THE ROXBURY LARGE CAP GROWTH FUND
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PROSPECTUS DATED MARCH 6, 2000
This prospectus contains important information about the 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.
Like all mutual fund shares, these securities have not been approved or
disapproved by the Securities and Exchange Commission nor has the Securities and
Exchange Commission determined whether this prospectus is accurate or complete.
Anyone who tells you otherwise is committing a criminal offense.
INFORMATION ABOUT THE ADVISER'S PRIOR PERFORMANCE APPEARS ON PAGE 6.
Presently Class A shares are being offered only to certain persons eligible to
purchase Class A shares at Net Asset Value. Class B and Class C shares are not
currently being offered.
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TABLE OF CONTENTS
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A LOOK AT THE GOALS, STRATEGIES, PORTFOLIO DESCRIPTION
RISKS AND EXPENSES OF THE Summary..........................................................3
FUND. Fees and Expenses................................................4
Adviser Prior Performance........................................6
Investment Objective.............................................7
Primary Investment Strategies....................................8
Additional Risk Information......................................9
DETAILS ABOUT THE SERVICE MANAGEMENT OF THE FUND
PROVIDERS. Investment Adviser..............................................10
Portfolio Manager...............................................11
Service Providers...............................................11
POLICIES AND INSTRUCTIONS FOR SHAREHOLDER INFORMATION
OPENING, MAINTAINING AND How Share Price is Calculated...................................13
CLOSING AN ACCOUNT IN THE Selecting the Correct Class of Shares...........................13
FUND. Sales Charges...................................................13
Sales Charge Reductions and Waivers.............................16
Purchase of Shares..............................................17
Redemption of Shares............................................18
Distributions...................................................18
Taxes...........................................................19
DETAILS ON DISTRIBUTION PLANS, DISTRIBUTION AND SERVICE ARRANGEMENTS
DISTRIBUTION AND SERVICE FEES Rule 12b-1 Fees.................................................20
AND THE FUND'S MASTER/FEEDER Shareholder Service Fees........................................21
ARRANGEMENT. Master/Feeder Structure.........................................21
FOR MORE INFORMATION....................................back cover
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For information about key terms and concepts, look for our "PLAIN TALK"
explanations.
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THE ROXBURY LARGE CAP GROWTH FUND
PORTFOLIO DESCRIPTION
PLAIN TALK
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WHAT IS A MUTUAL FUND?
A mutual fund pools shareholders' money and, using a professional
investment manager, invests in securities like stocks and bonds.
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SUMMARY
PLAIN TALK
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WHAT DOES "CAP" MEAN?
Cap or the market capitalization of a company means the value of all of
the shares of the company's common stock in the stock market.
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Investment Objective (BULLET) The ROXBURY LARGE CAP GROWTH FUND seeks superior
long-term growth of capital.
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Investment Focus (BULLET) Equity securities (generally common stocks)
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Share Price Volatility (BULLET) Moderate to high
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Principal Investment The Fund invests in a diversified portfolio of
Strategy equity securities (generally commonstocks) of
U.S. corporations with a market cap of $5
billion or more that have above average earnings
potential, compared to the securities market as
a whole.
(BULLET) The Fund operates as a "feeder fund" which
means that the Fund does not buy individual
securities directly. Instead, it invests in a
corresponding mutual fund or "master fund,"
which in turn purchases the actual stock
holdings. The Fund's master fund is the Large
Cap Growth Series (the "Series") of WT
Investment Trust I ("the Master").
(BULLET) In a master/feeder arrangement, a feeder fund,
like the Fund, takes your investment dollars and
transfers them to an even larger pool, like the
Series, for greater efficiency. The Fund and the
Series have the same investment objective,
policies and limitations. When this prospectus
refers to investments of the Fund it is actually
referring to the investments of the
Series.
(BULLET) The adviser purchases stocks it believes exhibit
consistent, above-average earnings growth,
superior quality and attractive risk/reward
characteristics. The adviser analyzes the stocks
of over 2000 companies using a bottom-up
approach to search for high quality companies
which are growing at about double the market's
average rate. The adviser generally sells stocks
when the risk/rewards of a stock turn negative,
when company fundamentals deteriorate, or when a
stock under performs the market or its peer
group.
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Principal Risks The Fund is subject to the following risks summarized
below which are further described under "Additional Risk
Information."
(BULLET) There is no guarantee that the stock market or
the stocks that the Fund buys will always
increase in value. Therefore, it is possible to
lose money by investing in the Fund.
(BULLET) The Fund's share price will fluctuate in
response to changes in the market value of the
Fund's investments. Market value will change as
a result of 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 Fund will depend on how
successfully the adviser pursues its investment
strategy.
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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 growth
returns.
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FEES AND EXPENSES
PLAIN TALK
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WHAT ARE FUND EXPENSES?
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 its average
annual net assets. Sales charges are deducted once when you make or
redeem your investment. Expenses are deducted from Fund assets.
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The table below describes the fees and expenses that you may pay if you buy and
hold shares of the Fund. The Fund offers different share classes to allow you to
maximize your potential return depending on your and your financial consultant's
current expectations for your investment in the Fund.
PLAIN TALK
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WHAT ARE SALES CHARGES?
The sales charge or load that you pay is a separate fee based on how
much you invest. This fee compensates your financial consultant for
providing you with investment assistance and on-going service as well
as handling all the paperwork associated with your investment and any
subsequent adjustments you make. For your convenience, the Fund is
offered in several classes, giving you several ways to pay this fee.
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SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR
INVESTMENT) CLASS A CLASS B(a) CLASS C
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<S> <C> <C> <C>
Maximum sales charge (load) imposed on 5.50%(b) None None
purchases (as a percentage of offering price)
Maximum deferred sales charge None(c) 5.00%(d) 1.00%(e)
Maximum sales charge imposed on None None None
reinvested dividends (and other
distributions)
Redemption fee(f) None None None
<FN>
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(a) Class B shares convert to Class A shares automatically at the beginning of
the seventh year after purchase. Investors seeking to purchase Class B
shares in amounts that exceed $250,000 should discuss with their financial
consultant whether the purchase of another class would be more appropriate.
(b) Reduced for purchases of $50,000 and more.
(c) Class A shares are not subject to a contingent deferred sales charge (a
"CDSC"); except certain purchases 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) 5.00% during the first year, 4.00% during the second year, 3.00% during the
third year; 2.00% during the fourth year, 2.00% during the fifth year,
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 only if redeemed within the
first 18 months after purchase.
(f) If you effect a redemption via wire transfer, you may be required to pay
fees, including a $10 wire fee and other fees, that will be directly
deducted from your redemption proceeds. If you request redemption checks to
be sent by overnight mail, you may be required to pay a $10 fee that will
be directly deducted from your redemption proceeds.
</FN>
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ANNUAL FUND OPERATING EXPENSES 1
(EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
CLASS A CLASS B CLASS C
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Management fees 0.55% 0.55% 0.55%
Distribution (12b-1) fee None 0.75% 0.75%
Shareholder Service fee 0.25% 0.25% 0.25%
Other expenses 2 0.55% 0.55% 0.55%
Total Annual Operating Expenses 3 1.35% 2.10% 2.10%
Cost Reduction (0.05%) (0.05%) (0.05%)
TOTAL NET EXPENSES 3 1.30% 2.05% 2.05%
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1 The table above and the example below each reflect the aggregate annual
operating expenses of the Fund and the Series.
2 "Other expenses" are based on estimated amounts for the current fiscal year.
3 The adviser has agreed to reduce its fees and/or reimburse expenses to limit
the total annual operating expenses to 1.30% for Class A Shares, 2.05% for each
of Class B shares and Class C shares. This arrangement 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 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 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:
1 YEAR 3 YEARS
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Class A 1 $675 $939
Class B $208 $643
Class B (assuming complete redemption at the end of
the 1 year or 3 year period) 2 $768 $1,043
Class C $208 $643
Class C (assuming complete redemption at end of $308 $643
period) 2
1 Assumes deduction at time of purchase of maximum sales charge.
2 Assumes deduction at redemption of maximum deferred sales charge.
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THE ABOVE EXAMPLE IS FOR COMPARISON PURPOSES ONLY AND IS NOT A REPRESENTATION OF
THE FUND'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 ten year
period ended September 30, 1999, using the same investment approach specified
for the Fund under "Investment Objective" and "Primary Investment Strategies."
The results for the period October 1, 1989 through July 31, 1998 are the results
of Roxbury Capital Management Inc., the predecessor to Roxbury Capital
Management, LLC.
The Accounts constitute the portfolios managed by the adviser (and its
predecessor) that have an identical or substantially similar investment
objective or investment approach as the 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. The Series will be managed primarily for taxable investors. The
Accounts were 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 on the Fund by the Investment Company Act of
1940, or the Internal Revenue Code of 1986. 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 Fund or the return you might achieve
by investing in the Fund. You should not rely on the following performance data
as an indication of future performance of the adviser or of the Fund.
TOTAL RETURN OF ACCOUNTS
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3 Years
1 Year Ended 5 Years 10 Years
Average Annual Return for the Ended DEC. 31, Ended Ended
Periods Specified: DEC. 31, 1999 1999 DEC. 31, 1999 DEC. 31, 1999
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The Accounts (net of
expenses).......................... 57.66% 43.14% 34.87% 21.46%
S&P 500 Index...................... 21.03% 27.56% 28.55% 18.19%
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Please read the following important notes concerning the Accounts:
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1. The results for the Accounts reflect 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 (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
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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 adviser and does not pay any commissions or expenses. If an index
had expenses, its performance would be lower.
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SPECIAL NOTE CONCERNING ADVISER INVESTMENT RETURNS: You should note that
the Fund 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 reduced to reflect the deduction 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 Fund and the 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 Fund will achieve its investment objective.
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PRIMARY INVESTMENT STRATEGIES
PLAIN TALK
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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.
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The Fund invests its assets in the Series, which, under normal market
conditions, invests at least 65%, and typically more, of its total assets in the
following equity (or equity-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 Series' total assets, have a market capitalization of $5
billion or higher at the time of purchase;
(BULLET) securities convertible into the common stock of U.S. corporations
described above;
(BULLET) options on common stock or options on stock indexes.
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
its investments. 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 other growth styles.
The adviser's research team analyzes a broad universe of over 2,000 companies.
Industry specialists search for high-quality companies that are growing their
earnings 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 attributes or factors.
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 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
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fundamentals deteriorate, or the stock underperforms the market or its peer
group. The latter device is employed to minimize mistakes and protect capital.
The Fund's investments will emphasize large cap growth stocks, but also may
include medium cap stocks and special situations.
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 Fund 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 Fund will be unable to achieve
its investment objective. The Fund 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 Fund. Further information about investment risk is available in our
Statement of Additional Information:
(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) GROWTH-ORIENTED INVESTING RISK: The risk that an investment in a
growth-oriented portfolio may be more volatile than the rest of the
U.S. market as a whole.
(BULLET) DERIVATIVES RISK: Some of the Fund's investments may be referred to as
"derivatives" because their value depends on, or derives from, the
value of an underlying asset, reference
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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 Master's total assets may at any time
be committed or exposed to derivative strategies.
(BULLET) MASTER/FEEDER RISK: The master /feeder structure is relatively new and
complex. While this structure is designed to reduce costs, it may not
do so, and there may be operational or other complications. For
example, large-scale redemptions by other feeders of their shares of
the master fund could have adverse effects on a fund such as requiring
the liquidation of a substantial portion of the master fund's holdings
at a time when it could be disadvantageous to do so. Also, other
feeders of a master fund may have a greater ownership interest in the
master fund and, therefore, could have effective voting control over
the operation of the master fund.
(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.
MANAGEMENT OF THE FUND
The Board of Trustees 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 the Fund and its
shareholders. The Board of Trustees includes a member of the Roxbury Investment
Committee.
INVESTMENT ADVISER
PLAIN TALK
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WHAT IS AN ADVISER?
The 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.
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Roxbury Capital Management, LLC, 100 Wilshire Boulevard, Suite 600, Santa
Monica, California 90401, serves as the investment adviser for the Fund (by
managing the Series). 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 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.
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PORTFOLIO MANAGER
The day-to-day management of the Series is the responsibility of Roxbury's
Investment Committee. The Investment Committee meets regularly to make
investment decisions for the Fund and relies on Roxbury's research team.
SERVICE PROVIDERS
The following chart provides information on the Fund's primary service
providers.
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<TABLE>
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<S> <C> <C> <C>
Asset Shareholder
Management Services
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ADVISER TRANSFER AGENT
ROXBURY CAPITAL MANAGEMENT, LLC PFPC INC.
100 WILSHIRE BOULEVARD 400 BELLEVUE PARKWAY
SUITE 600 WILMINGTON, DE 19809
SANTA MONICA, CA 90401 SUITE 108
Handles shareholder services,
including recordkeeping and
statements, payment of
Manages the Fund's investment distribution and processing of
activities. buy and sell requests.
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---------------------------------
ROXBURY LARGE CAP
GROWTH FUND
Fund Asset
Operations Safe Keeping
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ADMINISTRATOR AND CUSTODIAN
ACCOUNTING AGENT WILMINGTON TRUST COMPANY
PFPC INC. RODNEY SQUARE NORTH
400 BELLEVUE PARKWAY 1100 NORTH MARKET STREET
WILMINGTON, DE 19809 WILMINGTON, DE 19890
Provides facilities, equipment and Holds the Fund's assets,
personnel to carry out settle all portfolio trades
administrative services related to and collect most of the
the Fund and calculates the Fund's valuation data required for
NAV and distributions. calculating the Fund's NAV per
share.
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Distibution
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DISTRIBUTION
PROVIDENT DISTRIBUTORS, INC.
FOUR FALLS CORPORATE CENTER
WEST CONSHOHOCKEN, PA 19428
Distributes the Fund's shares.
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SHAREHOLDER INFORMATION
HOW SHARE PRICE IS CALCULATED
The Fund 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 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 determines the Fund'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. The Fund is subject to the risk that it has valued
certain of its stocks at a higher price than it can sell them.
PLAIN TALK
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WHAT IS THE NET ASSET VALUE or "NAV"?
NAV = ASSETS - LIABILITIES
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Outstanding Shares
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PFPC determines the NAV per share of the 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 the Fund, deducting
its liabilities and dividing the balance by the number of outstanding shares in
the Fund.
Shares will not be priced on those days the Fund 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
Presidents' 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 Fund. Each
class has its own cost structure, allowing you to choose the one that best meets
your requirements and current expectations. Your financial consultant can help
you decide which class is best for you. For estimated expenses of each class,
see the table under "Fees and Expenses" earlier in this prospectus.
CLASS A SHARES--INITIAL SALES CHARGE
If you purchase Class A shares, you will incur a sales charge at the time of
purchase (a "front-end load") based on the dollar amount of your purchase. The
maximum initial sales charge is 5.50%, which is reduced for purchases of $50,000
and more. Sales charges also may be reduced by using
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<PAGE>
the accumulation privilege described under "Sales Charge Reductions and
Waivers." Class A shares are subject to an ongoing shareholder service fee of
0.25% of the Fund's average net assets 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 some purchases 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 also will be issued upon conversion of
Class B shares, as described below under "Class B Shares." The minimum initial
investment in Class A shares is $2,000.
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 Fund's shares or to compensate the
distributor for its efforts to sell the shares of the Fund.
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YOUR INVESTMENT AS A PERCENTAGE OF AS A PERCENTAGE OF
OFFERING PRICE YOUR INVESTMENT
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$50,000 and less 5.50% 5.82%
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$50,000 up to $150,000 5.00% 5.26%
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$150,000 up to $250,000 4.50% 4.71%
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$250,000 up to $500,000 3.50% 3.63%
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$500,000 up to $1,000,000 3.00% 3.09%
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Over $1,000,000 0.00% 0.00%*
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CLASS B SHARES--DEFERRED SALES CHARGE
If you purchase Class B shares, you will not incur a sales charge at the time of
purchase. However, Class B shares are subject to an ongoing Rule 12b-1
distribution fee of 0.75% of average net assets and an ongoing shareholder
service fee of 0.25% of average net assets. Class B shares are subject to a CDSC
if you redeem them prior to the seventh year after purchase. At the beginning of
the seventh year after purchase, Class B shares will automatically convert into
Class A shares of the Fund, which are subject to the shareholder service 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. The minimum initial investment in
Class B shares is $2,000.
CLASS C SHARES--PAY AS YOU GO
If you purchase Class C shares, you do not incur a sales charge at the time of
purchase. However, Class C shares are subject to an ongoing Rule 12b-1
distribution fee of 0.75% of average net assets and an ongoing shareholder
service fee of 0.25% of average net assets. Class C shares also are subject to a
1.00% CDSC if you redeem them within 18 months of purchase. Although Class C
shares are subject to a CDSC for only 18 months (as compared to six years for
Class B), Class C shares have no conversion feature. Accordingly, if you
purchase Class C
-14-
<PAGE>
shares, those shares will be subject to the 0.75% distribution fee and the 0.25%
shareholder service fee for as long as you own your Class C shares. The minimum
initial investment in Class C shares is $2,000.
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 5.00%
---------------------------------------------------------------
2nd year 4.00%
---------------------------------------------------------------
3rd year 3.00%
---------------------------------------------------------------
4th year 2.00%
---------------------------------------------------------------
5th year 2.00%
---------------------------------------------------------------
6th year 1.00%
---------------------------------------------------------------
After the 6th year None
---------------------------------------------------------------
Class B shares will be automatically converted to Class A shares at the
beginning of the seventh year after purchase.
(BULLET) Class C Shares
If you redeem Class C shares within 18 months of purchase, you will be
charged a CDSC of 1.00%. There is no CDSC imposed on Class C shares acquired
through reinvestment of dividends or capital gains.
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.
OTHER CLASSES OF SHARES
The Fund also offers other classes of shares for special purposes. These other
classes are not available to the general public, although they may appear in
newspaper listings. When reviewing newspaper listings, please remember that the
class or classes listed may not be the class you own and therefore the net asset
value(s) listed may be different from the net asset value of your shares.
-15-
<PAGE>
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 our Statement
of Additional Information for terms and conditions.
To use these privileges, discuss your eligibility with your financial
consultant.
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_
(BULLET) Participation in certain fee-based programs
To use any of these waivers, contact your financial consultant.
REINSTATEMENT PRIVILEGE. If you sell shares of the Fund, you may invest some or
all of the proceeds in the Fund 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.
NET ASSET VALUE PURCHASES. Class A shares may be sold at net asset value, with
only a $2,000 minimum initial investment, to:
(BULLET) Clients of financial consultants 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;
-16-
<PAGE>
(BULLET) Trustees or other fiduciaries purchasing shares for certain retirement
plans of organizations with 50 or more eligible employees and
employer-sponsored benefit plans in connection with purchases of Fund
shares made as a result of participant-directed exchanges between
options in such a plan;
(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) "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 Fund shares;
(BULLET) Current or retired trustees, officers and employees of the Fund, 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;
and
(BULLET) Such other persons as are determined by the adviser or distributor to
have acquired shares under circumstances where the Fund has not
incurred any sales expense.
PURCHASE OF SHARES
Investors may purchase shares of the Fund through financial intermediaries such
as financial consultants, securities brokers, dealers or benefit plan
administrators. Investors should contact their financial intermediary directly
for appropriate purchase instructions, as well as for information pertaining to
accounts and any servicing or transaction fees that may be charged. Some
financial intermediaries may appoint subagents.
The minimum initial investment in Class A, Class B or Class C shares is $2,000
(including IRAs) and $100 for subsequent investments. The adviser or the
distributor, at their discretion, may waive these minimums. See our Statement of
Additional Information for further details.
See "Sales Charge Reductions and Waivers" for ways to make your initial
investment go farther.
Shares are sold at a public offering price based on the net asset value for the
class of shares selected. If your purchase order is received by the Transfer
Agent before the close of regular trading on the Exchange on any Business Day,
you will pay the next public offering price 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 Fund determines that accepting the
order would not be in the best interest of the Fund or its shareholders.
-17-
<PAGE>
It is the responsibility of the financial intermediary 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), call the Transfer Agent at (800)497-2960,
or see our Statement of Additional Information.
For information on 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
-----------------------------------------------------------------------
If you purchased your shares through a financial intermediary, you should
contact the intermediary for information relating to redemptions. The Fund's
name and your account number should accompany any redemption requests.
SMALL ACCOUNTS: If the value of your Fund accounts falls below $500, the Fund
may ask you to increase your balance. If the account balance is still below $500
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 $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 our 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 Fund are declared and paid
annually to you. Any net capital gain realized by the Fund will be distributed
annually.
Distributions are payable to shareholders of record at the time 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 distributions in cash.
-18-
<PAGE>
TAXES FEDERAL INCOME TAX: As long as the 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 the Fund 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 Fund invests
primarily in taxable securities. The 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 the Fund, whether reinvested in Fund shares or taken
as cash, are generally taxable to you as ordinary income. The Fund's
distributions of net capital gain, whether received in cash or reinvested in
additional Fund 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
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. The Fund
anticipates the distribution of net capital gain.
It is a taxable event for you if you sell or exchange shares of the 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 the 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 AND SERVICE ARRANGEMENTS
Provident Distributors, Inc. ("PDI") manages the Fund's distribution efforts and
enters into dealer agreements with financial consultants to sell fund shares.
PLAIN TALK
----------------------------------------------------------------------
HOW CAN YOUR FINANCIAL CONSULTANT HELP YOU?
Your financial consultant is thoroughly familiar with the Fund and
with Roxbury Capital Management. He or she can answer any questions
you have now, or in the future, about how the Fund operates, which
class of shares is most appropriate for you and how the Roxbury
investment style works and has performed for other investors. Your
financial consultant is a valuable and knowledgeable resource.
----------------------------------------------------------------------
-19-
<PAGE>
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 Fund has adopted a distribution plan under Rule 12b-1 that allows the Fund
to pay a fee to PDI for facilitating the sale and distribution of its shares.
Because these fees are paid out of the Fund's assets on an ongoing basis, over
time these fees indirectly will increase the cost of your investment and may
cost you more than paying other types of sales charges.
Rule 12b-1 permits a fund directly or indirectly to pay expenses associated with
the distribution of its shares and the servicing of its shareholders 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 Fund has
entered into, a Distribution Plan with PDI, for the Class B and Class C shares.
Under the Distribution Plan, the Fund 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 PDI may use the distribution fees received
from a class of shares to pay for the distribution and shareholder servicing
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 Fund to
prospective investors in that class; (iii) costs involved in preparing, printing
and distributing sales literature pertaining to the Fund and that class; and
(iv) costs involved in obtaining whatever information, analysis and reports with
respect to marketing and promotional activities that the Fund 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 you 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 to
provide services to shareholders of the Class B and Class C shares attributable
to those broker-dealers.
-20-
<PAGE>
SHAREHOLDER SERVICE FEES
The Board of Trustees has adopted a shareholder service plan authorizing the
Fund to pay service providers an annual fee not exceeding 0.25% of the Fund's
average daily net assets of each class of shares, to compensate service
providers who maintain a service relationship. Service activities provided under
this plan include (a) establishing and maintaining shareholder accounts and
records, (b) answering shareholder inquiries, (c) assisting in share purchases
and redemptions, (d) providing statements and reports to shareholders, and (e)
providing other related services requested by shareholders.
MASTER /FEEDER STRUCTURE
Other institutional investors, including other mutual funds, may invest in the
Series. The master/feeder structure enables various institutional investors,
including the 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 the Series, 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
Fund could switch to another master fund or decide to manage its assets itself.
The Fund is not currently contemplating such a move.
-21-
<PAGE>
FOR MORE INFORMATION
FOR INVESTORS WHO WANT MORE INFORMATION ON THE FUND, THE FOLLOWING DOCUMENTS ARE
AVAILABLE FREE UPON REQUEST:
STATEMENT OF ADDITIONAL INFORMATION (SAI): Provides a complete technical and
legal description of the Fund'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 Fund may be
obtained without charge by contacting:
Roxbury Large Cap Growth Fund
c/o PFPC Inc.
400 Bellevue Parkway
Suite 108
Wilmington, Delaware 19809
(800) 497-2960
8:30 a.m. to 5:00 p.m. Eastern time
Information about the Fund (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 (800) 497-2960.
The investment company registration number is 811-08648.
<PAGE>
THE ROXBURY LARGE CAP GROWTH FUND
400 Bellevue Parkway
Wilmington, Delaware 19809
- --------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
MARCH 6, 2000
- --------------------------------------------------------------------------------
This Statement of Additional Information is not a prospectus and should be read
in conjunction with the Fund's current prospectus, dated March 6, 2000, as
amended from time to time. A copy of the current prospectus may be obtained
without charge, by writing to Provident Distributors, Inc. ("PDI"), Four Falls
Corporate Center, West Conshohocken, PA 19428, and from certain financial
professionals such as broker-dealers that have entered into servicing agreements
with PDI or by calling (800) 497-2960.
<PAGE>
TABLE OF CONTENTS
GENERAL INFORMATION 3
INVESTMENT POLICIES 3
INVESTMENT LIMITATIONS 4
TRUSTEES AND OFFICERS 6
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES 8
INVESTMENT ADVISORY AND OTHER SERVICES 8
DISTRIBUTION OF SHARES AND RULE 12B-1 PLAN 9
BROKERAGE ALLOCATION AND OTHER PRACTICES 10
CAPITAL STOCK AND OTHER SECURITIES 11
PURCHASE, REDEMPTION AND PRICING OF SHARES 11
DIVIDENDS 14
TAXATION OF THE FUND 14
CALCULATION OF PERFORMANCE INFORMATION 16
APPENDIX A - OPTIONS, FUTURES AND FORWARD CURRENCY CONTRACT STRATEGIES A-1
APPENDIX B - DESCRIPTION OF RATINGS B-1
2
<PAGE>
GENERAL INFORMATION
The Roxbury Large Cap Growth Fund (the "Fund") is part of a mutual fund group
called WT Mutual Fund (the "Trust"). The Trust is a diversified, open-end
management investment company organized as a Delaware business trust on June 1,
1994. The name of the Trust was changed from Kiewit Mutual Fund to WT Mutual
Fund on October 20, 1998.
The Fund issues three classes of shares, Class A, Class B, and Class C. The Fund
operates as a feeder fund, which means that it does not buy individual
securities directly. Instead, it invests in a corresponding master fund with the
same investment objective, policies and limitations. The Fund's master fund is
the Large Cap Growth Series ("the "Series") of WT Investment Trust I ("the
Master").
INVESTMENT POLICIES
The following information supplements the information concerning the Fund's
investment objective, policies and limitations found in the prospectus. Unless
otherwise indicated, it applies to the Fund through its investment in the
Series. Although the Fund invests principally in common stocks, it may make
other kinds of investments from time to time.
CASH MANAGEMENT. The Fund may invest in cash and cash equivalents including
high-quality money market instruments and money market funds in order to manage
cash flow in the Fund. Certain of these instruments are described below.
(BULLET) MONEY MARKET FUNDS. The Fund may invest in the securities of other
money market mutual funds, within the limits prescribed by the
Investment Company Act of 1940, as amended ("1940 Act").
(BULLET) U.S. GOVERNMENT OBLIGATIONS. The Fund may invest in debt
securities issued or guaranteed by the U.S. Government, its
agencies or instrumentalities.
(BULLET) COMMERCIAL PAPER. The Fund 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 Fund 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 to be of comparable quality.
(BULLET) BANK OBLIGATIONS. The Fund 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 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 Fund 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 such as Moody's or S&P, or if unrated, are
determined by the adviser to be of comparable quality. (See Appendix B
"Description of Ratings"). Should the rating of a security be downgraded
subsequent to the Fund's purchase of the security, the adviser, as applicable,
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.
3
<PAGE>
HEDGING STRATEGIES. The Fund may engage in certain hedging strategies that
involve options and futures. These hedging strategies are described in detail in
Appendix A.
ILLIQUID SECURITIES. The Fund 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 adviser to the Board of Trustees.
OPTIONS ON SECURITIES AND SECURITIES INDEXES. The 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 percentage 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 Fund 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 the
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 the Fund'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 ("1933 Act")
or an exemption from registration. 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 Fund 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 Fund exceeds one-third of the
value of the Fund's total assets taken at fair market value. The 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, the 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.
INVESTMENT LIMITATIONS
Except as otherwise provided, the Fund and the 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
4
<PAGE>
lessor of (i) 67% or more of the shares of the 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
the 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 the Fund's assets or redemptions
of shares will not be considered a violation of the limitation.
The 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; (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
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 debt obligations issued or guaranteed by the
U.S. Government, its agencies or instrumentalities;
3. borrow money, provided that the Fund may borrow money for temporary or
emergency purposes, and then in an aggregate amount not in excess of 10% of the
Fund'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 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, including real estate
investment trusts;
7. purchase or sell physical commodities, provided that the Fund 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 FUND FROM
INVESTING ALL OR SUBSTANTIALLY ALL OF ITS ASSETS IN THE SHARES OF ANOTHER
REGISTERED OPEN-END INVESTMENT COMPANY SIMILAR TO ITS SERIES.
The following non-fundamental policies apply to the Fund and may be changed by
the Board of Trustees without shareholder approval. The Fund will not:
1. make short sales of securities except as described in the prospectus;
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.
5
<PAGE>
TRUSTEES AND OFFICERS
The Board of Trustees supervises the Fund's activities and reviews contractual
arrangements with the Trust's service providers. The Trustees and officers are
listed below. All persons named as Trustees and officers also serve in a similar
capacity for the Master. An asterisk (*) indicates those Trustees who are
"interested persons" of the Trust.
<TABLE>
<CAPTION>
- ----------------------------------- -------------- ------------------------------------------------------------------
POSITION(S)
HELD WITH
NAME, ADDRESS AND DATE OF BIRTH THE FUND PRINCIPAL OCCUPATION(S) DURING THE PAST FIVE YEARS
- ----------------------------------- -------------- ------------------------------------------------------------------
<S> <C> <C>
ROBERT ARNOLD Trustee Mr. Arnold founded, and currently co-manages, R. H. Arnold & Co.,
152 W. 57th Street, 44th Floor Inc., an investment banking company. Prior to forming R. H.
New York, NY 10019 Arnold & Co., Inc. in 1989, Mr. Arnold was Executive Vice
Date of Birth: 3/44 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 Officer of Wilmington
Rodney Square North President Trust Company since February 1996 and a Director of Rodney Square
1100 N. Market Street Management Corporation since 1996. He was Chairman and Director
Wilmington, DE 19890 of PNC Equity Advisors Company, and President and Chief
Date of Birth: 2/49 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 a Director of Provident Capital Management from 1993
to 1996.
- ----------------------------------- -------------- ------------------------------------------------------------------
NICHOLAS A. GIORDANO Trustee Mr. Giordano served as interim President of LaSalle University
1755 Governor's Way from July, 1998 through June, 1999 and was a consultant for
Blue Bell, PA 19422 financial 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 from 1968 to 1971. A
certified public accountant, he began his career at Price
Waterhouse in 1965.
- ----------------------------------- -------------- ------------------------------------------------------------------
JOHN J. QUINDLEN Trustee Mr. Quindlen retired as Senior Vice President - Finance of E.I.
313 Southwinds duPont de Nemours & Company, Inc. (diversified chemicals), a
1250 W. Southwinds Blvd. position held from 1984 to 1993. He served as Chief Financial
Vero Beach, FL 32963 Officer of E.I. duPont de Nemours & Company from 1984 through
Date of Birth: 5/32 June 1993. He also serves as a Director of St. Joe Paper Co.,
and as a Trustee of Kalmar Pooled Investment Trust.
- ----------------------------------- -------------- ------------------------------------------------------------------
LOUIS KLEIN JR. Trustee Mr. Klein has been a self-employed financial consultant since
80 Butternut Lane 1991. He has served as Trustee of Manville Personal Injury
Stamford, CT 06903 Settlement Trust since 1991.
Date of Birth: 5/35
- ----------------------------------- -------------- ------------------------------------------------------------------
CLEMENT C. MOORE, II Trustee Mr. Moore has been the Managing Partner, Mariemont Holdings,
5804 Quaker Neck Road LLC, a commercial real estate holding and development company
Chestertown, MD 21620 since 1980.
Date of Birth: 9/44
- ----------------------------------- -------------- -------------------------------------------------------------------
ERIC BRUCKER Trustee Mr. Brucker has been the Dean of the College of Business, Public
University of Maine Policy and Health at the University of Maine since September
Orono, ME 04473 1998. Prior to 1998, he was Dean of the School of Management at
Date of Birth: 12/41 the University of Michigan.
- ----------------------------------- -------------- -------------------------------------------------------------------
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------- -------------- ------------------------------------------------------------------
POSITION(S)
HELD WITH
NAME, ADDRESS AND DATE OF BIRTH THE FUND PRINCIPAL OCCUPATION(S) DURING THE PAST FIVE YEARS
- ----------------------------------- -------------- ------------------------------------------------------------------
<S> <C> <C>
WILLIAM P. RICHARDS* Trustee Mr. Richards is a Managing Director and Senior Portfolio Manager
100 Wilshire Boulevard with Roxbury Capital Management LLC. He works with foundation and
Suite 600 endowment accounts and leads the firm's mutual fund group.
Santa Monica, CA 90401 Previously, he was a principal at Roger Engemann & Associates,
Date of Birth: 11/36 and Van Deventer & Hoch. Prior to that, he was with Booz, Allen
and Hamilton.
- ----------------------------------- -------------- -------------------------------------------------------------------
ERIC K. CHEUNG Vice Mr. Cheung has been a Vice President at Wilmington Trust Company
Rodney Square North President since 1986. From 1978 to 1986, he was the Fund Manager for fixed
1100 N. Market Street income assets of the Meritor Financial Group. Since 1991, Mr.
Wilmington, DE 19890 Cheung has been the Division Manager, Fixed Income Products at
Date of Birth: 12/54 Wilmington Trust Company.
- ----------------------------------- -------------- -------------------------------------------------------------------
JOSEPH M. FAHEY, JR. Vice Mr. Fahey has been a Vice President with Rodney Square Management
Rodney Square North President Corporation ("RSMC") since 1992. He has been a Director and
1100 North Market Street Secretary of RSMC since 1986 and was an Assistant Vice President
Wilmington, DE 19809 from 1988 to 1992.
Date of Birth: 1/57
- ----------------------------------- -------------- -------------------------------------------------------------------
EUGENE A. TRAINOR, III Vice Mr. Trainor has been an Executive Vice President and Chief
520 Madison Avenue President Operating Officer for Cramer, Rosenthal McGlynn, Inc. since
New York, NY 10022 December 1998. Prior to 1998, he was Senior Vice President and
Date of Birth: 12/63 CFO from 1994 to 1998. From 1990 to 1994, he was CFO of Grotech
Capital Group, a venture capital company.
- ----------------------------------- -------------- -------------------------------------------------------------------
PAT COLLETTI Vice Mr. Colletti has been 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 1999, he was Controller for the Reserve Funds from 1986.
Date of Birth: 11/58
- ----------------------------------- -------------- -------------------------------------------------------------------
GARY M. GARDNER Secretary Mr. Gardner has been a Senior Vice President of PFPC Inc. since
400 Bellevue Parkway January 1994. Mr. Gardner provided legal and regulatory advice
Wilmington, DE 19809 to mutual funds and their management for more than twenty years
Date of Birth: 2/51 at Federated Investors, Inc., SunAmerica Asset Management Corp.
and The Boston Company, Inc.
- ----------------------------------- -------------- -------------------------------------------------------------------
</TABLE>
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 the Fund.
The following table shows the fees paid during the fiscal year ended June 30,
1999 to the Independent Trustees for their service to WT Mutual Fund and the
total compensation paid to the Trustees by the WT Fund Complex, which consists
of the Trust and the Master.
TRUSTEES' FEES FOR THE FISCAL YEAR ENDED JUNE 30, 1999
COMPENSATION FROM THE TOTAL COMPENSATION
INDEPENDENT TRUSTEE FUND FROM THE WT FUND COMPLEX
- ------------------- --------------------- ------------------------
Robert Arnold $10,500 $21,000
Nicholas Giordano $7,500 $15,000
Lawrence Thomas(1) $10,500 $21,000
(1) Mr. Thomas resigned as a Trustee effective August 12, 1999.
7
<PAGE>
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As of the date of this Statement of Additional Information, the Fund had not yet
commenced operations.
INVESTMENT ADVISORY AND OTHER SERVICES
ADVISORY SERVICES
Roxbury Capital Management, LLC serves as the investment adviser to the Series.
The 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.
Roxbury has agreed to waive a portion of its advisory fee or reimburse expenses
to the extent total operating expenses, as a percentage of average net assets,
exceed 1.30% for the Fund's Class A shares, and 2.05% for Class B and Class C
shares. This undertaking will remain in place until the Board of Trustees
approves its termination.
Under the terms of the advisory agreement, the adviser agrees to: (a) direct the
investments of the 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) 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, the
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. The 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-adviser 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 Trustees of the Trust who are affiliated with
the adviser and the salaries of all personnel of the adviser performing services
for the 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 the Trust and the Master. These services include
preparing shareholder reports, providing statistical and research data,
assisting the adviser 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 Trust. The accounting
services performed by PFPC include determining the net asset value per share of
the Fund and maintaining records relating to the Fund's securities transactions.
The Administration and Accounting Services Agreements provide 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 Trust or the Master, 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.
8
<PAGE>
ADDITIONAL SERVICE PROVIDERS INDEPENDENT AUDITORS. Ernst & Young, LLP, serves as
the independent auditor to the Trust and the Master, providing services which
include (1) auditing the annual financial statements for the Fund and the
Series, (2) assistance and consultation in connection with SEC filings and (3)
preparation of the annual federal income tax returns filed on behalf of the
Fund.
LEGAL COUNSEL. Pepper Hamilton LLP, 3000 Two Logan Square, 18th and Arch
Streets, Philadelphia, PA 19103, serves as counsel to the Trust and the Master.
CUSTODIAN. Wilmington Trust Company, 1100 N. Market Street, Wilmington, DE
19890, serves as the custodian of the Trust's assets.
TRANSFER AGENT. PFPC Inc. ("PFPC"), 400 Bellevue Parkway, Wilmington, DE
19809-0001, serves as the Transfer Agent and Dividend Paying Agent.
DISTRIBUTION OF SHARES AND RULE 12B-1 PLAN
Provident Distributors, Inc., ("PDI") Four Falls Corporate Center, West
Conshohocken, PA 19428, serves as the underwriter of the Fund's shares pursuant
to a Distribution Agreement with the Trust. Pursuant to the terms of the
Distribution Agreement, PDI is granted the right to sell the shares of the Fund
as agent for the Fund. Shares of the Fund 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 Fund 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 of the Fund and any other literature and advertising used in
connection with the offering, out of the compensation it receives pursuant to
the Fund's Plan of Distribution adopted pursuant to Rule 12b-1 under the 1940
Act (the "12b-1 Plan"). PDI receives no underwriting commissions or Rule 12b-1
fees in connection with the sale of the Fund's Class A 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 Fund or its shareholders for losses arising
in connection with the sale of Fund shares.
The Distribution Agreement became effective as of November 1, 1999 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 Fund (i) (by vote of a majority of the Trustees of
the Trust who are not interested persons of the Trust 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
Trust.
PDI will be compensated for distribution services according to the Class B and
Class C 12b-1 Plans, which became effective on November 1, 1999, regardless of
PDI's expenses. The Class B and Class C 12b-1 Plans provide 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.
When purchasing Class A shares, a sales charge will be incurred at the time of
purchase (a "front-end load") based on the dollar amount of the purchase. The
maximum initial sales charge is 5.50%, which is reduced for purchases of
9
<PAGE>
$50,000 and more. Sales charges also may be reduced by using the accumulation
privilege described under "Sales Charge Reductions and Waiver". 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.
Part of the front-end sales charge is paid directly to the selling broker-dealer
(the "dealer reallowance"). The remainder is retained by PDI and may be used
either to promote the sale of the Fund's shares or to compensate PDI for its
efforts to sell the shares of the Fund.
<TABLE>
<CAPTION>
- --------------------------------- --------------------------- ---------------------------- --------------------------
DEALER REALLOWANCE
YOUR INVESTMENT AS A PERCENTAGE OF AS A PERCENTAGE OF YOUR AS A PERCENTAGE OF
OFFERING PRICE INVESTMENT OFFERING PRICE
- --------------------------------- --------------------------- ---------------------------- --------------------------
<S> <C> <C> <C>
$50,000 and less 5.50% 5.82% 4.00%
- --------------------------------- --------------------------- ---------------------------- --------------------------
$50,000 up to $150,000 5.00% 5.26% 3.50%
- --------------------------------- --------------------------- ---------------------------- --------------------------
$150,000 up to $250,000 4.50% 4.71% 3.00%
- --------------------------------- --------------------------- ---------------------------- --------------------------
$250,000 up to $500,000 3.50% 3.63% 2.25%
- --------------------------------- --------------------------- ---------------------------- --------------------------
$500,000 up to $1,000,000 3.00% 3.09% 1.74%
- --------------------------------- --------------------------- ---------------------------- --------------------------
Over $1,000,000 0.00% 0.00%* 0.00%*
- --------------------------------- --------------------------- ---------------------------- --------------------------
</TABLE>
The Class B and Class C 12b-1 Plans further provide that payment shall be made
for any month only to the extent that such payment does not exceed (i) 0.75% on
an annualized basis of the respective Class B and Class C shares' 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 Fund 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. Any debt
securities purchased and sold by the Master 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.
10
<PAGE>
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 Trust issues three separate classes of shares, Class A, Class B, and Class C
shares of the Fund. The shares of the 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
(1) Class A shares bear a shareholder service fee of 0.25% of the average net
assets of Class A shares and (2) Class B and Class C shares bear Rule 12b-1
distribution expenses of 0.75% of the average net assets of the respective Class
B and Class C shares and have exclusive voting rights with respect to the Rule
12b-1 Plan pursuant to which the Rule 12b-1 fee may be paid. The net income
attributable to a class of shares and the dividends payable on such shares will
be reduced by the amount of any shareholder service or Rule 12b-1 fees;
accordingly, the net asset value of Class A, Class B and Class C shares will be
reduced by such amount to the extent the Fund has undistributed net income.
Shares of the 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. The Fund and each
class takes separate votes on matters affecting only the Fund or that class. For
example, a change in the fundamental investment policies for the Fund would be
voted upon by all shareholders of the Fund.
The Fund 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 Fund's outstanding
shares.
PURCHASE, REDEMPTION AND PRICING OF SHARES
PURCHASE OF SHARES.
BY MAIL: You or your financial intermediary may purchase shares by sending a
check drawn on a U.S. bank payable to Roxbury Large Cap Growth Fund, along with
a completed application (included at the end of the prospectus). If a subsequent
investment is being made, the check should also indicate your Fund account
number. When you make purchases by check, the 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:
BY REGULAR MAIL BY OVERNIGHT MAIL
--------------- -----------------
Roxbury Large Cap Growth Fund Roxbury Large Cap Growth Fund
c/o PFPC Inc. c/o PFPC Inc.
P.O. Box 8784 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) 497-2960 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.
11
<PAGE>
INDIVIDUAL RETIREMENT ACCOUNTS: You may purchase shares of the Fund 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
PFPC at (800) 497-2960. 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.
AUTOMATIC INVESTMENT PLAN: You may purchase Fund shares through an Automatic
Investment Plan ("AIP"). Under the AIP, PFPC, at regular intervals, will
automatically debit your bank checking account in an amount of $50 or more
(after the $2,000 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 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. To obtain an
application for the AIP, call the Transfer Agent at (800) 497-2960.
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 paycheck 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.
You or your financial intermediary 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
your financial intermediary to transmit redemption orders and credit your
account 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.
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:
By regular mail By overnight mail
--------------- -----------------
Roxbury Large Cap Growth Fund Roxbury Large Cap Growth Fund
c/o PFPC Inc. c/o PFPC Inc.
P.O. Box 8784 400 Bellevue Parkway - Suite 108
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 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.
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
12
<PAGE>
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 Fund 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.
All the redemptions, including bi-monthly redemptions of Fund shares, will be
effected at the NAV determined on or about the 25th day of the month.
ADDITIONAL INFORMATION REGARDING REDEMPTIONS: If shares to be redeemed represent
a recent investment made by check, the 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).
To ensure proper authorization before redeeming Fund 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 your cost, depending on
the net asset value at the time of redemption. Redemption of shares may result
in tax consequences (gain or loss) to you, and the proceeds of a redemption may
be subject to backup withholding.
Your 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 Fund's
securities or to determine the value of the Fund's net assets, or (d) ordered by
a governmental body having jurisdiction over the 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, you
may withdraw a request for redemption or may receive payment based on the net
asset value of the Fund next determined after the suspension is lifted.
The 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 Fund. If payment is made in securities, you may incur transaction
expenses in converting these securities into cash. The Fund has elected,
however, to be governed by Rule 18f-1 under the 1940 Act, as a result of which
the 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 Fund during any 90-day period. This election is irrevocable
unless the SEC permits its withdrawal.
PRICING OF SHARES
The net asset value per share of the 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 Fund is open for
business. The Fund is open for business on days when the Exchange, PFPC and the
Philadelphia branch office of the Federal Reserve are open for business
("Business Day").
In valuing the 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
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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 Fund'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 Fund, after
deducting any available capital loss carryovers are declared and paid to its
shareholders annually.
TAXATION OF THE FUND
GENERAL. The 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"), the 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 the 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 the 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.
The 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 the 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 you on
December 31 of that year if they are paid by the Fund during the following
January. Accordingly, such distributions will be taxed to you for the year in
which that December 31 falls.
You 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, you 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 the 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 you as a return of capital to the extent of your 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 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 you 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 you 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 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 the 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 the Fund has made an election not to have the following rules apply)
("Section 1256 Contracts") and that are held by the 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.
Code section 1092 (dealing with straddles) also may affect the taxation of
options and futures contracts in which the 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 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 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
the Fund of straddle transactions are not entirely clear.
If the 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 the Fund or a related person with
respect to
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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 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
the Fund. You should consult your tax adviser regarding specific questions
relating to federal, state and local taxes.
CALCULATION OF PERFORMANCE INFORMATION
The performance of the 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 Fund will vary based on changes in market conditions and the
level of the Fund'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
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 the
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.
B. YIELD CALCULATIONS. From time to time, the Fund may advertise its
yield. Yield for the Fund 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:
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.
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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 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 the 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, the 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 the Fund's performance and in
providing a basis for comparison with other investment alternatives. However,
the Fund'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 Fund's yields will tend to be somewhat higher than
prevailing market rates, and in periods of rising interest rates, the Fund's
yields will tend to be somewhat lower. Also, when interest rates are falling,
the inflow of net new money to the Fund from the continuous sale of its shares
will likely be invested in instruments producing lower yields than the balance
of the Funds' holdings, thereby reducing the current yields of the Fund. 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 the 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 the Fund.
In connection with communicating its performance to current or prospective
shareholders, the 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.
From time to time, in marketing and other literature, the Fund'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 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, the 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.
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Since the assets in all funds are always changing, the 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 the 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, the 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 the Fund, including reprints of or selections from,
editorials or articles about the Fund. Sources for performance information and
articles about the 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.
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.
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<PAGE>
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.
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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 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 Fund's investment objective
and limitations and permitted by applicable regulatory authorities. The
registration statement for the Fund 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
securities are not available for purchase. At those times, the Series Master 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 transactions
as in transactions in which the Series purchases a put option on a security that
it
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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 based on the difference
between the value of the index and the exercise price of the warrant; if the
Series holds a
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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.
(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
A-3
<PAGE>
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 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.
A-4
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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:
(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.
A-5
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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 as when there is no
movement in the level of the underlying index value or the securities
or currencies being hedged.
A-6
(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.
A-7
<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 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.
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.
B-1
<PAGE>
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>
March , 2000
VIA EDGAR TRANSMISSION
Securities and Exchange Commission
450 Fifth Street, N.W.
Judiciary Plaza
Washington, D.C. 20549
Re: WT Mutual Fund
Securities Act of 1933 Registration No. 33-84762 and
Investment Company Act of 1940 File No. 811-8648
Rule 497 (e) Filing
Dear Sir or Madam:
This letter is being transmitted by means of electronic submission, on behalf of
WT Mutual Fund (the "Fund"), and pursuant to the provisions of Rule 497 (e)
promulgated under the Securities Act of 1933, as amended. We are filing via
EDGAR Supplements to the Prospectus and Statement of Additional Information,
such documents are dated March , 2000.
If you have any questions regarding this filing, please do not hesitate to
contact the undersigned at (302) 791-2919.
Sincerely,
Danielle Gallagher
Regulatory Administration
CC: Brian S. Vargo, Esq. Pepper Hamilton LLP
