting
institutions) have a superior ability for repayment of senior short-term debt
obligations. P-1 repayment ability will often be evidenced by many of the
following characteristics:
(BULLET) Leading market positions in well-established industries.
(BULLET) High rates of return on funds employed.
(BULLET) Conservative capitalization structure with moderate reliance on
debt and ample asset protection.
(BULLET) Broad margins in earnings coverage of fixed financial charges and
high internal cash generation.
(BULLET) Well-established access to a range of financial markets and
assured sources of alternate liquidity.
B-1
<PAGE>
MUNICIPAL NOTES. The highest ratings for state and municipal short-term
obligations are "MIG 1," "MIG 2" and "MIG 3" (or "VMIG 1," "VMIG 2" and "VMIG 3"
in the case of an issue having a variable-rate demand feature). Notes rated "MIG
1" or "VMIG 1" are judged to be of the best quality. There is present strong
protection by established cash flows, superior liquidity support or demonstrated
broadbased access to the market for refinancing. Notes rated "MIG 2" or "VMIG 2"
are of high quality, with margins of protection that are ample although not so
large as in the preceding group. Notes rated "MIG 3" or "VMIG 3" are of
favorable quality, with all security elements accounted for but lacking the
undeniable strength of the preceding grades. Liquidity and cash flow protection
may be narrow, and market access for refinancing is likely to be less well
established.
S&P RATINGS
CORPORATE AND MUNICIPAL BONDS.
AAA: Bonds rated AAA are highest grade debt obligations. This rating indicates
an extremely strong capacity to pay interest and repay principal.
AA: Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from AAA issues only in small degree.
A: Bonds 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 bonds in higher rated categories.
BBB: Bonds rated BBB are regarded as having an adequate capacity to pay interest
and repay principal. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
CORPORATE AND MUNICIPAL COMMERCIAL PAPER. The "A-1" rating for corporate and
municipal commercial paper indicates that the degree of safety regarding timely
payment is strong. Those issues determined to possess extremely strong safety
characteristics will be rated "A-1+."
MUNICIPAL NOTES. The "SP-1" rating reflects a very strong or strong capacity to
pay principal and interest. Those issues determined to possess overwhelming
safety characteristics will be rated "SP-1+." The "SP-2" rating reflects a
satisfactory capacity to pay principal and interest.
FITCH RATINGS
DESCRIPTION OF FITCH'S HIGHEST STATE AND MUNICIPAL NOTES RATING.
AAA - Bonds considered to be investment grade and of the highest credit quality.
The obligor has an exceptionally strong ability to pay interest and repay
principal, which is unlikely to be affected by reasonably foreseeable events.
AA - Bonds considered to be investment grade and of very high credit quality.
The obligor's ability to pay interest and repay principal is very strong,
although not quite as strong as bonds rated AAA.
F-1+ - Issues assigned this rating are regarded as having the strongest degree
of assurance for timely payment.
F-1 - Issues assigned this rating reflect an assurance of timely payment only
slightly less in degree than issues rated F-1+.
B-2
<PAGE>
WT MUTUAL FUND
CRM PRIME MONEY MARKET FUND
CRM TAX-EXEMPT FUND
CRM INTERMEDIATE BOND FUND
CRM MUNICIPAL BOND FUND
CRM LARGE CAP VALUE FUND
CRM MID CAP VALUE FUND
CRM SMALL CAP VALUE FUND
400 Bellevue Parkway
Wilmington, Delaware 19809
- --------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
_______, 1999
- --------------------------------------------------------------------------------
This Statement of Additional Information is not a prospectus and should be read
in conjunction with the Funds' current prospectus, dated ______, 1999, as
amended from time to time. A copy of the current prospectus and annual report
may be obtained without charge, by writing to Provident Distributors, Inc.
("PDI"), Four Falls Corporate Center, West Conshohocken, PA 19428, and from
certain institutions such as banks or broker-dealers that have entered into
servicing agreements with PDI or by calling (800) _____.
Each Fund's audited financial statements for the year ended June 30, 1999,
included in the Annual Report to shareholders, are incorporated into this SAI by
reference.
<PAGE>
TABLE OF CONTENTS
GENERAL INFORMATION 2
INVESTMENT POLICIES 2
INVESTMENT LIMITATIONS 15
TRUSTEES AND OFFICERS 19
INVESTMENT ADVISORY AND OTHER SERVICES 21
RODNEY SQUARE MANAGEMENT CORPORATION 21
WILMINGTON TRUST COMPANY 21
DISTRIBUTION OF SHARES AND RULE 12B-1 PLAN 24
BROKERAGE ALLOCATION AND OTHER PRACTICES 25
CAPITAL STOCK AND OTHER SECURITIES 26
PURCHASE, REDEMPTION AND PRICING OF SHARES 26
DIVIDENDS 29
TAXATION OF THE FUNDS 30
CALCULATION OF PERFORMANCE INFORMATION 33
FINANCIAL STATEMENTS 37
APPENDIX A - OPTIONS, FUTURES AND FORWARD CURRENCY CONTRACT STRATEGIES A-1
APPENDIX B - DESCRIPTION OF RATINGS B-1
i
<PAGE>
GENERAL INFORMATION
WT Mutual Fund (the "Fund") is a diversified, open-end management investment
company organized as a Delaware business trust on June 1, 1994. The name of the
Fund was changed from Kiewit Mutual Fund to WT Mutual Fund on October 20, 1998.
The Fund has established the following Funds described in this Statement of
Additional Information: CRM Prime Money Market, CRM Tax-Exempt, CRM Intermediate
Bond, CRM Municipal Bond, CRM Large Cap Value, CRM Mid Cap Value and CRM Small
Cap Value Funds. Each of these Funds issues Institutional and Investor class
shares.
INVESTMENT POLICIES
The following information supplements the information concerning each Fund's
investment objective, policies and limitations found in the prospectus. Unless
otherwise indicated, it applies to the Funds through their investment in
corresponding master funds, which are series of WT Investment Trust I (the
"Series").
MONEY MARKET FUNDS
The "Money Market Funds" are the Prime Money Market Fund and the Tax-Exempt
Fund. Each has adopted a fundamental policy requiring it to maintain a constant
net asset value of $1.00 per share, although this may not be possible under
certain circumstances. Each Fund values its portfolio securities on the basis of
amortized cost (see "Purchase, Redemption and Pricing of Shares") pursuant to
Rule 2a-7 under the Investment Company Act of 1940 (the "1940 Act"). As
conditions of that Rule, the Board of Trustees has established procedures
reasonably designed to stabilize each Fund's price per share at $1.00 per share.
Each Fund maintains a dollar-weighted average portfolio maturity of 90 days or
less; purchases only instruments with effective maturities of 397 days or less;
and invests only in securities which are of high quality as determined by major
rating services or, in the case of instruments which are not rated, of
comparable quality as determined by the investment adviser, Rodney Square
Management Corporation, under the direction of and subject to the review of the
Board of Trustees.
BANK OBLIGATIONS. The Prime Money Market Fund may invest in U.S.
dollar-denominated obligations of major banks, including certificates of
deposit, time deposits and bankers' acceptances of major U.S. and foreign banks
and their branches located outside of the United States, of U.S. branches of
foreign banks, of foreign branches of foreign banks, of U.S. agencies of foreign
banks and of wholly owned banking subsidiaries of such foreign banks located in
the United States.
Obligations of foreign branches of U.S. banks and U.S. branches of wholly owned
subsidiaries of foreign banks may be general obligations of the parent bank, of
the issuing branch or subsidiary, or both, or may be limited by the terms of a
specific obligation or by governmental regulation. Because such obligations are
issued by foreign entities, they are subject to the risks of foreign investing.
A brief description of some typical types of bank obligations follows:
[BULLET] BANKERS' ACCEPTANCES. The Prime Money Market Fund may invest in
bankers' acceptances, which are credit instruments evidencing the
obligation of a bank to pay a draft that has been drawn on it by a
customer. These instruments reflect the obligation of both the
bank and the drawer to pay the face amount of the instrument upon
maturity.
[BULLET] CERTIFICATES OF DEPOSIT. The Prime Money Market Fund may invest in
certificates evidencing the indebtedness of a commercial bank to
repay funds deposited with it for a definite period of time
(usually from 14 days to one year) at a stated or variable
interest rate. Variable rate certificates of deposit provide that
the interest rate will fluctuate on designated dates based on
changes in a designated base rate (such as the composite rate for
certificates of deposit established by the Federal Reserve Bank of
New York).
[BULLET] TIME DEPOSITS. The Prime Money Market Fund may invest in time
deposits, which are bank deposits for fixed periods of time.
2
<PAGE>
CERTIFICATES OF PARTICIPATION. The Tax-Exempt Fund may invest in certificates of
participation, which give the investor an undivided interest in the municipal
obligation in the proportion that the investor's interest bears to the total
principal amount of the municipal obligation.
CORPORATE BONDS, NOTES AND COMMERCIAL PAPER. The Prime Money Market Fund may
invest in corporate bonds, notes and commercial paper. These obligations
generally represent indebtedness of the issuer and may be subordinated to other
outstanding indebtedness of the issuer. Commercial paper consists of short-term
promissory notes issued by corporations in order to finance their current
operations. The Fund will only invest in commercial paper rated, at the time of
purchase, in the highest category by a nationally recognized statistical rating
organization ("NRSRO"), such as Moody's or S&P or, if not rated, determined by
the adviser to be of comparable quality. See "Appendix B - Description of
Ratings." The Funds may invest in asset-backed commercial paper subject to Rule
2a-7 restrictions on investments in asset-backed securities, which include a
requirement that the security must have received a rating from a NRSRO.
FOREIGN SECURITIES. At the present time, portfolio securities of the Prime Money
Market Fund that are purchased outside the United States are maintained in the
custody of foreign branches of U.S. banks. To the extent that the Fund may
maintain portfolio securities in the custody of foreign subsidiaries of U.S.
banks, and foreign banks or clearing agencies in the future, those sub-custodian
arrangements are subject to regulations under the 1940 Act that govern custodial
arrangements with entities incorporated or organized in countries outside of the
United States.
ILLIQUID SECURITIES. The Money Market Funds may not invest more than 10% of the
value of its net assets in securities that at the time of purchase have legal or
contractual restrictions on resale or are otherwise illiquid. Illiquid
securities are securities that cannot be disposed of within seven days at
approximately the value at which they are being carried on a Fund's books.
The Board of Trustees has the ultimate responsibility for determining whether
specific securities are liquid or illiquid. The Board has delegated the function
of making day to day determinations of liquidity to the adviser, pursuant to
guidelines approved by the Board. The adviser will monitor the liquidity of
securities held by a Fund and report periodically on such decisions to the
Board.
INVESTMENT COMPANY SECURITIES. The Money Market Funds may invest in the
securities of other money market mutual funds, within the limits prescribed by
the 1940 Act. These limitations currently provide, in part, that a Fund may not
purchase shares of an investment company if (a) such a purchase would cause the
Fund to own in the aggregate more than 3% of the total outstanding voting stock
of the investment company or (b) such a purchase would cause the Fund to have
more than 5% of its total assets invested in the investment company or (c) more
than 10% of the Fund's total assets to be invested in the aggregate in all
investment companies. As a shareholder in an investment company, the Fund would
bear its pro rata portion of the investment company's expenses, including
advisory fees, in addition to its own expenses. Each Fund's investments of its
assets in the corresponding Series pursuant to the master/feeder structure are
excepted from the above limitations.
MUNICIPAL SECURITIES. The Money Market Funds each may invest in debt obligations
issued by states, municipalities and public authorities ("Municipal Securities")
to obtain funds for various public purposes. Yields on Municipal Securities are
the product of a variety of factors, including the general conditions of the
money market and of the municipal bond and municipal note markets, the size of a
particular offering, the maturity of the obligation and the rating of the issue.
Although the interest on Municipal Securities may be exempt from federal income
tax, dividends paid by a Fund to its shareholders may not be tax-exempt. A brief
description of some typical types of municipal securities follows:
[BULLET] GENERAL OBLIGATION SECURITIES are backed by the taxing power of
the issuing municipality and are considered the safest type of
municipal bond.
[BULLET] REVENUE OR SPECIAL OBLIGATION SECURITIES are backed by the
revenues of a specific project or facility tolls from a toll
bridge, for example.
3
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[BULLET] BOND ANTICIPATION NOTES normally are issued to provide interim
financing until long-term financing can be arranged. The long-term
bonds then provide money for the repayment of the Notes.
[BULLET] TAX ANTICIPATION NOTES finance working capital needs of
municipalities and are issued in anticipation of various seasonal
tax revenues, to be payable for these specific future taxes.
[BULLET] REVENUE ANTICIPATION NOTES are issued in expectation of receipt of
other kinds of revenue, such as federal revenues available under
the Federal Revenue Sharing Program.
[BULLET] INDUSTRIAL DEVELOPMENT BONDS ("IDBs") and Private Activity Bonds
("PABs") are specific types of revenue bonds issued on or behalf
of public authorities to finance various privately operated
facilities such as solid waste facilities and sewage plants. PABs
generally are such bonds issued after April 15, 1986. These
obligations are included within the term "municipal bonds" if the
interest paid on them is exempt from federal income tax in the
opinion of the bond issuer's counsel. IDBs and PABs are in most
case revenue bonds and thus are not payable from the unrestricted
revenues of the issuer. The credit quality of the IDBs and PABs is
usually directly related to the credit standing of the user of the
facilities being financed, or some form of credit enhancement such
as a letter of credit.
[BULLET] TAX-EXEMPT COMMERCIAL PAPER AND SHORT-TERM MUNICIPAL NOTES provide
for short-term capital needs and usually have maturities of one
year or less. They include tax anticipation notes, revenue
anticipation notes and construction loan notes.
[BULLET] CONSTRUCTION LOAN NOTES are sold to provide construction
financing. After successful completion and acceptance, many
projects receive permanent financing through the Federal Housing
Administration by way of "Fannie Mae" (the Federal National
Mortgage Association) or "Ginnie Mae" (the Government National
Mortgage Association).
[BULLET] PUT BONDS are municipal bonds which give the holder the right to
sell the bond back to the issuer or a third party at a specified
price and exercise date, which is typically well in advance of the
bond's maturity date.
REPURCHASE AGREEMENTS. The Money Market Funds may invest in repurchase
agreements. A repurchase agreement is a transaction in which a Fund purchases a
security from a bank or recognized securities dealer and simultaneously commits
to resell that security to a bank or dealer at an agreed date and price
reflecting a market rate of interest, unrelated to the coupon rate or the
maturity of the purchased security. While it is not possible to eliminate all
risks from these transactions (particularly the possibility of a decline in the
market value of the underlying securities, as well as delays and costs to the
Fund if the other party to the repurchase agreement becomes bankrupt), it is the
policy of a Fund to limit repurchase transactions to primary dealers and banks
whose creditworthiness has been reviewed and found satisfactory by the adviser.
Repurchase agreements maturing in more than seven days are considered illiquid
for purposes of a Fund's investment limitations.
SECURITIES LENDING. The Money Market Funds may from time to time lend its
portfolio securities to brokers, dealers and financial institutions. Such loans
by a Fund will in no event exceed one-third of that Fund's total assets and will
be secured by collateral in the form of cash or securities issued or guaranteed
by the U.S. Government, its agencies or instrumentalities, which will be
maintained in an amount equal to the current market value of the loaned
securities at all times the loan is outstanding. Each Fund will make loans of
securities only to firms deemed credit worthy by the adviser.
STANDBY COMMITMENTS. The Money Market Funds may invest in standby commitments.
It is expected that stand-by commitments will generally be available without the
payment of any direct or indirect consideration. However, if necessary and
advisable, the Funds may pay for standby commitments either separately in cash
or by paying a higher price for the obligations acquired subject to such a
commitment
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(thus reducing the yield to maturity otherwise available for the same
securities). Standby commitments purchased by the Funds will be valued at zero
in determining net asset value and will not affect the valuation of the
obligations subject to the commitments. Any consideration paid for a standby
commitment will be accounted for as unrealized depreciation and will be
amortized over the period the commitment is held by a Fund.
U.S. GOVERNMENT OBLIGATIONS. The Money Market Funds may invest in debt
securities issued or guaranteed by the U.S. Government, its agencies or
instrumentalities. Although all obligations of agencies and instrumentalities
are not direct obligations of the U.S. Treasury, payment of the interest and
principal on these obligations is generally backed directly or indirectly by the
U.S. Government. This support can range from securities supported by the full
faith and credit of the United States (for example, securities of the Government
National Mortgage Association), to securities that are supported solely or
primarily by the creditworthiness of the issuer, such as securities of the
Federal National Mortgage Association, Federal Home Loan Mortgage Corporation,
Tennessee Valley Authority, Federal Farm Credit Banks and the Federal Home Loan
Banks. In the case of obligations not backed by the full faith and credit of the
United States, a Fund must look principally to the agency or instrumentality
issuing or guaranteeing the obligation for ultimate repayment and may not be
able to assert a claim against the United States itself in the event the agency
or instrumentality does not meet its commitments.
VARIABLE AND FLOATING RATE SECURITIES. The Money Market Funds may invest in
variable and floating rate securities. The terms of variable and floating rate
instruments provide for the interest rate to be adjusted according to a formula
on certain pre-determined dates. Certain of these obligations also may carry a
demand feature that gives the holder the right to demand prepayment of the
principal amount of the security prior to maturity. An irrevocable letter of
credit or guarantee by a bank usually backs the demand feature. Fund investments
in these securities must comply with conditions established by the SEC under
which they may be considered to have remaining maturities of 397 days or less.
WHEN-ISSUED SECURITIES. The Money Market Funds may buy when-issued securities or
sell securities on a delayed-delivery basis. This means that delivery and
payment for the securities normally will take place approximately 15 to 90 days
after the date of the transaction. The payment obligation and the interest rate
that will be received are each fixed at the time the buyer enters into the
commitment. During the period between purchase and settlement, the purchaser
makes no payment and no interest accrues to the purchaser. However, when a
security is sold on a delayed-delivery basis, the seller does not participate in
further gains or losses with respect to the security. If the other party to a
when-issued or delayed-delivery transaction fails to transfer or pay for the
securities, the Fund could miss a favorable price or yield opportunity or could
suffer a loss.
A Fund will make a commitment to purchase when-issued securities only with the
intention of actually acquiring the securities, but the Fund may dispose of the
commitment before the settlement date if it is deemed advisable as a matter of
investment strategy. A Fund may also sell the underlying securities before they
are delivered, which may result in gains or losses. A separate account for each
Fund is established at the custodian bank, into which cash and/or liquid
securities equal to the amount of when-issued purchase commitments is deposited.
If the market value of the deposited securities declines additional cash or
securities will be placed in the account on a daily basis to cover the Fund's
outstanding commitments.
When a Fund purchases a security on a when-issued basis, the security is
recorded as an asset on the commitment date and is subject to changes in market
value generally, based upon changes in the level of interest rates. Thus, upon
delivery, the market value of the security may be higher or lower than its cost,
and this may increase or decrease the Fund's net asset value. When payment for a
when-issued security is due, a Fund will meet its obligations from
then-available cash flow, the sale of the securities held in the separate
account, the sale of other securities or from the sale of the when-issued
securities themselves. The sale of securities to meet a when-issued purchase
obligation carries with it the potential for the realization of capital gains or
losses.
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THE BOND FUNDS
The "Bond Funds" are the Intermediate Bond and the Municipal Bond Funds.
Wilmington Trust Company, the investment adviser for the Bond Funds, employs an
investment process that is disciplined, systematic and oriented toward a
quantitative assessment and control of volatility. The Bond Funds' exposure to
credit risk is moderated by limiting their investments to securities that, at
the time of purchase, are rated investment grade by a nationally recognized
statistical rating organization such as Moody's, S&P, or, if unrated, are
determined by the adviser to be of comparable quality. See "Appendix B -
Description of Ratings." Ratings, however, are not guarantees of quality or of
stable credit quality. Not even the highest rating constitutes assurance that
the security will not fluctuate in value or that a Fund will receive the
anticipated yield on the security. WTC continuously monitors the quality of the
Funds' holdings, and should the rating of a security be downgraded or its
quality be adversely affected, WTC will determine whether it is in the best
interest of the affected Fund to retain or dispose of the security.
The effect of interest rate fluctuations in the market on the principal value of
the Bond Funds is moderated by limiting the average dollar-weighted duration of
their investments -- in the case of the Intermediate Bond Fund to a range of 4
to 7 years, and in the case of the Municipal Bond Fund to a range of 4 to 8
years. Investors may be more familiar with the term "average effective maturity"
(when, on average, the fixed income securities held by the Fund will mature),
which is sometimes used to express the anticipated term of the Funds'
investments. Generally, the stated maturity of a fixed income security is longer
than it's projected duration. Under normal market conditions, the average
effective maturity, in the case of the Intermediate Bond Fund, within a range of
approximately 7 to 12 years, and in the case of the Municipal Bond Fund, within
a range of approximately 5 to 10 years. In the event of unusual market
conditions, the average dollar-weighted duration of the Funds may fall within a
broader range. Under those circumstances, the Intermediate Bond Fund may invest
in fixed income securities with an average dollar-weighted duration of 2 to 10
years.
WTC's goal in managing the Intermediate Bond Fund is to gain additional return
by analyzing the market complexities and individual security attributes which
affect the returns of fixed income securities. The Intermediate Bond Fund is
intended to appeal to investors who want a thoughtful exposure to the broad
fixed income securities market and the high current returns that characterize
the short-term to intermediate-term sector of that market.
Given the average duration of the holdings of the Bond Fund and the current
interest rate environment, the Fund should experience smaller price fluctuations
than those experienced by longer-term bond and municipal bond funds and a higher
yield than fixed-price money market and tax-exempt money market funds. Of
course, the Fund will likely experience larger price fluctuations than money
market funds and a lower yield than longer-term bond and municipal bond funds.
Given the quality of the Fund's holdings, which must be investment grade (rated
within the top four categories) or comparable to investment grade securities at
the time of purchase, the Funds will accept lower yields in order to avoid the
credit concerns experienced by funds that invest in lower quality fixed income
securities. In addition, although the Municipal Bond Fund expects to invest
substantially all of its net assets in municipal securities that provide
interest income that is exempt from federal income tax, it may invest up to 20%
of its net assets in other types of fixed income securities that provide
federally taxable income.
The composition of each Fund's holdings varies depending upon WTC's analysis of
the fixed income markets and the municipal securities markets (for the Municipal
Bond Fund), including analysis of the most attractive segments of the yield
curve, the relative value of the different market sectors, expected trends in
those markets and supply versus demand pressures. Securities purchased by the
Funds may be purchased on the basis of their yield or potential capital
appreciation or both. By maintaining each Fund's specified average duration, WTC
seeks to protect the Fund's principal value by reducing fluctuations in value
relative to those that may be experienced by bond funds with longer average
durations. This strategy may reduce the level of income attained by the Funds.
Of course, there is no guarantee that principal value can be protected during
periods of extreme interest rate volatility.
WTC may make frequent changes in the Funds' investments, particularly during
periods of rapidly fluctuating interest rates. These frequent changes would
involve transaction costs to the Funds and could result in taxable capital
gains.
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ASSET-BACKED SECURITIES. The Bond Funds may purchase interests in pools of
obligations, such as credit card or automobile loan receivables, purchase
contracts and financing leases. Such securities are also known as "asset-backed
securities," and the holders thereof may be entitled to receive a fixed rate of
interest, a variable rate that is periodically reset to reflect the current
market rate or an auction rate that is periodically reset at auction.
Asset-backed securities are typically supported by some form of credit
enhancement, such as cash collateral, subordinated tranches, a letter of credit,
surety bond or limited guaranty. Credit enhancements do not provide protection
against changes in the market value of the security. If the credit enhancement
is exhausted or withdrawn, security holders may experience losses or delays in
payment if required payments of principal and interest are not made with respect
to the underlying obligations. Except in very limited circumstances, there is no
recourse against the vendors or lessors that originated the underlying
obligations.
Asset-backed securities are likely to involve unscheduled prepayments of
principal that may affect yield to maturity, result in losses, and may be
reinvested at higher or lower interest rates than the original investment. The
yield to maturity of asset-backed securities that represent residual interests
in payments of principal or interest in fixed income obligations is particularly
sensitive to prepayments.
The value of asset-backed securities may change because of changes in the
market's perception of the creditworthiness of the servicing agent for the pool
of underlying obligations, the originator of those obligations or the financial
institution providing credit enhancement.
BANK OBLIGATIONS. The Bond Funds may invest in the same U.S. dollar-denominated
obligations of major banks as the Money Market Fund. (See "Bank Obligations".)
CORPORATE BONDS, NOTES AND COMMERCIAL PAPER. The Bond Funds may invest in
corporate bonds, notes and commercial paper. These obligations generally
represent indebtedness of the issuer and may be subordinated to other
outstanding indebtedness of the issuer. Commercial paper consists of short-term
unsecured promissory notes issued by corporations in order to finance their
current operations. The Funds will only invest in commercial paper rated, at the
time of purchase, in the highest category by a nationally recognized statistical
rating organization, such as Moody's or S&P or, if not rated, determined by WTC
to be of comparable quality.
FIXED INCOME SECURITIES WITH BUY-BACK FEATURES. Fixed income securities with
buy-back features enable the Bond Funds to recover principal upon tendering the
securities to the issuer or a third party. Letters of credit issued by domestic
or foreign banks often supports these buy-back features. In evaluating a foreign
bank's credit, WTC considers whether adequate public information about the bank
is available and whether the bank may be subject to unfavorable political or
economic developments, currency controls or other governmental restrictions that
could adversely affect the bank's ability to honor its commitment under the
letter of credit. The Municipal Bond Fund will not acquire municipal securities
with buy-back features if, in the opinion of counsel, the existence of a
buy-back feature would alter the tax-exempt nature of interest payments on the
underlying securities and cause those payments to be taxable to that Fund and
its shareholders.
Buy-back features include standby commitments, put bonds and demand features.
[BULLET] STANDBY COMMITMENTS. The Bond Funds may acquire standby commitments
from broker-dealers, banks or other financial intermediaries to enhance
the liquidity of portfolio securities. A standby commitment entitles a
Fund to same day settlement at amortized cost plus accrued interest, if
any, at the time of exercise. The amount payable by the issuer of the
standby commitment during the time that the commitment is exercisable
generally approximates the market value of the securities underlying
the commitment. Standby commitments are subject to the risk that the
issuer of a commitment may not be in a position to pay for the
securities at the time that the commitment is exercised.
Ordinarily, a Fund will not transfer a standby commitment to a third
party, although the Fund may sell securities subject to a standby
commitment at any time. A Fund may purchase standby commitments
separate from or in conjunction with the purchase of the securities
subject to the commitments. In the latter case, the Fund
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may pay a higher price for the securities acquired in consideration for
the commitment.
[BULLET] PUT BONDS. A put bond (also referred to as a tender option or third
party bond) is a bond created by coupling an intermediate or long-term
fixed rate bond with an agreement giving the holder the option of
tendering the bond to receive its par value. As consideration for
providing this tender option, the sponsor of the bond (usually a bank,
broker-dealer or other financial intermediary) receives periodic fees
that equal the difference between the bond's fixed coupon rate and the
rate (determined by a remarketing or similar agent) that would cause
the bond, coupled with the tender option, to trade at par. By paying
the tender offer fees, a Fund in effect holds a demand obligation that
bears interest at the prevailing short-term rate.
In selecting put bonds for the Bond Funds, WTC takes into consideration
the creditworthiness of the issuers of the underlying bonds and the
creditworthiness of the providers of the tender option features. A
sponsor may withdraw the tender option feature if the issuer of the
underlying bond defaults on interest or principal payments, the bond's
rating is downgraded or, in the case of a municipal bond, the bond
loses its tax-exempt status.
[BULLET] DEMAND FEATURES. Many variable rate securities carry demand features
that permit the holder to demand repayment of the principal amount of
the underlying securities plus accrued interest, if any, upon a
specified number of days' notice to the issuer or its agent. A demand
feature may be exercisable at any time or at specified intervals.
Variable rate securities with demand features are treated as having a
maturity equal to the time remaining before the holder can next demand
payment of principal. The issuer of a demand feature instrument may
have a corresponding right to prepay the outstanding principal of the
instrument plus accrued interest, if any, upon notice comparable to
that required for the holder to demand payment.
GUARANTEED INVESTMENT CONTRACTS. A guaranteed investment contract ("GIC") is a
general obligation of an insurance company. A GIC is generally structured as a
deferred annuity under which the purchaser agrees to pay a given amount of money
to an insurer (either in a lump sum or in installments) and the insurer promises
to pay interest at a guaranteed rate (either fixed or variable) for the life of
the contract. Some GICs provide that the insurer may periodically pay
discretionary excess interest over and above the guaranteed rate. At the GIC's
maturity, the purchaser generally is given the option of receiving payment or an
annuity. Certain GICs may have features that permit redemption by the issuer at
a discount from par value.
Generally, GICs are not assignable or transferable without the permission of the
issuer. As a result, the acquisition of GICs is subject to the limitations
applicable to each Fund's acquisition of illiquid and restricted securities. The
holder of a GIC is dependent on the creditworthiness of the issuer as to whether
the issuer is able to meet its obligations. No Fund intends to invest more than
5% of its net assets in GICs.
ILLIQUID SECURITIES. The Bond Funds may not invest more than 15% of the value of
its net assets in securities that at the time of purchase have legal or
contractual restrictions on resale or are otherwise illiquid.
MONEY MARKET FUNDS. The Bond Funds may invest in the securities of money market
mutual funds, within the limits prescribed by the 1940 Act. (See "Investment
Company Securities.")
MORTGAGE-BACKED SECURITIES. Mortgage-backed securities are securities
representing interests in a pool of mortgages secured by real property.
Government National Mortgage Association ("GNMA") mortgage-backed securities are
securities representing interests in pools of mortgage loans to residential home
buyers made by lenders such as mortgage bankers, commercial banks and savings
associations and are either guaranteed by the Federal
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Housing Administration or insured by the Veterans Administration. Timely payment
of interest and principal on each mortgage loan is backed by the full faith and
credit of the U.S. Government.
The Federal National Mortgage Association ("FNMA") and Federal Home Loan
Mortgage Corporation ("FHLMC") both issue mortgage-backed securities that are
similar to GNMA securities in that they represent interests in pools of mortgage
loans. FNMA guarantees timely payment of interest and principal on its
certificates and FHLMC guarantees timely payment of interest and ultimate
payment of principal. FHLMC also has a program under which it guarantees timely
payment of scheduled principal as well as interest. FNMA and FHLMC guarantees
are backed only by those agencies and not by the full faith and credit of the
U.S. Government.
In the case of mortgage-backed securities that are not backed by the U.S.
Government or one of its agencies, a loss could be incurred if the collateral
backing these securities is insufficient. This may occur even though the
collateral is U.S. Government-backed.
Most mortgage-backed securities pass monthly payment of principal and interest
through to the holder after deduction of a servicing fee. However, other payment
arrangements are possible. Payments may be made to the holder on a different
schedule than that on which payments are received from the borrower, including,
but not limited to, weekly, bi-weekly and semiannually. The monthly principal
and interest payments also are not always passed through to the holder on a PRO
RATA basis. In the case of collateralized mortgage obligations ("CMOs"), the
pool is divided into two or more tranches and special rules for the disbursement
of principal and interest payments are established.
CMO residuals are derivative securities that generally represent interests in
any excess cash flow remaining after making required payments of principal and
interest to the holders of the CMOs described above. Yield to maturity on CMO
residuals is extremely sensitive to prepayments. In addition, if a series of a
CMO includes a class that bears interest at an adjustable rate, the yield to
maturity on the related CMO residual also will be extremely sensitive to the
level of the index upon which interest rate adjustments are based.
Stripped mortgage-backed securities ("SMBS") are derivative multi-class mortgage
securities and may be issued by agencies or instrumentalities of the U.S.
Government or by private mortgage lenders. SMBS usually are structured with two
classes that receive different proportions of the interest and/or principal
distributions on a pool of mortgage assets. A common type of SMBS will have one
class of holders receiving all interest payments -- "interest only" or "IO" --
and another class of holders receiving the principal repayments -- "principal
only" or "PO." The yield to maturity of IO and PO classes is extremely sensitive
to prepayments on the underlying mortgage assets.
MUNICIPAL SECURITIES. Municipal securities are debt obligations issued by or on
behalf of states, territories and possessions of the United States, the District
of Columbia and their sub-divisions, agencies and instrumentalities, the
interest on which is, in the opinion of bond counsel, exempt from federal income
tax. These debt obligations are issued to obtain funds for various public
purposes, such as the construction of public facilities, the payment of general
operating expenses or the refunding of outstanding debts. They may also be
issued to finance various privately owned or operated activities. The three
general categories of municipal securities are general obligation, revenue or
special obligation and private activity municipal securities. A brief
description of typical municipal securities follows:
[BULLET] GENERAL OBLIGATION SECURITIES are backed by the taxing power of
the issuing municipality and are considered the safest type of
municipal bond. The proceeds from general obligation securities
are used to fund a wide range of public projects, including the
construction or improvement of schools, highways and roads, and
water and sewer systems.
[BULLET] REVENUE OR SPECIAL OBLIGATION SECURITIES are backed by the
revenues of a specific project or facility - tolls from a toll
bridge, for example. The proceeds from revenue or special
obligation securities are used to fund a wide variety of capital
projects, including electric, gas, water and sewer systems;
highways, bridges and tunnels; port and airport facilities;
colleges and universities; and hospitals. Many municipal issuers
also establish a debt service reserve fund from which principal
and interest
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payments are made. Further security may be available in the form
of the state's ability, without obligation, to make up deficits in
the reserve fund.
[BULLET] MUNICIPAL LEASE OBLIGATIONS may take the form of a lease, an
installment purchase or a conditional sale contract issued by
state and local governments and authorities to acquire land,
equipment and facilities. Usually, the Funds will purchase a
participation interest in a municipal lease obligation from a bank
or other financial intermediary. The participation interest gives
the holder a pro rata, undivided interest in the total amount of
the obligation.
Municipal leases frequently have risks distinct from those
associated with general obligation or revenue bonds. The interest
income from the lease obligation may become taxable if the lease
is assigned. Also, to free the municipal issuer from
constitutional or statutory debt issuance limitations, many leases
and contracts include non-appropriation clauses providing that the
municipality has no obligation to make future payments under the
lease or contract unless money is appropriated for that purpose by
the municipality on a yearly or other periodic basis. Finally, the
lease may be illiquid.
[BULLET] RESOURCE RECOVERY BONDS are affected by a number of factors, which
may affect the value and credit quality of these revenue or
special obligations. These factors include the viability of the
project being financed, environmental protection regulations and
project operator tax incentives.
[BULLET] PRIVATE ACTIVITY SECURITIES are specific types of revenue bonds
issued on behalf of public authorities to finance various
privately operated facilities such as educational, hospital or
housing facilities, local facilities for water supply, gas,
electricity, sewage or solid waste disposal, and industrial or
commercial facilities. The payment of principal and interest on
these obligations generally depends upon the credit of the private
owner/user of the facilities financed and, in certain instances,
the pledge of real and personal property by the private
owner/user. The interest income from certain types of private
activity securities may be considered a tax preference item for
purposes of the federal alternative minimum tax ("Tax Preference
Item").
Short-term municipal securities in which the Funds may invest include Tax
Anticipation, Revenue Anticipation, Bond Anticipation and Construction Loan
Notes. These were previously described for the Money Market Funds (See
"Municipal Securities.")
OPTIONS, FUTURES AND FORWARD CURRENCY CONTRACT STRATEGIES. Although the
Municipal Bond Fund has no current intention of so doing, each of the Bond Fund
may use options and futures contracts. The Intermediate Bond Funds may use
forward currency contracts. For additional information regarding such investment
strategies, see Appendix A to this Statement of Additional Information.
PARTICIPATION INTERESTS. The Bond Funds may invest in participation interests in
fixed income securities. A participation interest provides the certificate
holder with a specified interest in an issue of fixed income securities.
Some participation interests give the holders differing interests in the
underlying securities, depending upon the type or class of certificate
purchased. For example, coupon strip certificates give the holder the right to
receive a specific portion of interest payments on the underlying securities;
principal strip certificates give the holder the right to receive principal
payments and the portion of interest not payable to coupon strip certificate
holders. Holders of certificates of participation in interest payments may be
entitled to receive a fixed rate of interest, a variable rate that is
periodically reset to reflect the current market rate or an auction rate that is
periodically reset at auction. Asset-backed residuals represent interests in any
excess cash flow remaining after required payments of principal and interest
have been made.
More complex participation interests involve special risk considerations. Since
these instruments have only recently been developed, there can be no assurance
that any market will develop or be maintained for the instruments. Generally,
the fixed income securities that are deposited in trust for the holders of these
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interests are the sole source of payments on the interests; holders cannot look
to the sponsor or trustee of the trust or to the issuers of the securities held
in trust or to any of their affiliates for payment.
Participation interests purchased at a discount may experience price volatility.
Certain types of interests are sensitive to fluctuations in market interest
rates and to prepayments on the underlying securities. A rapid rate of
prepayment can result in the failure to recover the holder's initial investment.
The extent to which the yield to maturity of a participation interest is
sensitive to prepayments depends, in part, upon whether the interest was
purchased at a discount or premium, and if so, the size of that discount or
premium. Generally, if a participation interest is purchased at a premium and
principal distributions occur at a rate faster than that anticipated at the time
of purchase, the holder's actual yield to maturity will be lower than that
assumed at the time of purchase. Conversely, if a participation interest is
purchased at a discount and principal distributions occur at a rate faster than
that assumed at the time of purchase, the investor's actual yield to maturity
will be higher than that assumed at the time of purchase.
Participation interests in pools of fixed income securities backed by certain
types of debt obligations involve special risk considerations. The issuers of
securities backed by automobile and truck receivables typically file financing
statements evidencing security interests in the receivables, and the servicers
of those obligations take and retain custody of the obligations. If the
servicers, in contravention of their duty to the holders of the securities
backed by the receivables, were to sell the obligations, the third party
purchasers could acquire an interest superior to the interest of the security
holders. Also, most states require that a security interest in a vehicle must be
noted on the certificate of title and the certificate of title may not be
amended to reflect the assignment of the lender's security interest. Therefore,
the recovery of the collateral in some cases may not be available to support
payments on the securities. Securities backed by credit card receivables are
generally unsecured, and both federal and state consumer protection laws may
allow set-offs against certain amounts owed.
The Municipal Bond Fund will only invest in participation interests in municipal
securities, municipal leases or in pools of securities backed by municipal
assets if, in the opinion of counsel, any interest income on the participation
interest will be exempt from federal income tax to the same extent as the
interest on the underlying securities.
REPURCHASE AGREEMENTS. The Bond Funds may invest in the same repurchase
agreements, as the Money Market Funds. (See "Repurchase Agreements.")
SECURITIES LENDING. The Bond Funds may lend securities pursuant to agreements,
which require that the loans be continuously secured by collateral equal to 100%
of the market value of the loaned securities. Such collateral consists of cash,
securities of the U.S. Government or its agencies, or any combination of cash
and such securities. Such loans will not be made if, as a result, the aggregate
amount of all outstanding securities loans for a Fund exceed one-third of the
value of the Fund's total assets taken at fair market value. A Fund will
continue to receive interest on the securities lent while simultaneously earning
interest on the investment of the cash collateral in U.S. Government securities.
However, a Fund will normally pay lending fees to such broker-dealers and
related expenses from the interest earned on invested collateral. There may be
risks of delay in receiving additional collateral or risks of delay in recovery
of the securities and even loss of rights in the collateral should the borrower
of the securities fail financially. However, loans are made only to borrowers
deemed by the adviser to be of good standing and when, in the judgment of the
adviser, the consideration that can be earned currently from such securities
loans justifies the attendant risk. Either party upon reasonable notice to the
other party may terminate any loan. The Municipal Bond Fund has no current
intention of lending its portfolio securities and would do so only under unusual
market conditions since the interest income that a Fund receives from lending
its securities is taxable.
U.S. GOVERNMENT OBLIGATIONS. The Bond Funds may invest in the same debt
securities issued or guaranteed by the U.S. Government, its agencies or
instrumentalities as the Money Market Fund. (See "U.S. Government Obligations.")
VARIABLE AND FLOATING RATE SECURITIES. The Bond Funds may invest in variable and
floating rate securities. The terms of variable and floating rate instruments
provide for the interest rate to be adjusted
11
<PAGE>
according to a formula on certain pre-determined dates. Certain of these
obligations also may carry a demand feature that gives the holder the right to
demand prepayment of the principal amount of the security prior to maturity. An
irrevocable letter of credit or guarantee by a bank usually backs the demand
feature. Fund investments in these securities must comply with conditions
established by the SEC under which they may be considered to have remaining
maturities of 397 days or less.
Each of the Bond Funds may also purchase inverse floaters that are floating rate
instruments whose interest rates bear an inverse relationship to the interest
rate on another security or the value of an index. Changes in the interest rate
on the other security or index inversely affect the interest rate paid on the
inverse floater, with the result that the inverse floater's price is
considerably more volatile than that of a fixed rate security. For example, an
issuer may decide to issue two variable rate instruments instead of a single
long-term, fixed rate bond. The interest rate on one instrument reflects
short-term interest rates, while the interest rate on the other instrument (the
inverse floater) reflects the approximate rate the issuer would have paid on a
fixed rate bond multiplied by two minus the interest rate paid on the short-term
instrument. Depending on market availability, the two variable rate instruments
may be combined to form a fixed rate bond. The market for inverse floaters is
relatively new.
WHEN-ISSUED SECURITIES. The Bond Funds may buy when-issued securities or sell
securities on a delayed-delivery basis. This means that delivery and payment for
the securities normally will take place approximately 15 to 90 days after the
date of the transaction. The payment obligation and the interest rate that will
be received are each fixed at the time the buyer enters into the commitment.
During the period between purchase and settlement, the purchaser makes no
payment and no interest accrues to the purchaser. However, when a security is
sold on a delayed-delivery basis, the seller does not participate in further
gains or losses with respect to the security. If the other party to a
when-issued or delayed-delivery transaction fails to transfer or pay for the
securities, the Fund could miss a favorable price or yield opportunity or could
suffer a loss.
A Fund will make a commitment to purchase when-issued securities only with the
intention of actually acquiring the securities, but the Fund may dispose of the
commitment before the settlement date if it is deemed advisable as a matter of
investment strategy. A Fund may also sell the underlying securities before they
are delivered, which may result in gains or losses. A separate account for each
Fund is established at the custodian bank, into which cash and/or liquid
securities equal to the amount of when-issued purchase commitments is deposited.
If the market value of the deposited securities declines additional cash or
securities will be placed in the account on a daily basis to cover the Fund's
outstanding commitments.
When a Fund purchases a security on a when-issued basis, the security is
recorded as an asset on the commitment date and is subject to changes in market
value generally, based upon changes in the level of interest rates. Thus, upon
delivery, the market value of the security may be higher or lower than its cost,
and this may increase or decrease the Fund's net asset value. When payment for a
when-issued security is due, a Fund will meet its obligations from
then-available cash flow, the sale of the securities held in the separate
account, the sale of other securities or from the sale of the when-issued
securities themselves. The sale of securities to meet a when-issued purchase
obligation carries with it the potential for the realization of capital gains or
losses.
The Municipal Bond Fund may purchase securities on a when-issued basis in
connection with the refinancing of an issuer's outstanding indebtedness
("refunding contracts"). These contracts require the issuer to sell and the Fund
to buy municipal obligations at a stated price and yield on a settlement date
that may be several months or several years in the future. The offering proceeds
are then used to refinance existing municipal obligations. Although the
Municipal Bond Fund may sell its rights under a refunding contract, the
secondary market for these contracts may be less liquid than the secondary
market for other types of municipal securities. The Fund generally will not be
obligated to pay the full purchase price if it fails to perform under a
refunding contract. Instead, refunding contracts usually provide for payment of
liquidated damages to the issuer (currently 15-20% of the purchase price). The
Fund may secure its obligation under a refunding contract by depositing
collateral or a letter of credit equal to the liquidated damages provision of
the refunding contract. When required by Securities and Exchange Commission
("SEC") guidelines, the Fund will place liquid assets in a segregated custodial
account equal in amount to its obligations under outstanding refunding
contracts.
12
<PAGE>
ZERO COUPON BONDS. The Bond Funds may invest in zero coupon bonds of
governmental or private issuers that generally pay no interest to their holders
prior to maturity. Since zero coupon bonds do not make regular interest
payments, they allow an issuer to avoid the need to generate cash to meet
current interest payments and may involve greater credit risks than bonds paying
interest currently. Tax laws requiring the distribution of accrued discount on
the bonds, even though no cash equivalent thereto has been paid, may cause a
Fund to liquidate investments in order to make the required distributions.
RISK FACTORS APPLICABLE TO THE MUNICIPAL BOND FUND:
HEALTH CARE SECTOR. The health care industry is subject to regulatory action by
a number of private and governmental agencies, including federal, state and
local governmental agencies. A major source of revenues for the industry is
payments from the Medicare and Medicaid programs. As a result, the industry is
sensitive to legislative changes and reductions in governmental spending for
those programs. Numerous other factors may affect the industry, such as general
and local economic conditions; demand for services; expenses (including
malpractice insurance premiums) and competition among health care providers. In
the future, the following may adversely affect the industry: adoption of
legislation proposing a national health insurance program; medical and
technological advances which alter the demand for health services or the way in
which such services are provided; and efforts by employers, insurers and
governmental agencies to reduce the costs of health insurance and health care
services.
Health care facilities include life care facilities, nursing homes and
hospitals. The Municipal Bond Fund may invest in bonds to finance these
facilities which are typically secured by the revenues from the facilities and
not by state or local government tax payments. Moreover, in the case of life
care facilities, since a portion of housing, medical care and other services may
be financed by an initial deposit, there may be a risk of default in the payment
of principal or interest on a bond issue if the facility does not maintain
adequate financial reserves for debt service.
HOUSING SECTOR. The Municipal Bond Fund may invest in housing revenue bonds
which typically are issued by state, county and local housing authorities and
are secured only by the revenues of mortgages originated by those authorities
using the proceeds of the bond issues. Factors that may affect the financing of
multi-family housing projects include acceptable completion of construction,
proper management, occupancy and rent levels, economic conditions and changes in
regulatory requirements.
Since the demand for mortgages from the proceeds of a bond issue cannot be
precisely predicted, the proceeds may be in excess of demand, which would result
in early retirement of the bonds by the issuer. Since the cash flow from
mortgages cannot be precisely predicted, differences in the actual cash flow
from the assumed cash flow could have an adverse impact upon the issuer's
ability to make scheduled payments of principal and interest or could result in
early retirement of the bonds.
Scheduled principal and interest payments are often made from reserve or sinking
funds. These reserves are funded from the bond proceeds, assuming certain rates
of return on investment of the reserve funds. If the assumed rates of return are
not realized because of changes in interest rate levels or for other reasons,
the actual cash flow for scheduled payments of principal and interest on the
bonds may be inadequate.
ELECTRIC UTILITIES SECTOR. The electric utilities industry has experienced, and
may experience in the future: problems in financing large construction programs
in an inflationary period; cost increases and delays caused by environmental
considerations (particularly with respect to nuclear facilities); difficulties
in obtaining fuel at reasonable prices; the effects of conservation on the
demand for energy; increased competition from alternative energy sources; and
the effects of rapidly changing licensing and safety requirements.
PROPOSED LEGISLATION. From time to time, proposals have been introduced before
Congress for the purpose of restricting or eliminating the federal income tax
exemption for interest on debt obligations issued by states and their political
subdivisions. For example, federal tax law now limits the types and amounts of
tax-exempt bonds issuable for industrial development and other types of private
activities. These limitations may affect the future supply and yields of private
activity securities. Further proposals affecting the value of tax-exempt
securities may be introduced in the future. In addition, proposals have been
made, such as that involving the "flat tax," that could reduce or eliminate the
value of that exemption. If the availability of municipal securities for
investment or the value of the Municipal Bond Fund's holdings
13
<PAGE>
could be materially affected by such changes in the law, the Trustees would
reevaluate the Fund's investment objective and policies or consider the Fund's
dissolution.
FUND TURNOVER. Fund turnover rates for the past 2 years, (or since the date of
inception, if applicable) were:
- ---------------------------------------------------------
12 MONTHS ENDED 12 MONTHS ENDED
JUNE 30, 1999 JUNE 30, 1998
------------- -------------
- ---------------------------------------------------------
Intermediate Bond % %
- ---------------------------------------------------------
Municipal Bond % %
- ---------------------------------------------------------
THE EQUITY FUNDS
The "Equity Funds" are the Large Cap Value, the Mid Cap Value and the Small Cap
Value Funds.
CASH MANAGEMENT. The Equity Fund may invest in cash and cash equivalents,
including high-quality money market instruments and money market funds in order
to manage cash flow. Certain of these instruments are described below.
[BULLET] MONEY MARKET FUNDS. The Equity Funds may invest in the securities
of other money market mutual funds, within the limits prescribed
by the 1940 Act.
[BULLET] U.S. GOVERNMENT OBLIGATIONS. The Equity Funds may invest in the
same debt securities issued or guaranteed by the U.S. Government,
its agencies or instrumentalities as the Money Market Funds. (See
"U.S. Government Obligations.")
[BULLET] COMMERCIAL PAPER. The Equity Funds may invest in commercial paper.
Commercial paper consists of short-term (up to 270 days) unsecured
promissory notes issued by corporations in order to finance their
current operations. The Funds may invest only in commercial paper
rated A-1 or higher by S&P or Moody's or if not rated, determined
by the adviser or sub-adviser to be of comparable quality.
[BULLET] BANK OBLIGATIONS. The Equity Funds may invest in the same
obligations of U.S. banks as the Money Market Fund. (See "Bank
Obligations.")
CONVERTIBLE SECURITIES. Convertible securities have characteristics similar to
both fixed income and equity securities. Because of the conversion feature, the
market value of convertible securities tends to move together with the market
value of the underlying stock. As a result, a Fund's selection of convertible
securities is based, to a great extent, on the potential for capital
appreciation that may exist in the underlying stock. The value of convertible
securities is also affected by prevailing interest rates, the credit quality of
the issuers and any call provisions.
The Equity Funds may invest in convertible securities that are rated, at the
time of purchase, in the three highest rating categories by a nationally
recognized statistical rating organization ("NRSRO") such as Moody's or S&P, or
if unrated, are determined by the adviser to be of comparable quality. Ratings
represent the rating agency's opinion regarding the quality of the security and
are not a guarantee of quality. Should the rating of a security be downgraded
subsequent to a Fund's purchase of the security, the adviser will determine
whether it is in the best interest of the Fund to retain the security.
DEBT SECURITIES. Debt securities represent money borrowed that obligates the
issuer (e.g., a corporation, municipality, government, government agency) to
repay the borrowed amount at maturity (when the obligation is due and payable)
and usually to pay the holder interest at specific times.
HEDGING STRATEGIES. The Equity Funds may engage in certain hedging strategies
that involve options and futures. These hedging strategies are described in
detail in the Appendix.
14
<PAGE>
ILLIQUID SECURITIES. Each of the Funds may invest no more than 10% of its net
assets in securities that at the time of purchase have legal or contractual
restrictions on resale or are otherwise illiquid. If the limitations on illiquid
securities are exceeded, other than by a change in market values, the condition
will be reported by the Fund's investment adviser to the Board of Trustees.
OPTIONS ON SECURITIES AND SECURITIES INDEXES. The Large Cap Value Fund may
purchase call options on securities that the adviser intends to include in the
Fund in order to fix the cost of a future purchase or attempt to enhance return
by, for example, participating in an anticipated increase in the value of a
security. The Fund may purchase put options to hedge against a decline in the
market value of securities held in the Fund or in an attempt to enhance return.
The Fund may write (sell) put and covered call options on securities in which
they are authorized to invest. The Fund may also purchase put and call options,
and write put and covered call options on U.S. securities indexes. Stock index
options serve to hedge against overall fluctuations in the securities markets
rather than anticipated increases or decreases in the value of a particular
security. Of the 65% of the total assets of the Fund that are invested in equity
(or related) securities, the Fund may not invest more than 10% of such assets in
covered call options on securities and/or options on securities indices.
REPURCHASE AGREEMENTS. The Equity Funds may invest in the same repurchase
agreements, as the Money Market Funds. (See "Repurchase Agreements.")
RESTRICTED SECURITIES. Restricted securities are securities that may not be sold
to the public without registration under the Securities Act of 1933 or an
exemption from registration. Each of the Equity Funds may invest up to 15% of
its net assets in illiquid securities, subject to a Fund's investment
limitations on the purchase of illiquid securities. Restricted securities,
including securities eligible for re-sale under 1933 Act Rule 144A, that are
determined to be liquid are not subject to this limitation. This determination
is to be made by the adviser or a sub-adviser pursuant to guidelines adopted by
the Board of Trustees. Under these guidelines, the adviser or a sub-adviser will
consider the frequency of trades and quotes for the security, the number of
dealers in, and potential purchasers for, the securities, dealer undertakings to
make a market in the security, and the nature of the security and of the
marketplace trades. In purchasing such restricted securities, the adviser or a
sub-adviser intends to purchase securities that are exempt from registration
under Rule 144A under the 1933 Act.
SECURITIES LENDING. The Equity Funds may lend securities subject to the same
conditions applicable to the Bond Funds. (See "Securities Lending.")
FUND TURNOVER. Fund turnover rates for the past 2 years, (or since inception, if
applicable) were:
- ---------------------------------------------------------------
12 MONTHS ENDED 12 MONTHS ENDED
JUNE 30, 1999 JUNE 30, 1998
------------- -------------
- ---------------------------------------------------------------
Large Cap Value % %
- ---------------------------------------------------------------
Mid Cap Value % %
- ---------------------------------------------------------------
Small Cap Value % %
- ---------------------------------------------------------------
INVESTMENT LIMITATIONS
Except as otherwise provided, the Funds and their corresponding master series
have adopted the investment limitations set forth below. Limitations which are
designated as fundamental policies may not be changed without the affirmative
vote of the lessor of (i) 67% or more of the shares of a Fund present at a
shareholders meeting if holders of more than 50% of the outstanding shares of
the Fund are present in person or by proxy or (ii) more than 50% of the
outstanding shares of a Fund. If any percentage restriction on investment or
utilization of assets is adhered to at the time an investment is made, a later
change in percentage resulting from a change in the market values of a Fund's
assets or redemptions of shares will not be considered a violation of the
limitation.
15
<PAGE>
MONEY MARKET FUNDS:
Each Fund will not as a matter of fundamental policy:
1. purchase the securities of any one issuer if, as a result, more than 5% of
the Fund's total assets would be invested in the securities of such issuer, or
the Fund would own or hold 10% or more of the outstanding voting securities of
that issuer, provided that (1) the Fund may invest up to 25% of its total assets
without regard to these limitations; and (2) these limitations do not apply to
securities issued or guaranteed by the U.S. Government, its agencies or
instrumentalities;
2. purchase the securities of any issuer if, as a result, more than 25% of the
Fund's total assets would be invested in the securities of one or more issuers
having their principal business activities in the same industry, however, the
Fund may invest more than 25% of its total assets in the obligations of banks;
3. borrow money, except (1) from a bank for temporary or emergency purposes (not
for leveraging or investment) or (2) by engaging in reverse repurchase
agreements if the Fund's borrowings do not exceed an amount equal to 33 1/3% of
the current value of its assets taken at market value, less liabilities other
than borrowings;
4. make loans to other persons, except by (1) purchasing debt securities in
accordance with its investment objective, policies and limitations; (2) entering
into repurchase agreements; or (3) engaging in securities loan transactions
limited to 33 1/3% of the value of the Fund's total assets;
5. underwrite any issue of securities, except to the extent that the Fund may be
considered to be acting as underwriter in connection with the disposition of any
portfolio security;
6. purchase or sell real estate, provided that the Fund may invest in
obligations secured by real estate or interests therein or obligations issued by
companies that invest in real estate or interests therein; or
7. purchase or sell physical commodities or contracts, provided that currencies
and currency-related contracts will not be deemed physical commodities.
THE INVESTMENT LIMITATIONS DESCRIBED ABOVE DO NOT PROHIBIT A FUND FROM INVESTING
ALL OR SUBSTANTIALLY ALL OF ITS ASSETS IN THE SHARES OF ANOTHER REGISTERED
OPEN-END INVESTMENT COMPANY SUCH AS THE CORRESPONDING SERIES OF WT INVESTMENT
TRUST I.
With respect to the exclusion from the investment limitation described in number
2 above, the Fund has been advised that it is the SEC staff's current position,
that the exclusion may be applied only to U.S. bank obligations; the Premier
Money Market Fund, however, will consider both foreign and U.S. bank obligations
within this exclusion.
The following non-fundamental policies apply to the Fund unless otherwise
indicated, and the Board of Trustees may change them without shareholder
approval.
Each Fund will not:
1. make short sales of securities except short sales against the box;
2. purchase securities on margin except for the use of short-term credit
necessary for the clearance of purchases and sales of portfolio securities;
3. purchase portfolio securities if its outstanding borrowings exceed 5% of the
value of its total assets, and if at any time the Fund's bank borrowings exceed
its fundamental borrowing limitations due to a decline in net assets, such
borrowings will be promptly (within 3 days) reduced to the extent necessary to
comply with such limitations;
16
<PAGE>
4. make loans of portfolio securities unless such loans are fully collateralized
by cash, securities issued or guaranteed by the U.S. Government, its agencies or
instrumentalities, or any combination of cash and securities, marked to market
daily; or
5. purchase the securities of any one issuer if as a result more than 5% of the
Fund's total assets would be invested in the securities of such issuer, provided
that this limitation does not apply to securities issued or guaranteed by the
U.S. Government, its agencies or instrumentalities.
BOND FUNDS:
Each Fund will not as a matter of fundamental policy:
1. purchase the securities of any one issuer if, as a result, more than 5% of
the Fund's total assets would be invested in the securities of such issuer, or
the Fund would own or hold 10% or more of the outstanding voting securities of
that issuer, provided that (1) each Fund may invest up to 25% of its total
assets without regard to these limitations; and (2) these limitations do not
apply to securities issued or guaranteed by the U.S. Government, its agencies or
instrumentalities;
2. purchase the securities of any issuer if, as a result, more than 25% of the
Fund's total assets would be invested in the securities of one or more issuers
having their principal business activities in the same industry, provided that
this limitation does not apply to securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities (including repurchase agreements
fully collateralized by U.S. Government obligations) or to tax-exempt municipal
securities;
3. borrow money, provided that the Fund may borrow money from banks for
temporary or emergency services (not for leveraging or investment) or by
engaging in reverse repurchase agreements if the Fund's borrowings do not exceed
an amount equal to 33 1/3% of the current value of its assets taken at market
value, less liabilities other than borrowings;
4. make loans to other persons, except by (1) purchasing debt securities in
accordance with its investment objective, policies and limitations; (2) entering
into repurchase agreements; or (3) engaging in securities loan transactions
limited to 33 1/3% of the value of the Fund's total assets;
5. underwrite any issue of securities, except to the extent that the Fund may be
considered to be acting as underwriter in connection with the disposition of any
portfolio security;
6. purchase or sell real estate or real estate limited partnership interests,
provided that the Fund may invest in obligations secured by real estate or
interests therein or obligations issued by companies that invest in real estate
or interests therein, including real estate investment trusts;
7. purchase or sell physical commodities or commodities contracts except
financial and foreign currency futures contracts and options thereon, options on
foreign currencies and forward currency contracts; or
8. issue senior securities, except as appropriate to evidence indebtedness that
the Fund is permitted to incur, provided that futures, options and forward
currency transactions will not be deemed to be senior securities for purposes of
this limitation.
THE INVESTMENT LIMITATIONS DESCRIBED ABOVE DO NOT PROHIBIT A FUND FROM INVESTING
ALL OR SUBSTANTIALLY ALL OF ITS ASSETS IN THE SHARES OF ANOTHER REGISTERED
OPEN-END INVESTMENT COMPANY SUCH AS THE CORRESPONDING SERIES OF WT INVESTMENT
TRUST I.
The following non-fundamental policies apply to each Fund and may be changed by
the Board of Trustees without shareholder approval. Each Fund will not:
17
<PAGE>
1. pledge, mortgage or hypothecate its assets, except the Fund may pledge
securities having a market value at the time of the pledge not exceeding 33 1/3%
of the value of its total assets to secure borrowings, and the Fund may deposit
initial and variation margin in connection with transactions in futures
contracts and options on futures contracts;
2. make short sales of securities except short sales against the box;
3. purchase securities on margin except for the use of short-term credit
necessary for the clearance of purchases and sales of portfolio securities,
provided that the Fund may make initial and variation margin deposits in
connection with permitted transactions in options or futures;
4. purchase portfolio securities if its outstanding borrowings exceed 5% of the
value of its total assets;
5. when engaging in options, futures and forward currency contract strategies, a
Fund will either: (1) set aside cash or liquid securities in a segregated
account with the Fund's custodian in the prescribed amount; or (2) hold
securities or other options or futures contracts whose values are expected to
offset ("cover") its obligations thereunder. Securities, currencies or other
options or futures contracts used for cover cannot be sold or closed out while
the strategy is outstanding, unless they are replaced with similar assets;
6. purchase or sell non-hedging futures contracts or related options if
aggregate initial margin and premiums required to establish such positions would
exceed 5% of the Fund's total assets. For purposes of this limitation,
unrealized profits and unrealized losses on any open contracts are taken into
account, and the in-the-money amount of an option that is in-the-money at the
time of purchase is excluded; or
7. write put or call options having aggregate exercise prices greater than 25%
of the Fund's net assets, except with respect to options attached to or acquired
with or traded together with their underlying securities and securities that
incorporate features similar to options.
EQUITY FUNDS:
Each Fund will not as a matter of fundamental policy:
1. purchase the securities of any one issuer, if as a result, more than 5% of
the Fund's total assets would be invested in the securities of such issuer, or
the Fund would own or hold 10% or more of the outstanding voting securities of
that issuer, provided that (1) each Fund may invest up to 25% of its total
assets without regard to these limitations and (2) these limitations do not
apply to securities issued or guaranteed by the U.S. Government, its agencies or
instrumentalities;
2. purchase securities of any issuer if, as a result, more than 25% of the
Fund's total assets would be invested in the securities of one or more issuers
having their principal business activities in the same industry, however this
limitation does not apply to investments in short-term obligations issued or
guaranteed by the U.S. Government, its agencies or instrumentalities;
3. borrow money, however the Funds may borrow money for temporary or emergency
purposes, including the meeting of redemption requests, in amounts up to 33 1/3%
of a Fund's assets;
4. make loans to other persons, except by (1) purchasing debt securities in
accordance with its investment objective, policies and limitations; (2) entering
into repurchase agreements; or (3) engaging in securities loan transactions;
5. underwrite any issue of securities, except to the extent that the Fund may be
considered to be acting as underwriter in connection with the disposition of any
portfolio security;
18
<PAGE>
6. purchase or sell real estate. The Funds additionally may not invest in any
interest in real estate except securities issued or guaranteed by corporate or
governmental entities secured by real estate or interests therein, such as
mortgage pass-throughs and collateralized mortgage obligations, or issued by
companies that invest in real estate or interests therein;
7. purchase or sell physical commodities. The Funds additionally are restricted
from purchasing or selling contracts, options or options on contracts to
purchase or sell physical commodities; or
8. issue senior securities, except to the extent permitted by the 1940 Act,
however the Funds may borrow money subject to their investment limitation on
borrowing.
THE INVESTMENT LIMITATIONS DESCRIBED ABOVE DO NOT PROHIBIT A FUND FROM INVESTING
ALL OR SUBSTANTIALLY ALL OF ITS ASSETS IN THE SHARES OF ANOTHER REGISTERED
OPEN-END INVESTMENT COMPANY SUCH AS THE CORRESPONDING SERIES OF WT INVESTMENT
TRUST I.
The following non-fundamental policies apply to each Fund unless otherwise
indicated, and the Board of Trustees may change them without shareholder
approval. Each Fund will not:
1. pledge, mortgage or hypothecate its assets except to secure indebtedness
permitted to be incurred by the Fund, provided that the deposit in escrow of
securities in connection with the writing of put and call options,
collateralized loans of securities and collateral arrangements with respect to
margin for future contracts are not deemed to be pledges or hypothecations for
this purpose;
2. make short sales of securities except short sales against the box;
3. purchase securities on margin except for the use of short-term credit
necessary for the clearance of purchases and sales of portfolio securities,
however the Funds may make initial and variation margin deposits in connection
with permitted transactions in options without violating this limitation;
4. purchase portfolio securities if its outstanding borrowings exceed 5% of the
value of its total assets.
TRUSTEES AND OFFICERS
The Board of Trustees supervises the Funds' activities and reviews contractual
arrangements with the Funds' service providers. The Trustees and officers are
listed below. All persons named as Trustees and officers also serve in a similar
capacity for WT Investment Trust I. An asterisk (*) indicates those Trustees who
are "interested persons".
<TABLE>
<CAPTION>
- ------------------------------ -------------- ---------------------------------------------------------------
POSITION(S)
NAME, ADDRESS AND DATE OF HELD WITH
BIRTH THE FUND PRINCIPAL OCCUPATION(S) DURING THE PAST FIVE YEARS
- ------------------------------ -------------- ---------------------------------------------------------------
<S> <C> <C>
ROBERT ARNOLD Trustee In 1989, Mr. Arnold founded, and currently co-manages, R. H.
152 W. 57th Street, 44th Arnold & Co., Inc., an investment banking company. Prior to
Floor forming R. H. Arnold & Co., Inc., Mr. Arnold was Executive
New York, NY 10019 Vice President and a director to Cambrian Capital
Date of Birth: 3/44 Corporation, an investment banking firm he co-founded in 1987.
- ------------------------------ -------------- ---------------------------------------------------------------
ROBERT J. CHRISTIAN* Trustee, Mr. Christian has been Chief Investment Officer of Wilmington
Rodney Square North President Trust Company since February 1996 and Director of Rodney
1100 N. Market Street Square Management Corporation since 1996. He was Chairman
Wilmington, DE 19890 and Director of PNC Equity Advisors Company, and President
Date of Birth: 2/49 and Chief Investment Officer of PNC Asset Management Group
Inc. from 1994 to 1996. He was Chief Investment Officer of
PNC Bank from 1992 to 1996 and Director of Provident Capital
Management from 1993 to 1996.
- ------------------------------ -------------- ---------------------------------------------------------------
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------ -------------- ---------------------------------------------------------------
POSITION(S)
NAME, ADDRESS AND DATE OF HELD WITH
BIRTH THE FUND PRINCIPAL OCCUPATION(S) DURING THE PAST FIVE YEARS
- ------------------------------ -------------- ---------------------------------------------------------------
<S> <C> <C>
NICHOLAS A. GIORDANO Trustee Mr. Giordano was appointed interim President of LaSalle
LaSalle University University on July 1, 1998 and was a consultant for financial
Philadelphia, PA 19141 services organizations from late 1997 through 1998. He
Date of Birth: 3/43 served as president and chief executive officer of the
Philadelphia Stock Exchange from 1981 through August 1997,
and also served as chairman of the board of the exchange's
two subsidiaries: Stock Clearing Corporation of Philadelphia
and Philadelphia Depository Trust Company. Before joining
the Philadelphia Stock Exchange, Mr. Giordano served as chief
financial officer at two brokerage firms (1968-1971). A
certified public accountant, he began his career at Price
Waterhouse in 1965.
- ------------------------------ -------------- ---------------------------------------------------------------
LAWRENCE B. THOMAS Trustee Mr. Thomas retired in October 1996, after having served in
7813 Pierce Circle numerous financial positions at ConAgra, Inc. (an
Omaha, NE 68124 international food company) including Treasurer, Secretary,
Date of Birth: 3/46 Risk Officer, and Senior Vice President-Finance (Principal
Financial Officer). In his thirty-six years at ConAgra, he
also served as director and officer of its numerous
subsidiaries.
- ------------------------------ -------------- ---------------------------------------------------------------
ERIC K. CHEUNG Vice From 1978 to 1986, Mr. Cheung was the Portfolio Manager for
Rodney Square North President fixed income assets of the Meritor Financial Group. In 1986,
1100 N. Market Street Mr. Cheung joined Wilmington Trust Company and in 1991, he
Wilmington, DE 19890 became the Division Manager for all fixed income products.
Date of Birth: 12/54
- ------------------------------ -------------- ---------------------------------------------------------------
PAT COLLETTI Vice Mr. Colletti is Vice President and Director of Investment
400 Bellevue Parkway President Accounting and Administration of PFPC Inc. since April 1999.
Wilmington, DE 19809 and Treasurer Prior to joining PFPC, Mr. Colletti was Controller for the
Date of Birth: 11/58 Reserve Funds since 1986.
- ------------------------------ -------------- ---------------------------------------------------------------
GARY M. GARDNER Secretary Mr. Gardner has been a Senior Vice President of PFPC Inc.
400 Bellevue Parkway since January 1994. Previously, Mr. Gardner had provided
Wilmington, DE 19809 legal and regulatory advice to mutual funds and their
Date of Birth: 2/51 management for more than twenty years at Federated Investors,
Inc., SunAmerica Asset Management Corp. and The Boston
Company, Inc.
- ------------------------------ -------------- ---------------------------------------------------------------
</TABLE>
On July 1, 1999, the Trustees and officers of the Fund, as a group, owned
beneficially, or may be deemed to have owned beneficially, less than 1% of the
outstanding shares of each Fund.
The fees and expenses of the Trustees who are not "interested persons" of the
Fund ("Independent Trustees"), as defined in the 1940 Act are paid by each Fund.
The following table shows the fees paid during the fiscal year ended June 30,
1999 to the Independent Trustees for their service to the Fund and the total
compensation paid to the Trustees by the WT Fund Complex, which consists of the
Fund and WT Investment Trust I.
TRUSTEES FEES FOR THE FISCAL YEAR ENDED JUNE 30, 1999
AGGREGATE TOTAL COMPENSATION
COMPENSATION FROM THE FROM THE WT FUND
INDEPENDENT TRUSTEE FUND COMPLEX
Robert Arnold $ $
Nicholas Giordano $ $
20
<PAGE>
Lawrence Thomas $ $
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
Persons or organizations beneficially owning 25% or more of the outstanding
shares of a Fund may be presumed to "control" the Fund. As a result, those
persons or organizations could have the ability to vote a majority of the shares
of the Fund on any matter requiring the approval of the shareholders of that
Fund. As of July 1, 1999, no entities were known to own beneficially 5% or more
of the outstanding shares of the Funds.
INVESTMENT ADVISORY AND OTHER SERVICES
RODNEY SQUARE MANAGEMENT CORPORATION
RSMC serves as the investment adviser to the Prime Money Market Series and the
Tax-Exempt Series. RSMC is a Delaware corporation organized on September 17,
1981. It is a wholly owned subsidiary of WTC, a state-chartered bank organized
as a Delaware corporation in 1903. WTC is a wholly owned subsidiary of
Wilmington Trust Corporation, a publicly held bank holding company. RSMC may
occasionally consult, on an informal basis, with personnel of WTC's investment
departments.
Several affiliates of RSMC are also engaged in the investment advisory business.
Wilmington Trust FSB and Wilmington Brokerage Services Company, both wholly
owned subsidiaries of WTC, are registered investment advisers. In addition, WBSC
is a registered broker-dealer.
For its services as adviser, RSMC received the following fees:
12 MONTHS ENDED 12 MONTHS ENDED 12 MONTHS ENDED
6/30/99 6/30/98 6/30/97
Prime Money Market Series $ $ $
Tax-Exempt Series $ $ $
For its services as adviser, RSMC waived the following fees:
12 MONTHS ENDED 12 MONTHS ENDED 12 MONTHS ENDED
6/30/99 6/30/98 6/30/97
Prime Money Market Series $ $ $
Tax-Exempt Series $ $ $
WILMINGTON TRUST COMPANY
Wilmington Trust Company, the parent of RSMC, is a state-chartered bank
organized as a Delaware corporation in 1903. WTC is a wholly owned subsidiary of
Wilmington Trust Corporation, a publicly held bank holding company. WTC is
engaged in a variety of investment advisory activities, including the management
of collective investment pools, and has nearly a century of experience managing
the personal investments of high net-worth individuals. WTC also manages over
$3.8 billion in fixed income assets and $1.4 billion in equity assets for
various other institutional clients.
WTC serves as the adviser to the Short/Intermediate Bond Series, the
Intermediate Bond Series, the Municipal Bond Series, the Large Cap Core Series,
the Small Cap Core Series and the International Multi-Manager Series. WTC also
served as the adviser to the Premier Money Market Series until _____, 1999.
For WTC's services as investment adviser to each Series, WTC received the
following fees:
<TABLE>
<CAPTION>
OCTOBER 20, 1998 TO 12 MONTHS ENDED 12 MONTHS ENDED 12 MONTHS ENDED
JUNE 30, 1999 6/30/99 6/30/98 6/30/97
------------- ------- ------- -------
<S> <C> <C> <C> <C>
Intermediate Bond Series N/A $ $ $
Municipal Bond Series N/A $ $ $
</TABLE>
21
<PAGE>
For its services as adviser, WTC waived the following fees:
<TABLE>
<CAPTION>
OCTOBER 20, 1998 TO 12 MONTHS ENDED 12 MONTHS ENDED 12 MONTHS ENDED
JUNE 30, 1999 6/30/99 6/30/98 6/30/97
------------- ------- ------- -------
<S> <C> <C> <C> <C>
Intermediate Bond Series N/A $ $ $
Municipal Bond Series N/A $ $ $
</TABLE>
For Institutional shares, WTC, or RSMC , as applicable, have agreed to waive a
portion of their advisory fees or reimburse expenses to the extent total
operating expenses exceed 0.20% for the Premier Money Market Series, 0.55% for
the Intermediate Bond Series; 0.75% for the Municipal Bond Series, 0.75% for the
Large Cap Value Series. This waiver will remain in place until the Board of
Trustees approves its termination. [PLEASE CONFIRM FEE WAIVERS.]
CRAMER ROSENTHAL MCGLYNN, LLC
CRM serves as investment adviser to the Large Cap Value, the Mid Cap Value and
the Small Cap Series. CRM and its predecessors have managed investments in small
and medium capitalization companies for over 25 years. CRM is 76% owned (and
therefore controlled) by Cramer, Rosenthal, McGlynn, Inc. ("CRM") and its
shareholders. CRM is registered as an investment adviser with the SEC.
For its services as adviser, CRM received the following fees:
12 MONTHS ENDED 12 MONTHS ENDED 12 MONTHS ENDED
6/30/99 6/30/98 6/30/97
------- ------- -------
Large Cap Value Series
Mid Cap Value Series
Small Cap Value Series
For its services as adviser, CRM waived the following fees.
12 MONTHS ENDED 12 MONTHS ENDED 12 MONTHS ENDED
6/30/99 6/30/98 6/30/97
------- ------- -------
Large Cap Value Series
Mid Cap Value Series
Small Cap Value Series
For Institutional shares, CRM has voluntarily undertaken to waive a portion of
its fees and assume certain expenses of the above Series to the extent that the
total annual operating expenses exceed 1.40% of net assets. This undertaking may
be terminated at any time.
ADVISORY SERVICES. Under the terms of advisory agreements, each adviser agrees
to: (a) direct the investments of each Series, subject to and in accordance with
the Series' investment objective, policies and limitations set forth in the
Prospectus and this Statement of Additional Information; (b) purchase and sell
for each Series, securities and other investments consistent with the Series'
objectives and policies; (c) supply office facilities, equipment and personnel
necessary for servicing the investments of the Series; (d) pay the salaries of
all personnel of the Series and the adviser performing services relating to
research, statistical and investment activities on behalf of the Series; (e)
make available and provide such information as the Series and/or its
administrator may reasonably request for use in the preparation of its
registration statement, reports and other documents required by any applicable
federal, foreign or state statutes or regulations; (f) make its officers and
employees available to the Trustees and officers of the Fund for consultation
and discussion regarding the management of each Series and its investment
activities. Additionally, each adviser agrees to create and maintain all
necessary records in accordance with all applicable laws, rules and regulations
pertaining to the various functions performed by it and not otherwise created
and maintained by another party pursuant to contract with the Fund. Each adviser
may at any time or times, upon approval by the Board of Trustees, enter into one
or more sub-advisory agreements with a sub-advisor pursuant to which the adviser
delegates any or all of its duties as listed.
The agreements provide that each adviser shall not be liable for any error of
judgment or mistake of law or for any loss suffered by a Series in connection
with the matters to which the Agreement relates, except to
22
<PAGE>
the extent of a loss resulting from willful misfeasance, bad faith or gross
negligence on its part in the performance of its obligations and duties under
the agreement.
The salaries of any officers and the interested Trustees of the Funds who are
affiliated with an adviser and the salaries of all personnel of each adviser
performing services for each Fund relating to research, statistical and
investment activities are paid by the adviser.
ADMINISTRATION AND ACCOUNTING SERVICES
Under separate Administration and Accounting Services Agreements, PFPC Inc., 400
Bellevue Parkway, Wilmington, Delaware 19809 performs certain administrative and
accounting services for WT Mutual Fund and WT Investment Trust I. These services
include preparing shareholder reports, providing statistical and research data,
assisting the advisers in compliance monitoring activities, and preparing and
filing federal and state tax returns on behalf of the Fund and the Trust. In
addition, PFPC prepares and files various reports with the appropriate
regulatory agencies and prepares materials required by the SEC or any state
securities commission having jurisdiction over the Fund. The accounting services
performed by PFPC include determining the net asset value per share of each Fund
and maintaining records relating to the securities transactions of the Fund. The
Administration and Accounting Services Agreements provides that PFPC and its
affiliates shall not be liable for any error of judgment or mistake of law or
for any loss suffered by the Fund or its Funds, except to the extent of a loss
resulting from willful misfeasance, bad faith or gross negligence on their part
in the performance of their obligations and duties under the Administration and
Accounting Services Agreements.
For its administrative and accounting services, PFPC received the following
fees:
12 MONTHS ENDED FOR THE PERIOD
6/30/99 2/2/98 TO 6/30/98
------- -----------------
Intermediate Bond Series
Municipal Bond Series
Large Cap Value Series
Prior to February 2, 1998, RSMC provided administrative and accounting services
and was paid the following fees:
FOR THE PERIOD 12 MONTHS ENDED
7/1/97 TO 2/2/98 6/30/97
---------------- -------
Intermediate Bond Series
Municipal Bond Series
Large Cap Value Series
For its administrative and accounting services, PFPC received the following
fees:
12 MONTHS ENDED FOR THE PERIOD
6/30/99 1/5/98 TO 6/30/98
------- -----------------
Prime Money Market Series
Tax-Exempt Series
Prior to January 5, 1998, RSMC provided administrative and accounting services
and was paid the following fees:
FOR THE PERIOD 12 MONTHS ENDED
7/1/97 TO 1/4/98 6/30/97
---------------- -------
Prime Money Market Series
Tax-Exempt Series
23
<PAGE>
ADDITIONAL SERVICE PROVIDERS
INDEPENDENT AUDITORS. _________________________________, serves as the
independent auditor, providing services which include (1) auditing the annual
financial statements for the Funds, (2) assistance and consultation in
connection with SEC filings and (3) preparation of the annual federal income tax
returns filed on behalf of each Fund.
LEGAL COUNSEL. Pepper Hamilton LLP, 3000 Two Logan Square, 18th and Arch
Streets, Philadelphia, PA 19103, serves as counsel to the Fund and WT Investment
Trust I.
CUSTODIAN. PFPC Trust Company, 200 Stevens Drive, Lester, PA 19113, serves as
the Custodian.
TRANSFER AGENT. PFPC Inc., 400 Bellevue Parkway, Wilmington, DE 19890-0001,
serves as the Transfer Agent and Dividend Paying Agent.
DISTRIBUTION OF SHARES AND RULE 12B-1 PLAN
Provident Distributors, Inc. Four Falls Corporate Center, West Conshohocken, PA
19428, serves as the underwriter of the Funds' shares pursuant to a Distribution
Agreement with the Fund. Pursuant to the terms of the Distribution Agreement,
PDI is granted the right to sell the shares of the Funds as agent for the Fund.
Shares of the Funds are offered continuously.
Under the terms of the Distribution Agreement, PDI agrees to use all reasonable
efforts to secure purchasers for Investor class shares of the Funds and to pay
expenses of printing and distributing prospectuses, statements of additional
information and reports prepared for use in connection with the sale of Investor
class shares and any other literature and advertising used in connection with
the offering, out of the compensation it receives pursuant to the Funds' Plans
of Distribution adopted pursuant to Rule 12b-1 under the 1940 Act (the "12b-1
Plans"). PDI receives no underwriting commissions or Rule 12b-1 fees in
connection with the sale of the Funds' Institutional class shares.
The Distribution Agreement provides that PDI, in the absence of willful
misfeasance, bad faith or gross negligence in the performance of its duties or
by reason of reckless disregard of its obligations and duties under the
Agreements, will not be liable to the Funds or their shareholders for losses
arising in connection with the sale of Fund shares.
The Distribution Agreement became effective as of February 25, 1998 and
continues in effect for a period of two years. Thereafter, the agreement may
continue in effect for successive annual periods provided such continuance is
approved at least annually by a majority of the Trustees, including a majority
of the Independent Trustees. The Distribution Agreement terminates automatically
in the event of an assignment. The Agreement is also terminable without payment
of any penalty with respect to any Fund (i) (by vote of a majority of the
Trustees of the Fund who are not interested persons of the Fund and who have no
direct or indirect financial interest in the operation of any Rule 12b-1 Plan of
the Fund or any agreements related to a 12b-1 Plan, or by vote of a majority of
the outstanding voting securities of the applicable Fund) on sixty (60) days'
written notice to PDI; or (ii) by PDI on sixty (60) days' written notice to the
Fund.
PDI will be compensated for distribution services according to the Investor
class 12b-1 Plan, which became effective _____, 1999, regardless of PDI's
expenses. The Investor class 12b-1 Plan provides that PDI will be paid for
distribution activities such as public relations services, telephone services,
sales presentations, media charges, preparation, printing and mailing
advertising and sales literature, data processing necessary to support a
distribution effort and printing and mailing of prospectuses to prospective
shareholders. Additionally, PDI may pay certain financial institutions such as
banks or broker-dealers who have entered into servicing agreements with PDI
("Service Organizations") and other financial institutions for distribution and
shareholder servicing activities.
24
<PAGE>
The Investor class 12b-1 Plan further provides that payment shall be made for
any month only to the extent that such payment does not exceed (i) 0.25% on an
annualized basis of the Investor Class shares of each Fund's average net assets;
and (ii) limitations set from time to time by the Board of Trustees. The Board
of Trustees has only authorized implementation of each 12b-1 Plan for annual
payments of up to 0.05% of the Investor class shares of each of the Money Market
Fund's average net assets to reimburse PDI for making payments to certain
Service Organizations who have sold Investor class shares of the Funds and for
other distribution expenses.
<TABLE>
<CAPTION>
PAYMENTS MADE PURSUANT TO THE 12B-1 PLAN LARGE CAP VALUE SMALL CAP VALUE
FOR THE 12 MONTHS ENDED 6/30/99 SERIES MID CAP VALUE SERIES SERIES
<S> <C> <C> <C>
Trail Commissions: $ $ $
Preparation and Distribution of Marketing $ $ $
Materials:
Total: $ $ $
</TABLE>
Under the Investor class 12b-1 Plans, if any payments made by the adviser out of
its advisory fee, not to exceed the amount of that fee, to any third parties
(including banks), including payments for shareholder servicing and transfer
agent functions, were deemed to be indirect financing by each Fund of the
distribution of its Investor class shares, such payments are authorized. Each
Series may execute portfolio transactions with and purchase securities issued by
depository institutions that receive payments under the 12b-1 Plans. No
preference for instruments issued by such depository institutions is shown in
the selection of investments.
BROKERAGE ALLOCATION AND OTHER PRACTICES
The advisers and sub-advisers place all portfolio transactions on behalf of each
Series. Debt securities purchased and sold by the Series are generally traded on
the dealer market on a net basis (i.e., without commission) through dealers
acting for their own account and not as brokers, or otherwise involve
transactions directly with the issuer of the instrument. This means that a
dealer (the securities firm or bank dealing with a Series) makes a market for
securities by offering to buy at one price and sell at a slightly higher price.
The difference between the prices is known as a spread. When securities are
purchased in underwritten offerings, they include a fixed amount of compensation
to the underwriter.
The primary objective of the advisers and sub-advisers in placing orders on
behalf of the Series for the purchase and sale of securities is to obtain best
execution at the most favorable prices through responsible brokers or dealers
and, where the spread or commission rates are negotiable, at competitive rates.
In selecting a broker or dealer, each adviser considers, among other things: (i)
the price of the securities to be purchased or sold; (ii) the rate of the spread
or commission; (iii) the size and difficulty of the order; (iv) the nature and
character of the spread or commission for the securities to be purchased or
sold; (v) the reliability, integrity, financial condition, general execution and
operational capability of the broker or dealer; and (vi) the quality of any
research or statistical services provided by the broker or dealer to the Series
or to the advisers.
The advisers cannot readily determine the extent to which spreads or commission
rates or net prices charged by brokers or dealers reflect the value of their
research, analysis, advice and similar services. In such cases, each adviser
receives services it otherwise might have had to perform itself. The research,
analysis, advice and similar services provided by brokers or dealers can be
useful to the advisers in serving its other clients, as well as in serving the
Series. Conversely, information provided to the advisers by brokers or dealers
who have executed transaction orders on behalf of other clients of the adviser
may be useful in providing services to the Series. During the twelve-month
periods ended June 30, 1999, 1998 and 1997, the Series paid the following
brokerage commissions:
25
<PAGE>
12 MONTHS ENDED 12 MONTHS ENDED 12 MONTHS ENDED
6/30/99 6/30/98 6/30/97
Prime Money Market Series
Tax-Exempt Series
Intermediate Bond Series N/A N/A N/A
Municipal Bond Series N/A N/A N/A
Large Cap Value Series
Mid Cap Value Series
Small Cap Value Series
Some of the advisers' other clients have investment objectives and programs
similar to that of the Series. Occasionally, recommendations made to other
clients may result in their purchasing or selling securities simultaneously with
the Series. Consequently, the demand for securities being purchased or the
supply of securities being sold may increase, and this could have an adverse
effect on the price of those securities. It is the policy of the advisers not to
favor one client over another in making recommendations or in placing orders. In
the event of a simultaneous transaction, purchases or sales are averaged as to
price, transaction costs are allocated between a Series and other clients
participating in the transaction on a pro rata basis and purchases and sales are
normally allocated between the Series and the other clients as to amount
according to a formula determined prior to the execution of such transactions.
CAPITAL STOCK AND OTHER SECURITIES
The Fund issues two separate classes of shares, Institutional and Investor
shares, for each Fund with a par value of $.01 per share. The shares of each
Fund, when issued and paid for in accordance with the prospectus, will be fully
paid and non-assessable shares, with equal voting rights and no preferences as
to conversion, exchange, dividends, redemption or any other feature.
The separate classes of shares each represent interests in the same portfolio of
investments, have the same rights and are identical in all respects, except that
the Investor class shares bear Rule 12b-1 distribution expenses, and have
exclusive voting rights with respect to the Rule 12b-1 Plan pursuant to which
the distribution fee may be paid. The net income attributable to Investor shares
and the dividends payable on Investor shares will be reduced by the amount of
the distribution fees; accordingly, the net asset value of the Investor shares
will be reduced by such amount to the extent the Fund has undistributed net
income.
Shares of a Fund entitle holders to one vote per share and fractional votes for
fractional shares held. Shares have non-cumulative voting rights, do not have
preemptive or subscription rights and are transferable. Each Fund and class
takes separate votes on matters affecting only that Fund or class. For example,
a change in the fundamental investment policies for a Fund would be voted upon
only by shareholders of that Fund.
The Funds do not hold annual meetings of shareholders. The Trustees are required
to call a meeting of shareholders for the purpose of voting upon the question of
removal of any Trustee when requested in writing to do so by the shareholders of
record owning not less than 10% of a Fund's outstanding shares.
PURCHASE, REDEMPTION AND PRICING OF SHARES
PURCHASE OF SHARES. Information regarding the purchase of shares is discussed in
the "Purchase of Shares" section of the prospectus. Additional methods to
purchase shares are as follows:
INDIVIDUAL RETIREMENT ACCOUNTS: You may purchase shares of the Funds for a
tax-deferred retirement plan such as an individual retirement account ("IRA").
To order an application for an IRA and a brochure describing a Fund IRA, call
the Transfer Agent at (800) _____. PFPC Trust Company, as custodian for each IRA
account receives an annual fee of $10 per account, paid directly to PFPC Trust
Company by the IRA shareholder. If the fee is not paid by the due date, the
appropriate number of Fund shares owned by the IRA will be redeemed
automatically as payment.
26
<PAGE>
AUTOMATIC INVESTMENT PLAN: You may purchase Fund shares through an Automatic
Investment Plan ("AIP"). Under the AIP, the Transfer Agent, at regular
intervals, will automatically debit your bank checking account in an amount of
$50 or more (after the $1,000 minimum initial investment). You may elect to
invest the specified amount monthly, bimonthly, quarterly, semiannually or
annually. The purchase of Fund shares will be effected at their offering price
at 12:00 p.m. Eastern time for the Tax-Exempt Fund, at 2:00 p.m. Eastern Time
for the Prime Money Market, Premier Money Market and U.S. Government Funds, or
at the close of regular trading on the New York Stock Exchange ("Exchange")
(currently 4:00 p.m., Eastern time), for the Bond and Equity Funds, on or about
the 20th day of the month. For an application for the Automatic Investment Plan,
check the appropriate box of the application or call the Transfer Agent at (800)
_____.
PAYROLL INVESTMENT PLAN: The Payroll Investment Plan ("PIP") permits you to make
regularly scheduled purchases of Fund shares through payroll deductions. To open
a PIP account, you must submit a completed account application, payroll
deduction form and the minimum initial deposit to your employer's payroll
department. Then, a portion of your paychecks will automatically be transferred
to your PIP account for as long as you wish to participate in the plan. It is
the sole responsibility of your employer, not the Fund, the distributor, the
advisers or the transfer agent, to arrange for transactions under the PIP. The
Fund reserves the right to vary its minimum purchase requirements for employees
participating in a PIP.
REDEMPTION OF SHARES. Information regarding the redemption of shares is
discussed in the "Redemption of Shares" section of the prospectus. Additional
methods to redeem shares are as follows:
BY CHECK: You may utilize the check writing option to redeem shares of the Prime
Money Market and the Tax-Exempt Funds by drawing a check for $500 or more
against a Fund account. When the check is presented for payment, a sufficient
number of shares will be redeemed from your Fund account to cover the amount of
the check. This procedure enables you to continue receiving dividends on those
shares until the check is presented for payment. Because the aggregate amount of
Fund shares owned is likely to change each day, you should not attempt to redeem
all shares held in your account by using the check writing procedure. Charges
will be imposed for specially imprinted checks, business checks, copies of
canceled checks, stop payment orders, checks returned due to "nonsufficient
funds" and returned checks. These charges will be paid by automatically
redeeming an appropriate number of Fund shares. Each Fund and the Transfer Agent
reserve the right to terminate or alter the check writing service at any time.
The Transfer Agent also reserves the right to impose a service charge in
connection with the check writing service. If you are interested in the check
writing service, contact the Transfer Agency for further information. This
service is generally not available for Service Organization clients who are
provided a similar service by those organizations.
BY WIRE: Redemption proceeds may be wired to your predesignated bank account in
any commercial bank in the United States if the amount is $1,000 or more. The
receiving bank may charge a fee for this service. Proceeds may also be mailed to
your bank or, for amounts of $10,000 or less, mailed to your Fund account
address of record if the address has been established for at least 60 days. In
order to authorize the Transfer Agent to mail redemption proceeds to your Fund
account address of record, complete the appropriate section of the Application
for Telephone Redemptions or include your Fund account address of record when
you submit written instructions. You may change the account that you have
designated to receive amounts redeemed at any time. Any request to change the
account designated to receive redemption proceeds should be accompanied by a
guarantee of the shareholder's signature by an eligible institution. A signature
and a signature guarantee are required for each person in whose name the account
is registered. Further documentation will be required to change the designated
account when a corporation, other organization, trust, fiduciary or other
institutional investor holds the Fund shares.
SYSTEMATIC WITHDRAWAL PLAN: If you own shares of a Fund with a value of $10,000
or more you may participate in the Systematic Withdrawal Plan ("SWP"). Under the
SWP, you may automatically redeem a portion of your account monthly, bimonthly,
quarterly, semiannually or annually. The minimum withdrawal available is $100.
The redemption of Fund shares will be effected at the NAV determined on or about
the 25th day of the month.
27
<PAGE>
ADDITIONAL INFORMATION REGARDING REDEMPTIONS: To ensure proper authorization
before redeeming shares of the Funds, the Transfer Agent may require additional
documents such as, but not restricted to, stock powers, trust instruments, death
certificates, appointments as fiduciary, certificates of corporate authority and
waivers of tax required in some states when settling estates.
Clients of Service Organizations who have purchased shares through their
accounts with those Service Organizations should contact the Service
Organization prior to submitting a redemption request to ensure that all
necessary documents accompany the request. When shares are held in the name of a
corporation, other organization, trust, fiduciary or other institutional
investor, the Transfer Agent requires, in addition to the stock power, certified
evidence of authority to sign the necessary instruments of transfer. THESE
PROCEDURES ARE FOR THE PROTECTION OF SHAREHOLDERS AND SHOULD BE FOLLOWED TO
ENSURE PROMPT PAYMENT. Redemption requests must not be conditional as to date or
price of the redemption. Proceeds of a redemption will be sent within 7 days of
acceptance of shares tendered for redemption. Delay may result if the purchase
check has not yet cleared, but the delay will be no longer than required to
verify that the purchase check has cleared, and the Funds will act as quickly as
possible to minimize delay.
The value of shares redeemed may be more or less than the shareholder's cost,
depending on the net asset value at the time of redemption. Redemption of shares
may result in tax consequences (gain or loss) to the shareholder, and the
proceeds of a redemption may be subject to backup withholding.
A shareholder's right to redeem shares and to receive payment therefore may be
suspended when (a) the Exchange is closed, other than customary weekend and
holiday closings, (b) trading on the Exchange is restricted, (c) an emergency
exists as a result of which it is not reasonably practicable to dispose of a
Fund's securities or to determine the value of a Fund's net assets, or (d)
ordered by a governmental body having jurisdiction over a Fund for the
protection of the Fund's shareholders, provided that applicable rules and
regulations of the SEC (or any succeeding governmental authority) shall govern
as to whether a condition described in (b), (c) or (d) exists. In case of such
suspension, shareholders of the affected Fund may withdraw their requests for
redemption or may receive payment based on the net asset value of the Fund next
determined after the suspension is lifted.
Each Fund reserves the right, if conditions exist which make cash payments
undesirable, to honor any request for redemption by making payment in whole or
in part with readily marketable securities chosen by the Fund and valued in the
same way as they would be valued for purposes of computing the net asset value
of the applicable Fund. If payment is made in securities, a shareholder may
incur transaction expenses in converting these securities into cash. Each Fund
has elected, however, to be governed by Rule 18f-1 under the 1940 Act, as a
result of which a Fund is obligated to redeem shares solely in cash if the
redemption requests are made by one shareholder account up to the lesser of
$250,000 or 1% of the net assets of the applicable Fund during any 90-day
period. This election is irrevocable unless the SEC permits its withdrawal.
PRICING OF SHARES. The Premier Money Market Fund's securities are valued on the
basis of the amortized cost valuation technique. This involves valuing a
security initially at its cost and thereafter assuming a constant amortization
to maturity of any discount or premium, regardless of fluctuating interest rates
on the market value of the security. The valuation of the Fund's securities
based upon their amortized cost and the accompanying maintenance of the Fund's
per share net asset value of $1.00 is permitted in accordance with Rule 2a-7
under the 1940 Act. Certain conditions imposed by that Rule are set forth under
"Investment Policies." In connection with the use of the amortized cost
valuation technique, each Fund's Board of Trustees has established procedures
delegating to the adviser the responsibility for maintaining a constant net
asset value per share. Such procedures include a daily review of the Fund's
holdings to determine whether the Fund's net asset value, calculated based upon
available market quotations, deviates from $1.00 per share. Should any deviation
exceed 1/2 of 1% of $1.00, the Trustees will promptly consider whether any
corrective action should be initiated to eliminate or reduce material dilution
or other unfair results to shareholders. Such corrective action may include
selling of portfolio securities prior to maturity to realize capital gains or
losses, shortening average portfolio maturity, withholding dividends, redeeming
shares in kind and establishing a net asset value per share based upon available
market quotations.
28
<PAGE>
Should the Premier Money Market Fund incur or anticipate any unusual expense or
loss or depreciation that would adversely affect its net asset value per share
or income for a particular period, the Trustees would at that time consider
whether to adhere to the current dividend policy or to revise it in light of the
then prevailing circumstances. For example, if the Fund's net asset value per
share were reduced, or were anticipated to be reduced, below $1.00, the Trustees
could suspend or reduce further dividend payments until the net asset value
returned to $1.00 per share. Thus, such expenses or losses or depreciation could
result in investors receiving no dividends or reduced dividends for the period
during which they held their shares or in their receiving upon redemption a
price per share lower than that which they paid.
For the Bond Funds and the Equity Funds, the net asset value per share of each
Fund is determined by dividing the value of the Fund's net assets by the total
number of Fund shares outstanding. This determination is made by PFPC, as of the
close of regular trading on the Exchange (currently 4:00 p.m., Eastern Time)
each day the Funds are open for business. The Funds are open for business on
days when the Exchange, PFPC and the Philadelphia branch office of the Federal
Reserve are open for business.
In valuing a Fund's assets, a security listed on the Exchange (and not subject
to restrictions against sale by the Fund on the Exchange) will be valued at its
last sale price on the Exchange on the day the security is valued. Lacking any
sales on such day, the security will be valued at the mean between the closing
asked price and the closing bid price. Securities listed on other exchanges (and
not subject to restriction against sale by the Fund on such exchanges) will be
similarly valued, using quotations on the exchange on which the security is
traded most extensively. Unlisted securities that are quoted on the National
Association of Securities Dealers' National Market System, for which there have
been sales of such securities on such day, shall be valued at the last sale
price reported on such system on the day the security is valued. If there are no
such sales on such day, the value shall be the mean between the closing asked
price and the closing bid price. The value of such securities quoted on the
NASDAQ Stock Market System, but not listed on the National Market System, shall
be valued at the mean between the closing asked price and the closing bid price.
Unlisted securities that are not quoted on the NASDAQ Stock Market System and
for which over-the-counter market quotations are readily available will be
valued at the mean between the current bid and asked prices for such security in
the over-the-counter market. Other unlisted securities (and listed securities
subject to restriction on sale) will be valued at fair value as determined in
good faith under the direction of the Board of Trustees although the actual
calculation may be done by others. Short-term investments with remaining
maturities of less than 61 days are valued at amortized cost.
DIVIDENDS
Dividends from the Premier Money Market Fund are declared on each Business Day.
The dividend for a Business Day immediately preceding a weekend or holiday
normally includes an amount equal to the net income for the subsequent
non-Business Days on which dividends are not declared. However, no such dividend
includes any amount of net income earned in a subsequent semiannual accounting
period. A portion of the dividends paid by the U.S. Government Fund may be
exempt from state taxes.
Dividends from the Bond Funds' net investment income are declared on each
Business Day and paid to shareholders ordinarily on the first Business Day of
the following month. The dividend for a Business Day immediately preceding a
weekend or holiday normally includes an amount equal to the net income expected
for the subsequent non-Business Days on which dividends are not declared.
However, no such dividend included any amount of net income earned in a
subsequent semiannual period. Net short-term capital gain and net capital gain
(the excess of net long-term capital gain over the short-term capital loss)
realized by each Fund, after deducting any available capital loss carryovers,
are declared and paid annually.
Dividends from the Equity Funds' net investment income and distributions of net
short-term capital gain and net capital gain (the excess of net long-term
capital gain over the short-term capital loss) realized by each Fund, after
deducting any available capital loss carryovers are declared and paid to its
shareholders annually.
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TAXATION OF THE FUNDS
GENERAL. Each Fund is treated as a separate corporation for federal income tax
purposes. To qualify or continue to qualify for treatment as a regulated
investment company ("RIC") under the Internal Revenue Code of 1986, as amended
(the "Code"), each Fund must distribute to its shareholders for each taxable
year at least 90% of its investment company taxable income (consisting generally
of net investment income and net short-term capital gain and must meet several
additional requirements. For each Fund, these requirements include the
following: (1) the Fund must derive at least 90% of its gross income each
taxable year from dividends, interest, payments with respect to securities loans
and gains from the sale or other disposition of securities or foreign
currencies, or other income (including gains from options, futures and forward
contracts) derived with respect to its business of investing in securities or
those currencies; (2) at the close of each quarter of the Fund's taxable year,
at least 50% of the value of its total assets must be represented by cash and
cash items, U.S. Government securities, securities of other RICs and other
securities, with these other securities limited, in respect of any one issuer,
to an amount that does not exceed 5% of the value of the Fund's total assets and
that does not represent more than 10% of the issuer's outstanding voting
securities; and (3) at the close of each quarter of the Fund's taxable year, not
more than 25% of the value of its total assets may be invested in securities
(other than U.S. Government securities or the securities of other RICs) of any
one issuer.
If a Fund failed to qualify for treatment as a RIC in any taxable year, it would
be subject to tax on its taxable income at corporate rates and all distributions
from earnings and profits, including any distributions from net capital gain
(the excess of net long-term capital gain over net short-term capital loss),
would be taxable to its shareholders as ordinary income. In addition, the Fund
could be required to recognize unrealized gains, pay substantial taxes and
interest and make substantial distributions before qualifying again for RIC
treatment.
Each Fund will be subject to a nondeductible 4% excise tax to the extent it
fails to distribute by the end of any calendar year substantially all of its
ordinary income for that year and capital gain net income for the one-year
period ending on October 31 of that year, plus certain other amounts.
Dividends and other distributions declared by a Fund in October, November or
December of any year and payable to shareholders of record on a date in one of
those months will be deemed to have been paid by the Fund and received by the
shareholders on December 31 of that year if they are paid by the Fund during the
following January. Accordingly, such distributions will be taxed to the
shareholders for the year in which that December 31 falls.
Investors should be aware that if Fund shares are purchased shortly before the
record date for any dividend (other than an exempt-interest dividend) or capital
gain distribution, the shareholder will pay full price for the shares and will
receive some portion of the price back as a taxable distribution.
If a Fund makes a distribution to shareholders in excess of its current and
accumulated earnings and profits in any taxable year, the excess distribution
will be treated by each shareholder as a return of capital to the extent of the
shareholder's tax basis and thereafter as capital gain.
MONEY MARKET FUNDS:
Distributions from the Funds' investment company taxable income, if any, are
taxable to its shareholders as ordinary income to the extent of the Funds'
earnings and profits. Because the Funds' net investment income is derived from
interest rather than dividends, no portion of the distributions thereof is
eligible for the dividends-received deduction allowed to corporations.
BOND FUNDS:
Each Bond Fund may acquire zero coupon securities issued with original issue
discount. As a holder of those securities, a Fund must take into account the
original issue discount that accrues on the securities during the taxable year,
even if it receives no corresponding payment on them during the year. Because
each Fund annually must distribute substantially all of its investment company
taxable income and net tax-exempt income, including any original issue discount,
to satisfy the distribution requirements for RICs under the Code and (except
with respect to tax-exempt income) avoid imposition of the Excise Tax, a Fund
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may be required in a particular year to distribute as a dividend an amount that
is greater than the total amount of cash it actually receives. Those
distributions will be made from a Fund's cash assets or from the proceeds of
sales of portfolio securities, if necessary. A Fund may realize capital gains or
losses from those sales, which would increase or decrease its investment company
taxable income and/or net capital gain.
TAX-EXEMPT FUND AND MUNICIPAL BOND FUND: Each of these Funds will be able to pay
exempt-interest dividends to its shareholders only if, at the close of each
quarter of its taxable year, at least 50% of the value of its total assets
consists of obligations the interest on which is excludable from gross income
under section 103(a) of the Code; both Funds intend to continue to satisfy this
requirement. Distributions that a Fund properly designates as exempt-interest
dividends are treated by its shareholders as interest excludable from their
gross income for federal income tax purposes but may be tax preference items.
The aggregate dividends excludable from the shareholders' gross income may not
exceed the Fund's net tax-exempt income. The shareholders' treatment of
dividends from a Fund under state and local income tax laws may differ from the
treatment thereof under the Code. In order to qualify to pay exempt-interest
dividends, each Fund may be limited in its ability to engage in taxable
transactions such as repurchase agreements, options and futures strategies and
portfolio securities lending.
Tax-exempt interest attributable to certain "private activity bonds" ("PABs")
(including, in the case of a RIC receiving interest on those bonds, a
proportionate part of the exempt-interest dividends paid by the RIC) is a tax
preference item. Furthermore, even interest on tax-exempt securities held by a
Fund that are not PABs, which interest otherwise would not be a tax preference
item, nevertheless may be indirectly subject to the federal alternative minimum
tax in the hands of corporate shareholders when distributed to them by the Fund.
PABs are issued by or on behalf of public authorities to finance various
privately operated facilities. Entities or persons who are "substantial users"
(or persons related to "substantial users") of facilities financed by industrial
development bonds or PABs should consult their tax advisers before purchasing a
Fund's shares. For these purposes, the term "substantial user" is defined
generally to include a "non-exempt person" who regularly uses in trade or
business a part of a facility financed from the proceeds of such bonds.
Up to 85% of Social Security and railroad retirement benefits may be included in
taxable income for recipients whose adjusted gross income (including income from
tax-exempt sources such as the Tax-Exempt Municipal Bond Funds) plus 50% of
their benefits exceeds certain base amounts. Exempt-interest dividends from each
Fund still are tax-exempt to the extent described in the prospectus; they are
only included in the calculation of whether a recipient's income exceeds the
established amounts.
If a Fund invests in any instruments that generate taxable income, under the
circumstances described in the prospectus, distributions of the interest earned
thereon will be taxable to its shareholders as ordinary income to the extent of
its earnings and profits. Moreover, if a Fund realizes capital gain as a result
of market transactions, any distribution of that gain will be taxable to its
shareholders.
The Municipal Bond Fund may invest in municipal bonds that are purchased with
"market discount." For these purposes, market discount is the amount by which a
bond's purchase price is exceeded by its stated redemption price at maturity or,
in the case of a bond that was issued with original issue discount ("OID"), the
sum of its issue price plus accrued OID, except that market discount less than
the product of (1) 0.25% of the redemption price at maturity times and (2) the
number of complete years to maturity after the taxpayer acquired the bond is
disregarded. Market discount generally is accrued ratably, on a daily basis,
over the period from the acquisition date to the date of maturity. Gain on the
disposition of such a bond (other than a bond with a fixed maturity date within
one year from its issuance) generally is treated as ordinary (taxable) income,
rather than capital gain, to the extent of the bond's accrued market discount at
the time of disposition. In lieu of treating the disposition gain as above, the
Municipal Bond Fund may elect to include market discount in its gross income
currently, for each taxable year to which it is attributable.
The Tax-Exempt Municipal Bond Funds informs shareholders within 60 days after
its fiscal year-end (August 31) of the percentage of its income distributions
designated as exempt-interest dividends. The percentage is applied uniformly to
all distributions made during the year, so the percentage designated as
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tax-exempt for any particular distribution may be substantially different from
the percentage of the Fund's income that was tax-exempt during the period
covered by the distribution.
INTERMEDIATE BOND FUND: Interest and dividends received by the Intermediate Bond
Fund, and gains realized thereby, may be subject to income, withholding or other
taxes imposed by foreign countries and U.S. possessions that would reduce the
yield and/or total return on their securities. Tax conventions between certain
countries and the United States may reduce or eliminate these taxes, however,
and many foreign countries do not impose taxes on capital gains in respect of
investments by foreign investors.
EQUITY FUNDS:
It is anticipated that all or a portion of the dividends from the net investment
income of each Equity Fund will qualify for the dividends-received deduction
allowed to corporations. The qualifying portion may not exceed the aggregate
dividends received by the Fund from U.S. corporations. However, dividends
received by a corporate shareholder and deducted by it pursuant to the
dividends-received deduction are subject indirectly to the federal alternative
minimum tax. Moreover, the dividends-received deduction will be reduced to the
extent the shares with respect to which the dividends are received are treated
as debt-financed and will be eliminated if those shares are deemed to have been
held for less than 46 days. Distributions of net short-term capital gain and net
capital gain are not eligible for the dividends-received deduction.
Any loss realized by a shareholder on the redemption of shares within six months
from the date of their purchase will be treated as a long-term, instead of a
short-term, capital loss to the extent of any capital gain distributions to that
shareholder with respect to those shares.
HEDGING TRANSACTIONS. The use of hedging strategies, such as writing (selling)
and purchasing options and futures contracts and entering into forward currency
contracts, involves complex rules that will determine for federal income tax
purposes the amount, character and timing of recognition of the gains and losses
a Fund realizes in connection therewith. Gains from the disposition of foreign
currencies (except certain gains that may be excluded by future regulations) and
gains from options, futures and foreign currency contracts derived by a Fund
with respect to its business of investing in securities qualify as permissible
income under the Income Requirement.
Futures and foreign currency contracts that are subject to section 1256 of the
Code (other than such contracts that are part of a "mixed straddle" with respect
to which a Fund has made an election not to have the following rules apply)
("Section 1256 Contracts") and that are held by a Fund at the end of its taxable
year generally will be "marked-to-market" (that is, deemed to have been sold for
their market value) for federal income tax purposes. Sixty percent of any net
gain or loss recognized on these deemed sales, and 60% of any net realized gain
or loss from any actual sales of Section 1256 Contracts, will be treated as
long-term capital gain or loss, and the balance will be treated as short-term
capital gain or loss. As of the date of this Statement of Additional
Information, it is not entirely clear whether that 60% portion will qualify for
the reduced maximum tax rates on non-corporate taxpayers' net capital gain
enacted by the Taxpayer Relief Act of 1997 -- 20% (10% for taxpayers in the 15%
marginal tax bracket) for gain recognized on capital assets held for more than
18 months -- instead of the 28% rate in effect before that legislation, which
now applies to gain recognized on capital assets held for more than one year but
not more than 18 months. However, technical correction legislation passed by the
House of Representatives late in 1997 would clarify that the lower rates apply.
Section 1256 Contracts also may be marked-to-market for purposes of the Excise
Tax.
Section 988 of the Code also may apply to forward currency contracts and options
on foreign currencies. Under section 988, each foreign currency gain or loss
generally is computed separately and treated as ordinary income or loss. In the
case of overlap between sections 1256 and 988, special provisions determine the
character and timing of any income, gain or loss.
Code section 1092 (dealing with straddles) also may affect the taxation of
options and futures contracts in which a Fund may invest. Section 1092 defines a
"straddle" as offsetting positions with respect to personal property; for these
purposes, options and futures contracts are personal property. Under section
1092, any
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<PAGE>
loss from the disposition of a position in a straddle generally may be deducted
only to the extent the loss exceeds the unrealized gain on the offsetting
position(s) of the straddle. Section 1092 also provides certain "wash sale"
rules, which apply to transactions where a position is sold at a loss and a new
offsetting position is acquired within a prescribed period, and "short sale"
rules applicable to straddles. If a Fund makes certain elections, the amount,
character and timing of the recognition of gains and losses from the affected
straddle positions would be determined under rules that vary according to the
elections made. Because only a few of the regulations implementing the straddle
rules have been promulgated, the tax consequences to a Fund of straddle
transactions are not entirely clear.
If a Fund has an "appreciated financial position" -- generally, an interest
(including an interest through an option, futures or forward contract or short
sale) with respect to any stock, debt instrument (other than "straight debt") or
partnership interest the fair market value of which exceeds its adjusted basis
- -- and enters into a "constructive sale" of the same or substantially similar
property, the Fund will be treated as having made an actual sale thereof, with
the result that gain will be recognized at that time. A constructive sale
generally consists of a short sale, an offsetting notional principal contract or
futures or forward contract entered into by a Fund or a related person with
respect to the same or substantially similar property. In addition, if the
appreciated financial position is itself a short sale or such a contract,
acquisition of the underlying property or substantially similar property will be
deemed a constructive sale.
The foregoing tax discussion is a summary included for general informational
purposes only. Each shareholder is advised to consult its own tax adviser with
respect to the specific tax consequences to it of an investment in a Fund,
including the effect and applicability of state, local, foreign and other tax
laws and the possible effects of changes in federal or other tax laws.
Shortly after the end of each year, PFPC calculates the federal income tax
status of all distributions made during the year. In addition to federal income
tax, shareholders may be subject to state and local taxes on distributions from
a Fund. Shareholders should consult their tax advisers regarding specific
questions relating to federal, state and local taxes.
CALCULATION OF PERFORMANCE INFORMATION
The performance of a Fund may be quoted in terms of its yield and its total
return in advertising and other promotional materials. Performance data quoted
represents past performance and is not intended to indicate future performance.
Performance of the Funds will vary based on changes in market conditions and the
level of each Fund's expenses. These performance figures are calculated in the
following manner:
MONEY MARKET FUNDS:
A. YIELD for a money market fund is the net annualized yield for a
specified 7 calendar days calculated at simple interest rates.
Yield is calculated by determining the net change, exclusive of
capital changes, in the value of a hypothetical pre-existing
account having a balance of one share at the beginning of the
period, subtracting a hypothetical charge reflecting deductions
from shareholder accounts, and dividing the difference by the
value of the account at the beginning of the base period to obtain
the base period return. The yield is annualized by multiplying the
base period return by 365/7. The yield figure is stated to the
nearest hundredth of one percent.
The yield for the 7-day period ended June 30, 1999 was:
Prime Money Market Fund %
Tax-Exempt Fund %
B. EFFECTIVE YIELD is the net annualized yield for a specified 7
calendar days assuming reinvestment of income or compounding.
Effective yield is calculated by the same method as yield except
the yield figure is compounded by adding 1, raising the sum to a
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<PAGE>
power equal to 365 divided by 7, and subtracting 1 from the
result, according to the following formula:
Effective yield = [(Base Period Return + 1) 365/7] - 1.
The effective yield for the 7-day period ended June 30, 1999
was:
Prime Money Market Fund %
Tax-Exempt Fund %
ALL FUNDS:
A. AVERAGE ANNUAL TOTAL RETURN is the average annual compound rate of
return for the periods of one year, five years, ten years and the
life of a Fund, where applicable, all ended on the last day of a
recent calendar quarter. Average annual total return quotations
reflect changes in the price of a Fund's shares, if any, and
assume that all dividends during the respective periods were
reinvested in Fund shares. Average annual total return is
calculated by finding the average annual compound rates of return
of a hypothetical investment over such periods, according to the
following formula (average annual total return is then expressed
as a percentage):
T = (ERV/P)1/n - 1
Where: P = a hypothetical initial investment of
$1,000
T = average annual total return
n = number of years
ERV = ending redeemable value: ERV is
the value, at the end of the
applicable period, of a hypothetical
$1,000 investment made at the
beginning of the applicable period.
AVERAGE ANNUAL TOTAL RETURN FOR PERIODS ENDED JUNE 30, 1999
- ----------------------------------------------------------------------
1 YEAR 5 YEAR 10 YEAR
------ ------ -------
- ----------------------------------------------------------------------
Prime Money Market % % %
- ----------------------------------------------------------------------
Tax-Exempt Money Market % % %
- ----------------------------------------------------------------------
Intermediate Bond % % N/A
- ----------------------------------------------------------------------
Municipal Bond % % N/A
- ----------------------------------------------------------------------
Large Cap Value % % N/A
- ----------------------------------------------------------------------
Mid Cap Value % N/A N/A
- ----------------------------------------------------------------------
Small Cap Value % N/A N/A
- ----------------------------------------------------------------------
B. YIELD CALCULATIONS. From time to time, an Equity or Bond Fund may
advertise its yield. Yield for these Funds is calculated by dividing the Fund's
investment income for a 30-day period, net of expenses, by the average number of
shares entitled to receive dividends during that period according to the
following formula:
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YIELD = 2[((A-B)/CD + 1)6-1]
where:
a = dividends and interest earned during the period;
b = expenses accrued for the period (net of reimbursements);
c = the average daily number of shares outstanding during the
period that were entitled to receive dividends; and
d = the maximum offering price per share on the last day of the period.
The result is expressed as an annualized percentage (assuming semiannual
compounding) of the maximum offering price per share at the end of the period.
Except as noted below, in determining interest earned during the period
(variable "a" in the above formula), pfpc calculates the interest earned on each
debt instrument held by a Fund during the period by: (i) computing the
instrument's yield to maturity, based on the value of the instrument (including
actual accrued interest) as of the last business day of the period or, if the
instrument was purchased during the period, the purchase price plus accrued
interest; (ii) dividing the yield to maturity by 360; and (iii) multiplying the
resulting quotient by the value of the instrument (including actual accrued
interest). Once interest earned is calculated in this fashion for each debt
instrument held by the Fund, interest earned during the period is then
determined by totaling the interest earned on all debt instruments held by the
Fund.
For purposes of these calculations, the maturity of a debt instrument
with one or more call provisions is assumed to be the next date on which the
instrument reasonably can be expected to be called or, if none, the maturity
date. In general, interest income is reduced with respect to debt instruments
trading at a premium over their par value by subtracting a portion of the
premium from income on a daily basis, and increased with respect to debt
instruments trading at a discount by adding a portion of the discount to daily
income.
In determining dividends earned by any preferred stock or other
equity securities held by a Fund during the period (variable "a" in the above
formula), PFPC accrues the dividends daily at their stated dividend rates.
Capital gains and losses generally are excluded from yield calculations.
Because yield accounting methods differ from the accounting methods
used to calculate net investment income for other purposes, a Fund's yield may
not equal the dividend income actually paid to investors or the net investment
income reported with respect to the Fund in the Fund's financial statements.
Yield information may be useful in reviewing a Fund's performance and
in providing a basis for comparison with other investment alternatives. However,
the Funds' yields fluctuate, unlike investments that pay a fixed interest rate
over a stated period of time. Investors should recognize that in periods of
declining interest rates, the Funds' yields will tend to be somewhat higher than
prevailing market rates, and in periods of rising interest rates, the Funds'
yields will tend to be somewhat lower. Also, when interest rates are falling,
the inflow of net new money to the Funds from the continuous sale of their
shares will likely be invested in instruments producing lower yields than the
balance of the Funds' holdings, thereby reducing the current yields of the
Funds. In periods of rising interest rates, the opposite can be expected to
occur.
COMPARISON OF FUND PERFORMANCE. A comparison of the quoted performance offered
for various investments is valid only if performance is calculated in the same
manner. Since there are many methods of calculating performance, investors
should consider the effects of the methods used to calculate performance when
comparing performance of a Fund with performance quoted with respect to other
investment companies or types of investments. For example, it is useful to note
that yields reported on debt instruments are generally prospective, contrasted
with the historical yields reported by a Fund.
In connection with communicating its performance to current or prospective
shareholders, a Fund also may compare these figures to the performance of other
mutual funds tracked by mutual fund rating services or to unmanaged indices
which may assume reinvestment of dividends but generally do not reflect
deductions for administrative and management costs.
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From time to time, in marketing and other literature, a Money Market Fund's
performance may be compared to the performance of broad groups of comparable
mutual funds or unmanaged indexes of comparable securities such as the IBC First
Tier Money Market Index for the Premier Money Market Funds. Yield and
performance over time may also be compared to the performance of bank money
market deposit accounts and fixed-rate insured certificates of deposit (CDs), or
unmanaged indices of securities that are comparable to money market funds in
their terms and intent, such as Treasury bills, bankers' acceptances, negotiable
order of withdrawal accounts, and money market certificates. Most bank CDs
differ from money market funds in several ways: the interest rate is fixed for
the term of the CD, there are interest penalties for early withdrawal of the
deposit from a CD, and the deposit principal in a CD is insured by the FDIC.
From time to time, in marketing and other literature, the Bond and Equity Funds'
performance may be compared to the performance of broad groups of comparable
mutual funds or unmanaged indexes of comparable securities with similar
investment goals, as tracked by independent organizations such as Investment
Company Data, Inc. (an organization which provides performance ranking
information for broad classes of mutual funds), Lipper Analytical Services, Inc.
("Lipper") (a mutual fund research firm which analyzes over 1,800 mutual funds),
CDA Investment Technologies, Inc. (an organization which provides mutual fund
performance and ranking information), Morningstar, Inc. (an organization which
analyzes over 2,400 mutual funds) and other independent organizations. When
Lipper's tracking results are used, a Fund will be compared to Lipper's
appropriate fund category, that is, by fund objective and portfolio holdings.
Rankings may be listed among one or more of the asset-size classes as determined
by Lipper. When other organizations' tracking results are used, a Fund will be
compared to the appropriate fund category, that is, by fund objective and
portfolio holdings, or to the appropriate volatility grouping, where volatility
is a measure of a fund's risk.
Since the assets in all funds are always changing, a Fund may be ranked within
one asset-size class at one time and in another asset-size class at some other
time. In addition, the independent organization chosen to rank a Fund in
marketing and promotional literature may change from time to time depending upon
the basis of the independent organization's categorizations of mutual funds,
changes in a Fund's investment policies and investments, a Fund's asset size and
other factors deemed relevant. Advertisements and other marketing literature
will indicate the time period and Lipper asset-size class or other performance
ranking company criteria, as applicable, for the ranking in question.
Evaluations of Fund performance made by independent sources may also be used in
advertisements concerning a Fund, including reprints of or selections from,
editorials or articles about the Fund. Sources for performance information and
articles about a Fund may include the following:
BARRON'S, a Dow Jones and Company, Inc. business and financial weekly that
periodically reviews mutual fund performance data.
CDA INVESTMENT TECHNOLOGIES, INC., an organization that provides performance and
ranking information through examining the dollar results of hypothetical mutual
fund investments and comparing these results against appropriate market indices.
CHANGING TIMES, THE KIPLINGER MAGAZINE, a monthly investment advisory
publication that periodically features the performance of a variety of
securities.
CONSUMER DIGEST, a monthly business/financial magazine that includes a "Money
Watch" section featuring financial news.
FINANCIAL WORLD, a general business/financial magazine that includes a "Market
Watch" department reporting on activities in the mutual fund industry.
FORBES, a national business publication that from time to time reports the
performance of specific investment companies in the mutual fund industry.
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<PAGE>
FORTUNE, a national business publication that periodically rates the performance
of a variety of mutual funds.
IBC'S MONEY FUND REPORT, a weekly publication of IBC/Donoghue, Inc., of Ashland,
Massachusetts, reporting on the performance of the nation's money market funds,
summarizing money market fund activity, and including certain averages as
performance benchmarks, specifically "IBC's Money Fund Average," and "IBC's
Government Money Fund Average."
IBC'S MONEY FUND DIRECTORY, an annual directory ranking money market mutual
funds.
INVESTMENT COMPANY DATA, INC., an independent organization which provides
performance ranking information for broad classes of mutual funds.
INVESTOR'S DAILY, a daily newspaper that features financial, economic, and
business news.
LIPPER ANALYTICAL SERVICES, INC.'S MUTUAL FUND PERFORMANCE ANALYSIS, a weekly
publication of industry-wide mutual fund averages by type of fund.
MONEY, a monthly magazine that from time to time features both specific funds
and the mutual fund industry as a whole.
MUTUAL FUND VALUES, a biweekly Morningstar, Inc. publication that provides
ratings of mutual funds based on fund performance risk and portfolio
characteristics.
THE NEW YORK TIMES, a nationally distributed newspaper which regularly covers
financial news.
PERSONAL INVESTING NEWS, a monthly news publication that often reports on
investment opportunities and market conditions.
PERSONAL INVESTOR, a monthly investment advisory publication that includes a
"Mutual Funds Outlook" section reporting on mutual fund performance measures,
yields, indices and portfolio holdings.
SUCCESS, a monthly magazine targeted to the world of entrepreneurs and growing
business, often featuring mutual fund performance data.
USA TODAY, the nation's number one daily newspaper.
U.S. NEWS AND WORLD REPORT, a national business weekly that periodically reports
mutual fund performance data.
WALL STREET JOURNAL, a Dow Jones and Company, Inc. newspaper that regularly
covers financial news.
WIESENBERGER INVESTMENT COMPANIES SERVICES, an annual compendium of information
about mutual funds and other investment companies, including comparative data on
funds' backgrounds, management policies, salient features, management results,
income and dividend records, and price ranges.
FINANCIAL STATEMENTS
Each Fund's audited financial statements, and the audited financial statements
of its corresponding series for the fiscal year ended June 30, 1999, including
notes thereto and the report of __________thereon, are incorporated herein by
reference to the Fund's Annual Report to Shareholders.
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APPENDIX A
OPTIONS, FUTURES AND FORWARD CURRENCY CONTRACT STRATEGIES
REGULATION OF THE USE OF OPTIONS, FUTURES AND FORWARD CURRENCY CONTRACT
STRATEGIES. As discussed in the prospectus, in managing a Fund's corresponding
Series, the adviser may engage in certain options, futures and forward currency
contract strategies for certain bona fide hedging, risk management or other
portfolio management purposes. Certain special characteristics of and risks
associated with using these strategies are discussed below. Use of options,
futures and forward currency contracts is subject to applicable regulations
and/or interpretations of the SEC and the several options and futures exchanges
upon which these instruments may be traded. The Board of Trustees has adopted
investment guidelines (described below) reflecting these regulations.
In addition to the products, strategies and risks described below and in the
prospectus, the adviser expects to discover additional opportunities in
connection with options, futures and forward currency contracts. These new
opportunities may become available as new techniques develop, as regulatory
authorities broaden the range of permitted transactions and as new options,
futures and forward currency contracts are developed. These opportunities may be
utilized to the extent they are consistent with each Fund's investment objective
and limitations and permitted by applicable regulatory authorities. The
registration statement for the Funds will be supplemented to the extent that new
products and strategies involve materially different risks than those described
below and in the prospectus.
COVER REQUIREMENTS. The Series will not use leverage in their options and
futures. Accordingly, the Series will comply with guidelines established by the
SEC with respect to coverage of these strategies by either (1) setting aside
cash or liquid, unencumbered, daily marked-to-market securities in one or more
segregated accounts with the custodian in the prescribed amount; or (2) holding
securities or other options or futures contracts whose values are expected to
offset ("cover") their obligations thereunder. Securities, currencies, or other
options or futures contracts used for cover cannot be sold or closed out while
these strategies are outstanding, unless they are replaced with similar assets.
As a result, there is a possibility that the use of cover involving a large
percentage of the Series' assets could impede portfolio management, or the
Series' ability to meet redemption requests or other current obligations.
OPTIONS STRATEGIES. A Series may purchase and write (sell) only those options on
securities and securities indices that are traded on U.S. exchanges.
Exchange-traded options in the U.S. are issued by a clearing organization
affiliated with the exchange, on which the option is listed, which, in effect,
guarantees completion of every exchange-traded option transaction.
Each Series may purchase call options on securities in which it is authorized to
invest in order to fix the cost of a future purchase. Call options also may be
used as a means of enhancing returns by, for example, participating in an
anticipated price increase of a security. In the event of a decline in the price
of the underlying security, use of this strategy would serve to limit the
potential loss to the Series to the option premium paid; conversely, if the
market price of the underlying security increases above the exercise price and
the Series either sells or exercises the option, any profit eventually realized
would be reduced by the premium paid.
Each Series may purchase put options on securities that it holds in order to
hedge against a decline in the market value of the securities held or to enhance
return. The put option enables the Series to sell the underlying security at the
predetermined exercise price; thus, the potential for loss to the Series below
the exercise price is limited to the option premium paid. If the market price of
the underlying security is higher than the exercise price of the put option, any
profit the Series realizes on the sale of the security is reduced by the premium
paid for the put option less any amount for which the put option may be sold.
Each Series may on certain occasions wish to hedge against a decline in the
market value of securities that it holds at a time when put options on those
particular securities are not available for purchase. At those times, the Series
may purchase a put option on other carefully selected securities in which it is
authorized to invest, the values of which historically have a high degree of
positive correlation to the value of the securities actually held. If the
adviser's judgment is correct, changes in the value of the put options should
generally offset changes in the
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value of the securities being hedged. However, the correlation between the two
values may not be as close in these transactions as in transactions in which a
Series purchases a put option on a security that it holds. If the value of the
securities underlying the put option falls below the value of the portfolio
securities, the put option may not provide complete protection against a decline
in the value of the portfolio securities.
Each Series may write covered call options on securities in which it is
authorized to invest for hedging purposes or to increase return in the form of
premiums received from the purchasers of the options. A call option gives the
purchaser of the option the right to buy, and the writer (seller) the obligation
to sell, the underlying security at the exercise price during the option period.
The strategy may be used to provide limited protection against a decrease in the
market price of the security, in an amount equal to the premium received for
writing the call option less any transaction costs. Thus, if the market price of
the underlying security held by the Series declines, the amount of the decline
will be offset wholly or in part by the amount of the premium received by the
Series. If, however, there is an increase in the market price of the underlying
security and the option is exercised, the Series will be obligated to sell the
security at less than its market value.
Each Series may also write covered put options on securities in which it is
authorized to invest. A put option gives the purchaser of the option the right
to sell, and the writer (seller) the obligation to buy, the underlying security
at the exercise price during the option period. So long as the obligation of the
writer continues, the writer may be assigned an exercise notice by the
broker-dealer through whom such option was sold, requiring it to make payment of
the exercise price against delivery of the underlying security. The operation of
put options in other respects, including their related risks and rewards, is
substantially identical to that of call options. If the put option is not
exercised, the Series will realize income in the amount of the premium received.
This technique could be used to enhance current return during periods of market
uncertainty. The risk in such a transaction would be that the market price of
the underlying securities would decline below the exercise price less the
premiums received, in which case the Series would expect to suffer a loss.
Each Series may purchase put and call options and write covered put and call
options on indexes in much the same manner as the more traditional options
discussed above, except that index options may serve as a hedge against overall
fluctuations in the securities markets (or a market sector) rather than
anticipated increases or decreases in the value of a particular security. An
index assigns values to the securities included in the index and fluctuates with
changes in such values. Settlements of index options are effected with cash
payments and do not involve delivery of securities. Thus, upon settlement of an
index option, the purchaser will realize, and the writer will pay, an amount
based on the difference between the exercise price and the closing price of the
index. The effectiveness of hedging techniques using index options will depend
on the extent to which price movements in the index selected correlate with
price movements of the securities in which a Series invests. Perfect correlation
is not possible because the securities held or to be acquired by the Series will
not exactly match the composition of indexes on which options are purchased or
written.
Each Series may purchase and write covered straddles on securities or indexes. A
long straddle is a combination of a call and a put purchased on the same
security where the exercise price of the put is less than or equal to the
exercise price on the call. The Series would enter into a long straddle when the
adviser believes that it is likely that prices will be more volatile during the
term of the options than is implied by the option pricing. A short straddle is a
combination of a call and a put written on the same security where the exercise
price on the put is less than or equal to the exercise price of the call where
the same issue of the security is considered "cover" for both the put and the
call. The Series would enter into a short straddle when the adviser believes
that it is unlikely that prices will be as volatile during the term of the
options as is implied by the option pricing. In such case, the Series will set
aside cash and/or liquid, unencumbered securities in a segregated account with
its custodian equivalent in value to the amount, if any, by which the put is
"in-the-money," that is, that amount by which the exercise price of the put
exceeds the current market value of the underlying security. Because straddles
involve multiple trades, they result in higher transaction costs and may be more
difficult to open and close out.
Each Series may purchase put and call warrants with values that vary depending
on the change in the value of one or more specified indexes ("index warrants").
An index warrant is usually issued by a bank or other financial institution and
gives the Series the right, at any time during the term of the warrant, to
receive upon exercise of the warrant a cash payment from the issuer of the
warrant based on the value of the underlying index at the time of exercise. In
general, if a Series holds a call warrant and the value of the underlying index
rises above the
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exercise price of the warrant, the Series will be entitled to receive a cash
payment from the issuer upon exercise based on the difference between the value
of the index and the exercise price of the warrant; if the Series holds a put
warrant and the value of the underlying index falls, the Series will be entitled
to receive a cash payment from the issuer upon exercise based on the difference
between the exercise price of the warrant and the value of the index. The Series
holding a call warrant would not be entitled to any payments from the issuer at
any time when the exercise price is greater than the value of the underlying
index; the Series holding a put warrant would not be entitled to any payments
when the exercise price is less than the value of the underlying index. If the
Series does not exercise an index warrant prior to its expiration, then the
Series loses the amount of the purchase price that it paid for the warrant.
Each Series will normally use index warrants as it may use index options. The
risks of the Series' use of index warrants are generally similar to those
relating to its use of index options. Unlike most index options, however, index
warrants are issued in limited amounts and are not obligations of a regulated
clearing agency, but are backed only by the credit of the bank or other
institution which issues the warrant. Also, index warrants generally have longer
terms than index options. Index warrants are not likely to be as liquid as index
options backed by a recognized clearing agency. In addition, the terms of index
warrants may limit the Series' ability to exercise the warrants at any time or
in any quantity.
OPTIONS GUIDELINES. In view of the risks involved in using the options
strategies described above, each Series has adopted the following investment
guidelines to govern its use of such strategies; these guidelines may be
modified by the Board of Trustees without shareholder approval:
(1) each Series will write only covered options, and each
such option will remain covered so long as the Series
is obligated thereby; and
(2) no Series will write options (whether on securities
or securities indexes) if aggregate exercise prices
of previous written outstanding options, together
with the value of assets used to cover all
outstanding positions, would exceed 25% of its total
net assets.
SPECIAL CHARACTERISTICS AND RISKS OF OPTIONS TRADING. A Series may effectively
terminate its right or obligation under an option by entering into a closing
transaction. If a Series wishes to terminate its obligation to purchase or sell
securities under a put or a call option it has written, the Series may purchase
a put or a call option of the same series (that is, an option identical in its
terms to the option previously written). This is known as a closing purchase
transaction. Conversely, in order to terminate its right to purchase or sell
specified securities under a call or put option it has purchased, a Series may
sell an option of the same series as the option held. This is known as a closing
sale transaction. Closing transactions essentially permit a Series to realize
profits or limit losses on its options positions prior to the exercise or
expiration of the option. If a Series is unable to effect a closing purchase
transaction with respect to options it has acquired, the Series will have to
allow the options to expire without recovering all or a portion of the option
premiums paid. If a Series is unable to effect a closing purchase transaction
with respect to covered options it has written, the Series will not be able to
sell the underlying securities or dispose of assets used as cover until the
options expire or are exercised, and the Series may experience material losses
due to losses on the option transaction itself and in the covering securities.
In considering the use of options to enhance returns or for hedging purposes,
particular note should be taken of the following:
(1) The value of an option position will reflect, among other
things, the current market price of the underlying security or
index, the time remaining until expiration, the relationship
of the exercise price to the market price, the historical
price volatility of the underlying security or index, and
general market conditions. For this reason, the successful use
of options depends upon the adviser's ability to forecast the
direction of price fluctuations in the underlying securities
markets or, in the case of index options, fluctuations in the
market sector represented by the selected index.
(2) Options normally have expiration dates of up to three years.
An American style put or call
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option may be exercised at any time during the option period
while a European style put or call option may be exercised
only upon expiration or during a fixed period prior to
expiration. The exercise price of the options may be below,
equal to or above the current market value of the underlying
security or index. Purchased options that expire unexercised
have no value. Unless an option purchased by the Series is
exercised or unless a closing transaction is effected with
respect to that position, the Series will realize a loss in
the amount of the premium paid and any transaction costs.
(3) A position in an exchange-listed option may be closed out only
on an exchange that provides a secondary market for identical
options. Although the Series intends to purchase or write only
those exchange-traded options for which there appears to be a
liquid secondary market, there is no assurance that a liquid
secondary market will exist for any particular option at any
particular time. A liquid market may be absent if: (i) there
is insufficient trading interest in the option; (ii) the
exchange has imposed restrictions on trading, such as trading
halts, trading suspensions or daily price limits; (iii) normal
exchange operations have been disrupted; or (iv) the exchange
has inadequate facilities to handle current trading volume.
(4) With certain exceptions, exchange listed options generally
settle by physical delivery of the underlying security. Index
options are settled exclusively in cash for the net amount, if
any, by which the option is "in-the-money" (where the value of
the underlying instrument exceeds, in the case of a call
option, or is less than, in the case of a put option, the
exercise price of the option) at the time the option is
exercised. If the Series writes a call option on an index, the
Series will not know in advance the difference, if any,
between the closing value of the index on the exercise date
and the exercise price of the call option itself and thus will
not know the amount of cash payable upon settlement. If the
Series holds an index option and exercises it before the
closing index value for that day is available, the Series runs
the risk that the level of the underlying index may
subsequently change.
(5) A Series' activities in the options markets may result in a
higher Series turnover rate and additional brokerage costs;
however, the Series also may save on commissions by using
options as a hedge rather than buying or selling individual
securities in anticipation of, or as a result of, market
movements.
FUTURES AND RELATED OPTIONS STRATEGIES. Each Series may engage in futures
strategies for certain non-trading bona fide hedging, risk management and
portfolio management purposes.
Each Series may sell securities index futures contracts in anticipation of a
general market or market sector decline that could adversely affect the market
value of the Series' securities holdings. To the extent that a portion of a
Series' holdings correlate with a given index, the sale of futures contracts on
that index could reduce the risks associated with a market decline and thus
provide an alternative to the liquidation of securities positions. For example,
if a Series correctly anticipates a general market decline and sells index
futures to hedge against this risk, the gain in the futures position should
offset some or all of the decline in the value of the Series' holdings. A Series
may purchase index futures contracts if a significant market or market sector
advance is anticipated. Such a purchase of a futures contract would serve as a
temporary substitute for the purchase of the underlying securities, which may
then be purchased, in an orderly fashion. This strategy may minimize the effect
of all or part of an increase in the market price of securities that a Series
intends to purchase. A rise in the price of the securities should be in part or
wholly offset by gains in the futures position.
As in the case of a purchase of an index futures contract, a Series may purchase
a call option on an index futures contract to hedge against a market advance in
securities that the Series plans to acquire at a future date. The Series may
write covered put options on index futures as a partial anticipatory hedge, and
may write covered call options on index futures as a partial hedge against a
decline in the prices of securities held by the Series. This is analogous to
writing covered call options on securities. The Series also may purchase put
options on index futures contracts. The purchase of put options on index futures
contracts is analogous to the purchase of protective put options on individual
securities where a level of protection is sought below which no additional
economic loss would be incurred by the Series.
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FUTURES AND RELATED OPTIONS GUIDELINES. In view of the risks involved in using
the futures strategies that are described above, each Series has adopted the
following investment guidelines to govern its use of such strategies. The Board
of Trustees may modify these guidelines without shareholder vote.
(1) The Series will engage only in covered futures
transactions, and each such transaction will remain
covered so long as the Series is obligated thereby.
(2) The Series will not write options on futures
contracts if aggregate exercise prices of previously
written outstanding options (whether on securities or
securities indexes), together with the value of
assets used to cover all outstanding futures
positions, would exceed 25% of its total net assets.
SPECIAL CHARACTERISTICS AND RISKS OF FUTURES AND RELATED OPTIONS TRADING. No
price is paid upon entering into a futures contract. Instead, upon entering into
a futures contract, a Series is required to deposit with its custodian, in a
segregated account in the name of the futures broker through whom the
transaction is effected, an amount of cash, U.S. Government securities or other
liquid instruments generally equal to 10% or less of the contract value. This
amount is known as "initial margin." When writing a call or a put option on a
futures contract, margin also must be deposited in accordance with applicable
exchange rules. Unlike margin in securities transactions, initial margin on
futures contracts does not involve borrowing to finance the futures
transactions. Rather, initial margin on a futures contract is in the nature of a
performance bond or good-faith deposit on the contract that is returned to a
Series upon termination of the transaction, assuming all obligations have been
satisfied. Under certain circumstances, such as periods of high volatility, a
Series may be required by a futures exchange to increase the level of its
initial margin payment. Additionally, initial margin requirements may be
increased generally in the future by regulatory action. Subsequent payments,
called "variation margin," to and from the broker, are made on a daily basis as
the value of the futures or options position varies, a process known as "marking
to market." For example, when a Series purchases a contract and the value of the
contract rises, the Series receives from the broker a variation margin payment
equal to that increase in value. Conversely, if the value of the futures
position declines, a Series is required to make a variation margin payment to
the broker equal to the decline in value. Variation margin does not involve
borrowing to finance the futures transaction, but rather represents a daily
settlement of a Series' obligations to or from a clearing organization.
Buyers and sellers of futures positions and options thereon can enter into
offsetting closing transactions, similar to closing transactions on options on
securities, by selling or purchasing an offsetting contract or option. Futures
contracts or options thereon may be closed only on an exchange or board of trade
providing a secondary market for such futures contracts or options.
Under certain circumstances, futures exchanges may establish daily limits on the
amount that the price of a futures contract or related option may vary either up
or down from the previous day's settlement price. Once the daily limit has been
reached in a particular contract, no trades may be made that day at a price
beyond that limit. The daily limit governs only price movements during a
particular trading day and therefore does not limit potential losses, because
prices could move to the daily limit for several consecutive trading days with
little or no trading and thereby prevent prompt liquidation of unfavorable
positions. In such event, it may not be possible for the Series to close a
position and, in the event of adverse price movements, the Series would have to
make daily cash payments of variation margin (except in the case of purchased
options). However, if futures contracts have been used to hedge portfolio
securities, such securities will not be sold until the contracts can be
terminated. In such circumstances, an increase in the price of the securities,
if any, may partially or completely offset losses on the futures contract.
However, there is no guarantee that the price of the securities will, in fact,
correlate with the price movements in the contracts and thus provide an offset
to losses on the contracts.
In considering a Series' use of futures contracts and related options,
particular note should be taken of the following:
(1) Successful use by a Series of futures contracts and related
options will depend upon the adviser's ability to predict
movements in the direction of the securities markets, which
requires different skills and techniques than predicting
changes in the prices of individual securities. Moreover,
futures contracts relate not only to the current price level
of the underlying
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securities, but also to anticipated price levels at some point
in the future. There is, in addition, the risk that the
movements in the price of the futures contract will not
correlate with the movements in the prices of the securities
being hedged. For example, if the price of an index futures
contract moves less than the price of the securities that are
the subject of the hedge, the hedge will not be fully
effective, but if the price of the securities being hedged has
moved in an unfavorable direction, a Series would be in a
better position than if it had not hedged at all. If the price
of the securities being hedged has moved in a favorable
direction, the advantage may be partially offset by losses in
the futures position. In addition, if a Series has
insufficient cash, it may have to sell assets to meet daily
variation margin requirements. Any such sale of assets may or
may not be made at prices that reflect a rising market.
Consequently, a Series may need to sell assets at a time when
such sales are disadvantageous to the Series. If the price of
the futures contract moves more than the price of the
underlying securities, a Series will experience either a loss
or a gain on the futures contract that may or may not be
completely offset by movements in the price of the securities
that are the subject of the hedge.
(2) In addition to the possibility that there may be an imperfect
correlation, or no correlation at all, between price movements
in the futures position and the securities being hedged,
movements in the prices of futures contracts may not correlate
perfectly with movements in the prices of the hedged
securities due to price distortions in the futures market.
There may be several reasons unrelated to the value of the
underlying securities that cause this situation to occur.
First, as noted above, all participants in the futures market
are subject to initial and variation margin requirements. If,
to avoid meeting additional margin deposit requirements or for
other reasons, investors choose to close a significant number
of futures contracts through offsetting transactions,
distortions in the normal price relationship between the
securities and the futures markets may occur. Second, because
the margin deposit requirements in the futures market are less
onerous than margin requirements in the securities market,
there may be increased participation by speculators in the
futures market. Such speculative activity in the futures
market also may cause temporary price distortions. As a
result, a correct forecast of general market trends may not
result in successful hedging through the use of futures
contracts over the short term. In addition, activities of
large traders in both the futures and securities markets
involving arbitrage and other investment strategies may result
in temporary price distortions.
(3) Positions in futures contracts may be closed out only on an
exchange or board of trade that provides a secondary market
for such futures contracts. Although each Series intends to
purchase and 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 at any
particular time. In such event, it may not be possible to
close a futures position, and in the event of adverse price
movements, a Series would continue to be required to make
variation margin payments.
(4) Like options on securities, options on futures contracts have
limited life. The ability to establish and close out options
on futures will be subject to the development and maintenance
of liquid secondary markets on the relevant exchanges or
boards of trade. There can be no certainty that such markets
for all options on futures contracts will develop.
(5) Purchasers of options on futures contracts pay a premium in
cash at the time of purchase. This amount and the transaction
costs are all that is at risk. Sellers of options on futures
contracts, however, must post initial margin and are subject
to additional margin calls that could be substantial in the
event of adverse price movements. In addition, although the
maximum amount at risk when the Series purchases an option is
the premium paid for the option and the transaction costs,
there may be circumstances when the purchase of an option on a
futures contract would result in a loss to the Series when the
use of a futures contract would not, such as when there is no
movement in the level of the underlying index value or the
securities or currencies being hedged.
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(6) As is the case with options, a Series' activities in the
futures markets may result in a higher portfolio turnover rate
and additional transaction costs in the form of added
brokerage commissions. However, a Series also may save on
commissions by using futures contracts or options thereon as a
hedge rather than buying or selling individual securities in
anticipation of, or as a result of, market movements.
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APPENDIX B
DESCRIPTION OF RATINGS
Moody's and S&P are private services that provide ratings of the credit quality
of debt obligations. A description of the ratings assigned by Moody's and S&P to
the securities in which the Portfolios' corresponding Series may invest is
discussed below. These ratings represent the opinions of these rating services
as to the quality of the securities that they undertake to rate. It should be
emphasized, however, that ratings are general and are not absolute standards of
quality. The advisers and sub-advisers attempt to discern variations in credit
rankings of the rating services and to anticipate changes in credit ranking.
However, subsequent to purchase by a Series, an issue of securities may cease to
be rated or its rating may be reduced below the minimum rating required for
purchase by the Series. In that event, an adviser or sub-adviser will consider
whether it is in the best interest of the Series to continue to hold the
securities.
MOODY'S RATINGS
CORPORATE AND MUNICIPAL BONDS.
Aaa: Bonds that 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
edged." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa: Bonds that are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements present that make the
long-term risk appear somewhat larger than the Aaa securities.
A: Bonds that 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 some time in the future.
Baa: Bonds that are rated Baa are considered as medium-grade obligations (i.e.,
they are neither highly protected nor poorly secured). Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
CORPORATE AND MUNICIPAL COMMERCIAL PAPER. The highest rating for corporate and
municipal commercial paper is "P-1" (Prime-1). Issuers rated P-1 (or supporting
institutions) have a superior ability for repayment of senior short-term debt
obligations. P-1 repayment ability will often be evidenced by many of the
following characteristics:
[BULLET] Leading market positions in well-established industries.
[BULLET] High rates of return on funds employed.
[BULLET] Conservative capitalization structure with moderate reliance on debt
and ample asset protection.
[BULLET] Broad margins in earnings coverage of fixed financial charges and high
internal cash generation.
[BULLET] Well-established access to a range of financial markets and assured
sources of alternate liquidity.
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MUNICIPAL NOTES. The highest ratings for state and municipal short-term
obligations are "MIG 1," "MIG 2" and "MIG 3" (or "VMIG 1," "VMIG 2" and "VMIG 3"
in the case of an issue having a variable-rate demand feature). Notes rated "MIG
1" or "VMIG 1" are judged to be of the best quality. There is present strong
protection by established cash flows, superior liquidity support or demonstrated
broadbased access to the market for refinancing. Notes rated "MIG 2" or "VMIG 2"
are of high quality, with margins of protection that are ample although not so
large as in the preceding group. Notes rated "MIG 3" or "VMIG 3" are of
favorable quality, with all security elements accounted for but lacking the
undeniable strength of the preceding grades. Liquidity and cash flow protection
may be narrow, and market access for refinancing is likely to be less well
established.
S&P RATINGS
CORPORATE AND MUNICIPAL BONDS.
AAA: Bonds rated AAA are highest grade debt obligations. This rating indicates
an extremely strong capacity to pay interest and repay principal.
AA: Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from AAA issues only in small degree.
A: Bonds 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 bonds in higher rated categories.
BBB: Bonds rated BBB are regarded as having an adequate capacity to pay interest
and repay principal. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
CORPORATE AND MUNICIPAL COMMERCIAL PAPER. The "A-1" rating for corporate and
municipal commercial paper indicates that the degree of safety regarding timely
payment is strong. Those issues determined to possess extremely strong safety
characteristics will be rated "A-1+."
MUNICIPAL NOTES. The "SP-1" rating reflects a very strong or strong capacity to
pay principal and interest. Those issues determined to possess overwhelming
safety characteristics will be rated "SP-1+." The "SP-2" rating reflects a
satisfactory capacity to pay principal and interest.
FITCH RATINGS
DESCRIPTION OF FITCH'S HIGHEST STATE AND MUNICIPAL NOTES RATING.
AAA - Bonds considered to be investment grade and of the highest credit quality.
The obligor has an exceptionally strong ability to pay interest and repay
principal, which is unlikely to be affected by reasonably foreseeable events.
AA - Bonds considered to be investment grade and of very high credit quality.
The obligor's ability to pay interest and repay principal is very strong,
although not quite as strong as bonds rated AAA.
F-1+ - Issues assigned this rating are regarded as having the strongest degree
of assurance for timely payment.
F-1 - Issues assigned this rating reflect an assurance of timely payment only
slightly less in degree than issues rated F-1+.
B-2
<PAGE>
WT MUTUAL FUND
ROXBURY LARGE CAP GROWTH PORTFOLIO
400 Bellevue Parkway
Wilmington, Delaware 19809
- --------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
_______, 1999
- --------------------------------------------------------------------------------
This Statement of Additional Information is not a prospectus and should be read
in conjunction with the Portfolios' current prospectus, dated ______, 1999, as
amended from time to time. A copy of the current prospectus and annual report
may be obtained without charge, by writing to Provident Distributors, Inc.
("PDI"), Four Falls Corporate Center, West Conshohocken, PA 19428, and from
certain institutions such as banks or broker-dealers that have entered into
servicing agreements with PDI or by calling (800) _____.
The Portfolio's audited financial statements for the year ended June 30, 1999,
included in the Annual Report to shareholders, are incorporated into this SAI by
reference.
<PAGE>
TABLE OF CONTENTS
GENERAL INFORMATION ...................................................... 2
INVESTMENT POLICIES ...................................................... 2
INVESTMENT LIMITATIONS ................................................... 4
TRUSTEES AND OFFICERS .................................................... 5
INVESTMENT ADVISORY AND OTHER SERVICES ................................... 6
Distribution of shares and Rule 12b-1 Plan ............................... 8
BROKERAGE ALLOCATION AND OTHER PRACTICES ................................. 9
CAPITAL STOCK AND OTHER SECURITIES ....................................... 9
PURCHASE, REDEMPTION AND PRICING OF SHARES ............................... 10
DIVIDENDS ................................................................ 12
TAXATION OF THE PORTFOLIO ................................................ 12
CALCULATION OF PERFORMANCE INFORMATION ................................... 14
FINANCIAL STATEMENTS ..................................................... 18
APPENDIX A - OPTIONS, FUTURES AND FORWARD CURRENCY CONTRACT STRATEGIES ... A-1
APPENDIX B - DESCRIPTION OF RATINGS ...................................... B-1
i
<PAGE>
GENERAL INFORMATION
WT Mutual Fund (the "Fund") is a diversified, open-end management investment
company organized as a Delaware business trust on June 1, 1994. The name of the
Fund was changed from Kiewit Mutual Fund to WT Mutual Fund on October 20, 1998.
The Fund has established the Roxbury Large Cap Growth Portfolio described in
this Statement of Additional Information. The Portfolio issues three classes of
shares, classes A, B and C.
INVESTMENT POLICIES
The following information supplements the information concerning the Portfolio's
investment objective, policies and limitations found in the prospectus. Unless
otherwise indicated, it applies to the Portfolio through its investment in its
corresponding master fund, which is a series of WT Investment Trust I (the
"Series").
CASH MANAGEMENT. The Large Cap Growth Portfolio may invest no more than 15% of
its total assets in cash and cash equivalents including high-quality money
market instruments and money market funds in order to manage cash flow in the
Portfolio. Certain of these instruments are described below.
(BULLET) MONEY MARKET FUNDS. The Portfolio may invest in the securities of
other money market mutual funds, within the limits prescribed by
the 1940 Act.
(BULLET) U.S. GOVERNMENT OBLIGATIONS. The Portfolio may invest in debt
securities issued or guaranteed by the U.S. Government, its
agencies or instrumentalities.
(BULLET) COMMERCIAL PAPER. The Portfolio may invest in commercial paper.
Commercial paper consists of short-term (up to 270 days) unsecured
promissory notes issued by corporations in order to finance their
current operations. The Portfolio may invest only in commercial
paper rated A-1 or higher by S&P or Moody's or if not rated,
determined by the adviser or sub-adviser to be of comparable
quality.
(BULLET) BANK OBLIGATIONS. The Portfolio may invest in U.S. dollar-
denominated obligations of major banks, including certificates of
deposits, time deposits and bankers' acceptances of major U.S. and
foreign banks and their branches located outside of the United
States, of U.S. branches of foreign banks, of foreign branches of
foreign banks, of U.S. agencies of foreign banks and of wholly-
owned banking subsidiaries of such foreign banks located in the
U.S.
CONVERTIBLE SECURITIES. Convertible securities have characteristics similar to
both fixed income and equity securities. Because of the conversion feature, the
market value of convertible securities tends to move together with the market
value of the underlying stock. As a result, the Portfolio's selection of
convertible securities is based, to a great extent, on the potential for capital
appreciation that may exist in the underlying stock. The value of convertible
securities is also affected by prevailing interest rates, the credit quality of
the issuers and any call provisions.
The Portfolio may invest in convertible securities that are rated, at the time
of purchase, in the three highest rating categories by a nationally recognized
statistical rating organization ("NRSRO") such as Moody's or S&P, or if unrated,
are determined by the adviser or a sub-adviser, as applicable, to be of
comparable quality. Ratings represent the rating agency's opinion regarding the
quality of the security and are not a guarantee of quality. Should the rating of
a security be downgraded subsequent to the Portfolio's purchase of the security,
the adviser, as applicable, will determine whether it is in the best interest of
the Portfolio to retain the security.
DEBT SECURITIES. Debt securities represent money borrowed that obligates the
issuer (e.g., a corporation, municipality, government, government agency) to
repay the borrowed amount at maturity (when the obligation is due and payable)
and usually to pay the holder interest at specific times.
2
<PAGE>
HEDGING STRATEGIES. The Portfolio may engage in certain hedging strategies that
involve options and futures. These hedging strategies are described in detail in
the Appendix.
ILLIQUID SECURITIES. The Portfolio may invest no more than 15% of its net assets
in securities that at the time of purchase have legal or contractual
restrictions on resale or are otherwise illiquid. If the limitations on illiquid
securities are exceeded, other than by a change in market values, the condition
will be reported by the Portfolio's investment adviser to the Board of Trustees.
OPTIONS ON SECURITIES AND SECURITIES INDEXES. The Portfolio may purchase call
options on securities that the adviser intends to include in the Portfolio in
order to fix the cost of a future purchase or attempt to enhance return by, for
example, participating in an anticipated increase in the value of a security.
The Portfolio may purchase put options to hedge against a decline in the market
value of securities held in the Portfolio or in an attempt to enhance return.
The Portfolio may write (sell) put and covered call options on securities in
which they are authorized to invest. The Portfolio may also purchase put and
call options, and write put and covered call options on U.S. securities indexes.
Stock index options serve to hedge against overall fluctuations in the
securities markets rather than anticipated increases or decreases in the value
of a particular security. Of the 85% of the total assets of a Portfolio that are
invested in equity (or related) securities, the Portfolio may not invest more
than 10% of such assets in covered call options on securities and/or options on
securities indices.
REPURCHASE AGREEMENTS. The Portfolio may invest in repurchase agreements. A
repurchase agreement is a transaction in which a Portfolio purchases a security
from a bank or recognized securities dealer and simultaneously commits to resell
that security to a bank or dealer at an agreed date and price reflecting a
market rate of interest, unrelated to the coupon rate or the maturity of the
purchased security. While it is not possible to eliminate all risks from these
transactions (particularly the possibility of a decline in the market value of
the underlying securities, as well as delays and costs to the Portfolio if the
other party to the repurchase agreement becomes bankrupt), it is the policy of a
Portfolio to limit repurchase transactions to primary dealers and banks whose
creditworthiness has been reviewed and found satisfactory by the adviser.
Repurchase agreements maturing in more than seven days are considered illiquid
for purposes of a Portfolio's investment limitations.
RESTRICTED SECURITIES. Restricted securities are securities that may not be sold
to the public without registration under the Securities Act of 1933 or an
exemption from registration. The Portfolio may invest up to 15% of its net
assets in illiquid securities. Restricted securities, including securities
eligible for re-sale under 1933 Act Rule 144A, that are determined to be liquid
are not subject to this limitation. This determination is to be made by the
adviser pursuant to guidelines adopted by the Board of Trustees. Under these
guidelines, the adviser will consider the frequency of trades and quotes for the
security, the number of dealers in, and potential purchasers for, the
securities, dealer undertakings to make a market in the security, and the nature
of the security and of the marketplace trades. In purchasing such restricted
securities, the adviser intends to purchase securities that are exempt from
registration under Rule 144A under the 1933 Act.
SECURITIES LENDING. The Portfolio may lend securities pursuant to agreements,
which require that the loans be continuously secured by collateral equal to 100%
of the market value of the loaned securities. Such collateral consists of cash,
securities of the U.S. Government or its agencies, or any combination of cash
and such securities. Such loans will not be made if, as a result, the aggregate
amount of all outstanding securities loans for the Portfolio exceeds one-third
of the value of the Portfolio's total assets taken at fair market value. The
Portfolio will continue to receive interest on the securities lent while
simultaneously earning interest on the investment of the cash collateral in U.S.
Government securities. However, the Portfolio will normally pay lending fees to
such broker-dealers and related expenses from the interest earned on invested
collateral. There may be risks of delay in receiving additional collateral or
risks of delay in recovery of the securities and even loss of rights in the
collateral should the borrower of the securities fail financially. However,
loans are made only to borrowers deemed by the adviser to be of good standing
and when, in the judgment of the adviser, the consideration that can be earned
currently from such securities loans justifies the attendant risk. Either party
upon reasonable notice to the other party may terminate any loan.
3
<PAGE>
INVESTMENT LIMITATIONS
Except as otherwise provided, the Portfolio and its corresponding master series
has adopted the investment limitations set forth below. Limitations which are
designated as fundamental policies may not be changed without the affirmative
vote of the lessor of (i) 67% or more of the shares of the Portfolio present at
a shareholders meeting if holders of more than 50% of the outstanding shares of
the Portfolio are present in person or by proxy or (ii) more than 50% of the
outstanding shares of the Portfolio. If any percentage restriction on investment
or utilization of assets is adhered to at the time an investment is made, a
later change in percentage resulting from a change in the market values of the
Portfolio's assets or redemptions of shares will not be considered a violation
of the limitation.
The Portfolio will not as a matter of fundamental policy:
1. purchase the securities of any one issuer, if as a result, more than 5% of
the Portfolio's total assets would be invested in the securities of such issuer,
or the Portfolio would own or hold 10% or more of the outstanding voting
securities of that issuer, provided that (1) the Portfolio may invest up to 25%
of its total assets without regard to these limitations; (2) these limitations
do not apply to securities issued or guaranteed by the U.S. Government, its
agencies or instrumentalities; and (3) repurchase agreements fully
collateralized by U.S. Government obligations will be treated as U.S. Government
obligations;
2. purchase securities of any issuer if, as a result, more than 25% of the
Portfolio's total assets would be invested in the securities of one or more
issuers having their principal business activities in the same industry,
provided, that this limitation does not apply to debt obligations issued or
guaranteed by the U.S. Government, its agencies or instrumentalities;
3. borrow money, provided that the Portfolio may borrow money for temporary or
emergency purposes, and then in an aggregate amount not in excess of 10% of a
Portfolio's total assets;
4. make loans to other persons, except by (1) purchasing debt securities in
accordance with its investment objective, policies and limitations; (2) entering
into repurchase agreements; or (3) engaging in securities loan transactions;
5. underwrite any issue of securities, except to the extent that the Portfolio
may be considered to be acting as underwriter in connection with the disposition
of any portfolio security;
6. purchase or sell real estate, provided that the Portfolio may invest in
obligations secured by real estate or interests therein or obligations issued by
companies that invest in real estate or interests therein, including real estate
investment trusts;
7. purchase or sell physical commodities, provided that the Portfolio may invest
in, purchase, sell or enter into financial options and futures, forward and spot
currency contracts, swap transactions and other derivative financial
instruments; or
8. issue senior securities, except to the extent permitted by the 1940 Act.
THE INVESTMENT LIMITATIONS DESCRIBED ABOVE DO NOT PROHIBIT THE PORTFOLIO FROM
INVESTING ALL OR SUBSTANTIALLY ALL OF ITS ASSETS IN THE SHARES OF ANOTHER
REGISTERED OPEN-END INVESTMENT COMPANY SUCH AS THE CORRESPONDING SERIES OF WT
INVESTMENT TRUST I.
The following non-fundamental policies apply to the Portfolio and may be changed
by the Board of Trustees without shareholder approval. The Portfolio will not:
1. make short sales of securities except short sales against the box;
2. purchase securities on margin except for the use of short-term credit
necessary for the clearance of purchases and sales of portfolio securities;
4
<PAGE>
3. purchase portfolio securities if its outstanding borrowings exceed 5% of the
value of its total assets.
TRUSTEES AND OFFICERS
The Board of Trustees supervises the Portfolio's activities and reviews
contractual arrangements with the Portfolio's service providers. The Trustees
and officers are listed below. All persons named as Trustees and officers also
serve in a similar capacity for WT Investment Trust I. An asterisk (*) indicates
those Trustees who are "interested persons".
<TABLE>
<CAPTION>
- ------------------------ -------------- --------------------------------------------------------------
POSITION(S)
NAME, ADDRESS AND HELD WITH
DATE OF BIRTH THE FUND PRINCIPAL OCCUPATION(S) DURING THE PAST FIVE YEARS
- ------------------------ -------------- --------------------------------------------------------------
<S> <C> <C>
ROBERT ARNOLD Trustee In 1989, Mr. Arnold founded, and currently co-manages, R. H.
152 W. 57th Street, 44th Arnold & Co., Inc., an investment banking company. Prior to
Floor forming R. H. Arnold & Co., Inc., Mr. Arnold was Executive
New York, NY 10019 Vice President and a director to Cambrian Capital
Date of Birth: 3/44 Corporation, an investment banking firm he co-founded in 1987.
- ------------------------ -------------- --------------------------------------------------------------
ROBERT J. CHRISTIAN* Trustee, Mr. Christian has been Chief Investment Officer of Wilmington
Rodney Square North President Trust Company since February 1996 and Director of Rodney
1100 N. Market Street Square Management Corporation since 1996. He was Chairman
Wilmington, DE 19890 and Director of PNC Equity Advisors Company, and President
Date of Birth: 2/49 and Chief Investment Officer of PNC Asset Management Group
Inc. from 1994 to 1996. He was Chief Investment Officer of
PNC Bank from 1992 to 1996 and Director of Provident Capital
Management from 1993 to 1996.
- ------------------------ -------------- --------------------------------------------------------------
NICHOLAS A. GIORDANO Trustee Mr. Giordano was appointed interim President of LaSalle
LaSalle University University on July 1, 1998 and was a consultant for financial
Philadelphia, PA 19141 services organizations from late 1997 through 1998. He
Date of Birth: 3/43 served as president and chief executive officer of the
Philadelphia Stock Exchange from 1981 through August 1997,
and also served as chairman of the board of the exchange's
two subsidiaries: Stock Clearing Corporation of Philadelphia
and Philadelphia Depository Trust Company. Before joining
the Philadelphia Stock Exchange, Mr. Giordano served as chief
financial officer at two brokerage firms (1968-1971). A
certified public accountant, he began his career at Price
Waterhouse in 1965.
- ------------------------ -------------- --------------------------------------------------------------
LAWRENCE B. THOMAS Trustee Mr. Thomas retired in October 1996, after having served in
7813 Pierce Circle numerous financial positions at ConAgra, Inc. (an
Omaha, NE 68124 international food company) including Treasurer, Secretary,
Date of Birth: 3/46 Risk Officer, and Senior Vice President-Finance (Principal
Financial Officer). In his thirty-six years at ConAgra, he
also served as director and officer of its numerous
subsidiaries.
- ------------------------ -------------- --------------------------------------------------------------
ERIC K. CHEUNG Vice From 1978 to 1986, Mr. Cheung was the Portfolio Manager for
Rodney Square North President fixed income assets of the Meritor Financial Group. In 1986,
1100 N. Market Street Mr. Cheung joined Wilmington Trust Company and in 1991, he
Wilmington, DE 19890 became the Division Manager for all fixed income products.
Date of Birth: 12/54
- ------------------------ -------------- --------------------------------------------------------------
PAT COLLETTI Vice Mr. Colletti is Vice President and Director of Investment
400 Bellevue Parkway President Accounting and Administration of PFPC Inc. since April 1999.
Wilmington, DE 19809 and Treasurer Prior to joining PFPC, Mr. Colletti was Controller for the
Date of Birth: 11/58 Reserve Funds since 1986.
- ------------------------ -------------- --------------------------------------------------------------
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
- ------------------------ -------------- --------------------------------------------------------------
POSITION(S)
NAME, ADDRESS AND HELD WITH
DATE OF BIRTH THE FUND PRINCIPAL OCCUPATION(S) DURING THE PAST FIVE YEARS
- ------------------------ -------------- --------------------------------------------------------------
<S> <C> <C>
GARY M. GARDNER Secretary Mr. Gardner has been a Senior Vice President of PFPC Inc.
400 Bellevue since January 1994. Previously, Mr. Gardner had provided
Parkway legal and regulatory advice to mutual funds and their
Wilmington, DE 19809 management for more than twenty years at Federated Investors,
Date of Birth: 2/51 Inc., SunAmerica Asset Management Corp. and The Boston
Company, Inc.
- ------------------------ -------------- --------------------------------------------------------------
</TABLE>
On _____, 1999, the Trustees and officers of the Fund, as a group, owned
beneficially, or may be deemed to have owned beneficially, less than 1% of the
outstanding shares of each Portfolio.
The fees and expenses of the Trustees who are not "interested persons" of the
Fund ("Independent Trustees"), as defined in the 1940 Act are paid by each
Portfolio. The following table shows the fees paid during the fiscal year ended
June 30, 1999 to the Independent Trustees for their service to the Fund and the
total compensation paid to the Trustees by the WT Fund Complex, which consists
of the Fund and WT Investment Trust I.
TRUSTEES FEES FOR THE FISCAL YEAR ENDED JUNE 30, 1999
AGGREGATE TOTAL COMPENSATION
COMPENSATION FROM THE FROM THE WT FUND
INDEPENDENT TRUSTEE FUND COMPLEX
- ------------------- ---- -------
Robert Arnold $0 $
Nicholas Giordano $0 $
Lawrence Thomas $0 $
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
The Portfolio has not yet commenced operations.
INVESTMENT ADVISORY AND OTHER SERVICES
ROXBURY CAPITAL MANAGEMENT
Roxbury serves as the investment adviser to the corresponding Series of the
Large Cap Growth Portfolio.
The Large Cap Growth Series pays a monthly advisory fee to Roxbury at the annual
rate of 0.55% of the Series' first $1 billion of average daily net assets; .50%
of the Series' next $1 billion of average daily net assets; and .45% of the
Series average daily net assets over $2 billion.
For Institutional shares, Roxbury has agreed to waive a portion of its advisory
fee or reimburse expenses to the extent total operating expenses exceed 0.75%
for the Large Cap Growth Series. This waiver will remain in place until the
Board of Trustees approves its termination.
ADVISORY SERVICES. Under the terms of advisory agreements, the adviser agrees
to: (a) direct the investments of each Series, subject to and in accordance with
the Series' investment objective, policies and limitations set forth in the
Prospectus and this Statement of Additional Information; (b) purchase and sell
for the Series, securities and other investments consistent with the Series'
objectives and policies; (c) supply office facilities, equipment and personnel
necessary for servicing the investments of the Series; (d)
6
<PAGE>
pay the salaries of all personnel of the Series and the adviser performing
services relating to research, statistical and investment activities on behalf
of the Series; (e) make available and provide such information as the Series
and/or its administrator may reasonably request for use in the preparation of
its registration statement, reports and other documents required by any
applicable federal, foreign or state statutes or regulations; (f) make its
officers and employees available to the Trustees and officers of the Fund for
consultation and discussion regarding the management of the Series and its
investment activities. Additionally, each adviser agrees to create and maintain
all necessary records in accordance with all applicable laws, rules and
regulations pertaining to the various functions performed by it and not
otherwise created and maintained by another party pursuant to contract with the
Fund. Each adviser may at any time or times, upon approval by the Board of
Trustees, enter into one or more sub-advisory agreements with a sub-advisor
pursuant to which the adviser delegates any or all of its duties as listed.
The agreement provides that the adviser shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the Series in connection
with the matters to which the Agreement relates, except to the extent of a loss
resulting from willful misfeasance, bad faith or gross negligence on its part in
the performance of its obligations and duties under the agreement.
The salaries of any officers and the interested Trustees of the Funds who are
affiliated with an adviser and the salaries of all personnel of each adviser
performing services for each Fund relating to research, statistical and
investment activities are paid by the adviser.
ADMINISTRATION AND ACCOUNTING SERVICES
Under separate Administration and Accounting Services Agreements, PFPC Inc., 400
Bellevue Parkway, Wilmington, Delaware 19809 performs certain administrative and
accounting services for WT Mutual Fund and WT Investment Trust I. These services
include preparing shareholder reports, providing statistical and research data,
assisting the advisers in compliance monitoring activities, and preparing and
filing federal and state tax returns on behalf of the Fund and the Trust. In
addition, PFPC prepares and files various reports with the appropriate
regulatory agencies and prepares materials required by the SEC or any state
securities commission having jurisdiction over the Fund. The accounting services
performed by PFPC include determining the net asset value per share of each
Portfolio and maintaining records relating to the securities transactions of the
Fund. The Administration and Accounting Services Agreements provides that PFPC
and its affiliates shall not be liable for any error of judgment or mistake of
law or for any loss suffered by the Fund or its Portfolios, except to the extent
of a loss resulting from willful misfeasance, bad faith or gross negligence on
their part in the performance of their obligations and duties under the
Administration and Accounting Services Agreements.
7
<PAGE>
ADDITIONAL SERVICE PROVIDERS
INDEPENDENT AUDITORS. _________________________________, serves as the
independent auditor, providing services which include (1) auditing the annual
financial statements for the Portfolio, (2) assistance and consultation in
connection with SEC filings and (3) preparation of the annual federal income tax
returns filed on behalf of the Portfolio.
LEGAL COUNSEL. Pepper Hamilton LLP, 3000 Two Logan Square, 18th and Arch
Streets, Philadelphia, PA 19103, serves as counsel to the Fund and WT Investment
Trust I.
CUSTODIAN. PFPC Trust Company, 200 Stevens Drive, Lester, PA 19113, serves as
the Custodian.
TRANSFER AGENT. PFPC Inc., 400 Bellevue Parkway, Wilmington, DE 19890-0001,
serves as the Transfer Agent and Dividend Paying Agent.
DISTRIBUTION OF SHARES AND RULE 12B-1 PLAN
Provident Distributors, Inc. Four Falls Corporate Center, West Conshohocken, PA
19428, serves as the underwriter of the Portfolio's shares pursuant to a
Distribution Agreement with the Fund. Pursuant to the terms of the Distribution
Agreement, PDI is granted the right to sell the shares of the Portfolio as agent
for the Fund. Shares of the Portfolio are offered continuously.
Under the terms of the Distribution Agreement, PDI agrees to use all reasonable
efforts to secure purchasers for Class B and Class C shares of the Portfolio and
to pay expenses of printing and distributing prospectuses, statements of
additional information and reports prepared for use in connection with the sale
of Class B and Class C shares and any other literature and advertising used in
connection with the offering, out of the compensation it receives pursuant to
the Portfolio's Plans of Distribution adopted pursuant to Rule 12b-1 under the
1940 Act (the "12b-1 Plans"). PDI receives no underwriting commissions or Rule
12b-1 fees in connection with the sale of the Portfolio's Institutional class
shares.
The Distribution Agreement provides that PDI, in the absence of willful
misfeasance, bad faith or gross negligence in the performance of its duties or
by reason of reckless disregard of its obligations and duties under the
Agreement, will not be liable to the Portfolio or its shareholders for losses
arising in connection with the sale of Portfolio shares.
The Distribution Agreement became effective as of February 25, 1998 and
continues in effect for a period of two years. Thereafter, the agreement may
continue in effect for successive annual periods provided such continuance is
approved at least annually by a majority of the Trustees, including a majority
of the Independent Trustees. The Distribution Agreement terminates automatically
in the event of an assignment. The Agreement is also terminable without payment
of any penalty with respect to the Portfolio (i) (by vote of a majority of the
Trustees of the Portfolio who are not interested persons of the Portfolio and
who have no direct or indirect financial interest in the operation of any Rule
12b-1 Plan of the Portfolio or any agreements related to a 12b-1 Plan, or by
vote of a majority of the outstanding voting securities of the applicable
Portfolio) on sixty (60) days' written notice to PDI; or (ii) by PDI on sixty
(60) days' written notice to the Portfolio.
PDI will be compensated for distribution services according to the Class B and
Class C 12b-1 Plans, which became effective _____, 1999, regardless of PDI's
expenses. The Class B and Class C 12b-1 Plans provides that PDI will be paid for
distribution activities such as public relations services, telephone services,
sales presentations, media charges, preparation, printing and mailing
advertising and sales literature, data processing necessary to support a
distribution effort and printing and mailing of prospectuses to prospective
shareholders. Additionally, PDI may pay certain financial institutions such as
banks or broker-dealers who have entered into servicing agreements with PDI
("Service Organizations") and other financial institutions for distribution and
shareholder servicing activities.
8
<PAGE>
The Class B and Class C 12b-1 Plans further provides that payment shall be made
for any month only to the extent that such payment does not exceed (i) 0.25% on
an annualized basis of the Class B and Class C shares of the Portfolio's average
net assets; and (ii) limitations set from time to time by the Board of Trustees.
Under the Class B and Class C 12b-1 Plans, if any payments made by the adviser
out of its advisory fee, not to exceed the amount of that fee, to any third
parties (including banks), including payments for shareholder servicing and
transfer agent functions, were deemed to be indirect financing by the Portfolio
of the distribution of its shares, such payments are authorized. The Series may
execute portfolio transactions with and purchase securities issued by depository
institutions that receive payments under the 12b-1 Plans. No preference for
instruments issued by such depository institutions is shown in the selection of
investments.
BROKERAGE ALLOCATION AND OTHER PRACTICES
The adviser places all portfolio transactions on behalf of the Series. Debt
securities purchased and sold by the Series are generally traded on the dealer
market on a net basis (i.e., without commission) through dealers acting for
their own account and not as brokers, or otherwise involve transactions directly
with the issuer of the instrument. This means that a dealer (the securities firm
or bank dealing with a Series) makes a market for securities by offering to buy
at one price and sell at a slightly higher price. The difference between the
prices is known as a spread. When securities are purchased in underwritten
offerings, they include a fixed amount of compensation to the underwriter.
The primary objective of the adviser in placing orders on behalf of the Series
for the purchase and sale of securities is to obtain best execution at the most
favorable prices through responsible brokers or dealers and, where the spread or
commission rates are negotiable, at competitive rates. In selecting a broker or
dealer, the adviser considers, among other things: (i) the price of the
securities to be purchased or sold; (ii) the rate of the spread or commission;
(iii) the size and difficulty of the order; (iv) the nature and character of the
spread or commission for the securities to be purchased or sold; (v) the
reliability, integrity, financial condition, general execution and operational
capability of the broker or dealer; and (vi) the quality of any research or
statistical services provided by the broker or dealer to the Series or to the
adviser.
The adviser cannot readily determine the extent to which spreads or commission
rates or net prices charged by brokers or dealers reflect the value of their
research, analysis, advice and similar services. In such cases, the adviser
receives services it otherwise might have had to perform itself. The research,
analysis, advice and similar services provided by brokers or dealers can be
useful to the adviser in serving its other clients, as well as in serving the
Series. Conversely, information provided to the adviser by brokers or dealers
who have executed transaction orders on behalf of other clients of the adviser
may be useful in providing services to the Series.
Some of the adviser's other clients may have investment objectives and programs
similar to that of the Series. Occasionally, recommendations made to other
clients may result in their purchasing or selling securities simultaneously with
the Series. Consequently, the demand for securities being purchased or the
supply of securities being sold may increase, and this could have an adverse
effect on the price of those securities. It is the policy of the adviser not to
favor one client over another in making recommendations or in placing orders. In
the event of a simultaneous transaction, purchases or sales are averaged as to
price, transaction costs are allocated between a Series and other clients
participating in the transaction on a pro rata basis and purchases and sales are
normally allocated between the Series and the other clients as to amount
according to a formula determined prior to the execution of such transactions.
CAPITAL STOCK AND OTHER SECURITIES
The Fund issues three separate classes of shares, Class A, Class B and Class C
shares, for the Portfolio. The shares of the Portfolio, when issued and paid for
in accordance with the prospectus, will be fully paid and non-assessable shares,
with equal voting rights and no preferences as to conversion, exchange,
dividends, redemption or any other feature.
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The separate classes of shares each represent interests in the same portfolio of
investments, have the same rights and are identical in all respects, except that
the Class B and Class C shares bear Rule 12b-1 distribution expenses, and have
exclusive voting rights with respect to the Rule 12b-1 Plan pursuant to which
the distribution fee may be paid. The net income attributable to such shares and
the dividends payable on such shares will be reduced by the amount of the
distribution fees; accordingly, the net asset value of Class B and Class C
shares will be reduced by such amount to the extent the Portfolio has
undistributed net income.
Shares of the Portfolio entitle holders to one vote per share and fractional
votes for fractional shares held. Shares have non-cumulative voting rights, do
not have preemptive or subscription rights and are transferable. The Portfolio
and each class takes separate votes on matters affecting only that Portfolio or
class. For example, a change in the fundamental investment policies for a
Portfolio would be voted upon by all shareholders of that Portfolio.
The Portfolio does not hold annual meetings of shareholders. The Trustees are
required to call a meeting of shareholders for the purpose of voting upon the
question of removal of any Trustee when requested in writing to do so by the
shareholders of record owning not less than 10% of the Portfolio's outstanding
shares.
PURCHASE, REDEMPTION AND PRICING OF SHARES
PURCHASE OF SHARES. Information regarding the purchase of shares is discussed in
the "Purchase of Shares" section of the prospectus. Additional methods to
purchase shares are as follows:
INDIVIDUAL RETIREMENT ACCOUNTS: You may purchase shares of the Portfolio for a
tax-deferred retirement plan such as an individual retirement account ("IRA").
To order an application for an IRA and a brochure describing a Portfolio IRA,
call the Transfer Agent at (800) _____. PFPC Trust Company, as custodian for
each IRA account receives an annual fee of $10 per account, paid directly to
PFPC Trust Company by the IRA shareholder. If the fee is not paid by the due
date, the appropriate number of Portfolio shares owned by the IRA will be
redeemed automatically as payment.
AUTOMATIC INVESTMENT PLAN: You may purchase Portfolio shares through an
Automatic Investment Plan ("AIP"). Under the AIP, the Transfer Agent, at regular
intervals, will automatically debit your bank checking account in an amount of
$50 or more (after the $1,000 minimum initial investment). You may elect to
invest the specified amount monthly, bimonthly, quarterly, semiannually or
annually. The purchase of Portfolio shares will be effected at their offering
price at the close of regular trading on the New York Stock Exchange
("Exchange") (currently 4:00 p.m., Eastern time), on or about the 20th day of
the month. For an application for the Automatic Investment Plan, check the
appropriate box of the application or call the Transfer Agent at (800) _____.
PAYROLL INVESTMENT PLAN: The Payroll Investment Plan ("PIP") permits you to make
regularly scheduled purchases of Portfolio shares through payroll deductions. To
open a PIP account, you must submit a completed account application, payroll
deduction form and the minimum initial deposit to your employer's payroll
department. Then, a portion of your paychecks will automatically be transferred
to your PIP account for as long as you wish to participate in the plan. It is
the sole responsibility of your employer, not the Fund, the distributor, the
adviser or the transfer agent, to arrange for transactions under the PIP. The
Fund reserves the right to vary its minimum purchase requirements for employees
participating in a PIP.
REDEMPTION OF SHARES. Information regarding the redemption of shares is
discussed in the "Redemption of Shares" section of the prospectus. Additional
methods to redeem shares are as follows:
BY WIRE: Redemption proceeds may be wired to your predesignated bank account in
any commercial bank in the United States if the amount is $1,000 or more. The
receiving bank may charge a fee for this service. Proceeds may also be mailed to
your bank or, for amounts of $10,000 or less, mailed to your Portfolio
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account address of record if the address has been established for at least 60
days. In order to authorize the Transfer Agent to mail redemption proceeds to
your Portfolio account address of record, complete the appropriate section of
the Application for Telephone Redemptions or include your Portfolio account
address of record when you submit written instructions. You may change the
account that you have designated to receive amounts redeemed at any time. Any
request to change the account designated to receive redemption proceeds should
be accompanied by a guarantee of the shareholder's signature by an eligible
institution. A signature and a signature guarantee are required for each person
in whose name the account is registered. Further documentation will be required
to change the designated account when a corporation, other organization, trust,
fiduciary or other institutional investor holds the Portfolio shares.
SYSTEMATIC WITHDRAWAL PLAN: If you own Portfolio shares with a value of $10,000
or more you may participate in the Systematic Withdrawal Plan ("SWP"). Under the
SWP, you may automatically redeem a portion of your account monthly, bimonthly,
quarterly, semiannually or annually. The minimum withdrawal available is $100.
The redemption of Portfolio shares will be effected at the NAV determined on or
about the 25th day of the month.
ADDITIONAL INFORMATION REGARDING REDEMPTIONS: To ensure proper authorization
before redeeming Portfolio shares, the Transfer Agent may require additional
documents such as, but not restricted to, stock powers, trust instruments, death
certificates, appointments as fiduciary, certificates of corporate authority and
waivers of tax required in some states when settling estates.
When shares are held in the name of a corporation, other organization, trust,
fiduciary or other institutional investor, the Transfer Agent requires, in
addition to the stock power, certified evidence of authority to sign the
necessary instruments of transfer. THESE PROCEDURES ARE FOR THE PROTECTION OF
SHAREHOLDERS AND SHOULD BE FOLLOWED TO ENSURE PROMPT PAYMENT. Redemption
requests must not be conditional as to date or price of the redemption. Proceeds
of a redemption will be sent within 7 days of acceptance of shares tendered for
redemption. Delay may result if the purchase check has not yet cleared, but the
delay will be no longer than required to verify that the purchase check has
cleared, and the Fund will act as quickly as possible to minimize delay.
The value of shares redeemed may be more or less than the shareholder's cost,
depending on the net asset value at the time of redemption. Redemption of shares
may result in tax consequences (gain or loss) to the shareholder, and the
proceeds of a redemption may be subject to backup withholding.
A shareholder's right to redeem shares and to receive payment therefore may be
suspended when (a) the Exchange is closed, other than customary weekend and
holiday closings, (b) trading on the Exchange is restricted, (c) an emergency
exists as a result of which it is not reasonably practicable to dispose of the
Portfolio's securities or to determine the value of the Portfolio's net assets,
or (d) ordered by a governmental body having jurisdiction over the Portfolio for
the protection of the Portfolio's shareholders, provided that applicable rules
and regulations of the SEC (or any succeeding governmental authority) shall
govern as to whether a condition described in (b), (c) or (d) exists. In case of
such suspension, shareholders of the Portfolio may withdraw their requests for
redemption or may receive payment based on the net asset value of the Portfolio
next determined after the suspension is lifted.
The Portfolio reserves the right, if conditions exist which make cash payments
undesirable, to honor any request for redemption by making payment in whole or
in part with readily marketable securities chosen by the Portfolio and valued in
the same way as they would be valued for purposes of computing the net asset
value of the applicable Portfolio. If payment is made in securities, a
shareholder may incur transaction expenses in converting these securities into
cash. The Portfolio has elected, however, to be governed by Rule 18f-1 under the
1940 Act, as a result of which a Portfolio is obligated to redeem shares solely
in cash if the redemption requests are made by one shareholder account up to the
lesser of $250,000 or 1% of the net assets of the applicable Portfolio during
any 90-day period. This election is irrevocable unless the SEC permits its
withdrawal.
The net asset value per share of the Portfolio is determined by dividing the
value of the Portfolio's net assets by the total number of Portfolio shares
outstanding. This determination is made by PFPC, as of the
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close of regular trading on the Exchange (currently 4:00 p.m., Eastern Time)
each day the Portfolio is open for business. The Portfolio is open for business
on days when the Exchange, PFPC and the Philadelphia branch office of the
Federal Reserve are open for business.
In valuing the Portfolio's assets, a security listed on the Exchange (and not
subject to restrictions against sale by the Portfolio on the Exchange) will be
valued at its last sale price on the Exchange on the day the security is valued.
Lacking any sales on such day, the security will be valued at the mean between
the closing asked price and the closing bid price. Securities listed on other
exchanges (and not subject to restriction against sale by the Portfolio on such
exchanges) will be similarly valued, using quotations on the exchange on which
the security is traded most extensively. Unlisted securities that are quoted on
the National Association of Securities Dealers' National Market System, for
which there have been sales of such securities on such day, shall be valued at
the last sale price reported on such system on the day the security is valued.
If there are no such sales on such day, the value shall be the mean between the
closing asked price and the closing bid price. The value of such securities
quoted on the NASDAQ Stock Market System, but not listed on the National Market
System, shall be valued at the mean between the closing asked price and the
closing bid price. Unlisted securities that are not quoted on the NASDAQ Stock
Market System and for which over-the-counter market quotations are readily
available will be valued at the mean between the current bid and asked prices
for such security in the over-the-counter market. Other unlisted securities (and
listed securities subject to restriction on sale) will be valued at fair value
as determined in good faith under the direction of the Board of Trustees
although the actual calculation may be done by others. Short-term investments
with remaining maturities of less than 61 days are valued at amortized cost.
DIVIDENDS
Dividends from the Portfolio's net investment income and distributions of net
short-term capital gain and net capital gain (the excess of net long-term
capital gain over the short-term capital loss) realized by the Portfolio, after
deducting any available capital loss carryovers are declared and paid to its
shareholders annually.
TAXATION OF THE PORTFOLIO
GENERAL. The Portfolio is treated as a separate corporation for federal income
tax purposes. To qualify or continue to qualify for treatment as a regulated
investment company ("RIC") under the Internal Revenue Code of 1986, as amended
(the "Code"), the Portfolio must distribute to its shareholders for each taxable
year at least 90% of its investment company taxable income (consisting generally
of net investment income and net short-term capital gain and must meet several
additional requirements. For the Portfolio, these requirements include the
following: (1) the Portfolio must derive at least 90% of its gross income each
taxable year from dividends, interest, payments with respect to securities loans
and gains from the sale or other disposition of securities or foreign
currencies, or other income (including gains from options, futures and forward
contracts) derived with respect to its business of investing in securities or
those currencies; (2) at the close of each quarter of the Portfolio's taxable
year, at least 50% of the value of its total assets must be represented by cash
and cash items, U.S. Government securities, securities of other RICs and other
securities, with these other securities limited, in respect of any one issuer,
to an amount that does not exceed 5% of the value of the Portfolio's total
assets and that does not represent more than 10% of the issuer's outstanding
voting securities; and (3) at the close of each quarter of the Portfolio's
taxable year, not more than 25% of the value of its total assets may be invested
in securities (other than U.S. Government securities or the securities of other
RICs) of any one issuer.
If the Portfolio failed to qualify for treatment as a RIC in any taxable year,
it would be subject to tax on its taxable income at corporate rates and all
distributions from earnings and profits, including any distributions from net
capital gain (the excess of net long-term capital gain over net short-term
capital loss), would be taxable to its shareholders as ordinary income. In
addition, the Portfolio could be required to recognize unrealized gains, pay
substantial taxes and interest and make substantial distributions before
qualifying again for RIC treatment.
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The Portfolio will be subject to a nondeductible 4% excise tax to the extent it
fails to distribute by the end of any calendar year substantially all of its
ordinary income for that year and capital gain net income for the one-year
period ending on October 31 of that year, plus certain other amounts.
Dividends and other distributions declared by the Portfolio in October, November
or December of any year and payable to shareholders of record on a date in one
of those months will be deemed to have been paid by the Portfolio and received
by the shareholders on December 31 of that year if they are paid by the
Portfolio during the following January. Accordingly, such distributions will be
taxed to the shareholders for the year in which that December 31 falls.
Investors should be aware that if Portfolio shares are purchased shortly before
the record date for any dividend (other than an exempt-interest dividend) or
capital gain distribution, the shareholder will pay full price for the shares
and will receive some portion of the price back as a taxable distribution.
If the Portfolio makes a distribution to shareholders in excess of its current
and accumulated earnings and profits in any taxable year, the excess
distribution will be treated by each shareholder as a return of capital to the
extent of the shareholder's tax basis and thereafter as capital gain.
It is anticipated that all or a portion of the dividends from the net investment
income of the Portfolio will qualify for the dividends-received deduction
allowed to corporations. The qualifying portion may not exceed the aggregate
dividends received by the Portfolio from U.S. corporations. However, dividends
received by a corporate shareholder and deducted by it pursuant to the
dividends-received deduction are subject indirectly to the federal alternative
minimum tax. Moreover, the dividends-received deduction will be reduced to the
extent the shares with respect to which the dividends are received are treated
as debt-financed and will be eliminated if those shares are deemed to have been
held for less than 46 days. Distributions of net short-term capital gain and net
capital gain are not eligible for the dividends-received deduction.
Any loss realized by a shareholder on the redemption of shares within six months
from the date of their purchase will be treated as a long-term, instead of a
short-term, capital loss to the extent of any capital gain distributions to that
shareholder with respect to those shares.
HEDGING TRANSACTIONS. The use of hedging strategies, such as writing (selling)
and purchasing options and futures contracts and entering into forward currency
contracts, involves complex rules that will determine for federal income tax
purposes the amount, character and timing of recognition of the gains and losses
the Portfolio realizes in connection therewith. Gains from the disposition of
foreign currencies (except certain gains that may be excluded by future
regulations) and gains from options, futures and foreign currency contracts
derived by the Portfolio with respect to its business of investing in securities
qualify as permissible income under the Income Requirement.
Futures and foreign currency contracts that are subject to section 1256 of the
Code (other than such contracts that are part of a "mixed straddle" with respect
to which the Portfolio has made an election not to have the following rules
apply) ("Section 1256 Contracts") and that are held by a Portfolio at the end of
its taxable year generally will be "marked-to-market" (that is, deemed to have
been sold for their market value) for federal income tax purposes. Sixty percent
of any net gain or loss recognized on these deemed sales, and 60% of any net
realized gain or loss from any actual sales of Section 1256 Contracts, will be
treated as long-term capital gain or loss, and the balance will be treated as
short-term capital gain or loss. As of the date of this Statement of Additional
Information, it is not entirely clear whether that 60% portion will qualify for
the reduced maximum tax rates on non-corporate taxpayers' net capital gain
enacted by the Taxpayer Relief Act of 1997 -- 20% (10% for taxpayers in the 15%
marginal tax bracket) for gain recognized on capital assets held for more than
18 months -- instead of the 28% rate in effect before that legislation, which
now applies to gain recognized on capital assets held for more than one year but
not more than 18 months. However, technical correction legislation passed by the
House of Representatives late in 1997 would clarify that the lower rates apply.
Section 1256 Contracts also may be marked-to-market for purposes of the Excise
Tax.
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Code section 1092 (dealing with straddles) also may affect the taxation of
options and futures contracts in which the Portfolio may invest. Section 1092
defines a "straddle" as offsetting positions with respect to personal property;
for these purposes, options and futures contracts are personal property. Under
section 1092, any loss from the disposition of a position in a straddle
generally may be deducted only to the extent the loss exceeds the unrealized
gain on the offsetting position(s) of the straddle. Section 1092 also provides
certain "wash sale" rules, which apply to transactions where a position is sold
at a loss and a new offsetting position is acquired within a prescribed period,
and "short sale" rules applicable to straddles. If the Portfolio makes certain
elections, the amount, character and timing of the recognition of gains and
losses from the affected straddle positions would be determined under rules that
vary according to the elections made. Because only a few of the regulations
implementing the straddle rules have been promulgated, the tax consequences to
the Portfolio of straddle transactions are not entirely clear.
If the Portfolio has an "appreciated financial position" -- generally, an
interest (including an interest through an option, futures or forward contract
or short sale) with respect to any stock, debt instrument (other than "straight
debt") or partnership interest the fair market value of which exceeds its
adjusted basis -- and enters into a "constructive sale" of the same or
substantially similar property, the Portfolio will be treated as having made an
actual sale thereof, with the result that gain will be recognized at that time.
A constructive sale generally consists of a short sale, an offsetting notional
principal contract or futures or forward contract entered into by the Portfolio
or a related person with respect to the same or substantially similar property.
In addition, if the appreciated financial position is itself a short sale or
such a contract, acquisition of the underlying property or substantially similar
property will be deemed a constructive sale.
The foregoing tax discussion is a summary included for general informational
purposes only. Each shareholder is advised to consult its own tax adviser with
respect to the specific tax consequences to it of an investment in the
Portfolio, including the effect and applicability of state, local, foreign and
other tax laws and the possible effects of changes in federal or other tax laws.
Shortly after the end of each year, PFPC calculates the federal income tax
status of all distributions made during the year. In addition to federal income
tax, shareholders may be subject to state and local taxes on distributions from
the Portfolio. Shareholders should consult their tax advisers regarding specific
questions relating to federal, state and local taxes.
CALCULATION OF PERFORMANCE INFORMATION
The performance of the Portfolio may be quoted in terms of its yield and its
total return in advertising and other promotional materials. Performance data
quoted represents past performance and is not intended to indicate future
performance. Performance of the Portfolio will vary based on changes in market
conditions and the level of the Portfolio's expenses. These performance figures
are calculated in the following manner:
A. AVERAGE ANNUAL TOTAL RETURN is the average annual compound rate
of return for the periods of one year, five years, ten years
and the life of the Portfolio, where applicable, all ended on
the last day of a recent calendar quarter. Average annual total
return quotations reflect changes in the price of the
Portfolio's shares, if any, and assume that all dividends
during the respective periods were reinvested in Portfolio
shares. Average annual total return is calculated by finding
the average annual compound rates of return of a hypothetical
investment over such periods, according to the following
formula (average annual total return is then expressed as a
percentage):
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T = (ERV/P)1/n - 1
Where: P = a hypothetical initial investment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value: ERV is
the value, at the end of the
applicable period, of a hypothetical
$1,000 investment made at the
beginning of the applicable period.
B. YIELD CALCULATIONS. From time to time, the Portfolio may advertise
its yield. Yield for the Portfolio is calculated by dividing the Portfolio's
investment income for a 30-day period, net of expenses, by the average number of
shares entitled to receive dividends during that period according to the
following formula:
YIELD = 2[((A-B)/CD + 1)6-1]
where:
a = dividends and interest earned during the period;
b = expenses accrued for the period (net of
reimbursements);
c = the average daily number of shares outstanding
during the period that were entitled to receive
dividends; and
d = the maximum offering price per share on the last
day of the period.
The result is expressed as an annualized percentage (assuming semiannual
compounding) of the maximum offering price per share at the end of the period.
Except as noted below, in determining interest earned during the period
(variable "a" in the above formula), pfpc calculates the interest earned on each
debt instrument held by the Portfolio during the period by: (i) computing the
instrument's yield to maturity, based on the value of the instrument (including
actual accrued interest) as of the last business day of the period or, if the
instrument was purchased during the period, the purchase price plus accrued
interest; (ii) dividing the yield to maturity by 360; and (iii) multiplying the
resulting quotient by the value of the instrument (including actual accrued
interest). Once interest earned is calculated in this fashion for each debt
instrument held by the Portfolio, interest earned during the period is then
determined by totaling the interest earned on all debt instruments held by the
Portfolio.
For purposes of these calculations, the maturity of a debt instrument
with one or more call provisions is assumed to be the next date on which the
instrument reasonably can be expected to be called or, if none, the maturity
date. In general, interest income is reduced with respect to debt instruments
trading at a premium over their par value by subtracting a portion of the
premium from income on a daily basis, and increased with respect to debt
instruments trading at a discount by adding a portion of the discount to daily
income.
In determining dividends earned by any preferred stock or other equity
securities held by the Portfolio during the period (variable "a" in the above
formula), PFPC accrues the dividends daily at their stated dividend rates.
Capital gains and losses generally are excluded from yield calculations.
Because yield accounting methods differ from the accounting methods
used to calculate net investment income for other purposes, the Portfolio's
yield may not equal the dividend income actually paid to investors or the net
investment income reported with respect to the Portfolio in the Fund's financial
statements.
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Yield information may be useful in reviewing the Portfolio's
performance and in providing a basis for comparison with other investment
alternatives. However, the Portfolio's yields fluctuate, unlike investments that
pay a fixed interest rate over a stated period of time. Investors should
recognize that in periods of declining interest rates, the Portfolio's yields
will tend to be somewhat higher than prevailing market rates, and in periods of
rising interest rates, the Portfolio's yields will tend to be somewhat lower.
Also, when interest rates are falling, the inflow of net new money to the
Portfolio from the continuous sale of their shares will likely be invested in
instruments producing lower yields than the balance of the Portfolios' holdings,
thereby reducing the current yields of the Portfolio. In periods of rising
interest rates, the opposite can be expected to occur.
COMPARISON OF PORTFOLIO PERFORMANCE. A comparison of the quoted performance
offered for various investments is valid only if performance is calculated in
the same manner. Since there are many methods of calculating performance,
investors should consider the effects of the methods used to calculate
performance when comparing performance of the Portfolio with performance quoted
with respect to other investment companies or types of investments. For example,
it is useful to note that yields reported on debt instruments are generally
prospective, contrasted with the historical yields reported by the Portfolio.
In connection with communicating its performance to current or prospective
shareholders, the Portfolio also may compare these figures to the performance of
other mutual funds tracked by mutual fund rating services or to unmanaged
indices which may assume reinvestment of dividends but generally do not reflect
deductions for administrative and management costs.
From time to time, in marketing and other literature, the Portfolio's
performance may be compared to the performance of broad groups of comparable
mutual funds or unmanaged indexes of comparable securities with similar
investment goals, as tracked by independent organizations such as Investment
Company Data, Inc. (an organization which provides performance ranking
information for broad classes of mutual funds), Lipper Analytical Services, Inc.
("Lipper") (a mutual fund research firm which analyzes over 1,800 mutual funds),
CDA Investment Technologies, Inc. (an organization which provides mutual fund
performance and ranking information), Morningstar, Inc. (an organization which
analyzes over 2,400 mutual funds) and other independent organizations. When
Lipper's tracking results are used, the Portfolio will be compared to Lipper's
appropriate fund category, that is, by fund objective and portfolio holdings.
Rankings may be listed among one or more of the asset-size classes as determined
by Lipper. When other organizations' tracking results are used, the Portfolio
will be compared to the appropriate fund category, that is, by fund objective
and portfolio holdings, or to the appropriate volatility grouping, where
volatility is a measure of a fund's risk.
Since the assets in all funds are always changing, the Portfolio may be ranked
within one asset-size class at one time and in another asset-size class at some
other time. In addition, the independent organization chosen to rank the
Portfolio in marketing and promotional literature may change from time to time
depending upon the basis of the independent organization's categorizations of
mutual funds, changes in a Portfolio's investment policies and investments, the
Portfolio's asset size and other factors deemed relevant. Advertisements and
other marketing literature will indicate the time period and Lipper asset-size
class or other performance ranking company criteria, as applicable, for the
ranking in question.
Evaluations of Portfolio performance made by independent sources may also be
used in advertisements concerning the Portfolio, including reprints of or
selections from, editorials or articles about the Portfolio. Sources for
performance information and articles about the Portfolio may include the
following:
BARRON'S, a Dow Jones and Company, Inc. business and financial weekly that
periodically reviews mutual fund performance data.
CDA INVESTMENT TECHNOLOGIES, INC., an organization that provides performance and
ranking information through examining the dollar results of hypothetical mutual
fund investments and comparing these results against appropriate market indices.
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CHANGING TIMES, THE KIPLINGER MAGAZINE, a monthly investment advisory
publication that periodically features the performance of a variety of
securities.
CONSUMER DIGEST, a monthly business/financial magazine that includes a "Money
Watch" section featuring financial news.
FINANCIAL WORLD, a general business/financial magazine that includes a "Market
Watch" department reporting on activities in the mutual fund industry.
FORBES, a national business publication that from time to time reports the
performance of specific investment companies in the mutual fund industry.
FORTUNE, a national business publication that periodically rates the performance
of a variety of mutual funds.
IBC'S MONEY FUND REPORT, a weekly publication of IBC/Donoghue, Inc., of Ashland,
Massachusetts, reporting on the performance of the nation's money market funds,
summarizing money market fund activity, and including certain averages as
performance benchmarks, specifically "IBC's Money Fund Average," and "IBC's
Government Money Fund Average."
IBC'S MONEY FUND DIRECTORY, an annual directory ranking money market mutual
funds.
INVESTMENT COMPANY DATA, INC., an independent organization which provides
performance ranking information for broad classes of mutual funds.
INVESTOR'S DAILY, a daily newspaper that features financial, economic, and
business news.
LIPPER ANALYTICAL SERVICES, INC.'S MUTUAL FUND PERFORMANCE ANALYSIS, a weekly
publication of industry-wide mutual fund averages by type of fund.
MONEY, a monthly magazine that from time to time features both specific funds
and the mutual fund industry as a whole.
MUTUAL FUND VALUES, a biweekly Morningstar, Inc. publication that provides
ratings of mutual funds based on fund performance risk and portfolio
characteristics.
THE NEW YORK TIMES, a nationally distributed newspaper which regularly covers
financial news.
PERSONAL INVESTING NEWS, a monthly news publication that often reports on
investment opportunities and market conditions.
PERSONAL INVESTOR, a monthly investment advisory publication that includes a
"Mutual Funds Outlook" section reporting on mutual fund performance measures,
yields, indices and portfolio holdings.
SUCCESS, a monthly magazine targeted to the world of entrepreneurs and growing
business, often featuring mutual fund performance data.
USA TODAY, the nation's number one daily newspaper.
U.S. NEWS AND WORLD REPORT, a national business weekly that periodically reports
mutual fund performance data.
WALL STREET JOURNAL, a Dow Jones and Company, Inc. newspaper that regularly
covers financial news.
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WIESENBERGER INVESTMENT COMPANIES SERVICES, an annual compendium of information
about mutual funds and other investment companies, including comparative data on
funds' backgrounds, management policies, salient features, management results,
income and dividend records, and price ranges.
FINANCIAL STATEMENTS
The Portfolio's audited financial statements and the audited financial
statements of it's corresponding Series for the fiscal year ended June 30, 1999,
including notes thereto and the report of __________thereon, are incorporated
herein by reference to the Portfolio's Annual Report to Shareholders.
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APPENDIX A
OPTIONS, FUTURES AND FORWARD CURRENCY CONTRACT STRATEGIES
REGULATION OF THE USE OF OPTIONS, FUTURES AND FORWARD CURRENCY CONTRACT
STRATEGIES. As discussed in the prospectus, in managing the Portfolio's
corresponding Series, the adviser may engage in certain options, futures and
forward currency contract strategies for certain bona fide hedging, risk
management or other portfolio management purposes. Certain special
characteristics of and risks associated with using these strategies are
discussed below. Use of options, futures and forward currency contracts is
subject to applicable regulations and/or interpretations of the SEC and the
several options and futures exchanges upon which these instruments may be
traded. The Board of Trustees has adopted investment guidelines (described
below) reflecting these regulations.
In addition to the products, strategies and risks described below and in the
prospectus, the adviser expects to discover additional opportunities in
connection with options, futures and forward currency contracts. These new
opportunities may become available as new techniques develop, as regulatory
authorities broaden the range of permitted transactions and as new options,
futures and forward currency contracts are developed. These opportunities may be
utilized to the extent they are consistent with the Portfolio's investment
objective and limitations and permitted by applicable regulatory authorities.
The registration statement for the Portfolio will be supplemented to the extent
that new products and strategies involve materially different risks than those
described below and in the prospectus.
COVER REQUIREMENTS. The Series will not use leverage in their options and
futures. Accordingly, the Series will comply with guidelines established by the
SEC with respect to coverage of these strategies by either (1) setting aside
cash or liquid, unencumbered, daily marked-to-market securities in one or more
segregated accounts with the custodian in the prescribed amount; or (2) holding
securities or other options or futures contracts whose values are expected to
offset ("cover") their obligations thereunder. Securities, currencies, or other
options or futures contracts used for cover cannot be sold or closed out while
these strategies are outstanding, unless they are replaced with similar assets.
As a result, there is a possibility that the use of cover involving a large
percentage of the Series' assets could impede portfolio management, or the
Series' ability to meet redemption requests or other current obligations.
OPTIONS STRATEGIES. The Series may purchase and write (sell) only those options
on securities and securities indices that are traded on U.S. exchanges.
Exchange-traded options in the U.S. are issued by a clearing organization
affiliated with the exchange, on which the option is listed, which, in effect,
guarantees completion of every exchange-traded option transaction.
The Series may purchase call options on securities in which it is authorized to
invest in order to fix the cost of a future purchase. Call options also may be
used as a means of enhancing returns by, for example, participating in an
anticipated price increase of a security. In the event of a decline in the price
of the underlying security, use of this strategy would serve to limit the
potential loss to the Series to the option premium paid; conversely, if the
market price of the underlying security increases above the exercise price and
the Series either sells or exercises the option, any profit eventually realized
would be reduced by the premium paid.
The Series may purchase put options on securities that it holds in order to
hedge against a decline in the market value of the securities held or to enhance
return. The put option enables the Series to sell the underlying security at the
predetermined exercise price; thus, the potential for loss to the Series below
the exercise price is limited to the option premium paid. If the market price of
the underlying security is higher than the exercise price of the put option, any
profit the Series realizes on the sale of the security is reduced by the premium
paid for the put option less any amount for which the put option may be sold.
The Series may on certain occasions wish to hedge against a decline in the
market value of securities that it holds at a time when put options on those
particular securities are not available for purchase. At those times, the Series
may purchase a put option on other carefully selected securities in which it is
authorized to invest, the values of which historically have a high degree of
positive correlation to the value of the securities actually held. If the
adviser's judgment is correct, changes in the value of the put options should
generally offset changes in the value of the securities being hedged. However,
the correlation between the two values may not be as close in these
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transactions as in transactions in which the Series purchases a put option on a
security that it holds. If the value of the securities underlying the put option
falls below the value of the portfolio securities, the put option may not
provide complete protection against a decline in the value of the portfolio
securities.
The Series may write covered call options on securities in which it is
authorized to invest for hedging purposes or to increase return in the form of
premiums received from the purchasers of the options. A call option gives the
purchaser of the option the right to buy, and the writer (seller) the obligation
to sell, the underlying security at the exercise price during the option period.
The strategy may be used to provide limited protection against a decrease in the
market price of the security, in an amount equal to the premium received for
writing the call option less any transaction costs. Thus, if the market price of
the underlying security held by the Series declines, the amount of the decline
will be offset wholly or in part by the amount of the premium received by the
Series. If, however, there is an increase in the market price of the underlying
security and the option is exercised, the Series will be obligated to sell the
security at less than its market value.
The Series may also write covered put options on securities in which it is
authorized to invest. A put option gives the purchaser of the option the right
to sell, and the writer (seller) the obligation to buy, the underlying security
at the exercise price during the option period. So long as the obligation of the
writer continues, the writer may be assigned an exercise notice by the
broker-dealer through whom such option was sold, requiring it to make payment of
the exercise price against delivery of the underlying security. The operation of
put options in other respects, including their related risks and rewards, is
substantially identical to that of call options. If the put option is not
exercised, the Series will realize income in the amount of the premium received.
This technique could be used to enhance current return during periods of market
uncertainty. The risk in such a transaction would be that the market price of
the underlying securities would decline below the exercise price less the
premiums received, in which case the Series would expect to suffer a loss.
The Series may purchase put and call options and write covered put and call
options on indexes in much the same manner as the more traditional options
discussed above, except that index options may serve as a hedge against overall
fluctuations in the securities markets (or a market sector) rather than
anticipated increases or decreases in the value of a particular security. An
index assigns values to the securities included in the index and fluctuates with
changes in such values. Settlements of index options are effected with cash
payments and do not involve delivery of securities. Thus, upon settlement of an
index option, the purchaser will realize, and the writer will pay, an amount
based on the difference between the exercise price and the closing price of the
index. The effectiveness of hedging techniques using index options will depend
on the extent to which price movements in the index selected correlate with
price movements of the securities in which the Series invests. Perfect
correlation is not possible because the securities held or to be acquired by the
Series will not exactly match the composition of indexes on which options are
purchased or written.
The Series may purchase and write covered straddles on securities or indexes. A
long straddle is a combination of a call and a put purchased on the same
security where the exercise price of the put is less than or equal to the
exercise price on the call. The Series would enter into a long straddle when the
adviser believes that it is likely that prices will be more volatile during the
term of the options than is implied by the option pricing. A short straddle is a
combination of a call and a put written on the same security where the exercise
price on the put is less than or equal to the exercise price of the call where
the same issue of the security is considered "cover" for both the put and the
call. The Series would enter into a short straddle when the adviser believes
that it is unlikely that prices will be as volatile during the term of the
options as is implied by the option pricing. In such case, the Series will set
aside cash and/or liquid, unencumbered securities in a segregated account with
its custodian equivalent in value to the amount, if any, by which the put is
"in-the-money," that is, that amount by which the exercise price of the put
exceeds the current market value of the underlying security. Because straddles
involve multiple trades, they result in higher transaction costs and may be more
difficult to open and close out.
The Series may purchase put and call warrants with values that vary depending on
the change in the value of one or more specified indexes ("index warrants"). An
index warrant is usually issued by a bank or other financial institution and
gives the Series the right, at any time during the term of the warrant, to
receive upon exercise of the warrant a cash payment from the issuer of the
warrant based on the value of the underlying index at the time of exercise. In
general, if the Series holds a call warrant and the value of the underlying
index rises above the exercise price of the warrant, the Series will be entitled
to receive a cash payment from the issuer upon exercise
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based on the difference between the value of the index and the exercise price of
the warrant; if the Series holds a put warrant and the value of the underlying
index falls, the Series will be entitled to receive a cash payment from the
issuer upon exercise based on the difference between the exercise price of the
warrant and the value of the index. The Series holding a call warrant would not
be entitled to any payments from the issuer at any time when the exercise price
is greater than the value of the underlying index; the Series holding a put
warrant would not be entitled to any payments when the exercise price is less
than the value of the underlying index. If the Series does not exercise an index
warrant prior to its expiration, then the Series loses the amount of the
purchase price that it paid for the warrant.
The Series will normally use index warrants as it may use index options. The
risks of the Series' use of index warrants are generally similar to those
relating to its use of index options. Unlike most index options, however, index
warrants are issued in limited amounts and are not obligations of a regulated
clearing agency, but are backed only by the credit of the bank or other
institution which issues the warrant. Also, index warrants generally have longer
terms than index options. Index warrants are not likely to be as liquid as index
options backed by a recognized clearing agency. In addition, the terms of index
warrants may limit the Series' ability to exercise the warrants at any time or
in any quantity.
OPTIONS GUIDELINES. In view of the risks involved in using the options
strategies described above, the Series has adopted the following investment
guidelines to govern its use of such strategies; these guidelines may be
modified by the Board of Trustees without shareholder approval:
(1) the Series will write only covered options, and each
such option will remain covered so long as the Series
is obligated thereby; and
(2) the Series will not write options (whether on
securities or securities indexes) if aggregate
exercise prices of previous written outstanding
options, together with the value of assets used to
cover all outstanding positions, would exceed 25% of
its total net assets.
SPECIAL CHARACTERISTICS AND RISKS OF OPTIONS TRADING. The Series may effectively
terminate its right or obligation under an option by entering into a closing
transaction. If the Series wishes to terminate its obligation to purchase or
sell securities under a put or a call option it has written, the Series may
purchase a put or a call option of the same series (that is, an option identical
in its terms to the option previously written). This is known as a closing
purchase transaction. Conversely, in order to terminate its right to purchase or
sell specified securities under a call or put option it has purchased, the
Series may sell an option of the same series as the option held. This is known
as a closing sale transaction. Closing transactions essentially permit the
Series to realize profits or limit losses on its options positions prior to the
exercise or expiration of the option. If the Series is unable to effect a
closing purchase transaction with respect to options it has acquired, the Series
will have to allow the options to expire without recovering all or a portion of
the option premiums paid. If the Series is unable to effect a closing purchase
transaction with respect to covered options it has written, the Series will not
be able to sell the underlying securities or dispose of assets used as cover
until the options expire or are exercised, and the Series may experience
material losses due to losses on the option transaction itself and in the
covering securities.
In considering the use of options to enhance returns or for hedging purposes,
particular note should be taken of the following:
(1) The value of an option position will reflect, among other
things, the current market price of the underlying security or
index, the time remaining until expiration, the relationship
of the exercise price to the market price, the historical
price volatility of the underlying security or index, and
general market conditions. For this reason, the successful use
of options depends upon the adviser's ability to forecast the
direction of price fluctuations in the underlying securities
markets or, in the case of index options, fluctuations in the
market sector represented by the selected index.
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(2) Options normally have expiration dates of up to three years.
An American style put or call option may be exercised at any
time during the option period while a European style put or
call option may be exercised only upon expiration or during a
fixed period prior to expiration. The exercise price of the
options may be below, equal to or above the current market
value of the underlying security or index. Purchased options
that expire unexercised have no value. Unless an option
purchased by the Series is exercised or unless a closing
transaction is effected with respect to that position, the
Series will realize a loss in the amount of the premium paid
and any transaction costs.
(3) A position in an exchange-listed option may be closed out only
on an exchange that provides a secondary market for identical
options. Although the Series intends to purchase or write only
those exchange-traded options for which there appears to be a
liquid secondary market, there is no assurance that a liquid
secondary market will exist for any particular option at any
particular time. A liquid market may be absent if: (i) there
is insufficient trading interest in the option; (ii) the
exchange has imposed restrictions on trading, such as trading
halts, trading suspensions or daily price limits; (iii) normal
exchange operations have been disrupted; or (iv) the exchange
has inadequate facilities to handle current trading volume.
(4) With certain exceptions, exchange listed options generally
settle by physical delivery of the underlying security. Index
options are settled exclusively in cash for the net amount, if
any, by which the option is "in-the-money" (where the value of
the underlying instrument exceeds, in the case of a call
option, or is less than, in the case of a put option, the
exercise price of the option) at the time the option is
exercised. If the Series writes a call option on an index, the
Series will not know in advance the difference, if any,
between the closing value of the index on the exercise date
and the exercise price of the call option itself and thus will
not know the amount of cash payable upon settlement. If the
Series holds an index option and exercises it before the
closing index value for that day is available, the Series runs
the risk that the level of the underlying index may
subsequently change.
(5) The Series' activities in the options markets may result in a
higher Series turnover rate and additional brokerage costs;
however, the Series also may save on commissions by using
options as a hedge rather than buying or selling individual
securities in anticipation of, or as a result of, market
movements.
FUTURES AND RELATED OPTIONS STRATEGIES. The Series may engage in futures
strategies for certain non-trading bona fide hedging, risk management and
portfolio management purposes.
The Series may sell securities index futures contracts in anticipation of a
general market or market sector decline that could adversely affect the market
value of the Series' securities holdings. To the extent that a portion of the
Series' holdings correlate with a given index, the sale of futures contracts on
that index could reduce the risks associated with a market decline and thus
provide an alternative to the liquidation of securities positions. For example,
if the Series correctly anticipates a general market decline and sells index
futures to hedge against this risk, the gain in the futures position should
offset some or all of the decline in the value of the Series' holdings. The
Series may purchase index futures contracts if a significant market or market
sector advance is anticipated. Such a purchase of a futures contract would serve
as a temporary substitute for the purchase of the underlying securities, which
may then be purchased, in an orderly fashion. This strategy may minimize the
effect of all or part of an increase in the market price of securities that the
Series intends to purchase. A rise in the price of the securities should be in
part or wholly offset by gains in the futures position.
As in the case of a purchase of an index futures contract, the Series may
purchase a call option on an index futures contract to hedge against a market
advance in securities that the Series plans to acquire at a future date. The
Series may write covered put options on index futures as a partial anticipatory
hedge, and may write covered call options on index futures as a partial hedge
against a decline in the prices of securities held by the Series. This is
analogous to writing covered call options on securities. The Series also may
purchase put options on index futures contracts. The purchase of put options on
index futures contracts is analogous to the purchase of
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protective put options on individual securities where a level of protection is
sought below which no additional economic loss would be incurred by the Series.
FUTURES AND RELATED OPTIONS GUIDELINES. In view of the risks involved in using
the futures strategies that are described above, the Series has adopted the
following investment guidelines to govern its use of such strategies. The Board
of Trustees may modify these guidelines without shareholder vote.
(1) The Series will engage only in covered futures
transactions, and each such transaction will remain
covered so long as the Series is obligated thereby.
(2) The Series will not write options on futures
contracts if aggregate exercise prices of previously
written outstanding options (whether on securities or
securities indexes), together with the value of
assets used to cover all outstanding futures
positions, would exceed 25% of its total net assets.
SPECIAL CHARACTERISTICS AND RISKS OF FUTURES AND RELATED OPTIONS TRADING. No
price is paid upon entering into a futures contract. Instead, upon entering into
a futures contract, the Series is required to deposit with its custodian, in a
segregated account in the name of the futures broker through whom the
transaction is effected, an amount of cash, U.S. Government securities or other
liquid instruments generally equal to 10% or less of the contract value. This
amount is known as "initial margin." When writing a call or a put option on a
futures contract, margin also must be deposited in accordance with applicable
exchange rules. Unlike margin in securities transactions, initial margin on
futures contracts does not involve borrowing to finance the futures
transactions. Rather, initial margin on a futures contract is in the nature of a
performance bond or good-faith deposit on the contract that is returned to the
Series upon termination of the transaction, assuming all obligations have been
satisfied. Under certain circumstances, such as periods of high volatility, the
Series may be required by a futures exchange to increase the level of its
initial margin payment. Additionally, initial margin requirements may be
increased generally in the future by regulatory action. Subsequent payments,
called "variation margin," to and from the broker, are made on a daily basis as
the value of the futures or options position varies, a process known as "marking
to market." For example, when the Series purchases a contract and the value of
the contract rises, the Series receives from the broker a variation margin
payment equal to that increase in value. Conversely, if the value of the futures
position declines, the Series is required to make a variation margin payment to
the broker equal to the decline in value. Variation margin does not involve
borrowing to finance the futures transaction, but rather represents a daily
settlement of the Series' obligations to or from a clearing organization.
Buyers and sellers of futures positions and options thereon can enter into
offsetting closing transactions, similar to closing transactions on options on
securities, by selling or purchasing an offsetting contract or option. Futures
contracts or options thereon may be closed only on an exchange or board of trade
providing a secondary market for such futures contracts or options.
Under certain circumstances, futures exchanges may establish daily limits on the
amount that the price of a futures contract or related option may vary either up
or down from the previous day's settlement price. Once the daily limit has been
reached in a particular contract, no trades may be made that day at a price
beyond that limit. The daily limit governs only price movements during a
particular trading day and therefore does not limit potential losses, because
prices could move to the daily limit for several consecutive trading days with
little or no trading and thereby prevent prompt liquidation of unfavorable
positions. In such event, it may not be possible for the Series to close a
position and, in the event of adverse price movements, the Series would have to
make daily cash payments of variation margin (except in the case of purchased
options). However, if futures contracts have been used to hedge portfolio
securities, such securities will not be sold until the contracts can be
terminated. In such circumstances, an increase in the price of the securities,
if any, may partially or completely offset losses on the futures contract.
However, there is no guarantee that the price of the securities will, in fact,
correlate with the price movements in the contracts and thus provide an offset
to losses on the contracts.
In considering the Series' use of futures contracts and related options,
particular note should be taken of the following:
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(1) Successful use by the Series of futures contracts and related
options will depend upon the adviser's ability to predict
movements in the direction of the securities markets, which
requires different skills and techniques than predicting
changes in the prices of individual securities. Moreover,
futures contracts relate not only to the current price level
of the underlying securities, but also to anticipated price
levels at some point in the future. There is, in addition, the
risk that the movements in the price of the futures contract
will not correlate with the movements in the prices of the
securities being hedged. For example, if the price of an index
futures contract moves less than the price of the securities
that are the subject of the hedge, the hedge will not be fully
effective, but if the price of the securities being hedged has
moved in an unfavorable direction, the Series would be in a
better position than if it had not hedged at all. If the price
of the securities being hedged has moved in a favorable
direction, the advantage may be partially offset by losses in
the futures position. In addition, if the Series has
insufficient cash, it may have to sell assets to meet daily
variation margin requirements. Any such sale of assets may or
may not be made at prices that reflect a rising market.
Consequently, the Series may need to sell assets at a time
when such sales are disadvantageous to the Series. If the
price of the futures contract moves more than the price of the
underlying securities, the Series will experience either a
loss or a gain on the futures contract that may or may not be
completely offset by movements in the price of the securities
that are the subject of the hedge.
(2) In addition to the possibility that there may be an imperfect
correlation, or no correlation at all, between price movements
in the futures position and the securities being hedged,
movements in the prices of futures contracts may not correlate
perfectly with movements in the prices of the hedged
securities due to price distortions in the futures market.
There may be several reasons unrelated to the value of the
underlying securities that cause this situation to occur.
First, as noted above, all participants in the futures market
are subject to initial and variation margin requirements. If,
to avoid meeting additional margin deposit requirements or for
other reasons, investors choose to close a significant number
of futures contracts through offsetting transactions,
distortions in the normal price relationship between the
securities and the futures markets may occur. Second, because
the margin deposit requirements in the futures market are less
onerous than margin requirements in the securities market,
there may be increased participation by speculators in the
futures market. Such speculative activity in the futures
market also may cause temporary price distortions. As a
result, a correct forecast of general market trends may not
result in successful hedging through the use of futures
contracts over the short term. In addition, activities of
large traders in both the futures and securities markets
involving arbitrage and other investment strategies may result
in temporary price distortions.
(3) Positions in futures contracts may be closed out only on an
exchange or board of trade that provides a secondary market
for such futures contracts. Although the Series intends to
purchase and 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 at any
particular time. In such event, it may not be possible to
close a futures position, and in the event of adverse price
movements, the Series would continue to be required to make
variation margin payments.
(4) Like options on securities, options on futures contracts have
limited life. The ability to establish and close out options
on futures will be subject to the development and maintenance
of liquid secondary markets on the relevant exchanges or
boards of trade. There can be no certainty that such markets
for all options on futures contracts will develop.
(5) Purchasers of options on futures contracts pay a premium in
cash at the time of purchase. This amount and the transaction
costs are all that is at risk. Sellers of options on futures
contracts, however, must post initial margin and are subject
to additional margin calls that could be substantial in the
event of adverse price movements. In addition, although the
maximum amount at risk when the Series purchases an option is
the premium paid for the option and the transaction costs,
there may be circumstances when the purchase of an option on a
futures contract would result in a loss to the Series when the
use of a futures contract would not, such
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as when there is no movement in the level of the underlying
index value or the securities or currencies being hedged.
(6) As is the case with options, the Series' activities in the
futures markets may result in a higher portfolio turnover rate
and additional transaction costs in the form of added
brokerage commissions. However, the Series also may save on
commissions by using futures contracts or options thereon as a
hedge rather than buying or selling individual securities in
anticipation of, or as a result of, market movements.
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APPENDIX B
DESCRIPTION OF RATINGS
Moody's and S&P are private services that provide ratings of the credit quality
of debt obligations. A description of the ratings assigned by Moody's and S&P to
the securities in which the Portfolio's corresponding Series may invest is
discussed below. These ratings represent the opinions of these rating services
as to the quality of the securities that they undertake to rate. It should be
emphasized, however, that ratings are general and are not absolute standards of
quality. The adviser attempts to discern variations in credit rankings of the
rating services and to anticipate changes in credit ranking. However, subsequent
to purchase by the Series, an issue of securities may cease to be rated or its
rating may be reduced below the minimum rating required for purchase by the
Series. In that event, an adviser will consider whether it is in the best
interest of the Series to continue to hold the securities.
MOODY'S RATINGS
CORPORATE AND MUNICIPAL BONDS.
Aaa: Bonds that 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
edged." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa: Bonds that are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements present that make the
long-term risk appear somewhat larger than the Aaa securities.
A: Bonds that 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 some time in the future.
Baa: Bonds that are rated Baa are considered as medium-grade obligations (i.e.,
they are neither highly protected nor poorly secured). Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
CORPORATE AND MUNICIPAL COMMERCIAL PAPER. The highest rating for corporate and
municipal commercial paper is "P-1" (Prime-1). Issuers rated P-1 (or supporting
institutions) have a superior ability for repayment of senior short-term debt
obligations. P-1 repayment ability will often be evidenced by many of the
following characteristics:
[BULLET] Leading market positions in well-established industries.
[BULLET] High rates of return on funds employed.
[BULLET] Conservative capitalization structure with moderate reliance on debt
and ample asset protection.
[BULLET] Broad margins in earnings coverage of fixed financial charges and high
internal cash generation.
[BULLET] Well-established access to a range of financial markets and assured
sources of alternate liquidity.
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MUNICIPAL NOTES. The highest ratings for state and municipal short-term
obligations are "MIG 1," "MIG 2" and "MIG 3" (or "VMIG 1," "VMIG 2" and "VMIG 3"
in the case of an issue having a variable-rate demand feature). Notes rated "MIG
1" or "VMIG 1" are judged to be of the best quality. There is present strong
protection by established cash flows, superior liquidity support or demonstrated
broadbased access to the market for refinancing. Notes rated "MIG 2" or "VMIG 2"
are of high quality, with margins of protection that are ample although not so
large as in the preceding group. Notes rated "MIG 3" or "VMIG 3" are of
favorable quality, with all security elements accounted for but lacking the
undeniable strength of the preceding grades. Liquidity and cash flow protection
may be narrow, and market access for refinancing is likely to be less well
established.
S&P RATINGS
CORPORATE AND MUNICIPAL BONDS.
AAA: Bonds rated AAA are highest grade debt obligations. This rating indicates
an extremely strong capacity to pay interest and repay principal.
AA: Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from AAA issues only in small degree.
A: Bonds 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 bonds in higher rated categories.
BBB: Bonds rated BBB are regarded as having an adequate capacity to pay interest
and repay principal. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
CORPORATE AND MUNICIPAL COMMERCIAL PAPER. The "A-1" rating for corporate and
municipal commercial paper indicates that the degree of safety regarding timely
payment is strong. Those issues determined to possess extremely strong safety
characteristics will be rated "A-1+."
MUNICIPAL NOTES. The "SP-1" rating reflects a very strong or strong capacity to
pay principal and interest. Those issues determined to possess overwhelming
safety characteristics will be rated "SP-1+." The "SP-2" rating reflects a
satisfactory capacity to pay principal and interest.
FITCH RATINGS
DESCRIPTION OF FITCH'S HIGHEST STATE AND MUNICIPAL NOTES RATING.
AAA - Bonds considered to be investment grade and of the highest credit quality.
The obligor has an exceptionally strong ability to pay interest and repay
principal, which is unlikely to be affected by reasonably foreseeable events.
AA - Bonds considered to be investment grade and of very high credit quality.
The obligor's ability to pay interest and repay principal is very strong,
although not quite as strong as bonds rated AAA.
F-1+ - Issues assigned this rating are regarded as having the strongest degree
of assurance for timely payment.
F-1 - Issues assigned this rating reflect an assurance of timely payment only
slightly less in degree than issues rated F-1+.
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PART C - OTHER INFORMATION
ITEM 23. EXHIBITS.
EXHIBIT NO. DESCRIPTION OF EXHIBIT
(a) (i) Agreement and Declaration of Trust*
(ii) Certificate of Trust*
(iii) Certificate of Amendment to Certificate of Trust**
(iv) Certificate of Amendment to Certificate of Trust
dated October 20, 1998 is filed herewith.
(b) By-Laws*
(c) None
(d) (i) Form of Advisory Agreement between WT Investment
Trust I, on behalf of the Large Cap Core Series,
Small Cap Core Series, Short/Intermediate Series,
Intermediate Bond Series, Municipal Bond Series and
International Multi-Manager Series, and Wilmington
Trust Company filed herewith.
(ii) Form of Advisory Agreement between WT Investment
Trust I, on behalf of the Prime Money Market Series,
Premier Money Market Series, U.S. Government Series
and the Tax Exempt Series, and Rodney Square
Management Corporation filed herewith.
(iii) Form of Advisory Agreement between WT Investment
Trust I, on behalf of the Large Cap Value Series,
Small Cap Value Series and Mid Cap Series and Cramer
Rosenthal McGlynn LLC filed herewith.
(iv) Form of Advisory Agreement between WT Investment
Trust I, on behalf of the Large Cap Growth Series and
Roxbury Capital Management Inc. filed herewith.
(v) Form of Sub-Advisory Agreement among WT Investment
Trust I, on behalf of the International Multi-Manager
Series, Wilmington Trust Company and Clemente
Capital, Inc. filed herewith.
(vi) Form of Sub-Advisory Agreement among WT Investment
Trust I, on behalf of the International Multi-Manager
Series, Wilmington Trust Company and Scudder, Kemper
Investments, Inc. filed herewith.
(vii) Form of Sub-Advisory Agreement among WT Investment
Trust I, on behalf of the International Multi-Manager
Series, Wilmington Trust Company and Invista Capital
Management filed herewith.
(e) Distribution Agreement with Provident Distributors, Inc. dated
February 25, 1998*****
(f) None
(g) (i) Custody Agreement with Wilmington Trust Company*
(ii) Form of Sub-Custody Agreement between WT Investment
Trust I on behalf of the International Multi-Manager
Series and Bankers Trust Company to be filed
herewith.
<PAGE>
(h) (i) Transfer Agency Agreement with Rodney Square
Management Corporation dated February 19, 1997***
(ii) Accounting Services Agreement with Rodney Square
Management Corporation dated February 19, 1997***
(iii) Administration Agreement with Rodney Square
Management Corporation dated February 19, 1997***
(iv) Administrative Services Agreements with Kiewit
Investment Management Corp. dated February 19,
1997***
(v) Assignment Agreement dated January 5, 1998, among the
Registrant, Rodney Square Management Corporation and
PFPC Inc. with respect to the Administration
Agreement*****
(vi) Assignment Agreement dated January 5, 1998, among the
Registrant, Rodney Square management Corporation and
PFPC Inc. with respect to the Accounting Services
Agreement*****
(vii) Assignment Agreement dated January 5, 1998, among the
Registrant, Rodney Square management Corporation and
PFPC Inc. with respect to the Transfer Agency
Agreement*****
(i) Opinion of Pepper Hamilton LLP to be filed by amendment.
(j) None
(k) Not applicable
(l) Not applicable
(m) Plans of Distribution Pursuant to Rule 12b-1 to be filed by
subsequent amendment
(n) Not applicable
(o) Plans Pursuant to Rule 18f-3 to be filed by subsequent
amendment
* Previously filed with the Securities and Exchange Commission on Form N-1A
on July 25, 1994 and incorporated herein by reference.
** Previously filed with the Securities and Exchange Commission with
Pre-Effective amendment No. 1 on Form N-1A of November 29, 1994 and is
incorporated herein by reference.
*** Previously filed with the Securities and Exchange Commission with
Post-Effective Amendment No. 4 on Form N1-A on February 28, 1997 and
incorporated herein by reference.
**** Previously filed with the Securities and Exchange Commission with
Post-Effective Amendment No. 2 on Form N1-A on September 30, 1996 and
incorporated herein by reference.
***** Previously filed with the Securities and Exchange Commission with
Post-Effective Amendment No. 6 on Form N1-A on September 30, 1998 and
incorporated herein by reference.
<PAGE>
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE FUND.
None.
ITEM 25. INDEMNIFICATION.
Reference is made to Article VII of the Registrant's Agreement and Declaration
of Trust (Exhibit 23(a)(1)) and to Article X of the Registrant's By-Laws
(Exhibit 23(b)), which are incorporated herein by reference. Pursuant to Rule
484 under the Securities Act of 1933, as amended, the Registrant furnishes the
following undertaking:
"Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to trustees, officers and controlling
persons 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, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such trustee, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction 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 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISERS.
(i) Wilmington Trust Company ("WTC"), a Delaware corporation, serves as
investment adviser to the Large Cap Core, Small Cap Core,
Short/Intermediate, Intermediate Bond, Municipal Bond, and International
Multi Manager Series of the Fund. It currently manages large institutional
accounts and collective investment funds.
The directors and principal executive officers of WTC have held the following
positions of a substantial nature in the past two years:
Business or Other Connections of Principal Executive
Name Officers and Directors of WTC
- --------------------------------------------------------------------------------
Carolyn S. Burger Principal, CB Associates, Inc.; Director, PJM
Interconnection, L.L.C. & Rodel, Inc.
Ted T. Cecala Chairman and Chief Executive Officer, Wilmington
Trust Corporation and Wilmington Trust Company
Richard R. Collins Retired President and Chief Operating Officer,
American Life Insurance Company
Charles S. Crompton, Esq. Attorney, Partner, Potter Anderson & Corroon (law
firm)
H. Stewart Dunn, Jr., Esq. Attorney, Partner, Ivins, Phillips & Barker (law
firm)
Edward B. du Pont Private investor; Director, E. I. du Pont de Nemours
and Company, Incorporated; Retired Chairman,
Atlantic Aviation Corporation
<PAGE>
R. Keith Elliott Director, Chairman, President and Chief Executive
Officer, Hercules Incorporated; Director, PECO
Energy and Computer Task Group
Robert V.A. Harra, Jr. President, Chief Operating Officer and Treasurer,
Wilmington Trust Corporation and Wilmington Trust
Company
Andrew B. Kirkpatrick Of Counsel to, Morris, Nichols, Arsht & Tunnell (law
firm)
Rex L. Mears President of Ray L. Mears & Sons, Inc. (farming
corporation)
Walter D. Mertz Retired Senior Vice President, Wilmington Trust
Corporation and Wilmington Trust Company; Associate
Director
Hugh E. Miller Retired Executive, Formerly Vice Chairman, ICI
Americas, Inc.; was with parent Imperial Chemicals
Industries PLC for 20 years until 1990 including
management positions in the United States and
Europe; Chairman and Director, MGI PHARMA, Inc.
Stacey J. Mobley Senior Vice President of Communications, E. I. Du
Pont de Nemours and Company, Incorporated
G. Burton Pearson Retired Senior Vice President of Wilmington Trust
Corporation and Wilmington Trust Company; Associate
Director
Leonard W. Quill Formerly Chairman and Chief Executive Officer,
Wilmington Trust Corporation and Wilmington Trust
Company
David P. Roselle President, University of Delaware
H. Rodney Sharp, III Retired Manager, E. I. Du Pont de Nemours and
Company; Director, E. I. Du Pont de Nemours and
Company
Thomas P. Sweeney, Esq. Attorney, Partner, Richards, Layton & Finger (law
firm)
Mary Jornlin Theisen Former New Castle County Executive
Robert W. Tunnell, Jr. Managing Partner of Tunnell Companies, L.P., owner
and developer of real estate
(ii) Rodney Square Management Corporation ("RSMC"), a Delaware corporation,
serves as investment adviser to the Prime Money Market, U.S.
Government, Tax Exempt and Premier Money Market Series of the Fund.
RSMC is a wholly owned subsidiary of Wilmington Trust Company, also a
Delaware corporation, which in turn is wholly owned by Wilmington Trust
Corporation. Information as to the officers and directors of RSMC is
included in its Form ADV filed on March 11, 1987, and most recently
supplemented on March 3, 1999, with the Securities and Exchange
Commission File No. 801-22071 and is incorporated by reference herein.
(iii) Cramer Rosenthal McGlynn LLC ("CRM") serves as investment adviser to
the Large Cap Value, Small Cap Value and Mid Cap Value Series of the
Fund. Information as to the officers and directors of CRM is included
in its Form ADV filed with the Securities and
<PAGE>
Exchange Commission and most recently supplemented on March 26, 1999.
The Form ADV, File No. 801-55244 is incorporated by reference herein.
(iv) Roxbury Capital Management LLC ("Roxbury") serves as investment advisor
to the Large Cap Growth Series of the Fund. Information as to the
officers and directors of Roxbury is included in its Form ADV filed
with the Securities and Exchange Commission and most recently
supplemented on April 12, 1999. The Form ADV, File No. 801-55521 is
incorporated by reference.
ITEM 27 Principal Underwriter. Investment companies for which Provident
Distributors, Inc. also serves as principal underwriter:
(a) Time Horizon Funds
Pacific Innovations Trust
International Dollar Reserve Fund I, Ltd.
Provident Institutional Funds Trust
Columbia Common Stock Fund, Inc.
Columbia Growth Fund, Inc.
Columbia International Stock Fund, Inc.
Columbia Special Fund, Inc.
Columbia Small Cap Fund, Inc.
Columbia Real Estate Equity Fund, Inc.
Columbia Balanced Fund, Inc.
Columbia Daily Income Company
Columbia U.S. Government Securities Fund, Inc.
Columbia Fixed Income Securities Fund, Inc.
Columbia Municipal Bond Fund, Inc.
Columbia High Yield Fund, Inc.
Columbia National Municipal Bond Fund, Inc.
Kalmar Pooled Investment Trust
The RBB Fund, Inc.
Robertson Stephens Investment Trust
HT Insight Funds, Inc.
Harris Insight Funds Trust
Hilliard-Lyons Government Fund, Inc.
Hilliard-Lyons Growth Fund, Inc.
The Rodney Square Fund
The Rodney Square Tax-Exempt Fund
The Rodney Square Strategic Equity Fund
The Rodney Square Strategic Fixed-Income Fund
The BlackRock Funds, Inc. (Distributed by BlackRock Distributors,
Inc. a wholly owned subsidiary of Provident Distributors, Inc.)
The OFFITBANK Investment Fund, Inc. (Distributed by OFFIT Funds
Distributor, Inc. a wholly owned subsidiary of Provident
Distributors, Inc.)
The OFFITBANK Variable Insurance Fund, Inc. (Distributed by OFFIT
Funds Distributor, Inc. a wholly owned subsidiary of Provident
Distributors, Inc.)
CVO Greater China Fund, Inc. (Distributed by OFFIT Funds
Distributor, Inc. a wholly owned subsidiary of Provident
Distributors, Inc.)
(b) Reference is made to the caption "Distribution Arrangements" in the
Prospectuses constituting Part A of this Registration Statement. The
<PAGE>
information required by this Item 27 with respect to each director
of the underwriter is incorporated by reference to the Form BD filed
by the Underwriter with the Securities and Exchange Commission
pursuant to the Securities Exchange Act of 1934, as amended under
the File Number indicated:
Provident Distributors Inc. SEC File No. 8-46564
ITEM 28. LOCATIONS OF ACCOUNTS AND RECORDS
All accounts and records are maintained by the Registrant, or on its behalf by
the Fund's administrator, transfer agent, dividend paying agent and accounting
services agent, PFPC, Inc., 400 Bellevue Parkway, Wilmington, DE 19809.
ITEM 29. MANAGEMENT SERVICES.
There are no management-related service contracts not discussed in Part A or
Part B.
ITEM 30. UNDERTAKINGS.
None.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant has duly caused this Post-Effective
Amendment No. 8 to the Registration Statement to be signed on its behalf by the
undersigned, duly authorized, in the city of Wilmington, state of Delaware on
the 12th day of August, 1999.
WT MUTUAL FUND
BY: ______________________________
Robert J. Christian, President
Pursuant to the requirements of the Securities Act of 1933, this Post-Effective
Amendment to the Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
/S/Robert J. Christian Trustee, President August 12, 1999
- ------------------------
Robert J. Christian
/S/John J. Quindlen Trustee August 12, 1999
- ------------------------
John J. Quindlen
/S/Robert H. Arnold Trustee August 12, 1999
- ------------------------
Robert H. Arnold
/S/Nicholas A. Giordano Trustee August 12, 1999
- ------------------------
Nicholas A. Giordano
/S/Pat Colletti Vice President, Treasurer August 12, 1999
- ------------------------
Pat Colletti
<PAGE>
EXHIBIT INDEX
(a) (iv) Certificate of Amendment to Certificate of Trust dated October 20,
1998
(d) (i) Form of Advisory Agreement between WT Investment Trust I and
Wilmington Trust Company
(d) (ii) Form of Advisory Agreement between WT Investment Trust I and
Rodney Square Management Corporation
(d) (iii) Form of Advisory Agreement between WT Investment Trust I and
Cramer Rosenthal McGlynn LLC
(d) (iv) Form of Advisory Agreement between WT Investment Trust I and
Roxbury Capital Management Inc.
(d) (v) Form of Sub-Advisory Agreement among WT Investment Trust I,
Wilmington Trust Company and Clemente Capital, Inc.
(d) (vi) Form of Sub-Advisory Agreement among WT Investment Trust I,
Wilmington Trust Company and Scudder, Kemper Investments, Inc.
(d) (vii) Form of Sub-Advisory Agreement among WT Investment Trust I,
Wilmington Trust Company and Invista Capital Management
(g) (ii) Form of Sub-Custody Agreement between WT Investment Trust I and
Bankers Trust Company
Exhibit (a) (iv)
STATE OF DELAWARE
CERTIFICATE OF AMENDMENT TO
CERTIFICATE OF TRUST
Pursuant to Title 12, ss. 3810(b) of the Delaware General Corporation Law,
KIEWIT MUTUAL FUND, a Delaware business trust, (the "Trust") hereby executes the
following Certificate of Amendment:
1. The name of the Trust is KIEWIT MUTUAL FUND.
2. The Trust hereby amends and restates Article I of its Certificate of Trust
to read in its entirety as follows:
"1. NAME. The name of the business trust formed hereby is "WT MUTUAL FUND."
3. This Certificate of Amendment of the Certificate of Trust has been duly
adopted by a majority of the Trustees.
4. This Certificate of Amendment shall be effective upon filing.
IN WITNESS WHEREOF, the undersigned Trustee has executed this Certificate on
the 20th, day of October, 1998.
Lawrence B. Thomas
By: __________________________
Lawrence B. Thomas, Trustee
Exhibit (d) (i)
ADVISORY AGREEMENT
between
WT INVESTMENT TRUST I
and
WILMINGTON TRUST COMPANY
AGREEMENT made this ____ day of October, 1999, by and between WT
Investment Trust I, a Delaware business trust (hereinafter called the "Fund"),
and Wilmington Trust Company, a corporation organized under the laws of the
state of Delaware (hereinafter called the "Adviser").
WHEREAS, the Fund is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end management investment company,
and offers for sale distinct series of shares of beneficial interest (the
"Series"), each corresponding to a distinct portfolio; and
WHEREAS, the Fund desires to avail itself of the services, information,
advice, assistance and facilities of an investment adviser on behalf of one or
more Series of the Fund, and to have that investment adviser provide or perform
for the Series various research, statistical and investment services; and
WHEREAS, the Adviser is willing to furnish such services to the Fund
with respect to each of the Series listed on Schedule A to this Agreement on the
terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the promises and the mutual
covenants herein contained, it is agreed between the parties as follows:
1. EMPLOYMENT OF THE ADVISER. The Fund hereby employs the Adviser to
invest and reinvest the assets of the Series in the manner set forth in Section
2 of this Agreement subject to the direction of the Trustees and the officers of
the Fund, for the period, in the manner, and on the terms set forth hereinafter.
The Adviser hereby accepts such employment and agrees during such period to
render the services and to assume the obligations herein set forth. The Adviser
shall for all purposes herein be deemed to be an independent contractor and
shall, except as expressly provided or authorized (whether herein or otherwise),
have no authority to act for or represent the Fund in any way or otherwise be
deemed an agent of the Fund.
2. OBLIGATIONS OF, AND SERVICES TO BE PROVIDED BY, THE ADVISER. The
Adviser undertakes to provide the services hereinafter set forth and to assume
the following obligations:
A. INVESTMENT ADVISORY SERVICES.
(i) The Adviser shall direct the investments of each
Series, subject to and in accordance with the Series' investment objective,
policies and limitations as provided in its Prospectus and Statement of
Additional Information (the "Prospectus") and other governing
<PAGE>
instruments, as amended from time to time, and any other directions and policies
which the Trustees may issue to the Adviser from time to time.
(ii) The Adviser is authorized, in its discretion and
without prior consultation with the Fund, to purchase and sell for each Series,
securities and other investments consistent with the Series' objectives and
policies.
B. CORPORATE MANAGEMENT SERVICES.
(i) The Adviser shall furnish for the use of the Fund
office space and all office facilities, equipment and personnel necessary for
servicing the investments of the Fund.
(ii) The Adviser shall pay the salaries of all personnel
of the Fund and the Adviser performing services relating to research,
statistical and investment activities on behalf of the Fund.
C. PROVISION OF INFORMATION NECESSARY FOR PREPARATION OF
REGISTRATION STATEMENT, AMENDMENTS AND OTHER MATERIALS. The Adviser will make
available and provide such information as the Fund and/or its administrator may
reasonably request for use in the preparation of its registration statement,
reports and other documents required by any applicable federal, foreign or state
statutes or regulations.
D. CODE OF ETHICS. The Adviser has adopted a written code of
ethics complying with the requirements of Rule 17j-1 under the 1940 Act and
Section 204A of the Investment Advisers Act of 1940 and will provide the Fund
and its administrator, on the date of this Agreement, a copy of the code of
ethics and evidence of its adoption. Within forty-five (45) days of the end of
the last calendar quarter of each year while this Agreement is in effect, an
executive officer of the Adviser shall certify to the Trustees that the Adviser
has complied with the requirements of Rule 17j-1 and Section 204A during the
previous year and that there has been no violation of the Adviser's code of
ethics or, if such a violation has occurred, that appropriate action was taken
in response to such violation. Upon the written request of the Fund or its
administrator, the Adviser shall permit the Fund or its administrator to examine
the reports required to be made to the Adviser by Rule 17j-l(c)(l).
E. DISQUALIFICATION. The Adviser shall immediately notify the
Trustees of the occurrence of any event which would disqualify the Adviser from
serving as an investment adviser of an investment company pursuant to Section 9
of the 1940 Act or any other applicable statute or regulation.
F. OTHER OBLIGATIONS AND SERVICES. The Adviser shall make its
officers and employees available to the Trustees and officers of the Fund for
consultation and discussion regarding the management of each Series and its
investment activities.
-2-
<PAGE>
3. EXECUTION AND ALLOCATION OF PORTFOLIO BROKERAGE.
A. The Adviser, subject to the control and direction of the
Trustees, shall have authority and discretion to select brokers and dealers to
execute portfolio transactions for each Series, and for the selection of the
markets on or in which the transactions will be executed.
B. In acting pursuant to Section 3A, the Adviser will place
orders through such brokers or dealers in conformity with the portfolio
transaction policies set forth in the Fund's registration statement.
C. It is understood that neither the Fund nor the Adviser will
adopt a formula for allocation of a Series' brokerage.
D. It is understood that the Adviser may, to the extent permitted
by applicable laws and regulations, aggregate securities to be sold or purchased
for any Series and for other clients of the Adviser in order to obtain the most
favorable price and efficient execution. In that event, allocation of the
securities purchased or sold, as well as expenses incurred in the transaction,
will be made by the Adviser in the manner it considers to be the most equitable
and consistent with its fiduciary obligations to the Fund and to its other
clients.
E. It is understood that the Adviser may, in its discretion, use
brokers who provide a Series with research, analysis, advice and similar
services to execute portfolio transactions on behalf of the Series, and the
Adviser may pay to those brokers in return for brokerage and research services a
higher commission than may be charged by other brokers, subject to the Adviser
determining in good faith that such commission is reasonable in terms either of
the particular transaction or of the overall responsibility of the Adviser to
the Series and its other clients and that the total commissions paid by such
Series will be reasonable in relation to the benefits to the Series over the
long term.
F. It is understood that the Adviser may use brokers who (i) are
affiliated with the Adviser provided that no such broker will be utilized in any
transaction in which such broker acts as principal; and (ii) the commissions,
fees or other remuneration received by such brokers is reasonable and fair
compared to the commissions fees or other remuneration paid to other brokers in
connection with comparable transactions involving similar securities being
purchased or sold during a comparable period of time.
G. The Adviser shall provide such reports as the Trustees may
reasonably request with respect to each Series' total brokerage and portfolio
transaction activities and the manner in which that business was allocated.
4. DELEGATION OF ADVISER'S OBLIGATIONS AND SERVICES. With respect to
any or all Series, the Adviser may enter into one or more contracts
("Sub-Advisory Agreement") with a sub-adviser in which the Adviser delegates to
such sub-adviser any or all of its obligations or services specified in Section
2 of this Agreement, provided that each Sub-Advisory Agreement imposes on the
sub-adviser bound thereby all the duties and conditions the Adviser is subject
to
-3-
<PAGE>
under this Agreement, and further provided that each Sub-Advisory Agreement
meets all requirements of the 1940 Act and rules thereunder.
5. EXPENSES OF THE FUND. It is understood that the Fund will pay all
its expenses other than those expressly stated to be payable by the Adviser
hereunder, which expenses payable by the Fund shall include, without limitation:
A. fees payable for administrative services;
B. fees payable for accounting services;
C. the cost of obtaining quotations for calculating the value of
the assets of each Series;
D. interest and taxes;
E. brokerage commissions, dealer spreads and other costs in
connection with the purchase or sale of securities;
F. compensation and expenses of its Trustees other than those who
are "interested persons" of the Fund within the meaning of the
1940 Act;
G. legal and audit expenses;
H. fees and expenses related to the registration and
qualification of the Fund and its shares for distribution
under state and federal securities laws;
I. expenses of typesetting, printing and mailing reports, notices
and proxy material to shareholders of the Fund;
J. all other expenses incidental to holding meetings of the
Fund's shareholders, including proxy solicitations therefor;
K. premiums for fidelity bond and other insurance coverage;
L. the Fund's association membership dues;
M. expenses of typesetting for printing Prospectuses;
N. expenses of printing and distributing Prospectuses to existing
shareholders;
O. out-of-pocket expenses incurred in connection with the
provision of custodial and transfer agency service;
-4-
<PAGE>
P. service fees payable by each Series to the distributor for
providing personal services to the shareholders of each Series
and for maintaining shareholder accounts for those
shareholders;
Q. distribution fees; and
R. such non-recurring expenses as may arise, including costs
arising from threatened legal actions, suits and proceedings
to which the Fund is a party and the legal obligation which
the Fund may have to indemnify its Trustees and officers with
respect thereto.
6. COMPENSATION OF THE ADVISER. For the services and facilities to be
furnished hereunder, the Adviser shall receive advisory fees
calculated at the annual rates listed along with each Series' name
in Schedule B attached hereto. The aggregate of such advisory fees
for all Series shall be payable monthly as soon as practicable
after the last day of each month based on each Series' average
daily net assets.
7. ACTIVITIES AND AFFILIATES OF THE ADVISER.
A. The services of the Adviser to the Fund are not to be deemed
exclusive, and the Adviser is free to render services to others and engage in
other activities; provided, however, that such other services and activities do
not, during the term of this Agreement, interfere, in a material manner, with
the Adviser's ability to meet all of its obligations with respect to rendering
services to the Fund hereunder.
B. The Fund acknowledges that the Adviser or one or more of its
"affiliated persons" may have investment responsibilities or render investment
advise to or perform other investment advisory services for other individuals or
entities and that the Adviser, its "affiliated persons" or any of its or their
directors, officers, agents or employees may buy, sell or trade in securities
for its or their respective accounts ("Affiliated Accounts"). Subject to the
provisions of Section 3 of this Agreement, the Fund agrees that the Adviser or
its "affiliated persons" may give advice or exercise investment responsibility
and take such other action with respect to Affiliated Accounts which may differ
from the advice given or the timing or nature of action with respect to the
Series of the Fund, provided that the Adviser acts in good faith. The Fund
acknowledges that one or more of the Affiliated Accounts may at any time hold,
acquire, increase, decrease, dispose of or otherwise deal with positions in
investments in which one or more Series may have an interest. The Adviser shall
have no obligation to recommend for any Series a position in any investment
which an Affiliated Account may acquire, and the Fund shall have no first
refusal, co-investment or other rights in respect of any such investment, either
for its Series or otherwise.
C. Subject to and in accordance with the Agreement and
Declaration of Trust and By-Laws of the Fund as currently in effect and the 1940
Act and the rules thereunder, it is understood that Trustees, officers and
agents of the Fund and shareholders of the Fund are or may be interested in the
Adviser or its "affiliated persons" as directors, officers, agents or
shareholders of the Adviser or its "affiliated persons"; that directors,
officers, agents and
-5-
<PAGE>
shareholders of the Adviser or its "affiliated persons" are or may be interested
in the Fund as trustees, officers, agents, shareholders or otherwise; that the
Adviser or its "affiliated persons" may be interested in the Fund as
shareholders or otherwise; and that the effect of any such interests shall be
governed by said Agreement and Declaration of Trust, By-Laws and the 1940 Act
and the rules thereunder.
8. LIABILITIES OF THE ADVISER.
A. Except as provided below, in the absence of willful
misfeasance, bad faith, gross negligence, or reckless disregard of obligations
or duties hereunder on the part of the Adviser, the Adviser shall not be subject
to liability to the Fund or to any shareholder of the Fund or its Series for any
act or omission in the course of, or connected with, rendering services
hereunder or for any losses that may be sustained in the purchase, holding or
sale of any security or the making of any investment for or on behalf of the
Fund.
B. No provision of this Agreement shall be construed to protect
any Trustee or officer of the Fund, or the Adviser, from liability in violation
of Sections 17(h), 17(i), 36(a) or 36(b) of the 1940 Act.
9. EFFECTIVE DATE; TERM. This Agreement shall become effective on the
date first written above and shall remain in force for a period of two years
from such date, and from year to year thereafter, but only so long as such
continuance is specifically approved at least annually by the Board of Trustees,
including the vote of a majority of the Trustees who are not "interested
persons" of the Fund, cast in person at a meeting called for the purpose of
voting on such approval, or by vote of a majority of the outstanding voting
securities. The aforesaid provision shall be construed in a manner consistent
with the 1940 Act and the rules and regulations thereunder.
10. ASSIGNMENT. No "assignment" of this Agreement shall be made by the
Adviser, and this Agreement shall terminate automatically in event of such
assignment. The Adviser shall notify the Fund in writing in advance of any
proposed change of "control" to enable the Fund to take the steps necessary to
enter into a new advisory agreement.
11. AMENDMENT. This Agreement may be amended at any time, but only by
written agreement between the Adviser and the Fund, which amendment is subject
to the approval of the Trustees of the Fund and, where required by the 1940 Act,
the shareholders of any affected Series in the manner required by the 1940 Act
and the rules thereunder.
12. TERMINATION. This Agreement:
A. may at any time be terminated without payment of any penalty
by the Fund with respect to any Series (by vote of the Board
of Trustees of the Fund or by "vote of a majority of the
outstanding voting securities") on sixty (60) days' written
notice to the Adviser;
-6-
<PAGE>
B. shall immediately terminate in the event of its "assignment";
and
C. may be terminated with respect to any Series by the Adviser on
sixty (60) days' written notice to the Fund.
13. DEFINITIONS. As used in this Agreement, the terms "affiliated
person," "assignment," "control," "interested person" and "vote of a majority of
the outstanding voting securities" shall have the meanings set forth in the 1940
Act and the rules and regulations thereunder, subject to any applicable orders
of exemption issued by the Securities and Exchange Commission.
14. NOTICE. Any notice under this Agreement shall be given in writing
addressed and delivered or mailed postage prepaid to the other party to this
Agreement at its principal place of business.
15. SEVERABILITY. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby.
16. GOVERNING LAW. To the extent that state law has not been preempted
by the provisions of any law of the United States heretofore or hereafter
enacted, as the same may be amended from time to time, this Agreement shall be
administered, construed and enforced according to the laws of the state of
Delaware.
IN WITNESS WHEREOF the parties have caused this instrument to be signed
on their behalf by their respective officers thereunto duly authorized, and
their respective seals to be hereunto affixed, all as of the date first written
above.
WT INVESTMENT TRUST I
By:_________________________________
Name:
Title:
WILMINGTON TRUST COMPANY
By:_________________________________
Name:
Title:
-7-
<PAGE>
SCHEDULE A
DATED OCTOBER _____, 1999
TO
ADVISORY AGREEMENT
DATED OCTOBER _____, 1999
BETWEEN
WT INVESTMENT TRUST I
AND
WILMINGTON TRUST COMPANY
Large Cap Core Series
Small Cap Core Series
Short/Intermediate Bond Series
Intermediate Bond Series
Municipal Bond Series
International Multi-Manager Series
<PAGE>
SCHEDULE B
DATED OCTOBER _____ , 1999
TO
ADVISORY AGREEMENT
DATED OCTOBER _____ , 1999
BETWEEN
WT INVESTMENT TRUST I
AND
WILMINGTON TRUST COMPANY
FEE SCHEDULE
ANNUAL FEE AS A % OF
SERIES AVERAGE DAILY NET ASSETS
- ----------------------- ----------------------------------------
Large Cap Core Series .70% of the Series' first $1 billion of
average daily net assets; .65% of the
Series' next $1 billion of average daily
net assets; and .60% of the Series'
average daily net assets over $2
billion.
Small Cap Core Series .60% of the Series' first $1 billion of
average daily net assets; .55% of the
Series' next $1 billion of average daily
net assets; and .50% of the Series'
average daily net assets over $2
billion.
Short/Intermediate Series .35% of the Series' first $1 billion of
average daily net assets; .30% of the
Series' next $1 billion of average daily
net assets; and .25% of the Series'
average daily net assets over $2
billion.
Intermediate Bond Series .35% of the Series' first $1 billion of
average daily net assets; .30% of the
Series' next $1 billion of average daily
net assets; and .25% of the Series'
average daily net assets over $2
billion.
Municipal Bond Series .35% of the Series' first $1 billion of
average daily net assets; .30% of the
Series' next $1 billion of average daily
net assets; and .25% of the Series'
average daily net assets over $2
billion.
International Multi-Manager Series .65% of the Series average daily net
assets.
-2-
Exhibit (d) (ii)
ADVISORY AGREEMENT
between
WT INVESTMENT TRUST I
and
RODNEY SQUARE MANAGEMENT CORPORATION
AGREEMENT made this ____ day of October, 1999, by and between WT
Investment Trust I, a Delaware business trust (hereinafter called the "Fund"),
and Rodney Square Management Corporation, a corporation organized under the laws
of the state of Delaware (hereinafter called the "Adviser").
WHEREAS, the Fund is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end management investment company,
and offers for sale distinct series of shares of beneficial interest (the
"Series"), each corresponding to a distinct portfolio; and
WHEREAS, the Fund desires to avail itself of the services, information,
advice, assistance and facilities of an investment adviser on behalf of one or
more Series of the Fund, and to have that investment adviser provide or perform
for the Series various research, statistical and investment services; and
WHEREAS, the Adviser is willing to furnish such services to the Fund
with respect to each of the Series listed on Schedule A to this Agreement on the
terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the promises and the mutual
covenants herein contained, it is agreed between the parties as follows:
1. EMPLOYMENT OF THE ADVISER. The Fund hereby employs the Adviser to
invest and reinvest the assets of the Series in the manner set forth in Section
2 of this Agreement subject to the direction of the Trustees and the officers of
the Fund, for the period, in the manner, and on the terms set forth hereinafter.
The Adviser hereby accepts such employment and agrees during such period to
render the services and to assume the obligations herein set forth. The Adviser
shall for all purposes herein be deemed to be an independent contractor and
shall, except as expressly provided or authorized (whether herein or otherwise),
have no authority to act for or represent the Fund in any way or otherwise be
deemed an agent of the Fund.
2. OBLIGATIONS OF, AND SERVICES TO BE PROVIDED BY, THE ADVISER. The
Adviser undertakes to provide the services hereinafter set forth and to assume
the following obligations:
A. INVESTMENT ADVISORY SERVICES.
(i) The Adviser shall direct the investments of each Series,
subject to and in accordance with the Series' investment objective, policies and
limitations as provided in its Prospectus and Statement of Additional
Information (the "Prospectus") and other governing
<PAGE>
instruments, as amended from time to time, and any other directions and policies
which the Trustees may issue to the Adviser from time to time.
(ii) The Adviser is authorized, in its discretion and without
prior consultation with the Fund, to purchase and sell for each Series,
securities and other investments consistent with the Series' objectives and
policies.
B. CORPORATE MANAGEMENT SERVICES.
(i) The Adviser shall furnish for the use of the Fund office
space and all office facilities, equipment and personnel necessary for servicing
the investments of the Fund.
(ii) The Adviser shall pay the salaries of all personnel of
the Fund and the Adviser performing services relating to research, statistical
and investment activities on behalf of the Fund.
C. PROVISION OF INFORMATION NECESSARY FOR PREPARATION OF
REGISTRATION STATEMENT, AMENDMENTS AND OTHER MATERIALS. The Adviser will make
available and provide such information as the Fund and/or its administrator may
reasonably request for use in the preparation of its registration statement,
reports and other documents required by any applicable federal, foreign or state
statutes or regulations.
D. CODE OF ETHICS. The Adviser has adopted a written code of
ethics complying with the requirements of Rule 17j-1 under the 1940 Act and
Section 204A of the Investment Advisers Act of 1940 and will provide the Fund
and its administrator, on the date of this Agreement, a copy of the code of
ethics and evidence of its adoption. Within forty-five (45) days of the end of
the last calendar quarter of each year while this Agreement is in effect, an
executive officer of the Adviser shall certify to the Trustees that the Adviser
has complied with the requirements of Rule 17j-1 and Section 204A during the
previous year and that there has been no violation of the Adviser's code of
ethics or, if such a violation has occurred, that appropriate action was taken
in response to such violation. Upon the written request of the Fund or its
administrator, the Adviser shall permit the Fund or its administrator to examine
the reports required to be made to the Adviser by Rule 17j-l(c)(l).
E. DISQUALIFICATION. The Adviser shall immediately notify
the Trustees of the occurrence of any event which would disqualify the Adviser
from serving as an investment adviser of an investment company pursuant to
Section 9 of the 1940 Act or any other applicable statute or regulation.
F. OTHER OBLIGATIONS AND SERVICES. The Adviser shall make
its officers and employees available to the Trustees and officers of the Fund
for consultation and discussion regarding the management of each Series and its
investment activities.
2
<PAGE>
3. EXECUTION AND ALLOCATION OF PORTFOLIO BROKERAGE.
A. The Adviser, subject to the control and direction of the
Trustees, shall have authority and discretion to select brokers and dealers to
execute portfolio transactions for each Series, and for the selection of the
markets on or in which the transactions will be executed.
B. In acting pursuant to Section 3A, the Adviser will place
orders through such brokers or dealers in conformity with the portfolio
transaction policies set forth in the Fund's registration statement.
C. It is understood that neither the Fund nor the Adviser will
adopt a formula for allocation of a Series' brokerage.
D. It is understood that the Adviser may, to the extent permitted
by applicable laws and regulations, aggregate securities to be sold or purchased
for any Series and for other clients of the Adviser in order to obtain the most
favorable price and efficient execution. In that event, allocation of the
securities purchased or sold, as well as expenses incurred in the transaction,
will be made by the Adviser in the manner it considers to be the most equitable
and consistent with its fiduciary obligations to the Fund and to its other
clients.
E. It is understood that the Adviser may, in its discretion, use
brokers who provide a Series with research, analysis, advice and similar
services to execute portfolio transactions on behalf of the Series, and the
Adviser may pay to those brokers in return for brokerage and research services a
higher commission than may be charged by other brokers, subject to the Adviser
determining in good faith that such commission is reasonable in terms either of
the particular transaction or of the overall responsibility of the Adviser to
the Series and its other clients and that the total commissions paid by such
Series will be reasonable in relation to the benefits to the Series over the
long term.
F. It is understood that the Adviser may use brokers who (i) are
affiliated with the Adviser provided that no such broker will be utilized in any
transaction in which such broker acts as principal; and (ii) the commissions,
fees or other remuneration received by such brokers is reasonable and fair
compared to the commissions fees or other remuneration paid to other brokers in
connection with comparable transactions involving similar securities being
purchased or sold during a comparable period of time.
G. The Adviser shall provide such reports as the Trustees may
reasonably request with respect to each Series' total brokerage and portfolio
transaction activities and the manner in which that business was allocated.
4. DELEGATION OF ADVISER'S OBLIGATIONS AND SERVICES. With respect to
any or all Series, the Adviser may enter into one or more contracts
("Sub-Advisory Agreement") with a sub-adviser in which the Adviser delegates to
such sub-adviser any or all of its obligations or services specified in Section
2 of this Agreement, provided that each Sub-Advisory Agreement imposes on the
sub-adviser bound thereby all the duties and conditions the Adviser is subject
to
3
<PAGE>
under this Agreement, and further provided that each Sub-Advisory Agreement
meets all requirements of the 1940 Act and rules thereunder.
5. EXPENSES OF THE FUND. It is understood that the Fund will pay all
its expenses other than those expressly stated to be payable by the Adviser
hereunder, which expenses payable by the Fund shall include, without limitation:
A. fees payable for administrative services;
B. fees payable for accounting services;
C. the cost of obtaining quotations for calculating the value of
the assets of each Series;
D. interest and taxes;
E. brokerage commissions, dealer spreads and other costs in
connection with the purchase or sale of securities;
F. compensation and expenses of its Trustees other than those who
are "interested persons" of the Fund within the meaning of the
1940 Act;
G. legal and audit expenses;
H. fees and expenses related to the registration and
qualification of the Fund and its shares for distribution
under state and federal securities laws;
I. expenses of typesetting, printing and mailing reports, notices
and proxy material to shareholders of the Fund;
J. all other expenses incidental to holding meetings of the
Fund's shareholders, including proxy solicitations therefor;
K. premiums for fidelity bond and other insurance coverage;
L. the Fund's association membership dues;
M. expenses of typesetting for printing Prospectuses;
N. expenses of printing and distributing Prospectuses to existing
shareholders;
O. out-of-pocket expenses incurred in connection with the
provision of custodial and transfer agency service;
4
<PAGE>
P. service fees payable by each Series to the distributor for
providing personal services to the shareholders of each Series
and for maintaining shareholder accounts for those
shareholders;
Q. distribution fees; and
R. such non-recurring expenses as may arise, including costs
arising from threatened legal actions, suits and proceedings
to which the Fund is a party and the legal obligation which
the Fund may have to indemnify its Trustees and officers with
respect thereto.
6. COMPENSATION OF THE ADVISER. For the services and facilities to be
furnished hereunder, the Adviser shall receive advisory fees
calculated at the annual rates listed along with each Series' name
in Schedule B attached hereto. The aggregate of such advisory fees
for all Series shall be payable monthly as soon as practicable
after the last day of each month based on each Series' average
daily net assets.
7. ACTIVITIES AND AFFILIATES OF THE ADVISER.
A. The services of the Adviser to the Fund are not to be deemed
exclusive, and the Adviser is free to render services to others and engage in
other activities; provided, however, that such other services and activities do
not, during the term of this Agreement, interfere, in a material manner, with
the Adviser's ability to meet all of its obligations with respect to rendering
services to the Fund hereunder.
B. The Fund acknowledges that the Adviser or one or more of its
"affiliated persons" may have investment responsibilities or render investment
advise to or perform other investment advisory services for other individuals or
entities and that the Adviser, its "affiliated persons" or any of its or their
directors, officers, agents or employees may buy, sell or trade in securities
for its or their respective accounts ("Affiliated Accounts"). Subject to the
provisions of Section 3 of this Agreement, the Fund agrees that the Adviser or
its "affiliated persons" may give advice or exercise investment responsibility
and take such other action with respect to Affiliated Accounts which may differ
from the advice given or the timing or nature of action with respect to the
Series of the Fund, provided that the Adviser acts in good faith. The Fund
acknowledges that one or more of the Affiliated Accounts may at any time hold,
acquire, increase, decrease, dispose of or otherwise deal with positions in
investments in which one or more Series may have an interest. The Adviser shall
have no obligation to recommend for any Series a position in any investment
which an Affiliated Account may acquire, and the Fund shall have no first
refusal, co-investment or other rights in respect of any such investment, either
for its Series or otherwise.
C. Subject to and in accordance with the Agreement and
Declaration of Trust and By-Laws of the Fund as currently in effect and the 1940
Act and the rules thereunder, it is understood that Trustees, officers and
agents of the Fund and shareholders of the Fund are or may be interested in the
Adviser or its "affiliated persons" as directors, officers, agents or
shareholders of the Adviser or its "affiliated persons"; that directors,
officers, agents and
5
<PAGE>
shareholders of the Adviser or its "affiliated persons" are or may be interested
in the Fund as trustees, officers, agents, shareholders or otherwise; that the
Adviser or its "affiliated persons" may be interested in the Fund as
shareholders or otherwise; and that the effect of any such interests shall be
governed by said Agreement and Declaration of Trust, By-Laws and the 1940 Act
and the rules thereunder.
8. LIABILITIES OF THE ADVISER.
A. Except as provided below, in the absence of willful
misfeasance, bad faith, gross negligence, or reckless disregard of obligations
or duties hereunder on the part of the Adviser, the Adviser shall not be subject
to liability to the Fund or to any shareholder of the Fund or its Series for any
act or omission in the course of, or connected with, rendering services
hereunder or for any losses that may be sustained in the purchase, holding or
sale of any security or the making of any investment for or on behalf of the
Fund.
B. No provision of this Agreement shall be construed to protect
any Trustee or officer of the Fund, or the Adviser, from liability in violation
of Sections 17(h), 17(i), 36(a) or 36(b) of the 1940 Act.
9. EFFECTIVE DATE; TERM. This Agreement shall become effective on the
date first written above and shall remain in force for a period of two years
from such date, and from year to year thereafter, but only so long as such
continuance is specifically approved at least annually by the Board of Trustees,
including the vote of a majority of the Trustees who are not "interested
persons" of the Fund, cast in person at a meeting called for the purpose of
voting on such approval, or by vote of a majority of the outstanding voting
securities. The aforesaid provision shall be construed in a manner consistent
with the 1940 Act and the rules and regulations thereunder.
10. ASSIGNMENT. No "assignment" of this Agreement shall be made by the
Adviser, and this Agreement shall terminate automatically in event of such
assignment. The Adviser shall notify the Fund in writing in advance of any
proposed change of "control" to enable the Fund to take the steps necessary to
enter into a new advisory agreement.
11. AMENDMENT. This Agreement may be amended at any time, but only by
written agreement between the Adviser and the Fund, which amendment is subject
to the approval of the Trustees of the Fund and, where required by the 1940 Act,
the shareholders of any affected Series in the manner required by the 1940 Act
and the rules thereunder.
12. TERMINATION. This Agreement:
A. may at any time be terminated without payment of any penalty
by the Fund with respect to any Series (by vote of the Board
of Trustees of the Fund or by "vote of a majority of the
outstanding voting securities") on sixty (60) days' written
notice to the Adviser;
6
<PAGE>
B. shall immediately terminate in the event of its "assignment";
and
C. may be terminated with respect to any Series by the Adviser on
sixty (60) days' written notice to the Fund.
13. DEFINITIONS. As used in this Agreement, the terms "affiliated
person," "assignment," "control," "interested person" and "vote of a majority of
the outstanding voting securities" shall have the meanings set forth in the 1940
Act and the rules and regulations thereunder, subject to any applicable orders
of exemption issued by the Securities and Exchange Commission.
14. NOTICE. Any notice under this Agreement shall be given in writing
addressed and delivered or mailed postage prepaid to the other party to this
Agreement at its principal place of business.
15. SEVERABILITY. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby.
16. GOVERNING LAW. To the extent that state law has not been preempted
by the provisions of any law of the United States heretofore or hereafter
enacted, as the same may be amended from time to time, this Agreement shall be
administered, construed and enforced according to the laws of the state of
Delaware.
IN WITNESS WHEREOF the parties have caused this instrument to be signed
on their behalf by their respective officers thereunto duly authorized, and
their respective seals to be hereunto affixed, all as of the date first written
above.
WT INVESTMENT TRUST I
By:_________________________________
Name:
Title:
RODNEY SQUARE MANAGEMENT CORPORATION
By:_________________________________
Name:
Title:
7
<PAGE>
SCHEDULE A
DATED OCTOBER _____ , 1999
TO
ADVISORY AGREEMENT
DATED OCTOBER _____ , 1999
BETWEEN
WT INVESTMENT TRUST I
AND
RODNEY SQUARE MANAGEMENT CORPORATION
Retail Money Market Series
Institutional Money Market Series
Government Money Market Series
Tax Exempt Money Market Series
<PAGE>
SCHEDULE B
DATED OCTOBER _____, 1999
TO
ADVISORY AGREEMENT
DATED OCTOBER _____, 1999
BETWEEN
WT INVESTMENT TRUST I
AND
RODNEY SQUARE MANAGEMENT CORPORATION
ANNUAL FEE AS A % OF
SERIES AVERAGE DAILY NET ASSETS
- ---------------------------- ----------------------------------------
Retail Money Market Series .47% of the Series' first $1 billion of
average daily net assets; .43% of the
Series' next $500 million of average
daily net assets; .40% of the Series'
next $500 million of average daily net
assets; and .37% of the Series' average
daily net assets in excess of $2
billion.
Government Money Market Series .47% of the Series' first $1 billion of
average daily net assets; .43% of the
Series' next $500 million of average
daily net assets; .40% of the Series'
next $500 million of average daily net
assets; and .37% of the Series' average
daily net assets in excess of $2
billion.
Tax Exempt Money Market Series .47% of the Series' first $1 billion of
average daily net assets; .43% of the
Series' next $500 million of average
daily net assets; .40% of the Series'
next $500 million of average daily net
assets; and .37% of the Series' average
daily net assets in excess of $2
billion.
Institutional Money Market Series .20% of the Series' average daily net
assets.
Exhibit (d) (iii)
ADVISORY AGREEMENT
between
WT INVESTMENT TRUST I
and
CRAMER ROSENTHAL MCCLYNN, LLC
AGREEMENT made this ____ day of October, 1999, by and between WT
Investment Trust I, a Delaware business trust (hereinafter called the "Fund"),
and Cramer Rosenthal McGlynn, LLC a limited liability corporation organized
under the laws of the state of ____________ (hereinafter called the "Adviser").
WHEREAS, the Fund is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end management investment company,
and offers for sale distinct series of shares of beneficial interest (the
"Series"), each corresponding to a distinct portfolio; and
WHEREAS, the Fund desires to avail itself of the services, information,
advice, assistance and facilities of an investment adviser on behalf of one or
more Series of the Fund, and to have that investment adviser provide or perform
for the Series various research, statistical and investment services; and
WHEREAS, the Adviser is willing to furnish such services to the Fund
with respect to each of the Series listed on Schedule A to this Agreement on the
terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the promises and the mutual
covenants herein contained, it is agreed between the parties as follows:
1. EMPLOYMENT OF THE ADVISER. The Fund hereby employs the Adviser to
invest and reinvest the assets of the Series in the manner set forth in Section
2 of this Agreement subject to the direction of the Trustees and the officers of
the Fund, for the period, in the manner, and on the terms set forth hereinafter.
The Adviser hereby accepts such employment and agrees during such period to
render the services and to assume the obligations herein set forth. The Adviser
shall for all purposes herein be deemed to be an independent contractor and
shall, except as expressly provided or authorized (whether herein or otherwise),
have no authority to act for or represent the Fund in any way or otherwise be
deemed an agent of the Fund.
2. OBLIGATIONS OF, AND SERVICES TO BE PROVIDED BY, THE ADVISER. The
Adviser undertakes to provide the services hereinafter set forth and to assume
the following obligations:
A. INVESTMENT ADVISORY SERVICES.
(i) The Adviser shall direct the investments of each Series,
subject to and in accordance with the Series' investment objective, policies and
limitations as provided in
<PAGE>
its Prospectus and Statement of Additional Information (the "Prospectus") and
other governing instruments, as amended from time to time, and any other
directions and policies which the Trustees may issue to the Adviser from time to
time.
(ii) The Adviser is authorized, in its discretion and without
prior consultation with the Fund, to purchase and sell for each Series,
securities and other investments consistent with the Series' objectives and
policies.
B. CORPORATE MANAGEMENT SERVICES.
(i) The Adviser shall furnish for the use of the Fund office
space and all office facilities, equipment and personnel necessary for servicing
the investments of the Fund.
(ii) The Adviser shall pay the salaries of all personnel of
the Fund and the Adviser performing services relating to research, statistical
and investment activities on behalf of the Fund.
C. PROVISION OF INFORMATION NECESSARY FOR PREPARATION OF
REGISTRATION STATEMENT, AMENDMENTS AND OTHER MATERIALS. The Adviser will make
available and provide such information as the Fund and/or its administrator may
reasonably request for use in the preparation of its registration statement,
reports and other documents required by any applicable federal, foreign or state
statutes or regulations.
D. CODE OF ETHICS. The Adviser has adopted a written code of
ethics complying with the requirements of Rule 17j-1 under the 1940 Act and
Section 204A of the Investment Advisers Act of 1940 and will provide the Fund
and its administrator, on the date of this Agreement, a copy of the code of
ethics and evidence of its adoption. Within forty-five (45) days of the end of
the last calendar quarter of each year while this Agreement is in effect, an
executive officer of the Adviser shall certify to the Trustees that the Adviser
has complied with the requirements of Rule 17j-1 and Section 204A during the
previous year and that there has been no violation of the Adviser's code of
ethics or, if such a violation has occurred, that appropriate action was taken
in response to such violation. Upon the written request of the Fund or its
administrator, the Adviser shall permit the Fund or its administrator to examine
the reports required to be made to the Adviser by Rule 17j-l(c)(l).
E. DISQUALIFICATION. The Adviser shall immediately notify the
Trustees of the occurrence of any event which would disqualify the Adviser from
serving as an investment adviser of an investment company pursuant to Section 9
of the 1940 Act or any other applicable statute or regulation.
F. OTHER OBLIGATIONS AND SERVICES. The Adviser shall make its
officers and employees available to the Trustees and officers of the Fund for
consultation and discussion regarding the management of each Series and its
investment activities.
2
<PAGE>
3. EXECUTION AND ALLOCATION OF PORTFOLIO BROKERAGE.
A. The Adviser, subject to the control and direction of the
Trustees, shall have authority and discretion to select brokers and dealers to
execute portfolio transactions for each Series, and for the selection of the
markets on or in which the transactions will be executed.
B. In acting pursuant to Section 3A, the Adviser will place
orders through such brokers or dealers in conformity with the portfolio
transaction policies set forth in the Fund's registration statement.
C. It is understood that neither the Fund nor the Adviser will
adopt a formula for allocation of a Series' brokerage.
D. It is understood that the Adviser may, to the extent permitted
by applicable laws and regulations, aggregate securities to be sold or purchased
for any Series and for other clients of the Adviser in order to obtain the most
favorable price and efficient execution. In that event, allocation of the
securities purchased or sold, as well as expenses incurred in the transaction,
will be made by the Adviser in the manner it considers to be the most equitable
and consistent with its fiduciary obligations to the Fund and to its other
clients.
E. It is understood that the Adviser may, in its discretion, use
brokers who provide a Series with research, analysis, advice and similar
services to execute portfolio transactions on behalf of the Series, and the
Adviser may pay to those brokers in return for brokerage and research services a
higher commission than may be charged by other brokers, subject to the Adviser
determining in good faith that such commission is reasonable in terms either of
the particular transaction or of the overall responsibility of the Adviser to
the Series and its other clients and that the total commissions paid by such
Series will be reasonable in relation to the benefits to the Series over the
long term.
F. It is understood that the Adviser may use brokers who (i) are
affiliated with the Adviser provided that no such broker will be utilized in any
transaction in which such broker acts as principal; and (ii) the commissions,
fees or other remuneration received by such brokers is reasonable and fair
compared to the commissions fees or other remuneration paid to other brokers in
connection with comparable transactions involving similar securities being
purchased or sold during a comparable period of time.
G. The Adviser shall provide such reports as the Trustees may
reasonably request with respect to each Series' total brokerage and portfolio
transaction activities and the manner in which that business was allocated.
4. DELEGATION OF ADVISER'S OBLIGATIONS AND SERVICES. With respect to
any or all Series, the Adviser may enter into one or more contracts
("Sub-Advisory Agreement") with a sub-adviser in which the Adviser delegates to
such sub-adviser any or all of its obligations or services specified in Section
2 of this Agreement, provided that each Sub-Advisory Agreement imposes on the
sub-adviser bound thereby all the duties and conditions the Adviser is subject
to
3
<PAGE>
under this Agreement, and further provided that each Sub-Advisory Agreement
meets all requirements of the 1940 Act and rules thereunder.
5. EXPENSES OF THE FUND. It is understood that the Fund will pay all
its expenses other than those expressly stated to be payable by the Adviser
hereunder, which expenses payable by the Fund shall include, without limitation:
A. fees payable for administrative services;
B. fees payable for accounting services;
C. the cost of obtaining quotations for calculating the value of
the assets of each Series;
D. interest and taxes;
E. brokerage commissions, dealer spreads and other costs in
connection with the purchase or sale of securities;
F. compensation and expenses of its Trustees other than those who
are "interested persons" of the Fund within the meaning of the
1940 Act;
G. legal and audit expenses;
H. fees and expenses related to the registration and
qualification of the Fund and its shares for distribution
under state and federal securities laws;
I. expenses of typesetting, printing and mailing reports, notices
and proxy material to shareholders of the Fund;
J. all other expenses incidental to holding meetings of the
Fund's shareholders, including proxy solicitations therefor;
K. premiums for fidelity bond and other insurance coverage;
L. the Fund's association membership dues;
M. expenses of typesetting for printing Prospectuses;
N. expenses of printing and distributing Prospectuses to existing
shareholders;
O. out-of-pocket expenses incurred in connection with the
provision of custodial and transfer agency service;
4
<PAGE>
P. service fees payable by each Series to the distributor for
providing personal services to the shareholders of each Series
and for maintaining shareholder accounts for those
shareholders;
Q. distribution fees; and
R. such non-recurring expenses as may arise, including costs
arising from threatened legal actions, suits and proceedings
to which the Fund is a party and the legal obligation which
the Fund may have to indemnify its Trustees and officers with
respect thereto.
6. COMPENSATION OF THE ADVISER. For the services and facilities to be
furnished hereunder, the Adviser shall receive advisory fees
calculated at the annual rates listed along with each Series' name
in Schedule B attached hereto. The aggregate of such advisory fees
for all Series shall be payable monthly as soon as practicable
after the last day of each month based on each Series' average
daily net assets.
7. ACTIVITIES AND AFFILIATES OF THE ADVISER.
A. The services of the Adviser to the Fund are not to be deemed
exclusive, and the Adviser is free to render services to others and engage in
other activities; provided, however, that such other services and activities do
not, during the term of this Agreement, interfere, in a material manner, with
the Adviser's ability to meet all of its obligations with respect to rendering
services to the Fund hereunder.
B. The Fund acknowledges that the Adviser or one or more of its
"affiliated persons" may have investment responsibilities or render investment
advise to or perform other investment advisory services for other individuals or
entities and that the Adviser, its "affiliated persons" or any of its or their
directors, officers, agents or employees may buy, sell or trade in securities
for its or their respective accounts ("Affiliated Accounts"). Subject to the
provisions of Section 3 of this Agreement, the Fund agrees that the Adviser or
its "affiliated persons" may give advice or exercise investment responsibility
and take such other action with respect to Affiliated Accounts which may differ
from the advice given or the timing or nature of action with respect to the
Series of the Fund, provided that the Adviser acts in good faith. The Fund
acknowledges that one or more of the Affiliated Accounts may at any time hold,
acquire, increase, decrease, dispose of or otherwise deal with positions in
investments in which one or more Series may have an interest. The Adviser shall
have no obligation to recommend for any Series a position in any investment
which an Affiliated Account may acquire, and the Fund shall have no first
refusal, co-investment or other rights in respect of any such investment, either
for its Series or otherwise.
C. Subject to and in accordance with the Agreement and
Declaration of Trust and By-Laws of the Fund as currently in effect and the 1940
Act and the rules thereunder, it is understood that Trustees, officers and
agents of the Fund and shareholders of the Fund are or may be interested in the
Adviser or its "affiliated persons" as directors, officers, agents or
shareholders of the Adviser or its "affiliated persons"; that directors,
officers, agents and
5
<PAGE>
shareholders of the Adviser or its "affiliated persons" are or may be interested
in the Fund as trustees, officers, agents, shareholders or otherwise; that the
Adviser or its "affiliated persons" may be interested in the Fund as
shareholders or otherwise; and that the effect of any such interests shall be
governed by said Agreement and Declaration of Trust, By-Laws and the 1940 Act
and the rules thereunder.
8. LIABILITIES OF THE ADVISER.
A. Except as provided below, in the absence of willful
misfeasance, bad faith, gross negligence, or reckless disregard of obligations
or duties hereunder on the part of the Adviser, the Adviser shall not be subject
to liability to the Fund or to any shareholder of the Fund or its Series for any
act or omission in the course of, or connected with, rendering services
hereunder or for any losses that may be sustained in the purchase, holding or
sale of any security or the making of any investment for or on behalf of the
Fund.
B. No provision of this Agreement shall be construed to protect
any Trustee or officer of the Fund, or the Adviser, from liability in violation
of Sections 17(h), 17(i), 36(a) or 36(b) of the 1940 Act.
9. EFFECTIVE DATE; TERM. This Agreement shall become effective on the
date first written above and shall remain in force for a period of two years
from such date, and from year to year thereafter, but only so long as such
continuance is specifically approved at least annually by the Board of Trustees,
including the vote of a majority of the Trustees who are not "interested
persons" of the Fund, cast in person at a meeting called for the purpose of
voting on such approval, or by vote of a majority of the outstanding voting
securities. The aforesaid provision shall be construed in a manner consistent
with the 1940 Act and the rules and regulations thereunder.
10. ASSIGNMENT. No "assignment" of this Agreement shall be made by the
Adviser, and this Agreement shall terminate automatically in event of such
assignment. The Adviser shall notify the Fund in writing in advance of any
proposed change of "control" to enable the Fund to take the steps necessary to
enter into a new advisory agreement.
11. AMENDMENT. This Agreement may be amended at any time, but only by
written agreement between the Adviser and the Fund, which amendment is subject
to the approval of the Trustees of the Fund and, where required by the 1940 Act,
the shareholders of any affected Series in the manner required by the 1940 Act
and the rules thereunder.
12. TERMINATION. This Agreement:
A. may at any time be terminated without payment of any penalty
by the Fund with respect to any Series (by vote of the Board
of Trustees of the Fund or by "vote of a majority of the
outstanding voting securities") on sixty (60) days' written
notice to the Adviser;
6
<PAGE>
B. shall immediately terminate in the event of its "assignment";
and
C. may be terminated with respect to any Series by the Adviser on
sixty (60) days' written notice to the Fund.
13. DEFINITIONS. As used in this Agreement, the terms "affiliated
person," "assignment," "control," "interested person" and "vote of a majority of
the outstanding voting securities" shall have the meanings set forth in the 1940
Act and the rules and regulations thereunder, subject to any applicable orders
of exemption issued by the Securities and Exchange Commission.
14. NOTICE. Any notice under this Agreement shall be given in writing
addressed and delivered or mailed postage prepaid to the other party to this
Agreement at its principal place of business.
15. SEVERABILITY. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby.
16. GOVERNING LAW. To the extent that state law has not been preempted
by the provisions of any law of the United States heretofore or hereafter
enacted, as the same may be amended from time to time, this Agreement shall be
administered, construed and enforced according to the laws of the state of
Delaware.
IN WITNESS WHEREOF the parties have caused this instrument to be signed
on their behalf by their respective officers thereunto duly authorized, and
their respective seals to be hereunto affixed, all as of the date first written
above.
WT INVESTMENT TRUST I
By:_________________________________
Name:
Title:
CRAMER ROSENTHAL MCGLYNN, LLC
By:_________________________________
Name:
Title:
7
<PAGE>
SCHEDULE A
DATED OCTOBER _____, 1999
TO
ADVISORY AGREEMENT
DATED OCTOBER _____, 1999
BETWEEN
WT INVESTMENT TRUST I
AND
CRAMER ROSENTHAL MCGLYNN, LLC
Large Cap Value Series
Small Cap Value Series
Mid Cap Value Series
<PAGE>
SCHEDULE B
DATED OCTOBER _____ , 1999
TO
ADVISORY AGREEMENT
DATED OCTOBER _____ , 1999
BETWEEN
WT INVESTMENT TRUST I
AND
CRAMER ROSENTHAL MCGLYNN, LLC
FEE SCHEDULE
ANNUAL FEE AS A % OF
SERIES AVERAGE DAILY NET ASSETS
- ---------------------------- ----------------------------------------
Large Cap Value Series .55% of the Series' first $1 billion of
average daily net assets; .50% of the
Series' next $1 billion of average daily
net assets; and .45% of the Series'
average daily net assets over $2
billion.
Small Cap Value Series .75% of the Series' first $1 billion of
average daily net assets; .70% of the
Series' next $1 billion of average daily
net assets; and .65% of the Series'
average daily net assets over $2
billion.
Mid Cap Value Series .75% of the Series' first $1 billion of
average daily net assets; .70% of the
Series' next $1 billion of average daily
net assets; and .65% of the Series'
average daily net assets over $2
billion.
Exhibit (d) (iv)
ADVISORY AGREEMENT
between
WT INVESTMENT TRUST I
and
ROXBURY CAPITAL MANAGEMENT LLC
AGREEMENT made this ____ day of October, 1999, by and between WT
Investment Trust I, a Delaware business trust (hereinafter called the "Fund"),
and Roxbury Capital Management LLC, a limited liability corporation organized
under the laws of the state of ___________ (hereinafter called the "Adviser").
WHEREAS, the Fund is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end management investment company,
and offers for sale distinct series of shares of beneficial interest (the
"Series"), each corresponding to a distinct portfolio; and
WHEREAS, the Fund desires to avail itself of the services, information,
advice, assistance and facilities of an investment adviser on behalf of one or
more Series of the Fund, and to have that investment adviser provide or perform
for the Series various research, statistical and investment services; and
WHEREAS, the Adviser is willing to furnish such services to the Fund
with respect to each of the Series listed on Schedule A to this Agreement on the
terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the promises and the mutual
covenants herein contained, it is agreed between the parties as follows:
1. EMPLOYMENT OF THE ADVISER. The Fund hereby employs the Adviser to
invest and reinvest the assets of the Series in the manner set forth in Section
2 of this Agreement subject to the direction of the Trustees and the officers of
the Fund, for the period, in the manner, and on the terms set forth hereinafter.
The Adviser hereby accepts such employment and agrees during such period to
render the services and to assume the obligations herein set forth. The Adviser
shall for all purposes herein be deemed to be an independent contractor and
shall, except as expressly provided or authorized (whether herein or otherwise),
have no authority to act for or represent the Fund in any way or otherwise be
deemed an agent of the Fund.
2. OBLIGATIONS OF, AND SERVICES TO BE PROVIDED BY, THE ADVISER. The
Adviser undertakes to provide the services hereinafter set forth and to assume
the following obligations:
A. INVESTMENT ADVISORY SERVICES.
(i) The Adviser shall direct the investments of each Series,
subject to and in accordance with the Series' investment objective, policies and
limitations as provided in its Prospectus and Statement of Additional
Information (the "Prospectus") and other governing
<PAGE>
instruments, as amended from time to time, and any other directions and policies
which the Trustees may issue to the Adviser from time to time.
(ii) The Adviser is authorized, in its discretion and without
prior consultation with the Fund, to purchase and sell for each Series,
securities and other investments consistent with the Series' objectives and
policies.
B. CORPORATE MANAGEMENT SERVICES.
(i) The Adviser shall furnish for the use of the Fund office
space and all office facilities, equipment and personnel necessary for servicing
the investments of the Fund.
(ii) The Adviser shall pay the salaries of all personnel of
the Fund and the Adviser performing services relating to research, statistical
and investment activities on behalf of the Fund.
C. PROVISION OF INFORMATION NECESSARY FOR PREPARATION OF
REGISTRATION STATEMENT, AMENDMENTS AND OTHER MATERIALS. The Adviser will make
available and provide such information as the Fund and/or its administrator may
reasonably request for use in the preparation of its registration statement,
reports and other documents required by any applicable federal, foreign or state
statutes or regulations.
D. CODE OF ETHICS. The Adviser has adopted a written code of
ethics complying with the requirements of Rule 17j-1 under the 1940 Act and
Section 204A of the Investment Advisers Act of 1940 and will provide the Fund
and its administrator, on the date of this Agreement, a copy of the code of
ethics and evidence of its adoption. Within forty-five (45) days of the end of
the last calendar quarter of each year while this Agreement is in effect, an
executive officer of the Adviser shall certify to the Trustees that the Adviser
has complied with the requirements of Rule 17j-1 and Section 204A during the
previous year and that there has been no violation of the Adviser's code of
ethics or, if such a violation has occurred, that appropriate action was taken
in response to such violation. Upon the written request of the Fund or its
administrator, the Adviser shall permit the Fund or its administrator to examine
the reports required to be made to the Adviser by Rule 17j-l(c)(l).
E. DISQUALIFICATION. The Adviser shall immediately notify the
Trustees of the occurrence of any event which would disqualify the Adviser from
serving as an investment adviser of an investment company pursuant to Section 9
of the 1940 Act or any other applicable statute or regulation.
F. OTHER OBLIGATIONS AND SERVICES. The Adviser shall make its
officers and employees available to the Trustees and officers of the Fund for
consultation and discussion regarding the management of each Series and its
investment activities.
2
<PAGE>
3. EXECUTION AND ALLOCATION OF PORTFOLIO BROKERAGE.
A. The Adviser, subject to the control and direction of the
Trustees, shall have authority and discretion to select brokers and dealers to
execute portfolio transactions for each Series, and for the selection of the
markets on or in which the transactions will be executed.
B. In acting pursuant to Section 3A, the Adviser will place
orders through such brokers or dealers in conformity with the portfolio
transaction policies set forth in the Fund's registration statement.
C. It is understood that neither the Fund nor the Adviser will
adopt a formula for allocation of a Series' brokerage.
D. It is understood that the Adviser may, to the extent permitted
by applicable laws and regulations, aggregate securities to be sold or purchased
for any Series and for other clients of the Adviser in order to obtain the most
favorable price and efficient execution. In that event, allocation of the
securities purchased or sold, as well as expenses incurred in the transaction,
will be made by the Adviser in the manner it considers to be the most equitable
and consistent with its fiduciary obligations to the Fund and to its other
clients.
E. It is understood that the Adviser may, in its discretion, use
brokers who provide a Series with research, analysis, advice and similar
services to execute portfolio transactions on behalf of the Series, and the
Adviser may pay to those brokers in return for brokerage and research services a
higher commission than may be charged by other brokers, subject to the Adviser
determining in good faith that such commission is reasonable in terms either of
the particular transaction or of the overall responsibility of the Adviser to
the Series and its other clients and that the total commissions paid by such
Series will be reasonable in relation to the benefits to the Series over the
long term.
F. It is understood that the Adviser may use brokers who (i) are
affiliated with the Adviser provided that no such broker will be utilized in any
transaction in which such broker acts as principal; and (ii) the commissions,
fees or other remuneration received by such brokers is reasonable and fair
compared to the commissions fees or other remuneration paid to other brokers in
connection with comparable transactions involving similar securities being
purchased or sold during a comparable period of time.
G. The Adviser shall provide such reports as the Trustees may
reasonably request with respect to each Series' total brokerage and portfolio
transaction activities and the manner in which that business was allocated.
4. DELEGATION OF ADVISER'S OBLIGATIONS AND SERVICES. With respect to
any or all Series, the Adviser may enter into one or more contracts
("Sub-Advisory Agreement") with a sub-adviser in which the Adviser delegates to
such sub-adviser any or all of its obligations or services specified in Section
2 of this Agreement, provided that each Sub-Advisory Agreement imposes on the
sub-adviser bound thereby all the duties and conditions the Adviser is subject
to
3
<PAGE>
under this Agreement, and further provided that each Sub-Advisory Agreement
meets all requirements of the 1940 Act and rules thereunder.
5. EXPENSES OF THE FUND. It is understood that the Fund will pay all
its expenses other than those expressly stated to be payable by the Adviser
hereunder, which expenses payable by the Fund shall include, without limitation:
A. fees payable for administrative services;
B. fees payable for accounting services;
C. the cost of obtaining quotations for calculating the value of
the assets of each Series;
D. interest and taxes;
E. brokerage commissions, dealer spreads and other costs in
connection with the purchase or sale of securities;
F. compensation and expenses of its Trustees other than those who
are "interested persons" of the Fund within the meaning of the
1940 Act;
G. legal and audit expenses;
H. fees and expenses related to the registration and
qualification of the Fund and its shares for distribution
under state and federal securities laws;
I. expenses of typesetting, printing and mailing reports, notices
and proxy material to shareholders of the Fund;
J. all other expenses incidental to holding meetings of the
Fund's shareholders, including proxy solicitations therefor;
K. premiums for fidelity bond and other insurance coverage;
L. the Fund's association membership dues;
M. expenses of typesetting for printing Prospectuses;
N. expenses of printing and distributing Prospectuses to existing
shareholders;
O. out-of-pocket expenses incurred in connection with the
provision of custodial and transfer agency service;
4
<PAGE>
P. service fees payable by each Series to the distributor for
providing personal services to the shareholders of each Series
and for maintaining shareholder accounts for those
shareholders;
Q. distribution fees; and
R. such non-recurring expenses as may arise, including costs
arising from threatened legal actions, suits and proceedings
to which the Fund is a party and the legal obligation which
the Fund may have to indemnify its Trustees and officers with
respect thereto.
6. COMPENSATION OF THE ADVISER. For the services and facilities to be
furnished hereunder, the Adviser shall receive advisory fees
calculated at the annual rates listed along with each Series' name
in Schedule B attached hereto. The aggregate of such advisory fees
for all Series shall be payable monthly as soon as practicable
after the last day of each month based on each Series' average
daily net assets.
7. ACTIVITIES AND AFFILIATES OF THE ADVISER.
A. The services of the Adviser to the Fund are not to be deemed
exclusive, and the Adviser is free to render services to others and engage in
other activities; provided, however, that such other services and activities do
not, during the term of this Agreement, interfere, in a material manner, with
the Adviser's ability to meet all of its obligations with respect to rendering
services to the Fund hereunder.
B. The Fund acknowledges that the Adviser or one or more of its
"affiliated persons" may have investment responsibilities or render investment
advise to or perform other investment advisory services for other individuals or
entities and that the Adviser, its "affiliated persons" or any of its or their
directors, officers, agents or employees may buy, sell or trade in securities
for its or their respective accounts ("Affiliated Accounts"). Subject to the
provisions of Section 3 of this Agreement, the Fund agrees that the Adviser or
its "affiliated persons" may give advice or exercise investment responsibility
and take such other action with respect to Affiliated Accounts which may differ
from the advice given or the timing or nature of action with respect to the
Series of the Fund, provided that the Adviser acts in good faith. The Fund
acknowledges that one or more of the Affiliated Accounts may at any time hold,
acquire, increase, decrease, dispose of or otherwise deal with positions in
investments in which one or more Series may have an interest. The Adviser shall
have no obligation to recommend for any Series a position in any investment
which an Affiliated Account may acquire, and the Fund shall have no first
refusal, co-investment or other rights in respect of any such investment, either
for its Series or otherwise.
C. Subject to and in accordance with the Agreement and
Declaration of Trust and By-Laws of the Fund as currently in effect and the 1940
Act and the rules thereunder, it is understood that Trustees, officers and
agents of the Fund and shareholders of the Fund are or may be interested in the
Adviser or its "affiliated persons" as directors, officers, agents or
shareholders of the Adviser or its "affiliated persons"; that directors,
officers, agents and
5
<PAGE>
shareholders of the Adviser or its "affiliated persons" are or may be interested
in the Fund as trustees, officers, agents, shareholders or otherwise; that the
Adviser or its "affiliated persons" may be interested in the Fund as
shareholders or otherwise; and that the effect of any such interests shall be
governed by said Agreement and Declaration of Trust, By-Laws and the 1940 Act
and the rules thereunder.
8. LIABILITIES OF THE ADVISER.
A. Except as provided below, in the absence of willful
misfeasance, bad faith, gross negligence, or reckless disregard of obligations
or duties hereunder on the part of the Adviser, the Adviser shall not be subject
to liability to the Fund or to any shareholder of the Fund or its Series for any
act or omission in the course of, or connected with, rendering services
hereunder or for any losses that may be sustained in the purchase, holding or
sale of any security or the making of any investment for or on behalf of the
Fund.
B. No provision of this Agreement shall be construed to protect
any Trustee or officer of the Fund, or the Adviser, from liability in violation
of Sections 17(h), 17(i), 36(a) or 36(b) of the 1940 Act.
9. EFFECTIVE DATE; TERM. This Agreement shall become effective on the
date first written above and shall remain in force for a period of two years
from such date, and from year to year thereafter, but only so long as such
continuance is specifically approved at least annually by the Board of Trustees,
including the vote of a majority of the Trustees who are not "interested
persons" of the Fund, cast in person at a meeting called for the purpose of
voting on such approval, or by vote of a majority of the outstanding voting
securities. The aforesaid provision shall be construed in a manner consistent
with the 1940 Act and the rules and regulations thereunder.
10. ASSIGNMENT. No "assignment" of this Agreement shall be made by the
Adviser, and this Agreement shall terminate automatically in event of such
assignment. The Adviser shall notify the Fund in writing in advance of any
proposed change of "control" to enable the Fund to take the steps necessary to
enter into a new advisory agreement.
11. AMENDMENT. This Agreement may be amended at any time, but only by
written agreement between the Adviser and the Fund, which amendment is subject
to the approval of the Trustees of the Fund and, where required by the 1940 Act,
the shareholders of any affected Series in the manner required by the 1940 Act
and the rules thereunder.
12. TERMINATION. This Agreement:
A. may at any time be terminated without payment of any penalty
by the Fund with respect to any Series (by vote of the Board
of Trustees of the Fund or by "vote of a majority of the
outstanding voting securities") on sixty (60) days' written
notice to the Adviser;
6
<PAGE>
B. shall immediately terminate in the event of its "assignment";
and
C. may be terminated with respect to any Series by the Adviser on
sixty (60) days' written notice to the Fund.
13. DEFINITIONS. As used in this Agreement, the terms "affiliated
person," "assignment," "control," "interested person" and "vote of a majority of
the outstanding voting securities" shall have the meanings set forth in the 1940
Act and the rules and regulations thereunder, subject to any applicable orders
of exemption issued by the Securities and Exchange Commission.
14. NOTICE. Any notice under this Agreement shall be given in writing
addressed and delivered or mailed postage prepaid to the other party to this
Agreement at its principal place of business.
15. SEVERABILITY. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby.
16. GOVERNING LAW. To the extent that state law has not been preempted
by the provisions of any law of the United States heretofore or hereafter
enacted, as the same may be amended from time to time, this Agreement shall be
administered, construed and enforced according to the laws of the state of
Delaware.
IN WITNESS WHEREOF the parties have caused this instrument to be signed on their
behalf by their respective officers thereunto duly authorized, and their
respective seals to be hereunto affixed, all as of the date first written above.
WT INVESTMENT TRUST I
By:_________________________________
Name:
Title:
ROXBURY CAPITAL MANAGEMENT LLC
By:_________________________________
Name:
Title:
7
<PAGE>
SCHEDULE A
DATED OCTOBER _____, 1999
TO
ADVISORY AGREEMENT
DATED OCTOBER _____, 1999
BETWEEN
WT INVESTMENT TRUST I
AND
ROXBURY CAPITAL MANAGEMENT LLC
Large Cap Growth Series
<PAGE>
SCHEDULE B
DATED OCTOBER _____ , 1999
TO
ADVISORY AGREEMENT
DATED OCTOBER _____ , 1999
BETWEEN
WT INVESTMENT TRUST I
AND
ROXBURY CAPITAL MANAGEMENT LLC
FEE SCHEDULE
ANNUAL FEE AS A % OF
PORTFOLIO AVERAGE DAILY NET ASSETS
- ---------------------------- ----------------------------------------
Large Cap Growth Series .55% of the Series'first $1 billion of
average daily net assets; .50% of the
Series' next $1 billion of average daily
net assets; and .45% of the Series'
average daily net assets over $2
billion.
Exhibit (d) (v)
CLEMENTE CAPITAL, INC.
SUB-ADVISORY AGREEMENT
THIS SUB-ADVISORY AGREEMENT is made as of the _____ day of October,
1999, among WT Investment Trust I, a Delaware business trust (the "Fund"),
Wilmington Trust Company (the "Adviser"), a corporation organized under the laws
of the state of Delaware and Clemente Capital, Inc. a corporation organized
under the laws of the state of New York (the "Sub-Adviser").
WHEREAS, the Fund is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end management investment company
and offers for public sale distinct series of shares of beneficial interest; and
WHEREAS, the International Multi-Manager Series (the "Series") is a
series of the Fund; and
WHEREAS, the Adviser acts as the investment adviser for the Series
pursuant to the terms of an Investment Advisory Agreement between the Fund and
the Adviser under which the Adviser is responsible for the coordination of
investment of the Series' assets in portfolio securities; and
WHEREAS, the Adviser is authorized under the Investment Advisory
Agreement to delegate its investment responsibilities to one or more persons or
companies;
NOW THEREFORE, in consideration of the promises and mutual covenants
herein contained, the Fund, the Adviser and the Sub-Adviser agree as follows:
1. APPOINTMENT OF SUB-ADVISER. The Adviser and the Fund hereby appoint and
employ the Sub-Adviser as a discretionary portfolio manager, on the
terms and conditions set forth herein, of those assets of the Series
which the Adviser determines to assign to the Sub-Adviser (those assets
being referred to as the "Series Account"). The Adviser may, from time
to time, make additions to and withdrawals, including cash and cash
equivalents, from the Series Account.
2. ACCEPTANCE OF APPOINTMENT. The Sub-Adviser accepts its appointment as a
discretionary portfolio manager and agrees to use its professional
judgment to make investment decisions for the Series with respect to
the investments of the Series Account and to implement such decisions
on a timely basis in accordance with the provisions of this Agreement.
<PAGE>
3. DELIVERY OF DOCUMENTS. The Adviser has furnished the Sub-Adviser with
copies properly certified or authenticated of each of the following and
will promptly provide the Sub-Adviser with copies properly certified or
authenticated of any amendment or supplement thereto:
(a) The Series' Investment Advisory Agreement;
(b) The Fund's most recent effective registration statement and
financial statements as filed with the Securities and Exchange
Commission;
(c) The Fund's Agreement and Declaration of Trust and By-Laws; and
(d) Any policies, procedures or instructions adopted or approved by the
Fund's Board of Trustees relating to obligations and services
provided by the Sub-Adviser.
4. PORTFOLIO MANAGEMENT SERVICES OF THE SUB-ADVISER. The Sub-Adviser is
hereby employed and authorized to select portfolio securities for
investment by the Series, to purchase and to sell securities for the
Series Account, and upon making any purchase or sale decision, to place
orders for the execution of such portfolio transactions in accordance
with Sections 6 and 7 hereof and Schedule A hereto (as amended from
time to time). In providing portfolio management services to the Series
Account, the Sub-Adviser shall be subject to and shall conform to such
investment restrictions as are set forth in the 1940 Act and the rules
thereunder, the Internal Revenue Code, applicable state securities
laws, applicable statutes and regulations of foreign jurisdictions, the
supervision and control of the Board of Trustees of the Fund, such
specific instructions as the Board of Trustees may adopt and
communicate to the Sub-Adviser, the investment objective, policies and
restrictions of the Fund applicable to the Series furnished pursuant to
Section 5 of this Agreement, the provisions of Schedule A and Schedule
B hereto and other instructions communicated to the Sub-Adviser by the
Adviser. The Sub-Adviser is not authorized by the Fund to take any
action, including the purchase or sale of securities for the Series
Account, in contravention of any restriction, limitation, objective,
policy or instruction described in the previous sentence. The
Sub-Adviser shall maintain on behalf of the Fund the records listed in
Schedule B hereto (as amended from time to time). At the Fund's
reasonable request, the Sub-Adviser will consult with the Fund or with
the Adviser with respect to any decision made by it with respect to the
investments of the Series Account.
5. INVESTMENT OBJECTIVE, POLICIES AND RESTRICTIONS. The Fund will provide
the Sub-Adviser with the statement of investment objective, policies
and restrictions applicable to the Series as contained in the Series'
Prospectus and Statement of Additional Information, all amendments or
supplements to the Prospectus and Statement of Additional Information,
and any instructions adopted by the Board of Trustees supplemental
thereto. The Fund agrees, on an ongoing basis, to notify the
Sub-Adviser in writing of each change in the fundamental and
non-fundamental investment policies of the Series and will provide the
Sub-Adviser with such further information concerning the investment
2
<PAGE>
objective, policies, restrictions and such other information applicable
thereto as the Sub-Adviser may from time to time reasonably request for
performance of its obligations under this Agreement. The Fund retains
the right, on written notice to the Sub-Adviser or the Adviser, to
modify any such objective, policies or restrictions in accordance with
applicable laws, at any time.
6. TRANSACTION PROCEDURES. All transactions will be consummated by payment
to or delivery by the custodian designated by the Fund (the
"Custodian"), or such depositories or agents as may be designated by
the Custodian in writing, of all cash and/or securities due to or from
the Series Account, and the Sub-Adviser shall not have possession or
custody thereof. The Sub-Adviser shall advise the Custodian and confirm
in writing to the Fund and to the administrator designated by the Fund
or any other designated agent of the Fund, all investment orders for
the Series Account placed by it with brokers and dealers at the time
and in the manner set forth in Schedule B hereto (as amended from time
to time). The Fund shall issue to the Custodian such instructions as
may be appropriate in connection with the settlement of any transaction
initiated by the Sub-Adviser. The Fund shall be responsible for all
custodial arrangements and the payment of all custodial charges and
fees, and, upon giving proper instructions to the Custodian, the
Sub-Adviser shall have no responsibility or liability with respect to
custodial arrangements or the acts, omissions or other conduct of the
Custodian, except that it shall be the responsibility of the
Sub-Adviser to take appropriate action if the Custodian fails to
confirm in writing proper execution of the instructions.
7. ALLOCATION OF BROKERAGE. The Sub-Adviser shall have authority and
discretion to select brokers and dealers (including brokers that may be
affiliates of the Sub-Adviser to the extent permitted by Section 7(c)
hereof) to execute portfolio transactions initiated by the Sub-Adviser,
and for the selection of the markets on or in which the transactions
will be executed, subject to the following and subject to conformance
with the policies and procedures disclosed in the Fund's Prospectus and
Statement of Additional Information and the policies and procedures
adopted by the Fund's Board of Trustees.
(a) In executing portfolio transactions, the Sub-Adviser will give
primary consideration to securing the best price and execution.
Consistent with this policy, the Sub-Adviser may consider the
financial responsibility, research and investment information and
other services provided by brokers or dealers who may effect or be
a party to any such transaction or other transactions to which
other clients of the Sub-Adviser may be a party. It is understood
that neither the Fund, the Adviser nor the Sub-Adviser has adopted
a formula for allocation of the Fund's investment transaction
business. It is also understood that it is desirable for the Fund
that the Sub-Adviser have access to supplemental investment and
market research and security and economic analyses provided by
certain brokers who may execute brokerage transactions at a higher
commission to the Fund than may result when allocating brokerage to
other brokers on the basis of seeking the lowest commission.
Therefore, the Sub-Adviser is authorized to place orders for the
purchase and sale of securities for the Series with certain such
brokers, subject
3
<PAGE>
to review by the Fund's Board of Trustees from time to time with
respect to the extent and continuation of this practice. It is
understood that the services provided by such brokers may be useful
to the Sub-Adviser in connection with its services to other clients
of the Sub-Adviser. The Sub-Adviser is also authorized to place
orders with certain brokers for services deemed by the Adviser to
be beneficial for the Fund; and the Sub-Adviser shall follow the
directions of the Adviser or the Fund in this regard.
(b) On occasions when the Sub-Adviser deems the purchase or sale of a
security to be in the best interest of the Series as well as other
clients of the Sub-Adviser, the Sub-Adviser, to the extent
permitted by applicable laws and regulations, may, but shall be
under no obligation to, aggregate the securities to be sold or
purchased in order to obtain the best price and execution. In such
event, allocation of the securities so purchased or sold, as well
as expenses incurred in the transaction, will be made by the
Sub-Adviser in the manner it considers to be the most equitable and
consistent with its fiduciary obligations to the Fund in respect of
the Series and to such other clients.
(c) The Sub-Adviser agrees that it will not execute without the prior
written approval of the Adviser any portfolio transactions for the
Series Account with a broker or dealer which is (i) an affiliated
person of the Fund, including the Adviser or any Sub-Adviser for
any Series of the Fund; (ii) a principal underwriter of the Fund's
shares; or (iii) an affiliated person of such an affiliated person
or principal underwriter. The Adviser agrees that it will provide
the Sub-Adviser with a list of such brokers and dealers.
(d) The Adviser shall render regular reports to the Fund of the total
brokerage business placed and the manner in which the allocation
has been accomplished.
8. PROXIES. The Sub-Adviser will vote all proxies solicited by or with
respect to issuers of securities in which assets of the Series Account
may be invested from time to time. At the request of the Sub-Adviser,
the Adviser shall provide the Sub-Adviser with its recommendations as
to the voting of such proxies.
9. REPORTS TO THE SUB-ADVISER. The Fund will provide the Sub-Adviser with
such periodic reports concerning the status of the Series Account as
the Sub-Adviser may reasonably request.
10. FEES FOR SERVICES. The compensation of the Sub-Adviser for its services
under this Agreement shall be calculated and paid by the Adviser in
accordance with the attached Schedule C. Pursuant to the provisions of
the Investment Advisory Agreement between the Fund and the Adviser, the
Adviser is solely responsible for the payment of fees to the
Sub-Adviser, and the Sub-Adviser agrees to seek payment of the
Sub-Adviser's fees solely from the Adviser.
4
<PAGE>
11. OTHER INVESTMENT ACTIVITIES OF THE SUB-ADVISER. The Fund acknowledges
that the Sub-Adviser or one or more of its affiliated persons may have
investment responsibilities or render investment advice to or perform
other investment advisory services for other individuals or entities
and that the Sub-Adviser, its affiliated persons or any of its or their
directors, officers, agents or employees may buy, sell or trade in any
securities for its or their own respective accounts ("Affiliated
Accounts"). Subject to the provisions of Section 7(b) hereof, the Fund
agrees that the Sub-Adviser or its affiliated persons may give advice
or exercise investment responsibility and take such other action with
respect to other Affiliated Accounts which may differ from the advice
given or the timing or nature of action taken with respect to the
Series Account, provided that the Sub-Adviser acts in good faith, and
provided further, that it is the Sub-Adviser's policy to allocate,
within its reasonable discretion, investment opportunities to the
Series Account over a period of time on a fair and equitable basis
relative to the Affiliated Accounts, taking into account the investment
objective and policies of the Series and any specific investment
restrictions applicable thereto. The Fund acknowledges that one or more
of the Affiliated Accounts may at any time hold, acquire, increase,
decrease, dispose of or otherwise deal with positions in investments in
which the Series Account may have an interest from time to time,
whether in transactions which involve the Series Account or otherwise.
The Sub-Adviser shall have no obligation to acquire for the Series
Account a position in any investment which any Affiliated Account may
acquire, and the Fund shall have no first refusal, co-investment or
other rights in respect of any such investment, either for the Series
Account or otherwise.
12. CERTIFICATE OF AUTHORITY. The Fund, the Adviser and the Sub-Adviser
shall furnish to each other from time to time certified copies of the
resolutions of their Boards of Trustees/Directors or executive
committees, as the case may be, evidencing the authority of officers
and employees who are authorized to act on behalf of the Fund, a Series
Account, the Adviser and/or the Sub-Adviser.
13. LIMITATION OF LIABILITY. The Sub-Adviser shall not be liable for any
action taken, omitted or suffered to be taken by it in its reasonable
judgment, in good faith and believed by it to be authorized or within
the discretion or rights or powers conferred upon it by this Agreement,
or in accordance with (or in the absence of) specific directions or
instructions from the Fund or the Adviser, provided, however, that such
acts or omissions shall not have resulted from the Sub-Adviser's
willful misfeasance, bad faith, gross negligence or a reckless
disregard of duty. Nothing in this Section 13 shall be construed in a
manner inconsistent with Section 17(i) of the 1940 Act.
14. CONFIDENTIALITY. Subject to the duty of the Sub-Adviser, the Adviser
and the Fund to comply with applicable law, including any demand of any
regulatory or taxing authority having jurisdiction, the parties hereto
shall treat as confidential all material non-public information
pertaining to the Series Account and the actions of the Sub-Adviser,
the Adviser and the Fund in respect thereof.
5
<PAGE>
15. ASSIGNMENT. No assignment of this Agreement shall be made by the
Sub-Adviser, and this Agreement shall terminate automatically in the
event of such assignment. The Sub-Adviser shall notify the Fund and the
Adviser in writing sufficiently in advance of any proposed change of
control within the meaning of the 1940 Act to enable the Fund and the
Adviser to take the steps necessary to enter into a new contract with
the Sub-Adviser.
16. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE FUND. The Fund
represents, warrants and agrees that:
(a) The Sub-Adviser has been duly appointed by the Board of Trustees of
the Fund to provide investment services to the Series Account as
contemplated hereby.
(b) The Fund will deliver to the Sub-Adviser a true and complete copy
of its then current Prospectus and Statement of Additional
Information as effective from time to time and such other documents
or instruments governing the investment of the Series Account and
such other information as is necessary for the Sub-Adviser to carry
out its obligations under this Agreement.
(c) The Fund is currently in compliance and shall at all times continue
to comply with the requirements imposed upon the Fund by applicable
law and regulations.
17. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE ADVISER. The Adviser
represents, warrants and agrees that:
(a) The Adviser has been duly authorized by the Board of Trustees of
the Fund to delegate to the Sub-Adviser the provision of investment
services to the Series Account as contemplated hereby.
(b) The Adviser is currently in compliance and shall at all times
continue to comply with the requirements imposed upon the Adviser
by applicable law and regulations.
18. REPRESENTATIONS. WARRANTIES AND AGREEMENTS OF THE SUB-ADVISER. The
Sub-Adviser represents, warrants and agrees that:
(a) The Sub-Adviser is registered as an "investment adviser" under the
Investment Advisers Act of 1940 ("Advisers Act") or is a "bank" as
defined in Section 202(a)(2) of the Advisers Act.
(b) The Sub-Adviser will maintain, keep current and preserve on behalf
of the Fund, in the manner required or permitted by the 1940 Act,
the records identified in Schedule B. The Sub-Adviser agrees that
such records (unless otherwise indicated on Schedule B) are the
property of the Fund, and will be surrendered to the Fund promptly
upon request. The Sub-Adviser agrees to keep confidential all
records of the Fund and information relating to the Fund, unless
the release of such
6
<PAGE>
records or information is otherwise consented to in writing by the
Fund or the Adviser. The Fund and the Adviser agree that such
consent shall not be unreasonably withheld and may not be withheld
where the Sub-Adviser may be exposed to civil or criminal contempt
proceedings or when required to divulge such information or records
to duly constituted authorities.
(c) The Sub-Adviser will complete such reports concerning purchases or
sales of securities on behalf of the Series Account as the Adviser
or the Fund may from time to time require to ensure compliance with
the 1940 Act, the Internal Revenue Code, applicable state
securities laws and applicable statutes and regulations of foreign
jurisdictions.
(d) The Sub-Adviser has adopted a written code of ethics complying with
the requirements of Rule 17j-1 under the 1940 Act and Section 204A
of the Advisers Act and has provided the Fund with a copy of the
code of ethics and evidence of its adoption. Within forty-five (45)
days of the end of the last calendar quarter of each year while
this Agreement is in effect, the president or a vice president or
general partner of the Sub-Adviser shall certify to the Fund that
the Sub-Adviser has complied with the requirements of Rule 17j-1
and Section 204A during the previous year and that there has been
no violation of the Sub-Adviser's code of ethics or, if such a
violation has occurred, that appropriate action was taken in
response to such violation. Upon the written request of the Fund,
the Sub-Adviser shall permit the Fund, its employees or its agents
to examine the reports required to be made to the Sub-Adviser by
Rule 17j-1(c)(1).
(e) The Sub-Adviser will promptly after filing with the Securities and
Exchange Commission an amendment to its Form ADV furnish a copy of
such amendment to the Fund and the Adviser.
(f) The Sub-Adviser will immediately notify the Fund and the Adviser of
the occurrence of any event which would disqualify the Sub-Adviser
from serving as an investment adviser of an investment company
pursuant to Section 9 of the 1940 Act or otherwise. The Sub-Adviser
will also immediately notify the Fund and the Adviser if it is
served or otherwise receives notice of any action, suit,
proceeding, inquiry or investigation, at law or in equity, before
or by any court, public board or body, involving the affairs of the
Series.
19. AMENDMENT. This Agreement may be amended at any time, but only by
written agreement among the Sub-Adviser, the Adviser and the Fund,
which amendment, other than amendments to Schedules A and B, is subject
to the approval of the Board of Trustees and, to the extent required by
the 1940 Act, the shareholders of the Series in the manner required by
the 1940 Act and the rules thereunder, subject to any applicable orders
of exemption issued by the Securities and Exchange Commission.
7
<PAGE>
20. EFFECTIVE DATE; TERM. This Agreement shall become effective on the date
first written above and shall remain in force for a period of time of
two years from such date, and from year to year thereafter but only so
long as such continuance is specifically approved at least annually by
the vote of a majority of the Trustees who are not interested persons
of the Fund, the Adviser or the Sub-Adviser, cast in person at a
meeting called for the purpose of voting on such approval, and by a
vote of the Board of Trustees or of a majority of the outstanding
voting securities of the Series. The aforesaid requirement that this
Agreement may be continued "annually" shall be construed in a manner
consistent with the 1940 Act and the rules and regulations thereunder.
21. TERMINATION.
(a) This Agreement may be terminated by the Fund (by a vote of the
Board of Trustees of the Fund or by a vote of a majority of the
outstanding voting securities of the Series), without the payment
of any penalty, immediately upon written notice to the other
parties hereto, in the event of a material breach of any provision
thereof by the party so notified or otherwise by the Fund, upon
sixty (60) days' written notice to the other parties hereto, but
any such termination shall not affect the status, obligations or
liabilities of any party hereto to the others.
(b) This Agreement may also be terminated by the Adviser or the
Sub-Adviser, without the payment of any penalty immediately upon
written notice to the other parties hereto, in the event of a
material breach of any provision thereof by the party so notified
if such breach shall not have been cured within a 20-day period
after notice of such breach or otherwise by the Adviser or the
Sub-Adviser upon sixty (60) days' written notice to the other
parties hereto, but any such termination shall not affect the
status, obligations or liabilities of any party hereto to the
others.
22. DEFINITIONS. As used in this Agreement, the terms "affiliated person,"
"assignment," "control," "interested person," "principal underwriter"
and "vote of a majority of the outstanding voting securities" shall
have the meanings set forth in the 1940 Act and the rules and
regulations thereunder, subject to any applicable orders of exemption
issued by the Securities and Exchange Commission.
23. NOTICE. Any notice under this Agreement shall be given in writing
addressed and delivered or mailed, postage prepaid, to the other
parties to this Agreement at their principal place of business.
24. SEVERABILITY. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder
of this Agreement shall not be affected thereby.
25. GOVERNING LAW. To the extent that state law is not preempted by the
provisions of any law of the United States heretofore or hereafter
enacted, as the same may be amended
8
<PAGE>
from time to time, this Agreement shall be administered, construed and
enforced according to the laws of the State of Delaware.
26. ENTIRE AGREEMENT. This Agreement and the Schedules attached hereto
embodies the entire agreement and understanding between the parties.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed, as of the day and year first written above.
WT INVESTMENT TRUST I
on behalf of
THE INTERNATIONAL MULTI-MANAGER
SERIES
By: __________________________________________
Robert J. Christian, President
CLEMENTE CAPITAL, INC.
By: __________________________________________
Title: _______________________________________
WILMINGTON TRUST COMPANY
By: __________________________________________
Robert J. Christian, Senior Vice President
SCHEDULES: A. Operating Procedures
B. Record Keeping Requirements
C Fee Schedule
9
<PAGE>
SCHEDULE A
DATED OCTOBER _____, 1999
TO
SUB-ADVISORY AGREEMENT
DATED OCTOBER _____, 1999
AMONG WT INVESTMENT
TRUST I, WILMINGTON TRUST
COMPANY AND CLEMENTE CAPITAL, INC.
OPERATING PROCEDURES
From time to time the Adviser shall issue written Operating Procedures which
shall govern reporting of transactions and other matters so as to facilitate (i)
the monitoring of the Fund's compliance with the restrictions and limitations
applicable to the operations of a registered investment company and (ii) the
preparation of reports to the Board of Trustees, regulatory authorities and
shareholders.
SUBSTANTIVE LIMITATIONS
A. The Sub-Adviser will manage the Series Account as if the Series Account
were a registered investment company subject to the investment
objective, policies and limitations applicable to the Series stated in
the Fund's Prospectus and Statement of Additional Information, as from
time to time in effect, included in the Fund's registration statement
or a supplement thereto under the Securities Act of 1933 and the
Investment Company Act of 1940 (the "1940 Act"), as each may be amended
from time to time; provided, however, that if a more stringent
restriction or limitation than any of the foregoing is stated in
Section B of this Schedule, the more stringent restriction or
limitation shall apply to the Series Account.
B. The Sub-Adviser shall not, without the written approval of the Adviser,
on behalf of the Series Account:
1. purchase securities of any issuer if such purchase would cause more
than 3.33 % of the voting securities of such issuer to be held in
the Series Account (1940 Act ss.5(b)(1); IRC* ss.851(b)(4)(a)(ii));
2. purchase securities if such purchase would cause:
a. more than 1 % of the outstanding voting stock of any other
investment company to be held in the Series Account (1940 Act
ss.12(d)(1)(A)(i)),
- ----------------------------
* Internal Revenue Code
A-1
<PAGE>
b. securities issued by any other investment company having an
aggregate value in excess of 5 % of the value of the total
assets in the Series Account to be held in the Series Account
(1940 Act ss.12(d)(1)(A)(i)),
c. securities issued by all other investment companies having an
aggregate value in excess of 10% of the value of the total
assets of the Series Account to be held in the Series Account
(1940 Act ss.12(d)(1)(A)(iii)),
d. more than 3.33% of the outstanding voting stock of any
registered closed-end investment company to be held in the
Series Account, and by any other investment company having as
its investment adviser any of the Sub-Advisers, the Adviser,
or any other investment adviser to the Fund (1940 Act
ss.12(d)(1)(C));
3. purchase securities of any insurance company if such purchase would
cause more than 3.33% of the outstanding voting securities of any
insurance company to be held in the Series Account (1940 Act
ss.12(d)(2)); or
4. purchase securities of or any interest in any person who is a
broker, a dealer, is engaged in the business of underwriting, is an
investment adviser to an investment company or is a registered
investment adviser under the Investment Advisers Act of 1940 unless
a. such purchase is of a security of any issuer that, in its most
recent fiscal year, derived 15% or less of its gross revenues
from securities-related activities (1940 Act Rule 12d3-l(a)),
or
b. despite the fact that such purchase is of any security of any
issuer that derived more than 15% of its gross revenues from
securities-related activities:
(1) immediately after the purchase of any equity security, the
Series Account would not own more than 5% of outstanding
securities of that class of the issuer's equity securities
(1940 Act Rule 12d3-1(b)(1));
(2) immediately after the purchase of any debt security, the
Series Account would not own more than 10% of the outstanding
principal amount of the issuer's debt securities (1940 Act
Rule 12d3-1(b)(2)); and
(3) immediately after the purchase, not more than 5% of the value
of the Series Account's total assets would be invested in the
issuer's securities (1940 Act Rule 12d3-1(b)(3)).
C. In the event that the number of Sub-Advisers shall vary from three (3),
the percentage limitations of Subsections B1, B2a, B2d, B3, B4b(1) and
B4b(4) of this Schedule shall be
A-2
<PAGE>
adjusted (i) in the case of an increase in the number of Sub-Advisers,
proportionately downward and (ii) in the case of a decrease of the
number of Sub-Advisers, proportionately upward.
The Adviser shall notify the Sub-Adviser of an increase or decrease in
the number of Sub-Advisers and the proportionate decrease or increase
in the percentages specified in the subsections enumerated in the
preceding sentence, but the Adviser's failure to do so shall not affect
the operation of this Section C of this Schedule.
D. The Sub-Adviser will manage the Series Account so that no more than 10%
of the gross income of the Series Account is derived from any source
other than dividends, interest, payments with respect to securities
loans (as defined in IRC ss.512(a)(5)), and gains from the sale or
other disposition of stock or securities (as defined in the 1940 Act
ss.2(a)(36)) or foreign currencies, or other income (including, but not
limited to, gains from options, futures, or forward contracts) derived
with respect to the Series's business of investing in such stock,
securities, or currencies (IRC ss.851(b)(2)).
A-3
<PAGE>
SCHEDULE B
DATED OCTOBER _____, 1999
TO
SUB-ADVISORY AGREEMENT
DATED OCTOBER _____, 1999
AMONG WT INVESTMENT
TRUST I, WILMINGTON TRUST
COMPANY AND CLEMENTE CAPITAL, INC.
RECORD KEEPING REQUIREMENTS
RECORDS TO BE MAINTAINED BY THE SUB-ADVISER:
A. (Rule 31a-l(b)(5) and (6)). A record of each brokerage order, and all
other portfolio purchases and sales, given by the Sub-Adviser on behalf
of the Series Account for, or in connection with, the purchase or sale
of securities, whether executed or unexecuted. Such records shall
include:
1. the name of the broker;
2. the terms and conditions of the order and of any modification or
cancellation thereof;
3. the time of entry or cancellation;
4. the price at which executed;
5. the time of receipt of a report of execution; and
6. the name of the person who placed the order on behalf of the Series
Account.
B. (Rule 31a-l(b)(9)). A record for each fiscal quarter, completed within
ten (10) days after the end of the quarter, showing specifically the
basis or bases (e.g. execution ability, execution and research) upon
which the allocation of orders for the purchase and sale of portfolio
securities to named brokers or dealers was effected, and the division
of brokerage commissions or other compensation on such purchase and
sale orders. Such record:
1. shall include the consideration given to:
a. the sale of shares of the Fund by brokers or dealers;
b. the supplying of services or benefits by brokers or dealers
to:
(1) the Fund,
B-1
<PAGE>
(2) the Adviser,
(3) the Sub-Adviser, and
(4) any person other than the foregoing; and
c. any other consideration other than the technical
qualifications of the brokers and dealers as such;
2. shall show the nature of the services or benefits made available;
3. shall describe in detail the application of any general or specific
formula or other determinant used in arriving at such allocation of
purchase and sale orders and such division of brokerage commissions
or other compensation; and
4. shall show the name of the person responsible for making the
determination of such allocation and such division of brokerage
commissions or other compensation.
C. (Rule 31a-l(b)(10)). A record in the form of an appropriate memorandum
identifying the person or persons, committees or groups authorizing the
purchase or sale of portfolio securities. Where an authorization is
made by a committee or group, a record shall be kept of the names of
its members who participate in the authorization. There shall be
retained as part of this record: any memorandum, recommendation or
instruction supporting or authorizing the purchase or sale of portfolio
securities and such other information as is appropriate to support the
authorization.*
D. (Rule 31a-1(f)). Such accounts, books and other documents as are
required to be maintained by registered investment advisers by rule
adopted under Section 204 of the Investment Advisers Act of 1940, to
the extent such records are necessary or appropriate to record the
Sub-Adviser's transactions with respect to the Series Account.
- ----------------------------
* Such information might include: the current Form 10-K, annual and quarterly
reports, press releases, reports by analysts and from brokerage firms (including
their recommendation, i.e., buy, sell, hold) or any internal reports or
portfolio adviser reviews.
B-2
<PAGE>
SCHEDULE C
DATED OCTOBER _____, 1999
TO
SUB-ADVISORY AGREEMENT
DATED OCTOBER _____, 1999
AMONG WT INVESTMENT
TRUST I, WILMINGTON TRUST
COMPANY AND CLEMENTE CAPITAL, INC.
FEE SCHEDULE
For the services to be provided to the Series pursuant to the attached
Sub-Advisory Agreement, the Adviser shall pay the Sub-Adviser a monthly fee in
accordance with the following formula:
Monthly Fee = (.50% x net asset value of the Sub-Adviser's Series Account on the
last business day of the month) / 12
Such fee shall be payable in arrears within 15 business days following the end
of each month.
Exhibit (d) (vi)
SCUDDER KEMPER INVESTMENTS, INC.
SUB-ADVISORY AGREEMENT
THIS SUB-ADVISORY AGREEMENT is made as of the _____ day of October,
1999, among WT Investment Trust I, a Delaware business trust (the "Fund"),
Wilmington Trust Company (the "Adviser"), a corporation organized under the laws
of the state of Delaware and Scudder Kemper Investments, Inc., a corporation
organized under the laws of the state of Delaware (the "Sub-Adviser").
WHEREAS, the Fund is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end management investment company
and offers for public sale distinct series of shares of beneficial interest; and
WHEREAS, the International Multi-Manager Series (the "Series") is a
series of the Fund; and
WHEREAS, the Adviser acts as the investment adviser for the Series
pursuant to the terms of an Investment Advisory Agreement between the Fund and
the Adviser under which the Adviser is responsible for the coordination of
investment of the Series' assets in portfolio securities; and
WHEREAS, the Adviser is authorized under the Investment Advisory
Agreement to delegate its investment responsibilities to one or more persons or
companies;
NOW THEREFORE, in consideration of the promises and mutual covenants
herein contained, the Fund, the Adviser and the Sub-Adviser agree as follows:
1. APPOINTMENT OF SUB-ADVISER. The Adviser and the Fund hereby appoint and
employ the Sub-Adviser as a discretionary portfolio manager, on the
terms and conditions set forth herein, of those assets of the Series
which the Adviser determines to assign to the Sub-Adviser (those assets
being referred to as the "Series Account"). The Adviser may, from time
to time, make additions to and withdrawals, including cash and cash
equivalents, from the Series Account.
2. ACCEPTANCE OF APPOINTMENT. The Sub-Adviser accepts its appointment as a
discretionary portfolio manager and agrees to use its professional
judgment to make investment decisions for the Series with respect to
the investments of the Series Account and to implement such decisions
on a timely basis in accordance with the provisions of this Agreement.
<PAGE>
3. DELIVERY OF DOCUMENTS. The Adviser has furnished the Sub-Adviser with
copies properly certified or authenticated of each of the following and
will promptly provide the Sub-Adviser with copies properly certified or
authenticated of any amendment or supplement thereto:
(a) The Series' Investment Advisory Agreement;
(b) The Fund's most recent effective registration statement and
financial statements as filed with the Securities and Exchange
Commission;
(c) The Fund's Agreement and Declaration of Trust and By-Laws; and
(d) Any policies, procedures or instructions adopted or approved by the
Fund's Board of Trustees relating to obligations and services
provided by the Sub-Adviser.
4. PORTFOLIO MANAGEMENT SERVICES OF THE SUB-ADVISER. The Sub-Adviser is
hereby employed and authorized to select portfolio securities for
investment by the Series, to purchase and to sell securities for the
Series Account, and upon making any purchase or sale decision, to place
orders for the execution of such portfolio transactions in accordance
with Sections 6 and 7 hereof and Schedule A hereto (as amended from
time to time). In providing portfolio management services to the Series
Account, the Sub-Adviser shall be subject to and shall conform to such
investment restrictions as are set forth in the 1940 Act and the rules
thereunder, the Internal Revenue Code, applicable state securities
laws, applicable statutes and regulations of foreign jurisdictions, the
supervision and control of the Board of Trustees of the Fund, such
specific instructions as the Board of Trustees may adopt and
communicate to the Sub-Adviser, the investment objective, policies and
restrictions of the Fund applicable to the Series furnished pursuant to
Section 5 of this Agreement, the provisions of Schedule A and Schedule
B hereto and other instructions communicated to the Sub-Adviser by the
Adviser. The Sub-Adviser is not authorized by the Fund to take any
action, including the purchase or sale of securities for the Series
Account, in contravention of any restriction, limitation, objective,
policy or instruction described in the previous sentence. The
Sub-Adviser shall maintain on behalf of the Fund the records listed in
Schedule B hereto (as amended from time to time). At the Fund's
reasonable request, the Sub-Adviser will consult with the Fund or with
the Adviser with respect to any decision made by it with respect to the
investments of the Series Account.
5. INVESTMENT OBJECTIVE, POLICIES AND RESTRICTIONS. The Fund will provide
the Sub-Adviser with the statement of investment objective, policies
and restrictions applicable to the Series as contained in the Series'
Prospectus and Statement of Additional Information, all amendments or
supplements to the Prospectus and Statement of Additional Information,
and any instructions adopted by the Board of Trustees supplemental
thereto. The Fund agrees, on an ongoing basis, to notify the
Sub-Adviser in writing of each change in the fundamental and
non-fundamental investment policies of the Series and will provide the
Sub-Adviser with such further information concerning the investment
2
<PAGE>
objective, policies, restrictions and such other information applicable
thereto as the Sub-Adviser may from time to time reasonably request for
performance of its obligations under this Agreement. The Fund retains
the right, on written notice to the Sub-Adviser or the Adviser, to
modify any such objective, policies or restrictions in accordance with
applicable laws, at any time.
6. TRANSACTION PROCEDURES. All transactions will be consummated by payment
to or delivery by the custodian designated by the Fund (the
"Custodian"), or such depositories or agents as may be designated by
the Custodian in writing, of all cash and/or securities due to or from
the Series Account, and the Sub-Adviser shall not have possession or
custody thereof. The Sub-Adviser shall advise the Custodian and confirm
in writing to the Fund and to the administrator designated by the Fund
or any other designated agent of the Fund, all investment orders for
the Series Account placed by it with brokers and dealers at the time
and in the manner set forth in Schedule B hereto (as amended from time
to time). The Fund shall issue to the Custodian such instructions as
may be appropriate in connection with the settlement of any transaction
initiated by the Sub-Adviser. The Fund shall be responsible for all
custodial arrangements and the payment of all custodial charges and
fees, and, upon giving proper instructions to the Custodian, the
Sub-Adviser shall have no responsibility or liability with respect to
custodial arrangements or the acts, omissions or other conduct of the
Custodian, except that it shall be the responsibility of the
Sub-Adviser to take appropriate action if the Custodian fails to
confirm in writing proper execution of the instructions.
7. ALLOCATION OF BROKERAGE. The Sub-Adviser shall have authority and
discretion to select brokers and dealers (including brokers that may be
affiliates of the Sub-Adviser to the extent permitted by Section 7(c)
hereof) to execute portfolio transactions initiated by the Sub-Adviser,
and for the selection of the markets on or in which the transactions
will be executed, subject to the following and subject to conformance
with the policies and procedures disclosed in the Fund's Prospectus and
Statement of Additional Information and the policies and procedures
adopted by the Fund's Board of Trustees.
(a) In executing portfolio transactions, the Sub-Adviser will give
primary consideration to securing the best price and execution.
Consistent with this policy, the Sub-Adviser may consider the
financial responsibility, research and investment information and
other services provided by brokers or dealers who may effect or be
a party to any such transaction or other transactions to which
other clients of the Sub-Adviser may be a party. It is understood
that neither the Fund, the Adviser nor the Sub-Adviser has adopted
a formula for allocation of the Fund's investment transaction
business. It is also understood that it is desirable for the Fund
that the Sub-Adviser have access to supplemental investment and
market research and security and economic analyses provided by
certain brokers who may execute brokerage transactions at a higher
commission to the Fund than may result when allocating brokerage to
other brokers on the basis of seeking the lowest commission.
Therefore, the Sub-Adviser is authorized to place orders for the
purchase and sale of securities for the Series with certain such
brokers, subject
3
<PAGE>
to review by the Fund's Board of Trustees from time to time with
respect to the extent and continuation of this practice. It is
understood that the services provided by such brokers may be useful
to the Sub-Adviser in connection with its services to other clients
of the Sub-Adviser. The Sub-Adviser is also authorized to place
orders with certain brokers for services deemed by the Adviser to
be beneficial for the Fund; and the Sub-Adviser shall follow the
directions of the Adviser or the Fund in this regard.
(b) On occasions when the Sub-Adviser deems the purchase or sale of a
security to be in the best interest of the Series as well as other
clients of the Sub-Adviser, the Sub-Adviser, to the extent
permitted by applicable laws and regulations, may, but shall be
under no obligation to, aggregate the securities to be sold or
purchased in order to obtain the best price and execution. In such
event, allocation of the securities so purchased or sold, as well
as expenses incurred in the transaction, will be made by the
Sub-Adviser in the manner it considers to be the most equitable and
consistent with its fiduciary obligations to the Fund in respect of
the Series and to such other clients.
(c) The Sub-Adviser agrees that it will not execute without the prior
written approval of the Adviser any portfolio transactions for the
Series Account with a broker or dealer which is (i) an affiliated
person of the Fund, including the Adviser or any Sub-Adviser for
any Series of the Fund; (ii) a principal underwriter of the Fund's
shares; or (iii) an affiliated person of such an affiliated person
or principal underwriter. The Adviser agrees that it will provide
the Sub-Adviser with a list of such brokers and dealers.
(d) The Adviser shall render regular reports to the Fund of the total
brokerage business placed and the manner in which the allocation
has been accomplished.
8. PROXIES. The Sub-Adviser will vote all proxies solicited by or with
respect to issuers of securities in which assets of the Series Account
may be invested from time to time. At the request of the Sub-Adviser,
the Adviser shall provide the Sub-Adviser with its recommendations as
to the voting of such proxies.
9. REPORTS TO THE SUB-ADVISER. The Fund will provide the Sub-Adviser with
such periodic reports concerning the status of the Series Account as
the Sub-Adviser may reasonably request.
10. FEES FOR SERVICES. The compensation of the Sub-Adviser for its services
under this Agreement shall be calculated and paid by the Adviser in
accordance with the attached Schedule C. Pursuant to the provisions of
the Investment Advisory Agreement between the Fund and the Adviser, the
Adviser is solely responsible for the payment of fees to the
Sub-Adviser, and the Sub-Adviser agrees to seek payment of the
Sub-Adviser's fees solely from the Adviser.
4
<PAGE>
11. OTHER INVESTMENT ACTIVITIES OF THE SUB-ADVISER. The Fund acknowledges
that the Sub-Adviser or one or more of its affiliated persons may have
investment responsibilities or render investment advice to or perform
other investment advisory services for other individuals or entities
and that the Sub-Adviser, its affiliated persons or any of its or their
directors, officers, agents or employees may buy, sell or trade in any
securities for its or their own respective accounts ("Affiliated
Accounts"). Subject to the provisions of Section 7(b) hereof, the Fund
agrees that the Sub-Adviser or its affiliated persons may give advice
or exercise investment responsibility and take such other action with
respect to other Affiliated Accounts which may differ from the advice
given or the timing or nature of action taken with respect to the
Series Account, provided that the Sub-Adviser acts in good faith, and
provided further, that it is the Sub-Adviser's policy to allocate,
within its reasonable discretion, investment opportunities to the
Series Account over a period of time on a fair and equitable basis
relative to the Affiliated Accounts, taking into account the investment
objective and policies of the Series and any specific investment
restrictions applicable thereto. The Fund acknowledges that one or more
of the Affiliated Accounts may at any time hold, acquire, increase,
decrease, dispose of or otherwise deal with positions in investments in
which the Series Account may have an interest from time to time,
whether in transactions which involve the Series Account or otherwise.
The Sub-Adviser shall have no obligation to acquire for the Series
Account a position in any investment which any Affiliated Account may
acquire, and the Fund shall have no first refusal, co-investment or
other rights in respect of any such investment, either for the Series
Account or otherwise.
12. CERTIFICATE OF AUTHORITY. The Fund, the Adviser and the Sub-Adviser
shall furnish to each other from time to time certified copies of the
resolutions of their Boards of Trustees/Directors or executive
committees, as the case may be, evidencing the authority of officers
and employees who are authorized to act on behalf of the Fund, a Series
Account, the Adviser and/or the Sub-Adviser.
13. LIMITATION OF LIABILITY. The Sub-Adviser shall not be liable for any
action taken, omitted or suffered to be taken by it in its reasonable
judgment, in good faith and believed by it to be authorized or within
the discretion or rights or powers conferred upon it by this Agreement,
or in accordance with (or in the absence of) specific directions or
instructions from the Fund or the Adviser, provided, however, that such
acts or omissions shall not have resulted from the Sub-Adviser's
willful misfeasance, bad faith, gross negligence or a reckless
disregard of duty. Nothing in this Section 13 shall be construed in a
manner inconsistent with Section 17(i) of the 1940 Act.
14. CONFIDENTIALITY. Subject to the duty of the Sub-Adviser, the Adviser
and the Fund to comply with applicable law, including any demand of any
regulatory or taxing authority having jurisdiction, the parties hereto
shall treat as confidential all material non-public information
pertaining to the Series Account and the actions of the Sub-Adviser,
the Adviser and the Fund in respect thereof.
5
<PAGE>
15. ASSIGNMENT. No assignment of this Agreement shall be made by the
Sub-Adviser, and this Agreement shall terminate automatically in the
event of such assignment. The Sub-Adviser shall notify the Fund and the
Adviser in writing sufficiently in advance of any proposed change of
control within the meaning of the 1940 Act to enable the Fund and the
Adviser to take the steps necessary to enter into a new contract with
the Sub-Adviser.
16. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE FUND. The Fund
represents, warrants and agrees that:
(a) The Sub-Adviser has been duly appointed by the Board of Trustees of
the Fund to provide investment services to the Series Account as
contemplated hereby.
(b) The Fund will deliver to the Sub-Adviser a true and complete copy
of its then current Prospectus and Statement of Additional
Information as effective from time to time and such other documents
or instruments governing the investment of the Series Account and
such other information as is necessary for the Sub-Adviser to carry
out its obligations under this Agreement.
(c) The Fund is currently in compliance and shall at all times continue
to comply with the requirements imposed upon the Fund by applicable
law and regulations.
17. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE ADVISER. The Adviser
represents, warrants and agrees that:
(a) The Adviser has been duly authorized by the Board of Trustees of
the Fund to delegate to the Sub-Adviser the provision of investment
services to the Series Account as contemplated hereby.
(b) The Adviser is currently in compliance and shall at all times
continue to comply with the requirements imposed upon the Adviser
by applicable law and regulations.
18. REPRESENTATIONS. WARRANTIES AND AGREEMENTS OF THE SUB-ADVISER. The
Sub-Adviser represents, warrants and agrees that:
(a) The Sub-Adviser is registered as an "investment adviser" under the
Investment Advisers Act of 1940 ("Advisers Act") or is a "bank" as
defined in Section 202(a)(2) of the Advisers Act.
(b) The Sub-Adviser will maintain, keep current and preserve on behalf
of the Fund, in the manner required or permitted by the 1940 Act,
the records identified in Schedule B. The Sub-Adviser agrees that
such records (unless otherwise indicated on Schedule B) are the
property of the Fund, and will be surrendered to the Fund promptly
upon request. The Sub-Adviser agrees to keep confidential all
records of the Fund and information relating to the Fund, unless
the release of such
6
<PAGE>
records or information is otherwise consented to in writing by the
Fund or the Adviser. The Fund and the Adviser agree that such
consent shall not be unreasonably withheld and may not be withheld
where the Sub-Adviser may be exposed to civil or criminal contempt
proceedings or when required to divulge such information or records
to duly constituted authorities.
(c) The Sub-Adviser will complete such reports concerning purchases or
sales of securities on behalf of the Series Account as the Adviser
or the Fund may from time to time require to ensure compliance with
the 1940 Act, the Internal Revenue Code, applicable state
securities laws and applicable statutes and regulations of foreign
jurisdictions.
(d) The Sub-Adviser has adopted a written code of ethics complying with
the requirements of Rule 17j-1 under the 1940 Act and Section 204A
of the Advisers Act and has provided the Fund with a copy of the
code of ethics and evidence of its adoption. Within forty-five (45)
days of the end of the last calendar quarter of each year while
this Agreement is in effect, the president or a vice president or
general partner of the Sub-Adviser shall certify to the Fund that
the Sub-Adviser has complied with the requirements of Rule 17j-1
and Section 204A during the previous year and that there has been
no violation of the Sub-Adviser's code of ethics or, if such a
violation has occurred, that appropriate action was taken in
response to such violation. Upon the written request of the Fund,
the Sub-Adviser shall permit the Fund, its employees or its agents
to examine the reports required to be made to the Sub-Adviser by
Rule 17j-1(c)(1).
(e) The Sub-Adviser will promptly after filing with the Securities and
Exchange Commission an amendment to its Form ADV furnish a copy of
such amendment to the Fund and the Adviser.
(f) The Sub-Adviser will immediately notify the Fund and the Adviser of
the occurrence of any event which would disqualify the Sub-Adviser
from serving as an investment adviser of an investment company
pursuant to Section 9 of the 1940 Act or otherwise. The Sub-Adviser
will also immediately notify the Fund and the Adviser if it is
served or otherwise receives notice of any action, suit,
proceeding, inquiry or investigation, at law or in equity, before
or by any court, public board or body, involving the affairs of the
Series.
19. AMENDMENT. This Agreement may be amended at any time, but only by
written agreement among the Sub-Adviser, the Adviser and the Fund,
which amendment, other than amendments to Schedules A and B, is subject
to the approval of the Board of Trustees and, to the extent required by
the 1940 Act, the shareholders of the Series in the manner required by
the 1940 Act and the rules thereunder, subject to any applicable orders
of exemption issued by the Securities and Exchange Commission.
7
<PAGE>
20. EFFECTIVE DATE; TERM. This Agreement shall become effective on the date
first written above and shall remain in force for a period of time of
two years from such date, and from year to year thereafter but only so
long as such continuance is specifically approved at least annually by
the vote of a majority of the Trustees who are not interested persons
of the Fund, the Adviser or the Sub-Adviser, cast in person at a
meeting called for the purpose of voting on such approval, and by a
vote of the Board of Trustees or of a majority of the outstanding
voting securities of the Series. The aforesaid requirement that this
Agreement may be continued "annually" shall be construed in a manner
consistent with the 1940 Act and the rules and regulations thereunder.
21. TERMINATION.
(a) This Agreement may be terminated by the Fund (by a vote of the
Board of Trustees of the Fund or by a vote of a majority of the
outstanding voting securities of the Series), without the payment
of any penalty, immediately upon written notice to the other
parties hereto, in the event of a material breach of any provision
thereof by the party so notified or otherwise by the Fund, upon
sixty (60) days' written notice to the other parties hereto, but
any such termination shall not affect the status, obligations or
liabilities of any party hereto to the others.
(b) This Agreement may also be terminated by the Adviser or the
Sub-Adviser, without the payment of any penalty immediately upon
written notice to the other parties hereto, in the event of a
material breach of any provision thereof by the party so notified
if such breach shall not have been cured within a 20-day period
after notice of such breach or otherwise by the Adviser or the
Sub-Adviser upon sixty (60) days' written notice to the other
parties hereto, but any such termination shall not affect the
status, obligations or liabilities of any party hereto to the
others.
22. DEFINITIONS. As used in this Agreement, the terms "affiliated person,"
"assignment," "control," "interested person," "principal underwriter"
and "vote of a majority of the outstanding voting securities" shall
have the meanings set forth in the 1940 Act and the rules and
regulations thereunder, subject to any applicable orders of exemption
issued by the Securities and Exchange Commission.
23. NOTICE. Any notice under this Agreement shall be given in writing
addressed and delivered or mailed, postage prepaid, to the other
parties to this Agreement at their principal place of business.
24. SEVERABILITY. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder
of this Agreement shall not be affected thereby.
25. GOVERNING LAW. To the extent that state law is not preempted by the
provisions of any law of the United States heretofore or hereafter
enacted, as the same may be amended
8
<PAGE>
from time to time, this Agreement shall be administered, construed and
enforced according to the laws of the State of Delaware.
26. ENTIRE AGREEMENT. This Agreement and the Schedules attached hereto
embodies the entire agreement and understanding between the parties.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed, as of the day and year first written above.
WT INVESTMENT TRUST I
on behalf of
THE INTERNATIONAL MULTI-MANAGER SERIES
By: __________________________________________
Robert J. Christian, President
SCUDDER KEMPER INVESTMENTS, INC.
By: __________________________________________
Title: _______________________________________
WILMINGTON TRUST COMPANY
By: __________________________________________
Robert J. Christian, Senior Vice President
SCHEDULES: A. Operating Procedures
B. Record Keeping Requirements
C Fee Schedule
9
<PAGE>
SCHEDULE A
DATED OCTOBER _____, 1999
TO
SUB-ADVISORY AGREEMENT
DATED OCTOBER _____, 1999
AMONG WT INVESTMENT
TRUST I, WILMINGTON TRUST
COMPANY AND SCUDDER KEMPER INVESTMENTS, INC.
OPERATING PROCEDURES
From time to time the Adviser shall issue written Operating Procedures which
shall govern reporting of transactions and other matters so as to facilitate (i)
the monitoring of the Fund's compliance with the restrictions and limitations
applicable to the operations of a registered investment company and (ii) the
preparation of reports to the Board of Trustees, regulatory authorities and
shareholders.
SUBSTANTIVE LIMITATIONS
A. The Sub-Adviser will manage the Series Account as if the Series Account
were a registered investment company subject to the investment
objective, policies and limitations applicable to the Series stated in
the Fund's Prospectus and Statement of Additional Information, as from
time to time in effect, included in the Fund's registration statement
or a supplement thereto under the Securities Act of 1933 and the
Investment Company Act of 1940 (the "1940 Act"), as each may be amended
from time to time; provided, however, that if a more stringent
restriction or limitation than any of the foregoing is stated in
Section B of this Schedule, the more stringent restriction or
limitation shall apply to the Series Account.
B. The Sub-Adviser shall not, without the written approval of the Adviser,
on behalf of the Series Account:
1. purchase securities of any issuer if such purchase would cause more
than 3.33 % of the voting securities of such issuer to be held in
the Series Account (1940 Act ss.5(b)(1); IRC* ss.851(b)(4)(a)(ii));
2. purchase securities if such purchase would cause:
a. more than 1 % of the outstanding voting stock of any other
investment company to be held in the Series Account (1940 Act
ss.12(d)(1)(A)(i)),
- ----------------------------
* Internal Revenue Code
A-1
<PAGE>
b. securities issued by any other investment company having an
aggregate value in excess of 5 % of the value of the total
assets in the Series Account to be held in the Series Account
(1940 Act ss.12(d)(1)(A)(i)),
c. securities issued by all other investment companies having an
aggregate value in excess of 10% of the value of the total
assets of the Series Account to be held in the Series Account
(1940 Act ss.12(d)(1)(A)(iii)),
d. more than 3.33% of the outstanding voting stock of any
registered closed-end investment company to be held in the
Series Account, and by any other investment company having as
its investment adviser any of the Sub-Advisers, the Adviser,
or any other investment adviser to the Fund (1940 Act
ss.12(d)(1)(C));
3. purchase securities of any insurance company if such purchase would
cause more than 3.33% of the outstanding voting securities of any
insurance company to be held in the Series Account (1940 Act
ss.12(d)(2)); or
4. purchase securities of or any interest in any person who is a
broker, a dealer, is engaged in the business of underwriting, is an
investment adviser to an investment company or is a registered
investment adviser under the Investment Advisers Act of 1940 unless
a. such purchase is of a security of any issuer that, in its most
recent fiscal year, derived 15% or less of its gross revenues
from securities-related activities (1940 Act Rule 12d3-l(a)),
or
b. despite the fact that such purchase is of any security of any
issuer that derived more than 15% of its gross revenues from
securities-related activities:
(1) immediately after the purchase of any equity security, the
Series Account would not own more than 5% of outstanding
securities of that class of the issuer's equity securities
(1940 Act Rule 12d3-1(b)(1));
(2) immediately after the purchase of any debt security, the
Series Account would not own more than 10% of the outstanding
principal amount of the issuer's debt securities (1940 Act
Rule 12d3-1(b)(2)); and
(3) immediately after the purchase, not more than 5% of the value
of the Series Account's total assets would be invested in the
issuer's securities (1940 Act Rule 12d3-1(b)(3)).
C. In the event that the number of Sub-Advisers shall vary from three (3),
the percentage limitations of Subsections B1, B2a, B2d, B3, B4b(1) and
B4b(4) of this Schedule shall be
A-2
<PAGE>
adjusted (i) in the case of an increase in the number of Sub-Advisers,
proportionately downward and (ii) in the case of a decrease of the
number of Sub-Advisers, proportionately upward.
The Adviser shall notify the Sub-Adviser of an increase or decrease in
the number of Sub-Advisers and the proportionate decrease or increase
in the percentages specified in the subsections enumerated in the
preceding sentence, but the Adviser's failure to do so shall not affect
the operation of this Section C of this Schedule.
D. The Sub-Adviser will manage the Series Account so that no more than 10%
of the gross income of the Series Account is derived from any source
other than dividends, interest, payments with respect to securities
loans (as defined in IRC ss.512(a)(5)), and gains from the sale or
other disposition of stock or securities (as defined in the 1940 Act
ss.2(a)(36)) or foreign currencies, or other income (including, but not
limited to, gains from options, futures, or forward contracts) derived
with respect to the Series's business of investing in such stock,
securities, or currencies (IRC ss.851(b)(2)).
A-3
<PAGE>
SCHEDULE B
DATED OCTOBER _____, 1999
TO
SUB-ADVISORY AGREEMENT
DATED OCTOBER _____, 1999
AMONG WT INVESTMENT
TRUST I, WILMINGTON TRUST
COMPANY AND SCUDDER KEMPER INVESTMENTS, INC.
RECORD KEEPING REQUIREMENTS
RECORDS TO BE MAINTAINED BY THE SUB-ADVISER:
A. (Rule 31a-l(b)(5) and (6)). A record of each brokerage order, and all
other portfolio purchases and sales, given by the Sub-Adviser on behalf
of the Series Account for, or in connection with, the purchase or sale
of securities, whether executed or unexecuted. Such records shall
include:
1. the name of the broker;
2. the terms and conditions of the order and of any modification or
cancellation thereof;
3. the time of entry or cancellation;
4. the price at which executed;
5. the time of receipt of a report of execution; and
6. the name of the person who placed the order on behalf of the Series
Account.
B. (Rule 31a-l(b)(9)). A record for each fiscal quarter, completed within
ten (10) days after the end of the quarter, showing specifically the
basis or bases (e.g. execution ability, execution and research) upon
which the allocation of orders for the purchase and sale of portfolio
securities to named brokers or dealers was effected, and the division
of brokerage commissions or other compensation on such purchase and
sale orders. Such record:
1. shall include the consideration given to:
a. the sale of shares of the Fund by brokers or dealers;
b. the supplying of services or benefits by brokers or dealers
to:
(1) the Fund,
B-1
<PAGE>
(2) the Adviser,
(3) the Sub-Adviser, and
(4) any person other than the foregoing; and
c. any other consideration other than the technical
qualifications of the brokers and dealers as such;
2. shall show the nature of the services or benefits made available;
3. shall describe in detail the application of any general or specific
formula or other determinant used in arriving at such allocation of
purchase and sale orders and such division of brokerage commissions
or other compensation; and
4. shall show the name of the person responsible for making the
determination of such allocation and such division of brokerage
commissions or other compensation.
C. (Rule 31a-l(b)(10)). A record in the form of an appropriate memorandum
identifying the person or persons, committees or groups authorizing the
purchase or sale of portfolio securities. Where an authorization is
made by a committee or group, a record shall be kept of the names of
its members who participate in the authorization. There shall be
retained as part of this record: any memorandum, recommendation or
instruction supporting or authorizing the purchase or sale of portfolio
securities and such other information as is appropriate to support the
authorization.*
D. (Rule 31a-1(f)). Such accounts, books and other documents as are
required to be maintained by registered investment advisers by rule
adopted under Section 204 of the Investment Advisers Act of 1940, to
the extent such records are necessary or appropriate to record the
Sub-Adviser's transactions with respect to the Series Account.
- ----------------------------
* Such information might include: the current Form 10-K, annual and quarterly
reports, press releases, reports by analysts and from brokerage firms (including
their recommendation, i.e., buy, sell, hold) or any internal reports or
portfolio adviser reviews.
B-2
<PAGE>
SCHEDULE C
DATED OCTOBER _____, 1999
TO
SUB-ADVISORY AGREEMENT
DATED OCTOBER _____, 1999
AMONG WT INVESTMENT
TRUST I, WILMINGTON TRUST
COMPANY AND SCUDDER KEMPER INVESTMENTS, INC.
FEE SCHEDULE
For the services to be provided to the Series pursuant to the attached
Sub-Advisory Agreement, the Adviser shall pay the Sub-Adviser a monthly fee in
accordance with the following formula:
Monthly Fee = (.50% x net asset value of the Sub-Adviser's Series Account on the
last business day of the month) / 12
Such fee shall be payable in arrears within 15 business days following the end
of each month.
Exhibit (d) (vi)
INVISTA CAPITAL MANAGEMENT, INC.
SUB-ADVISORY AGREEMENT
THIS SUB-ADVISORY AGREEMENT is made as of the _____ day of October,
1999, among WT Investment Trust I, a Delaware business trust (the "Fund"),
Wilmington Trust Company (the "Adviser"), a corporation organized under the laws
of the state of Delaware and Scudder Kemper Investments, Inc., a corporation
organized under the laws of the state of Iowa (the "Sub-Adviser").
WHEREAS, the Fund is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end management investment company
and offers for public sale distinct series of shares of beneficial interest; and
WHEREAS, the International Multi-Manager Series (the "Series") is a
series of the Fund; and
WHEREAS, the Adviser acts as the investment adviser for the Series
pursuant to the terms of an Investment Advisory Agreement between the Fund and
the Adviser under which the Adviser is responsible for the coordination of
investment of the Series' assets in portfolio securities; and
WHEREAS, the Adviser is authorized under the Investment Advisory
Agreement to delegate its investment responsibilities to one or more persons or
companies;
NOW THEREFORE, in consideration of the promises and mutual covenants
herein contained, the Fund, the Adviser and the Sub-Adviser agree as follows:
1. APPOINTMENT OF SUB-ADVISER. The Adviser and the Fund hereby appoint and
employ the Sub-Adviser as a discretionary portfolio manager, on the
terms and conditions set forth herein, of those assets of the Series
which the Adviser determines to assign to the Sub-Adviser (those assets
being referred to as the "Series Account"). The Adviser may, from time
to time, make additions to and withdrawals, including cash and cash
equivalents, from the Series Account.
2. ACCEPTANCE OF APPOINTMENT. The Sub-Adviser accepts its appointment as a
discretionary portfolio manager and agrees to use its professional
judgment to make investment decisions for the Series with respect to
the investments of the Series Account and to implement such decisions
on a timely basis in accordance with the provisions of this Agreement.
<PAGE>
3. DELIVERY OF DOCUMENTS. The Adviser has furnished the Sub-Adviser with
copies properly certified or authenticated of each of the following and
will promptly provide the Sub-Adviser with copies properly certified or
authenticated of any amendment or supplement thereto:
(a) The Series' Investment Advisory Agreement;
(b) The Fund's most recent effective registration statement and
financial statements as filed with the Securities and Exchange
Commission;
(c) The Fund's Agreement and Declaration of Trust and By-Laws; and
(d) Any policies, procedures or instructions adopted or approved
by the Fund's Board of Trustees relating to obligations and
services provided by the Sub-Adviser.
4. PORTFOLIO MANAGEMENT SERVICES OF THE SUB-ADVISER. The Sub-Adviser is
hereby employed and authorized to select portfolio securities for
investment by the Series, to purchase and to sell securities for the
Series Account, and upon making any purchase or sale decision, to place
orders for the execution of such portfolio transactions in accordance
with Sections 6 and 7 hereof and Schedule A hereto (as amended from
time to time). In providing portfolio management services to the Series
Account, the Sub-Adviser shall be subject to and shall conform to such
investment restrictions as are set forth in the 1940 Act and the rules
thereunder, the Internal Revenue Code, applicable state securities
laws, applicable statutes and regulations of foreign jurisdictions, the
supervision and control of the Board of Trustees of the Fund, such
specific instructions as the Board of Trustees may adopt and
communicate to the Sub-Adviser, the investment objective, policies and
restrictions of the Fund applicable to the Series furnished pursuant to
Section 5 of this Agreement, the provisions of Schedule A and Schedule
B hereto and other instructions communicated to the Sub-Adviser by the
Adviser. The Sub-Adviser is not authorized by the Fund to take any
action, including the purchase or sale of securities for the Series
Account, in contravention of any restriction, limitation, objective,
policy or instruction described in the previous sentence. The
Sub-Adviser shall maintain on behalf of the Fund the records listed in
Schedule B hereto (as amended from time to time). At the Fund's
reasonable request, the Sub-Adviser will consult with the Fund or with
the Adviser with respect to any decision made by it with respect to the
investments of the Series Account.
5. INVESTMENT OBJECTIVE, POLICIES AND RESTRICTIONS. The Fund will provide
the Sub-Adviser with the statement of investment objective, policies
and restrictions applicable to the Series as contained in the Series'
Prospectus and Statement of Additional Information, all amendments or
supplements to the Prospectus and Statement of Additional Information,
and any instructions adopted by the Board of Trustees supplemental
thereto. The Fund agrees, on an ongoing basis, to notify the
Sub-Adviser in writing of each change in the fundamental and
non-fundamental investment policies of the Series and will provide the
Sub-Adviser with such further information concerning the investment
2
<PAGE>
objective, policies, restrictions and such other information applicable
thereto as the Sub-Adviser may from time to time reasonably request for
performance of its obligations under this Agreement. The Fund retains
the right, on written notice to the Sub-Adviser or the Adviser, to
modify any such objective, policies or restrictions in accordance with
applicable laws, at any time.
6. TRANSACTION PROCEDURES. All transactions will be consummated by payment
to or delivery by the custodian designated by the Fund (the
"Custodian"), or such depositories or agents as may be designated by
the Custodian in writing, of all cash and/or securities due to or from
the Series Account, and the Sub-Adviser shall not have possession or
custody thereof. The Sub-Adviser shall advise the Custodian and confirm
in writing to the Fund and to the administrator designated by the Fund
or any other designated agent of the Fund, all investment orders for
the Series Account placed by it with brokers and dealers at the time
and in the manner set forth in Schedule B hereto (as amended from time
to time). The Fund shall issue to the Custodian such instructions as
may be appropriate in connection with the settlement of any transaction
initiated by the Sub-Adviser. The Fund shall be responsible for all
custodial arrangements and the payment of all custodial charges and
fees, and, upon giving proper instructions to the Custodian, the
Sub-Adviser shall have no responsibility or liability with respect to
custodial arrangements or the acts, omissions or other conduct of the
Custodian, except that it shall be the responsibility of the
Sub-Adviser to take appropriate action if the Custodian fails to
confirm in writing proper execution of the instructions.
7. ALLOCATION OF BROKERAGE. The Sub-Adviser shall have authority and
discretion to select brokers and dealers (including brokers that may be
affiliates of the Sub-Adviser to the extent permitted by Section 7(c)
hereof) to execute portfolio transactions initiated by the Sub-Adviser,
and for the selection of the markets on or in which the transactions
will be executed, subject to the following and subject to conformance
with the policies and procedures disclosed in the Fund's Prospectus and
Statement of Additional Information and the policies and procedures
adopted by the Fund's Board of Trustees.
(a) In executing portfolio transactions, the Sub-Adviser will give
primary consideration to securing the best price and execution.
Consistent with this policy, the Sub-Adviser may consider the
financial responsibility, research and investment information and
other services provided by brokers or dealers who may effect or be
a party to any such transaction or other transactions to which
other clients of the Sub-Adviser may be a party. It is understood
that neither the Fund, the Adviser nor the Sub-Adviser has adopted
a formula for allocation of the Fund's investment transaction
business. It is also understood that it is desirable for the Fund
that the Sub-Adviser have access to supplemental investment and
market research and security and economic analyses provided by
certain brokers who may execute brokerage transactions at a higher
commission to the Fund than may result when allocating brokerage to
other brokers on the basis of seeking the lowest commission.
Therefore, the Sub-Adviser is authorized to place orders for the
purchase and sale of securities for the Series with certain such
brokers, subject
3
<PAGE>
to review by the Fund's Board of Trustees from time to time with
respect to the extent and continuation of this practice. It is
understood that the services provided by such brokers may be useful
to the Sub-Adviser in connection with its services to other clients
of the Sub-Adviser. The Sub-Adviser is also authorized to place
orders with certain brokers for services deemed by the Adviser to
be beneficial for the Fund; and the Sub-Adviser shall follow the
directions of the Adviser or the Fund in this regard.
(b) On occasions when the Sub-Adviser deems the purchase or sale of a
security to be in the best interest of the Series as well as other
clients of the Sub Adviser, the Sub-Adviser, to the extent
permitted by applicable laws and regulations, may, but shall be
under no obligation to, aggregate the securities to be sold or
purchased in order to obtain the best price and execution. In such
event, allocation of the securities so purchased or sold, as well
as expenses incurred in the transaction, will be made by the
Sub-Adviser in the manner it considers to be the most equitable and
consistent with its fiduciary obligations to the Fund in respect of
the Series and to such other clients.
(c) The Sub-Adviser agrees that it will not execute without the prior
written approval of the Adviser any portfolio transactions for the
Series Account with a broker or dealer which is (i) an affiliated
person of the Fund, including the Adviser or any Sub-Adviser for
any Series of the Fund; (ii) a principal underwriter of the Fund's
shares; or (iii) an affiliated person of such an affiliated person
or principal underwriter. The Adviser agrees that it will provide
the Sub-Adviser with a list of such brokers and dealers.
(d) The Adviser shall render regular reports to the Fund of the total
brokerage business placed and the manner in which the allocation
has been accomplished.
8. PROXIES. The Sub-Adviser will vote all proxies solicited by or with
respect to issuers of securities in which assets of the Series Account
may be invested from time to time. At the request of the Sub-Adviser,
the Adviser shall provide the Sub-Adviser with its recommendations as
to the voting of such proxies.
9. REPORTS TO THE SUB-ADVISER. The Fund will provide the Sub-Adviser with
such periodic reports concerning the status of the Series Account as
the Sub-Adviser may reasonably request.
10. FEES FOR SERVICES. The compensation of the Sub-Adviser for its services
under this Agreement shall be calculated and paid by the Adviser in
accordance with the attached Schedule C. Pursuant to the provisions of
the Investment Advisory Agreement between the Fund and the Adviser, the
Adviser is solely responsible for the payment of fees to the
Sub-Adviser, and the Sub-Adviser agrees to seek payment of the
Sub-Adviser's fees solely from the Adviser.
4
<PAGE>
11. OTHER INVESTMENT ACTIVITIES OF THE SUB-ADVISER. The Fund acknowledges
that the Sub-Adviser or one or more of its affiliated persons may have
investment responsibilities or render investment advice to or perform
other investment advisory services for other individuals or entities
and that the Sub-Adviser, its affiliated persons or any of its or their
directors, officers, agents or employees may buy, sell or trade in any
securities for its or their own respective accounts ("Affiliated
Accounts"). Subject to the provisions of Section 7(b) hereof, the Fund
agrees that the Sub-Adviser or its affiliated persons may give advice
or exercise investment responsibility and take such other action with
respect to other Affiliated Accounts which may differ from the advice
given or the timing or nature of action taken with respect to the
Series Account, provided that the Sub-Adviser acts in good faith, and
provided further, that it is the Sub-Adviser's policy to allocate,
within its reasonable discretion, investment opportunities to the
Series Account over a period of time on a fair and equitable basis
relative to the Affiliated Accounts, taking into account the investment
objective and policies of the Series and any specific investment
restrictions applicable thereto. The Fund acknowledges that one or more
of the Affiliated Accounts may at any time hold, acquire, increase,
decrease, dispose of or otherwise deal with positions in investments in
which the Series Account may have an interest from time to time,
whether in transactions which involve the Series Account or otherwise.
The Sub-Adviser shall have no obligation to acquire for the Series
Account a position in any investment which any Affiliated Account may
acquire, and the Fund shall have no first refusal, co-investment or
other rights in respect of any such investment, either for the Series
Account or otherwise.
12. CERTIFICATE OF AUTHORITY. The Fund, the Adviser and the Sub-Adviser
shall furnish to each other from time to time certified copies of the
resolutions of their Boards of Trustees/Directors or executive
committees, as the case may be, evidencing the authority of officers
and employees who are authorized to act on behalf of the Fund, a Series
Account, the Adviser and/or the Sub-Adviser.
13. LIMITATION OF LIABILITY. The Sub-Adviser shall not be liable for any
action taken, omitted or suffered to be taken by it in its reasonable
judgment, in good faith and believed by it to be authorized or within
the discretion or rights or powers conferred upon it by this Agreement,
or in accordance with (or in the absence of) specific directions or
instructions from the Fund or the Adviser, provided, however, that such
acts or omissions shall not have resulted from the Sub-Adviser's
willful misfeasance, bad faith, gross negligence or a reckless
disregard of duty. Nothing in this Section 13 shall be construed in a
manner inconsistent with Section 17(i) of the 1940 Act.
14. CONFIDENTIALITY. Subject to the duty of the Sub-Adviser, the Adviser
and the Fund to comply with applicable law, including any demand of any
regulatory or taxing authority having jurisdiction, the parties hereto
shall treat as confidential all material non-public information
pertaining to the Series Account and the actions of the Sub-Adviser,
the Adviser and the Fund in respect thereof.
5
<PAGE>
15. ASSIGNMENT. No assignment of this Agreement shall be made by the
Sub-Adviser, and this Agreement shall terminate automatically in the
event of such assignment. The Sub-Adviser shall notify the Fund and the
Adviser in writing sufficiently in advance of any proposed change of
control within the meaning of the 1940 Act to enable the Fund and the
Adviser to take the steps necessary to enter into a new contract with
the Sub-Adviser.
16. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE FUND. The Fund
represents, warrants and agrees that:
(a) The Sub-Adviser has been duly appointed by the Board of Trustees of
the Fund to provide investment services to the Series Account as
contemplated hereby.
(b) The Fund will deliver to the Sub-Adviser a true and complete copy
of its then current Prospectus and Statement of Additional
Information as effective from time to time and such other documents
or instruments governing the investment of the Series Account and
such other information as is necessary for the Sub-Adviser to carry
out its obligations under this Agreement.
(c) The Fund is currently in compliance and shall at all times continue
to comply with the requirements imposed upon the Fund by applicable
law and regulations.
17. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE ADVISER. The Adviser
represents, warrants and agrees that:
(a) The Adviser has been duly authorized by the Board of Trustees of
the Fund to delegate to the Sub-Adviser the provision of investment
services to the Series Account as contemplated hereby.
(b) The Adviser is currently in compliance and shall at all times
continue to comply with the requirements imposed upon the Adviser
by applicable law and regulations.
18. REPRESENTATIONS. WARRANTIES AND AGREEMENTS OF THE SUB-ADVISER. The
Sub-Adviser represents, warrants and agrees that:
(a) The Sub-Adviser is registered as an "investment adviser" under the
Investment Advisers Act of 1940 ("Advisers Act") or is a "bank" as
defined in Section 202(a)(2) of the Advisers Act.
(b) The Sub-Adviser will maintain, keep current and preserve on behalf
of the Fund, in the manner required or permitted by the 1940 Act,
the records identified in Schedule B. The Sub-Adviser agrees that
such records (unless otherwise indicated on Schedule B) are the
property of the Fund, and will be surrendered to the Fund promptly
upon request. The Sub-Adviser agrees to keep confidential all
records of the Fund and information relating to the Fund, unless
the release of such
6
<PAGE>
records or information is otherwise consented to in writing by the
Fund or the Adviser. The Fund and the Adviser agree that such
consent shall not be unreasonably withheld and may not be withheld
where the Sub-Adviser may be exposed to civil or criminal contempt
proceedings or when required to divulge such information or records
to duly constituted authorities.
(c) The Sub-Adviser will complete such reports concerning purchases or
sales of securities on behalf of the Series Account as the Adviser
or the Fund may from time to time require to ensure compliance with
the 1940 Act, the Internal Revenue Code, applicable state
securities laws and applicable statutes and regulations of foreign
jurisdictions.
(d) The Sub-Adviser has adopted a written code of ethics complying with
the requirements of Rule 17j-1 under the 1940 Act and Section 204A
of the Advisers Act and has provided the Fund with a copy of the
code of ethics and evidence of its adoption. Within forty-five (45)
days of the end of the last calendar quarter of each year while
this Agreement is in effect, the president or a vice president or
general partner of the Sub-Adviser shall certify to the Fund that
the Sub-Adviser has complied with the requirements of Rule 17j-1
and Section 204A during the previous year and that there has been
no violation of the Sub-Adviser's code of ethics or, if such a
violation has occurred, that appropriate action was taken in
response to such violation. Upon the written request of the Fund,
the Sub-Adviser shall permit the Fund, its employees or its agents
to examine the reports required to be made to the Sub-Adviser by
Rule 17j-1(c)(1).
(e) The Sub-Adviser will promptly after filing with the Securities and
Exchange Commission an amendment to its Form ADV furnish a copy of
such amendment to the Fund and the Adviser.
(f) The Sub-Adviser will immediately notify the Fund and the Adviser of
the occurrence of any event which would disqualify the Sub-Adviser
from serving as an investment adviser of an investment company
pursuant to Section 9 of the 1940 Act or otherwise. The Sub-Adviser
will also immediately notify the Fund and the Adviser if it is
served or otherwise receives notice of any action, suit,
proceeding, inquiry or investigation, at law or in equity, before
or by any court, public board or body, involving the affairs of the
Series.
19. AMENDMENT. This Agreement may be amended at any time, but only by
written agreement among the Sub-Adviser, the Adviser and the Fund,
which amendment, other than amendments to Schedules A and B, is subject
to the approval of the Board of Trustees and, to the extent required by
the 1940 Act, the shareholders of the Series in the manner required by
the 1940 Act and the rules thereunder, subject to any applicable orders
of exemption issued by the Securities and Exchange Commission.
7
<PAGE>
20. EFFECTIVE DATE; TERM. This Agreement shall become effective on the date
first written above and shall remain in force for a period of time of
two years from such date, and from year to year thereafter but only so
long as such continuance is specifically approved at least annually by
the vote of a majority of the Trustees who are not interested persons
of the Fund, the Adviser or the Sub-Adviser, cast in person at a
meeting called for the purpose of voting on such approval, and by a
vote of the Board of Trustees or of a majority of the outstanding
voting securities of the Series. The aforesaid requirement that this
Agreement may be continued "annually" shall be construed in a manner
consistent with the 1940 Act and the rules and regulations thereunder.
21. TERMINATION.
(a) This Agreement may be terminated by the Fund (by a vote of the
Board of Trustees of the Fund or by a vote of a majority of the
outstanding voting securities of the Series), without the payment
of any penalty, immediately upon written notice to the other
parties hereto, in the event of a material breach of any provision
thereof by the party so notified or otherwise by the Fund, upon
sixty (60) days' written notice to the other parties hereto, but
any such termination shall not affect the status, obligations or
liabilities of any party hereto to the others.
(b) This Agreement may also be terminated by the Adviser or the
Sub-Adviser, without the payment of any penalty immediately upon
written notice to the other parties hereto, in the event of a
material breach of any provision thereof by the party so notified
if such breach shall not have been cured within a 20-day period
after notice of such breach or otherwise by the Adviser or the
Sub-Adviser upon sixty (60) days' written notice to the other
parties hereto, but any such termination shall not affect the
status, obligations or liabilities of any party hereto to the
others.
22. DEFINITIONS. As used in this Agreement, the terms "affiliated person,"
"assignment," "control," "interested person," "principal underwriter"
and "vote of a majority of the outstanding voting securities" shall
have the meanings set forth in the 1940 Act and the rules and
regulations thereunder, subject to any applicable orders of exemption
issued by the Securities and Exchange Commission.
23. NOTICE. Any notice under this Agreement shall be given in writing
addressed and delivered or mailed, postage prepaid, to the other
parties to this Agreement at their principal place of business.
24. SEVERABILITY. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder
of this Agreement shall not be affected thereby.
25. GOVERNING LAW. To the extent that state law is not preempted by the
provisions of any law of the United States heretofore or hereafter
enacted, as the same may be amended
8
<PAGE>
from time to time, this Agreement shall be administered, construed and
enforced according to the laws of the State of Delaware.
26. ENTIRE AGREEMENT. This Agreement and the Schedules attached hereto
embodies the entire agreement and understanding between the parties.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed, as of the day and year first written above.
WT INVESTMENT TRUST I
on behalf of
THE INTERNATIONAL MULTI-MANAGER SERIES
By: __________________________________________
Robert J. Christian, President
INVISTA CAPITAL MANAGEMENT, INC.
By: __________________________________________
Title: _______________________________________
WILMINGTON TRUST COMPANY
By: __________________________________________
Robert J. Christian, Senior Vice President
SCHEDULES: A. Operating Procedures
B. Record Keeping Requirements
C Fee Schedule
9
<PAGE>
SCHEDULE A
DATED OCTOBER _____, 1999
TO
SUB-ADVISORY AGREEMENT
DATED OCTOBER _____, 1999
AMONG WT INVESTMENT
TRUST I, WILMINGTON TRUST
COMPANY AND INVISTA CAPITAL
MANAGEMENT, INC.
OPERATING PROCEDURES
From time to time the Adviser shall issue written Operating Procedures which
shall govern reporting of transactions and other matters so as to facilitate (i)
the monitoring of the Fund's compliance with the restrictions and limitations
applicable to the operations of a registered investment company and (ii) the
preparation of reports to the Board of Trustees, regulatory authorities and
shareholders.
SUBSTANTIVE LIMITATIONS
A. The Sub-Adviser will manage the Series Account as if the Series Account
were a registered investment company subject to the investment
objective, policies and limitations applicable to the Series stated in
the Fund's Prospectus and Statement of Additional Information, as from
time to time in effect, included in the Fund's registration statement
or a supplement thereto under the Securities Act of 1933 and the
Investment Company Act of 1940 (the "1940 Act"), as each may be amended
from time to time; provided, however, that if a more stringent
restriction or limitation than any of the foregoing is stated in
Section B of this Schedule, the more stringent restriction or
limitation shall apply to the Series Account.
B. The Sub-Adviser shall not, without the written approval of the Adviser,
on behalf of the Series Account:
1. purchase securities of any issuer if such purchase would cause more
than 3.33 % of the voting securities of such issuer to be held in
the Series Account (1940 Act ss.5(b)(1); IRC* ss.851(b)(4)(a)(ii));
2. purchase securities if such purchase would cause:
a. more than 1 % of the outstanding voting stock of any other
investment company to be held in the Series Account (1940 Act
ss.12(d)(1)(A)(i)),
- ----------------------------
*Internal Revenue Code
A-1
<PAGE>
b. securities issued by any other investment company having an
aggregate value in excess of 5 % of the value of the total
assets in the Series Account to be held in the Series Account
(1940 Act ss.12(d)(1)(A)(i)),
c. securities issued by all other investment companies having an
aggregate value in excess of 10% of the value of the total
assets of the Series Account to be held in the Series Account
(1940 Act ss.12(d)(1)(A)(iii)),
d. more than 3.33% of the outstanding voting stock of any
registered closed-end investment company to be held in the
Series Account, and by any other investment company having as
its investment adviser any of the Sub-Advisers, the Adviser,
or any other investment adviser to the Fund (1940 Act
ss.12(d)(1)(C));
3. purchase securities of any insurance company if such purchase would
cause more than 3.33% of the outstanding voting securities of any
insurance company to be held in the Series Account (1940 Act
ss.12(d)(2)); or
4. purchase securities of or any interest in any person who is a
broker, a dealer, is engaged in the business of underwriting, is an
investment adviser to an investment company or is a registered
investment adviser under the Investment Advisers Act of 1940 unless
a. such purchase is of a security of any issuer that, in its most
recent fiscal year, derived 15% or less of its gross revenues
from securities-related activities (1940 Act Rule 12d3-l(a)),
or
b. despite the fact that such purchase is of any security of any
issuer that derived more than 15% of its gross revenues from
securities-related activities:
(1) immediately after the purchase of any equity security, the
Series Account would not own more than 5% of outstanding
securities of that class of the issuer's equity securities
(1940 Act Rule 12d3-1(b)(1));
(2) immediately after the purchase of any debt security, the
Series Account would not own more than 10% of the outstanding
principal amount of the issuer's debt securities (1940 Act
Rule 12d3-1(b)(2)); and
(3) immediately after the purchase, not more than 5% of the value
of the Series Account's total assets would be invested in the
issuer's securities (1940 Act Rule 12d3-1(b)(3)).
C. In the event that the number of Sub-Advisers shall vary from three (3),
the percentage limitations of Subsections B1, B2a, B2d, B3, B4b(1) and
B4b(4) of this Schedule shall be
A-2
<PAGE>
adjusted (i) in the case of an increase in the number of Sub-Advisers,
proportionately downward and (ii) in the case of a decrease of the
number of Sub-Advisers, proportionately upward.
The Adviser shall notify the Sub-Adviser of an increase or decrease in
the number of Sub-Advisers and the proportionate decrease or increase
in the percentages specified in the subsections enumerated in the
preceding sentence, but the Adviser's failure to do so shall not affect
the operation of this Section C of this Schedule.
D. The Sub-Adviser will manage the Series Account so that no more than 10%
of the gross income of the Series Account is derived from any source
other than dividends, interest, payments with respect to securities
loans (as defined in IRC ss.512(a)(5)), and gains from the sale or
other disposition of stock or securities (as defined in the 1940 Act
ss.2(a)(36)) or foreign currencies, or other income (including, but not
limited to, gains from options, futures, or forward contracts) derived
with respect to the Series' business of investing in such stock,
securities, or currencies (IRC ss.851(b)(2)).
A-3
<PAGE>
B-2
SCHEDULE B
DATED OCTOBER _____, 1999
TO
SUB-ADVISORY AGREEMENT
DATED OCTOBER _____, 1999
AMONG WT INVESTMENT
TRUST I, WILMINGTON TRUST
COMPANY AND INVISTA CAPITAL
MANAGEMENT, INC.
RECORD KEEPING REQUIREMENTS
RECORDS TO BE MAINTAINED BY THE SUB-ADVISER:
A. (Rule 31a-l(b)(5) and (6)). A record of each brokerage order, and all
other portfolio purchases and sales, given by the Sub-Adviser on behalf
of the Series Account for, or in connection with, the purchase or sale
of securities, whether executed or unexecuted. Such records shall
include:
1. the name of the broker;
2. the terms and conditions of the order and of any modification or
cancellation thereof;
3. the time of entry or cancellation;
4. the price at which executed;
5. the time of receipt of a report of execution; and
6. the name of the person who placed the order on behalf of the Series
Account.
B. (Rule 31a-l(b)(9)). A record for each fiscal quarter, completed within
ten (10) days after the end of the quarter, showing specifically the
basis or bases (e.g. execution ability, execution and research) upon
which the allocation of orders for the purchase and sale of portfolio
securities to named brokers or dealers was effected, and the division
of brokerage commissions or other compensation on such purchase and
sale orders. Such record:
1. shall include the consideration given to:
a. the sale of shares of the Fund by brokers or dealers;
b. the supplying of services or benefits by brokers or dealers
to:
B-1
<PAGE>
(1) the Fund,
(2) the Adviser,
(3) the Sub-Adviser, and
(4) any person other than the foregoing; and
c. any other consideration other than the technical
qualifications of the brokers and dealers as such;
2. shall show the nature of the services or benefits made available;
3. shall describe in detail the application of any general or specific
formula or other determinant used in arriving at such allocation of
purchase and sale orders and such division of brokerage commissions
or other compensation; and
4. shall show the name of the person responsible for making the
determination of such allocation and such division of brokerage
commissions or other compensation.
C. (Rule 31a-l(b)(10)). A record in the form of an appropriate memorandum
identifying the person or persons, committees or groups authorizing the
purchase or sale of portfolio securities. Where an authorization is
made by a committee or group, a record shall be kept of the names of
its members who participate in the authorization. There shall be
retained as part of this record: any memorandum, recommendation or
instruction supporting or authorizing the purchase or sale of portfolio
securities and such other information as is appropriate to support the
authorization.*
D. (Rule 31a-1(f)). Such accounts, books and other documents as are
required to be maintained by registered investment advisers by rule
adopted under Section 204 of the Investment Advisers Act of 1940, to
the extent such records are necessary or appropriate to record the
Sub-Adviser's transactions with respect to the Series Account.
- ----------------------------
* Such information might include: the current Form 10-K, annual and quarterly
reports, press releases, reports by analysts and from brokerage firms (including
their recommendation, i.e., buy, sell, hold) or any internal reports or
portfolio adviser reviews.
B-2
<PAGE>
SCHEDULE C
DATED OCTOBER _____, 1999
TO
SUB-ADVISORY AGREEMENT
DATED OCTOBER _____, 1999
AMONG WT INVESTMENT
TRUST I, WILMINGTON TRUST
COMPANY AND INVISTA CAPITAL
MANAGEMENT, INC.
FEE SCHEDULE
For the services to be provided to the Series pursuant to the attached
Sub-Advisory Agreement, the Adviser shall pay the Sub-Adviser a monthly fee in
accordance with the following formula:
Monthly Fee = (.50% x net asset value of the Sub-Adviser's Series Account on the
last business day of the month) / 12
Such fee shall be payable in arrears within 15 business days following the end
of each month.
Exhibit (g) (ii)
CUSTODIAN AGREEMENT
AGREEMENT dated as of______________, between BANKERS TRUST COMPANY (the
"Custodian") and [Name of customer] (the "Customer").
WHEREAS, the Customer may be organized with one or more series of
shares, each of which shall represent an interest in a separate portfolio of
Securities and Cash (each as hereinafter defined) (all such existing and
additional series now or hereafter listed on Exhibit A being hereafter referred
to individually as a "Portfolio" and collectively, as the "Portfolios"); and
WHEREAS, the Customer desires to appoint the Custodian as custodian on
behalf of the Portfolios under the terms and conditions set forth in this
Agreement, and the Custodian has agreed to so act as custodian.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto agree as follows:
1. EMPLOYMENT OF CUSTODIAN. The Customer hereby employs the
Custodian as custodian of all assets of each Portfolio which are delivered to
and accepted by the Custodian or any Subcustodian (as that term is defined in
Section 4) (the "Property") pursuant to the terms and conditions set forth
herein. For purposes of this Agreement, "delivery" of Property shall include the
acquisition of a security entitlement (as that term is defined in the New York
Uniform Commercial Code ("UCC")) with respect thereto. Without limitation, such
Property shall include stocks and other equity interests of every type,
evidences of indebtedness, other instruments representing same or rights or
obligations to receive, purchase, deliver or sell same and other non-cash
investment property of a Portfolio ("Securities") and cash from any source and
in any currency ("Cash"), provided that the Custodian shall have the right, in
its sole discretion, to refuse to accept as Property any property of a Portfolio
that the Custodian considers not to be appropriate or in proper form for deposit
for any reason. The Custodian shall not be responsible for any property of a
Portfolio held or received by the Customer or others and not delivered to the
Custodian or any Subcustodian.
2. MAINTENANCE OF SECURITIES AND CASH AT CUSTODIAN AND
SUBCUSTODIAN LOCATIONS. Pursuant to Instructions, the Customer shall direct the
Custodian to (a) settle Securities transactions and maintain cash in the country
or other jurisdiction in which the principal trading market for such Securities
is located, where such Securities are to be presented for payment or where such
Securities are acquired and (b) maintain cash and cash equivalents in such
countries in amounts reasonably necessary to effect the Customer's transactions
in such Securities. Instructions to settle Securities transactions in any
country shall be deemed to authorize the holding of such Securities and Cash in
that country.
3. CUSTODY ACCOUNT. The Custodian agrees to establish and
maintain one or more custody accounts on its books each in the name of a
Portfolio (each, an "Account") for any and all Property from time to time
received and accepted by the Custodian or any Subcustodian for the account of
such Portfolio. Upon delivery by the Customer to the Custodian of any acceptable
Property belonging to a Portfolio, the
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Customer shall, by Instructions (as hereinafter defined in Section 15),
specifically indicate which Portfolio such Property belongs or if such Property
belongs to more than one Portfolio shall allocate such Property to the
appropriate Portfolio, and the Custodian shall allocate such Property to the
Accounts in accordance with the Instructions. The Customer on behalf of each
Portfolio, acknowledges its responsibility as a principal for all of its
obligations to the Custodian arising under or in connection with this Agreement,
warrants its authority to deposit in the appropriate Account any Property
received therefor by the Custodian or a Subcustodian and to give, and authorize
others to give, instructions relative thereto. The Custodian may deliver
securities of the same class in place of those deposited in the Account.
The Custodian shall hold, keep safe and protect as custodian for each
Account, on behalf of the Customer, all Property in such Account and, to the
extent such Property constitutes financial assets for purposes of the New York
UCC, shall maintain those financial assets in such Account as security
entitlements in favor of the Portfolio in whose name the Account is maintained.
All transactions, including, but not limited to, foreign exchange transactions,
involving the Property shall be executed or settled solely in accordance with
Instructions (which shall specifically reference the Account for which such
transaction is being settled), except that until the Custodian receives
Instructions to the contrary, the Custodian will:
(a) collect all interest and dividends and all other income and
payments, whether paid in cash or in kind, on the Property, as
the same become payable and credit the same to the appropriate
Account;
(b) present for payment all Securities held in an Account which
are called, redeemed or retired or otherwise become payable
and all coupons and other income items which call for payment
upon presentation to the extent that the Custodian or
Subcustodian is actually aware of such opportunities and hold
the cash received in such Account pursuant to this Agreement;
(c) (i) exchange Securities where the exchange is purely
ministerial (including, without limitation, the exchange of
temporary securities for those in definitive form and the
exchange of warrants, or other documents of entitlement to
securities, for the Securities themselves) and (ii) when
notification of a tender or exchange offer (other than
ministerial exchanges described in (i) above) is received for
an Account, endeavor to receive Instructions, provided that if
such Instructions are not received in time for the Custodian
to take timely action, no action shall be taken with respect
thereto;
(d) whenever notification of a rights entitlement or a fractional
interest resulting from a rights issue, stock dividend or
stock split is received for an Account and such rights
entitlement or fractional interest bears an expiration date,
if after endeavoring to obtain Instructions such Instructions
are not received in time for the Custodian to take timely
action or if actual notice of such actions was received too
late to seek Instructions, sell in the discretion of the
Custodian (which sale the Customer hereby authorizes the
Custodian to make) such rights entitlement or fractional
interest and credit the Account with the net proceeds of such
sale;
(e) execute in the Customer's name for an Account, whenever the
Custodian deems it appropriate, such ownership and other
certificates as may be required to obtain the payment of
income from the Property in such Account;
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(f) pay for each Account, any and all taxes and levies in the
nature of taxes imposed on interest, dividends or other
similar income on the Property in such Account by any
governmental authority. In the event there is insufficient
Cash available in such Account to pay such taxes and levies,
the Custodian shall notify the Customer of the amount of the
shortfall and the Customer, at its option, may deposit
additional Cash in such Account or take steps to have
sufficient Cash available. The Customer agrees, when and if
requested by the Custodian and required in connection with the
payment of any such taxes to cooperate with the Custodian in
furnishing information, executing documents or otherwise; and
(g) appoint brokers and agents for any of the ministerial
transactions involving the Securities described in (a) - (f),
including, without limitation, affiliates of the Custodian or
any Subcustodian.
4. SUBCUSTODIANS AND SECURITIES SYSTEMS. The Customer authorizes
and instructs the Custodian to maintain the Property in each Account directly in
one of its U.S. branches or indirectly through custody accounts which have been
established by the Custodian with the following other securities intermediaries:
(a) another U.S. bank or trust company or branch thereof located in the U.S.
which is itself qualified under the Investment Company Act of 1940, as amended
("1940 Act"), to act as custodian (individually, a "U.S. Subcustodian"), or a
U.S. securities depository or clearing agency or system in which the Custodian
or a U.S. Subcustodian participates (individually, a "U.S. Securities System")
or (b) one of its non-U.S. branches or majority-owned non-U.S. subsidiaries, a
non-U.S. branch or majority-owned subsidiary of a U.S. bank or a non-U.S. bank
or trust company, acting as custodian (individually, a "non-U.S. Subcustodian";
U.S. Subcustodians and non-U.S. Subcustodians, collectively, "Subcustodians"),
or a non-U.S. depository or clearing agency or system in which the Custodian or
any Subcustodian participates (individually, a "non-U.S. Securities System";
U.S. Securities System and non-U.S. Securities System, collectively, Securities
System"), PROVIDED that in each case in which a U.S. Subcustodian or U.S.
Securities System is employed, each such Subcustodian or Securities System shall
have been approved by Instructions; PROVIDED FURTHER that in each case in which
a non-U.S. Subcustodian or non-U.S. Securities System is employed, (a) such
Subcustodian or Securities System either is (i) a "qualified U.S. bank" as
defined by Rule 17f-5 under the 1940 Act ("Rule 17f-5") or (ii) an "eligible
foreign custodian" within the meaning of Rule 17f-5 or such Subcustodian or
Securities System is the subject of an order granted by the U.S. Securities and
Exchange Commission ("SEC") exempting such agent or the subcustody arrangements
thereto from all or part of the provisions of Rule 17f-5 and (b) the agreement
between the Custodian and such non-U.S. Subcustodian has been approved by
Instructions; it being understood that the Custodian shall have no liability or
responsibility for determining whether the approval of any Subcustodian or
Securities System has been proper under the 1940 Act or any rule or regulation
thereunder.
Upon receipt of Instructions, the Custodian agrees to cease the
employment of any Subcustodian or Securities System with respect to the
Customer, and if desirable and practicable, appoint a replacement Subcustodian
or securities system in accordance with the provisions of this Section. In
addition, the Custodian may, at any time in its discretion, upon written
notification to the Customer, terminate the employment of any Subcustodian or
Securities System.
Upon request of the Customer, the Custodian shall deliver to the
Customer annually a certificate stating: (a) the identity of each non-U.S.
Subcustodian and non-U.S. Securities System then acting on behalf of the
Custodian and the name and address of the governmental agency or other
regulatory authority
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that supervises or regulates such non-U.S Subcustodian and non-U.S. Securities
System; (b) the countries in which each non-U.S. Subcustodian or non-U.S.
Securities System is located; and (c) so long as Rule 17f-5 requires the
Customer's Board of Trustees to directly approve its foreign custody
arrangements, such other information relating to such non-U.S. Subcustodians and
non-U.S. Securities Systems as may reasonably be requested by the Customer to
ensure compliance with Rule 17f-5. So long as Rule 17f-5 requires the Customer's
Board of Trustees to directly approve its foreign custody arrangements, the
Custodian also shall furnish annually to the Customer information concerning
such non-U.S. Subcustodians and non-U.S. Securities Systems similar in kind and
scope as that furnished to the Customer in connection with the initial approval
of this Agreement. Custodian agrees to promptly notify the Customer if, in the
normal course of its custodial activities, the Custodian has reason to believe
that any non-U.S. Subcustodian or non-U.S. Securities System has ceased to be a
qualified U.S. bank or an eligible foreign custodian each within the meaning of
Rule 17f-5 or has ceased to be subject to an exemptive order from the SEC.
5. USE OF SUBCUSTODIAN. With respect to Property in an Account
which is maintained by the Custodian through a Subcustodian employed pursuant to
Section 4:
(a) The Custodian will identify on its books as belonging to the
Customer on behalf of a Portfolio, any Property maintained
through such Subcustodian.
(b) Any Property in the Account held by a Subcustodian will be
subject only to the instructions of the Custodian or its
agents.
(c) Property deposited with a Subcustodian will be maintained in
an account holding only assets for customers of the Custodian.
(d) Any agreement the Custodian shall enter into with a non-U.S.
Subcustodian with respect to maintaining Property shall
require that (i) the Account will be adequately indemnified or
its losses adequately insured; (ii) the Securities so
maintained are not subject to any right, charge, security
interest, lien or claim of any kind in favor of such
Subcustodian or its creditors except a claim for payment in
accordance with such agreement for their safe custody or
administration and expenses related thereto, (iii) beneficial
ownership of such Securities be freely transferable without
the payment of money or value other than for safe custody or
administration and expenses related thereto, (iv) adequate
records will be maintained identifying the Property maintained
pursuant to such Agreement as belonging to the Custodian, on
behalf of its customers and (v) to the extent permitted by
applicable law, officers of or auditors employed by, or other
representatives of or designated by, the Custodian, including
the independent public accountants of or designated by, the
Customer be given access to the books and records of such
Subcustodian relating to its actions under its agreement
pertaining to any Property maintained by it thereunder or
confirmation of or pertinent information contained in such
books and records be furnished to such persons designated by
the Custodian.
6. USE OF SECURITIES SYSTEM. With respect to Property in the
Account(s) which is maintained by the Custodian or any Subcustodian through a
Securities System employed pursuant to Section 4:
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(a) The Custodian shall, and the Subcustodian will be required by
its agreement with the Custodian to, identify on its books
such Property as being maintained for the account of the
Custodian or Subcustodian for its customers.
(b) Any Property maintained through a Securities System for the
account of the Custodian or a Subcustodian will be subject
only to the instructions of the Custodian or such
Subcustodian, as the case may be.
(c) Property deposited with a Securities System will be maintained
in an account holding only assets for customers of the
Custodian or Subcustodian, as the case may be, unless
precluded by applicable law, rule, or regulation.
(d) The Custodian shall provide the Customer with any report
obtained by the Custodian on the Securities System's
accounting system, internal accounting control and procedures
for safeguarding securities deposited in the Securities
System.
7. AGENTS. The Custodian may at any time or times in its sole
discretion appoint (or remove) any other U.S. bank or trust company which is
itself qualified under the 1940 Act to act as custodian, as its agent to carry
out such of the provisions of this Agreement as the Custodian may from time to
time direct; PROVIDED, however, that the appointment of any agent shall not
relieve the Custodian of its responsibilities or liabilities hereunder.
8. RECORDS, OWNERSHIP OF PROPERTY, STATEMENTS, OPINIONS OF
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS.
(a) The ownership of the Property whether Securities, Cash and/or
other property, and whether maintained directly by the Custodian or indirectly
through a Subcustodian or a Securities System as authorized herein, shall be
clearly recorded on the Custodian's books as belonging to the appropriate
Account and not for the Custodian's own interest. The Custodian shall keep
accurate and detailed accounts of all investments, receipts, disbursements and
other transactions for each Account. All accounts, books and records of the
Custodian relating thereto shall be open to inspection and audit at all
reasonable times during normal business hours by any person designated by the
Customer. All such accounts shall be maintained and preserved in the form
reasonably requested by the Customer. The Custodian will supply to the Customer
from time to time, as mutually agreed upon, a statement in respect to any
Property in an Account maintained by the Custodian or by a Subcustodian. In the
absence of the filing in writing with the Custodian by the Customer of
exceptions or objections to any such statement within sixty (60) days of the
mailing thereof, the Customer shall be deemed to have approved such statement
and in such case or upon written approval of the Customer of any such statement,
such statement shall be presumed to be for all purposes correct with respect to
all information set forth therein.
(b) The Custodian shall take all reasonable action as the Customer
may request to obtain from year to year favorable opinions from the Customer's
independent certified public accountants with respect to the Custodian's
activities hereunder in connection with the preparation of the Customer's Form
N-1A and the Customer's Form N-SAR or other periodic reports to the SEC and with
respect to any other requirements of the SEC.
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(c) At the request of the Customer, the Custodian shall deliver to
the Customer a written report prepared by the Custodian's independent certified
public accountants with respect to the services provided by the Custodian under
this Agreement, including, without limitation, the Custodian's accounting
system, internal accounting control and procedures for safeguarding Cash and
Securities, including Cash and Securities deposited and/or maintained in a
securities system or with a Subcustodian. Such report shall be of sufficient
scope and in sufficient detail as may reasonably be required by the Customer and
as may reasonably be obtained by the Custodian.
(d) The Customer may elect to participate in any of the electronic
on-line service and communications systems offered by the Custodian which can
provide the Customer, on a daily basis, with the ability to view on-line or to
print on hard copy various reports of Account activity and of Securities and/or
Cash being held in any Account. To the extent that such service shall include
market values of Securities in an Account, the Customer hereby acknowledges that
the Custodian now obtains and may in the future obtain information on such
values from outside sources that the Custodian considers to be reliable and the
Customer agrees that the Custodian (i) does not verify or represent or warrant
either the reliability of such service nor the accuracy or completeness of any
such information furnished or obtained by or through such service and (ii) shall
be without liability in selecting and utilizing such service or furnishing any
information derived therefrom.
9. HOLDING OF SECURITIES, NOMINEES, ETC. Securities in an Account
which are maintained by the Custodian or any Subcustodian may be held directly
by such entity in the name of the Customer or in bearer form or maintained, on
behalf of a Portfolio, in the Custodian's or Subcustodian's name or in the name
of the Custodian's or Subcustodian's nominee. Securities that are maintained
through a Subcustodian or which are eligible for deposit in a Securities System
as provided above may be maintained with the Subcustodian or the Securities
System in an account for the Custodian's or Subcustodian's customers, unless
prohibited by law, rule, or regulation. The Custodian or Subcustodian, as the
case may be, may combine certificates representing Securities held in an Account
with certificates of the same issue held by it as fiduciary or as a custodian.
In the event that any Securities in the name of the Custodian or its nominee or
held by a Subcustodian and registered in the name of such Subcustodian or its
nominee are called for partial redemption by the issuer of such Security, the
Custodian may, subject to the rules or regulations pertaining to allocation of
any Securities System in which such Securities have been deposited, allot, or
cause to be allotted, the called portion of the respective beneficial holders of
such class of security in any manner the Custodian deems to be fair and
equitable. Securities maintained with a Securities System shall be maintained
subject to the rules of that Securities System governing the rights and
obligations among the Securities System and its participants.
10. PROXIES, ETC. With respect to any proxies, notices, reports or
other communications relative to any of the Securities in any Account, the
Custodian shall perform such services and only such services relative thereto as
are (i) set forth in Section 3 of this Agreement, (ii) described in the
applicable Service Standards (the "Proxy Service") or (iii) as may otherwise be
agreed upon between the Custodian and the Customer. The liability and
responsibility of the Custodian in connection with the Proxy Service referred to
in (ii) of the immediately preceding sentence and in connection with any
additional services which the Custodian and the Customer may agree upon as
provided in (iii) of the immediately preceding sentence shall be as set forth in
the description of the Proxy Service and as may be agreed upon by the Custodian
and the Customer in connection with the furnishing of any such additional
service and shall not be affected by any other term of this Agreement. Neither
the Custodian nor its nominees or agents shall vote upon or in respect of any of
the Securities in the Account, execute any form of proxy to vote thereon, or
give any
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consent or take any action (except as provided in Section 3) with respect
thereto except upon the receipt of Instructions relative thereto.
11. SEGREGATED ACCOUNT. To assist the Customer in complying with
the requirements of the 1940 Act and the rules and regulations thereunder, the
Custodian shall, upon receipt of Instructions, establish and maintain a
segregated account or accounts on its books for and on behalf of a Portfolio.
12. SETTLEMENT PROCEDURES. Securities will be transferred,
exchanged or delivered by the Custodian or a Subcustodian upon receipt by the
Custodian of Instructions which include all information required by the
Custodian. Settlement and payment for Securities received for an Account and
delivery of Securities out of such Account may be effected in accordance with
the customary or established securities trading or securities processing
practices and procedures in the jurisdiction or market in which the transaction
occurs, including, without limitation, delivering Securities to the purchaser
thereof or to a dealer therefor (or an agent for such purchaser or dealer)
against a receipt with the expectation of receiving later payment for such
Securities from such purchaser or dealer, as such practices and procedures may
be modified or supplemented in accordance with the standard operating procedures
of the Custodian in effect from time to time for that jurisdiction or market.
The Custodian shall not be liable for any loss which results from effecting
transactions in accordance with the customary or established securities trading
or securities processing practices and procedures in the applicable jurisdiction
or market.
Notwithstanding that the Custodian may settle purchases and sales
against, or credit income to, an Account, on a contractual basis, as outlined in
the applicable Service Standards as defined below and provided to the Customer
by the Custodian, the Custodian may, at its sole option, reverse such credits or
debits to the appropriate Account in the event that the transaction does not
settle, or the income is not received in a timely manner, and the Customer
agrees to hold the Custodian harmless from any losses which may result
therefrom.
The applicable Service Standards shall be defined as the Global Guide,
the Policies and Standards Manual, and any other documents issued by the
Custodian from time to time specifying the procedures for communicating with the
Customer, the terms of any additional services to be provided to the Customer,
and such other matters as may be agreed between the Customer and the Custodian
from time to time.
13. CONDITIONAL CREDITS.
(a) Notwithstanding any other provision of this Agreement, the
Custodian shall not be required to comply with any Instructions to settle the
purchase of any securities for the Account, unless there are sufficient
immediately available funds in the relevant currency in the Account, PROVIDED
THAT, if, after all expenses, debits and withdrawals of Cash in the relevant
currency ("Debits") applicable to the Account have been made and if after all
Conditional Credits, as defined below, applicable to the Account have been made
final entries as set forth in (c) below, the amount of immediately available
funds of the relevant currency in such Account is at least equal to the
aggregate purchase price of all securities for which the Custodian has received
Instructions to settle on that date ("Settlement Date"), the Custodian, upon
settlement, shall credit the Securities to the Account by making a final entry
on its books and records.
(b) Notwithstanding the foregoing, if after all Debits applicable to
the Account have been made, there remains outstanding any Conditional Credit (as
defined below) applicable to the Account or the
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amount of immediately available funds in a given currency in such Account are
less than the aggregate purchase price in such currency of all securities for
which the Custodian has received Instructions to settle on the Settlement Date,
the Custodian, upon settlement, may credit the securities to the Account by
making a conditional entry on its books and records ("Conditional Credit"),
pending receipt of sufficient immediately available funds in the relevant
currency in the Account.
(c) If, within a reasonable time from the posting of a Conditional
Credit and after all Debits applicable to the Account have been made,
immediately available funds in the relevant currency at least equal to the
aggregate purchase price in such currency of all securities subject to a
Conditional Credit on a Settlement Date are deposited into the Account, the
Custodian shall make the Conditional Credit a final entry on its books and
records. In such case, the Customer shall be liable to the Custodian only for
late charges at a rate which the Custodian customarily charges for similar
extensions of credit.
(d) If (i) within a reasonable time from the posting of a Conditional
Credit, immediately available funds at least equal to the resultant Debit on a
Settlement Date are not on deposit in the Account, or (ii) any Proceeding shall
occur, the Custodian may sell such of the Securities subject to the Conditional
Credit as it selects in its sole discretion and shall apply the net proceeds of
such sale to cover such Debit, including related late charges, and any remaining
proceeds shall be credited to the Account. If such proceeds are insufficient to
satisfy such debt in full, the Customer shall continue to be liable to the
Custodian for any shortfall. The Custodian shall make the Conditional Credit a
final entry on its books as to the Securities not required to be sold to satisfy
such Debit. Pending payment in full by the Customer of the purchase price for
Securities subject to a Conditional Credit, and the Custodian's making a
Conditional Credit a final entry on its books, and, unless consented to by the
Custodian, the Customer shall have no right to give further Instructions in
respect of Securities subject to a Conditional Credit. The Custodian shall have
the sole discretion to determine which Securities shall be deemed to have been
paid for by the Customer out of funds available in the Account. Any such
Conditional Credit may be reversed (and any corresponding Debit shall be
canceled) by the Custodian unless and until the Custodian makes a final entry on
its books crediting such Securities to the Account. The term "Proceeding" shall
mean any insolvency, bankruptcy, receivership, reorganization or similar
proceeding relating to the Customer, whether voluntary or involuntary.
(e) The Customer agrees that it will not use the Account to facilitate
the purchase of securities without sufficient funds in the Account (which funds
shall not include the expected proceeds of the sale of the purchased
securities).
14. PERMITTED TRANSACTIONS. The Customer agrees that it will cause
transactions to be made pursuant to this Agreement only upon Instructions in
accordance with Section 15 and only for the purposes listed below.
(a) In connection with the purchase or sale of Securities at
prices as confirmed by Instructions.
(b) When Securities are called, redeemed or retired, or otherwise
become payable.
(c) In exchange for or upon conversion into other securities alone
or other securities and cash pursuant to any plan or merger, consolidation,
reorganization, recapitalization or readjustment.
(d) Upon conversion of Securities pursuant to their terms into
other securities.
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(e) Upon exercise of subscription, purchase or other similar
rights represented by Securities.
(f) For the payment of interest, taxes, management or supervisory
fees, distributions or operating expenses.
(g) In connection with any borrowings by the Customer requiring a
pledge of Securities, but only against receipt of amounts borrowed or in order
to satisfy requirements for additional or substitute collateral.
(h) In connection with any loans, but only against receipt of
collateral as specified in Instructions which shall reflect any restrictions
applicable to the Customer.
(i) For the purpose of redeeming shares of the capital stock of
the Customer against delivery of the shares to be redeemed to the Custodian, a
Subcustodian or the Customer's transfer agent.
(j) For the purpose of redeeming in kind shares of the Customer
against delivery of the shares to be redeemed to the Custodian, a Subcustodian
or the Customer's transfer agent.
(k) For delivery in accordance with the provisions of any
agreement among the Customer, on behalf of a Portfolio, the Portfolio's
investment adviser and a broker-dealer registered under the Securities Exchange
Act of 1934 and a member of the National Association of Securities Dealers,
Inc., relating to compliance with the rules of The Options Clearing Corporation,
the Commodities Futures Trading Commission or of any registered national
securities exchange, or of any similar organization or organizations, regarding
escrow or other arrangements in connection with transactions by the Customer.
(l) For release of Securities to designated brokers under covered
call options, provided, however, that such Securities shall be released only
upon payment to the Custodian of monies for the premium due and a receipt for
the Securities which are to be held in escrow. Upon exercise of the option, or
at expiration, the Custodian will receive the Securities previously deposited
from broker. The Custodian will act strictly in accordance with Instructions in
the delivery of Securities to be held in escrow and will have no responsibility
or liability for any such Securities which are not returned promptly when due
other than to make proper request for such return.
(m) For spot or forward foreign exchange transactions to
facilitate security trading or receipt of income from Securities related
transactions.
(n) Upon the termination of this Agreement as set forth in Section
20.
(o) For other proper purposes.
The Customer agrees that the Custodian shall have no obligation to
verify the purpose for which a transaction is being effected.
15. INSTRUCTIONS. The term "Instructions" means instructions from
the Customer in respect of any of the Custodian's duties hereunder which have
been received by the Custodian at its address set forth in Section 22 below (i)
in writing (including, without limitation, facsimile transmission) or by tested
telex
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signed or given by such one or more person or persons as the Customer shall have
from time to time authorized in writing to give the particular class of
Instructions in question and whose name and (if applicable) signature and office
address have been filed with the Custodian, or (ii) which have been transmitted
electronically through an electronic on-line service and communications system
offered by the Custodian or other electronic instruction system acceptable to
the Custodian, or (iii) a telephonic or oral communication by one or more
persons as the Customer shall have from time to time authorized to give the
particular class of Instructions in question and whose name has been filed with
the Custodian; or (iv) upon receipt of such other form of instructions as the
Customer may from time to time authorize in writing and which the Custodian has
agreed in writing to accept. Instructions in the form of oral communications
shall be confirmed by the Customer by tested telex or writing in the manner set
forth in clause (i) above, but the lack of such confirmation shall in no way
affect any action taken by the Custodian in reliance upon such oral instructions
prior to the Custodian's receipt of such confirmation. Instructions may relate
to specific transactions or to types or classes of transactions, and may be in
the form of standing instructions.
The Custodian shall have the right to assume in the absence of notice
to the contrary from the Customer that any person whose name is on file with the
Custodian pursuant to this Section has been authorized by the Customer to give
the Instructions in question and that such authorization has not been revoked.
The Custodian may act upon and conclusively rely on, without any liability to
the Customer or any other person or entity for any losses resulting therefrom,
any Instructions reasonably believed by it to be furnished by the proper person
or persons as provided above.
16. STANDARD OF CARE. The Custodian shall be responsible for the
performance of only such duties as are set forth herein or contained in
Instructions given to the Custodian which are not contrary to the provisions of
this Agreement. The Custodian will use reasonable care with respect to the
safekeeping of Property in each Account and, except as otherwise expressly
provided herein, in carrying out its obligations under this Agreement. So long
as and to the extent that it has exercised reasonable care, the Custodian shall
not be responsible for the title, validity or genuineness of any Property or
other property or evidence of title thereto received by it or delivered by it
pursuant to this Agreement and shall be held harmless in acting upon, and may
conclusively rely on, without liability for any loss resulting therefrom, any
notice, request, consent, certificate or other instrument reasonably believed by
it to be genuine and to be signed or furnished by the proper party or parties,
including, without limitation, Instructions, and shall be indemnified by the
Customer for any losses, damages, costs and expenses (including, without
limitation, the fees and expenses of counsel) incurred by the Custodian and
arising out of action taken or omitted with reasonable care by the Custodian
hereunder or under any Instructions. The Custodian shall be liable to the
Customer for any act or omission to act of any Subcustodian to the same extent
as if the Custodian committed such act itself. With respect to a Securities
System, the Custodian shall only be responsible or liable for losses arising
from employment of such Securities System caused by the Custodian's own failure
to exercise reasonable care. In the event of any loss to the Customer by reason
of the failure of the Custodian or a Subcustodian to utilize reasonable care,
the Custodian shall be liable to the Customer to the extent of the Customer's
actual damages at the time such loss was discovered without reference to any
special conditions or circumstances. In no event shall the Custodian be liable
for any consequential or special damages. The Custodian shall be entitled to
rely, and may act, on advice of counsel (who may be counsel for the Customer) on
all matters and shall be without liability for any action reasonably taken or
omitted pursuant to such advice.
In the event the Customer subscribes to an electronic on-line service
and communications system offered by the Custodian, the Customer shall be fully
responsible for the security of the Customer's connecting terminal, access
thereto and the proper and authorized use thereof and the initiation and
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application of continuing effective safeguards with respect thereto and agree to
defend and indemnify the Custodian and hold the Custodian harmless from and
against any and all losses, damages, costs and expenses (including the fees and
expenses of counsel) incurred by the Custodian as a result of any improper or
unauthorized use of such terminal by the Customer or by any others.
All collections of funds or other property paid or distributed in
respect of Securities in an Account, including funds involved in third-party
foreign exchange transactions, shall be made at the risk of the Customer.
Subject to the exercise of reasonable care, the Custodian shall have no
liability for any loss occasioned by delay in the actual receipt of notice by
the Custodian or by a Subcustodian of any payment, redemption or other
transaction regarding Securities in each Account in respect of which the
Custodian has agreed to take action as provided in Section 3 hereof. The
Custodian shall not be liable for any loss resulting from, or caused by, or
resulting from acts of governmental authorities (whether de jure or de facto),
including, without limitation, nationalization, expropriation, and the
imposition of currency restrictions; devaluations of or fluctuations in the
value of currencies; changes in laws and regulations applicable to the banking
or securities industry; market conditions that prevent the orderly execution of
securities transactions or affect the value of Property; acts of war, terrorism,
insurrection or revolution; strikes or work stoppages; the inability of a local
clearing and settlement system to settle transactions for reasons beyond the
control of the Custodian; hurricane, cyclone, earthquake, volcanic eruption,
nuclear fusion, fission or radioactivity, or other acts of God.
The Custodian shall have no liability in respect of any loss, damage or
expense suffered by the Customer, insofar as such loss, damage or expense arises
from the performance of the Custodian's duties hereunder by reason of the
Custodian's reliance upon records that were maintained for the Customer by
entities other than the Custodian prior to the Custodian's employment under this
Agreement.
The provisions of this Section shall survive termination of this
Agreement.
17. INVESTMENT LIMITATIONS AND LEGAL OR CONTRACTUAL RESTRICTIONS
OR REGULATIONS. The Custodian shall not be liable to the Customer and the
Customer agrees to indemnify the Custodian and its nominees, for any loss,
damage or expense suffered or incurred by the Custodian or its nominees arising
out of any violation of any investment restriction or other restriction or
limitation applicable to the Customer or any Portfolio pursuant to any contract
or any law or regulation. The provisions of this Section shall survive
termination of this Agreement.
18. FEES AND EXPENSES. The Customer agrees to pay to the Custodian
such compensation for its services pursuant to this Agreement as may be mutually
agreed upon in writing from time to time and the Custodian's reasonable
out-of-pocket or incidental expenses in connection with the performance of this
Agreement, including (but without limitation) legal fees as described herein
and/or deemed necessary in the judgment of the Custodian to keep safe or protect
the Property in the Account. The initial fee schedule is attached hereto as
Exhibit B. Such fees will not be abated by, nor shall the Custodian be required
to account for, any profits or commissions received by the Custodian in
connection with its provision of custody services under this agreement. The
Customer hereby agrees to hold the Custodian harmless from any liability or loss
resulting from any taxes or other governmental charges, and any expense related
thereto, which may be imposed, or assessed with respect to any Property in an
Account and also agrees to hold the Custodian, its Subcustodians, and their
respective nominees harmless from any liability as a record holder
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of Property in such Account. The Custodian is authorized to charge the
applicable Account for such items and the Custodian shall have a lien on the
Property in the applicable Account for any amount payable to the Custodian under
this Agreement, including but not limited to amounts payable pursuant to Section
13 and pursuant to indemnities granted by the Customer under this Agreement. The
provisions of this Section shall survive the termination of this Agreement.
19. TAX RECLAIMS. With respect to withholding taxes deducted and
which may be deducted from any income received from any Property in an Account,
the Custodian shall perform such services with respect thereto as are described
in the applicable Service Standards and shall in connection therewith be subject
to the standard of care set forth in such Service Standards. Such standard of
care shall not be affected by any other term of this Agreement.
20. AMENDMENT, MODIFICATIONS, ETC. No provision of this Agreement
may be amended, modified or waived except in a writing signed by the parties
hereto. No waiver of any provision hereto shall be deemed a continuing waiver
unless it is so designated. No failure or delay on the part of either party in
exercising any power or right under this Agreement operates as a waiver, nor
does any single or partial exercise of any power or right preclude any other or
further exercise thereof or the exercise of any other power or right.
21. TERMINATION. (a) TERMINATION OF ENTIRE AGREEMENT. This
Agreement may be terminated by the Customer or the Custodian by ninety (90)
days' written notice to the other; PROVIDED that notice by the Customer shall
specify the names of the persons to whom the Custodian shall deliver the
Securities in each Account and to whom the Cash in such Account shall be paid.
If notice of termination is given by the Custodian, the Customer shall, within
ninety (90) days following the giving of such notice, deliver to the Custodian a
written notice specifying the names of the persons to whom the Custodian shall
deliver the Securities in each Account and to whom the Cash in such Account
shall be paid. In either case, the Custodian will deliver such Property to the
persons so specified, after deducting therefrom any amounts which the Custodian
determines to be owed to it hereunder. In addition, the Custodian may in its
discretion withhold from such delivery such Property as may be necessary to
settle transactions pending at the time of such delivery. The Customer grants to
the Custodian a lien and right of setoff against the Account and all Property
held therein from time to time in the full amount of the foregoing obligations.
If within ninety (90) days following the giving of a notice of termination by
the Custodian, the Custodian does not receive from the Customer a written notice
specifying the names of the persons to whom the Custodian shall deliver the
Securities in each Account and to whom the Cash in such Account shall be paid,
the Custodian, at its election, may deliver such Securities and pay such Cash to
a bank or trust company doing business in the State of New York to be held and
disposed of pursuant to the provisions of this Agreement, or may continue to
hold such Securities and Cash until a written notice as aforesaid is delivered
to the Custodian, provided that the Custodian's obligations shall be limited to
safekeeping.
(b) TERMINATION AS TO ONE OR MORE PORTFOLIOS. This Agreement may
be terminated by the Customer or the Custodian as to one or more Portfolios (but
less than all of the Portfolios) by delivery of an amended Exhibit A deleting
such Portfolios, in which case termination as to such deleted Portfolios shall
take effect ninety (90) days after the date of such delivery, or such earlier
time as mutually agreed. The execution and delivery of an amended Exhibit A
which deletes one or more Portfolios shall constitute a termination of this
Agreement only with respect to such deleted Portfolio(s), shall be governed by
the preceding provisions of Section 21 as to the identification of a successor
custodian and the delivery of Cash and Securities of the Portfolio(s) so deleted
to such successor custodian, and shall not affect the obligations
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of the Custodian and the Customer hereunder with respect to the other Portfolios
set forth in Exhibit A, as amended from time to time.
22. NOTICES. Except as otherwise provided in this Agreement, all
requests, demands or other communications between the parties or notices in
connection herewith (a) shall be in writing, hand delivered or sent by
registered mail, telex or facsimile addressed to such other address as shall
have been furnished by the receiving party pursuant to the provisions hereof and
(b) shall be deemed effective when received, or, in the case of a telex, when
sent to the proper number and acknowledged by a proper answerback.
23. SEVERAL OBLIGATIONS OF THE PORTFOLIOS. With respect to any
obligations of the Customer on behalf of each Portfolio and each of its related
Accounts arising out of this Agreement, the Custodian shall look for payment or
satisfaction of any obligation solely to the assets and property of the
Portfolio and such Accounts to which such obligation relates as though the
Customer had separately contracted with the Custodian by separate written
instrument with respect to each Portfolio and its related Accounts.
24. SECURITY FOR PAYMENT. To secure payment of all obligations due
hereunder, the Customer hereby grants to the Custodian a continuing security
interest in and right of setoff against each Account and all Property held
therein from time to time in the full amount of such obligations; PROVIDED THAT,
if there is more than one Account and the obligations secured pursuant to this
Section can be allocated to a specific Account or the Portfolio related to such
Account, such security interest and right of setoff will be limited to Property
held for that Account only and its related Portfolio. Should the Customer fail
to pay promptly any amounts owed hereunder, the Custodian shall be entitled to
use available Cash in the Account or applicable Account, as the case may be, and
to dispose of Securities in the Account or such applicable Account as is
necessary. In any such case and without limiting the foregoing, the Custodian
shall be entitled to take such other actions or exercise such other options,
powers and rights as the Custodian now or hereafter has as a secured creditor
under the New York Uniform Commercial Code or any other applicable law.
25. REPRESENTATIONS AND WARRANTIES.
(a) The Customer hereby represents and warrants to the Custodian that:
(i) the employment of the Custodian and the allocation of
fees, expenses and other charges to any Account as herein provided, is not
prohibited by law or any governing documents or contracts to which it is
subject;
(ii) the terms of this Agreement do not violate any obligation
by which it is bound, whether arising by contract, operation of law or
otherwise;
(iii) this Agreement has been duly authorized by appropriate
action and when executed and delivered will be binding upon it and each
Portfolio in accordance with its terms; and
(iv) it will deliver to the Custodian a duly executed
Secretary's Certificate in the form of Exhibit E hereto or such other evidence
of such authorization as the Custodian may reasonably require, whether by way of
a certified resolution or otherwise.
(b) The Custodian hereby represents and warrants to the Customer that:
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(i) the terms of this Agreement do not violate any obligation
by which it is bound, whether arising by contract, operation of law or
otherwise;
(ii) this Agreement has been duly authorized by appropriate
action and when executed and delivered will be binding upon it in accordance
with its terms;
(iii) it will deliver to the Customer such evidence of such
authorization as the Customer may reasonably require, whether by way of a
certified resolution or otherwise; and
(iv) Custodian is qualified as a custodian under Section 26(a)
of the 1940 Act and warrants that it will remain so qualified or upon ceasing to
be so qualified shall promptly notify the Customer in writing.
26. GOVERNING LAW AND SUCCESSORS AND ASSIGNS. This Agreement shall
be governed by the law of the State of New York and shall not be assignable by
either party, but shall bind the successors in interest of the Customer and the
Custodian.
27. PUBLICITY. Customer shall furnish to Custodian at its office
referred to in Section 22 above, prior to any distribution thereof, copies of
any material prepared for distribution to any persons who are not parties hereto
that refer in any way to the Custodian. Customer shall not distribute or permit
the distribution of such materials if Custodian reasonably objects in writing
within ten (10) business days of receipt thereof (or such other time as may be
mutually agreed) after receipt thereof. The provisions of this Section shall
survive the termination of this Agreement.
28. REPRESENTATIVE CAPACITY AND BINDING OBLIGATION. A copy of the
[DECLARATION OF TRUST/TRUST INSTRUMENT]of the Customer is on file with The
Secretary of THE [COMMONWEALTH OF MASSACHUSETTS/STATE OF DELAWARE], and notice
is hereby given that this Agreement is not executed on behalf of the Trustees of
the Customer as individuals, and the obligations of this Agreement are not
binding upon any of the Trustees, officers or shareholders of the Customer
individually but are binding only upon the assets and property of the
Portfolios.
The Custodian agrees that no shareholder, trustee or officer of the
Customer may be held personally liable or responsible for any obligations of the
Customer arising out of this Agreement.
29. SUBMISSION TO JURISDICTION. Any suit, action or proceeding
arising out of this Agreement may be instituted in any State or Federal court
sitting in the City of New York, State of New York, United States of America,
and the Customer irrevocably submits to the non-exclusive jurisdiction of any
such court in any such suit, action or proceeding and waives, to the fullest
extent permitted by law, any objection which it may now or hereafter have to the
laying of venue of any such suit, action or proceeding brought in such a court
and any claim that such suit, action or proceeding was brought in an
inconvenient forum.
30. CONFIDENTIALITY. The parties hereto agree that each shall
treat confidentially the terms and conditions of this Agreement and all
information provided by each party to the other regarding its business and
operations. All confidential information provided by a party hereto shall be
used by any other party hereto solely for the purpose of rendering services
pursuant to this Agreement and, except as may be required in carrying out this
Agreement, shall not be disclosed to any third party without the prior consent
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<PAGE>
of such providing party. The foregoing shall not be applicable to any
information that is publicly available when provided or thereafter becomes
publicly available other than through a breach of this Agreement, or that is
required or requested to be disclosed by any bank or other regulatory examiner
of the Custodian, Customer, or any Subcustodian, any auditor of the parties
hereto, by judicial or administrative process or otherwise by applicable law or
regulation. The provisions of this Section shall survive the termination of this
Agreement.
31. SEVERABILITY. If any provision of this Agreement is determined
to be invalid or unenforceable, such determination shall not affect the validity
or enforceability of any other provision of this Agreement.
32. ENTIRE AGREEMENT. This Agreement together with any Exhibits
attached hereto, contains the entire agreement between the parties relating to
the subject matter hereof and supersedes any oral statements and prior writings
with respect thereto.
33. HEADINGS. The headings of the paragraphs hereof are included
for convenience of reference only and do not form a part of this Agreement.
34. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original. This Agreement shall
become effective when one or more counterparts have been signed and delivered by
each of the parties hereto.
IN WITNESS WHEREOF, each of the parties has caused its duly authorized
signatories to execute this Agreement as of the date first written above.
[CUSTOMER]
By: _________________________________
Name: ___________________________
Title: ____________________________
By: _________________________________
Name: ___________________________
Title: ____________________________
BANKERS TRUST COMPANY
By: _________________________________
Name: ___________________________
Title: ____________________________
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<PAGE>
EXHIBIT A
To Custodian Agreement dated as of _______________, between Bankers
Trust Company and [Customer].
LIST OF PORTFOLIOS
The following is a list of Portfolios referred to in the first WHEREAS
clause of the above-referred to Custodian Agreement. Terms used herein as
defined terms unless otherwise defined shall have the meanings ascribed to them
in the above-referred to Custodian Agreement.
[CUSTOMER]
By: _________________________________
Name: ___________________________
Title: ____________________________
By: _________________________________
Name: ___________________________
Title: ____________________________
BANKERS TRUST COMPANY
By: _________________________________
Name: ___________________________
Title: ____________________________
<PAGE>
EXHIBIT B
To Custodian Agreement dated as of _____________, between Bankers Trust
Company and CUSTOMER.
INSERT FEE SCHEDULE
<PAGE>
EXHIBIT C
[NAME OF ENTITY]
CERTIFICATE OF THE SECRETARY
I, [NAME OF SECRETARY], hereby certify that I am the Secretary of [NAME
OF ENTITY], a [TYPE OF ENTITY] organized under the laws of [JURISDICTION] (the
"Company"), and as such I am duly authorized to, and do hereby, certify that:
1. ORGANIZATIONAL DOCUMENTS. The Company's organizational
documents, and all amendments thereto, have been filed with the appropriate
governmental officials of [JURISDICTION], the Company continues to be in
existence and is in good standing, and no action has been taken to repeal such
organizational documents, the same being in full force and effect on the date
hereof.
2. BYLAWS. The Company's Bylaws have been duly adopted and no
action has been taken to repeal such Bylaws, the same being in full force and
effect.
3. RESOLUTIONS. Resolutions have been duly adopted on behalf of
the Company, which resolutions (i) have not in any way been revoked or
rescinded, (ii) have been in full force and effect since their adoption, to and
including the date hereof, and are now in full force and effect, and (iii) are
the only corporate proceedings of the Company now in force relating to or
affecting the matters referred to therein, including, without limitation,
confirming that the Company is duly authorized to enter into a certain custody
agreement with Bankers Trust Company (the "Agreement"), and that certain
designated officers, including those identified in paragraph 4 of this
Certificate, are authorized to execute said Agreement on behalf of the Company,
in conformity with the requirements of the Company's organizational documents,
Bylaws, and other pertinent documents to which the Company may be bound.
4. INCUMBENCY. The following named individuals are duly elected
(or appointed), qualified, and acting officers of the Company holding those
offices set forth opposite their respective names as of the date hereof, each
having full authority, acting individually, to bind the Company, as a legal
matter, with respect to all matters pertaining to the Agreement, and to execute
and deliver said Agreement on behalf of the Company, and the signatures set
forth opposite the respective names and titles of said officers are their true,
authentic signatures:
NAME TITLE SIGNATURE
[NAME] [POSITION] ____________________
[NAME] [POSITION] ____________________
[NAME] [POSITION] ____________________
<PAGE>
IN WITNESS WHEREOF, I have hereunto set my hand this ____ day of
[DATE], 19__.
By: __________________________
Name: __________________________
Title: Secretary
I, [NAME OF CONFIRMING OFFICER], [TITLE] of the Company, hereby certify
that on this ___ day of [DATE], 19__, [Name of Secretary] is the duly elected
Secretary of the Company and that the signature above is his genuine signature.
By:________________________________
Name:______________________________
Title:_____________________________
<PAGE>
EXHIBIT D
CASH MANAGEMENT ADDENDUM (this "ADDENDUM") to the CUSTODIAN AGREEMENT
(the "AGREEMENT") between BANKERS TRUST COMPANY (the "CUSTODIAN") and [NAME OF
CLIENT] (the "CUSTOMER").
WHEREAS, the Custodian will provide cash management services to the
Customer, and the Custodian and the Customer desire to confirm their
understanding with respect to such services;
NOW, THEREFORE, the Custodian and the Customer agree as follows:
1. Until the Custodian receives Instructions to the contrary, the
Custodian will (a) hold with Subcustodians, in deposit accounts maintained for
the benefit of the Custodian's clients, all Cash received for the Account, (b)
credit such interest, if any, on Cash in the Account as the Custodian shall from
time to time determine and (c) receive compensation out of any amounts paid by
Subcustodians in respect of Cash in the Account.
2. The Custodian may (on an overnight or other short-term basis)
move certain, or all, currencies of Cash in the Account from any Subcustodian
and place it, as deposits or otherwise, with one or more other Subcustodians
(including branches and affiliates of the Custodian). The Custodian will notify
the Customer of any placement procedures it implements and will move Cash in
accordance with such procedures until it notifies the Customer otherwise or
receives Instructions to the contrary. The Custodian may credit interest and
receive compensation as described in 1 above with respect to any Cash moved. If
any Cash is held in an investment fund managed by Bankers Trust, it will notify
the fund (as opposed to the Customer) as provided herein with respect to such
Cash.
3. The Customer acknowledges that it has received and reviewed
the current policies of the Custodian regarding cash management services, which
are attached to this Addendum.
4. To the extent any of the Property or Cash in the Account is
subject to the Employee Retirement Income Security Act of 1974, the Customer (a)
represents and warrants that it, at all times during the duration of the
Agreement, will be a qualified professional asset manager as defined in the
prohibited transaction exemption 84-14 and that the provisions of the exemption
apply to the Agreement (and transactions thereunder) and (b) agrees to maintain
such records as are necessary to comply with the exemption or to enable
interested persons to determine that the conditions of the exemption are met.
5. Capitalized terms used but not defined in this Addendum are
used with the respective meanings assigned to them in the Agreement.
<PAGE>
IN WITNESS WHEREOF, this Addendum has been executed as of the date of
the Agreement.
BANKERS TRUST COMPANY
By:___________________________
[NAME OF CUSTOMER]
By:___________________________
<PAGE>
GLOBAL CUSTODY CASH MANAGEMENT PROGRAM
In the Global Custody cash management program, currencies on
which Bankers Trust pays interest are divided into two categories: (1)
currencies on which we pay interest based on a market benchmark rate for
overnight deposits, and (2) currencies on which we pay interest based on a rate
paid by the London branch of Bankers Trust Company or the local subcustodian.
CURRENCIES ON WHICH WE PAY INTEREST BASED ON A MARKET
BENCHMARK RATE FOR OVERNIGHT DEPOSITS (WHICH WE CALL "BENCHMARK RATE
CURRENCIES"):
(BULLET) For each of these currencies, the interest rate we pay is
based on a specific market benchmark (such as Effective Fed
Funds) and is calculated by taking an average of the benchmark
rate and subtracting a spread. (See Schedule A)
(BULLET) Currently, the only Benchmark Rate Currency is the U.S.
Dollar. Over time we will be considering additional currencies
to include in this category.
(BULLET) Operationally, most balances in Benchmark Rate Currencies are
swept overnight into deposits at the London branch of Bankers
Trust Company. Where you have selected a short-term investment
fund, your U.S. Dollar balances in the U.S. will be swept
overnight in accordance with your instructions.
CURRENCIES ON WHICH WE PAY INTEREST BASED ON A RATE PAID BY
THE LONDON BRANCH OF BANKERS TRUST COMPANY OR THE LOCAL SUBCUSTODIAN (WHICH WE
CALL "BASE RATE CURRENCIES"):
(BULLET) For each of these currencies, the interest rate we pay is
based on the rate paid by the London branch or the local
subcustodian on overnight deposits in the currency. In either
case, interest is calculated by using the overnight rate
(which will be the actual overnight, a weekly average, or
monthly average rate, depending on the currency) and
subtracting a spread. (See Schedule A)
(BULLET) Currencies that are part of the sweep program will earn
interest based on the base rate, which will be the higher of
the rate offered by the London branch of Bankers Trust Company
or the local subcustodian.
(BULLET) Currencies that are not part of the sweep program will
generally earn interest based on the rate paid by the local
subcustodian. We may at times be able to sweep certain
currency balances into deposits of Bankers Trust Company's
London branch in order to be able to earn a higher rate for
you. On those days, any such currency will be treated as part
of the sweep program, and you will earn interest on all of
your balances in that currency at the higher rate for that
day.
<PAGE>
(BULLET) Currently, there are 29 Base Rate Currencies, 10 of which are
included in our sweep program to the London branch.
(BULLET) Operationally, most balances in Base Rate Currencies that are
part of our sweep program are swept overnight into deposits at
the London branch, while balances in Base Rate Currencies that
are not part of our sweep program remain with the local
subcustodian.
FOR EACH CURRENCY ON WHICH WE PAY INTEREST:
(BULLET) We will notify you periodically in writing of changes in
spreads and updates to the cash management program. These
program updates also will be available through Global Custody
Flash Notices.
(BULLET) FOR MARKETS WHERE WE MAINTAIN ONE OR MORE OMNIBUS CASH
ACCOUNTS, YOU EARN INTEREST AT THE CALCULATED RATE ON YOUR
ENTIRE CONTRACTUAL BALANCE WITHOUT ANY ACTION ON YOUR PART AND
WITHOUT ANY MINIMUM BALANCE REQUIREMENTS. This is the case
regardless of whether we are able to invest your balances at
or near the applicable benchmark or base rate and regardless
of whether your contractual balance may exceed your actual
balance.
(BULLET) FOR MARKETS WHERE WE MAINTAIN ONE OR MORE OMNIBUS CASH
ACCOUNTS, THE MINIMUM RATE PAID IS 0.50%, except for the
Japanese Yen (for which the minimum rate of 0.05% has been
suspended for the time being due to market conditions) and the
Singapore Dollar (for which the minimum rate is 0.25%). Please
note that this is also subject to change as appropriate for
any currency. Notwithstanding the foregoing, in no event will
interest be negative.
(BULLET) FOR THE CURRENCIES OF "CLIENT SPECIFIC MARKETS," THOSE MARKETS
WHERE FOR REGULATORY OR OTHER REASONS WE DO NOT MAINTAIN
OMNIBUS ACCOUNTS FOR CLIENT CASH, ON WHICH WE PAY CREDIT
INTEREST (which at this time are the Hungarian Forint, Israeli
Shekel, Polish Zloty, Korean Won and Taiwanese Dollar), we
will no longer be taking a spread for providing interest on
cash balances. The credit interest you earn on overnight
balances will be based on actual balances, as opposed to
contractual balances, and the minimum credit interest rate
will no longer be applied.
(BULLET) YOU WILL HAVE CONTINUOUS ACCESS THROUGH GLOBE*VIEW, BTWORLD,
OR GLOBE*LINK OR OTHER AGREED ELECTRONIC ON-LINE SYSTEM TO THE
INTEREST RATE EARNED DURING THE PREVIOUS "RATE AVERAGING
PERIOD". Because we may use weekly or monthly average rates to
calculate the interest you earn, we do not know the actual
interest rate until the weekly or monthly period is completed.
<PAGE>
(BULLET) Our program generally requires that overnight balances in each
currency remain with (or are swept to) a subcustodian we
designate for that currency. Nevertheless, we pay our stated
rate of interest on any balances that, because of transactions
in your account, are held overnight with an alternate
subcustodian if we receive interest on that currency from that
subcustodian. If the alternate subcustodian does not pay
interest, however, these balances are excluded from our
program.
(BULLET) FOR SWEPT CURRENCIES, FROM TIME TO TIME WE MAY NOT BE ABLE TO
SWEEP THE FULL AMOUNT OF YOUR BALANCES TO THE LONDON BRANCH
because of operational constraints or because your balance on
a contractual basis temporarily exceeds your actual balance.
You will, however, always receive credit for interest based on
your entire contractual balance. To the extent you would have
earned a lower rate on balances not swept, we will make up the
difference. To the extent that actual balances are higher than
contractually posted balances due to purchase fails or
otherwise, we will retain the interest earned as compensation.
(BULLET) THE EFFECTIVE RATE WE PAY ON OVERNIGHT BALANCES WILL GENERALLY
DIFFER FROM THE EFFECTIVE RATE WE RECEIVE (WHETHER FROM THE
LONDON BRANCH OR THE LOCAL SUBCUSTODIAN). Any difference
between the effective rate we receive and the effective rate
we pay (which may be positive or negative, but is generally
positive) is kept by us and covers our fee for running the
cash management program and the related costs we absorb.
Obviously, there will be currencies on which we will not pay
interest because of local regulations, insufficient scale, or other reasons.
However, we hope to identify additional currencies where we can begin paying
interest and we will announce those to you as soon as practical.
Currently most cash balances in our overnight sweep program
are swept into deposits at the London branch of Bankers Trust Company. We
reserve the right to utilize other branches or affiliates for the overnight
sweep program. In the event of such change, we will notify you in writing, which
may be through Global Custody Flash Notice.
As you know, overdrafts are not permitted in the normal course
of business in any currency. Should they occur in any currency, your account
will be charged a fee to settle transactions in advance of receipt of funds. If
the overdraft is not promptly cured (and in any event upon the expiration of 30
days) after the investment manager has been notified of the outstanding
overdraft, the account's home currency will be used to cure the overdraft and
the associated foreign exchange will be done by Bankers Trust at market rates.
(Other currencies may be utilized to the extent the home currency is
insufficient.) Investment managers that have not cured overdrafts within such
period will be deemed to have directed such foreign exchange transaction.
Accounts subject to ERISA will be deemed to have engaged in the transaction
under the authority of the class exemptions available to qualified professional
asset managers and in-house investment managers. To the extent that the
overdraft is less than the U.S. dollar equivalent of $50,000, Bankers Trust's
foreign exchange desk will bundle the transaction with other small amounts for
other clients.
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SCHEDULE A
CASH MANAGEMENT PROGRAM - GLOBAL CUSTODY
Overnight Uninvested Cash Balances
(* - Denotes currencies in sweep program)
CURRENCIES RATES
---------- -----
Argentine Peso Base Rate less 150
Australian Dollar* Base Rate less 130
British Pound Sterling* Base Rate less 215
Canadian Dollar* Base Rate less 175
Czech Koruna Base Rate less 75
Danish Krone* Base Rate less 250
EMU Euro* Base Rate less 175
Greek Drachma Base Rate less 150
Hong Kong Dollar* Base Rate less 250
Hungarian Forint Base Rate less 0
Indonesian Rupiah Base Rate less 200
Israeli Shekel Base Rate less 0
Japanese Yen Base Rate less 75
Jordanian Dinar Base Rate less 200
Korean Won Base Rate less 0
Malaysian Ringgit 1 Base Rate less 200
Mexican Peso Base Rate less 200
New Taiwan Dollar Base Rate less 0
New Zealand Dollar Base Rate less 100
Norwegian Krone* Base Rate less 175
Philippine Peso Base Rate less 150
Polish Zloty Base Rate less 0
Singapore Dollar Base Rate less 200
Slovak Koruna Base Rate less 150
South African Rand* Base Rate less 250
Swedish Krona* Base Rate less 250
Swiss Franc* Base Rate less 100
Thai Baht Base Rate less 200
Turkish Lira Base Rate less 200
U.S. Dollar* Effective Fed Funds less 100 2
We reserve the right, in our sole discretion, to adjust the base rates and
benchmark rates used and the spreads charged at any time and for any reason. We
will notify you periodically in writing of changes in spreads and updates to the
cash management program. These program updates also will be available through
Global Custody Flash Notices.
1 As a result of the new rules recently introduced by local Malaysia regulators,
we have suspended paying interest on Ringgit balances. Should the situation
change, we will notify you via Flash Notice.
2 Not applicable if U.S. Dollars are swept to a short-term investment fund.